Republic of the Philippines COMMISSION ON AUDIT

Commonwealth Avenue, Quezon City

ANNUAL AUDIT REPORT

on the

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL

For the Year Ended December 31, 2014

i

EXECUTIVE SUMMARY

A. Introduction

The House of Representatives Electoral Tribunal (HRET) was constituted

under Section 17, Article VI of the 1987 Philippine Constitution to act as the sole

judge of all contests relating to the election, returns and qualifications of Members of

the House of Representatives. The major function of the HRET and its principal

program, project and activity is the adjudication of electoral contests involving

Members of the House of Representatives.

B. Financial Highlights

A summary of the financial position and sources and utilization of funds for

the calendar year 2014 is presented below:

The Statement of Appropriations, Allotments, Obligations, Disbursements and

Balances for calendar year 2014 is shown in Annex A.

C. Operational Highlights

The HRET reported the following accomplishments:

1. Promulgated the following decisions for cases pertaining to 2013-2016 Congressional Term:

a. HRET Case No. 13-001 (QW), Omar vs. Dimaporo, decision dated June 9, 2014

Particulars Amount

Financial Position

Assets 34,730,224.52

Liabilities 19,452,626.33

Net Assets/Equity 15,277,598.19

Sources and Application of Funds

Allotments Received 154,503,000.00

Continuing Appropriations 411,000.00

Total Allotments 154,914,000.00

Obligations Incurred 148,998,000.00

Unexpended Balance 5,916,000.00

ii

b. HRET Case No. 13-002 (EP), Rodriguez vs. Radaza, decision dated July 31, 2014

c. HRET Case No. 13-003 dated January 30, 2014, Apacible vs. Ermita-Buhain, decision dated January 30, 2014

d. HRET Case No. 13-005, Castillo vs. Revilla, decision dated June 9, 2014 e. HRET Case No. 13-007, Matillano vs. Hagedorn, decision dated January 30,

2014

f. HRET Case No. 13-009, Benaldo vs. Uy, decision dated February 27, 2014 g. HRET Case No. 13-021, Muhlach vs. Fuentebella, decision dated August 28,

2014

h. HRET Case No. 13-026, Talaga vs. Alcala, decision dated January 30, 2014 i. HRET Case No. 13-027, Matienzo vs. Reyes, decision dated January 30, 2014 j. HRET Case No. 13-029, Dumarpa vs. Adiong, decision dated May 29, 2014

2. A total of seventeen cases for the 2013-2016 congressional term have attained finality;

3. Conducted technical examination of the signatures and thumbmarks or fingerprints appearing in the Voters Registration Records and Election Day

Computerized Voters’ List pertaining to the 66 revised protested clustered

precincts;

4. Decryption of printed and ballot images of five HRET cases in the Commission on Election; and

5. Revision of ballots of six HRET cases.

D. Scope of Audit

An audit was made on the accounts and operations of the HRET for the CY

2014. The audit was aimed to ascertain the propriety of the financial transactions and

determine the fairness of the presentation of the financial statements of the agency.

E. Auditor’s Report

The Auditor rendered an unqualified opinion on the fairness of presentation of

the financial statements of HRET as of December 31, 2014.

F. Observations and Recommendations

1. Expense allowance of P312,307.08 paid to personnel detailed to two Tribunal Members were charged erroneously to Honoraria (Account Code 50102100),

instead of Other Maintenance and Operating Expenses (Account Code 50299990).

iii

Likewise, reimbursement of cervical and HPV vaccines and payment for flu

vaccines administration amounting to P9,000.00 and P31,800.00, respectively,

were charged erroneously against Office Supplies Expense (Account Code

50203010) instead of Medical, Dental and Laboratory Supplies Expenses

(Account Code 50203080).

We recommended that Management instruct the Accountant to recognize

expenses using the appropriate accounts in the Revised Chart of Accounts.

2. The House of Representatives Electoral Tribunal has no GAD Plan for CY 2014 as required under Section 33 of the General Provisions of the General

Appropriations Act (GAA) for FY 2014 and Joint Circular No. 2012-01 of the

Philippine Commission on Women (PCW), National Economic and Development

Authority and Department of Budget and Management (DBM).

We recommended that Management prepare and implement an annual GAD plan

and budget endorsed by the PCW as required in Section 8.2 of Joint Circular

2012-01.

3. The HRET reported GAD-related projects costing P450,474.47 only or 6.09 percent of the required allocation of P7,399,200.00, contrary to Section 6.1 of the

Philippine Commission on Women/National Economic and Development

Authority/Department of Budget and Management Joint Circular No. 2012-01.

We recommended and Management agreed to increase expenditures for GAD-

related projects and activities to meet the minimum amount prescribed by law.

The aforementioned observations and the corresponding recommendations were

discussed with Management during the exit conference on April 13, 2015.

Management views and comments were incorporated in the report, where appropriate.

G. Implementation of Prior Years’ Recommendations

Of the four prior years’ audit recommendations, one was implemented and three

were not implemented.

