COA Audit On DOH For 2020 (Observations and Recommendations)

PART II - OBSERVATIONS AND RECOMMENDATIONS
1. We acknowledge the comments of the Department of Health (DOH) Management on

our audit observations and recommendations. Some of these comments, particularly those
given by the DOH-Central Office (DOH-CO) were included in this Report, where appropriate.
As to the updated comments of the Operating Units (OUs), we recommend that these be
reviewed by the DOH-CO s Audit Committee based on our recommendations to the Secretary
of Health (SOH) stated herein, and that said comments be submitted by the OUs to their
respective Audit Teams for the latter s further evaluation in coming up with appropriate audit
decisions. The deficiencies noted in audit are summarized in the following paragraphs:
Financial Matters
Accounting errors and omissions
2. The asset, liabilities and equity accounts of the DOH had errors and omissions
misstating their year-end balances by 70,894,401,298.55, 944,035,967.72 and
70,171,552,317.53, respectively, which represent 26.97%, 3.66% and 29.60% of said
account groups. Due to the significant impact of such misstatements on the reported
, M ,
accuracy, cut-off, classification, existence, rights and obligations, valuation and
allocation, presentation, and understandability of the said accounts could not be relied
upon.
3. Paragraph 15 of the International Public Sector Accounting Standards (IPSAS) 1,

Presentation of Financial Statements (FS), describes FS as structured representation of the
financial position and financial performance of an entity. The standard further states that the
objectives of general-purpose FS are to provide information about the financial position,
financial performance, and cash flows of an entity that is useful to a wide range of users in
making and evaluating decisions about the allocation of resources. Specifically, the objectives
of general-purpose financial reporting in the public sector should be to provide information
useful for decision making, and to demonstrate the accountability of the entity for the
resources entrusted to it by:
a. Providing information about the sources, allocation, and uses of financial

resources;
b. Providing information about how the entity financed its activities and met its
cash requirements;
c. Providing information that is useful in evaluating the entit s abilit to finance
its activities and to meet its liabilities and commitments;
d. Providing information about the financial condition of the entity and changes in
it; and
e. Providing aggregate information useful in evaluating the entit s performance in
terms of service costs, efficiency and accomplishments.
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4. The complete set of general purpose FS consists of:
a. Statement of Financial Position;

b. Statement of Financial Performance;
c. Statement of Changes in Net Assets/Equity;
d. Statement of Cash Flows;
e. Statement of Comparison of Budget and Actual Amounts; and
f. Notes to the Financial Statements, comprising a summary of significant
accounting policies and other explanatory notes.
5. Paragraph 27 of IPSAS 1 further states that the FS shall present fairly the financial
position, financial performance and cash flows of an entity. Fair presentation requires the
faithful representation of the effects of transactions, other events, and conditions in accordance
with the definitions and recognition criteria for assets, liabilities, revenue, and expenses set
out in IPSAS. The application of IPSAS, with additional disclosures when necessary, is
presented to result in FS that achieve a fair presentation.
6. When an audited entity presents its FS, it is implicitly making assertions that certain
conditions have been fulfilled in the accounts, among which are as follows:
Table I. FS Assertions Affected

Assertion Condition
Completeness All transactions and events that should be recorded have been recorded.
Accuracy All transactions and events were recorded without error; all information disclosed is in the correct amounts,
and which reflect their proper values.
Cut-off All transactions and events were recorded within the correct reporting period.
Classification All transactions have been recorded in the proper accounts; assets, liabilities and equity interests have
been recorded in the proper accounts.
Existence All account balances exist for assets, liabilities, and equity.
Rights and The entity holds or controls the rights to assets, and liabilities are the obligations of the entity.
obligations
Valuation and Assets, liabilities, and equity interests have been included in the FS at appropriate amounts and any
allocation resulting valuation or allocation adjustments have been appropriately recorded.
Presentation For account balances - assets, liabilities and equity interests are appropriately aggregated or
disaggregated and clearly described, and related disclosures are relevant and understandable in the
context of the requirements of the applicable financial reporting framework.
Understandability The information included in the FS has been appropriately presented and is clearly understandable.
7. The responsibility for the fair presentation and reliability of FS rests with the
Management of the reporting entity, particularly the head of finance/accounting office and the
head of entity or his authorized representative, as provided in the Philippine Application
Guidance (PAG) 4 on IPSAS I and Section 4, Chapter 19 of the Government Accounting
Manual (GAM) for National Government Agencies (NGAs), Volume I.
8. In our audit of the DOH s accounts, we noted accounting errors and misstatements
which were not adjusted as at year-end, as shown in Table II.
77
Table II. Summary of Accounting Errors and Omissions
AMOUNT OF (OVER) UNDERSTATEMENT IN PESOS
FINDINGS
ERRORS/
ASSETS (A)
INTANGI- LIABILITIES
OTHER EQUITY (E)
CASH RECEIVABLES INVENTORIES PPE BLE (L)
ASSETS
ASSETS
A. Unrecorded/late recorded transactions
A.01
Unrecorded
- 1,328,391.22 - - - - (10,428,164.82) 11,756,556.04
fund utilization
A.02
Unrecorded
- (15,528,331.95) 293,221,129.20 277,717,476.72 - - 73,849,204.55 481,561,069.42
assets
A.03
Unrecorded
settlement of - (1,835,971.14) - - - - - (1,835,971.14)
disallowances
A.04
Unrecorded
distributions,
issuances, (1,570,786,043.
- - (49,182,795,118.34) - - (4,496,000.00) (50,749,085,161.83)
disposals and 49)
derecognition
of assets
A.05
Unrecorded
income and 27,241,393.00 3,273,796.58 - - - - - 30,515,189.58
collections
A.06
Unrecorded
liabilities and 7,000,000.00 - - - - - 37,295,382.58 (30,295,382.58)
accruals
A.07
Unrecorded
- 4,458,382.75 - - - - - 4,458,382.75
disallowances
A.08
Unrecorded - (10,824,834,484
- - - (1,000,046.53) (1,500,046.53) (10,824,334,484.90)
liquidations .90)
A.09
Unrecorded
(90,527.50) - - - - - (78,027.50) (12,500.00)
remittance
A.10
Unrecorded
IRM
- - - - - - (4,915,170.00) 4,915,170.00
Reimburseme
nts
B. Misclassification of accounts
B.01
Erroneous use 189,711,504.
1,121,981.55 145,940,865.97 120,518,024.91 (84,480,428.89) 257,790.00 14,338.68 (6,338,932.38)
of accounts 60
C. Unrecorded adjustments
C.01
Unrecorded
- - - (12,590,611.44) - - - (12,590,611.44)
depreciation
C.02
Unrecorded
adjustment to
- (4,476,496.79) - (16,193,522.36) - - - (20,670,019.15)
appropriate
account
C.03
Unrecorded
Impairment - (7,438,148,682.34) (722,333.24) (238,052,247.97) - - - (7,676,923,263.55)
Losses
C.04
Unrecorded
Book
(6,039,839.44) (1,238,568.08) - - - - 4,310,483.12 (11,588,890.64)
reconciling
items
78
AMOUNT OF (OVER) UNDERSTATEMENT IN PESOS
FINDINGS
ERRORS/ ASSETS (A)
INTANGI- LIABILITIES
OTHER EQUITY (E)
CASH RECEIVABLES INVENTORIES PPE BLE (L)
ASSETS
ASSETS
C.05
Unrecorded
elimination,
(1,478,881.41) (125,345,134.18) 20,579,779.97 726,005.15 - 3,183,357.17 (174,473,044.89) 72,138,171.59
adjusting and
closing entries
C.06
Erroneous
Recording of
Transactions
- (19,420,309.16) (2,736,355.59) (35,681,650.75) - 2,783,765.37 (13,736,704.59) (41,317,845.54)
(over or
under-
recording)
C.07
Recording of
transactions
with no - (7,909,600.19) - (16,750,242.46) - - - (24,659,842.65)
supporting
documents
C.08 Improper
Recording of
- (418,290.01) (47,476,037.58) (1,759,489.46) - 23,691,400.00 (17,388,900.08) (8,573,516.97)
Transactions
Total Net (Over) Understatements
₱27,754,126. (₱18,284,154,432. (₱48,799,410,910. (₱1,697,850,754. ₱257,790. ₱28,672,814. ₱78,150,516. (₱68,802,881,883.
A=L+E 20 22) 67) 95) 00 69 44 39)
(₱68,724,731,366.95) (₱68,724,731,366.95)
Total Errors Per Accounts Affected (Absolute Amount)
₱46,236,726. ₱18,517,158,649. ₱49,009,035,591. ₱3,279,845,596. ₱2,566,290. ₱39,558,445. ₱944,035,967. ₱70,171,552,317.
50 48 17 09 00 31 72 53
A=L+E
₱944,035,967. ₱70,171,552,317.
₱70,894,401,298.55
72 53
Financial Statement Balances
₱25,822,821,896. ₱237,079,830,254.
₱262,902,652,151.01
51 50
Percent of Total Errors Per Accounts Affected (Absolute Amount)
26.97% 3.66% 29.60%
Details of accounting errors and omissions:
Misstatement in Cash accounts 46,236,726.50
9. The misstatements found in Cash accounts as at year-end are shown below.
Table III. Summary of Misstatements in Cash Accounts

