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EXECUTIVE SUMMARY

A. Introduction

The Polytechnic University of the Philippines (PUP) was founded in October 1904

and was originally known as Manila Business School (MBS) under the superintendence of

C.A. O’Reilley. In 1908, it was renamed Philippine School of Commerce (PSC) and merged

with the Philippine Normal School in 1933 to 1946. By virtue of Republic Act (RA) No. 779

in 1952, the PSC was changed to Philippine College of Commerce (PCC). Subsequently,

with the passage of Presidential Decree No. 1341 on April 1, 1978, the PCC was converted

into a chartered state university, now known as the PUP.

Governance of PUP is vested upon the Board of Regents, which exercises policy-

making functions to carry out the mission and programs of the University by virtue of

RA No. 8292, the Higher Education Modernization Act of 1997.

The PUP is administered by Dr. Emanuel C. de Guzman, President and is assisted by

an Executive Vice President and six Vice Presidents, to wit:

Executive Vice-President Dr. Herminia E. Manimtim

Vice-President for:

Academic Affairs

Dr. Manuel M. Muhi

Administration Mr. Alberto C. Guillo

Student Affairs and Services Dr. Herminia E. Manimtim

Finance Ms. Marisa J. Legaspi

Research, Extension, Planning and

Development

Dr. Joseph Mercado

Branches and Campuses Mr. Pascualito B. Gatan

As of December 31, 2017, the PUP had a total of 1,494 personnel complement,

inclusive of the Branches and Campuses as shown in the table below:

Academic Administrative Total

Designee/Official Regular Designee/Official Regular Casual

307 352 48 299 488 1,494

The PUP commits its academic resources and manpower to achieve its goals

through:

a. Provision of undergraduate and graduate education which meet international

standards of quality and excellence;

b. Generation and transmission of knowledge in the broad range of disciplines

relevant and responsive to the dynamically changing domestic and international

environment;

c. Provision of more equitable access to higher education opportunities to deserving

and qualified Filipinos; and

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d. Optimization, through efficiency and effectiveness, of social, institutional, and

individual returns and benefits derived from the utilization of higher education

resources.

B. Operational Highlights

The largest University in terms of student population, the PUP is serving 65,970

students for the 1st semester and 62,774 students for the 2nd

semester of Calendar Year (CY)

2017 in its 25 Campuses located in Metro Manila, Northern and Central Luzon, and

Southern Luzon, of which 12 Campuses are funded by the Local Government Units (LGUs),

as follows:

PUP Campuses/Branches Address Remarks

1. Main - A. Mabini Campus Anonas St., Sta. Mesa, Manila

2. National Development

Corporation (NDC)