TABLE OF CONTENTS

PART PARTICULARS PAGE

I - Audited Financial Statements

Independent Auditor’s Report

1

Statement of Management’s Responsibility for

Financial Statements

3

Statement of Financial Position

4

Statement of Financial Performance

Statement of Changes in Net Assets/Equity

5

6

Statement of Cash Flows

Statement of Comparison of Budget and

Actual Amount

7

8

Notes to Financial Statements

9

II - Observations and Recommendations

19

III - Status of Implementation of Prior Years’

Audit Recommendations

24

IV - Annexes

PART I

AUDITED FINANCIAL STATEMENTS

PART II

OBSERVATIONS AND RECOMMENDATIONS

PART III

STATUS OF IMPLEMENTATION OF PRIOR

YEARS’ AUDIT RECOMMENDATIONS

PART IV

ANNEXES

Note Amount

Current Assets

Cash and Cash Equivalents 5 19,270,747.03

Receivables 6 16,240.92

Inventories 7 431,521.78

Other Assets 8 148,860.74

Total Current Assets 19,867,370.47

Non-Current Assets

Property, Plant and Equipment 9 14,838,354.05

Investments 10 24,500.00

Total Non-Current Assets 14,862,854.05

Total Assets 34,730,224.52

Current Liabilities

Financial Liabilities 11 5,257,648.46

Other Payables 12 14,194,977.87

Total Liabilities 19,452,626.33

Accumulated Surplus/(Deficit) 15,277,598.19

Total Net Assets/Equity 15,277,598.19

Total Liabilities and Net Assets/Equity 34,730,224.52

NET ASSETS/EQUITY

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL

STATEMENT OF FINANCIAL POSITION

AS OF DECEMBER 31, 2014

ASSETS

LIABILITIES

In Peso

4

Note Amount

Revenue

Service and Business Income 13 99,284.01

Total Revenue 99,284.01

Less: Current Operating Expenses

Personnel Services 14 89,263,869.84

Maintenance and Other Operating Expenses 15 58,103,088.08

Non-Cash Expenses 16 2,366,772.19

Total Current Operating Expenses 149,733,730.11

Surplus/(Deficit) from Current Operations (149,634,446.10)

Net Financial Assistance/Subsidy 17 153,047,384.72

Losses 18 (291,767.16)

Surplus/(Deficit) for the Year 3,121,171.46

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNALSTATEMENT OF FINANCIAL PERFORMANCE

REGULAR AGENCY BOOKS

For the Year Ended December 31, 2014

In Peso

5

Balance at January 1, 2014 13,041,496.69

Prior Period Adjustments/Unrecorded Income and Expenses (508,421.54)

Restated balance 12,533,075.15

Changes in net assets/equity for Calendar Year 2014

Surplus for the Year 3,121,171.46

Total recognized revenue and expense for the period 3,121,171.46

Others (376,648.42)

Balance at December 31, 2014 15,277,598.19

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL

STATEMENT OF CHANGES IN NET ASSETS/EQUITY

GENERAL FUND

Accumulated

Surplus/(Deficit)

FOR THE YEAR ENDED DECEMBER 31, 2014

In Peso

6

Note Amount

Cash Flows From Operating Activities

Cash Inflows

Receipt of Notice of Cash Allocation 143,473,000.00

Collection of Income/Revenues 92,279.53

Other Receipts 10,742,645.23

Adjustments 4,899,608.15

Total Cash Inflows 159,207,532.91

Cash Outflows

Remittance to National Treasury 376,648.42

Payment of Expenses 122,546,995.77

Purchase of Inventories 1,985,867.84

Grant of Cash Advances 6,215,324.80

Prepayments 44,160.00

Refund of Deposits 9,187,712.29

Payment of Accounts Payable 3,840,988.34

Remittance of Personnel Benefit Contributions and Mandatory Deductions 10,464,575.97

Other Disbursements 285,967.89

Reversal of Unutilized NCA 1,117,057.23

Adjustments 4,295,483.82

Total Cash Outflows 160,360,782.37 Net Cash Provided by (Used in) Operating Activities 19 (1,153,249.46)

Cash Flows from Investing Activities

Cash Inflows

Proceeds from Sale of Other Assets 31,500.00

Total Cash Inflows 31,500.00

Cash Outflows

Purchase/Construction of Property, Plant and Equipment 1,013,981.42

Total Cash Outflows 1,013,981.42

Net Cash Provided By (Used In) Investing Activities (982,481.42)

Cash Flows From Financing Activities

Cash Inflows

Total Cash Inflows -

Cash Outflows

Total Cash Outflows -

Net Cash Provided By (Used In) Financing Activities -

Increase (Decrease) in Cash and Cash Equivalents (2,135,730.88)

Cash and Cash Equivalents, January 1, 2014 21,406,477.91

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL

STATEMENT OF CASH FLOWS

GENERAL FUND

FOR THE YEAR ENDED DECEMBER 31, 2014

In Peso

7

Cash and Cash Equivalents, December 31, 2014 19,270,747.03

8

9

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL NOTES TO FINANCIAL STATEMENTS

For the Year Ended December 31, 2014

1. General/Agency Profile

1.1 The House of Representatives Electoral Tribunal (HRET) was constituted

under the 1987 Constitution (Section 17, Article VI) to act as the sole judge of

all contests relating to the election returns and qualifications of Members of

the House of Representatives.

