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Introduction
On October 8, 1979, PD No. 1645 amended certain provisions of PD Nos. 269 and
1370 and raised NEAs authorized capital stock to PhP5 Billion and expanded its functions
to include the development of mini-hydro and dendro thermal projects.
On June 8, 2001, RA No. 9136, better known as the Electric Power Industry Reform
Act (EPIRA) of 2001, was enacted. Section 58 of the said law gave NEA an additional
mandate as follows:
c. To review and upgrade regulatory policies with a view to enhancing the viability of
the electric cooperatives, as electric utilities.
d. Furthermore, the EPIRA had increased NEAs authorized capital from PhP5 Billion to
PhP15 Billion. However, as of December 31, 2012, no additional subscription was
made by the National Government.
Administrative Order (AO) No. 112 dated December 7, 2004 directed the NEA to take
full and sole authority and responsibility in the conversion of electric cooperatives into stock
cooperatives. Pursuant to the AO, the NEA Board of Administrators promulgated the
Guidelines in the Conduct of ECs Referendum (GCECR) to convert into either stock
cooperative under the Cooperative Development Authority or stock corporation under the
Securities and Exchange Commission.
Scope of Audit
The audit covered the examination of accounts and operations of the Agency for
calendar year 2012. It also included the verification of the Agencys compliance with
existing laws, rules and regulations and review of financial statements and reports to
ascertain the fairness and reliability of the Agencys financial position and its financial
performance.
i
The audit also covered the review and examination of the records and documents
pertaining to the utilization of subsidy fund releases amounting to P983,917,385.21,
composed of Regular Subsidy of P257,472,108.71; Priority Development Assistance
Fund (PDAF) P37,712,143.64; Calamity Assistance Rehabilitation Effort (CARE)
P82,515,455.57; Barangay/Sitio Electrification Project (BLEP/SEP) P104,714,475.06;
Pantawid Kuryente Katas ng Vat (PKKV) P480,918,500.00 and Expanded Rural
Electrification Program (EREP) P20,584,702.23 to selected Electric Cooperatives (ECs)
and to determine whether the government funds were utilized in accordance with the
Memorandum of Agreement signed between the Agency and the ECs. The audit was
also done to ascertain whether the subsidies were utilized with due regard to economy,
efficiency and established policy and the effectiveness of the electrification projects was
in line with the attainment of the Agencys objectives.
Shown below are the comparative financial position and financial performance of
NEA for CY 2012 and CY 2011.
Budget Utilization
Expenditures
COB Balance
Disbursement
PS 207,664,000 204,671,301 2,992,699
MOOE 3,701,328,000 117,623,023 3,583,704,977
CO 4,746,522,000 12,503,419 4,734,018,581
TOTAL 8,655,514,000 334,797,743 8,320,716,257
COA Audit Team Composition
ii
The NEA was audited by 2 Teams under CGS Cluster 3- Public Utilities, Audit
Group E headed by Ms. Marlyn V. Balazon, State Auditor IV and OIC-Supervising
Auditor. The Audit Team was composed of the following.
Name/Position Designation
Marlyn V. Balazon, SAIV Audit Team Leader, Team 1 Financial and Compliance
Editha L. Galvez, SA III Audit Team Member Team 1 Financial and compliance
Herminio P. Peguerra, SA II Audit Team Member Team 1 Financial and compliance
Cecilia M. Morales, Sa II Audit Team Member Team 1 Financial and compliance
Maria Paulina P. Cordero, SA I Audit Team Member Team 1 Financial and compliance
Elizabeth A. Martelino, SA IV Audit Team Leader, Team 2 NEA Subsidy/APU
Cynthia L. Florida, SA III Audit Team Member, Team 2 NEA Subsidy/APU
Ricardo M. Jacobo, SA II Audit Team Member, Team 2 NEA Subsidy/APU
Angelica B. Gaerlan, SA II Audit Team Member, Team 2 NEA Subsidy/APU
Audit Opinion
We recommended that NEA ensure that all the requirements for the smooth
implementation of subsidy-funded projects have been complied with or
secured by the electric cooperatives before releasing any subsidy fund.
We also recommend regular and close coordination with the local government
units to address all the anticipated problems in the project implementation.
iii
3. Repeated cases of project implementation by electric cooperatives prior to receipt of
subsidy fund from NEA.
7. Project cost based on the As built staking sheet per liquidation report lower than
the evaluated cost of NEA.
For the subject projects, we recommend that Management require post facto
approval by the PDAF proponent of the changes in project implementation; and
require SORECO II to return the amount of P190,476 unless the ownership has
been transferred to its name.
iv
10. Some recipients of PKKV Subsidy not residential consumers
11. Procurement of Private Health Care Services for NEA Personnel for CY 2012 in
violation of COA Resolution No. 2005-001.
We recommended that Management seek post facto approval from the Office
of the President. Non-submission thereof will cause the issuance of the
necessary Notice of Disallowance which may be appealed pursuant to Rule IV,
Section 4 of the Revised 2009 Rules of Procedure of COA.
On the other hand, we will seek clarification from the DBM of the Health Care
Insurance which was claimed to have approved the same notwithstanding the
prohibition under COA Resolution No. 2005-001.
Beginning Ending
Audit
Balance Issued Settled Balance
Action
Jan. 1, 2012 Dec.31, 2012
Suspensions - 2,241,878.50 2,234,508.50 7,370.00
Disallowances 59,604.71 25,850.27 29,752.47 55,702.51
Charges - - - -
TOTAL 59,604.71 2,267,728.77 2,264,260.97 63,072.51
Partially Not
Agency Implemented Implemented Implemented Total
NEA 8 7 - 15