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CONSOLIDATED COMMENTS AND OBSERVATIONS

I. FINANCIAL ISSUES
1. CASH IN BANK
Audit of the Cash in Bank accounts with a total of P1,240,617,261 that
represents 84 per cent of the cash and cash equialents and 1! per
cent of the total current assets disclosed the followin" de#ciencies$
1.1 Unreconciled discrepnc! "e#$een "oo% nd "n%
"lnces & '())*(+,*-(..1)
%he audit disclosed prealent discrepancies &etween the
&alances of the depositor' &anks and the &ook &alances of the
Cash in Bank accounts of seeral re"ional o(ces) %otal
discrepancies a*ounted to P400,427,84+)10, as shown &elow$
,e"ion Book Balance Bank Balance -iscrepanc'
. P 41,!!8,+8!)20 P/1,!//,+21)6+ P10,06+,067)++
.. 17,7/0,+07)+! 1!,264,072)44 01,+//,+64)8+1
... 160,4/+,2!2)40 7,+!1,!/7)20 1+2,84/,/++)20
.2 1++,2!2,/1+)62 17,60/,4+2)+! 1/7,688,86/)0/
2 18,+00,000)00 16,800,000)00 1,700,000)00
2... +,!88,4!7)+8 26,887)64 +,!61,60!)!4
.3 12,118,471)/8 10,77+,712)2+ 1,/42,7+!)1/
CA, 100,18/,208)42 11,!60,872)27 88,222,//6)1+
4C, +/,+08,+12)+! 4!,/71,0!/)64 4,1/7,418)!+
To#l './.*,..*01(.,- '1/.*0+,*.(1.
/-
'())*(+,*-(..1)
At 4C,, the discrepanc' of P4,1/7,418)!+ pertained to the
ne"atie &alance of 5quita&le PC. Bank67eneral 8und due to the
ad9ust*ent in funds transferred fro* 7eneral 8und to -:;8 and
ise ersa, and dor*ant<closed accounts which still e=ist in the
&ooks)
At ,e"ions . and ..* the *aterial discrepancies &etween &ook
and &ank &alances pertained to prior 'ears> unidenti#ed
reconcilin" ite*s which were carried forward in the &ooks
fro* 'ear to 'ear)
;f the total discrepanc' of P1+2,84/,/++)20 of ,e"ion ..., 8/ per
cent or P127,100,848)67 represents closed accounts at
Philippine 4ational Bank and ?and Bank of the Philippines
%he *aterial di@erence per &ooks and &ank &alance of ?and
Bank account at ,e"ion .2 pertained to the unreconciled
accounts in 200/ and prior 'ears while the di@erence in
5quita&le PC. Bank pertained to erroneous recordin" of
corporate fund deposits in :one' ;rder 8und account) %he
ne"atie &alance of 5quita&le PC. BankA:;8 Cash Adance was
due to the failure to record in the &ooks of ,e"ion .2 the funds
transferred &' the Central ;(ce) %his account does not also
reconcile with the cash&ook *aintained &' the dis&ursin" o(cer)
At ,e"ion 2, discrepanc' of P1,700,000)00 is caused &'
reconcilin" ite*s per &ook and per &ank which re*ained
uncorrected for ei"ht 081 'ears, errors and o*issions in
recordin" deposits and re*ittances which re*ained unad9usted),
closed post*asters &ank accounts still carried in the &ooks,
understate*ent and oerstate*ent of &ank &alances)
%he discrepanc' of P+,!61,60!)!4 &etween &ook &alance and
?and&ank &alances on Post*aster>s account at ,e"ion 2...
pertained to transactions prior to clusterin" which re*ained
unreconciled)
At ,e"ion .3* Cash in Bank accounts a*ountin" to
P12,118,471)/8 did not reconcile with the &alance of its
su&sidiar' led"ers a*ountin" to P10,77+,712)2+ or a di@erence
of P1,/42,7+!)1/)
At CA,, &alance per led"er di@ers fro* the &alance per &ank &'
P88,222,//6)1+ as of -ece*&er /1, 200+$
Cash in Bank per led"er P100,18/,208)4
2
Cash in Bank per &ank state*ents 11,!60,872)27
O2ers##e3en# o4 "oo% "lnce '--*+++*00/.
1.
%he oerstate*ent was due to unrecorded<erroneous recordin"
of fund transfers, &ank deposits, ad9ust*ents and
dis&urse*ents)
5e reco33end #6# Mn7e3en#8
Re9:ire Re7ionl Acco:n#n#s #o e;er# 3ore e<or# #o #rce*
2eri4!* nd reconcile 2rinces "e#$een "oo% nd "n%
"lnces nd #o prepre "n% reconcili#ion s##e3en#s.
1.+ Del!ed=non>prepr#ion o4 Bn% Reconcili#ion
S##e3en# ?BRS@ 4or 0.) "n% cco:n#s >
'/)-*),+*.)+.0.
PPC Bead ;(ce presentl' *aintains twent'Aone 0211 &ank
accounts with four 041 di@erent &anks na*el' ?and Bank of the
Philippines, 5quita&le PC.B, Philippine 4ational Bank and the
Philippine Postal Cain"s Bank)
;ut of the 21 &ank accounts, two 021 &ank accounts na*el'
Cash in BankA?ocal Current -:;8 5PC.B are without B,C since
:arch 1!!!) As of -ece*&er /1, 200+ its &ook &alance
a*ounted to P16!,!/0,487)64 which represents al*ost /! per
cent of the total cash in &ank accounts)
%he audit also disclosed that out of the /66 &ank accounts
*aintained &' the re"ional o(ces, 202 or ++ per cent has no
updated &ank reconciliation state*ents, while 148 or 40 per
cent are dela'ed in su&*ission fro* 1 *onth to one 'ear) %his
renders the alidit' and fairness of the presentation of the Cash
in Bank accounts in the #nancial state*ents dou&tful)
Cu**ar' of Bank Accounts Dithout Epdated Bank ,econciliation
Ctate*ent 0B,C1
4onApreparation
%he nonApreparation<dela'ed preparation of B,C contraenes
the proisions of Cection 74 of P- 144+ which states that FAt the
close of each *onth, depositories shall report to the A"enc'
Bead, in such for* as he *a' direct, the condition of the a"enc'
account standin" on the &ooks) %he Bead of the A"enc' shall
see to it that reconciliation is *ade &etween the &alance shown
in the reports and the &alance found in the &ooks of the
a"enc')G
Bank reconciliation tallies the cash &alances of the a"enc'>s
records and &ank records) .t ai*s to identif' transactions not
recorded either &' the &ank or &' the a"enc') .t also points out
errors co**itted with the end iew of *akin" necessar'
ad9ust*ents) Ad9ustin" entries are recorded after the anal'sis
and eri#cation of the reconcilin" ite*s appearin" in the &ank
reconciliation state*ents) %he preparation and anal'sis of &ank
reconciliation state*ent on a re"ular &asis is an i*portant tool
for *ana"e*ent in its proper cash *ana"e*ent in order to
arrie at sound decisions thus it should &e "ien fore*ost
i*portance and attention)
%he nonApreparation<dela'ed preparation of Bank ,econciliation
Ctate*ents, which has &een a consistent issue in preious
Annual Audit ,eports of PPC, resulted in the accu*ulation of
reconcilin" ite*s in the Cash in Bank account)
8urther*ore, interested parties will &e depried of their
opportunit' to deter*ine the irre"ularities or discrepancies that
*a' arise fro* the transactions inolin" deposits)
,e"ion 4o) of
Bank
Account
s
4o
B,C
Dith
-ela'ed
B,C
%otal A*ountA 4o
B,C<Dith -ela'ed
B,C
Dith
Epdated
B,C
. 61 2/ /+ P40,+44,028)2+ /
... 4! 48 1 160,4/+,2!2)40 A
.2 !2 21 71 1++,2!2,/1+)62 A
2. /1 2/ A 1/,6//,101)66 8
2... 22 A 17 4,244,8/8)48 +
.3 6 / / 12,118,471)/8 A
3 // /0 / 1+0,!++,/!!)!1 A
3.. 6 + 1 7,6+7,6!!)/2 A
CA, +1 /! 12 11,!60,872)27 A
4C, 1+ 10 + +1,2/0,48/)06 A
To#l 0// +)+ 1(- '/)-*),+*.)+.0. 1/
5e reco33end #6# Mn7e3en#8
a. Re9:ire responsi"le oAcils #o send periodic re3inders
#o deposi#or! "n%s #o ens:re #6# #6e "n% 4:rnis6es
#6e ''C Re7ionl OAces $i#6 #6e re9:ired "n%
s##e3en#s $i#6in #6e prescri"ed period o"ser2ed in #6e
"n%in7 ind:s#r!.
b. Re9:ire Re7ionl Acco:n#n#s #o prepre "n%
reconcili#ion s##e3en#s.
1.0. S:"sidir! Led7ers o4 "n% cco:n#s re no# :pd#ed=no#
3in#ined.
Para"raph 20a1 of Cection 488 of the 7oern*ent Accountin"
and Auditin" :anual 07AA:1, 2olu*e .. states that Ftotals of
su&sidiar' led"er &alances are reconciled with their respectie
control account at the end of each *onth) A state*ent thereon
is prepared quarterl' to support the correspondin" account in
the trial &alance)G
A su&sidiar' led"er will facilitate the recordin" and tracin" of
transactions in detail which is necessar' in co*in" up with
infor*ation concernin" past operations and present condition
and used as &asis for proper decision *akin")
8our 041 re"ional o(ces do not *aintain su&sidiar' led"ers of its
&ank accounts while three 0/1 other re"ional o(ces includin"
4C, are not updated in postin" transactions of its &ank accounts
in the su&sidiar' led"er and "eneral led"er)
Bank Accounts without Cu&sidiar' ?ed"ers
,e"ion 4o Cu&sidiar' ?ed"er Cu&sidiar' ?ed"er 4ot
Epdated
. 3
... 3
.2 3
2. 3
2... 3
CA, 3
4C, 3
5e reco33end #6# Mn7e3en#8
Re9:ire Re7ionl Acco:n#n#s #o 3in#in nd :pd#e
s:"sidir! led7ers 4or ll "n% cco:n#s #o 4cili##e #6e erl!
de#ec#ion o4 errors* e;pedi#e dB:s#3en#s nd #o de#er3ine i4
#o#l o4 indi2id:l cco:n#s reconcile $i#6 #6e #o#l in #6e
Cenerl Led7er.
1.(. Non>clos:re o4 #6e 7enc!Ds dor3n# "n% cco:n#s > '
(*0-+* ++/.0(
4onAclosure of the a"enc'>s dor*ant &ank accounts totalin"
P4,/82,226)/4 does not onl' deprie the corporation use of the
idle funds &ut also allows the unnecessar' loss of the funds
due to the &ank>s i*position of dor*anc' fees and the possi&le
classi#cation of the account into Enclai*ed Balances Account
pursuant to Cection 264 of the :anual of ,e"ulations for
Banks)
%hese &ank accounts are as follows$
Bank Account A*ount ,e*arks
PPC Bead ;(ce$
PPCB %rust 8und
Acct)
P2,770,!!0)04 + 'ears dor*ant
4C,$
?BPAarious :;8
5PC. %hrift Cta*ps
fund
/6/,2!7)10
20,!/0)00
-or*ant since 1!!8
-or*ant since 2002
CA,$
?BPAariousA78
?BPAariousA:;8
5PC.AariousA78
217,002)44
!0+,/42)+2
+0,102)24
42,680)00
-or*ant since 1!!7
doA
-or*ant since 200/
doA
,e"ion 2...$
5PC.AariousA:;8 11,882)00 -or*ant since 1!!8
To#l '(*0-+*++/.
0(
At PPCABead ;(ce, the PPCB %rust 8und re*ains dor*ant for
*ore than #e 0+1 'ears) %his account was opened and funded
&' su&sid' contri&utions fro* the 4ational 7oern*ent
speci#call' to pa' for the "ratuit' of e*plo'ees who were laid
o@ as a result of the conersion of the Postal Cerice to a
corporation) %o date the re*ainin" &alance a*ounted to
P2,770,!!0)04)
At ,e"ion 2... these &ank accounts had &een nonA*oin" since
1!!8 and no action was taken to close the accounts or transfer
the re*ainin" &alances to their respectie actie accounts thus
its &alances were slowl' &ein" eaten up &' &ank char"es)
At CA,, con#r*ation of &ank account &alances with the ?and
Bank of the Philippines and 5quita&le PC. Bank reealed that the
corporation still *aintains &ank accounts a*ountin" to
P1,21+,127)20 that are alread' dor*ant or inactie) Caid
&alances are "raduall' decreasin" due to &ank serice fees) .t
has &een o&sered that the &ank char"ed fees after a 'ear of
inactiit') Bank serice char"e was onl' P110)00 per *onth in
200/, and was increased to P200)00 in Hune 200+)
%he :anual on C'ste*s and Procedures of ?BP speci#call'
proides that inactie current<sain" accounts and *atured ti*e
deposits held &' ?BP in faor of persons known to &e dead or
unheard fro* durin" the precedin" ten 0101 'ears or *ore shall
&e classi#ed<transferred to the Enclai*ed Balances Account and
that all Enclai*ed Balances upon application of the proper
proceedin"s shall &e classi#ed and transferred to F-ue to the
%reasurer of the PhilippinesG account)
5e reco33end #6# Mn7e3en#8
a) Considerin7 #6e Enncil cons#rin#s o4 #6e corpor#ion*
i33edi#el! :nder#%e #6e necessr! proced:res 4or #6e
clos:re nd=or #rns4er o4 #6ese dor3n# "n% cco:n#s
#o 2oid 4:r#6er loss d:e #o dor3nc! 4ees.
". Re9:ire #6e Acco:n#in7 Di2ision #o 3oni#or* re2ie$* nd
prepre #6e correspondin7 "n% reconcili#ion 4or ll
dor3n# cco:n#s nd #o in9:ire=conEr3 4ro3 4or3er
deposi#or! "n%s 4or n! e;is#in7 dor3n# cco:n#s.
1.5 UndB:s#ed lon7 o:#s#ndin7 reconcilin7 i#e3s in #6e
Bn%
Reconcili#ion S##e3en# & '+)+*,(/*)-).(/
At ,e"ion .2, as in our preious 'ear>s audit o&seration, it was
noted that the reconcilin" ite*s in the a"enc' &ooks are
repeatedl' carried in Bank ,econciliation Ctate*ents and
re*ained unad9usted since 1!!7)
.ncluded as reconcilin" ite*s in the Bank ,econciliation
Ctate*ents for ?and Bank of the Philippines are &alancin"
#"ures in the a*ount of P/!,+61,048)/7 for Corporate 8und and
P118,!76,!80)+1 for :one' ;rder 8und while reconcilin" ite*s
in the Bank Ctate*ents for 5quita&le PC. Bank 05PC.B1 are
erroneous recordin" of "eneral fund deposits in the *one' order
funds &ooks and ice ersa)
Another reconcilin" ite* for which no action was undertaken &'
the concerned o(cials is the continuous i*position of P+0)00
*onthl' &ank serice char"es on dor*ant accounts with ?and
Bank of the Philippines)
At ,e"ion 2, reconcilin" ite*s that re*ained uncorrected for 8
'ears are as follows$
Per Books Per Bank
C8A?BP P4,2/8,!+8)7! P2,06/,+!2)6+
-:;8A?BP,old +,4!1,8++)24 7,/+6,822)2+
5rrors and o*issions
in recordin" of
deposits and
re*ittances
180,420)76 /88,478)+7
Current 'ear
reconcilin" ite*s
0net
understate*ent1
240,4+!)8/
At ,e"ion 2.., , total unad9usted reconcilin" ite*s since 1!!2
shown in the ?BP &ank reconciliation state*ents as of -ece*&er
/1, 200+ a*ounted to P//,++!,186)!6 representin" net
understate*ents of Cash in Bank 6?BP account)
At ,e"ion 2..., eri#ed &ank reconciliation state*ents showed
seeral reconcilin" ite*s a*ountin" to P4!7,170)00 which were
not 'et ad9usted in the &ooks, there&' understatin" the &ook
&alance as of -ece*&er /1, 200+ &' the sa*e a*ount)
5e reco33end #6# Mn7e3en#8
Re9:ire Re7ionl cco:n#n#s #o i33edi#el! e<ec# #6e
necessr! dB:s#3en#s o4 lon7 o:#s#ndin7 reconcilin7 i#e3s in
#6e "n% reconcili#ion s##e3en#s #o es#"lis6 #6e cc:r#e
"lnces o4 cs6 in "n%.
1./. Unrelesed c6ec%s s o4 Dece3"er 01* +)). $ere no#
res#ored #o Cs6 in Bn% cco:n# & '1*-+-*)(+.1(
%he 47AC which the a"enc' adopted startin" :a' 1, 200+
requires that at the end of the 'ear, the cash equialent of all
unreleased checks shall &e restored and the appropriate lia&ilit'
accounts shall &e reco"niIed &efore the closin" of the &ooks to
reJect the correct &alance of cash in &ank and lia&ilities
accounts in the &ooks of the a"enc')
At ,e"ion 2.., eri#cation of outstandin" checks disclosed a total
of P 1,2/2,17/)6+ of unreleased checks as of &alance sheet
date) 4o reersin" entries were *ade thus understatin" &oth the
cash in &ank and lia&ilit' account)
Ci*ilarl', at ,e"ion 2...* unreleased checks as of -ece*&er /1,
200+ totalin" P+!+,86!)2! were not restored to cash in &ank
account)
5e reco33end #6# Mn7e3en#8
Re9:ire Acco:n#in7 Di2ision #o res#ore=re2er# #6e 3o:n# o4
:nrelesed c6ec%s #o #6e Cs6 in Bn% Acco:n# #o 4irl!
presen# cs6 nd li"ili#! cco:n#s s o4 "lnce s6ee# d#e.