Pureza St., Sta. Mesa, Manila

3. Marcelo H. Del Pilar Campus Valencia St., Sta. Mesa, Manila

4. Taguig Branch Gen. Santos Ave., Lower Bicutan,

Taguig City

5. Commonwealth Branch Don Fabian St., Commonwealth Ave.,

Quezon City

6. San Juan Campus Addition Hills, San Juan City LGU funded

7. Parañaque Campus Col. E. L. De Leon, Parañaque City LGU funded

8. Mariveles Branch Freeport Area, Mariveles Bataan

9. Sta. Maria Campus Sitio Gulod, Bgy. Pulong Buhangin, Sta.

Maria, Bulacan

LGU funded

10. Pulilan Campus Pulilan Regional Rd., Pulilan, Bulacan LGU funded

11. Cabiao Campus San Roque Cabiao, Nueva Ecija LGU funded

12. Lopez Branch Yumol St., Brgy. Burgos, Lopez,

Quezon

13. Mulanay Branch Mulanay, Quezon Province

14. Unisan Branch Kalilaya Ibaba, Unisan, Quezon

15. General Luna Campus Gen. Luna, Quezon Province LGU funded

16. Ragay Branch Rolando R. Andaya Hwy., Ragay,

Camarines Sur

17. Sto. Tomas Branch Bonifacio St., Poblacion II

18. Maragondon Branch Maragondon, Cavite

19. Alfonso Branch Alfonso, Cavite LGU funded

20. Bansud Campus Poblacion Bansud, Mindoro Oriental

21. Sablayan Campus Sablayan, Mindoro Occidental LGU funded

22. Biñan Campus Biñan, Laguna LGU funded

23. San Pedro Campus United Bayanihan Proper, San Pedro,

Laguna

LGU funded

24. Sta. Rosa Campus Tiongco Subd., Sta. Rosa, Laguna LGU funded

25. Calauan Campus Bay-Calauan Hwy., Calauan, Laguna LGU funded

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The PUP adopts the centralized accounting system wherein only one set of books for

all its Campuses is kept and maintained by the Accounting Department in its Main Campus

located at Sta. Mesa, Manila.

The LGU-funded Campuses, except for the Campus in Alfonso, Cavite, are being

billed by the Accounting Department for the salaries, allowances and other benefits of the

assigned Administrative and Academic Personnel. Likewise, the LGUs where the

Campuses in Sablayan, Occidental Mindoro, Sta. Maria, Bulacan, Sta. Rosa and Calauan,

Laguna are located are also billed for Maintenance and Other Operating Expenses (MOOE)

which are being shouldered in full by the LGUs. The MOOE of the rest of the Campuses are

shared in part by PUP and the LGUs, the latter paying directly the creditors for their share in

the MOOE. The funds released by LGUs to PUP are considered as inter-agency fund

transfers. On the other hand, the PS and MOOE of the Campus in Alfonso, Cavite are being

charged against the revolving fund from the LGU which is being replenished annually.

The PUP reported the following accomplishments per Major Final Output (MFO)

and Performance Indicators for CY 2017:

Performance Indicators Targets Actual

Accomplishments Percentage of

Accomplishments

MFO 1 - Higher Education Services

1. No. of graduates in mandated &

priority programs 12,267 13,310 108.50

2. Percentage of total graduates that are

in priority courses 77.00% 80.49% 104.53

3. Average percentage passing in

licensure examinations by SUC

graduates/national average % passing

in board programs covered by SUC

117.00% 122.99% 105.12

4. Percentage of programs accredited as

Level 1

4.35% 4.35% 100.00

5. Percentage of programs accredited as

Level 2 94.44% 100% 105.89

6. Percentage of programs accredited as

Level 3 72.41% 93.10% 128.57

7. Percentage of graduates who finished

their academic programs according to

the prescribed timeframe

82.00% 81.50% 99.39

MFO 2 - Advanced Education Services

1. No. of graduates in mandated &

priority programs 330 575 174.24

2. Percentage of graduates who engaged

in employment within six months of

graduation

95.00% 100.00% 105.26

3. Percentage of students who rate

timeliness of education delivery/

supervision as good or better

96.00% 98.70% 102.81

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Performance Indicators Targets Actual

Accomplishments Percentage of

Accomplishments

MFO 3 – Research Services

1. Number of research studies

completed

196 316 161.22

2. Percentage of research outputs

published in recognized journal or

submitted for patenting or patented

38.27% 45.66% 119.31

3. Percentage of research projects

completed within the original project

timeframe

95.00% 100.00% 105.26

MFO 4 – Extension Services

1. Number of persons trained weighted

by length of training 15,900 16,031 100.82

2. Number of persons provided with

technical advice

2,530 2,576 101.82

3. Percentage of trainees who rate the

training course as good or better 96.00% 98.67% 102.78

4. Percentage of clients who rate the

advisory services as good or better 91.00% 94.59% 103.95

5. Percentage of persons who receive

training or advisory services who rate

timeliness of services as good or

better

100.00% 100.00% 100.00

6. Percentage of requests for technical

advice that are responded to within

three days

100.00% 100.00% 100.00

7. Percentage of persons who receive

training or advisory services who rate

timeliness of services as good or

better

95.00% 97.79% 102.94

C. Financial Highlights

For CY 2017, the PUP has a total appropriation of ₱1,346,119,000.00 as provided

for in RA No. 10924, the General Appropriations Act (GAA) for Fiscal Year (FY) 2017.