1.2 The major function of the HRET and its principal program/project/activity is

the adjudication of electoral contests involving Members of the House of

Representatives. No target is set for the number of electoral cases to be

resolved each year because the adjudication depends upon the progress of

each proceedings strictly followed in each case.

1.3 The tribunal is composed of nine members, three of whom are Justices of the

Supreme Court and the rest are Members of the House of Representatives.

The Senior Justice acts as the Chairman. As of December 31, 2014, the

HRET has a total personnel complement of 122, composed of the following:

Permanent 76

Coterminous 46

Total 122

2. Statement of Compliance and Basis of Preparation of Financial Statements

2.1 The financial statements of the House of Representatives Electoral Tribunal (HRET) have been prepared in accordance with and comply with the

Philippine Public Sector Accounting Standards (PPSAS) issued by the

Commission on Audit per COA Resolution No. 2014-003 dated January 24,

2014.

2.2 The financial statements of the HRET have been prepared on the basis of historical cost. The Statement of Cash Flows is prepared using the direct

method.

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3. Summary of Significant Accounting Policies

3.1 Basis of Accounting

a. The Tribunal uses accrual basis of accounting for all of its income and expense accounts. All income and expense accounts are recognized when

earned or incurred, as the case maybe, and reported in the financial

statements in the period to which they relate. Income is generally

composed of filing fees, photocopying and certification charges and sale

of TSNs, HRET Rules, CDs and Reports of the Tribunal.

b. Accounts were reclassified to conform with the Revised Chart of Accounts for National Government Agencies under COA Circular No. 2013-002

dated January 30, 2013. The said conversion/reclassification was made in

order to conform with additional accounts/revised description/title of

accounts and relevant Accounting Policies and Guidelines.

3.2 Cash and Cash Equivalents

a. Cash and cash equivalents comprise cash on hand and cash in bank, deposits on call and highly liquid investments with an original maturity of

three months or less, which are readily convertible to known amounts of

cash and are subject to insignificant risk of changes in value. For the

purpose of the consolidated statement of cash flows, cash and cash

equivalents consist of cash and short-term deposits, net of outstanding

bank overdrafts.

b. Petty Cash Fund (PCF) account is maintained under the Imprest System. All replenishments are directly charged to the expense account. The PCF

is not used to purchase regular inventory items for stock.

3.3 Inventories

a. Inventory is measured at cost upon initial recognition. To the extent that inventory was received through non-exchange transactions, the cost of the

inventory is its fair value at the date of acquisition.

b. After initial recognition, inventory is measured at the lower of cost and net realizable value. However, to the extent that a class of inventory is

distributed or deployed at no charge or for a nominal charge, that class of

inventory is measured at the lower of cost and current replacement cost.

c. Net realizable value is the estimated selling price in the ordinary course of operations, less the estimated costs of completion and the estimated costs

necessary to make the sale, exchange, or distribution.

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d. Inventories are recognized as an expense when deployed for utilization or consumption in the ordinary course of operations of the agency.

e. Supplies and materials purchased for inventory purposes are recorded using the Perpetual Inventory System.

3.4 Property, Plant and Equipment (PPE)

a. PPE are carried at cost less accumulated depreciation. Regular maintenance, repairs and minor replacements are charged against the

respective Maintenance Expense accounts of each type of Property and

Equipment.

b. An item is recognized as PPE if it meets the characteristic and recognition criteria as a PPE. A PPE acquired through non-exchange transaction is

measured at its fair value as at the date of acquisition.

3.5 Payable Accounts

a. Payable accounts are recognized and recorded in the books of accounts only upon acceptance of the goods/inventory/other assets and rendition of

services to the agency.

3.6 Budget Information

a. The annual budget is prepared on a cash basis and is published in the government website. As a result of the adoption of the cash basis for

budgeting purposes, a separate Statement of Comparison of Budget and

Actual Amounts is presented showing the basis, timing or entity

differences.

3.7 Employees Benefits

a. The employees of HRET are members of the Government Service Insurance System (GSIS), which provides life and retirement insurance

coverage.

b. The HRET recognizes the undiscounted amount of short term employee benefits, like salaries, wages, bonuses, allowances, etc., as expense unless

capitalized, and as a liability after deducting the amount paid.

c. The HRET recognizes expenses for accumulating compensated absences when these are paid (commuted or paid as terminal leave benefits).

Unused entitlements that have accumulated at the reporting date are not

recognized as expense. Non-accumulating compensated absences, like

special leave privileges, are not recognized.