1.,. Non>#rns4er o4 deposi#s in e;cess o4 3in#inin7
"lnces
-eposits receied &' the ?and Bank of the Philippines depositor'
&ranches in e=cess of the *aintainin" &alances are not &ein"
re*itted or transferred in full to ?BP Central ;(ce account
contrar' to Cections +)/ and 4)2 of the :e*orandu* of
A"ree*ent &etween ?BP and PPC)
Anal'sis *ade on the *onthl' endin" &alances of the accounts
*aintained with ?BP showed that the' hae not &een re*ittin"
or transferrin" all deposits in e=cess of the *aintainin" &alance
to the ?BP Central ;(ce account) %he *aintainin" &alances for
the 7eneral fund and :one' ;rder 8und are P1+,000)00 and
P10,000)00 respectiel')
5e reco33end #6# Mn7e3en#8
Coordin#e $i#6 #6e 2rio:s LB' "rnc6es 4or #6e #rns4er o4 ll
3o:n#s in e;cess o4 #6e 3in#inin7 "lnce #o #6e ''C>LB'
Min Acco:n# #o pro2ide #6e corpor#ion ddi#ionl 4:nds #o
Ennce i#s c:rren# oper#in7 e;penses nd #o p! 3one! order
li"ili#ies.
+. CASH COLLECTINC OFFICERS
Anal'sis of the Cash Collectin" ;(cers account a*ountin" to
P87,6+4,!+6)8! as of -ece*&er /1, 200+ disclosed the followin"
o&serations$
+.1 Unreconciled S:"sidir! nd Cenerl Led7er "lnces o4
Cs6 Collec#in7 OAcers Acco:n# & '0+*),.*,+-.)(
Cu&sidiar' and "eneral led"er &alances of Cash Collectin"
;(cers account of seeral PPC re"ional o(ces showed
discrepancies totalin" P /2,07+,728)04) -etails follow$
,e"ion
A * o u n t
7eneral 8und :one' ;rder % o t a l
. 244,+64)87 164,07/)0! 408,6/7)!6
.. 40/,+41)87 01/!,446)+11 264,0!+)/6
... !,8/6,12/)76 18,!41,/00)!
2
28,777,424)68
2.. 2,+88,+14)!7 A 2,+88,+14)!7
2... 74!)!+ /6,/0+)12 /7,0++)07
To#l 10*),0*(1..
(+
11*))+*+0+.
/+
0+*),.*,+-.
)(
At ,e"ion 2.., the unreconciled a*ount or discrepanc' had
increased fro* P1)+1 : in 2004 to P2)+8 : in 200+ or 71 per
cent which si"ni#es the lack of e@ort on the part of *ana"e*ent
to eli*inate these discrepancies)
?ikewise, at ,e"ion .2, su&sidiar' led"ers were not updated
while no su&sidiar' led"ers were *aintained in ,e"ions 2 and
CA,) At PPCA4C,, &oth su&sidiar' and "eneral led"ers are not
updated)
Cection 488 of the 7AA: 2ol) .. proides that su&sidiar' led"ers
are necessar' to support the &alances of controllin" accounts
appearin" in the "eneral ?ed"er)
5e reco33end #6# Mn7e3en#8
S#ric#l! re9:ire Re7ionl cco:n#n#s #o reconcile S:"sidir!
nd Cenerl Led7er "lnces o4 Cs6 Collec#in7 OAcer cco:n#
s $ell s #6e 3nd#or! 3in#ennce o4 :pd#ed s:"sidir!
led7ers s re9:ired in Sec#ion (-- o4 CAAM* Vol:3e II.
+.+ Unreconciled disrepncies "e#$een cco:n#in7 records
nd pos#3s#ersD Enncil repor#s=cco:n# c:rren# &
'()*(,1*+11./,
%he accountin" records and post*asters> #nancial
reports<account current in ,e"ions .., ..., .2, CA, and 4C,
showed the followin" discrepancies totalin" P40,471,211)67
,e"ion Per 7eneral
?ed"er
Per Post*asters>
,eport
-iscrepanc'
.. P2,60/,202)06 P1,40+,214)47 P1,1!7,!87)+!
... /2,82+,7+2)14 /,+66,441)8! 2!,2+!,/10)2+
.2 2,60/,202)06 1,40+,214)47 1,1!7,!87)+!
CA, 01,142,112)/41 24!,/2/)11 01,/!1,4/+)4+1
4C, 18,2/4,!1/)44 8,027,++1)7+ 10,207,/61)6!
To#l '..*1+(*1.,.0/ '1(*/.0*,(../1 '()*(,1*+11./,
Co*parison of Cash Collectin" ;(cers account per &ooks with
the actual cash on hand of post*asters per *onthl' #nancial
reports su&*itted &' post*asters fro* ,e"ions .., ... and 4C,
disclosed that &alance per &ooks is oerstated &'
P40,664,6+!)+/ while at CA,, the &alance per &ooks is
understated &' P1,/!1,4/+)4+)
At ,e"ion ..., the oerstate*ent is &rou"ht a&out &' the
unrecorded cash shorta"es and unad9usted losses fro* cash due
to ro&&er') 5ntries to ad9ust the oerstate*ent cannot &e
e@ected due to the unaaila&ilit' of records pertainin" to the
cash shorta"e and nonAsu&*ission of required docu*ents to
support request for relief of accounta&ilit')
:eanwhile, at 4C,, the discrepanc' is attri&uted to unreconciled
prior 'ear>s &alance and partl' to the erroneous &ookin" of
transactions pertainin" to ta= withheld fro* *ailers, 7lo&e Auto
?oad sales, and adance pa'*ent of clients)
At ,e"ions .. and .2, ad9ust*ents *ade in the Post*aster>s
Account Current has no correspondin" entr' in the &ooks while
at CA,, the ne"atie &ook &alance of the Cash Collectin" ;(cer
account started in 1!!8)
5e reco33end #6# Mn7e3en# #%e #6e 4ollo$in7 co:rses o4
c#ion8
. Re9:ire #6e reclssiEc#ion #o Recei2"les cco:n#
cli3s 7ins# cco:n#"le oAcersD s6or#7es nd losses
o4 pos#3s#ers d:e #o ro""er! $i#6o:# re9:es# 4or relie4
4ro3 cco:n#"ili#! nd #6e re9:ired doc:3en#s $i#6in
#6e prescri"ed period.
". For NCR* re9:ire* #6e Acco:n#in7 Di2ision #o
in2es#i7#e :nreconciled prior !ers "lnces nd e<ec#
#6e necessr! dB:s#in7 en#ries.
c. In #6e cse o4 ne$l! i3ple3en#ed pos#l ser2ices in
#6e NCR* re9:ire Acco:n#in7 Di2ision #o 4ollo$ #6e
prescri"ed Bo:rnl en#ries p:rs:n# #o iss:ed 7:idelines.
Re9:ire pos#3s#ers #o "e 7:ided on #6e proper
presen##ion o4 #6e sles proceeds 4ro3 ne$ pos#l
ser2ices in #6eir repor# o4 collec#ions.
d. Re9:ire Acco:n#in7 Di2ision #o con#in:e #o #rce nd
reconcile Cs6 Collec#in7 OAcer cco:n# $i#6 #6e
"lnces o4 cs6 on 6nd s repor#ed "! #6e 'os#3s#ers
nd Cl:s#er Heds=Cs6iers.
+.0 Undeposi#ed Collec#ions s o4 Dece3"er 01* +)). >
'(*-(.*1(0.,(
%he followin" PPC re"ional o(ces reported undeposited
collections totalin" P4,84+,!4/)74) -etails follow$
Re7ion Cenerl F:nd Mone! Order
F:nd
To#l
3 P1,727,880)/8 P/2,!!2)4/ P1,760,872)81
3. 1,100,8+8)++ 1!1,!66)20 1,2!2,824)7+
3.. /+6,104)00 1,4/6,142)18 1,7!2,246)18
To#l '0*1-(*-(+.10 '1*//1*1)).-1 '(*-(.*1(0.,(
Ci*ilarl', ,e"ion 2. also reported that collections were not &ein"
deposited intact in Bacolod Cit', Bini"aran, Can Hose, and Kali&o
post o(ces)
Cection 6! 0f P- 144+, -B:A-;8 Hoint Circular 4o) 1A81 and
Cection 1/4 of 7AA: 2olu*e 1 require that all collections should
&e deposited dail' or not later than the ne=t &ankin" da')
5e reco33end #6# Mn7e3en#8
Re9:ire Re7ionl Direc#ors nd 'os#l Dis#ric# Mn7ers #o
closel! 3oni#or pos# oAces :nder #6eir B:risdic#ions nd see #o
i# #6# collec#ions re deposi#ed in#c# dil! or no# l#er #6n #6e
ne;# "n%in7 d! #o 2oid e;pos:re o4 7o2ern3en# 4:nds #o
ris%s o4 loss d:e #o #6e4# nd ro""er!.
+.( Ne# o2ers##e3en# o4 Cs6 Collec#in7 OAcer cco:n# &
'/1+*1(...,
Bereunder are details of this oerstate*ent<understate*ent in
the Cash Collectin" ;(cer account$
,e"ion A*ount ,easons<Causes of the
;erstate*ent
0Enderstate*ent1
2... P6!7,28+)00 Enrecorded deposits
3.. 1,411,707)+4 Enad9usted cash
accounta&ilities of
transferred, dis*issed
and deceased
accounta&le o(cers
CA, 1,416,046)!7 -ou&le recordin" of
:a'A-ece*&er, 200+
deposits
P6!2,!4+)+7
5e reco33end #6# Mn7e3en#8
Re9:ire Re7ionl Acco:n#n#s #o 3%e #6e necessr! dB:s#in7
en#ries #o es#"lis6 #6e cc:r#e "lnce o4 #6e Cs6 Collec#in7
OAcers cco:n#.
+.. Viol#ions o4 "sic in#ernl con#rol principles in #6e
6ndlin7 o4 cs6 collec#ions in Re7ions VI nd VII
2)+)1 Bacolod Cit' Post ;(ce uses collections for pa'*ent of
arious e=penses and unauthoriIed cash adances of
e*plo'ees) %he cashier alle"ed that e=penses were paid
out of cash collections due to nonAreplenish*ent of the
pett' cash fund since Au"ust, 200+) Cash adances or
ales were "ien to e*plo'ees in anticipation of the 7:A
&onus)
2)+)2 At ,e"ion 2.., there are post*asters who practice lappin"
&' holdin" certain a*ount of cash collections fro* sale of
posta"e sta*ps and postal *one' order for seeral
da's<*onths and at the sa*e ti*e report the equialent
sta*ps and other postal products sold as still part of their
inentor' in the Ctock Accounta&ilit') %his is in iolation of
Cection 6! of P- 144+ and Cection 1/4 of the 7AA:,
2olu*e . requirin" the re*ittance or deposit intact the full
a*ount of *one' receied and collected to the treasur'
of the a"enc' concerned and credited to the particular
accounts to which said *one's &elon")
2)+)/ Postal tellers in ,o=as Cit' Post ;(ce were not properl'
desi"nated contrar' to Cection 6+ of the 7AA:) 2olu*e .
which proides that the head of the a"enc' *a'
desi"nate such nu*&er of collection o(cers or a"ents as
*a' &e dee*ed necessar')
:eanwhile, in Kali&o Post ;(ce, + postal tellers were not
&onded contrar' to %reasur' ;rder 4o) 1A!!, ,eised
,e"ulations 7oernin" 8idelit' Bondin" of 7oern*ent
;(cials and e*plo'ees)
2)+)4 At ,e"ion 2.., ori"inal copies of cancelled o(cial receipts
and spoiled<da*a"ed accounta&le for*s with *one'
alue like postal .- and *one' order checks were not
su&*itted to the C;A auditor in iolation of Cection !!,
7AA:, 2olu*e .)
2)+)+ At ,e"ion 2., paid *one' order checks were not sta*ped
FpaidG as proof of pa'*ent &' tellers<cashiers)
5e reco33end #6# Mn7e3en# #%e #6e 4ollo$in7 co:rses o4
c#ion8
a. Ins#r:c# 'os#3s#ers=cs6iers in Re7ion VI #o s#op :sin7 cs6
collec#ions #o p! 4or oAce e;penses nd :n:#6oriFed
cs6 d2nces o4 e3plo!ees.
b. In#ernl A:di# Ser2ice ?IAS@ s6o:ld cond:c# re7:lr s:rprise
cs6 e;3in#ion #o :nco2er lppin7 prc#ices in Re7ion
VII.
c. Re9:ire ll pos#l #ellers=cco:n#"le oAcers #o "e properl!
desi7n#ed nd "onded.
d. S#ric#l! re9:ire s:"3ission o4 cncelled=de4ec#i2e oAcil
receip#s nd o#6er cco:n#"le 4or3s #o COA.
0. CASH DISBURSINC OFFICERS
%his account pertains to cash adances "ranted to cashiers, post*asters
or dul' desi"nated dis&ursin" o(cers for salaries and wa"es, allowances
and other si*ilar pa'*ents for personal serices) 8or ,e"ional ;(ces, it
also includes cash adances for do*estic *one' order pa'*ents) Prior
to the i*ple*entation of 47AC at PPC, the a&oeA*entioned t'pes of
cash adance transactions were lod"ed under Cash -is&ursin" ;(cer 6
,e"ular 08A70A+01A011 and Cash -is&ursin" ;(cer 6 -o*estic :one'
;rder 8und 08A70A+021 accounts, respectiel')
.n the course of audit of this account, seeral audit o&serations hae
&een noted, as discussed in the succeedin" para"raphs)
0.1 Unli9:id#ed cs6 d2nces o4 '-/*-,/*).).-. 4or
personl ser2ices e;pendi#:res s # !er>end
Pertinent rules and re"ulations "oern the "rant, utiliIation and
liquidation of cash adances in order to proide for a *ore
e(cient and e@ectie control oer such transactions) Cection 8!
of P- 144+, otherwise known as F%he 7oern*ent Auditin" Code
of the Philippines,G requires that Fa cash adance shall &e
reported on and liquidated as soon as the purpose for which it
was "ien has &een sered)G .t also states that, Fno additional
cash adance shall &e allowed to an' o(cial or e*plo'ee unless
the preious cash adance "ien to hi* is #rst settled or a
proper accountin" thereof is *ade)G
Dith re"ard to cash adances for salaries, wa"es and
allowances, Cection +)1)1 of C;A Circular 4o) !7A002 dated
8e&ruar' 10, 1!!7 requires that these &e liquidated within #e
0+1 da's after each #fteen 01+1 da'<end of the *onth pa' period)
.n addition, Cection +)8 of the sa*e Circular requires that all
cash adances should &e full' liquidated at the end of each 'ear
e=cept for pett' cash fund)
,eiew of Cash 6 -is&ursin" ;(cers account as of -ece*&er /1,
200+, howeer, disclosed that cash adances for pa'*ents of
personal serices totalin" P86,876,0+0)8+ as shown in the ta&le
&elow, re*ained unliquidated contrar' to the a&oeA*entioned
Cection 8! of P- 144+ and Cections +)1)1 and +)8 of C;A
Circular !7A002) -etails follow$
,e"ion A*ount
Bead ;(ce P 286,776)82
4C, /+,810,82+)6+
... /7,0!!,407)/2
.2 !,!0!,2!7)08
2. 188,/!6)87
2... 4/+,707)00
3 /,14+,640)11
' -/*-,/*).).-.
At the Bead ;(ce, appro=i*atel' /4 percent or P!6,/++ of the
'earAend &alance per &ooks of P286,776)82 has &een
outstandin" for oer 60 da's)
.n the case of the 4C,, the outstandin" &alance of su&9ect
account as of -ece*&er /1, 200+ was not supported &' a
schedule since su&sidiar' led"ers 0C?1 for such account were not
updated) ?ast update as of ;cto&er /1, 200+ showed C?
&alance of P20,!7!,682)87 which was P4,7/+,!04)!2 less than
the a*ount appearin" in the &ooks at such date) Based on the
;cto&er 200+ C? &alance, appro=i*atel' 20L or P 4,1!!,861)+4
has &een outstandin" for 120 da's to 22 'ears) %hese cash
adances were for pa'*ent of salaries and other personal
&ene#ts datin" &ack as far as 1!8/) Appro=i*atel' /! percent
of these nonA*oin" cash adances &elon"s to accounta&le
o(cers<post*asters who hae either died, retired, resi"ned or
&een dis*issed) As to the re*ainin" 61L or P2,+46,008)!7,
post*asters to who* de*and letters were sent or telephone
inquiries were placed, clai*ed that the said a*ount were not
actuall' unliquidated &ut onl' unrecorded since so*e of the*
hae alread' su&*itted their liquidations, onl' that the
Accountin" -iision thereat has lost<*isplaced the
correspondin" paid pa'rolls and liquidation ouchers) %he
post*asters concerned hae also clai*ed that since the cash
adances were for pa'*ent of salaries, wa"es and other
personal &ene#ts, post o(ce e*plo'ees would hae co*plained
had the' not receied their salaries and wa"es)
At ,e"ion ..., checks representin" cash adances for the
pa'*ents of salaries were *ailed with the pa'roll to the
post*asters concerned on or &efore the 1+
th
and end of the
pa'in" *onth) Boweer, ti*el' su&*ission of the dul'
acco*plished pa'roll as part of the liquidation process was not
properl' o&sered &' the post*asters, hence, cash adances
re*ained unliquidated)
?ikewise, al*ost P10 *illion cash adances still re*ained
outstandin" as at 'earAend at ,e"ion .2) %hese hae
accu*ulated since seeral post*asters were "ranted additional
cash adances without requirin" the* #rst to settle their
preious unliquidated o&li"ations and een if the pa'roll for the
preious da' period were not returned to the ,e"ional ;(ce)
Cuch practice iolated Cection 8! of P- 144+ as cited a&oe)
:oreoer, su&sidiar' led"er cards thereat for cash adances
were not updated for the 'ear 200+) %his has *ade *onitorin"
of accounts di(cult) %he Chief of Accountin" Cection and the
-is&ursin" ;(cer thereat e=plained that the' lack personnel to
update the su&sidiar' led"ers and *onitor the cash adances
"ranted to post*asters)
4onAliquidation of outstandin" cash adances within the period
prescri&ed under Cection 8! of P- 144+ and C;A Circular 4o)
!7A002 resulted to the understate*ent of e=penses, the
oerstate*ent of .nco*e<,etained 5arnin"s and the
oerstate*ent of the asset account, CashA-is&ursin" ;(cers)
Cince C?s were not updated at the 4C, and ,e"ion .2, the
relia&ilit' of the 7? &alances of su&9ect account thereat could
not &e ascertained)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Closel! 3oni#or #6e 7rn#* :#iliF#ion nd li9:id#ion o4
cs6 d2nces #o ens:re co3plince $i#6 r:les nd
re7:l#ions.