AMOUNT OF
ERRORS TOTAL ERRORS PER
(OVER)/UNDERSTATEMENT PER
ACCOUNTS AFFECTED REF. ACCOUNTS AFFECTED
ERRORS/ FINDINGS ON EACH
(see Table II) (ABSOLUTE AMOUNT)
ACCOUNTS AFFECTED
Cash in Bank -Local Currency, Savings Account B.01 130,669.48 130,669.48
Cash in Bank-Local Currency, Current Account A.05 25,914,235.51 35,186,874.85
A.06 7,000,000.00
B.01 1,214,570.83
C.04 2,536,949.92
C.05 (1,478,881.41)
B.01 (401,140.77)
Cash -Treasury/Agency Deposit, Regular 7,205,450.14
C.04 (6,804,309.37)
B.01 401,140.77 331,380.78
Cash -Treasury/Agency Deposit, Trust
C.04 (69,759.99)
A.05 1,327,157.49 1,945,322.51
Cash-Collecting Officers
B.01 (1,569,760.00)
79
AMOUNT OF
ERRORS TOTAL ERRORS PER
(OVER)/UNDERSTATEMENT PER
ACCOUNTS AFFECTED REF. ACCOUNTS AFFECTED
ERRORS/ FINDINGS ON EACH
(see Table II) (ABSOLUTE AMOUNT)
ACCOUNTS AFFECTED
C.04 (1,702,720.00)
Cash-Modified Disbursement System (MDS),
A.09 (90,527.50) 90,527.50
Regular
Petty Cash B.01 1,346,501.24 1,346,501.24
NET (OVER)/UNDERSTATEMENT ON CASH ACCOUNTS ₱27,754,126.20
TOTAL ACCOUNTING ERRORS PER CASH ACCOUNTS ₱46,236,726.50
10. The errors found in Cash accounts were attributed to the non-recording of receipt of
collections and fund transfers, deposits, interest income, deposits of trust receipts, non-
restoration of unreleased commercial checks at year-end, non-cancellation of stale checks,
unrecorded remittances of contributions, absence of periodic reconciliation of records, non-
compliance with pertinent rules and regulations and inability to institute sound financial
controls.
11. Due to the significant impact of the foregoing accounting errors/omissions on the
reported balance of the Cash accounts, Management s assertions as to accurac , classification,
completeness, and rights and obligations on the said accounts could not be relied upon.
12. We recommended and the Secretary of Health (SOH), through the

Administration and Financial Management Team (AFMT), agreed to instruct the
Central Office (CO) and concerned operating units (OUs) to record the necessary
adjusting entries in the books of accounts based on relevant and sufficient supporting
documents.
Misstatements in Receivable accounts 18,517,158,649.48
13. The following are the misstatements found in various Receivable accounts which were
not adjusted in the books of accounts as at year-end.
Table IV. Summary of Misstatements in Receivable accounts

AMOUNT OF
TOTAL ERRORS PER
ERRORS REF. (OVER)/UNDERSTATEMENT PER
ACCOUNTS AFFECTED ACCOUNTS AFFECTED
(see Table II) ERRORS/ FINDINGS ON EACH
(ABSOLUTE AMOUNT)
ACCOUNTS AFFECTED
Accounts Receivable A.05 3,273,796.58 49,896,452.54
B.01 54,659,540.49
C.02 (8,458,099.49)
C.04 (4,445,806.48)
C.05 4,867,021.44
Due from Government -Owned or Controlled A.08 (129,443,733.85) 177,984,396.88
Corporations (GOCCs) B.01 (50,210,552.92)
C.05 (3,106,260.88)
C.06 6,838,237.93
C.07 (2,062,087.16)
B.01 142,593,627.47
Due from Local Government Units (LGUs) 48,946,288.23
C.05 (93,647,339.24)
Due from National Government Agencies NGAs) A.02 (15,528,331.95) 10,720,075,123.69
A.08 (10,695,390,751.05)
B.01 13,507,148.24
C.02 (4,476,496.79)
C.04 3,206,238.40
80
AMOUNT OF
TOTAL ERRORS PER
ERRORS REF. (OVER)/UNDERSTATEMENT PER
(see Table II) ERRORS/ FINDINGS ON EACH
(ABSOLUTE AMOUNT)
ACCOUNTS AFFECTED
C.05 (21,531,230.54)
C.06 138,300.00
Due from Officers and Employees C.02 (4,988,108.67) 4,938,604.30
C.04 1,000.00
C.08 48,504.37
Due from Other Funds A.01 1,328,391.22 14,426,427.48
B.01 30,872,874.25
C.05 (11,927,324.96)
C.07 (5,847,513.03)
B.01 (43,324,358.71) 29,878,150.55
Other Receivables
C.02 13,446,208.16
Receivables-Disallowances/Charges A.03 (1,835,971.14) 3,232,940.38
A.07 4,458,382.75
B.01 1,077,323.15
C.08 (466,794.38)
NET (OVER)/UNDERSTATEMENT ON RECEIVABLE ACCOUNTS
(10,816,374,166.79)
GROSS (A)
Allowance for Impairment -Due from GOCCs B.01 3,234,736.00 3,234,736.00
Allowance for Impairment- Various Receivables C.03 6,949,576,895.99 6,949,576,895.99
Allowance for Impairment-Accounts Receivable B.01 8,094,023.00 493,639,977.44
C.03 488,571,786.35
C.06 (3,025,831.91)
Allowance for Impairment-Other Receivables B.01 (8,094,023.00) 21,328,656.00
C.06 29,422,679.00
7,467,780,265.43
CONTRA ACCOUNTS (B)
(₱18,284,154,432.22)
NET (C) (C = A B)
TOTAL ACCOUNTING ERRORS PER RECEIVABLE ACCOUNTS ₱18,517,158,649.48
14. The errors found were attributed to the absence of periodic reconciliation of records,
non-compliance with pertinent rules and regulations and inability to institute sound financial
controls.
15. These adversel affected Management s assertions on the completeness, accurac ,

existence, classification and valuation of the year-end balances of Receivables in the
Statement of Financial Position. The conditions presented likewise impact on the ability to
manage its receivable accounts, proper implementation of programs, activities and projects,
and in general, safeguard its assets and public funds entrusted to its care.
16. We recommended and the SOH, through the AFMT, agreed to direct the CO and
concerned OUs to:
a. immediately conduct reconciliation of records and accomplish the same

within a specific time-frame;
b. record the necessary adjusting entries in the books of accounts based on