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4. Changes in Accounting Policies

4.1 On January 1, 2014, the HRET adopted the Philippine Public Sector Accounting Standards (PPSAS), which replaced the existing standard. The

new standard includes the requirement for recognition, measurement,

presentation and disclosure of financial statements.

4.2 The HRET recognizes the effects of changes in accounting estimates prospectively by including in surplus or deficit.

5. Cash and Cash Equivalents

5.1 This account consists of:

Petty Cash Fund P 57,742.40

Cash-in-Bank-Local, Currency, CA 14,313,396.48

Cash–Modified Disbursement System, Regular 4,899,608.15

Total P19,270,747.03

5.2 Cash-in-Bank - Local Currency, Current account amounting to P14,313,396.48 is maintained at the Land Bank of the Philippines–COA Branch. This

represents the deposits made by the Protestants and Protestees who are parties

to electoral cases for expenses incidental to the adjudication of their cases,

which are held-in-trust by the Tribunal.

5.3 Cash-Modified Disbursement System, Regular account amounting to P4,899,608.15 represents the balance of the restored cash equivalent of all

unreleased MDS checks as of December 31, 2014. The said restoration is in

compliance with COA GAFMIS Circular Letter No. 2002-001 dated December

16, 2002, in which all unreleased checks as of December 31, 2014 were

restored in the Cash – National Treasury, MDS account and the appropriate

payable/liability account was recognized under a Journal Entry Voucher (JEV).

However, in the ensuing year, a JEV shall be prepared to reverse the journal

entry made by debiting the appropriate payable/liability account and crediting

the Cash-National Treasury, MDS account. The said MDS account is

maintained at the Landbank-COA Branch.

6. Receivables

This account consists of Due from NGAs amounting to P16,240.92 which

represents prepayments made to the Procurement Service for various office supplies.

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7. Inventories

This pertains to Office Supplies Inventory which are held for consumption,

details summarized as follows:

Carrying amount, January 1, 2014 P 559,603.42

Purchases for the year 1,180,554.30

Expensed during the year except write-down (1,308,635.94)

Carrying amount, December 31, 2014 P 431,521.78

8. Other Assets

8.1. This account consists of:

8.2. The Advances account consists of:

Advances to Special Disbursing Officers P 8,218.58

Advances to Officers and Employees 79,912.41

Total P 88,130.99

8.3. The Advances to Special Disbursing Officers account represents cash advances for special purpose/time-bound undertakings. The remaining

balance of P8,218.58 pertains to excess of cash advances granted over

expenses incurred. The said amount has already been returned in January and

February, 2015 covered by various Official Receipts.

8.4. The Advances to Officers and Employees account represents the amounts advanced to officers and employees for official travel. The remaining balance

of P79,912.41 pertains to excess of cash advances granted over expenses

incurred. The said amount has already been returned in 2015 covered by

various Official Receipts.

8.5. Prepayments in the amount of P5,520.00 pertain to Other Prepayments account which represents balance of the prepayments made to Central Book

Supply, Inc. for Supreme Court Reports Annotated (SCRA) Volumes 722 up

to 724 which were not yet delivered as of December 31, 2014. The said books

were delivered under Charge Invoice Nos. 127828 dated January 13, 2015 and

128026 dated January 26, 2015 in the amounts of P3,680.00 and P1,840.00,

respectively.

Advances P 88,130.99

Prepayments 5,520.00

Deposits 55,209.75

Total P 148,860.74

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8.6. The Guaranty Deposits account amounting to P55,209.75 consists of deposits for telephone lines (PLDT), water lines (MWSS) and cellular phones.

9. Property, Plant and Equipment

9.1 This account consists of:

Account Description

Amount

Accumulated

Depreciation

Net Book Value

Office Equipment P 4,942,137.90 P 3,934,263.68 P 1,007,874.22

Information and Communication

Technology Equipment

8,559,354.40 5,313,445.28 3,245,909.12

Communication Equipment 1,081,127.92 712,821.80 368,306.12

Disaster Response and Rescue Equipment 105,902.85 88,573.51 17,329.34

Other Machinery and Equipment 20,992.20 18,893.00 2,099.20

Motor Vehicles 8,856,142.17 2,100,416.69 6,755,725.48

Furniture and Fixtures 3,370,751.15 2,427,530.91 943,220.24

Books 1,225,612.40 997,547.76 228,064.64

Leased Assets Improvements, Building 3,589,274.21 1,319,448.52 2,269,825.69

Total P31,751,295.20 P16,912,941.15 P14,838,354.05

9.2 The Leased Assets Improvements, Building account pertains to the cost of improvements made to the COA-NCR Building which is subject to a Lease

Agreement with the Commission on Audit together with the Senate Electoral

Tribunal.

10. Investments

This account represents Investment in Stocks with PLDT with carrying

amount of P24,500.00.