&) Discon#in:e #6e prc#ice o4 7rn#in7 ddi#ionl cs6
d2nces $6en pre2io:s cs6 d2nces 62e no# "een
li9:id#ed.
c. En4orce i33edi#e se##le3en# o4 :nli9:id#ed cs6
d2nces.
d) Ens:re #6# cco:n#"le oAcers ?AO@ se##le #6eir
o:#s#ndin7 cs6 d2nces "e4ore "ein7 clered o4
cco:n#"ili#ies $i#6 #6e ''C :pon re#ire3en#*
resi7n#ion* #rns4er or sepr#ion 4ro3 #6e ser2ice.
T6e oAcils responsi"le 4or ppro2in7 #6eir clernces
$i#6o:# Ers# en4orcin7 se##le3en# o4 cs6 d2nces
7rn#ed #o AO s6o:ld "e 3de li"le.
e. Upd#e SLs re7:lrl! nd reconcile $i#6 CL 3on#6l!.
0.+ Unreconciled discrepncies "e#$een 7enerl nd
s:"sidir! led7ers & '+*10+*1(0.1(
Co*parison of the &alances of the "eneral led"er 07?1 and
su&sidiar' led"er 0C?1 for Cash 6 -is&ursin" ;(cers account at
three PPC re"ional o(ces showed the followin" discrepancies
which were not reconciled as at 'earAend$
,e"ion Per 7? Per C? -i@erence
... P
/7,0!!,407)/2
P /6,1/0,27/)41 P0 !6!,1//)!11
2 1,008,!72)+0 1,!22,1!!)70 !1/,227)20
2. !28,600)01 8+0,277)01 0 78,/2/)001
3 +,/!7,2!7)87 2 ,+!8,+84)44 02,7!8,71/)4/1
'((*(0(*+,,.
,)
'(1*.)1*00(../ '?+*10+*1(0.1(
@
%he di@erence of P!1/,227)20 at ,e"ion 2 resulted fro*
unrecorded shorta"es, error in liquidation of cash adance and
late recordin" of the liquidation) A portion of the discrepanc'
was the total a*ount of P 280,000 credited to the su&9ect
account after &alance sheet date and &efore closin" of &ooks,
which further reduced the 7? &alance)
At ,e"ion 2., eri#cation of C? disclosed that P/02,24+)00 of its
&alance as of -ece*&er /1, 200+ pertained to the unliquidated
cash adance in :one' ;rder 8und of an e*plo'ee who has
retired since 8e&ruar' 1, 2002)
.n the case of ,e"ion 3, su&sidiar' led"ers were not properl'
*aintained, hence, the total of the schedule of unliquidated
cash adances for personal serices and *aintenance and other
operatin" e=penses of P402,/0+)44 and the total *one' order
cash adances condensed fro* the report of checks issued
*aintained &' the re"ional cashier a*ountin" to P2,1!6,278)00
did not reconcile with the 7? &alance of P+,/!7,2!7)87 for
su&9ect account) 4o reconciliation of records and transactions &'
and &etween the Accountin" Cection and the ;(ce of the
,e"ional Cashier was *ade)
8ailure to reconcile discrepancies &etween 7? and C? at the
a&oeA*entioned four re"ional o(ces iolated the require*ent
in Para"raph 2 of Cection 40/ of 7AA:, 2olu*e .., that, Ftotals of
su&sidiar' led"er &alances are reconciled with their respectie
control account at the end of each *onth)G
Enreconciled 7? and C? &alances resulted to unrelia&le &ook
&alances for su&9ect account at the a&oeA*entioned re"ional
o(ces as at 'earAend)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Anl!Fe=Reconcile discrepncies "e#$een CL nd SL
"lnces.
b. Ens:re #6# cco:n#"le oAcers ?AO@ se##le #6eir
o:#s#ndin7 cs6 d2nces Ers# "e4ore "ein7 clered
o4 cco:n#"ili#! $i#6 #6e ''C :pon re#ire3en#*
resi7n#ion* #rns4er or sepr#ion 4ro3 #6e ser2ice.
Hold li"le #6e oAcil=s responsi"le 4or ppro2in7
clernces o4 #6ese AOs $i#6o:# Ers# en4orcin7
se##le3en# o4 #6eir :nli9:id#ed cs6 d2nces.
0.0 Erroneo:s pos#in7s o4 en#ries ledin7 #o o2ers##e3en#
o4 '1,1*110.1. # #6e Cen#rl OAce nd
:nders##e3en# o4 '1*1)-*-(,.-1 # #6e CAR
%he 'earAend 7? &alance of P286,776)82 for su&9ect account at
the Central ;(ce was oerstated &' P171,!1/)1+ when
co*pared to the C? &alance of P114,86/)67 which was the
correct &alance) %he discrepancies consisted *ostl' of errors in
postin" to the related accounts for cash adances$ Pett' Cash
8und and -ue fro* ;(cers and 5*plo'ees) 4o ad9ust*ent has
&een *ade to correct the oerstate*ent in Cash 6 -is&ursin"
;(cers account despite identi#cation of transactions and their
respectie a*ounts co*prisin" the discrepancies &etween the
7? and C? &alances)
At the CA,, the Cash 6 -is&ursin" ;(cers account was
understated &' a total of P1,!08,847)8!) 2eri#cation of the
account disclosed that cash adances recorded in the Check
-is&urse*ent Hournal in ;cto&er 200+ in the a*ount of
P1,71!,2/4)01 was *isposted to the Cash 6 Collectin" ;(cer
account) ;n the other hand, total liquidations recorded in the
Cash -is&urse*ent Hournal for the sa*e *onth, di@ered fro*
the a*ount posted in the 7?, thus, oerstatin" the su&9ect
account &' P+,000)02) .t has also &een noted that the recordin"
*ade in -ece*&er 200+ of the liquidation of April 1A1+, 200+
pa'roll of Ba"uio Cit' Central Post ;(ce was understated &'
P10)00) 8urther*ore, one transaction a*ountin" to P1!/,60/)!0
pertainin" to Cash A Collectin" ;(cer account was erroneousl'
posted to the Cash 6 -is&ursin" ;(cers account, oerstatin" the
latter account)
Proper accountin" procedure de*ands that #nancial
transactions &e recorded in such a wa' as to aoid inaccurate or
*isleadin" infor*ation)
5rroneous entries co*pro*ise the inte"rit' of &alances and
failure to correct such errors or discrepancies &etween 7? and
C? &alances resulted in unrelia&le &ook &alance for Cash 6
-is&ursin" ;(cers account at the Central ;(ce and the CA,)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
a. Boo% ll iden#iEed discrepncies "e#$een CL nd
SL "lnces #o s6o$ #6e correc# "lnces o4 #6e <ec#ed
cco:n#s 4or cs6 d2nces # #6e Cen#rl OAce.
b. E;ercise cre4:l re2ie$ on #6e proprie#! o4
cco:n#in7 en#ries 3de nd #6eir correc# pos#in7 in #6e
CL #o 2oid or 3ini3iFe cco:n#in7 errors.
0.( SL "lnce o4 cs6 d2nces 4or 3one! order p!3en#s
di<ered 4ro3 #6e pos#3s#ersD cs6"oo% "lnces "!
'+)+*-00.+1
At ,e"ion 3., co*parison &etween the C? &alance of cash
adances for do*estic *one' order 0:;1 cards presented for
pa'*ent &' clients and the accounta&le o(cers> cash&ooks
*aintained &' Post*asters showed a di@erence of P202,8//)21)
.t was noted that with the e=ception of those found to hae
shorta"es, seeral post*asters carried outstandin" &alances in
their su&sidiar' for so lon" without the &ene#t of ad9ust*ent)
Also, seeral post*asters did not e=haust the *one' order cash
adance for the pa'*ent of :; cards &ut instead, used other
funds like the 78 and :;8 as the case *a' &e)
Enreconciled discrepanc' &etween the C? &alance and that of
the accounta&le o(cers> cash&ooks co*pro*ised the inte"rit'
of the 'earAend &alance for su&9ect account at ,e"ion 3.)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
a. Veri4! nd reconcile #6e discrepnc! "e#$een SL
nd #6e cs6"oo%s 6eld "! pos#3s#ers.
". Discon#in:e #6e prc#ice o4 :#iliFin7 o#6er 4:nds
i4 cs6 d2nces 4or 3one! order p!3en#s re s#ill
2il"le.
0.. Cs6 d2nces o4 '/,0*)11... 7rn#ed on cco:n# o4
in4rs#r:c#:re nd o#6er proBec#s
Para"raph 0"1 of Cection 174 of the 7oern*ent Accountin" and
Auditin" :anual, 2olu*e 1, proides that Fno cash adance shall
&e "ranted on account of infrastructures or other undertakin"s
on a pro9ect &asisG)
,eiew of the dis&urse*ents *ade at ,e"ion 2..t" disclosed that
seeral cash adances totalin" P67/,0!!)++ were drawn &'
arious Post*asters<Cuperisin" Postal Cerice ;(cers fro*
funds intended for capital outla') %he e=istin" practice is not
onl' contrar' to Cection 174 of the 7AA: &ut also e=poses the
funds to possi&le theft, loss or *isappropriation) :ana"e*ent
co**ented that the' resorted to the practice of drawin" cash
adances fro* funds intended for capital outla' in order to
facilitate and *eet the tar"et co*pletion of the pro9ects<s set &'
the Post*aster 7eneral)
5e reco33end #6# 3n7e3en# d6ere #o #6e pro2ision o4
Sec#ion 1,( o4 CAAM* Vol:3e I.
'ETTG CASH FUND
Cash adances for pett' operatin" and *aintenance e=penses "ranted
to dul' desi"nated Pett' Cash 8und Custodians are recorded in the
Pett' Cash 8und 01041 account) %his t'pe of cash adances was
for*erl' classi#ed as Cash -is&ursin" ;(cer 6 ;peratin" until PPC
conerted its old accounts to those prescri&ed under 47AC Chart of
Accounts e@ectie April 1, 200+)
At the Central ;(ce, the 'earAend &alance was unrelia&le due to
erroneous postin"s or *isclassi#cations of cash adances noted, as
follows$
0./ Unli9:id#ed specil cs6 d2nces o4
'1*-.-*//(.)( 4or one>#i3e or speciEc e;pendi#:res
erroneo:sl! clssiEed s 'e##! Cs6 F:nd
;ut of the Pett' Cash 8und 0PC81 account &alance of
P1,!82,00/)07 as of -ece*&er /1, 200+, onl' P12/,//!)0/ or
appro=i*atel' 6 percent co*prised the re"ular fund held &'
dul' desi"nated custodians for recurrin" pett' operatin"
e=penses) %he &alance of the account a*ountin" to
P1,8+8,664)04 or appro=i*atel' !4 percent pertained to special
cash adances for oneAti*e or speci#c e=penditures to
accounta&le o(cers 0A;1 who were not dul' desi"nated PC8
custodians) %hese were "ranted &etween Hanuar' 1!!! and
Au"ust 200+ and records showed that #e A;s were een
"ranted additional adances for operatin" e=penditures despite
their outstandin" &alances)
%he followin" rules and re"ulations on cash adances hae not
&een o&sered with re"ard to the unliquidated<*isclassi#ed
a*ount as at 'earAend and the additional cash adances
"ranted to accounta&le o(cers despite their outstandin"
&alances$
a) Cection 8! of P- 144+
&) Cection +)1)2 of C;A Circular 4o) !7A002 dated 8e&ruar'
10, 1!!7 requires that cash adances for pett' operatin"
e=penses and #eld operatin" e=penses should &e
liquidated within twent' 0201 da's after the end of the
'ear, su&9ect to replenish*ent as frequentl' as necessar'
durin" the 'ear)
c) PPC :e*orandu* Circular 4o) 0+A0+ dated :arch /0,
200+ proided for the *odi#cations in the treat*ent and
issuance of cash adances for pett' operatin" e=penses,
a*on" which are quoted &elow$
F011 All accounta&le<dis&ursin" o(cers *aintainin" cash
adances for pett' operatin" e=penses and<or for
e=pense where the issuance<pa'*ent thru check is
i*practica&le, shall liquidate their cash adances
on or &efore 1+ April 200+)
===
0101 All unliquidated cash adances as of 1+ April 200+
as required under this :e*orandu* Circular shall
&e &ooked up as -ue fro* the Accounta&le
;(cer<5*plo'ee concerned)
0111 .f said cash adance after hain" &ooked up as -ue
fro* ;(cers<5*plo'ees shall re*ain unliquidated
until /0 April 200+, the a*ount shall &e su&9ect for
salar' deduction e@ectie the ensuin" *onth)G
%he erroneous classi#cation of special cash adances for
speci#c purposes other than PC8 in the Pett' Cash 8und account
resulted to unrelia&le account &alance at the Central ;(ce)
8urther, the nonAliquidation of outstandin" cash adances within
the period prescri&ed resulted to the understate*ent of
e=penses, the oerstate*ent of .nco*e<,etained 5arnin"s and
the oerstate*ent of the asset account, Pett' Cash 8und)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Closel! 3oni#or #6e 7rn#* :#iliF#ion nd li9:id#ion
o4 cs6 d2nces #o ens:re co3plince $i#6 r:les nd
re7:l#ions. Discon#in:e #6e prc#ice o4 7rn#in7
ddi#ionl cs6 d2nces $6en pre2io:s cs6 d2nces
62e no# "een li9:id#ed.
". En4orce i33edi#e se##le3en# o4 :nli9:id#ed cs6
d2nces.
c. E;ercise c:#ion in #6e pos#in7 o4 cco:n#in7 en#ries
so s #o 2oid cco:n#in7 errors. Reclssi4! #6e cs6
d2nces 4or one>#i3e or speciEc e;pendi#:res lod7ed
:nder #6e 'e##! Cs6 F:nd cco:n# #o D:e 4ro3 OAcers
nd E3plo!ees cco:n#.
0., Cs6 d2nce :#iliFed 4or p:rposes o#6er #6n 4or
$6ic6 i# $s 7rn#ed
,eiew of a liquidation oucher and its supportin" docu*ents
that were su&*itted in 200+ in partial liquidation of a cash
adance of P200,000 "ranted to an accounta&le o(cer at the
7eneral Cerices -epart*ent in 200/ reealed the followin"
discrepancies$
a) A total of P4+,++8)2+ was utiliIed for e=penses on food and
plaque which hae no relation to the purpose for which
the cash adance was "ranted) %his action was contrar'
to Cection 174 0e1 of the 7AA:, 2olu*e 1, which proides
that the cash adance shall &e used onl' for the speci#c
le"al purpose for which it was "ranted)
&) Dhile the cash adance was "ranted on Hune 18, 200/, the
sa*e was onl' partiall' liquidated on 8e&ruar' 7, 200+
contrar' to e=istin" laws, rules and re"ulations, to wit$
i) Cection 8! of P- 144+ requires that Fa cash
adance shall &e reported on and liquidated as
soon as the purpose for which it was "ien has
&een sered)
ii) Cection 17! 0a1 021 of 7AA:, 2olu*e 1, proides$
Fa) %he accounta&le o(cer shall liquidate his cash
adance within the prescri&ed period as
follows$
===
1) 8or pett' operatin" e=penses and #eld
operatin" e=penses within 20 da's
after the end of the 'earM su&9ect to
replenish*ent durin" the 'ear)G
iii) Cection +)1)2 of C;A Circular !7A002 dated
8e&ruar' 10, 1!!7 proides that cash adances for
pett' operatin" e=penses and #eld operatin"
e=penses &e liquidated within twent' 0201 da's
after the end of the 'ear)
c) %he liquidation oucher was processed and credited without
the approal of an authoriIed o(cial) %his was contrar' to
Cection 1/8 0e1 of the 7AA:, 2olu*e ., which proides the
funda*ental principle for the #nancial transaction and
operations of an' "oern*ent a"enc' that Fdis&urse*ent
or disposition of "oern*ent funds and propert' shall
inaria&l' &ear the approal of proper o(cials)G
d) %he followin" require*ents for the pa'*ent for the repair
and *aintenance and repair set forth under Cection /62
of the 7AA:, 2olu*e 1, were not co*plied with$
.f the repair inoles replace*ent of spare parts, a
,eport of Daste :aterials is prepared upon
su&*ission of the wornAout spare parts)
Canass fro* at least three 0/1 repair shops or
pu&lic &iddin" if the a*ount inoled is *ore than
P +0,000)
%he repair shop to which the contract is awarded
*ust &e dul' accredited &' the -epart*ent of
%rade and .ndustr', e=cept in places where there is
no accredited shop in the localit' or where the
accredited shop does not hae su(cient facilities or
where the cost of serices of the accredited shop is
relatiel' hi"h or co*pletion of repairs will su@er
dela's as certi#ed &' the head of the a"enc' or his
dul' authoriIed representatie)
%he 9o& contracts as to the speci#c 9o& to &e
undertaken) %he speci#cations of *aterials to &e
used) %he period within which the 9o& is to &e
co*pleted and other details)
Darrant' certi#cate of the repair shops)
Certi#cate of Acceptance test for the work or
serice done is in confor*it' with the
speci#cation of the contract and
acco*plished within the speci#ed period of
ti*e)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Moni#or dis":rse3en# nd li9:id#ions 4or co3plince
$i#6 e;is#in7 l$s* r:les nd re7:l#ions.