During the year, the University received a total allotment of ₱1,600,266,106.59, including

releases of Automatic Appropriations for Retirement and Life Insurance Premiums, Special

Purpose Funds and Continuing Appropriations. Of the total allotment, the amount of

₱1,522,304,315.21 was obligated, leaving an unobligated balance of ₱77,961,791.38 at

year-end. Details are shown in the succeeding page:

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Source of Funds Appropriations Allotments Obligations

Incurred

Unobligated

Balance

A. Current Budget

Agency Specific Budget

Personnel

Services (PS) 1,025,121,209.00 985,660,174.00 981,870,990.32 3,789,183.68

Maintenance and

Other Operating

Expenses

(MOOE)

233,587,791.00 233,587,791.00 202,995,638.09 30,592,152.91

Capital

Outlay(CO) 87,410,000.00 82,410,000.00 80,463,222.74 1,946,777.26

Sub-total 1,346,119,000.00 1,301,657,965.00 1,265,329,851.15 36,328,113.85

Automatic Appropriations

Retirement &

Life Insurance

Premium-PS 81,856,973.00 81,856,973.00 65,645,713.28 16,211,259.72

Special Purpose Funds

Miscellaneous

Personnel

Benefits Fund

52,652,970.00 52,652,970.00 52,607,385.14 45,584.86

Pension and

Gratuity Fund 3,531,299.00 3,531,299.00 3,531,292.88 6.12

Sub-total 56,184,269.00 56,184,269.00 56,138,678.02 45,590.98

Total 1,484,160,242.00 1,439,699,207.00 1,387,114,242.45 52,584,964.55

B. Continuing Appropriations

Agency Specific Budget

Property, Plant,

and Equipment

(PPE)

104,606,000.00 104,606,000.00 102,119,270.80 2,486,729.20

MOOE 55,960,899.59 55,960,899.59 33,070,801.96 22,890,097.63

Total 160,566,899.59 160,566,899.59 135,190,072.76 25,376,826.83

Grand Total 1,644,727,141.59 1,600,266,106.59 1,522,304,315.21 77,961,791.38

In addition, the PUP is authorized to retain and use its income from tuition fees and

other charges as well as from its income generating projects to constitute as the Special Trust

Fund of the University by virtue of RA No. 8292. During the year, the approved budget

amounted to ₱599,327,971.90, of which ₱330,202,947.43 was utilized, leaving an

unutilized balance of ₱269,125,024.47.

The University’s financial position and financial performance for CY 2017 with

corresponding figures for CY 2016 (restated), are as follows:

Particulars 2017 2016 (Restated)

Financial Position

Assets 2,102,598,135.50 2,067,667,907.73

Liabilities 710,059,150.33 774,952,794.21

Equity 1,392,538,985.17 1,292,715,113.52

Financial Performance

Revenue 443,488,742.83 418,822,678.42

Less: Current Operating Expenses

PS 1,332,795,198.14 1,239,708,326.32

MOOE 317,721,893.58 283,619,923.51

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Particulars 2017 2016 (Restated)

Financial Expenses 3,230,231.75 8,131,939.33

Non-Cash Expenses 69,714,510.03 71,679,879.26

Surplus (Deficit) from Current Operations (1,279,973,090.67) (1,184,317,390.00)

Financial Assistance/Subsidy from National

Government 1,347,763,003.72 1,187,824,752.95

Gains/(Losses) 9,618,849.12 6,644,477.02

Surplus (Deficit) for the period 77,408,762.17 10,151,839.97

D. Scope of Audit

The audit covered the review of the accounts and operations of the PUP for the year

ended December 31, 2017. The audit was conducted to: (a) ascertain the level of assurance

that may be placed on management’s assertions on the financial statements; (b) determine

the propriety of transactions as well as the extent of compliance with applicable laws, rules

and regulations; (c) recommend agency improvement opportunities; and (d) determine the

extent of the implementation of prior year’s audit recommendations.

E. Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the PUP for the CY 2017 for reasons stated in the attached

Independent Auditor’s Report and as discussed in Part II of this Report.

F. Summary of Significant Audit Observations and Recommendations

The following are the significant audit observations and recommendations which

are discussed in detail in Part II of the report:

1. Of the approved 2017 Special Trust Fund (STF) budget amounting to

₱408,514,303.00, the amount of ₱268,709,194.00 or 65.78 percent was

allocated and utilized for Personnel Services for the payment of salaries,

allowances and fringe benefits of PUP personnel, while the remaining 34.22

percent or ₱139,805,109.00 was allotted for Maintenance and Other Operating

Expenses, Capital Outlay, Fiduciary Fees, and Research and Extension

Services, leaving no budget for the rehabilitation of the school buildings,

classrooms and comfort rooms, thus not responsive to the needs of the students

for modernized, and improved physical facilities. Moreover, allocated in

CY 2017 was only 0.12 percent instead of the required 10.00 percent for its

Mandatory Reserves as Contingency Fund. (Observation No. 1)

We recommended that the Management:

a. prioritize the needs of the students by allocating resources to the

rehabilitation of school buildings, classrooms and comfort rooms to

ensure effective delivery of services;

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b. maximize the utilization of the STF to ensure accomplishment of the

PUP’s major functions not only on instruction but also on research and

extension services; and

c. comply strictly with the CHED Memorandum No. 20, series of 2011 on

the documents required to support the STF budget prior to approval

by the BOR.

2. Laxity by the PUP in the maintenance of its parcels of land situated at S.H.

Loyola (formerly Lepanto) St., Sampaloc, Manila, with an aggregate land area

of approximately 5,344.90 square meters (sq. m.), which includes school

buildings and other structures resulted in: a) understatement of the balance of

PUP Lepanto lots due to non-conduct of revaluation; and b) the continued

existence of two (2) school buildings that have deteriorated through the passage

of time on Lots 24-B and 24-C of Block 4002. (Observation No. 2)

We recommended that the Management:

a. require the immediate conduct of revaluation on all the land/lot

properties owned by PUP in all its Branches and Campuses to properly

reflect the value of the assets in the books; and

b. submit concrete plans for the utilization of the land in accordance with

the purpose for which it was conveyed, otherwise, in the event that PUP

ceases to need the land, to return said idle lands and remnants of

structures/buildings therein to the National Government as an enabler

and for the benefit of the National Government in carrying out other

priority programs, projects and activities in the areas of education,

health, youth and sports development, human settlement, science and

culture, and economic development.

3. The PUP’s Capital Outlay commitment as reflected in the Project

Implementation Plan for Capital Outlay-Infrastructure of CY 2017 was not

attained due to delays in the pre-procurement activities, thereby target

completion dates were not observed. Thus, no accomplishment was reported,

affecting the Agency’s efficiency rating as at December 31, 2017. Also,

infrastructure projects pertaining to releases under the General Appropriations

Act (GAA) for FY 2015 totaling ₱26,351,620.01 were started and completed

only in CY 2017 and only one infrastructure project amounting to

₱4,962,815.29, which pertains to releases under the GAA FY 2016, was started

during the end of the 3rd Quarter of CY 2017 thus denying the students and the

general public from the immediate use of upgraded, modernized and safe

structures. (Observation No. 3)

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In view of the foregoing, we recommended that the Management:

a. accelerate infrastructure project implementation thru proper

scheduling and planning in consonance with the PUP’s Annual

Procurement Plan;

b. promptly utilize the funds intended for infrastructure projects as

targeted by PUP to keep up with the accelerated pace of the University

development process and in the end, promote the welfare of students;

and

c. adjust the implementation schedule of its infrastructure projects,

anticipating the effects of failure of bidding and other related reasons

of delay to expedite implementation of infrastructure projects.