11. Financial Liabilities

a. This account consists of:

Accounts Payables P5,236,648.46

Guaranty/Security Deposits Payable 21,000.00

Total P5,257,648.46

b. The Accounts Payable represents obligations to various suppliers arising from the purchase of goods and services and other obligations in connection

with the Tribunal’s operations. As of December 31, 2014, the balance

includes the amount of P261,371.47 which represents various accruals made

on services rendered which remained unpaid as of December 31, 2014. Also

included in the balance of Accounts Payable Account is the restored cash

15

equivalent of various unreleased checks drawn from the Cash-Modified

Disbursement System, Regular Account amounting to P4,899,608.15. The

remaining balance of P48,656.27 represents various outstanding accounts

payable which were set-up in 2014.

c. The Trust Liabilities account pertains to Guaranty/Security Deposits Payable amounting to P21,000.00. This represents the Performance Bond paid by the

House of Representatives Electoral Tribunal-Employees Cooperative in

compliance with the Photocopying Service Agreement.

12. Other Payables

The Other Payables account amounting to P14,194,977.87 pertains to the cash

deposits made by various Protestants and Protestees for expenses to be incurred in

connection with the adjudication of their cases filed with the Tribunal.

13. Revenue

13.1. Total Revenue for the year consists of the following:

Other Service Income P51,946.72

Interest Income 47,337.29

Total P99,284.01

13.2. The Other Service Income is composed of the following:

Filing Fee P30,000.00

Sale of Valueless Records 8,984.22

HRET Rules 5,900.00

Certified True Copy 3,300.00

Certification 2,070.00

Stenographic Notes 1,642.50

Research Fee 50.00

Total P51,946.72

13.3. Interest Income amounting to P47,337.29 pertains to the interest earned from the Current Account maintained at the Landbank-COA Branch.

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14. Personnel Services (PS)

Personnel Services is composed of the following:

Salaries and Wages

Salaries and Wages - Regular P47,932,194.09

Other Compensation 16,883,297.47

Personnel Economic Relief Allowance (PERA) 2,932,841.84

Representation Allowance (RA) 2,955,112.91

Transportation Allowance (TA) 4,812,112.90

Clothing/Uniform Allowance 590,000.00

Productivity Incentive Allowance 459,000.00

Honoraria 525,800.00

Year End Bonus 3,993,304.82

Cash Gift 615,125.00

Personnel Benefit Contributions 6,414,825.62

Retirement and Life Insurance Premiums 5,660,113.12

Pag-IBIG Contributions 146,100.00

PhilHealth Contributions 462,512.50

Employees Compensation Insurance Premiums 146,100.00

Other Personnel Benefits 18,033,552.66

Terminal Leave Benefits 391,744.46

Other Personnel Benefits 17,641,808.20

Total PS P89,263,869.84

15. Maintenance and Other Operating Expenses (MOOE)

MOOE is composed of the following:

Travelling Expenses P3,664,889.44

Travelling Expenses - Local 1,627,388.97

Travelling Expenses - Foreign 2,037,500.47

Training and Scholarship Expenses

Training Expenses 2,219,244.50

Supplies and Material Expenses 3,442,766.82

Office Supplies Expenses 2,912,972.53

Accountable Forms Expenses 5,500.00

Non-Accountable Forms Expenses 110.00

Fuel, Oil and Lubricants Expenses 523,811.79

Other Supplies and Materials Expenses 372.50

Utility Expenses 2,662,661.05

Water Expenses 216,354.61

Electricity Expenses 2,446,306.44

17

Communication Expenses 2,480,460.04

Postage and Courier Expenses 42,790.00

Telephone Expenses 1,980,610.04

Internet Subscription Expenses 457,060.00

Confidential, Intelligence and Extraordinary Expenses

Extraordinary and Miscellaneous Expenses 4,887,965.41

Professional Services 4,978,886.33

Legal Services 500.00

Consultancy Services 4,978,386.33

General Services 2,685,669.04

Janitorial Services 1,509,461.08

Security Services 1,176,207.96

Repairs and Maintenance 425,158.58

Repairs and Maintenance - Machinery and Equipment 202,518.41

Repairs and Maintenance - Transportation Equipment 122,074.42

Repairs and Maintenance - Furniture and Fixtures 2,500.00

Repairs and Maintenance - Leased Assets

Improvements, Bldg. 98,065.75

Taxes, Insurance Premiums and Other Fees 204,091.47

Taxes, Duties and Licenses 2,579.06

Fidelity Bond Premiums 116,625.00

Insurance Expenses 84,887.41

Other Maintenance and Operating Expenses 30,451,295.40

Representation Expenses 5,035,195.29

Rent/Lease Expenses 1,247,662.37

Subscription Expenses 92,268.00

Other Maintenance and Operating Expenses 24,076,169.74

Total MOOE P 58,103,088.08

16. Non-Cash Expenses

This consists of the following:

Depreciation-Machinery and Equipment P 993,389.47

Depreciation-Transportation Equipment 901,832.29

Depreciation-Furniture, Fixtures and Books 148,515.75

Depreciation-Leased Assets Improvements Building 323,034.68

Total P2,366,772.19

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17. Net Financial Assistance/Subsidy

This consists of the Subsidy from the National Government, as follows:

NCA received from DBM for the payment of expenses for

the Tribunal’s operational requirements and various

accounts payable incurred in operations

P143,473,000.00

Reversion of unutilized NCA (1,117,057.23)

Tax Remittance Advice (TRA) issued to BIR 10,691,441.95

Total P153,047,384.72

18. Loss on Sale of Assets

The Loss on Sale of Assets of P291,767.16 pertains to the difference between the

selling price or the proceeds from sale of unserviceable properties totaling

P31,500.00 and the carrying amount of these properties of P323,267.16.

19. Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)

Surplus/Deficit for the year 3,121,171.46

Add/(Deduct) Non-Cash Movements:

Depreciation 2,366,772.19

Increase/(Decrease) in Payables (6,976,967.21)

(Gain)/Loss on sale or property, plant and

equipment

291,767.16

(Increase)/Decrease in other current assets 123,343.04

(Increase)/Decrease in receivables (79,336.10)

Net Cash Flows from Operating Activities (1,153,249.46)

19

OBSERVATIONS AND RECOMMENDATIONS

Erroneous charging of expenses

1. Expense allowance of P312,307.08 paid to personnel detailed to two Tribunal Members were charged erroneously to Honoraria (Account Code 50102100),

instead of Other Maintenance and Operating Expenses (Account Code

50299990). Likewise, reimbursement of cervical and HPV vaccines and

payment for flu vaccines administration amounting to P9,000.00 and

P31,800.00, respectively, were charged erroneously against Office Supplies

Expense (Account Code 50203010) instead of Medical, Dental and Laboratory

Supplies Expenses (Account Code 50203080).

1.1 Section 18 of the General Provisions of the GAA for FY 2014 states that, “Use of Government Funds. Government funds shall be utilized in

accordance with the appropriations authorized for the purpose.”

Expense allowance charged erroneously to Honoraria

1.2 Section 53 of the same General Provisions states:

“Honoraria. The respective agency appropriations for honoraria

shall only be paid to the following:

(a) Teaching personnel of the DepEd, TESDA, x x x .

(b) Those who act as lecturers, resource persons, coordinators and facilitators in seminars, training programs, and other similar

activities in training institutions, including those conducted by

agencies for their officials and employees wherein no seminar

fees are collected from participants;

(c) Chairs and members of commissions, boards, councils, and other similar entities, including personnel thereof who are not paid

salaries nor per diems but compensated in the form of honoraria

as provided by law, rules and regulations;

(d) Those who are involved in science and technological activities and render services beyond their regular workload;

(e) Officials and employees assigned to special projects, xxx.

20

(f) Officials and employees authorized to received honoraria under

RA No. 9184 and its IRR.”

1.3 Review and verification of the transactions for CY 2014 showed that the following personnel detailed to two Tribunal Members claimed expense

allowance at the rate stated opposite their names. The expense allowance is in

the form of a compensation in lieu of services rendered, for these personnel

are not included in the payroll of co-terminous employees:

Name

Rate for the

Month of

Jan. to Dec.

Rate for the

Month of Jan.

to Sept.

Rate for the

Month of Oct.

to Dec.

Staff of Justice Diosdado Peralta

1. Flor Madarang 5,000.00

2. Flerida Lim 5,000.00

3. Arnel Gacayan 5,000.00

Staff of Justice Lucas Bersamin

1. Erlano Ruiz 4,500.00 4,500.00

2. Donald Edralin Nonato 2,500.00 2,500.00

3. Ramon Nicolei Ramos 2,000.00 2,500.00

4. Ara Janica Austria 2,000.00 2,500.00

5. Alan H. Dalisay 2,000.00 2,500.00

6. Santa Carolina Bersamin 2,000.00 2,500.00

1.4 Payments were made in favor of these personnel as shown in Annex B. The schedule showed that the nine detailed personnel claimed a total of

P312,307.08 for the period January to December 2014 which were charged

erroneously against Honoraria (Account Code 50102100), in violation of

Section 53 of the General Provisions of GAA.

1.5 As a result, expenditure for the Honoraria is overstated by P312,307.08 and Other Maintenance and Operating Expenses is understated by the same

amount.

Vaccine expenses charged erroneously to Office Supplies Expense

1.6 Review and evaluation of the disbursement vouchers for the months of October and December 2014 showed that the following were charged

erroneously to Office Supplies Expense instead of Medical, Dental and

Laboratory Supplies Expenses:

C H E C K

Particulars Date No. Amount Payee

10/01/14 260738 31,800.00 Uni-Vax Medical and Equipment Supplies

Payment for flu vaccine administration for 100 personnel at P336.00 per dose

12/17/14 261180 9,000.00 Atty. Girlie I. Salarda Reimbursement of cervical and HPV vaccine

Total 40,800.00

21

1.7 As a result of the erroneous charging of the expenses, there was an overstatement of the Office Supplies Expenses by P40,800.00 and

understatement of Medical, Dental and Laboratory Supplies Expenses by the

same amount.