". S#ric#l! en4orce li9:id#ion o4 cs6 d2nce $i#6in #6e
prescri"ed period.
c. S:"3i# B:s#iEc#ion 4or non>co3plince $i#6 #6e
re9:ire3en#s 4or #6e p!3en# 4or #6e repir nd
3in#ennce o4 7o2ern3en# 2e6icles.
0.- O2ers##ed CL "lnce # #6e Cen#rl OAce d:e #o
erroneo:s pos#in7s or clssiEc#ion o4 cs6 d2nces
%he 7? &alance of P1,!82,00/)07 for PC8 at the Central ;(ce
did not tall' with the correct &alance as shown in the su&sidiar'
led"er 0C?1 there&' oerstatin" the for*er &' P16/,16!)!4) %he
transactions and their respectie a*ounts co*prisin" the
discrepancies &etween the 7? and C? &alances hae alread'
&een identi#ed &ut no ad9ust*ents hae &een *ade as at 'earA
end to correct said &alances)
Proper accountin" procedure de*ands that #nancial
transactions &e recorded in such a wa' as to aoid inaccurate or
*isleadin" infor*ation)
8ailure to ad9ust the discrepancies &etween 7? and C? &alances
resulted in unrelia&le &ook &alance for the Pett' Cash 8und
account at the Central ;(ce)
5e reco33end #6# Acco:n#in7 Sec#ion "oo% ll iden#iEed
discrepncies "e#$een CL nd SL "lnces #o s6o$ #6e correc#
"lnces o4 #6e <ec#ed cco:n#s 4or cs6 d2nces # #6e
Cen#rl OAce.
4. DUE FROM RECIONAL OFFICE=DUE TO CENTRAL OFFICE
Ender the Chart of Accounts for the 47AC, F-ue fro* ,e"ional
;(ces<Cta@ Bureaus<Branch ;(cesG07? Acct 1421 and F-ue to Central
;(ce<Bo*e ;(ceG 07? Acct 4211 shall &e used to record intero(ce
transactions &etween the PPC Central ;(ce 0C;1 and its ,e"ional
o(ces 0,;1 such as transfer of cash fro* ,;>s to C; or ice ersa,
issuances<return of sta*ps to<fro* ,;>s, transfer of #=ed assets<
centrall' procured supplies and *aterials to the re"ional o(ces and
e=penses incurred &' ,e"ional o(ces &ut paid &' Central ;(ce)
(.1 A"nor3l "lnces o4 #6e in#eroAce cco:n#s D:e 4ro3
Re7ionl OAce nd D:e #o Cen#rl OAce in #6e #o#l
3o:n# o4 ' +*11.*)+,*-(..,+.
,eiew of the accounts, -ue fro* ,e"ional ;(ces and -ue to
Central ;(ce disclosed a&nor*al &alances of the intero(ce
accounts in the total a*ount of P2,11+,027,84+)72) -etails
follow$
,e"ion -ue fro* ,;
01421
-ue to C;
04211
-i@erence
4C,
,e"ion .
,e"ion ..
,e"ion ...
,e"ion .2
,e"ion 2
,e"ion 2.
,e"ion 2..
,e"ion 2...
,e"ion .3
,e"ion 3
,e"ion 3.
,e"ion 3..
CA,
Enidenti#ed
.nentor' 6 %otal
Postshop
;.:;
0/,147,6//,/+6)7
!1
1,16!,2/!,!78)46
214,80+,817)8+
7/,070,82/)01
8/,0+1,820)66
210,!0/,876)24
/17,6+2,02!)21
107,+!+,276)20
//4,876,+66)1/
/0!,4//,8!0)24
17+,877,/+1)2!
228,200,8+0)+4
2!+,60!,71/)02
2//,!0/,+++)+/
164,7!1,00!)2+
2,8!0,/!4)72
48,82!,411)44
/,+47)++
670,/+4,781)6/
1,/66,14+)++
+0,0/7,/02)41
02,0/!,206,88/)081
+!,!81,888)!0
87,676,842)74
1+!,482,2/1)+7
/08,/41,26/)7!
/6,!!7,+88)6/
16,!27,72+)11
0+8/,/+!,/7!)001
12,+14,!18)!4
0180,404,476)761
107,/64,7+8)40
0/,817,!88,1/8)4
21
1,167,87/,8/2)!1
164,768,+1+)44
2,112,277,706)0!
2/,06!,!/1)76
12/,227,0//)+0
1+8,16!,7!7)64
0200,74+,!87)+!1
2!7,878,!77)+0
2!2,+06,16+)1/
7+!,2/6,7/0)2!
21+,68+,!/1)60
476,014,18!)78
126,+/8,7!7)1/
164,7!1,00!)2+
2,8!0,/!4)72
48,82!,411)44
/,+47)++ k
TOTAL -+0*1)+*..(... ?1*+11*1+.*+11.1
,@
+*11.*)+,*-(..
,+
%hese accounts &etween the PPC Central o(ce and its ,e"ional
o(ces, under nor*al circu*stances shall show a Iero &alance in
the consolidated #nancial state*ents)
%he a&nor*al a*ounts represented prior 'ear>s a&nor*al
&alance of intero(ce transfers recorded under Accounts 8A71A
!01 and 8A81A!01 in the ;ld 7oern*ent Accountin" C'ste*)
%hese a&nor*al &alance is a result of *ana"e*ent>s failure to
reconcile these accounts) %he details and alidit' of these
accounts cannot &e full' ascertained due to lack of aaila&le
records and supportin" docu*ents)
%he reasons for these di@erences are the followin"$
.*proper accountin" entries drawn to ad9ust the
unrecorded fund transfers
Enrecorded transfer of *one' order collections to Central
;(ce for 2002 and prior 'ears due to failure of :one'
;rder Cerice to coordinate with the Accountin" Cection
to account for the actual *one' order issued)
4onArecordin"<dela'ed recordin" of transactions either &'
Central ;(ce or ,e"ional ;(ce
8ailure to conduct periodic reconciliation of the &alances
of the reciprocal accounts)
Considerin" these a&nor*al &alances, the assets and lia&ilities
accounts are &oth adersel' a@ected)
%his is an audit issue in the preious Annual Audit report of PPC)
5e rei#er#e o:r reco33end#ion on #6e 4ollo$in7 co:rses o4
c#ion8
. Reconcile re7:lrl! #6e D:e 4ro3 Re7ionl OAce nd
D:e #o Cen#rl OAce cco:n#s #o ens:re #6# ll
in#eroAce #rnsc#ions re recorded in #6e "oo%s. An!
discrepnc! s6o:ld "e i33edi#el! nl!Fed nd
dB:s#ed ccordin7l!.
". I3pro2e #6e in#ernl con#rol 3es:res nd proced:res
re7rdin7 #rns4ers o4 4:nds* s:pplies nd 3#erils*
s#3ps nd 3one! orders #o re7ionl oAces #o ens:re
co3ple#e nd cc:r#e recordin7 o4 ll #rnsc#ions in
#6e "oo%s.
c. O"ser2e close coordin#ion o4 #6e concerned oAces
in2ol2e in #6e in#eroAce #rns4er #rnsc#ions.
.. 'RO'ERTG* 'LANT AND EHUI'MENT
Propert' Plant and 5quip*ent accounts of PPC with an a""re"ate
&alance of P2,/+4,0/+,662 net of accu*ulated depreciation of
P77+,074,1!! as of -ece*&er /1, 200+ represent 24 per cent of the
total assets of PPC) Boweer, fairness of presentation of the accounts
in the #nancial state*ents of PPC is a@ected &' the followin"
o&serations$
5.1 Fil:re #o cond:c# p6!sicl in2en#or! o4 proper#!* pln#
nd e9:ip3en# ?''E@ & ',+)*1(1*)/0.11
Audit of the PP5 accounts disclosed that the followin" PPC
re"ional o(ces and Bead ;(ce did not conduct ph'sical
inentor' of its PP5$
,e"ion A*ount of PP5
. P17,/68,474)60
.2 /,/!8,+!7)06
2... /!,001,!/8)00
3.. +,80!,628)17
Bead ;(ce 6++,/70,426)16
To#l ',+)*1(1*)/0.11
%here were no eri#ed ph'sical inentor' reports thus the
accurac' and alidit' of the recorded &alances as well as the
ph'sical status and e=istence of the ite*s recorded under the
PP5 accounts can not &e ascertained)
%he :anual on the 4ew 7oern*ent Accountin" C'ste* 047AC1,
requires that ,eport on the Ph'sical Count of Propert', Plant and
5quip*ent shall &e used to report the ph'sical count of propert'
plant and equip*ent &' t'pe as of a "ien date) .t shows the
&alance of propert' and equip*ent per cards and per count and
shorta"e<oera"e if an') :oreoer, it proides that F8or check
and &alance, the Propert' and Cuppl' ;(ce Enit shall *aintain
Propert' Cards 0PC1 for propert', plant and equip*ent and Ctock
Cards 0CC1 for inentories) %he &alance in quantit' per PC and
CC should alwa's reconcile with the led"er cards of the
Accountin" Enit)G
..+ Fil:re #o 3in#in e9:ip3en# led7er crd 4or proper#!
pln# nd e9:ip3en# > '1+(*./(*/((.+,
4o equip*ent led"er cards were *aintained in ,e"ions . and 2..
for propert' and equip*ent a*ountin" to P/8,6!7,007)4/ and
P8+,867,6/6)84, respectiel')
Cection 441 of the 7AA:, 2olu*e .. proides that$
F5quip*ent ?ed"er Card 05?C1 shall &e kept for each class of
equip*ent to record the acquisition, description, custod',
esti*ated life, depreciation, disposal and other infor*ation
a&out the equip*ent &ased on the source docu*ents of the
transaction) ,esult of ph'sical inentor' shall &e reconciled with
this led"er card and the control accounts)G
8urther, Cection / of P- 144+ proides that F %he accounts of an
a"enc' shall &e kept in such detail as necessar' to *eet the
needs of the a"enc' and at the sa*e ti*e &e adequate to
furnish the infor*ation needed &' #scal or control a"encies of
the "oern*ent) %he hi"hest standards of honest', o&9ectiit'
and consistenc' shall &e o&sered in the keepin" of the
accounts to safe"uard a"ainst inaccurate or *isleadin"
infor*ation)G
..0 ''C proper#ies $i#6o:# le7l doc:3en#s o4 o$ners6ip >
'+11*1).*1,/.)1
2eri#cation *ade on ?and account of the 4C, disclosed that as
of -ece*&er /1, 200+, the cost of the land where PPCA4C,
&uildin" is erected and where the Philippine Postal Cain"s Bank
.nc) 0PPCB.1 is situated is still recorded in the &ooks een without
the necessar' le"al docu*ents to support its ownership, thus
oerstatin" the cost of the land in the #nancial state*ents &'
P28/, 446,000)00) %his is due to the clari#cator' state*ent of
the -epart*ent of 5niron*ent and 4atural ,esources issued on
Cepte*&er, 200+ statin" that PPC is onl' an ad*inistrator of the
su&9ect land &' irtue of Procla*ation 4o) 406 and
not the a&solute owner thus it cannot clai* le"al ownership and
cannot transfer its ri"ht and ownership of the land)
Purchased and donated lots to arious ,e"ional o(ces
a*ountin" to P1!0,417,204)01 lack %ransfer Certi#cate of %itle
as follows$
,e"ion A3o:n#
. P /7,762,100)00
.. 7,7+1,!00)00
.2 1+,16/,700)00
2 1,/00,000)00
2.. !!,086,07+)00
2... 14,!08,/40)00
3.. 14,44+,08!)01
To#l '11)*(1,*+)(.)1
%he Buildin" and Ctructures account of ,e"ion . with appraised
alue of P21, 0!4,!72)08 were not supported with alid
docu*ents of ownership, and hence the authenticit' and
propriet' of the account cannot &e ascertained)
;n the other hand, in ,e"ion .2, #e lots coered under
conditional -eed of -onation with a &ook alue of P/!/,000
were alread' reerted to the owners) Boweer, these are still in
the &ooks of PPC)
..( Ne# Unders##e3en# o4 #6e 'roper#!* 'ln# nd
E9:ip3en# cco:n#> '0-*,11*)-,.1.
2eri#cation of the docu*ents and schedules of *otor ehicles
and *otorc'cles disclosed that the followin" PPC ,e"ional
o(ces hae understated<oerstated &alance of the account)
-etails follow$
Region #of Units Motor Vehicles #of Units Motorcycle Remarks
I 827,449.66 ! "nrecor#e# #"e to a$sence of #oc"ments
IV !! 4,4%9,8!.%% "nrecor#e#
VII !6 %,%6,!47.!% 2% 278,4%%.%% "nrecor#e#
VIII 6,&47,84!.49 "n#erstate# 'al"e in the $ooks
()R *2,4!,982.9% o'erstate# #"e to erroneo"s aging
+et "n#erstatement 29,6&6,84%.&& 278,4%%.%%
.n the &ooks of ,e"ion 8, the alue of &uildin"s reported at P16,
0/4,1/4)82 was understated &' P11, 4/4,7!4)21 co*puted as
follows$
%otal Per 1!!+ Asian
Appraisal
P 24,4+7,000)00
Add$ Acquisitions 01!!+A
200+1
/,011,!2!)0/
2alue of Buildin"s, 12</1<0+ 27,468,!2!)0/
Balance Per 7eneral ?ed"er 16,0/4,1/4)82
Unders##e3en# o4
B:ildin7s
' 11*(0(*,1(.+1
?ikewise, audit of CA, Post ;(ce reealed that the ;(ce
Buildin" account was oerstated &' P2,6+0,!47)61 due to$
4et oerstate*ent due to unreconciled
di@erence &etween recorded costs and &illin"
P207,1+1)66
and inspection reports
,ecorded o(ce &uildin" in 2001 was a"ain
recorded in 200/
82/,04+)!+
Cost of o(ce &uildin"s not constructed and not
occupied &' PPCACA, recorded as part of its
assets
/20,000)00
Burned &uildin" still carried in the &ooks 1,/00,7+0)00
To#l o2ers##e3en# '+*/.)*1(,./1
... Discrepnc! "e#$een Cenerl led7er nd p6!sicl
in2en#or! co:n# & '1.*,/1*0-1.+/
Audit of the *otor ehicle account of the Bead ;(ce disclosed
that there is a discrepanc' a*ountin" to P1+, 76!,/8!)26
&etween the 7? &alance of P!4, 214,+/0)!1 and the ph'sical
inentor' count &alance of P10!, !8/,!20)17 as of -ece*&er
/1, 200+)
../ Undoc:3en#ed OAce F:rni#:re* 3o#or 2e6icle nd
e9:ip3en# &In #rnsi# Acco:n# & '+/*,1/*(1-..)
As of -ece*&er /1, 200+, a total of P26,7!6,418)+0 of ;(ce
8urniture, :otor 2ehicle and 5quip*ent re*ained in the &ooks of
the Bead ;(ce) Caid a*ount has &een outstandin" since 2002
and has no su&sidiar' lon"er or docu*ents on #le)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Cond:c# periodic p6!sicl in2en#or! o4 ll 'roper#ies*
'ln# nd E9:ip3en# #o scer#in #6eir e;is#ence*
$6ere"o:#s nd c#:l condi#ions. M%e #6e
necessr! reconcili#ion #o presen# 4irl! #6e "lnces o4
#6e proper#!* pln# nd e9:ip3en# cco:n#s.
". Min#in s:"sidir! led7ers or led7er crds 4or ec6
sse# #o 3oni#or #6e repirs nd 3in#ennce* ddi#ions
or i3pro2e3en#s 3de s $ell s #6e depreci#ed or
ppreci#ed 2l:e nd n! o#6er necessr! in4or3#ion
needed #6# ser2e s cco:n#in7 d#.
c. E;er# e<or# #o doc:3en# o$ners6ip o4 #6e rel es##e
proper#ies o4 ''C #o pre2en# #6e possi"ili#! #6# #6ese
sse#s "e #i#led in #6e n3e o4 pri2#e persons.
Li%e$ise* drop 4ro3 #6e "oo%s #6e 2l:e o4 lnd nd
o#6er depreci"le sse#s o4 $6ic6 o$ners6ip re no#
s:ppor#ed "! le7l doc:3en#s nd lo#s $6ic6 re cli3ed
"c% "! #6e donors)
d. Sec:re necessr! doc:3en#s o4 o$ners6ip o4 depreci"le
sse#s li%e 3o#or 2e6icles nd 3o#orc!cles #o 2lid#e
#6e en#ries in #6e "oo%s o4 cco:n#s. E<ec# dB:s#in7
en#ries #o reIec# correc# 3o:n# o4 proper#! nd
e9:ip3en#.
/. ACCOUNTS RECEIVABLE
Accounts ,eceia&le with a &alance of P4,126,6+/,/22, net of
allowance for dou&tful accounts in the a*ount of P6+,8+6,!07
represents 4/ per cent of the total assets of PPC) %he accurac',
alidit' and e=istence of the account, howeer, could not &e relied
upon due to the followin" o&serations$
Acco:n#s Recei2"le='!"le > In#ern#ionl
/.1 Unreconciled Blnce o4 Acco:n#s Recei2"le='!"le
In#ern#ionl per Acco:n#in7 Boo%s 7ins# records o4
In#ern#ionl Acco:n#s Di2ision.