4. Non-adherence of the PUP to the prescribed laws, rules and regulations of the

State Universities and Colleges (SUCs) - Tulong Dunong Program (TDP)

adversely affected the efficient and effective implementation of the program

that resulted in: a) unutilized appropriations amounting to ₱51,497,000.00 and

₱38,522,000.00 for FYs 2016 and 2017, respectively; b) the appropriations

being allocated to legislators’ endorsed potential grantees by the PUP Budget

Office; c) procedural lapses in accepting applications and payments of grant and

documentary requirements that resulted in the lapsing of ₱11,878,500.00 or 42

percent of the total unutilized NCAs for FYs 2016 and 2017 of ₱28,406,500.00;

and d) non-submission of quarterly reports on the utilization of funds, including

the list of beneficiaries to the concerned agencies and government bodies and

non-posting thereof in the PUP website, thereby depriving the existing student-

grantees and the other underprivileged students of the opportunity to avail of the

benefits of the TDP. (Observation No. 4)

We recommended that the Management implement the following:

a. initiate actions regarding the acceptance, screening, and evaluation of

applicants to facilitate and expedite the process of selection of all

deserving students enrolled at the PUP in order to maximize the use of

the funds pursuant to the IRR of SUCs - TDP per JMC No. 2017-03;

b. facilitate the dissemination of information to student-grantees whose

scholarships have been approved and compel them to submit the

requirements strictly within the set deadlines in order to expedite the

processing of their scholarship claims;

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c. maintain an updated database by monitoring constantly the status and

academic performance of the student-grantees and to the DBM, the

Speaker of the House of Representatives, the President of the Senate of

the Philippines, House Committee on Appropriations and the Senate

Committee on Finance, the required quarterly reports on the utilization

of funds and list of beneficiaries and post the same in the official website

of the University; and

d. submit justification on the excess payments made to the student-

grantees amounting to ₱720,500.00 and on the outright deduction of

administrative cost of ₱1,645,000.00 from the financial assistance of the

TDP beneficiaries and on the recognition thereof as miscellaneous

income in STF or Fund 164.

5. The flawed implementation of the Expanded Students’ Grants-in-Aid Program

for Poverty Alleviation (ESGP-PA) resulted in: a) unutilized appropriations

amounting to ₱34,600,800.00 or 69 percent of the total approved budget due to

non-adherence to the prescribed timelines in the implementation of ESGP-PA;

b) lapsed NCAs totaling ₱2,842,800.00 due to inadequate monitoring that

affected the timely release of the stipend to student-grantees; c) minimal

utilization of the Administrative and Miscellaneous Cost (AMC) amounting to

₱79,743.00 or 17 percent of the ₱457,200.00 total amount allotted;

d) discrepancies that resulted in the overstatement of corresponding Expense

and Liability accounts amounting to ₱1,236,000.00 in the Agency books and

non-recognition in the FAR 1-A under disbursements column amounting to

₱1,019,700.00; and e) non-submission of quarterly reports on the utilization of

funds, including the list of beneficiaries to the concerned agencies and

government bodies, and non-posting thereof in the PUP website, thereby

depriving the students of the immediate benefits that the scholarship program

offers. (Observation No. 5)

We recommended that the Management:

a. maximize utilization of the ESGP-PA funds;

b. make representation with the DSWD to improve the system of the

selection of grantees and promptly submit its endorsement prior to the

start of the school year to ensure that deserving 4Ps beneficiaries can

benefit in a timely manner from the scholarship program;

c. facilitate the dissemination of information to student-grantees whose

scholarships have been approved and compel them to submit the

requirements strictly within the set deadlines in order to allow for the

early release of the NCA and expedite the processing of their scholarship

claims;

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d. assist the SFAS in carrying out its functions as regards the provision on

AMC and recommend additional activities that will fast-track the

implementation of the ESGP-PA Scholarship Program;

e. require the Accountant to effect the necessary adjustments in FAR

No. 1-A and in the Agency books, carefully and conscientiously analyze

and review the reports submitted to them prior to recording, and

regularly reconcile the Agency books and the FAR in order to avoid

inaccuracies in the succeeding periods; and

f. maintain an updated database by constantly monitoring the status and

academic performance of ESGP-PA grantees and submit the required

quarterly reports on the utilization of funds and list of beneficiaries to

the DBM, the Speaker of the House of Representatives, the President of

the Senate of the Philippines, House Committee on Appropriations and

the Senate Committee on Finance and post the same in the official

website of the University.

