Republic of the Philippines

COMMISSION ON AUDIT
National Government Sector
Cluster 5 – Education and Employment
Audit Group A, Team 14A, DepEd Division of Isabela
Ilagan City, Isabela

December 22, 2017

MS. ANGELES A. MARALLAG

State Auditor IV
OIC Regional Supervising Auditor
Cluster 5- National Government Sector
Tuguegarao City, Cagayan

Madam:

We submit the Cash Examination Report conducted on the cash and accounts of
Mr. Felymar G. Domingo, Disbursing Officer/Cashier of Mabini National High School at
Gamu, Isabela on November 22, 2017.

The attached report consists of three (3) parts: Part I – Introduction; Part II – Findings
and Recommendations; and Part III – Annexes.

Our examination disclosed no shortage nor overage incurred by the Accountable

Officer. However, in the course of audit, we have noted deficiencies and made
recommendations thereto.

Very truly yours,

ELMER H. DAUIGOY
State Auditor III
OIC Audit Team Leader
 PART I – INTRODUCTION

AGENCY BACKGROUND

Mabini National High School, formerly Mabini Barangay High School was
established in 1968 through the initiative of Barangay Council of Mabini headed by ex-
Barrio Captain Caesar Manuel, who later was elected as Vice Mayor with Barangay Auditor
ex-Mayor Jose Valeros Uy. It was also recognized as Barangay Palayan School because
parents, through the unified effort of school administration and barangay council,
collaboratively joined the Bayanihan farming force for the remuneration of volunteer
teachers.

The school was renamed Mabini National High School under RA 6054 and by virtue
of nationalization, the school was incorporated in the General Appropriation Act of 1991
sponsored by former Congressman Simpliciano Domingo Jr, of the 2nd District of Isabela.

At present it is headed by Ms. Myline J. Respcio, Head Teacher. For S.Y 2017-2018,
six hundred sixty-eight were enrolled in the school.

SCOPE OF AUDIT

Examination was conducted on the cash and accounts of

Mr. Felymar G. Domingo, Disbursing Officer/Cashier of Mabini National High School at
Gamu, Isabela on November 22, 2017.

The cash examination aims to:

(a) establish the actual existence of cash in the custody of the Accountable Officer as
well as the validity of the cash items presented;
(b) determine whether all monies received had been correctly recorded and fully
accounted for in accordance with laws, rules and regulations;
(c) ascertain whether disbursements are actually paid and properly recorded;
(d) prove the accuracy of the cash balance; and
(e) verify if accountable forms are duly accounted for.
 PART II – FINDINGS AND RECOMMENDATIONS

1. The Accountable Officer was not bonded contrary to Section 101 of the Government
Auditing Code of the Philippines (PD 1445) and Treasury Circular No. 02-2009
dated August 6, 2009, thus the agency is not ensured of cost recovery in the event of
defalcations, shortages and unrelieved losses.

Section 101 of PD 1445 requires that:

“Every officer in any government agency who is authorized and accountable
for the possession or custody of government funds or property shall be
properly bonded in accordance with law.”

Furthermore, Section 4.9 of Treasury Circular No. 02-009, prescribed the extent of
liability and condition of bond and provides that a public officer whose fidelity is
insured in the Fidelity Fund shall, from the moment he assumes the duties of the
office, is considered bonded to the government for the faithful performance of all
duties imposed upon him by law, and for the faithful accounting of all funds and
public properties coming into his possession, custody or control by appropriation,
collection, transfer or otherwise, as well as for the lawful payment, disbursement and
expenditure or transfer of all such funds or public properties in his custody,
possession or under his control as accountable or responsible officer. The Fidelity
Fund shall be available for the purpose of replacing defalcations, shortages,
unrelieved losses in the accounts of bonded public officers, for the payment of fees
and costs incident to civil proceedings brought against them to recover sums paid on
their account from said fund.

Examination conducted on the cash and accounts of the Accountable Officer on

November 22, 2017 disclosed that her bond has already expired on July 26, 2017. Also,
analysis of his cash advances for the period from November 9, 2016 to November 22, 2017
showed total cash advances of P 341,446.17 which necessitates timely renewal of his fidelity
bond.

Non-renewal of bond deprives the agency of the benefit of recovery in cases of

defalcations, shortages and unrelieved losses granted on the above- mentioned Treasury
Circular.

We recommended that Management instruct the personnel in-charge of the bond

application of her/his duty to ensure that all Accountable Officers be properly bonded
and if their bonds have already expired, application for their renewal should be
processed immediately.

2. The cashbook maintained by the Accountable Officer (AO) for cash advances is not
updated contrary to Section 181 (b) of GAAM Volume I, resulting in the delay in the
conduct of the cash examination.
Section 181 (b) of GAAM Volume I provides that:
 “xxx. The AO shall record the transactions in the prescribed cashbook daily.
He may record each invoice/receipt/voucher individually or the total
disbursements for the day depending on the volume of the transactions.”

