EXECUTIVE SUMMARY OF THE
The Office on Muslim Affairs (OMA) was created by virtue of Executive Order No. 122-A dated January 30, 1987 as amended by Executive Order No. 295 with the mandate of preserving and developing the culture, traditions, institutions and well-being of Muslim Filipinos, in conformity with the country’s laws and in consonance with national unity and development.
The agency’s Balance Sheet as of December 31, 1999 showed total assets, liabilities and residual equity of P60,707,266.11, P74,635,365.055 and (P13,928.098.94), respectively. On the other hand, the Statement of Operations of the OMA-Main for the year 1999 showed that it received total allotments of P85,442,255.45, of which P77,941,990.17 was obligated, thereby leaving an excess allotment of P7,500,265.28. Of the excess allotment, P5,196,572.74 was reverted to Cumulative Results of Operation-Unappropriated (CROU).
SCOPE OF AUDIT
The audit covered the accounts and operations of the OMA-Main for calendar year 1999 and is limited to financial and compliance audit. The examination was aimed at ascertaining the fairness and reliability of the agency’s financial position and the results of its operations, and the adequacy of its books of accounts and its subsidiary records. The results of the Value for Money Audit (VFM) conducted are in a separate report.
STATE AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS
An adverse opinion was rendered on the financial statements of the OMA-Main as of December 31, 1999 due to: unreconciled difference of P20,551,505.16 between the Subsidiary Ledger (SL) and General Ledger (GL) for Cash-Disbursing Officers with a balance of P36,991,425.82; non-maintenance of SL for Cash-Other Agencies and Cash-Funds Entrusted to NGOs/POs accounts with balances of P2,795,012.80 and P10,595,300.00, respectively; recording as an outright expense of financial assistance to NGOs/POs totaling P1,796,295.00; non-conduct of physical inventory taking and non maintenance of Supplies/Equipment Ledger Card and Stock Card, non-recording of donations received from various sources, improper recording of acquisitions of IT resources and items worth less than P10,000.00, and non-recording of corollary entry for gasoline, oil and lubricants for Inventories and Fixed Assets accounts with a book balance totaling P9,986,146.99; non-establishment of the correctness of Accounts Payable – Unliquidated Obligations account with the balance of P58,804,255.13 and non-reversion of accounts payable which have remained outstanding for more than two years to CROU; negative balance of Trust-Liabilities – Government Owned or Controlled Corporations account of P915,787.24 due to non-immediate liquidation of prior year’s cash advance; non-preparation of Monthly Bank Reconciliation Statement and Allocation and Utilization Control Sheet for Cash-Treasury Account (Check and Other Disbursements) which was closed to National Clearing Account; non-recording of prior year’s collections and disbursements pertaining to Hajj/Pilgrimage, non-submission of thirteen (13) Disbursement Vouchers totaling P2,049,780.08 for post-audit.
SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS AND FAVORABLE OBSERVATIONS
The following are the significant audit findings and recommendations for the year 1999:
Require the Accountant to reconcile the discrepancy between the SL and GL for Cash-Disbursing Officers account by evaluating the recommendations of the team previously created and effect necessary adjustments to said account. Also, require the Accountant to prepare and maintain subsidiary ledger for the Cash-Other Agencies and Cash-Funds Entrusted to NGOs/POs accounts. If necessary, create a task force to do the reconciliation and/or authorize the Accounting Division to render overtime services for the purpose. Documents at the auditing unit may be referred to if the accounting documents are not available.
Moreover, require the Accountant to correct/adjust to Cash-Funds Entrusted to NGOs/POs (8-70-910) account all financial assistance or grants which were earlier recorded as outright expense and henceforth comply with Section 7.0 of COA Circular No. 96-003. Furthermore, require the beneficiaries of the said grants to liquidate the cash entrusted to them by submitting a summary of expenses and accomplishment in connection with the implementation of the project for a given period of time, for verification and notation by concerned officers of the agency.
Create a committee of two or more employees, including the property officer or custodian, to be witnessed by a representative of the Agency Auditor, to conduct a physical inventory of all the agency’s property as of December 31 and submit a corresponding Inventory Report to the Auditor not later than January 31 of each year. Said Inventory Report should be reconciled with the property and accounting records.
Moreover, require the Property Officer to prepare and maintain Supplies/Equipment Ledger Cards and Stock Cards. Furthermore, require him to submit a certified copy of Deed of Donations or its equivalent to the Accountant for recording purposes. Items donated without cost should be recorded at their fair market value.
Furthermore, require the Accountant to prepare adjusting entries to record the acquisitions of IT resources in accordance with COA Circular No. 97-003 Also, reclassify and record furniture, fixtures, equipment and books, amounting less than P10,000.00 in accordance with COA Circular Nos. 97-005 and 98-003. Likewise, require the Accountant to record purchases and issuances or consumption of gasoline, oil and lubricants in accordance with Sec. 4.2 of COA Circular No. 94-009.