6. The Cash in Bank-Local Currency Current Account (CIB-LCCA) as of

December 31, 2017 amounting to ₱512,837,808.28 is of doubtful validity due

to: a) delayed/non-submission of Monthly Bank Reconciliation Statements

(BRS) that resulted in unreconciled net variance of ₱237,621,112.83 between

bank and book balances; b) dormant PNB bank accounts amounting to

₱7,145,375.08 that were transferred/deposited to the PUP Regular Trust Fund

account maintained at LBP without proper documentation; c) doubtful

existence and ownership of two dormant bank accounts totaling ₱480,600.54;

and d) investment in High-Yield Savings Account of ₱230,000,000.00 sourced

from Special Trust Fund that lacked concrete and detailed investment plan of

the projects, contrary to Section 74 of Presidential Decree No. 1445 and

existing regulations on cash management. (Observation No. 7)

We recommended that the Management:

a. require the Accountant to prepare and submit the BRS to arrive at an

accurate Cash in Bank balance;

b. properly support the JEVs with Board Resolution authorizing the

transfer of dormant funds, bank reconciliation statements and original

documents that would show proof that said PNB accounts were already

closed;

c. request for the possible write-off of the Real Bank dormant accounts

reflected in the Agency books amounting to ₱480,600.54 due to doubtful

ownership and existence; and

d. submit concrete and detailed plan of the projects to be funded from

investments of the Special Trust Fund.

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7. The Inventory Accounts as of December 31, 2017 amounting to

₱60,790,557.53 is of doubtful validity due to: a) unrecorded Office Supplies

Inventory amounting to ₱3,663,135.08 that understated the Office Supplies

Inventory account; b) dormant inventory accounts amounting to ₱5,921,520.20

due to non-existing inventories; c) existence of expired/obsolete inventory

items in the stockroom of the Asset Management Office (AMO) and still

carried in the books; d) improper maintenance of Supplies Ledger Cards

(SLCs) by the Accounting Department and Stock Cards (SCs) by the AMO,

thus correctness and completeness of the Inventory balance in quantity cannot

be ascertained; and e) non- submission and reconciliation of the prescribed

Report on the Physical Count of Inventories (RPCI) as at year-end by the AMO

with the records of the Accounting Department. (Observation No. 10)

We recommended that the Management:

a. require the Accounting Office to:

a.1. draw JEV for the identified unrecorded deliveries in CY 2017 and

provide the Audit Team a copy thereof;

a.2. initiate the verification, validation, review, analyses and

reconciliation with the other related accounts in the trial balance

of the dormant balances of the Inventory account and expired/

obsolete inventory items and record the necessary adjusting/

correcting journal entries in the books pursuant to COA Circular

No. 97-001;

a.3. maintain SLC for adequate control in compliance with Section 17,

Chapter 8 and Appendix 57 of the GAM, Volumes I and II,

respectively;

b. require the Asset Management Office to:

b.1. regularly update the SC for adequate control of the quantity of

supplies (Appendix 58, GAM Volume II);

b.2. conduct physical inventory taking at least every six months as of

June 30 and December 31 of each year, and submit to the Office

of the Auditor the Report on the Physical Count of Inventories

(RPCI) to be submitted to the Office of the Auditor; and

b.3. properly dispose all inventories deemed expired/obsolete still

existing in the stockroom of the Supply Office.