%he .nternational Accounts -iision 0.A-1 of the Philippine Postal
Corporation 0PPC1 records data pertainin" to transactions on
international accounts receia&le and accounts pa'a&le co*in"
fro* Central :ail 5=chan"e Center 0C:5C1, 8orei"n Curface :ail
-istri&ution Center 08C:-C1 and the arious 8orei"n Postal
Ad*inistrations 08PAs1 and airline co*panies) Based on the
infor*ation receied fro* C:5C, 8C:-C, airline co*panies and
the 8PAC, .A- prepares reports and supplies the Accountin"
-iision on the details of Accounts ,eceia&le<Pa'a&le
.nternational for recordin" to PPC>s &ooks of accounts)
;n the other hand, the Accountin" -iision prepares 9ournal
entries to record in the &ooks of accounts the infor*ation<data
receied fro* .A- and fro* PPC>s depositor' &ank the
re*ittances receied fro* 8PAs and pa'*ents *ade &' PPC to
the arious 8PAs and airline co*panies)
Anal'sis of the Accounts ,eceia&le<Pa'a&le .nternational
accounts, disclosed that the &alances per &ooks as of -ece*&er
/1, 200+ do not tall' with the &alances of the outstandin"
Accounts ,eceia&le<Pa'a&leA .nternational fro* arious 8PAs of
the .nternational Accounts -iision for the sa*e period) -etails
follow$
)ccts Recei'a$le*
International
)ccts ,aya$le*
International
,er -ooks, as of
2.!.%&
,,682,8!%,8%6.4! ,,97,64&,72.9
,er I)/0s Recor#s,
as of 2.!.%&
68%,427,99!.27 29%,4!6,24.8
Variance ,,%%2,4%2,8!.6 ,,68,2%9,498.%
Also, to date the Accountin" -iision has not 'et *aintained
su&sidiar' led"ers for Accounts ,eceia&le<Pa'a&leA.nternational
accounts) -ue to the a&sence of su&sidiar' led"ers for Accounts
,eceia&le<Pa'a&leA.nternational accounts, the alidit' of the
clai*s of PPC fro* the di@erent 8PAs could not &e ascertained)
:oreoer, ad9ustin" entries to correct &alances of the clai*s of
certain 8PAs and ice ersa could not &e *ade as there are no
indiidual led"ers for each 8PA)
.ndiidual led"ers for each 8PA shall reJect the &alance of the
Accounts ,eceia&le and Accounts Pa'a&le at an' "ien period
of ti*e) Also, reconciliation will &e *ade easier &etween records
of arious 8PAs a"ainst PPC records)
.nternal control polic' of independent checks on perfor*ance
and reiew s'ste*s under Cection ++ of the 7oern*ent
Accountin" and Auditin" :anual, 2olu*e ... states that$
FActions in carr'in" out and recordin" of transactions should &e
su&9ect to reiew and crossAcheckin") Knowled"e that one>s
actions are checked fro* ti*e to ti*e is a deterrent to
ne"li"ence in the perfor*ance of duties) .ndependent checks on
perfor*ance include reiew s'ste*s and an internal audit
o(ce)G
Cection ++ also prescri&es as one of the ele*ents of internal
control, the presence of reiew s'ste* throu"h periodic
reconciliation of accounts which inoles erif'in" the accurac'
of one set of records a"ainst an independent set of docu*ents)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Min#in s:"sidir! led7ers per F'A 4or
esier reconcili#ion nd 3oni#orin7.
". Cond:c# periodic reconcili#ion o4 #6e
records o4 #6e IAD nd Acco:n#in7 Di2ision #o rri2e #
#6e correc# "lnce o4 #6e Acco:n#s Recei2"le>
In#ern#ionl cco:n#s.
c. Also* cond:c# re7:lr reconcili#ion
"e#$een ''C records nd #6e records o4 #6e 2rio:s F'As
#o 2oid discrepncies nd correc# e;is#in7 ones)
/.+ Credi# 3e3os represen#in7 dollr re3i##nces 4ro3
2rio:s Forei7n 'os#l Ad3inis#r#ions ?F'As@ re3ined
:niden#iEed nd credi#ed solel! #o Acco:n#s Recei2"le
s res:l# o4 #6e prc#ice o4 #6e principle o4 o<se##in7.
As of -ece*&er /1, 200+, audit showed a total of ECN
21,+1!,260)60 or P1, 186,+!!,86+)4+ representin" re*ittances
fro* arious 8orei"n Postal Ad*inistrations) Boweer, the 8PAs
who *ade these re*ittances and what particular transactions
are &ein" settled re*ained unidenti#ed)
Article ,5 1/0+, 4u*&er / of the Eniersal Postal Enion 0EPE1
A"ree*ent proides that 8PAs F*a' settle postal de&ts
e=pressed in Cpecial -rawin" ,i"hts 0C-,s1 &' o@settin" credits
and de&its in its relations with another ad*inistration)G
PPC &ills other 8PAs &' preparin" a state*ent of a*ount due
0PPC>s Accounts ,eceia&le1 on a quarterl' &asis) %he state*ent
of account is acco*panied with the followin" reports$
8or* CP 7+, which is the su**ariIed or recapitulation of
the transactions presented in C-,M
8or* CP !4, which is the detailed presentation of
transactions of outward *ails sent throu"h airlines 0air
parcels1 indicatin" therein the dispatchin" 8PA,
dispatchin" o(ce of e=chan"e, *onth and 'ear of the
transaction, quarter, *ail nu*&er, total nu*&er of parcels
and "ross wei"ht in kilo"ra*s and
8or* CP !/, which is the detailed presentation of
transactions of outward *ails sent throu"h ship*ent
0surface parcels1 indicatin" therein the dispatchin" 8PA,
dispatchin" o(ce of e=chan"e, *onth and 'ear of the
transaction, quarter, *ail nu*&er, total nu*&er of parcels
and "ross wei"ht in kilo"ra*s
;n the other hand other 8PAs send their state*ent of accounts
0PPC>s Accounts Pa'a&le1 to PPC with the sa*e attach*ents
enu*erated a&oe) 5quita&le PC.Bank, the depositor' &ank of
PPC directl' receies re*ittances fro* arious 8PAs) %hese
a*ounts are credited to PPC>s account with the 5quita&le
PC.Bank &' *eans of Credit :e*os 0C:1) 5quita&le PC.Bank
noti#es PPC and proides records of C:) .t has &een o&sered
howeer that not all credit *e*os are proided with pertinent
details of the transaction)
PPC records the transaction &' de&itin" Cash in Bank and
creditin" Accounts ,eceia&le) %he a*ount of the Accounts
,eceia&le credited pertains to the net a*ount collected
resultin" fro* o@settin" of the receia&le and pa'a&le fro*
international transactions)
%his practice a@ects the accurac' and relia&ilit' of the &alances
of the Accounts ,eceia&le and Accounts Pa'a&le 6.nternational
accounts) ;ther accounts such as Prior Oear>s Ad9ust*ent and
7ain or ?oss on 8orei"n 5=chan"e are also a@ected &' the
practice of o@settin" and settle*ent of accounts)
%his has &een an audit issue in last 'ear>s audit)
5e #6ere4ore rei#er#e o:r reco33end#ion 4or 3n7e3en# #o8
. O"#in #6e de#ils o4 p!3en#s 3de "! F'As
credi#ed #o #6e "n% in order #o record #6e correc#
3o:n#s rel#ed #o #6e <ec#ed cco:n#s.
". Re9:ire F'As* #6ro:76 $ri#in7* #o ##c6 de#ils
o4 p!3en# $6en 3%in7 p!3en#s nd no#i4! ''C
i33edi#el! o4 n! re3i##nces 3de direc#l! #o #6e
"n%.
c. Cond:c# re7:lr reconcili#ion "e#$een records
o4 F'A nd #6e E9:i#"le 'CIBn%.
/.0 As o4 Dece3"er 01* +)).* '6ilpos# USA 6s #o#l o4
'++)* -+0*+01.,+ ps# d:e cco:n# $i#6 #6e '6ilippine
'os#l Corpor#ion.
Anal'sis of the Accounts ,eceia&leA .nternational account
disclosed that as of -ece*&er /1, 200+, Philpost ECA has a total
of ECN 4,1+8,62!)7+ or P220,82/,2/!)72 of past due accounts)
,ecords showed that part of the a*ount are transactions of prior
'ears fro* 2001 to 2004)
;n April 2/, 200/, the Philippine Postal Corporation 0licensor1
and Philpost ECA 0licensee1 e=ecuted a contract for the
acquisition of Philpost ECA fro* Philippine Postal Corporation the
e=clusie ri"ht to esta&lish Cites, and use Philippine posta"e
indicia, *anifests, *ail&a"s and support infor*ation in
connection with the operation of its &usiness of proidin"
international re*ail serices within the Enited Ctates of A*erica)
Philpost ECA pa's onl' an annual license fee of ECN10,000 while
its past due accounts totals ECN 4,1+8,62!)7+) -ela'ed
collection of clai*s fro* Philpost ECA *a' &e translated as
opportunit' loss for PPC &ecause of the hu"e a*ount inoled)
Bad the Philpost account &een collected and inested it could
hae earned for the Corporation additional inco*e to &e used
for its da' to da' operations for a &etter delier' of serices)
5e rei#er#e o:r reco33end#ions #6#8
. Mn7e3en# ens:re
pro3p# collec#ion o4 cli3s 4ro3 '6ilpos# USA s:c6 s
erl! prepr#ion nd sendin7 o4 "ills nd re7:lr
3oni#orin7 o4 cco:n#s in order #o seson"l! de#ec#
lon7 o:#s#ndin7 cco:n#s.
". Ad2ise ll concerned
depr#3en#s #o closel! coordin#e $i#6 ec6 o#6er so
#6# records nd=or doc:3en#s necessr! 4or erl! "illin7
nd collec#ion o4 Acco:n#s Recei2"le 4ro3 '6ilpos# "e
3de # #6e erlies# possi"le #i3e.
Acco:n#s Recei2"le & In#ern#ionl Mone! Order
/.( Unreconciled discrepnc! "e#$een cco:n#in7 records
nd repor# o4 #6e Mone! Order Ser2ice & '+(*/-/*1-).(+
%he .nternational :one' ;rder -iision of the :one' ;rder
Cerice 0:;C1 is responsi&le for the operation of the *one'
order, #=in" of *one' order fees, preparation and
i*ple*entation of conentions and other a"ree*ents for the
e=chan"e of *one' orders with other countries, and su&*ission
of su**ariIed reports of these transactions to the 7eneral
Accountin" -iision 07A-1)
%he 7A-, on the other hand, records, su**ariIes the
transactions on *one' order &ased on reports and supportin"
docu*ents su&*itted &' the :;C, and *aintains su&sidiar'
led"ers for the twele 0121 di@erent 8PAs) -espite the
*aintenance of indiidual records of :;C and 7A-,
discrepancies were still noted) Co*parison &etween the
su**ar' report on Accounts ,eceia&le &alances of 8PAs as of
-ece*&er /1, 200+ of the :;C and the &alance of the Accounts
,eceia&le, .nternational :one' ;rder account per "eneral
led"er of the 7A- showed a di@erence in the a*ount of
P24,686,180)42, to wit$
7A- P47,!08,667)28
:;C 2/,222,486)86
-i@erence P24,686,180)42
2eri#cation of the transactions disclosed that nonAreconciliation
of records "ae rise to the discrepanc') %he de#cienc' cannot
&e easil' identi#ed on which countr' it occurred as the 7A- has
not 'et su&*itted su&sidiar' led"ers for each account of the
twele 0121 8PAs)
Cection ++ of the 7AA:, 2olu*e ... proides that F,eiews of
transactions and internal control shall &e perfor*ed on an onA
"oin" &asis for proper *onitorin" and adherence to prescri&ed
policies and procedures)G .t also states that FActions in carr'in"
out and recordin" of transactions should &e su&9ect to reiew
and crossAcheckin") Knowled"e that one>s action is checked
fro* ti*e to ti*e is a deterrent to ne"li"ence in the
perfor*ance of duties)G
5e reco33end #6e 4ollo$in7 co:rses o4 c#ions8
. I3pro2e #6e repor#in7 nd recordin7 s!s#e3 "ein7 done "!
#6e MOS nd CAD so #6ere $o:ld "e no d:plic#ion o4 repor#
prepr#ion nd proper 3oni#orin7 co:ld "e e<ec#ed #o
re7:lrl! reconcile en#ries in #6e s:"sidir! led7ers o4 "o#6
depr#3en#s.
". Cond:c# re7:lr reconcili#ion o4 s:"sidir! led7ers 4or ll
F'As #o ens:re #6# n! discrepnc! is i33edi#el!
iden#iEed nd correc#ed nd #o ens:re #6# records o4 #6e
CAD nd MOS 7ree $i#6 ec6 o#6er.
c. O"ser2e close coordin#ion "e#$een persons in2ol2ed in #6e
3oni#orin7 o4 #rnsc#ions #o ens:re co3ple#e nd cc:r#e
recordin7 o4 ll #rnsc#ions in #6e "oo%s.
'os#7e C6r7e Acco:n#s ?'CA@
/.. Blnces o4 'os#7e C6r7e cco:n# in E2e ''C Re7ionl
OAces #o#lin7 '1,1*)0.*,-1.,. #6# represen# 1, per
cen# o4 #6e #o#l o:#s#ndin7 recei2"le o4
'1*)0(*./).,-1./, cnno# "e scer#ined.
%he re"ional o(ces with the correspondin" &alances of PCA are
as follows$
Re7ion A3o:n#
... P 67,/2!)00
.2 1,1!2,786)4+
2. /+0,++4)!/
3 86/,801)68
4C, 168,+61,/0!)6!
To#l '1,1*)0.*,-1.,.
At 4C, and ,e"ion 3, the account &alances are not relia&le due
to the failure of the Accountin" Cection to su&*it the *onthl'
reports<schedules and docu*entation to C;A which resulted in
the nonAeri#cation of the account, while in ,e"ion .2 the
alidit' of the recorded &alance cannot &e esta&lished &ecause
there were instances wherein inco*e on char"e accounts were
not accuratel' recorded in the &ooks) Preparation of *onthl'
reports is not attended to &' *ana"e*ent alle"edl' due to lack
of personnel to handle the workload)
Cu&sidiar' led"ers in ,e"ions .2 and 2. are not
*aintained<updated, thus, the indiidual account &alances of
PCA holders were not reconciled with the respectie control
accounts at the end of the *onth) Ci*ilarl', a state*ent thereon
was not prepared quarterl' to support the correspondin"
accounts in the trial &alance)
2eri#cation of approed PCA per*its in ,e"ions ... and 2.
reealed that a"encies aailin" PCA hae either e=pired,
de#cient or without per*it contrar' to the ;peratin" Policies,
7uidelines and Procedures on Business :ails<Posta"e Char"e
Account Cerice as approed under Board ,esolution 4o) 2004A
+6) Cection ..)A)/ of the ;peratin" Policies, 7uidelines and
Procedures proides that all PCA per*its shall &e alid onl' until
-ece*&er /1 of the 'ear applied for) %he renewal of per*its
shall &e done eer' Hanuar' of the ensuin" 'ear) Cection ..)A)+ of
the ;peratin" Policies, 7uidelines and Procedures likewise
proides that PCA per*its &eco*e inalid when the per*it was
not renewed after e=piration period and when the custo*er<s
has not paid their account for two consecutie *onths)
/./ Unreconciled "lnces o4 'os#7e C6r7e Acco:n# per
"oo%s 7ins# clien#s=pos#3s#ersD records nd
s:"sidir! led7ers in #6e 3o:n#s o4 '(/.*+1(.1) nd
'1*),,*1./.+- respec#i2el!.
Con#r*ation results in ,e"ions ... and CA, disclosed that the
recorded &alances of the Accounts ,eceia&le 6 %rade were not
reconciled with the clients> and post*asters> records &'
P46+,2!4)10, there&' a@ectin" the fair presentation of the
account, to wit$
,e"ion Per Books Per Con#r*ation -i@erence
... P67,/28)60 P6/!,6+7)00 P+72,/28)40
CA, 177,126)7+ 70,0!2)4+ 0107,0/4)/01
To#l '+((*(...0. ',)1*,(1.(. '(/.*+1(.1)
At ,e"ion ..., the account &alance per &ooks does not a"ree with
the post*asters> record due to the failure of the post*asters
with PCA transactions to su&*it reports to accountin"
depart*ent)
;n the other hand, reiew of the &illin" state*ents sent to PCA
account holders in CA, showed that the state*ents include onl'
the current char"es) Boweer, eri#cation of reports reealed
that the clients hae outstandin" &alances with the Corporation)
%he accountin" depart*ent is still in the process of reconcilin"
the accounts with the post*asters> reports) Boweer, there is
di(cult' in reconcilin" the accounts due to the nonAaaila&ilit'
of records of preious 'ears)
;n the other hand, recorded &alances of the accounts in two
re"ional o(ces do not a"ree with the &alances per su&sidiar'
led"ers<schedules &' a net a*ount of P!,077,!+6)28, as
presented &elow$
,e"ion Per Books Per Cu&sidiar'
?ed"er
-i@erence
Chort 0;er1
2.. P1,168,760)/0 P1,107,284)72 P061,47+)+81
CA, 177,126)7+ 2!6,482)!2 11!,/+6)17
4C, 168,+61,/0!)6! 177,+81,/8+)/8 !,020,07+)6!
To#l '1/1*1),*11/.,
(
'1,-*1-.*1.0.)
+
'1*),,*1./.+-
/., Fil:re #o i3pose s:rc6r7e on :npid pos#7e c6r7e
cco:n#)
,ecords showed that in ,e"ion ..., no surchar"e equialent to
oneAtenth of one percent 01<10 of 1L1 for eer' da' of dela' of
pa'*ent of posta"e char"e account in e=cess of /0 da's was
i*posed contrar' to Cection ..)C)1 of the ;peratin" Policies,
7uidelines and Procedures on Business :ails<Posta"e Char"e
Account Cerice as approed under Board ,esolution 4o) 2004A
+6)
5e rei#er#e o:r reco33end#ions 4or 'os#7e C6r7e
Acco:n#s #o8
. En4orce co3plince $i#6 #6e Oper#in7 'olicies*
C:idelines nd 'roced:res on B:siness Mils='os#7e
C6r7e Acco:n# Ser2ice s ppro2ed :nder Bord
Resol:#ion No. +))(>)/ on #6e 4ollo$in7 3##ers8
Sec#ion I.+ re9:irin7 p!3en# o4 'CA $i#6in 0) d!s 4ro3
d#e o4 3ilin7
Sec#ion II.C.1 re9:irin7 i3posi#ion o4 s:rc6r7e o4 1=1) o4
1 per cen# 4or e2er! d! o4 del! o4 p!3en# in e;cess o4
0) d!s
Sec#ion II.A.0 nd . on #6e 2lidi#! o4 'CA per3i#s
". Re9:ire #6e Acco:n#in7 Depr#3en# #o en4orce collec#ion
o4 'CA nd e;er# e;#r e<or#s #o collec# lon7 o:#s#ndin7
cco:n#s
c. Re9:ire #6e Acco:n#in7 Depr#3en# #o reconcile #6e
recorded "lnces o4 #6e cco:n#s $i#6 #6e "lnces per
clien#sJ records nd repor#s o4 pos#3s#ers=sc6ed:le o4
cco:n#in7
d. Co3pl! $i#6 #6e pro2isions o4 Sec#ion (0 ?(@ o4 'D 1((.
on #6e s:"3ission #o COA o4 doc:3en#s rel#i2e #o
'os#7e C6r7e Acco:n# #rnsc#ions
DUE FROM OFFICERS AND EM'LOGEES
/.- Unli9:id#ed #r2el nd specil cs6 d2nces o4
'1*.1+*1,(.1.