During the cash examination, it was observed that the AO failed to record daily
transactions and closed the cashbook for cash advances at the end of the day. During the
conduct of the cash examination, the AO was still updating the record for the transactions of
previous months. The delay in recording likewise delayed the examination of cash
accountability. The last entry in his cashbook during the conduct of cash examination was
November 8, 2016, the date of last cash examination.

Hence, the ending balance of cash accountability in the cashbook at the time of the
cash examination could not be readily established which resulted in the delay of submission
of the cash examination report. The AO was instructed to update his cashbook to properly
establish the amount of his cash accountability as of the date of cash examination.

We recommended that Management require the Cashier/Disbursing Officer to

maintain updated cashbooks that is, each transaction be recorded upon occurrence and
cashbook should be balanced, ruled and closed after every transaction.

3. Liquidation Reports on cash advances granted to the Accountable Officer were not
submitted to the Office of the Auditor within the required period provided by COA
Circular No. 97-002 dated February 10, 1997 resulting in delay in the completion of
the Cash Examination Report and casting doubt on the proper utilization of
amounts advanced.

COA Circular No. 97-002 dated February 10, 1997 provides the following:
5.1 “The AO shall liquidate his cash advance as follows: 5.1.1
Salaries, Wages, etc. - within five (5) days after each fifteen (15)
day/end of the month pay period. 5.1.2 Petty Operating Expenses
and Field Operating Expenses - within twenty (20) days after the
end of the year; subject to replenishment as frequently as
necessary during the year.”

Failure of the AO to liquidate his cash advance within the

prescribed period shall constitute a valid cause for the
withholding of his salary and the instruction of other sanctions
xxx.

5.3 “Within ten (10) days after receipt of the report and supporting
documents from the AO, the Accountant shall verify the report,
record it in the books and submit the same with all the
vouchers/payrolls and supporting documents to the Auditor. The
cash advance shall be considered liquidated upon the recording
thereof by the Accountant in the books of accounts although not
yet audited by the COA auditor.”

9.2.2 “The Auditor shall demand the presentation by the AO of his

cashbook, cash and cash items for examination. Failure by the
AO to have duly forthcoming any public funds with which he is
 chargeable, upon demand by the Auditor shall be prima facie
evidence of misappropriation.”

Examination of the record maintained by this Office on the received reports submitted
by Muñoz National High School showed that no liquidation reports were submitted for the
amount advanced amounting to P 341,446.17 as mentioned in Finding No. 1. On November
22, we instructed the AO to liquidate his cash advances and request the Bookkeeper to submit
the liquidation reports. The Disbursing Officer mentioned that she had submitted some of the
liquidation report to the Bookkeeper, however he failed to submit the same to the Office of
the Auditor. The liquidation reports were only submitted on December 8, 2017.

Non-submission of Liquidation Reports as required in COA Circular No. 97-002

resulted in the delay on the preparation of Cash Examination Report and cast doubt on proper
utilization of amounts advanced.

We recommended that Management instruct the Accountable Officer to

liquidate cash advances on time and monitor submission by the Bookkeeper of the
Liquidation Reports to the Office of the Auditor.

4. The Bookkeeper did not maintain Subsidiary Ledger (Appendix 6) contrary to the
provisions of Section 114.2. of Presidential Decree (P.D.) 1445 and Section 12.b.2,
Chapter 2 of GAM, Volume I, thus the accuracy of the balances per books
could not be ascertained and the difficulty of reconciling the balance appearing in
the Cashbook of the Disbursing Officer against the balance per Ledgers of the
Accountant/Bookkeeper as of a certain period.

Section 114.2 of the P.D. 1445 provides:

“Subsidiary records shall be kept where necessary.”

Likewise, Section 12.b.2, Chapter 2 of GAM Volume 1 prescribes the preparation of

Subsidiary Ledger.

Ledger should be maintained per account to post transactions into their respective
account classification. This ledger shows detail for each control account in the GL which is
maintained per account and fund cluster by the Accounting Division/Unit.

During the conduct of the examination, we requested the bookkeeper to submit the
subsidiary ledger; unfortunately no accounting records were maintained. Thus, reconciliation
between the balance per cashbook maintained by the Disbursing Officer and book balance per
accounting records cannot be made possible.

The Bookkeeper should prepare and maintain ledgers and not just rely on the record of
the Accountable Officer to strengthen internal control and provide check and balance over the
amounts reflected in their respective records.

We recommended that Management monitor the compliance by the Bookkeeper

with the afore-mentioned provisions of GAM and P.D. 1445 on the maintenance and
preparation of Subsidiary Ledger/General Ledger.
 PART III- ANNEXS

A. Report of Cash Examination(General Form 74-A)

B. Statement of Accountability of Accountable Forms Without Money Value as of
November 22, 2017