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8. The Property, Plant and Equipment (PPE) accounts with carrying amounts

totaling ₱1,448,384,056.07, which represent 68.89 percent of the total assets of

the PUP as of December 31, 2017, were doubtful as to valuation, accuracy and

existence due to: a) cost of PUP Annex Building, which was demolished in CY

2010, was still carried in the books due to undetermined exact carrying value of

the building demolished; b) non-recording in the Agency books of eight parcels

of land acquired by the PUP through donation, which are being used in its

operations; c) continued existence of unaccounted beginning balances of PPE

items totaling ₱419,859,780.52; and d) non-submission of a complete Report

on the Physical Count of PPE (RPCPPE) on all properties of the PUP and non-

maintenance of the required PPE Ledger Cards and Subsidiary Ledgers by the

Accounting Department and Property Cards by the AMO thus, rendering any

reconciliation of records to be futile. (Observation No. 11)

We recommended that the Management:

On Lepanto Properties –

a. require the Accountant and Property Officer to exhaust all possible

means to retrieve all pertinent documents to trace/determine the

historical costs and related accumulated depreciation of the Old Annex

Building that was demolished in CY 2010 so that assets are properly

derecognized in the books of accounts;

On Various PPE Accounts –

b. require the Accounting Department to coordinate with the Committee

on Land Titles for the recognition of PUP Land in the Agency books

after, among others, undertaking required measures such as appraisal

of the land particularly those acquired thru donation;

c. require the Accounting Department to start identifying the composition

of beginning balances that remain unaccounted for in the Agency books;

d. establish and maintain/update the required PC and PPELC for all PPE

items and complete the information/details in the Subsidiary Ledgers;

and

e. require the inventory team to complete the physical inventory of all PUP

properties and reconcile the result thereof with the PPELC maintained

by the Accounting Department and submit copy of the RPCPPE to the

COA Audit Team.

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9. The accuracy of the balance of the Accounts Payable (A/P) account of

₱251,547,089.80 in the PUP books as of December 31, 2017 is doubtful due to:

a) inclusion of obligated Contracts/Purchase Orders (POs) on goods and

services not yet delivered or rendered which overstated the A/P account by

₱3,350,884.82; b) incurrence of obligations in CY 2017 in the absence of duly

approved contract/POs and conforme by the supplier that overstated the A/P

account by ₱13,279,056.50; c) inclusion of cancelled POs and liabilities deemed

paid totaling ₱828,102.29, hence further overstating the A/P balance at year-

end; and d) resulting variances in the amount of ₱31,669,150.75 on balances

between Aging of Due and Demandable Obligations (FAR No. 3) and the

Agency books under General Fund (101), contrary to pertinent laws, rules and

regulations on the propriety of charges to A/P. (Observation No. 13)

We recommended that the Management require:

a. the Accountant to refrain from certifying and recording obligations to

Accounts Payable without the suppliers/creditors bills, for goods/

services/delivered/rendered; and prepare the necessary adjusting

journal entries on the noted deficiencies to exclude valid commitments

in the Accounts Payable account, instead, disclose the amount in the

Notes to F/S;

b. the Budget Officer to submit to COA a report on the “List of Not Yet

Due and Demandable Obligations” for valid commitments based on the

approved contracts/purchase orders where projects are not yet

implemented and/or goods are not yet delivered.

G. Summary of Audit Suspensions, Disallowances and Charges at Year-End

As at December 31, 2017, the PUP had a total unsettled suspensions and

disallowances of ₱282,412,195.86 and ₱197,251,658.46, respectively. In addition, audit

suspensions and disallowances prior to the effectivity of the Rules and Regulations on

Settlement of Accounts (RRSA) are continuously being monitored and enforced, pursuant

to Section 28.3 of COA Circular No. 2009-006 dated September 15, 2009 amounting to

₱1,186,507.86. Details of the suspensions and disallowances are discussed in Part II of this

report.

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H. Status of Implementations of Prior Years’ Audit Recommendations

Of the 99 audit recommendations embodied in the prior years’ AARs, 30 were

implemented, 47 were partially implemented and 22 were not implemented as shown below.

The details of prior years’ recommendations are discussed in Part III of the report.

Status of Implementation Number Percentage

Implemented 30 30

Partially Implemented 47 48

Not Implemented 22 22

Total 99 100