relevant and sufficient supporting documents;
c. henceforth, comply strictly with pertinent rules and regulations; and
81
d. conduct thorough evaluation, assessment and investigation of outstanding
accounts, and record impairment and other adjustments thereof.
Misstatements in Inventory accounts 49,009,035,591.17
17. The misstatements in Inventory accounts that remained unadjusted as at year-end are
as follows:
Table V. Summary of Misstatements in Inventory Accounts
AMOUNT OF
TOTAL ERRORS PER
ERRORS REF. (OVER)/UNDERSTATEMENT
(see Table II) PER ERRORS/ FINDINGS ON
(ABSOLUTE AMOUNT)
EACH ACCOUNTS AFFECTED
Accountable Forms, Plates and Stickers Inventory A.02 28,587.00 1,187,442.87
A.04 (1,059,729.87)
C.06 (138,300.00)
B.01 (18,000.00)
Construction Materials Inventory A.02 1,417,378.03 1,602,034.06
A.04 (253,341.47)
B.01 437,997.50
Drugs and Medicines for Distribution A.02 807,000.00 366,969,254.88
A.04 (381,214,507.22)
C.05 13,438,252.34
Drugs and Medicines Inventory A.02 2,753,799.32 15,901,606.99
A.04 (29,827,492.33)
B.01 11,262,226.02
C.06 (90,140.00)
Food Supplies Inventory A.02 39,600.00
A.04 (2,494,082.75) 2,505,116.75
C.06 (50,634.00)
Fuel, Oil and Lubricants Inventory A.04 (487,176.98) 606,358.94
B.01 (119,181.96)
Medical, Dental and Laboratory Supplies for A.02 39,168,548.62 456,020,023.47
Distribution A.04 (454,346,180.70)
C.05 6,496,065.69
C.08 (47,338,457.08)
Medical, Dental and Laboratory Supplies Inventory A.02 137,836,908.87 81,433,642.09
A.04 (41,909,950.79)
B.01 (11,004,439.21)
C.06 (3,358,121.28)
C.08 (130,755.50)
Merchandise Inventory A.02 6,328,833.38 2,078,000.31
A.04 (4,486,920.64)
B.01 (205,541.66)
C.06 441,629.23
Non -Accountable Forms Inventory B.01 93,628.77 93,628.77
Office Supplies Inventory A.02 3,401,545.03 18,224,185.57
A.04 (14,809,749.18)
B.01 (6,948,573.38)
C.05 128,766.96
C.06 3,825.00
Other Supplies and Materials for Distribution A.02 2,297,763.50 34,020,499.36
A.04 (36,318,262.86)
Other Supplies and Materials Inventory A.02 2,349,664.00 13,720,813.57
A.04 (16,683,203.03)
B.01 163,605.00
C.06 455,945.46
C.08 (6,825.00)
Property and Equipment for Distribution A.02 38,964,190.00 223,864,670.27
A.04 (416,501,503.74)
B.01 153,672,643.47
Semi -Expendable Books B.01 371,380.57 371,380.57
Semi -Expendable Medical Equipment A.02 85,900.00
82
AMOUNT OF
TOTAL ERRORS PER
(ABSOLUTE AMOUNT)
A.04 (444,706.41) 662,479.19
B.01 1,021,285.60
Semi-Expendable Communication Equipment A.04 (205,599.00) 797,536.70
B.01 1,003,135.70
Semi-Expendable Disaster Response and Rescue A.04 (75,100.00) 51,090.00
Equipment B.01 24,010.00
Semi-Expendable Furniture and Fixtures A.02 648,000.00 3,152,957.19
A.04 (1,381,113.75)
B.01 3,886,070.94
Semi-Expendable Information and Communications A.02 292,908.00 8,435,384.31
Technology Equipment A.04 (508,530.40)
B.01 8,651,006.71
Semi-Expendable Machinery A.04 (4,200.00) 125,518.00
B.01 129,718.00
Semi-Expendable Office Equipment A.02 1,291,308.00 6,052,776.06
A.04 (564,166.70)
B.01 5,325,634.76
Semi-Expendable Other Machinery and Equipment A.02 13,990.00 17,618.59
A.04 (133,920.75)
B.01 102,872.16
C.06 (560.00)
Semi-Expendable Sports Equipment B.01 7,003.00 7,003.00
Various Inventory accounts A.02 55,495,205.45 47,770,412,236.42
A.04 (47,779,085,679.77)
B.01 (47,338,457.08)
C.05 516,694.98
NET (OVER)/UNDERSTATEMENT ON INVENTORY ACCOUNTS
(48,798,688,577.43)
GROSS (A)
Allowance for Impairment -Drugs and Medicines
C.03 722,333.24 722,333.24
Inventory
NET (OVER)/UNDERSTATEMENT ON INVENTORY CONTRA
722,333.24
ACCOUNTS (B)
NET (OVER)/UNDERSTATEMENT ON INVENTORY ACCOUNTS
(₱48,799,410,910.67)
NET (C) (C = A B)
TOTAL ACCOUNTING ERRORS PER INVENTORY ACCOUNTS ₱49,009,035,591.17
18. Our audit showed that despite prior ears audit recommendations, the deficiencies
were still caused by the failure to conduct periodic physical count, incomplete inventory
reports, failure to maintain and update complete accounting records, non-evaluation of
inventory items for impairment and non-conformance to established guidelines in the
management of inventories, among others.
19. The noted accounting errors affected Management s assertions on the completeness,
accuracy, cut-off, existence, classification and valuation of the year-end balances of
Inventories in the Statement of Financial Position.
20. The continued neglect of settling the errors in various inventory accounts and the
apparent lack of interest in clearing the current ear s inventor variances as evidenced b the
inaction, considered to be the root cause of the problem, violate the pertinent provisions of
Presidential Decree (PD) 1445 on adequacy of needed information and has resulted to the
presentation of unreliable, inaccurate and misleading financial information of the DOH.
OUs to:
83
a. strategize and come up with documented plans on how they can reconcile the
variances between inventory balances shown in the FS and those of the
supply records and inventory reports, with the plan clearly stating the
specific responsibilities of personnel involved, targets and timelines, among
others, and implementation thereof be strictly monitored;
b. after reconciliation, for the Accountants to effect necessary adjustments in

their respective records to establish the correct inventory balances based on
sufficient supporting documents; and
c. impose sanctions on erring personnel, on the basis of Section 127 of PD 1445,

both those who are responsible for any loss of inventories and those who are
negligent in their duties causing the continued presence of variance between
book and physical count balances.
Misstatements in Property, Plant and Equipment (PPE) accounts 3,279,845,596.09
22. The misstatements in PPE accounts that remained unadjusted as at year-end are as
follows:
Table VI. Summary of Misstatements in PPE Accounts