1.8 We recommended that Management instruct the Accountant to recognize expenses using the appropriate accounts in the Revised Chart of

Accounts.

1.9 Management commented that they will comply with the recommendation and that they will take the necessary steps to prevent the occurrence of a similar

situation in the future.

2. Status of Audit Suspensions, Disallowances and Charges (SASDC)

2.1 There was no Audit Suspension and Disallowances for CY 2014 and there is no unsettled audit suspension, disallowance and charges in prior years.

3. Gender and Development (GAD)

3.1 The House of Representatives Electoral Tribunal has no GAD Plan for CY 2014 as required under Section 33 of the General Provisions of the

General Appropriations Act (GAA) for FY 2014 and Joint Circular No.

2012-01 of the Philippine Commission on Women (PCW), National

Economic and Development Authority and Department of Budget and

Management (DBM).

3.2 Section 33 of the General Provisions of GAA for FY 2014 states that, “All agencies of the government shall formulate a Gender and Development

(GAD) Plan designed to address gender issues within their concerned sectors

or mandate and implement applicable provisions under R.A. No. 9710 or the

Magna Carta of Women, Convention on the Elimination of All Forms of

Discrimination Against Women, the Beijing Platform for Action, the

Millennium Development Goals (2000-2015), the Philippine Plan for

Gender-Responsive Development (1995-2025), and the Philippine

Development Plan (2011-2016).” The GAD plan shall be integrated in the

regular activities of the agencies, which shall be at least five percent of their

budget.

3.3 Further, Section 8.2 of Joint Circular 2012-01 of the PCW/NEDA/DBM states that, “The GFPS of the agency shall review all submitted GPBs and as

needed, provide comments or recommendations for revision. Agency review

22

of GPBs shall focus on the alignment of the GAD plan with the GAD agenda

and the correctness and alignment of the entries in each column of the GPB

template, e. g. if the proposed activities respond to the identified gender issue

or cause of the issue, the issues are correctly identified or formulated, if

there are clear indicators and targets, if the proposed budget is realistic, if

the number of proposed activities are doable within the year, among others.

The GFPS shall then submit the final GPBs and the corresponding GAD ARs

to PCW for review and endorsement to DBM.”

3.4 It was observed that for CY 2014, Management did not have a GAD Plan and

Budget which was supposed to be endorsed by the Philippine Commission on

Women (PCW). Management admitted such lapse in their letter dated March

6, 2014 to the Supervising Auditor.

3.5 Due to the absence of a GAD plan and budget, Management was not guided as to which GAD-related projects and activities were to be funded and

implemented. Without this plan, the Audit Team found it difficult to

evaluate and determine if the projects stated in the HRET’s accomplishment

report were GAD-related.

3.6 We recommended that Management prepare and implement an annual GAD plan and budget endorsed by the PCW as required in Section 8.2

of Joint Circular 2012-01.

3.7 Management commented that in acknowledgement of the said deficiency, all the members of the GAD Focal Point System, which include both the

Executive Committee and the GAD Technical Working Group, underwent

several trainings starting 2013 in order to secure the endorsement of the PCW

for their GAD Plan and Budget for CY 2015. Further, Management

commented that they were nonetheless guided by RA No. 9710, otherwise

known as the Magna Carta of Women, and its Implementing Rules in

determining which projects and activities were GAD-related and thus the

expenses of which may be attributed to GAD.

3.8 The HRET reported GAD-related projects costing P450,474.47 only or 6.09 percent of the required allocation of P7,399,200.00, contrary to

Section 6.1 of the Philippine Commission on Women/National Economic

and Development Authority/Department of Budget and Management

Joint Circular No. 2012-01.

3.9 Section 6.1 of Joint Circular 2012-01 states that, “At least five percent (5%) of the total agency budget appropriations authorized under the annual GAA

shall correspond to activities supporting GAD plans and programs. The

GAD budget shall be drawn from the agency’s maintenance and other

operating expenses (MOOE), capital outlay (CO), and personal services

(PS).”

23

3.10 The HRET had a total appropriations of P147,984,000.00 for CY 2014, of which five per cent or P7,399,200.00 was authorized for GAD activities.

Although HRET had no GAD plan, its GAD accomplishment report showed

a total actual cost of P450,474.47, or only 6.09 per cent of the required

budget of P7,399,200.00.

3.11 We recommended and Management agreed to increase expenditures for GAD-related projects and activities to meet the minimum amount

prescribed by law.

3.12 Management commented that they will continue to endeavor to comply with the adverted provisions of Section 33 of the General Provisions of the 2014

GAA and Joint Circular 2012-01 and increase the expenses for GAD-related

projects and activities.

4. Compliance with Tax Laws and Regulations

4.1 In compliance with DOF-DBM-COA Joint Circular 1-200 dated January 3, 2000 and Presidential Memorandum Order No. 219 dated February 13, 1989,

taxes withheld from 2014 disbursements were remitted to the Bureau of

Internal Revenue (BIR) on or before due dates. The total taxes remitted to

BIR amounting to P10,714,740.20 consist of taxes withheld from salaries and

expanded and final taxes withheld from payment of goods and services.