,eiew of cash adances lod"ed in the -ue fro* ;(cers and
5*plo'ees account at the Bead ;(ce disclosed nonAco*pliance
with the laws, rules and re"ulations on the "rantin" and
liquidation of cash adances) As of -ece*&er /1, 200+, cash
adances for trael and other oneAti*e or speci#c e=penditure of
P1,+12,!74)1+ re*ained unliquidated contrar' to Cection 8! of
P- 144+) Appro=i*atel' 68 per cent or P1,0/0,/6/)27 of the
'earAend &alance has &een outstandin" for at least 60 da's and
up to ! 'ears despite the prescri&ed periods set in Cection +)1)/
of C;A Circular !7A002 within which to liquidate cash adances)
%went'Athree 02/1 accounts a*ountin" to P244,!+8)14 or
appro=i*atel' 16 percent of P1,+12,!74)1+ pertained to
&alances of accounta&le o(cers who are no lon"er e*plo'ed at
PPC, hence, their settle*ents are dou&tful) %hese pertained to
cash adances "ranted &etween the period Hul' 1!!6 and
Hanuar' 200/)
8urther, additional cash adances for trael were allowed durin"
the 'ear without #rst requirin" settle*ent of preious cash
adances, in iolation of Cection 8! of P- 144+) %went'Aseen
0271 o(cers and e*plo'ees were "ranted additional cash
adances for traelM two 021 o(cials were een allowed fro* 4 to
11 ti*es)
-espite the issuance of Philpost :e*orandu* Circular 4o) 0+A06
which a*on" others, instructed the liquidation on or &efore April
/0, 200+ of outstandin" cash adances for trael on record as of
date of conersion to 47AC accounts, *ost of these accounts
still e=isted as at 'earAend) 4o salar' deduction was e@ected for
outstandin" accounts, as proided under Cection +)1 of C;A
Circular !7A002, e=cept for a few accounta&le o(cers alread'
su&9ected to it prior to April 1, 200+)
4onAliquidation of outstandin" cash adances within the period
prescri&ed under Cection 8! of P- 144+ and C;A Circular 4o)
!7A002 resulted to the understate*ent of e=penses, the
oerstate*ent of .nco*e<,etained 5arnin"s and the
oerstate*ent of the asset account, -ue fro* ;(cers and
5*plo'ees)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Moni#or #6e 7rn#* :#iliF#ion nd li9:id#ion o4 cs6
d2nces #o ens:re co3plince $i#6 r:les nd
re7:l#ions. Discon#in:e #6e prc#ice o4 7rn#in7
ddi#ionl cs6 d2nces $6en pre2io:s cs6 d2nces
62e no# "een li9:id#ed Ers#.
". En4orce i33edi#e se##le3en# o4 :nli9:id#ed cs6
d2nces.
c. Ens:re #6# AOs se##le #6eir o:#s#ndin7 cs6 d2nces
Ers# "e4ore "ein7 clered o4 cco:n#"ili#ies $i#6 #6e
''C once #6e! #rns4er* re#ire or resi7n 4ro3 #6e ser2ice.
T6e oAcils responsi"le 4or ppro2in7 #6eir clernces
$i#6o:# Ers# en4orcin7 se##le3en# o4 #6eir :nli9:id#ed
cs6 d2nces s6o:ld "e 3de li"le.
/.1 Unders##e3en# o4 7enerl led7er "lnce "!
'0/+*-/,.1+ per#inin7 #o #r2el nd specil cs6
d2nces
%he portion of the 7? &alance of the -ue fro* ;(cers and
5*plo'ees account pertainin" to trael and special cash
adances as of -ece*&er /1, 200+ a*ountin" to P1,+12,!74)1+
did not tall' with that of the C? which showed the correct
&alance of P1,87+,842)07 resultin" to understate*ent in the
&ooks &' P/62,867)!2) %he speci#c transactions co*prisin"
such discrepanc' hae alread' &een identi#ed &ut no
ad9ust*ents hae &een *ade as at 'earAend to correct said
&alances)
8inancial transactions *ust &e recorded accuratel' to aoid
presentin" *isleadin" infor*ation)
8ailure to ad9ust the discrepancies &etween 7? and C? &alances
resulted in unrelia&le &ook &alances for the -ue fro* ;(cers
and 5*plo'ees account at the Central ;(ce)
5e reco33end #6# Acco:n#in7 Depr#3en# "oo% iden#iEed
discrepncies "e#$een CL nd SL "lnces #o s6o$ #6e correc#
"lnces o4 #6e <ec#ed cco:n#s 4or cs6 d2nces.
/.1) Blnces o4 D:e 4ro3 OAcers nd E3plo!ees cco:n# in
4o:r re7ionl oAces 3o:n#in7 #o '1,*//.*,1/.).
represen#in7 +. per cen# o4 #6e #o#l recei2"le o4
'/1*.,1*-)1 cnno# "e scer#ined.
%he four re"ional o(ces with their correspondin" &alances are
as follows$
,e"ion A*ount
4C, P/,00+,702)!/
... 6,642,26/)2/
2. 4/!,+7/)+2
.3 7,+78,2+6)/7
To#l '1,*//.*,1/.).
/.1).1 S:"sidir! led7ers no# 3in#ined
Cu&sidiar' led"ers are not *aintained for -ue fro*
;(cers and 5*plo'ees accounts at 4C, and
,e"ion 2. in the a*ount of P/,00+,702)!/ and
P4/!,+7/)+2, respectiel') A schedule showin" the
indiidual &alances at the end of the *onth is
prepared in lieu of su&sidiar' led"ers at 4C,)
/.1).+ Unreconciled "lnces o4 #6e cco:n#
At ,e"ion .3, the su&sidiar' led"er &alance
a*ountin" to P!,!0/,6/8)18 do not reconcile with
the &alance per &ooks of P7,+78,2+6)/7, there&'
showin" a discrepanc' of P2,/2+,/81)81) %he
accounts represent unsettled &alances of thirt' four
0/41 accounta&le o(cers, twent' three 02/1 of
which are no lon"er in serice) %he collecti&ilit' of
these accounts see*s re*ote as no e@ort was
e=erted &' *ana"e*ent to recoer the &alances of
these accounts)
;n the other hand, the su&sidiar' records of the
account in ,e"ion ... a*ountin" to P6,642,26/)2/
do not a"ree with the records of the ,e"ional
.nternal Audit<?e"al -iision in the a*ount of
P11,72/,7!+)86 there&' resultin" to a discrepanc'
of P+, 081,+/2)6/)
Recei2"le & C6r7es=Disllo$nces
/.11 Unse##led "lnces o4 '1-*10,*,/1.+- nd '0*.(0*+0/.))
# NCR nd Re7ion VIII* respec#i2el!* in #6e #o#l 3o:n#
o4 '+1*/-)*11/.+-* represen#in7 +/ per cen# o4 #6e #o#l
Recei2"les* Disllo$nces=C6r7es cco:n# o4
'-+*-1(*)-1 re do:"#4:l o4 collec#ion.
Anal'sis of the account disclosed that at 4C, and ,e"ion 2...,
the account includes shorta"es of arious persons who are no
lon"er connected with the Corporation, so*e of who* are
alread' deceased)
%he account &alance a*ountin" to P862,!0/)!1 has not &een
full' docu*ented in ,e"ion 3 and schedules were not prepared
&' the accountin" depart*ent) %he account re*ained in the
&ooks for *ore than #e 'ears)
At 4C,, the "eneral led"er &alance of P18,1/7,761)28 does not
tall' with the &alance in the schedule of P17,641,!4!)68 or a
di@erence of P4!+,811)60)
At ,e"ion 2..., total unrecoered shorta"es a*ounted to
P/,+4/,2/6 as of -ece*&er /1, 200+)
At ,e"ion ..., co*parison of the records of ,.AC<?e"al with the
su&sidiar' led"er showed a discrepanc' of P+,081,+/2)6/) .t as
also noted that the shorta"e of :s) 8lorenda -aid, Post*aster
of ?a PaI Post ;(ce a*ountin" to P1/+,+6!)66 was not taken
up &oth in the records of Accountin" -iision and ?e"al -iision)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. S#ric#l! d6ere #o #6e pro2isions o4 Sec#ion (--* o4 CAAM*
Vol:3e II on #6e reconcili#ion o4 #6e #o#ls o4 #6e
s:"sidir! led7er "lnces $i#6 #6eir respec#i2e con#rol
cco:n# # #6e end o4 ec6 3on#6.
". In#ensi4! collec#ion o4 cco:n#s recei2"le "! iss:in7
de3nd le##ers #o delin9:en# de"#ors nd o#6er le7l
c#ions #o en4orce collec#ion.
c. S:"3i# #o COA doc:3en#r! e2idence #6# ll possi"le
3ens 62e "een resor#ed #o reco2er #6e "lnces o4 #6e
cco:n#s. Re9:es# 4or $ri#e>o< o4 cco:n#s pro2en no# 2lid
or :ndoc:3en#ed.
CSIS Arrer7es
/.1+ Ass:3p#ion o4 in#eres# on personl s6re 4or CSIS Li4e
nd Re#ire3en# 're3i:3 6s no le7l "sis
A :e*orandu* of A"ree*ent 0:;A1 was e=ecuted &etween the
Philippine Postal Corporation 0PPC1 and the 7oern*ent Cerice
.nsurance C'ste* 07C.C1 on :a' 18, 2004, in order that the
suspension of the loan priile"es of PPC personnel in the Bead
;(ce and 4C, due to the arrears in the pa'*ent of pre*iu* of
PPC casual e*plo'ees fro* Hune 24, 1!!7 to Hul' 1!!! &e lifted)
As of -ece*&er /1, 200/, arreara"es totaled P+7,6+4,8+6)+/
&roken down as follows$
Principal P2!,087,007)16
.nterest 28,+67,84!)/7
%otal P+7,6+4,8+6)+/
;ne of the duties of PPC as proided for in Cection 1 of the :;A
states the followin"$
F1)0 ''C shall collect the arrears in pre*iu*s representin" the
e*plo'ees> share for the period fro* Hune 24, 1!!7 to Hul' 1!!!
includin" interests for the sa*e period and shall re*it the
a*ount so collected &e"innin" Hanuar' 2004 in accordance with
the schedules as appearin" in Anne=es FAG and FAA1G = = =)G
Dhile PPC has the dut' to collect and re*it the a*ount stated
in the anne=es *entioned, there was no attach*ent to the :;A
proidin" for the na*es of e*plo'ees whose pre*iu*
pa'*ents were in arrears)
Based on the Ctate*ent of Pre*iu* Accounts proided &' the
7C.C, hereunder are the totals of the a*ount to &e paid to 7C.C
relatie to the arreara"es fro* Hune 1!!7 to Hul' 1!!! for Bead
;(ce casual e*plo'ees, pa'a&le *onthl' for three 'ears
startin" Hanuar' 2004 up to -ece*&er 2006$
Particulars
Co2ern3en#
S6re nd
EC ?CS@
'ersonl
S6re
?'S@
%otal Principal
7C P1//,414)44<*o)
PC P 8!,++!)+8<*o)
P
4,802,!1!)84
P /,224,144)88
%otal interest for the period
06<24<!7A12</1<0/
7C P 1/1,0!0)41<*o)
PC P 87,!+!)84<*o)
P
4,71!,2+4)76
P /,166,++4)24
%otal additional *onthl'
interest for the *onths of
Hanuar' 2004 to -ece*&er
2006)
P
1,777,080)/2
P 1,1!2,!//)+8
;n April 1+, 2004, Check 4o) 207!20 was issued &' PPC in the
a*ount of P2,18/,26/)!+ in pa'*ent of the Hanuar' 2004 7C.C
a*ortiIation for 4C, and Bead ;(ce casual e*plo'ees as
follows$
4C, P 1,+80,6!8)/8
Bead ;(ce 602,+6+)+7
%otal P 2,18/,26/)!+
%he a*ount of P1,+80,6!8)/8 was recorded in the &ooks under
-ue 8ro* ,e"ional ;(ces 6 4C,, while for the Bead ;(ce, the
a*ount of P 602,+6+)+7, was recorded under the followin"
accounts$
Acco:n# N#:re A3o:n#
Prior Oears
Ad9ust*entsA
,eductions 07A!2A4201
7oern*ent share for
principal 0P1//,414)441
and interest for the period
06<24<!7612</1<0/
0P1/1,0!0)411
P 264,+04)8+
,eceia&les fro*
5*plo'ees 08A71A!00A
011
Personal share for principal
0P8!,++!)+81M interest for
the period 06<24<!7A
12</1<0/ 0P87,!+!)841M
and interest for the *onth
of Hanuar' 2004
P64,482)!0)

242,002)/2
.nterest 5=pense 0/A0!A
0001
7oern*ent Chare for
interest for the *onth of
Hanuar' 2004

!6,0+8)40
To#l '
/)+*./...,
;n April /0, 2004, Hournal 2oucher 0H21 4o) /7+! was drawn to
reclassif' the P1+2,442)74 interests on the unpaid personal
share for 7C.C ?ife and ,etire*ent Pre*iu* arreara"es
preiousl' recorded as ,eceia&le fro* 5*plo'ees)
%he a*ount of P87,!+!)84 which corresponds to the interest
for the period Hanuar' 24, 1!!7 6 -ece*&er /1, 200/ for the
Hanuar' 2004 a*ortiIation was char"ed to Prior Oear
Ad9ust*entsA,eduction account 07A!2A4201 while interest on
personal share for Hanuar' 2004 in the a*ount of P64,482)!0
was char"ed to interest e=pense account 0/A0!A0001)
;ne of the supportin" papers to the H2 had a note which stated
that interest preiousl' char"ed to e*plo'ees is assu*ed &'
PPC)
2eri#cation fro* accountin" records for the 'ears 2004 and
200+ showed that su&sequent pa'*ents for interests on
personal share were all assu*ed &' PPC) PPC howeer, did not
su&*it le"al &asis for treatin" the afore*entioned interest as its
e=pense)
8or the 'ears 2004 and 200+, interests on personal share of ?ife
and ,etire*ent pre*iu*s of casual e*plo'ees assu*ed &' PPC
a*ounted to P/,27/,710)!4) %his includes interest for the
Hanuar' 2006 a*ortiIation in the a*ount of P 10!,4+4)14 paid
&' PPC to 7C.C in -ece*&er 200+)
Aside fro* the a&oe *entioned interests on personal share,
PPC also pa's 7C.C the a*ount of P8!,++!)+8 per *onth
correspondin" to arreara"es on personal share of the principal
a*ount of 7C.C pre*iu*s of casual e*plo'ees) %his is recorded
in PPC>s &ooks under ,eceia&le fro* ;(cers<5*plo'ees
account 0-ue fro* ;(cers<5*plo'ees 6 Account Code 12/
under the 47AC1)
A*ount paid &' PPC to 7C.C correspondin" to the a&oe
*entioned arreara"es for the 'ears 2004 and 200+ totaled
P2,14!,42!)!2) ;ut of this a*ount, onl' P1,486,060)41 has
&een deducted &' PPC fro* the salaries of e*plo'ees concerned
leain" a &alance as of -ece*&er /1, 200+ on the -ue fro*
;(cers<5*plo'ees account in the a*ount of P66/,/6!)+1)
%he a&sence of the na*es of e*plo'ees coered under the :;A
contri&uted to the accu*ulation of the uncollected receia&les
fro* PPC>s o(cers and e*plo'ees) ,ecords show that while PPC
pa's 7C.C the a*ount of P8!,++!)+8 *onthl' for the principal
a*ount of 7C.C pre*iu*s 0personal share1, the full a*ount had
not &een deducted fro* the *onthl' salaries of e*plo'ees
concerned)
;n :a' /0, 200+, Check 4o) 22/1!4 was issued in the a*ount
of P1,4/0,2!7)71 for re*ittance of insurance pre*iu*
0e*plo'ee>s share1 underpa'*ent for the 'ears 200/ and 2004
as follows$
Hanuar' to -ece*&er 200/ P 6!7,077)/0
Hanuar' to -ece*&er 2004 7//,220)41
To#l '1*(0)*+1,.,1
;ut of the a&oe a*ount, onl' P16/,!8+)7+ was deducted fro*
salaries of e*plo'ees concerned leain" a &alance of
P1,266,/11)!6 as of -ece*&er /1, 200+)
A*ount -ue fro* ;(cers and 5*plo'ees as of -ece*&er /1,
200+ totaled P1,!2!,681)47 consistin" of arreara"es of principal
a*ount of 7C.C ?ife and ,etire*ent of casual e*plo'ees
0personal share1 in the a*ount of P66/,/6!)+1 and the &alance
of the a*ount adanced &' PPC to 7C.C for the insurance
pre*iu* underpa'*ent for the 'ears 200/ and 2004
0e*plo'ees share1 in the a*ount of P1,266,/11)!6)
.t was further noted that Check 4o) 220870 issued &' PPC on
;cto&er 20, 2004 in the a*ount of P8!,++!)+8 for the Hul' 2004
a*ortiIation was not posted in the 7eneral ?ed"er for the
,eceia&leA5*plo'ees account in 2004 nor was it posted in the
200+ 7eneral ?ed"er for -ue fro* ;(cers<5*plo'ees) %his
resulted in the understate*ent of the -ue fro*
;(cers<5*plo'ees account as of -ece*&er /1, 200+ &'
P8!,++!)+8)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. De#er3ine #6e n3es o4 ''C cs:l e3plo!ees co2ered in
#6e MOA "e#$een ''C nd CSIS. M%e represen##ions $i#6
CSIS nd e;cl:de #6e 3o:n# o4 rrer7es nd in#eres#s on
personl s6re o4 e3plo!ees $6o re no lon7er in #6e
ser2ice o4 ''C # #6e #i3e o4 #6e e;ec:#ion o4 #6e MOA.