AMOUNT OF
TOTAL ERRORS PER
(ABSOLUTE AMOUNT)
Books A.02 509,461.13 485,236.18
B.01 (24,224.95)
Buildings A.02 12,377,339.40 597,235,033.57
C.02 584,857,694.17
Communication Equipment A.02 84,900.00 707,850.42
B.01 (773,205.42)
C.07 (19,545.00)
Construction and Heavy Equipment B.01 (2,300.00) 2,300.00
Construction in Progress-Buildings and Other A.02 823,983.93 1,283,409,354.72
Structures B.01 (78,206,597.03)
C.02 (1,205,656,713.62)
C.06 (370,028.00)
Construction in Progress-Infrastructure Assets B.01 (10,736,341.91) 10,736,341.91
Disaster Response and Rescue Equipment B.01 (24,010.00) 24,010.00
Furniture and Fixtures A.02 255,497.00 3,614,574.18
B.01 (3,789,071.18)
C.03 (65,000.00)
C.07 (16,000.00)
Hospitals and Health Centers A.04 (1,077,284,332.32) 443,808,131.01
B.01 43,729,009.96
C.02 589,695,127.85
C.06 52,063.50
Information and Communications Technology A.02 4,293,605.96 2,112,268.44
Equipment B.01 (347,034.32)
C.03 (498,780.00)
C.07 (5,560,060.08)
Machinery B.01 (14,400.00) 14,400.00
Medical Equipment A.02 170,415,791.27 50,198,548.26
B.01 (90,680,168.33)
C.03 (12,353,166.68)
C.06 (15,500,000.00)
84
AMOUNT OF
TOTAL ERRORS PER
(ABSOLUTE AMOUNT)
C.08 (1,683,908.00)
Military, Police and Security Equipment B.01 469,186.00 469,186.00
Motor Vehicles A.02 58,058,888.00 30,026,689.90
A.04 (83,198,000.00)
B.01 (14,950.00)
C.03 (3,388,127.90)
C.06 (1,484,500.00)
Office Equipment A.02 1,904,338.97 5,814,225.46
B.01 (7,110,745.03)
C.03 (332,809.40)
C.07 (275,010.00)
Other Land Improvements B.01 20,339,974.12 22,746,097.68
C.02 2,406,123.56
Other Machinery and Equipment A.02 74,600.00 3,133,663.40
B.01 (880,829.00)
C.03 (381,444.00)
C.07 (1,945,990.40)
Other Property, Plant and Equipment A.02 309,777.00 3,750,453.84
B.01 (3,879,466.83)
C.08 (180,764.01)
Other Structures B.01 7,986,316.24 7,986,316.24
Other Transportation Equipment B.01 (29,495.00) 29,495.00
Power Supply Systems B.01 5,241,116.23 12,750,690.02
C.02 7,509,573.79
Technical and Scientific Equipment B.01 (45,785,964.74) 68,065,292.58
C.07 (22,279,327.84)
Various Property, Plant and Equipment A.02 28,609,294.06 386,790,384.50
A.04 (414,250,316.51)
B.01 (160,696.00)
C.03 (1,714,671.20)
C.05 726,005.15
Water Supply Systems B.01 463,020.00 5,457,691.89
C.02 4,994,671.89
NET (OVER)/UNDERSTATEMENT ON PPE ACCOUNTS COST (A) (1,544,710,635.52)
Accumulated Depreciation Machinery C.06 (31,484.03) 31,484.03
Accumulated Depreciation -Construction and Heavy
B.01 1,242.00
Equipment (1,242.00)
Accumulated Depreciation -Military, Police and
B.01 125,069.43
Security Equipment 125,069.43
Accumulated Depreciation -Other Property, Plant
C.06 757,913.83
and Equipment (757,913.83)
Accumulated Depreciation -Various Property, Plant
C.03 1,308,204.05
and Equipment (1,308,204.05)
Accumulated Depreciation -Water Supply Systems C.01 39,541.15 39,541.15
Accumulated Depreciation-Buildings C.01 1,618,622.37 1,433,258.21
C.06 (185,364.16)
Accumulated Depreciation-Communication B.01 (101,924.23) 229,829.91
Equipment C.06 (109,399.02)
C.07 (18,506.66)
C.03 (3,249.99) 3,883.34
Accumulated Depreciation-Furniture and Fixtures
C.07 (633.35)
Accumulated Depreciation-Hospitals and Health A.04 (3,946,605.34) 9,681,800.76
Centers C.01 9,948,860.23
C.06 3,679,545.87
Accumulated Depreciation-Information and B.01 (1,175,653.34) 5,289,435.43
Communications Technology Equipment C.01 41,493.49
C.03 (390,495.02)
C.06 135,453.69
C.07 (3,900,234.25)
Accumulated Depreciation-Medical Equipment B.01 (78,593,412.55) 74,781,451.69
C.01 60,166.67
C.03 (9,916,875.55)
85
AMOUNT OF
TOTAL ERRORS PER
(ABSOLUTE AMOUNT)
C.06 13,773,852.29
C.08 (105,182.55)
Accumulated Depreciation-Motor Vehicles C.03 (1,810,776.47) 1,310,443.14
C.06 500,333.33
Accumulated Depreciation-Office Equipment B.01 372,095.37 178,323.90
C.01 3,293.64
C.03 (291,583.64)
C.06 (71,335.87)
C.07 (190,793.40)
Accumulated Depreciation-Other Infrastructure
B.01 45,899.95
Assets (45,899.95)
Accumulated Depreciation-Other Land C.01 118,385.49 1,041,506.40
Improvements C.06 923,120.91
Accumulated Depreciation-Other Machinery and B.01 (375,380.98) 2,211,253.20
Equipment C.03 (196,075.82)
C.06 76,470.54
C.07 (1,716,266.94)
Accumulated Depreciation-Other Structures C.06 444,753.18 444,753.18
Accumulated Depreciation-Power Supply Systems B.01 45,899.95 806,148.35
C.01 760,248.40
Accumulated Depreciation-Technical and Scientific
C.07 7,519,256.26
Equipment (7,519,256.26)
Accumulated Impairment Losses - Various
C.03 233,181,608.63
Equipment 233,181,608.63
Accumulated Impairment Losses -Information and
C.03 44,769.00
Communications Technology Equipment 44,769.00
Accumulated Impairment Losses -Office Equipment C.03 9,131.70 9,131.70
Accumulated Impairment Losses -Water Supply
C.06 1,153.35
Systems 1,153.35
NET (OVER)/UNDERSTATEMENT ON PPE CONTRA ACCOUNTS (B) 153,140,119.43
NET (OVER)/UNDERSTATEMENT ON PPE ACCOUNTS NET (C) (C =
(₱1,697,850,754.95)
A B)
TOTAL ACCOUNTING ERRORS PER PPE ACCOUNTS ₱3,279,845,596.09
23. Our audit showed that there have been no considerable efforts on the part of some OUs
to rectify the deficiencies noted in previous years concerning the PPE accounts. This is
evidenced by the unsettled errors and omissions already communicated to their respective
Management in prior audit reports but were still observed in the current ear s audit, and the
existence of additional deficiencies noted, which grossly affect the reliability of the reported
PPE balances as well as Management assertions of completeness, existence, valuation, rights
and disclosure, inherent in the fair presentation of the FS.
24. The material amounts of discrepancy which have been present since the past years
have not been verified, investigated, adjusted and cleared as required by existing regulations.
There was no running or test inventory done for the purpose of ascertaining the correctness of
records and determining any possible losses and even with the conduct of year-end physical
count was not taken by the DOH.
25. The continued inability in resolving the decades-old problem involving PPE accounts
directly resulted in the release of unreliable financial information on the true state of DOH
assets and its power to take full control over its PPE.
86
OUs to:
a. effect the necessary adjusting entries in the books of accounts based on

relevant and sufficient supporting documents; and
b. impose sanctions on erring personnel, on the basis of Section 127 of PD 1445,

both those who are responsible for any loss of inventories and those who are
negligent in their duties causing the continued presence of variance between
book and physical count balances.
Misstatements in Intangible Assets accounts 2,566,290.00
27. The misstatements found in Intangible Assets accounts as at year-end are shown
below.
Table VII. Summary of Misstatements in Intangible Asset Accounts
AMOUNT OF
TOTAL ERRORS PER
(ABSOLUTE AMOUNT)
Computer Software B.01 1,412,040.00 1,412,040.00
NET (OVER)/UNDERSTATEMENT ON INTANGIBLE
1,412,040.00
ASSET ACCOUNTS GROSS (A)
Accumulated Amortization -Computer Software B.01 1,154,250.00 1,154,250.00
NET (OVER)/UNDERSTATEMENT ON INTANGIBLE ASSET CONTRA
1,154,250.00
ACCOUNTS (B)
NET (OVER)/UNDERSTATEMENT ON INTANGIBLE ASSET
₱257,790.00
ACCOUNTS NET (C) (C = A B)
TOTAL ACCOUNTING ERRORS PER INTANGIBLE ASSET
₱2,566,290.00
ACCOUNTS
28. The GAM for NGAs, Volume III, define the account Computer Software as being used
to recognize the purchase cost or capitalized development cost of computer software programs
for use in government operation. Development costs include cost of coding, testing and cost
to produce product masters. The account is credited for obsolescence, transfers or other
disposal.
29. Our audit showed that there was erroneous recording of computer software items as
ICT Equipment in the total amount of 2,566,290.00 in the books of NSC-Min and WV-CHD
and that the same remained not adjusted as at year-end.
30. The deficiency, caused by non-compliance with the GAM, resulted in the
overstatement of ICT Equipment and the consequent understatement of the Computer
Software account. It also adversel affected Management s assertions on the classification of
intangible assets in the Statement of Financial Position.
31. We recommended and the SOH, through the AFMT, agreed to direct the
concerned OUs to record the necessary adjusting entries in their books of accounts.
87
Misstatements in Other Asset accounts 39,558,445.31
32. The misstatements found in the Other Assets accounts are presented in Table VIII.
Table VIII. Summary of Misstatements in Other Asset Accounts