Month

Date

Remitted

Taxes Withheld

Total

Compensation

Purchase of

Goods and

Services

January 2/4/2014 P 704,744.61 P 15,697.58 P 720,442.19

February 3/6/2014 712,090.50 77,097.90 789,188.40

March 4/3/2014 701,055.31 84,520.15 785,575.46

April 5/6/2014 704,147.58 273,003.26 977,150.84

May 6/2/2014 692,068.02 78,825.56 770,893.58

June 7/2/2014 692,537.97 108,832.33 801,370.30

July 8/5/2014 722,148.63 55,669.38 777,818.01

August 9/3/2014 1,828,485.37 66,357.50 1,894,842.87

September 10/3/2014 751,819.04 76,345.22 828,164.26

October 11/6/2014 751,965.05 64,092.77 816,057.82

November 12/3/2014 715,698.10 76,075.98 791,774.08

December 1/5/2015 635,124.37 126,338.02 761,462.39

Total P9,611,884.55 P1,102,855.65 P10,714,740.20

24

5. Compliance with GSIS Premium Deductions and Remittances (RA 8291)

5.1 GSIS Social Insurance and Employees Compensation Fund (SIF and ECIF) premiums were deducted from the salaries of employees and remitted on time

to the GSIS.

6. Compliance with PDAF Decision

6.1 The HRET did not receive funds from the Priority Development Assistance Fund (PDAF) for the calendar year 2014.

7. Disbursement Acceleration Program (DAP)

7.1 The HRET did not receive allotment for the DAP for CY 2014.

25

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Of the four prior years’ audit recommendations, one was implemented and three

were not implemented.

Observations and

Recommendations

Reference

AAR

Page No.

Actions Taken by

Management

Auditor’s

Validation

Results

2013

Management failed to

furnish the Office of the

Auditor copy of purchase

orders within five (5)

working days from issuance

thereof contrary to COA

Circular No. 2009-001

dated February 12, 2009.

We recommended that

Management require the

officials concerned to

comply with COA Circular

No. 2009-001 on the

submission of a copy of

purchase order issued

within the reglementary

period.

16-17

Implemented

Purchase Orders

(POs) and Job

Orders (JOs)

were religiously

forwarded to the

Office of the

Auditor.

POs and JOs

were submitted

within 5 days

after receipt of

the supplier/s.

26

Observations and

Recommendations

Reference

AAR

Page No.

Actions Taken by

Management

Auditor’s

Validation

Results

2012

1. The agency had no programs/projects

related to senior citizens

and the differently-

abled persons and did

not allocate at least one

per cent of its budget as

required under Section

29 of the General

Provisions of R.A. No.

10155, GAA for CY

2012.

We recommended that

Management prepare

programs/projects

related to the senior

citizens and differently-

abled persons and

allocate at least one

percent (1%) of its

budget as required in

the GAA provision

2011

1. Management was still using the traditional cash

payroll scheme in paying

the salaries, allowances

and other personnel

benefits of its officers

and employees instead of

the automated payroll-

thru-bank system, thus,

incurring unnecessary

manpower resources and

exposing payroll money

to risks of losses through

theft or robbery.

20-21

Not implemented

Management had

instructed

the General

Service to

complete the plan

for the project as

soon as possible,

so that the

necessary budget

be allocated for

the purpose.

Not implemented

The HRET has

only 127

employees and

payment of

salaries,

allowances and

other personnel

benefits is more

convenient using

the traditional

cash payroll

scheme.

Management did

not prepare

plans/projects

related to the

senior citizens

and differently-

abled persons,

hence no

disbursement

was made.

Management

contended that

using the

Automated Bank

Scheme would

entail much

time queuing at

the bank. And

if they use such

scheme,

employees

assigned at the

Cash Manage-

ment Service

will have no

27

Observations and

Recommendations

Reference

AAR

Page No.

Actions Taken by

Management

Auditor’s

Validation

Results

We recommended that

Management consider

adopting payment of

salaries thru automated

bank scheme to

strengthen internal

control on cash and to

promote operational

efficiency. Initiate

arrangements/coordinate

with government

depository bank to

implement the payroll

thru ATM.

2. The agency has not created an Internal Audit

Service/Unit contrary to

Administrative Order

Nos. 278 and 70 dated

April 28, 1992 and April

14, 2003, respectively.

We reiterated our

previous

recommendation that

Management organize an

IAS pursuant to

Administrative Order

Nos. 278 and 70.

Otherwise, Management

should request an

exemption from the

application of these

regulations.

21

Not implemented

In compliance

with the pro-

vision of Admi-

nistrative Order

Nos. 278 and 70,

the Tribunal will

create an IAS to

be supervised by

the Section Chief

of the Accounting

Service, who will

be relieved of her

work in the

Processing Unit.

more duties to

perform.

Moreover, their

depository bank

is very near the

HRET.

Management is

considering im-

plementing the

recommendation

in the future.