". Reco7niFe #6e '0*+,0*,1).1( in#eres#s on personl s6re o4
Li4e nd Re#ire3en# pre3i:3s o4 ''C cs:l e3plo!ees s
D:e 4ro3 OAcers=E3plo!ees in 2ie$ o4 #6e "sence o4 le7l
"sis 4or ''CDs ss:3p#ion o4 sid in#eres#.
c. I33edi#el! ded:c# 4ro3 #6e slries o4 e3plo!ees
concerned #6e 3o:n# d2nced "! ''C d:e #o #6e
:nderp!3en# o4 CSIS pre3i:3s o4 i#s e3plo!ees ?personl
s6re@.
d. Considerin7 #6e 3#erili#! o4 #6e 3o:n# d2nced "! ''C
#o #6e CSIS* nd #6e #i76# Enncil condi#ion o4 #6e
Corpor#ion* re4rin 4ro3 p!in7 o:# o4 #6e 7o2ern3en#
4:nd* personl s6re o4 i#s e3plo!ees #o o#6er en#i#ies.
F:r#6er3ore* in#ensi4! collec#ion 4ro3 i#s oAcers nd
e3plo!ees 3o:n# d2nced "! ''C.
e. For proper 3oni#orin7 o4 3o:n# d:e 4ro3
oAcers=e3plo!ees rel#i2e #o CSIS p!3en#s "! ''C*
sc6ed:le s6o:ld "e prepred s##in7 #6e n3es o4
e3plo!ees* 3o:n# o4 recei2"le 4ro3 ec6 e3plo!ee*
3o:n# ded:c#ed 4ro3 #6eir slries nd #6e 3on#6l!
"lnces o4 #6e recei2"les ''C 6s 4ro3 ec6 e3plo!ee.
4. AdB:s# #6e cco:n#in7 "oo%s #o reIec# #6e '-1*..1..-
:nders##e3en# o4 #6e D:e 4ro3 OAcers=E3plo!ees
cco:n#.
ALLO5ANCE FOR DOUBTFUL ACCOUNTS
%he 4ew 7oern*ent Accountin" C'ste* 047AC1 :anual proides for
the followin"$
F%rade receia&les shall &e alued at their face a*ount *inus,
wheneer appropriate, allowance for dou&tful accounts) Bad de&ts
e=pense and<or an' anticipated ad9ust*ents which in the nor*al
course of eents will reduce the a*ount of receia&les fro* the
de&tors to esti*ated realiIa&le alues shall &e set up at the end of the
accountin" period) ,eceia&les fro* "oern*ent a"encies and
personnel shall not &e su&9ect to Bad -e&ts)G
.t was further stated in the :anual that Fthe allowance for dou&tful
accounts shall &e proided in an a*ount &ased on the collecti&ilit' of
receia&le &alances and ealuation of such factors as a"in" of the
accounts, collection e=periences of the a"enc', loss e=periences, and
identi#ed dou&tful accountsG)
/.10 Ade9:c! o4 llo$nce 4or do:"#4:l cco:n#s cnno# "e
scer#ined d:e #o lc% o4 ppro2ed $ri##en polic! &
'/.*-./*1)/...
%he alidit' and reasona&leness of the allowance for dou&tful
accounts in the a*ount of P6+,8+6,!06)++ cannot &e
ascertained due to lack of approed written polic')
Anal'sis of the account disclosed that allowance for dou&tful
accounts in the total a*ount of P6+,8+6,!06)++ was reco"niIed
&' the PPC Central ;(ce, 4C,, ,e"ion 2, and ,e"ion 3) -etails
follow$
Outstanding
Receivables As
of 12/31/05
Allowance
for Doubtful
Accounts
Percent
,,( Recei'a$les * 1ra#e 8&7,24,268.98
(entral International Money 2r#er 47,9%8,667.28
2ffice International )cco"nts ,68&,!68,&68.98
Recei'a$les * /isallo3ances.(harges &2,944,7!7.92
/"e from +ational 1reas"ry 6,7&6,&%.&2
/"e from 2fficers an# 4m5loyees 4,!7&,6&9.94 !,&7!,&!9.79 24.86
/"e from 6"$si#iaries &9,88&,862.8% 27,927,84.%9 7.47
/"e from +7)88s 2,97,!8%.79
/"e from +7U8s &26,!86.7&
/"e from 72((8s %7,%46.99
Recei'a$les * 2thers 2,492,4&&.4% 8%8,28.%% !2.4!
3,104,4!,53!"35 32,30#,41"##
,,(*+(R Recei'a$les * 1ra#e 68,&6,!%9.69 !!,4&2,6%.&% 9.8&
Region V Recei'a$les * 1ra#e 972,7%&.69 44,248.&% 4.&&
Recei'a$les * 2thers 97,!%9.49 6,%%%.%% 6.7
Region I9 Recei'a$les * 1ra#e !%4,9&7.&6 4&,&&&.67 4.94
1$,3$,2#2"43 33,54!,$4"$!
3,2!4,433,#1"!# $5,#5$,0$"55
Descri%tion
&O&A'
8urther eri#cation disclosed the followin" o&serations$
At the PPC Bead ;(ce 6
8or calendar 'ears 2004 and 200+, no allowance for dou&tful
accounts was setAup in PPC Bead ;(ce &ooks of accounts) %he
&alance of the account as of -ece*&er /1, 200+ a*ountin" to
P/2,/08,!41)88 was a carr' oer of the allowance preiousl' set
up in the 'ear 200/)
At 4C,, the allowance for dou&tful account a*ountin" to
P//,4+2,160)+0 representin" 1!)8+L of the total Posta"e
Char"e Account for the current 'ear in the a*ount of
P168,+61,/0!)6!, was co*puted without le"al &asis)
In 2ie$ o4 #6e 3#erili#! o4 #6e o:#s#ndin7 recei2"le* $e
rei#er#e o:r pre2io:s reco33end#ion #o cond:c# s#:d! 4or
s:"se9:en# dop#ion o4 polic! on #6e se##in7>:p o4 llo$nce
4or do:"#4:l cco:n#s. I# s6ll #%e in#o consider#ion s:c6
4c#ors s 7in7 o4 #6e cco:n#s* collec#ion e;perience o4 #6e
co3pn! in rel#ion #o #6e pr#ic:lr recei2"les* ps# nd
e;pec#ed loss e;periences* nd iden#iEed do:"#4:l cco:n#s*
s $ell s #6e pro2isions o4 #6e NCAS Mn:l in #6e
de#er3in#ion o4 #6e llo$nce 4or do:"#4:l cco:n#s #o 7i2e
ss:rnce #6# recei2"les re presen#ed in #6e Enncil
s##e3en#s # i#s ne# reliF"le 2l:e.
,. INVENTORIES
,.1 Blnces o4 #6e 4ollo$in7 in2en#or! cco:n#s per "oo%s
nd per 3on#6l! cco:n#"ili#! repor#s o4 re7ionl
c:s#odins s o4 Dece3"er 01* +)). s6o$s #o#l
discrepnc! o4 ',1*1/0*+/..-/.
Balance
Balance
Per -i@erence
.te*s Per Books
:onthl'
,eport Chort 0;er1
N#ionl Cpi#l
Re7ion
Posta"e Cta*ps
A
,e")
Custodian
1!!,764
)18
186,0/
7)+!
01/,726)
+!1
Philatelic
Cta*ps A
,e")
Custodian
207,062
)22
20,2+
7)!0
0186,804)
/21
Philpost
Products A
,e")
Custodian
10,0/+)
!8
!,!/
6)00
0!!)!
81
;(cial ,eceipts
114,7!2
)00
62,40
0)00
0+2,/!2)
001
:one' ;rder
8or*s
282,472
)00
210,4+
+)10
072,016)
!01
814,126
)/8
48!,08
6)+!
0/2+,0/!)
7!1
Re7ion I
Philatelic .te*s
1,416,8/8
)+8
677,40
2)11
07/!,4/6)
471
Philpost
Products
48,/40)
+0
42,48
0)00
0+,860)
+01
7u**ed %apes
14,800)
00
14,80
0)00 A
Posta"e Cta*ps
2,/24,686
)66
126,68
!)72
02,1!7,!!6)
!41
:one' ;rder
8or*s
12,/16)
4!
1/,2+
6)2+
!/!)
76
Postal .ds
!16)
87
86
/)72
0+/)1
+1
/,817,8!!
)10
87+,4!
1)80
02,!42,407)
/01
Re7ion III
Philatelic .te*s 2,/48,6/7 487,01 01,861,62/)
Balance
Balance
Per -i@erence
.te*s Per Books
:onthl'
,eport Chort 0;er1
)28 4)2/ 0+1
Philpost
Products
16+,141
)!2

A
016+,141)
!21
;(ce Cupplies
P 4onA
Accta&le 8or*s
.nt')
2,4!+,40!)
28
!/4,17
!)+4
01,+61,22!)
741
Posta"e Cta*ps
17,0/!,+2+
)60
10/,80
+)6+
016,!/+,71!)
!+1
7u**ed %ape
1,14+,80+
)80
41,80
0)00
01,104,00+)
801
:one' ;rder
Blank 8or*s
44,164,2/1)
1+
7+,!!
0)7/
044,088,240)
421
;(cial ,eceipts
6+,482)
+6
61,20
8)16
04,274)
401
Postal .-
014,/!1)
681
6,10
7)!2
20,4!!)
60
Cpare Parts
1,/26,248
)+0
100,02
1)00
01,226,227)
+01
68,7/6,0!0
)41
1,810,12
7)2/
066,!2+,!6/)
181
Re7ion KII
Posta"e Cta*ps
+!,+74)
66
/7,/1
/)8/
022,260)
8/1
Philatelic
Cta*ps
10,!24)
46
/,61
0)!6
07,/1/)
+01
:one' ;rder
8or*
14,0+0)
8/
14,1!
8)10
147)
27
Blank Postal .-
/7,+00)
00
/7,+0
0)00 A
122,04!
)!+
!2,62
2)8!
02!,427)
061
Re7ion K
Posta"e Cta*ps
01!4,!84)
201
2/,66
+)+1
218,64!)
71
Philatel'
17/,182
)++
+7,2!
8)21
011+,884)
/41
:one' ;rder
Blank 8or*s
126,762)
!6
20,+1
/)00
0106,24!)
!61
104,!61
)/1
101,47
6)72
0/,484)
+!1
CAR
Accounta&le
8or*s
.nentor'
8,426,728
)2/
141,8!
7)+6
08,284,8/0)
671
Balance
Balance
Per -i@erence
.te*s Per Books
:onthl'
,eport Chort 0;er1
:erchandise
.nentor'
7/4,486
)74
78,88
8)88
06++,+!7)
861
!,161,214
)!7
220,78
6)44
08,!40,428)
+/1
Crnd To#l
82,6+1,/80
)81
/,488,11
4)!+
07!,16/,26+)
861
%he discrepancies were due to the followin"$
1) 5rrors in recordin" production<acquisition cost in the accountin"
records upon receipt and issuance of accounta&le for*s)
2) A&sence of periodic reconciliation of the .nentor' Accounts
&alance per &ook with the :onthl' Accounta&ilit' ,eport &alances)
/) Cpare parts and so*e o(ce supplies receied fro* central o(ce
hae no unit cost, hence, the' are not recorded in the &ooks of
account)
4) 8ailure of Accounta&le ;(cers to re"ularl' su&*it their *onthl'
accounta&ilit' reports)
+) Ese of the sellin" price as unit cost and not the production cost in
prior 'ears)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Cond:c# re7:lr reconcili#ion o4 cco:n#in7 records
7ins# 3on#6l! repor# o4 cco:n#"ili#ies o4 in2en#or!
c:s#odins. T%e ppropri#e c#ions #o correc# n!
discrepncies.
". Re9:ire ''C Cen#rl OAce #o send=#rns3i# co3ple#e d#
incl:din7 :ni# cos#s o4 #rns4erred s:pplies* in2en#ories
nd cco:n#"le 4or3s.
-. ACCOUNTS 'AGABLE
-.1 Vrio:s li"ili#! cco:n#s $i#6 "nor3l or de"i#
"lnces >
'+*11-*+0)*10/.10
Anal'sis of ;ther Pa'a&les account in ,e"ion 2.. disclosed
a&nor*al<de&it &alances of the followin" lia&ilit' accounts$
Account A*ount
;ther Pa'a&lesA-:;8ACA P262,7!!,88!)7+
;ther Pa'a&lesAC275:C ?oan 1,+01,242)77
;ther Pa'a&lesAPC:BA. 6,846)+1
;ther Pa'a&lesAP5EP 1!,460)00
;ther Pa'a&lesAPB.?A:?.85 24,8!/)28
%otal ' +/(*0.+*00+.01
:eanwhile, in ,e"ion 3, 2/ a&nor*al lia&ilit' su&Aaccounts are
cate"oriIed as follows$
Current lia&ilit' P1,/82,124)+!
.nterAa"enc' Pa'a&les 4,78+,462)4!
.ntraAa"enc' Pa'a&les 1,!11,2+1,780)22
;ther ?ia&ilit' account !0,486)/2
To#l '1*11,*.)1*-.0./+
PPCA4C,>s lia&ilities with a&nor*al and dor*ant &alances are$
.nterAa"enc' pa'a&lesA7C.C P12,004,/6/)68
.ntraAa"enc' pa'a&lesA
su&sidiaries
4,/64,/87)/2
To#l '1/*0/-*,.1.))
Cection 112 of P- 144+ proides that each "oern*ent a"enc'
shall record its #nancial transaction and operations confor*a&l'
with "enerall' accepted accountin" principles and in accordance
with pertinent laws and re"ulations) .n like *anner, the #nancial
state*ents shall &e &ased on o(cial accountin" records kept in
accordance with law and "enerall' accepted accountin"
principles and standards)
Ender the a&oe circu*stances, the e=istence of a&nor*al
lia&ilit' accounts indicates that the corporation settles its
lia&ilities &e'ond the ceilin" of le"al and e=istin" o&li"ations)
A&nor*al accounts were o&sered to hae &een caused &'
i*proper recordin" of #nancial transactions, fore*ost of which
are the ad9ust*ents and corrections of prior 'ears) 4onA
*aintenance of co*plete su&sidiar' led"ers for su&Aaccounts
a""raated the situation)
.n the a&oe list, pro*inent a*on" the interAa"enc' pa'a&les of
,e"ion 3 is the 7C.C 5nhance Calar' ?oan in the a*ount of
P/,04/,728)+0 which indicates oerpa'*ent of re*ittance for
salar' loan o&li"ations to 7C.C) .n the case of PPCA4C,, the
cause<reason of P12,004,/6/)68 de&it &alance of interAa"enc'
pa'a&les cannot &e ascertained)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. In2es#i7#e ll "nor3l "lnces :nder #6e li"ili#!
cco:n#s. Reconcile re3i##nces 4or in#er nd in#r>
7enc! p!"les #o #6e concerned 7encies nd oAces.
". Min#in s:"sidir! led7ers 4or s:">cco:n#s or
#rnsc#ion inde; crds #o ##in cc:rc! in reconcilin7
cco:n# "lnces.
-.+ Unrecorded #rns4er #o ''C>Cen#rl OAce o4 #r:s#
li"ili#ies represen#in7 3one! order iss:ed 3o:n#in7 #o
'1.)*(0(*+((.(. in Re7ion IV.
Anal'sis of ;ther pa'a&lesA%rust ?ia&ilitiesA-o*estic :one'
;rder for &oth ?and Bank and 5quita&le PC. Bank disclosed that
the total a*ount of P1+0,4/4,244)4+ reJected in the #nancial
state*ent as of -ece*&er /1, 200+ pertains to -ece*&er /1,
200/ &alance carried oer to 'ear 200+)
%he a*ount represents *one' order collections for the period
2002 and prior 'ears that were not transferred to Central ;(ce
due to failure of :one' ;rder Cection to coordinate with
Accountin" -iision to account for the actual *one' order
issued) PPCA,e"ion .2 records *one' order issued in the Cash
,eceipts Book &ased on Account Current<A&stract of Collections
and -eposits su&*itted &' post*asters while the transfer of
trust lia&ilit' to Central ;(ce are recorded &ased on :onthl'
,eport of :one' ;rder %ransactions prepared &' :one' ;rder
Cection) Boweer, the personnel inAchar"e of the :one' ;rder
Cection ad*itted that the :onthl' ,eports of :one' ;rder
%ransactions e=clude inco*plete reports su&*itted &'
post*asters) .t was also o&sered that such transfer of trust
lia&ilities were not recorded in the Central ;(ce &ooks)
%he unrecorded transfers oerstated ;ther Pa'a&lesA%rust
?ia&ilitiesA-:;8 and understated -ue to Central ;(ce accounts)
5e reco33end #6e cond:c# o4 periodic reconcili#ion o4 #6e
records o4 Acco:n#in7 Di2ision nd Mone! Order Ser2ice #o
ens:re #6# ll 3one! orders re properl! recorded
-.0 No s:"sidir! led7ers 3in#ined 4or li"ili#! cco:n#s
3o:n#in7 #o ' -0-*1(/*-./.0-
,e"ion Account A*ount
3 Current ?ia&ilities
.nterAa"enc' pa'a&les
.ntraAa"enc' pa'a&les
;ther lia&ilities
P14,!+8,727)71
+,861,082)80
24+,7//)76
777,10!,16!)72
Cu&Atotal P7!8,174,71/)!!