AMOUNT OF
TOTAL ERRORS PER
(ABSOLUTE AMOUNT)
Advances for Payroll A.08 (1,000,046.53) 6,079,303.85
B.01 3,938,816.12
C.06 3,140,534.26
Advances to Contractors B.01 (1,606,091.77) 1,964,596.66
C.06 (358,504.89)
Advances to Officers and Employees B.01 (651,851.03) 556,469.94
C.05 93,645.09
C.06 1,736.00
B.01 (3,064,776.26)
Advances to Special Disbursing Officer 2,921,748.71
C.05 143,027.55
Other Deposits B.01 109,048.45 109,048.45
Other Prepayments B.01 (109,048.45) 23,582,351.55
C.08 23,691,400.00
B.01 1,398,241.62
Prepaid Insurance 4,344,926.15
C.05 2,946,684.53
NET (OVER)/UNDERSTATEMENT ON OTHER ASSET ACCOUNTS ₱28,672,814.69
TOTAL ACCOUNTING ERRORS PER OTHER ASSET ACCOUNTS ₱39,558,445.31
33. The misstatements noted were caused by the failure to recognize the unexpired portion
of insurance premiums, unrecorded liquidations, wrong usage of accounts, under-recording,
double posting and erroneous amounts posted for cash advances and advances to contractors,
and recording of undelivered food supplies.
34. The deficiencies noted adversely affect the reliability of the reported balances of Other
Assets as well as Management assertions of completeness, accuracy, cut-off, classification and
existence of said balances.
35. The reliability and correctness of year-end balances of affected accounts were
therefore compromised because of the errors detected.
36. We recommended and the SOH, through the AFMT, agreed to direct the OUs to
effect the necessary accounting entries to correct the book balances of the Other Asset
accounts and, henceforth, observe the proper classification of accounts.
Misstatements in Liability Accounts 944,035,967.72
37. The following misstatements were detected during the course of our audit:
88
Table IX. Summary of Misstatements in Liability Accounts
AMOUNT OF
TOTAL ERRORS PER
(ABSOLUTE AMOUNT)
Accounts Payable A.02 73,849,204.55 254,865,030.98
A.06 412,208.01
B.01 (145,412,607.66)
C.04 276,475.03
C.05 (154,259,208.30)
C.06 (12,342,202.53)
C.08 (17,388,900.08)
Due to BIR B.01 3,332,396.65 7,464,114.71
C.05 3,982,341.04
C.06 149,377.02
A.08 (500,000.00)
Due to Central Office 3,685,393.79
B.01 4,185,393.79
Due to GOCCs A.10 (4,915,170.00) 118,793,644.21
B.01 128,623,984.21
C.06 (4,915,170.00)
Due to GSIS B.01 3,933.36
1,238,606.80
C.05 (1,242,540.16)
Due to LGUs B.01 78,500,483.46 78,500,483.46
Due to NGAs A.01 (10,428,164.82)
25,049,127.74
B.01 (14,620,962.92)
Due to Officers and Employees A.06 29,883,174.57 292,742,361.40
A.08 (1,000,046.53)
B.01 259,447,922.49
C.05 1,279,023.21
C.06 3,132,287.66
Due to Operating Units A.04 (4,496,000.00)
1,031,155.56
B.01 3,464,844.44
Due to Other Funds B.01 (263,890.75) 12,191,215.71
C.05 (11,927,324.96)
Due to Pag -IBIG A.09 (78,027.50) 52,030.58
B.01 42,236.67
C.05 (16,239.75)
Due to PhilHealth B.01 1,549,173.99 1,805,134.07
C.05 255,960.08
Due to Regional Offices A.06 2,000,000.00 8,102,110.44
B.01 2,068,102.35
C.04 4,034,008.09
Guaranty/Security Deposits Payable B.01 (1,217,366.55) 9,174,607.49
C.05 (8,196,244.20)
C.06 239,003.26
Other Deferred Credits B.01 (38,489,852.71) 38,489,852.71
Other Payables B.01 (16,951,516.64) 16,951,516.64
Trust Liabilities A.06 5,000,000.00 73,899,581.43
B.01 (74,550,769.58)
C.05 (4,348,811.85)
NET (OVER)/UNDERSTATEMENT ON LIABILITY ACCOUNTS ₱78,150,516.44
TOTAL ACCOUNTING ERRORS PER LIABILITY ACCOUNTS ₱944,035,967.72
38. As found, the misstatements were due to erroneous recording of assets and
corresponding liabilities, non-recognition of transfers/turn-over of assets to OUs, failure to
record fund transfers, unrecognized liabilities for services rendered, non-accrual of liability
items, unrecorded deposits of trust receipts, non-restoration of unreleased commercial checks
at year-end, failure to cancel stale checks, non-reversion of invalid, unsupported and past due
payables, unrecorded mandatory remittances to various government institutions, unrecorded
reimbursements from the Interim Reimbursement Mechanism (IRM) fund, and erroneous set-
up of payable accounts for not-yet-incurred expenditures, among others.
89
39. The year-end balances of liability accounts are therefore materially misstated. The
noted accounting errors grossl affected Management s assertions on the completeness,
accuracy, cut-off, existence and classification of the year-end balances of liability accounts in
the Statement of Financial Position.
concerned OUs to cause the recording of adjustments in their books of accounts based
on sufficient supporting documents and henceforth, comply with all relevant rules and
regulations in the recognition of liabilities.
Misstatements in Equity accounts 70,171,552,317.53
41. The misstatements found in the Equity accounts are presented in Table X.
Table X. Summary of Misstatements in Equity Accounts

AMOUNT OF
ERRORS
(OVER)/UNDERSTATEMENT PER TOTAL ERRORS PER ACCOUNTS
ACCOUNTS AFFECTED REF.
ERRORS/ FINDINGS ON EACH AFFECTED (ABSOLUTE AMOUNT)
(see Table II)
ACCOUNTS AFFECTED
A.01 1,756,556.04 60,988,939,148.72
A.02 480,579,305.88
A.03 (1,835,971.14)
A.04 (50,730,295,426.54)
A.06 (29,316,415.29)
A.07 4,458,382.75
A.08 (10,824,334,484.90)
A.09 (12,500.00)
Accumulated Surplus/(Deficit) A.10 4,915,170.00
B.01 84,124,324.92
C.01 (8,827,787.48)
C.02 (20,670,019.15)
C.03 (75,614.91)
C.04 (11,934,086.07)
C.05 72,138,171.59
C.06 461,278.67
C.07 (24,955,040.65)
C.08 14,885,007.56
NET (OVER)/UNDERSTATEMENT ON EQUITY
(60,988,939,148.72)
ACCOUNTS (A)
Affiliation Fees B.01 2,254,433.75 2,254,433.75
Assistance from Government-Owned or
B.01 (3,546,768.60) 3,546,768.60
Controlled Corporations
Assistance from Local Government Units B.01 (20,400,000.00) 20,400,000.00
Assistance from Other National
A.01 10,000,000.00 10,000,000.00
Government Agencies
Fines and Penalties -Business Income B.01 (9,252,478.11) 9,252,478.11
Hospital Fees A.05 30,515,189.58 339,075,980.57
B.01 (371,261,220.43)
C.06 1,670,050.28
Income from Grants and Donations in
B.01 9,000.00 9,000.00
Cash
Income from Grants and Donations in Kind B.01 (54,595,472.08) 101,933,929.16
C.08 (47,338,457.08)
Interest Income C.04 345,195.43 345,195.43
Miscellaneous Income B.01 9,144,265.22 9,144,265.22
Other Business Income B.01 (1,682,936.05) 1,682,936.05
Other Service Income B.01 (29,300.00) 29,300.00
Sales Revenue B.01 17,114,683.91 17,114,683.91
Subsidy from Central Office A.02 1,145,773.54 230,732,873.17
B.01 229,587,099.63
90
AMOUNT OF
ERRORS
(see Table II)
ACCOUNTS AFFECTED
Subsidy from National Government B.01 (234,967,410.13) 234,967,410.13
Subsidy from Regional Office/Staff Bureau B.01 (1,951,543.46) 1,951,543.46
NET (OVER)/UNDERSTATEMENT ON INCOME
(443,239,894.60)
ACCOUNTS (B)
Hospital Discounts, Allowances and Free B.01
13,391,985.88 13,391,985.88
Services
NET (OVER)/UNDERSTATEMENT ON INCOME CONTRA-
13,391,985.88
ACCOUNTS (C)
Accountable Forms Expenses A.04 5,600.00 5,600.00
Assistance/Subsidies-Others B.01 3,090,000.00 3,090,000.00
Consultancy Services B.01 (7,720,894.55) 7,720,894.55
Cost of Sales A.04 8,026,186.98 29,108,184.30
B.01 21,081,997.32
Depreciation -Buildings and Other C.01 3,657,870.16 5,801,053.78
Structures C.06 2,143,183.62
Depreciation -Machinery and Equipment B.01 (682,741.36) 13,076,172.53
C.01 104,953.80
C.06 13,759,142.64
C.08 (105,182.55)
Depreciation-Land Improvements C.06 19,630.15 19,630.15
Depreciation-Transportation Equipment C.06 500,333.33 500,333.33
Drugs and Medicines Expenses B.01 (18,403,459.10) 18,403,459.10
Employees Compensation Insurance
B.01 764,600.00 764,600.00
Premiums
Financial Assistance to Local Government
B.01 (2,658,144.00) 2,658,144.00
Units
Food Supplies Expenses A.02 164,010.00 21,069,057.25
A.04 2,494,082.75
C.08 (23,727,150.00)
Fuel, Oil and Lubricants Expenses A.04 237,210.79 237,210.79
Impairment Loss -Other Receivables B.01 (2,950,930.00) 2,950,930.00
Impairment Loss-Inventories B.01 (369,991.27) 352,341.97
C.03 722,333.24
Impairment Loss-Loans and Receivables B.01 6,185,666.00
C.03 7,438,148,682.34 7,470,731,195.43
C.06 26,396,847.09
Impairment Loss-Property, Plant and
C.03 237,976,633.06 237,976,633.06
Equipment
Insurance Expenses B.01 (1,398,241.62) 1,398,241.62
Medical, Dental and Laboratory Supplies A.04 4,840,671.24
Expenses B.01 (10,139,896.21) 5,594,422.97
C.07 (295,198.00)
Office Supplies Expenses A.04 1,392,384.32 1,470,674.32
B.01 78,290.00
Other General Services B.01 (226,616.78) 226,616.78
Other Losses B.01 224,747.02 224,747.02
Other Maintenance and Operating
B.01 (225,480,033.82) 225,480,033.82
Expenses
Other Professional Services B.01 (92,454,274.21) 92,454,274.21
Other Supplies and Materials Expenses A.04 1,428,453.21 1,339,858.21
B.01 (40,995.00)
C.08 (47,600.00)
Overtime and Night Pay A.06 978,967.29 978,967.29
Rent/Lease Expenses B.01 5,253,622.00 5,883,659.66
C.06 630,037.66
Retirement and Life Insurance Premiums B.01 (26,493,629.35) 26,493,629.35
Salaries and Wages -Regular B.01 (136,511.94) 136,511.94
Semi-Expendable Furniture, Fixtures and
A.04 14,900.00 14,900.00
Books Expenses
Semi-Expendable Machinery and A.04 350,246.00 333,346.00
Equipment Expenses B.01 (16,900.00)
Terminal Leave Benefits B.01 (4,420.00) 4,420.00
Transportation and Delivery Expenses B.01 136,511.94 136,511.94
91
AMOUNT OF
ERRORS
(see Table II)
ACCOUNTS AFFECTED
Telephone Expenses B.01 (10,144,130.00) 10,144,130.00
NET (OVER)/UNDERSTATEMENT ON EXPENSE
7,357,310,854.19
ACCOUNTS (D)
NET (OVER)/UNDERSTATEMENT ON EQUITY
(₱68,802,881,883.39)
ACCOUNTS (E) (E = A + B C E)
TOTAL ACCOUNTING ERRORS PER EQUITY ACCOUNTS ₱70,171,552,317.53
42. These misstatements, caused by non-compliance with pertinent accounting

