Sectoral Performance Audit Report on the
It is the policy of the state to provide basic services, uphold and protect the rights of the people for peaceful and dignified life. The realization of this policy, however, requires adequate funding.
Governmentís funds are mainly sourced from collections by authorized government agencies from taxes, custom duties and fees for services rendered. These collections are intended to finance the governmentís budgetary requirements. Any deficiency from collections are financed from domestic and foreign borrowings.
The efficiency in collection system therefore is crucial in the performance of governmentís functions particularly in the implementation of government programs and projects.
The collection function is being performed by several government agencies in charge of collecting taxes, duties and other fees required under existing rules and regulations.
One of the government agencies authorized to collect certain fees is the Land Transportation Office (LTO). Collections are undertaken by the LTO through designated National Collecting Officers (NCOs) assigned in 12 Regional Offices with at least 15 to 36 District Offices each. Their performance is guided by the rules and regulations issued by the Department of Finance (DOF), Bureau of Treasury (BTr) and the LTO.
As a general rule, collections by NCOs are required to be deposited to the BTr account maintained with the Authorized Government Depository Banks (AGDBs) within the day or the following day. Their collections are available for withdrawal by the BTr on the 6th day after the date of deposit.
LTO is one of the bureaus under the Department of Transportation and Communication (DOTC). LTO envisions a well-developed transportation system that will play a vital role in improving the quality of life of the Filipino people, particularly by introducing a more viable means of land transport for users and commuters.
To achieve this vision, LTO is performing the following functions:
Collections by the LTOís designated NCOs at the Main Office are deposited to the BTr account maintained with the Land Bank of the Philippines (LBP) East Avenue Branch, one of the five AGDBs.
For the year 2002, the LTO reported consolidated income
The audit was conducted to assess the adequacy of existing policies and procedures on national collections and effectiveness of their implementation in ensuring that collections are deposited on time to the BTr account and are accurately reported and recorded in the BTr and LTO books.
AUDIT SCOPE AND METHODOLOGY
The audit focused on the evaluation of the existing system, policies and procedures in ensuring that collections are deposited and remitted to the BTr account within the reglementary period and are accurately reported and recorded. The validation of existing system was tested on recorded collections and remittances between the periods January 2002 to June 2003. The audit covered five national government agencies including the LTO.
The team assessed the adequacy of policies and procedure adopted by the LTO on the basis of the following audit criteria:
The following procedures, among others, were undertaken to attain the objective:
The audit was conducted from July 1, 2003 to February 23, 2004 pursuant to MS/TS Office Order No. 2003-008 dated June 24, 2003.
The audit concluded that the existing guidelines and procedures on collections and deposits prescribed under various issuances of the LTO and DOF are adequate to provide proper guidance to the NCOs on the manner of depositing and reporting collections.
The team, however, noted that compliance with the
requirement of depositing collections during the day was not properly
monitored by the LTO and the BTr. Some NCOs deposit their dayís collection
only on the following or several days after collection. This put to risks
collections specially on Fridays and a day before the holiday reaching as
The LTO and the BTr records on NCO collections were not
also reconciled with a difference of
The team also noted that the reliability and accuracy of the data generated by the Revenue Collection System developed by STRADCOM Co. was affected by the presence of systemís deficiencies noted by the COA-ICTC which the LTO failed to address.
As collection function is a vital component in ensuring economic development, these concerns should be immediately addressed by the LTO and the BTr. The team recommended certain measures to address these concerns for consideration by the agency.
MANAGEMENTíS REACTIONS TO AUDIT OBSERVATIONS
The results of the audit were forwarded to LTO on June 8, 2004 with follow up letter dated July 8, 2004 for the comments. As there were no comments received as of to date, the report was finalized without them.