.2 Enliquidated
;&li"ations 6 PC 0prior
'ears1
Enliquidated
;&li"ations 6 :;;5
0prior 'ears1
Enliquidated
;&li"ations 6 PC
0current 'ear1
Enliquidated
;&li"ations 6 :;;5
0current 'ear1
P41,67!,806)
81
+,/!/,!1/)01
011,846,1/2)7+1
1,244,+++)42
Cu&Atotal /6,472,142)/!
2 /,+00,000)00
To#l '-0-*1(/*-./.0
-
Cection 488 of 7AA: 2ol) .. states that Ftotals of su&sidiar'
led"er &alances are reconciled with their respectie control
accounts at the end of each *onth) A state*ent thereon is
prepared quarterl' to support the correspondin" accounts in the
trial &alance)G %he a&sence of su&sidiar' led"ers or inadequate
*aintenance of it renders the a&oe lia&ilit' accounts
uneri#a&le thus its alidit' and accurac' could not &e
ascertained)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
a) Re7ionl Direc#ors s#ric#l! re9:ire Re7ionl cco:n#n#s #o
3in#in s:"sidir! led7ers 4or es! 3oni#orin7 nd
cco:n#in7 p:rposes.
&) Cond:c# periodic reconcili#ion o4 #6e "lnces o4 #6e
s:"sidir! led7ers $i#6 #6eir respec#i2e con#rol cco:n#.
-.( Unli9:id#ed o"li7#ions o4 prior !ers re3in :nse##led
nd=or o:#s#ndin7 4or 3ore #6n + !ers.
At 4C,, the unliquidated o&li"ations are as follows$
Oear 4o) of Oears ;utstandin" A*ount
2001 and prior + 'ears and *ore P/!,62!,/71)40
2002 4 'ears 1,2+4,042)40
200/ / 'ears 6,221,+41)8!
To#l '(,*1)(*1.../1
Dhile in ,e"ion 7, prior 'ears unliquidated o&li"ations are$
Oear 4o) of Oears
;utstandin"
A*ount
2001 + 'ears P2+7,!12)/+
2002 4 'ears 1,8/8,6//)28
200/ / 'ears 70,214)67
2004 2 'ears /0!,+1/)40
%otal P2,476,27/)70
%he a&oe &alances are supposed to hae &een
liquidated<ad9usted for the' hae &een reco"niIed in the &ooks
as alid current o&li"ations to &e paid or settled ordinaril' within
the a"enc'>s operatin" c'cle or within a 'ear) %he e=istence of
these unliquidated &alances, the lar"est of which has &een in
the &ooks for #e 'ears and *ore, is dee*ed irre"ular, castin"
dou&t on the alidit' of the clai*s)
Cection !8 of P- 144+ and Cection 1+! of the 7AA: 2ol)1
proide that &alances of the Accounts Pa'a&le which hae &een
outstandin" for *ore than two 'ears or *ore and a"ainst which
no actual clai*, ad*inistratie or 9udicial, has &een #led, or
which is not coered &' perfected contracts on record *a' &e
reerted to the retained earnin"s)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Re9:ire Re7ionl cco:n#n#s #o 2eri4!* in2es#i7#e nd
dB:s# #6e "o2e ci#ed o:#s#ndin7 prior !ersD "lnces.
". Min#in s:"sidir! led7ers nd cond:c# periodic
reconcili#ion o4 s:"sidir! led7er "lnces $i#6 i#s
correspondin7 con#rol cco:n#s.
c. Co3pl! $i#6 #6e pro2isions o4 Sec#ion 1- o4 'D 1((. nd
Sec#ion 1.1 o4 #6e CAAM* Vol:3e I re9:irin7 ll cli3s
o:#s#ndin7 4or 3ore #6n + !ers or 3ore nd no# d:l!
s:ppor#ed or 2lid#ed "e re2er#ed #o re#ined ernin7s.
-... O2ers##e3en# o4 2rio:s li"ili#! cco:n#s in Cordiller
A:#ono3o:s Re7ion d:e #o :nrecorded #rnsc#ions nd
erroneo:s cco:n#in7 en#ries.
%hese accounts are the followin"$
;erstate*ent
Accounts Pa'a&le 04011 P8/8,0!/)01
;ther Accounts Pa'a&le 04/!1 !,148,/17)2+
.nterAa"enc' Pa'a&leA;ther 4ational 7ot)
A"encies
+74,6+6)7/
To#l '1)*./1*)//.11
%he oerstate*ent, a*on" others, is due to dou&le recordin" of
ad9ustin" entries and unrecorded cleared *one' orders for
;ther Pa'a&le account)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ions8
. Re9:ire #6e Re7ionl cco:n#n# #o es#"lis6 #6e
proprie#! o4 cco:n#in7 en#ries "e4ore cer#i4!in7 #6e
correc#ness o4 s:"se9:en# pos#in7 #o #6e 7enerl led7er.
". M%e #6e necessr! correc#in7 en#ries #o dB:s# #6e
"o2e>3en#ioned cco:n#s.
1. CONTINCENT ACCOUNTS
1.1 Undoc:3en#ed Con#in7en#>S:spense Acco:n#s
%he 47AC :anual proides the followin" &asic policies and
concepts on contin"ent accounts)
F1+) Contin"ent Accounts 6 Contin"ent accounts shall no lon"er
&e used) All #nancial transactions shall &e recorded usin"
appropriate accounts &ased on the prescri&ed chart of
accounts)G 0underscorin" ours1
PPC adopted the 47AC Chart of Accounts e@ectie April 1, 200+,
conertin" its accounts usin" :arch /1, 200+ &alances) Prior to
the conersion of its accounts to 47AC , the Contin"ent
Cuspense accounts were the du*pin" accounts for an'
unreconciled and unsu&stantiated accounts despite the issuance
of PPC :e*orandu* on :arch 21, 2001 with a directie that
onl' &alances of the then Postal Cerice which cannot &e
su&stantiated &' alid docu*ents should &e reclassi#ed to the
Contin"ent Cuspense accounts) .t further directed the PPC
accountants to e=haust all e@orts to reconcile and su&stantiate
all account &alances listed in the Cu**ar' of Cuspense
accounts within one 011 'ear upon receipt of said :e*orandu*)
%he recorded &alance of Contin"ent Assets, Contin"ent
?ia&ilities and Contin"ent Capital Cuspense accounts a*ounted
to P1,4/0,84/,+08, P60/,868,286 and P+1!,/7/,+01,
respectiel', as of :arch /1, 200+)
.t has &een o&sered, howeer, that with the i*ple*entation of
the 47AC codin" s'ste* on April 1, 200+, the Contin"ent
Cuspense accounts of the PPC Bead and ,e"ional ;(ce 4o) .3
were written o@ fro* PPC>s &ooks of accounts while in other
re"ional o(ces, the &alances were transferred to either the -ue
to Central ;(ce, ;ther Assets or ;ther Pa'a&les accounts)
At PPC Bead ;(ce, out of the P1,20/,+24,+0!)+2 &alance of the
Contin"ent Asset account, onl' P1,/17,264)/6 was conerted to
the 47AC Account ,eceia&le, -isallowances<Char"es while the
re*ainin" P1,202,207,24+)16 was written o@ fro* the &ooks)
%here are, howeer, no supportin" docu*ents fro* which to
alidate the ad9ust*ents to the contin"ent account))
At PPC ,e"ion .3, assets, lia&ilities and contin"ent capital
accounts were ad9usted &' P10,22/,/72)+2, P1,6//,017)!2 and
P8,+!0,/++)60, respectiel' to se"re"ate "ood and &ad accounts
purportedl' to enhance a relia&le infor*ation of PPC #nancial
position) 7ood accounts are those considered as realiIa&le ones
and dul' su&stantiated with alid docu*ents while &ad accounts
are those which the a"enc' could not produce docu*ents to
proe its e=istence, hence should &e dropped<ad9usted fro* the
&ooks of accounts)
At 4C,, the &alance of Contin"ent Asset account of
P60,+6+,7/8)!8 was de&ited and credited to -ue to Central
o(ce account 0Account 4o) 4211)
%he afore*entioned ad9ust*ents resulted in the understate*ent
of the accounts in the #nancial state*ents as of -ece*&er /1,
200+)
At PPC ,e"ions / and 6, the &alances of Contin"ent Cuspense
accounts in the Preli*inar' %rial Balance re*ain unconerted to
47AC) Boweer, the PPC Bead ;(ce conerted the accounts to
47AC in the consolidated trial &alance without eri#cation of the
schedules and details of the &alances, thus, a@ectin" the fair
presentation of the accounts in the #nancial state*ents)
Contin"ent Cuspense Accounts 47AC
,e"ion Assets ?ia&ilities Capital ;ther Assets
02!01
;ther Pa'a&les
04/!1
/ P//,476,!+8)00 P//,476,!+8)00 P2,/2!,71!)/1 P//,476,!+8)00 P/+,806,677)/1
6 !2,01+,7!2)20 0)00 6,282,7!1)08 !2,01+,7!2)20 6,282,7!1)08
To#l '1+.*(1+*,.).+
)
'00*(,/*1.-.
))
'-*/1+*.1).0
1
'1+.*(1+*,.).+
)
'(+*)-1*(/-.
01
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. E;er# e<or# #o reconcile nd reclssi4! con#in7en# i#e3s #o
#6eir proper cco:n#s. In #6e 3en#i3e #6#
reconcili#ion 6d no# "een co3ple#ed* re2er# "c% #o #6e
"oo%s o4 cco:n#s s o4 Dece3"er 01* +)).* #6e #o#l
3o:n# $ri##en o< 4ro3 #6e Con#in7en# S:spense
cco:n#s :sin7 #6e s:77es#ed NCAS cco:n#s s:"Bec# #o
c6n7es :pon s:"3ission nd 2lid#ion o4 s:ppor#in7
doc:3en#s o4 #6e s:"Bec# con#in7en# i#e3s.
". Ens:re #6# n! dB:s#3en# in #6e "oo%s s6o:ld l$!s "e
s:ppor#ed $i#6 s:Acien# :#6ori#! or "sis.
II. MANACEMENT ISSUES
'ERSONAL SERVICES
8or CO 200+, Personal Cerices with an a""re"ate a*ount of
P2,+47,+!/,/07 represent 67L of the total operatin" e=penses) %here
was an increase in Personal Cerices in 200+ &' P1/6,/!/,/47 or
+)66L co*pared to P2,411,1!!,!60 in CO 2004) %he increase *a' &e
attri&uted to the followin"$
1. '!3en# o4 slr! di<eren#ils 4or CG 111- nd 1111 6s
no le7l "sis & '1+, 3illion
Cection 4 011 of P- 144+, otherwise known as the Auditin" Code
of the Philippines, prescri&es that one of the funda*ental
principles "oernin" #nancial transactions and operations of an'
"oern*ent a"enc' is that Fno *one' shall &e paid out of an'
treasur' or depositor' e=cept in pursuance of an appropriation
law or other speci#c statutor' authorit'G)
,eiew of e=penditures on personal serices for CO 200+
disclosed that a total of P126,884,776)16 was paid to e*plo'ees
of PPC Bead and ,e"ional o(ces for salar' di@erential for COs
1!!8) 0Anne= A1) Ci*ilar pa'*ents were *ade in CO 2004
coerin" salar' di@erential for CO 1!!! in the total a*ount of
P1!7,!2/,006)8+ 0Anne= A1)
%he -epart*ent of Bud"et and :ana"e*ent 0-B:1 approed
Corporate ;peratin" Bud"et 0C;B1 for COs 2004 and 200+ do
not contain an' &ud"et for salar' di@erential of prior 'ears)
:oreoer, the -B: approed C;B for CO 200/ stated that the
a*ount appropriated for prior 'ears> Personal Cerices
require*ents which include salar' di@erential of P1+6,620,000
has no le"al &asis since there was no -B: approed
;r"aniIational Ctructure and Cta(n" Pattern 0;CCP1 for CO 1!!8
and 1!!!) Also, the footnotes in the C;B for CO 200/ proide
that the reco**ended leel for personal serices is for
&ud"etar' purposes onl' and shall not &e construed as
appropriate authoriIation or le"al &asis for the "rant of speci#c
&ene#ts<allowances)
PPC, &' irtue of its Charter, ,)A) 4o) 7/+4, has the power to #=
the salaries and e*olu*ents of its e*plo'ees) Boweer, the
followin" proisions of Cection 6 of P)-) 4o) 1+!7 requires that
&efore their i*ple*entation, the salaries and e*olu*ents of its
e*plo'ees should #rst &e reiewed and approed &' the -B:,
who has the authorit' in approin" plantilla positions$
FA"encies, positions or "roups of o(cials and e*plo'ees of the
national "oern*ent includin" "oern*ent owned or controlled
corporations who are hereafter e=e*pted &' law fro* ;CPC
coera"e shall o&sere such "uidelines and policies as *a'&e
issued &' the President "oernin" position classi#cation, salar'
rates, leels of allowance, pro9ect and other honoraria, oerti*e
rates and other for*s of co*pensation and frin"e &ene#ts)
Exemption notwithstanding, agencies shall report to the
President, through the budget commission on their position
classifcation and compensation plans, policies, rates and other
related details following such specifcations as maybe
prescribed by the President)G 0underscorin" supplied1
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
. Mn7e3en# s6o:ld d6ere s#ric#l! #o #6e e;is#in7
l$s* r:les nd re7:l#ions re7rdin7 #6e "sic
re9:ire3en#s 4or p!3en# o4 slries.
". Co3pl! $i#6 #6e li3i##ions se# 4or#6 in #6e DBM
ppro2ed Corpor#e Oper#in7 B:d7e#.
c. Coordin#e $i#6 #6e DBM rel#i2e #o #6e cond:c# o4
r#ionliF#ion nd s#r#e7ic re2ie$ o4 ''C oper#ions
nd 4:nc#ions #o ddress ll iss:es nd concerns
ssoci#ed $i#6 #6e ''C pln#ill.
Finncil Repor#s
+. Del! in #6e s:"3ission o4 co3ple#e Enncil repor#s
Cection 121 of P)-) 144+ proides that F%he #nancial reports
prepared &' a"encies shall co*pl' with the speci#c
require*ents of applica&le laws and re"ulations as to nature,
accountin" &asis, content, frequenc' and distri&ution = = =)G
Cection 122 of the sa*e Code also states that$
FCu&*ission of ,eports) 011 Dheneer dee*ed necessar' in the
e=i"encies of the serice, the Co**ission *a' under re"ulation
issued &' it require the a"enc' heads, chief accountants, &ud"et
o(cers, cashiers, dis&ursin" o(cers, ad*inistratie or
personnel o(cers and other responsi&le o(cials of the arious
a"encies to su&*it trial &alances, ph'sical inentor' reports,
current plantilla of personnel, and such other reports as *a' &e
necessar' for the e=ercise of its function) 021 8ailure on the part
of the o(cial concerned to su&*it the docu*ents and reports
*entioned herein shall auto*aticall' cause the suspension of
pa'*ent of their salaries until the' shall hae co*plied with the
require*ent of the Co**ission)G
Cection 4!0 of the 7AA:, 2olu*e . requires the su&*ission of
*onthl' %rial Balance not later than the twentieth da' after the
end of the *onth)
;n the other hand, Para"raph 8 of the Philippine Accountin"
Ctandards 0PAC1 1 proides that a co*plete set of #nancial
state*ents co*prises$
a) Balance sheet
&) .nco*e state*ent
c) .nco*e state*ent
0i1 all chan"es in equit'
0ii1 chan"es in equit' other than those arisin" fro*
transactions with equit' holders actin" in their
capacit' as equit' holders
d) cash Jow state*ent
e. notes, co*prisin" a su**ar' of si"ni#cant accountin"
policies and other e=planator' notes
8urther*ore, the Corporate Accountin" :anual of the a"enc'
speci#call', the 8inancial reportin" C'ste* proides for the
preparation and su&*ission to the Co**ission on Audit of the
followin" #nancial state*ents$
8inancial ,eports 8requenc' of Preparation and
Cu&*ission
.nco*e Ctate*ent :onthl'<OearAend
Balance Cheet AdoA
Ctate*ent of Chan"es in 8inancial
Position
AdoA
-espite seeral er&al followAups and written requests<re*inders,
the required reports were not su&*itted on the speci#ed period) %o
date, :ana"e*ent has not su&*itted the 4otes to 8inancial
Ctate*ents thus infor*ation enu*erated under para"raphs 10/A
108 of PAC 1 releant to the understandin" of the #nancial
state*ents were not disclosed) %he practice de#es the er'
purpose of "oern*ent accountin", which is to proide control of
acts of o(cials in the receipt, disposition and utiliIation of
"oern*ent funds and propert' and to proide *ana"e*ent with
ti*el' infor*ation that *a' &e used in decisionA*akin")
8inancial reports shall &e su&*itted to the ;(ce of the Auditor not
later than the 10
th
da' of the ensuin" *onth) 8ailure on the part of
the o(cials concerned to su&*it the docu*ents and reports shall
auto*aticall' cause the suspension of pa'*ent of their salaries
until the' hae co*plied with the require*ents of the Co**ission
on Audit)
-ela' in the preparation and su&*ission of #nancial reports has
&een a recurrin" condition in the a"enc') %he Co**ission on
Audit, one of the users of the #nancial reports was disadanta"ed of
the aderse condition as the delier' of auditin" serices was not
i*ple*ented in due ti*e)
.t appears that the functions of recordin" of transactions, keepin" of
accounts and the preparation of #nancial reports could not &e
e@ectiel' deliered) Accountin" records were inadequate and
personnel are not well adept of the accountin" functions)
5e reco33end #6e 4ollo$in7 co:rses o4 c#ion8
c. Acco:n#in7 personnel
:nder7o #rinin7 nd se3inrs #o ##in eAcienc!
in #6e prepr#ion nd s:"3ission o4 Enncil
repor# $i#6in #6e prescri"ed dedlines.
d. Lo" ro##ion nd re>
ssi7n3en# o4 personnel in #er3s o4 $or%lod in
con4or3i#! $i#6 "sic in#ernl 3es:res.

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