regulations, resulted in erroneous account balances in the books of accounts of the DOH and
its OUs. These were attributed to: (a) late submission or non-submission of reports by
concerned offices (i.e., Supply Chain Offices, General Services Offices, among others,) to the
Accounting Division; (b) lack of coordination and monitoring procedures on flow of
transactions by the concerned offices and the Accounting Division; (c) lack of necessary
documentation to support adjusting entries; (d) erroneous entries being overlooked by the
Accountants; (e) absence of official pronouncements as to accounting treatment of particular
transactions department-wide; and (f) lack of financial audit conducted by the Internal Audit
Service (IAS).
43. The noted errors and omissions in recording and reporting financial transactions
inevitably affected the fair presentation of the accounts in the FSs of the OUs and that of the
DOH as a whole, and grossl affected Management s assertions on the completeness,
accuracy, cut-off, existence, classification, rights and obligations, valuation, presentation and
understandability of the reported balances in the FS.
44. It is worth noting that there are few OUs which had already effected adjusting entries
to correct some errors in CY 2021. However, their year-end FS still include the
aforementioned errors, thus, still rendering the reported balances erroneous and unreliable.
45. We recommended and the SOH, through the AFMT, agreed to direct :
The Accountants to:
a. effect the necessary adjustments on the errors and omissions, among others,
the erroneous recording of transactions as well as misclassification of accounts
to correct the reported balances of affected accounts in the FS;
b. effect the necessary restatement entries to correct the final and beginning
balances of the 2020 consolidated FS; and
c. observe the proper recording, adjustments and reclassifications of accounts

and transactions, and that all transactions be supported with necessary
documentations in accordance with the IPSAS, GAM for NGAs and other
existing accounting rules and regulations;
92
The Heads of OUs to:
d. formulate and strictly implement internal control policies requiring timely

submission of reports consistent with requirements in the GAM and
immediate submission of supporting documents to their respective accounting
units for recording purposes, taking into account the deadlines and imposition
of corresponding penalties for non-compliance, and for strict adherence
thereto by the process owners and other responsible offices; and
e. submit complete documentation and improve financial controls in their

respective agencies and ensure that only transactions with complete and
proper documentations are recorded; and
The IAS to:
f. develop audit strategies and systems and conduct financial audit on all DOH
offices in accordance with the Internal Auditing Standards for the Philippine
Public Sector and the Internal Control Standards for the Philippine Public
Sector prescribed under COA Circular No. 2018-003 dated November 21,
2018, and submit recommendations to the SOH on courses of actions that need
to be implemented in order to avoid errors and misstatements in the books of
accounts.
Accounting deficiencies
Table XI. Summary Table of Accounting Deficiencies

ACCOUNTING DEFICIENCIES
ASSETS EQUITY (including
LIABILITIES Income and
Cash Receivables Inventories PPE
Expenses)
Dormant/Unauthorized/Unnecessary/Uncollected/Unliquidated/Long-Outstanding Accounts
49,121,153,305.23 - - - -
Negative Account Balances
- - - 86,720,537.84 -
Unexplained/undetermined Beginning Balances
- - 145,052,949.79 - -
Absence of Periodic Reconciliation/Non-Maintenance/Non-Preparation of SL/Schedule of AR/SLCs/SCs
- 265,314,360.37 187,956,815.72 962,449,293.65 269,709,558.08 -
No Physical Count/Non-submission of RPCI
1,998,534,559.02
Other deficiencies in supply management
51,120,178.23
Non-assessment of the physical conditions of the equipment for impairment
- - - 1,746,415,542.91 - -
PPEs not reported in the Report on the Physical Count of Property, Plant and Equipment (RPCPPE)
- - - 2,495,608,999.70 - -
Individual PPE items in the schedule of PPE did not tally with the unit values in the RPCPPE, but the total amount of the PPE in both documents were
reconciled
- - - - - -
PPE items acquired in lump sum price not allocated to the individual asset
17,923,541.00
Lacking descriptions and/or inconsistent specifications between PPE records
- - - - -
Unreconciled Amounts / Non-reconciliation of Accounts
Accounting Records (GL) vs. Confirmation Replies
- 11,030,315,353.52 - - 129,617.15 -
93
ACCOUNTING DEFICIENCIES
ASSETS EQUITY (including
LIABILITIES Income and
Cash Receivables Inventories PPE
Expenses)
Accounting Records (GL) vs. Subsidiary Ledgers (SL)
- 450,178.00 - - 92,347,759.76 -
Lapsing Schedule of PPE vs. Financial Statements (FS)
- - - 40,292,239.65 - -
Accounting Records (GL) vs. Physical count balances
- - - 23,281,384,118.82 - -
Accounting Records (GL) vs. Accounts Receivables Schedules
- 6,975,536.13 - - - -
Accounting Records (GL) vs. Other Records
- - - 570,610,286.83 131,410,759.25 -
Unaccounted/Unsupported with Documents
101,845,218.21 - - - 3,376,009.48 -
Unpaid Obligation
120,151,705.03
Double Maintenance of SLs
1,346,859.00
Non-elimination of intra-agency accounts
- 3,102,265,302.00 - - 2,524,709,207.49 33,388,737,795.50
Non-disclosure in the Notes to FS
- - - 15,050,474.34 - -
TOTAL DEFICIENCIES
63,526,474,035.25 29,274,787,446.69 3,229,902,013.08 33,388,737,795.50
101,845,218.21 2,237,611,552.97
95,140,718,253.12 3,229,902,013.08 33,388,737,795.50
36,618,639,808.58
131,759,358,061.70
Financial Statement Balances
₱262,902,652,151.01 ₱25,822,821,896.51 ₱237,079,830,254.50
36.19% 12.51% 14.08%
Unaccounted discrepancies in cash balances - 101,845,218.21
46. The existence of unaccounted discrepancies in Cash accounts totaling

101,845,218.21 -end cash accounts.
47. Section 74 of PD No. 1445 states that at the close of each month, depositories shall
report to the agency head, in such form as he may direct, the condition of the agency account
standing on their books. The head of the agency shall see to it that a reconciliation is made
between the balance shown in the reports and the balance found in the books of the agency.
48. Section 111 thereof requires that the accounts of an agency shall be kept in such detail
as is necessary to meet the needs of the agency and at the same time be adequate to furnish
the information needed by fiscal or control agencies of the government. The highest standards
of honesty, objectivity and consistency shall be observed in the keeping of accounts to
safeguard against inaccurate or misleading information.
49. We have noted in our audit that there were discrepancies in Cash accounts totaling
101,845,218.21 which the concerned OUs could not account mainly due to unavailability of
bank statements and uncorrected errors in posting in subsidiary ledgers (SLs). Details are
shown in Table XII.
94
Table XII. Accounting Deficiencies in Cash Accounts
Region OU Accounts Affected Deficiency Amount in PhP
NCR MMCHD Cash in Bank Local the reconciling items comprising such difference could 13,269,800.69
Currency, Savings Account not be determined on the ground of non/late preparation
(CIB-LCSA) of Bank Reconciliation Statements, CIB LCSA
POC Cash-Collecting Officers Discrepancy between the GL balance and the amount 42,868.00
reflected in the Report of Collections and Deposits (RCD)
of the Cashier as of December 31, 2020
RITM Cash in Bank- Local Reconciling differences between book records and bank 3,341,813.41
Currency, Current Account confirmation reply could not be validated due to non-
(LCCA) preparation of the Bank Reconciliation Statement for the
RITM Payroll
II BGH Cash in Bank, LCCA Items causing discrepancy could not be verified due to 173,835.10
lack of bank statements.
Cash-Modified 500.00
Disbursement System
(MDS), Regular
VIII EV-CHD Cash in Bank - LCCA The closing of SALAG account was erroneously posted 10,091,964.24
to OSEC-SASAKAWA while UNICEF collections were
erroneously posted in SALAG. The Renal Disease and
REDCOP are just one account but posted separately. Per
SL, SRTD had no beginning balance but this account was
closed in March 2018. Thus, it can be concluded that the
existence of balances was due to erroneous posting in
the SL and unreliable beginning balances.
IX BasGH Cash in Bank-LCCA The reconciling items arose because of the unavailability 60,186,889.38
of bank statements for all months in 2013 until 2015.
Hence, the nature of these differences cannot be
established. Despite a request made to LBP- Basilan
Branch on June 20, 2016 for copies of the bank
statements from 2015 to May 2016 to facilitate
statements for the months of CY 2016 were provided.