Require the Accountant to reconcile the discrepancy between the Statement and GL of the Accounts Payable – Unliquidated Obligations account. Also, payables covered by unliquidated cash advances should be reviewed and appropriate adjustments should be taken in the books. Consider in the reconciliation of Cash-Disbursing Officer account mentioned in finding number 1 the data on unliquidated cash advances under the Accounts Payable account. The Task Force that may be created for finding number 1 may also be assigned to do the job of reconciling the Accounts Payable balance considering that the unliquidated cash advance comprise most of the accounts payable. Moreover, revert to the Cumulative Results of Operations – Unappropriated all accounts payable which have remained outstanding for more than two years.
Require the accountable officers with outstanding cash advance pertaining to salaries to liquidate them immediately so that the withheld amount from salaries can be immediately credited to avoid a negative balance for said account. Require also the Cashier to remit the check representing the withheld amounts from employees within the prescribed period to avoid imposition of penalty thereon.
Require the Accountant to prepare Bank Reconciliation Statement (BRS) for Cash-Treasury Account (Check Disbursements) on a monthly basis and prepare correcting/adjusting entries for discrepancies/errors immediately after the BRS was prepared and items for correction/adjustment were properly analyzed and verified. Moreover, require both the Accountant and Cashier to prepare and maintain an Allocation and Utilization Control Sheet for them to easily determine the status of cash allocation/balance.
Require the concerned Finance Officers to submit to the Accountant, for recording purposes, a Summary of Statement of Collections and Disbursements pertaining to the 1996-1998 Hajj/Pilgrimage, in the meantime that the Report of Collections and Disbursements with supporting documents are with the special audit team. Also, require the use of the prescribed official receipt form in acknowledging payments pertaining thereto and deposit the same in authorized government depository bank in the same way that payments for plane fare and mutawiif/services fees should be made in an authorized government depository bank.
Require the Accountant to see to it that all Disbursement Vouchers and their supporting documents are submitted for post-audit. If the same could not be presented, the said transactions should not be recorded as valid disbursements.
Require the officials and officers concerned to refund the excess amount of foods, meals, snacks and groceries for meetings and entertainment of visitors charged to expenses object code 29 totalling P603,788.84. Henceforth, direct all the agency’s officials and employees to limit their claim for foods, meals, snacks and groceries for meetings and entertainment of visitors within the extraordinary and miscellaneous expenses authorized them by law.
Require the accountable officers to liquidate their cash advance at the end of the year or within the prescribed period. Also, stop the practice of granting additional CA to Accountable Officers with unliquidated cash advance to avoid further accumulation of the unliquidated cash advance. If necessary, withhold the salary of the concerned accountable officer to compel them to liquidate their cash advances.
Comply with Section 3.0 of COA Circular No. 96-003 in granting and paying financial assistance so that the objectives of such financial assistance will be fully attained.
Strictly adhere to the above rules and regulations on overtime to avoid disallowances due to overpayment.
Refrain from paying regular expenses on reimbursement basis. Payments on reimbursement basis should be limited to an amount not exceeding P15,000 per transaction, except when a higher amount is allowed by law and/or specific authority by the Commission on Audit.
Assign the MAD directly under the Office of the Executive Director and require them to perform their functions, duties, and responsibilities in accordance with AO No. 278.
Consider the reassignment of the Cash Division from the Financial and Management Services(FMS) to Administrative Services (AS) to comply with the objective of EO No. 122-A.
Require the Accountant to apply for bonding by following the procedures set forth under Section 4.0 of the TO No. 95-01.
Require the Accountant to record the MRSMI prepared and submitted by the Property Officer on a monthly basis so that verification thereof could be conducted on a timely manner.
Require the Cashier and Accountant to prepare and submit a Monthly Report of Accountability for Accountable Forms for Checks and Official Receipts and Journal Voucher, respectively, so that completeness of accounts related thereto can be ascertained.
Require the Property Officer to comply with the above rules so that verification and/or inspection can be conducted immediately.
Require the concerned accountable/responsible officers to observe strictly the rules and regulations on the submission of accounting and financial reports mentioned above. In this manner, the examination, audit and settlement of accounts can be conducted in a timely manner.
Enforce the settlement of suspensions and disallowances within the prescribed period. Likewise, see to it the requirements of transactions suspended in audit are complied with and appropriate actions are taken on the deficiencies noted as contained in the NSs, NDs, NCs and AOM.
Require the Accountant to see to it that taxes withheld are remitted on a monthly basis and within ten (10) days after the close of each month pursuant to BIR Regulations on withholding and remitting of taxes. Also, require the Accountant to identify the taxes withheld which have not yet been remitted and cause the remittance of the same to the BIR immediately to avoid being penalized.
Require the Accountant to comply with the requirement of the Presidential Memorandum Order No. 219 as regard quarterly submission of a listing of purchase/contract with certain entities to BIR.
The above audit findings and recommendations were discussed with the officials and employees concerned of the OMA-MAIN during the exit conference conducted on February 23, 2000 and we are pleased to note their favorable reactions on the same.
STATUS OF IMPLEMENTATION BY THE AUDITEE OF PRIOR YEARS’ AUDIT RECOMMENDATIONS
Of the eight (8) audit recommendations embodied in the 1998 Annual Audit Report, only one (1) was fully implemented in 1999 while two (2) were partially implemented and five (5) not implemented at all.