XI DRMC Cash-Collecting Officers Discrepancy between the Cash-Collecting Officers 14,737,547.39
account per post-closing trial balance and the cash on
Deposits.
Collections received through banks (direct deposits) were

recorded in lump sum by the Accountant at month-end
documented by monthly bank statement regardless of the
date of issuance of ORs by the Cashier and recognition
of such as part of Cashier's accountabilities.
TOTAL 101,845,218.21
50. Said deficiencies indicate failure of concerned OUs to immediately address the causes
of the discrepancies resulting in their non-correction up to the year-end, thus, the reliability of
the reported Cash accounts balance is negated.
51. We recommended and the SOH, through the AFMT, agreed to direct the OUs to
immediately reconcile all cash records, settle all deficiencies noted in cash accounts and
effect adjustments when needed.
95
Improper handling of receivables - 49,121,153,305.23
52. The inability of the CO and some OUs to properly handle and monitor their
receivables led to the non-collection and/or non-liquidation of receivables amounting to
3,496,940,596.58 10 1,619,333,785.48 for more than
10 years.
53. The reported receivables of the DOH consisted of accounts receivable, fund transfers
to other government agencies and non-government organizations/civil society organizations,
receivables from officers and employees and other receivables. These are expected to be
collected and/or liquidated within one year, thus, they are aptly categorized as current assets
in the FS.
54. The accounting procedures on inter-agency transferred funds and write-off of

receivables have been prescribed in several COA issuances such as Circular Nos. 94-013 dated
December 13, 1994, 2007-001 dated October 25, 2007, 2016-005 dated December 19, 2016,
and 2016-022 dated December 19, 2016.
55. In our review of receivables, we found that relevant guidelines/regulations were not
strictly complied with in the management of these accounts totaling 49,121,153,305.23,
resulting in the non-collection and/or non-liquidation of receivables amounting to
3,496,940,596.58 for more than three to 10 ears and 1,619,333,785.48 for more than 10
years, as shown in the Aging Schedule in Annex II, Table 1.
56. Other deficiencies such as unreconciled balances with debtors /implementing

agencies records, unreconciled amounts between accounting records and Accounts
Receivable (AR) schedule, non-preparation of AR schedule and absence of periodic
reconciliation, as presented in Annex II, Table 2.
57. These observations were mainly caused by the non-institutionalization of accounting

guidelines/regulations within the DOH system.
58. As a result, the valuation and accuracy of year-end receivable balances were rendered
doubtful.
59. We recommended and the SOH agreed to:
a. issue appropriate orders/memoranda/circulars institutionalizing existing

guidelines/regulations on the management of receivable accounts within the
DOH system and exact strict compliance thereof; and
b. remind the CO and OUs to immediately settle all deficiencies noted in the audit
of receivable accounts, record necessary adjustments, and impose
administrative sanctions on negligent/erring personnel concerned.
96
Deficiencies in inventory accounts
60. The pertinent rules, policies and procedures in accounting and management of
inventories were not faithfully adhered to raising doubts on the existence and accuracy
of the reported year-end balances of the Inventory accounts, thereby affecting the
reliability and fair presentation thereof in the FS.
61. Chapter 8 of the GAM for NGAs, Volume I, prescribes the inventory accounting
system which consists of the system of monitoring, controlling and recording of acquisition
and disposal of inventory. Physical count of inventories, which is required semi-annually, is
an indispensable procedure for checking the integrity of property custodianship.
62. Our audit revealed deficiencies in accounting and management of inventories such as
failure to conduct physical inventory and to submit their Report on Physical Count of
Inventories (RPCI), non-maintenance of Supplies Ledger Cards (SLCs) and Stock Cards
(SCs), non-preparation of Report on Supplies and Materials Issued (RSMI), and other
deficiencies. Details are shown in Annex III.
63. Said deficiencies are attributed to lack of manpower as well as the restrictions brought
about by the COVID-19 pandemic.
64. These conditions, Management s assertions on the completeness, e istence and

accuracy of the year-end balance of Inventories could not be relied upon.
65. We recommended and the SOH, through the AFMT, agreed to direct the
concerned OUs to:
a. ensure the conduct of semi-annual physical count of inventories and

reconciliation of accounting and supply records; and
b. direct the Accountants and supply officers to maintain SLCs and SCs,
respectively; and
c. consider assigning sufficient manpower in their accounting and supply units.
Deficiencies in PPE accounts - 29,274,787,446.69
66. The persisting failure of the CO and various OUs to conduct reconciliation
activities, mismanagement of accounting and property records and other deficiencies
PPE 29,274,787,446.69 cast doubt on the reliability of
reported PPE balances in the FS.
67. Pertinent provisions of Chapter 10 of the GAM for NGAs, IPSAS 17 and other
governmental issuances regulate the proper accounting and recording of transactions
involving PPE accounts.
68. Our audit revealed accounting deficiencies which further adversely affected the
completeness, accuracy, existence, rights and obligations, valuation and allocation of PPE
97
balances in the FS. Most notable are the non-assessment of the physical conditions of
equipment for impairment and unaccounted variances between accounting and property
records affecting PPEs aggregating at least 33,204,355,907.38. Details are provided in Table
XIII and XIV.
Table XIII. Accounting Deficiencies in PPE Accounts
Deficiency Region OU Amount in PhP Criteria
Non-assessment of NCR DOH-CO 1,746,415,542.91 Paragraph 26, IPSAS 21, Impairment of Non-Cash Generating Assets, states
the physical that at each reporting date, an entity shall assess whether there is an indication
conditions of the that an asset may be impaired. If any such indication exists, the entity shall
equipment for estimate the recoverable service amount of the asset.
impairment
The policies and procedures on impairment of non-cash generating PPEs are
provided in Section 28, Chapter 10 of the GAM, Volume I.
Non-maintenance of NCR POC 877,872,921.51 Section 42, Chapter 10 of the GAM, Volume I, requires the Chief Accountant
PPELC to maintain the PPE Ledger Card (PPELC) for each category of PPE including
Unreconciled NCR TMC 388,326,985.17 work and other animals, livestock etc. The PPELC shall be kept to record
differences between NCR VMC 3,242,232.45 promptly the acquisition, description, custody, estimated useful life,
the books and Report NCR FDA 548,489,597.28 depreciation, impairment loss, disposal and other information about the asset.
on Physical Count of NCR RITM 105,873,048.29 For check and balance, the Property and Supply Office/Unit shall likewise
PPE (RPCPPE) NCR RMC 167,948,066.37 maintain Property Card (PC) for PPE in their custody to account for the
balance (in absolute NCR MMCHD 60,045,096.07 receipt and disposition of the same. The balance per PC shall be reconciled
amount) with PPELC maintained by the Accounting Division/Unit. They shall also be
NCR NCMH 25,269,888.40 reconciled with other property records like Property Acknowledgement
NCR SLH 16,844,318,382.68 Receipt (PAR).
II SIMC 451,871,869.41
II CVMC 83,721,058.67
III CHD 1,893,794,961.82
III TRC Bataan 943,596.56
III JBLMGH 59,192,742.49
III Dr. 335,000.00
PJGMRMC
III TGH 38,591,443.96
V CHD 104,499,909.97
V BMC 865,733,243.77
V BRGHCMC 134,473,580.70
V BRTTH 447,706,648.53
VI CLMMRH 45,184,512.89
VI WVMC 390,558,726.29
VI DJSMMCEH not stated
VII VSMMC 7,316,300.00
VIII CHD 52,932,836.45
IX CHD 61,575,599.03
IX LGH 186,412,191.58
X NMMC 94,832,818.55
XI NSC-Min 5,482,257.98
XI CHD 166,188.92
XII CHD 212,545,334.54
PPEs not reported in CAR BGHMC 427,500.00 Section 42.g, Chapter 10 of the GAM, Volume I, states that (Appendix 73)
the RPCPPE NCR QMMC 1,814,123.88 describes RPCPPE as the form to be used to report the physical count and
V BRTTH 214,888,000.00 condition of PPE by type as at a given date, including those which are
V BMC 1,397,506,638.29 unrecorded and those which could not be accounted for. It shows the balance
of PPE per property cards and per count and the shortage/overage, if any. It
VIII CHD 879,666,500.61 shall be rendered by the Inventory Committee, on its yearly physical count of
XI CHD 1,306,236.92 properties owned by the entity.
Individual PPE items VI CHD not stated Section 111 of PD No. 1445 states that the highest standards of honesty,
in the schedule of objectivity and consistency shall be observed in the keeping of accounts to
PPE did not tally with safeguard against inaccurate or misleading information.
the unit values in the
RPCPPE, but the Section 6, Chapter 19 of the GAM, Volume I, provides the qualitative
total amount of the characteristics of financial reporting, one of which is reliability. A reliable
PPE in both information is free from material error and bias, and can be depended on by
98
Deficiency Region OU Amount in PhP Criteria
documents were users to represent faithfully that which it purports to represent or could
reconciled reasonably be expected to represent.
Variance between the NCR FDA 570,610,286.83
GL and PPELC
Lapsing Schedule of I MMMHMC 40,292,239.65
PPE not reconciled
with FS balances
Failed to prepare/ NCR SLRGH 84,576,372.14
maintain/update/ NCR RITM not stated
reconcile the PC
and/or PPELC NCR RMC not stated
III TRC Bataan not stated
Section 42, Chapter 10 of the GAM, Volume I
III TGH not stated
V BRTTH not stated
VI TRC-Iloilo not stated
IX ZCMC not stated
Unexplained/ VI WVS 128,656,552.66
undetermined WVMC 16,396,397.13
beginning balances
PPE items acquired I MMMHMC 17,923,541.00
in lump sum price not Section 111 of PD No. 1445; Section 6, Chapter 19 of the GAM, Volume I
allocated to the
individual asset
Lacking descriptions XI NSC-Min not stated
and/or inconsistent
specifications
between PPE records
Projects terminated XIII CHD 15,050,474.34 Paragraph 127(c) of IPSAS 1 states that the notes shall provide additional
and those that could information that is not presented on the face of the statement of financial
not be traced/located position, statement of financial performance, statement of changes in net
were not disclosed in assets/equity, or cash flow statement, but that is relevant to an understanding
the Notes to Financial of any of them.
Statements
Grand TOTAL 29,274,787,446.69
Table XIV. Compliance/Governance Issues Noted in the Audit of PPE Accounts
Deficiency Region OU Amount Criteria
a. Lapses in PPE inventory-taking

Failure to conduct physical inventory I ITRMC 1,433,606,834.43 Section 38, Chapter 10 of the
taking of all its PPE (per Book Balance) GAM Volume I
IV-B ONP not stated Section 38, Chapter 10 of the
GAM Volume I
VI WVS not stated Section 38, Chapter 10 of the
GAM Volume I
VI WVMC not stated Section 38, Chapter 10 of the
GAM Volume I
VI DJSMMCEH not stated Section 38, Chapter 10 of the
GAM Volume I
XII CS 161,220,123.42 Section 38, Chapter 10 of the
GAM Volume I
TOTAL 1,594,826,957.85
Non-observance of pertinent procedures, NCR SLRGH not stated Appendix 73 of GAM for NGAs
rules and regulations in the conduct of Vol. II
the physical count of PPEs I MMMHMC not stated Appendix B of the IPSAS
III Bataan GHMC 333,540,224.84 Appendix 73 of GAM Volume II
VI WVS not stated Paragraph g, Section 42, Chapter
10, Volume I of the GAM
VII CSMC 477,515,152.12 Appendix 73 of GAM Volume II
TOTAL 811,055,376.96
99
PPEs not presented/not found during NCR SLRGH 1,327,535.00 Section 38, Chapter 10 of the
physical count GAM Volume I
CAR CHD 127,409.44 Section 38, Chapter 10 of the
GAM Volume I
X MHARSMC 72,651.33 Section 38, Chapter 10 of the
GAM Volume I
TOTAL 1,527,595.77
Existence of property items subject for NCR SLRGH 1,923,740.00 Section 2 of the PD No. 1445
repair since 2018 to 2019 in the TOTAL 1,923,740.00
RPCPPE
Sub-TOTAL 2,409,333,670.58
b.) Mismanagement of Unserviceable Properties
Disposal of unserviceable government NCR NCMH 5,976,964.27
property were made without strict IX LGH not stated Section 79 , PD No. 1445
adherence to the provision of Section 79
of PD 1445 TOTAL
-
Failure to prepare Inventory and VII ECSGH 5,560,262.75 COA Circular No. 2020-006 dated
Inspection Report of Unserviceable January 31, 2020 and Section 40
Property (IlRUP) (d), Chapter 10 of GAM, Volume 1
TOTAL 5,560,262.75
Sub-TOTAL 11,537,227.02
c.) Other Deficiencies affecting PPEs
Non-conduct of Periodic Preventive VIII EVRMC 839,482,437.00
Section 2, PD No. 1445
Maintenance of PPE SCRH 33,987,000.00
TOTAL 873,469,437.00
Idle/Unutilized PPE NCR DJFMH 6,890,100.00
NCR LPGH-STC 3,598,000.00
VIII EVRMC 188,864,888.00 Section 2 of PD No. 1445
XIII CHD 52,849,000.00
XIII ASTMMC 9,920,000.00
TOTAL 262,121,988.00
Unlocated/unaccounted/non-existing III Bataan GHMC not stated Sections 2, 102, and 104 of PD
PPE 1445
IX DJRMH 214,455.79 Sections 2, 102, and 104 of PD
1445
XII CRMC 1,268,643.00 Sections 2, 102, and 104 of PD
1445
TOTAL 1,483,098.79
Deficiencies in the distribution of NCR DOH-CO 65,044,533.45 Section 2 of PD No. 1445
centrally-procured assets (non-recording
in the books of recipient, lack of
supporting documents, equipment were
not received)
Turned over/distributed PPE lacks I CHD 154,751,659.00 Section 21, Chapter 5 of the
documentary requirements for the GAM, Volume I and Section 47 of
donations Administrative Code of 1987,
DOH Administrative Order No.
2019-0048
Accountability/custodianship not yet I MMMHMC 108,151.74
transferred to the incoming personnel
Non-presentation of property tags, I MMMHMC not stated
damaged/worn out tag or
data/information indicated in the tags
varying with that of the RPCPPE
Failure to renew Motor Vehicle's III JBLMGH 4,750,000.00 Sec.5, Article I, Chapter II of RA
registration No. 4136 dated June 20, 1964.
Accumulated balances in CIP account VII CHD 103,553,897.56 Paragraph IV.6, Annex I of the
due to the delay or failure to act on time Revised IRR of RA 9184
by Contract Termination Review
Committee
100
Vehicles did not carry government plates X APMC not stated COA Circular No. 75-6 and Office
and had no logo/seal or not properly of
marked the President AO No. 239 s. 2008,
Undistributed Property and Equipment XIII CHD 43,414,797.55 Section 2 of PD No. 1445
for Distribution items
TOTAL 371,623,039.30
Sub-TOTAL 1,508,697,563.09
Grand TOTAL 3,929,568,460.69
69. The continued neglect of settling the problems besetting the PPE accounts and
apparent lack of interest in clearing the current ear s unreconciled balances and other
deficiencies noted as evidenced by its inaction and considered to be the root cause of the
problem, violate the relevant provisions of PD 1445 on adequacy of needed information and
has resulted to the presentation of unreliable, inaccurate and misleading financial information
in the FS of the DOH.
70. We recommended and the SOH, through the AFMT, agreed to direct the CO
and OUs to:
a. assess at each reporting date, the physical condition of their PPEs to determine
whether there is an indication that an asset may be impaired, and to follow the
policies and procedures on impairment of non-cash generating PPEs as
provided in Section 28, Chapter 10 of the GAM for NGAs, Volume I;
b. submit their individual plans on how to, once and for all, resolve the problems
encountered in the conduct of periodic physical count and reconciliation
activities; and
c. after reconciliation and within a specific time-frame, direct the Accountants

to effect necessary adjustments in their respective records to establish the
correct PPE balances based on sufficient supporting documents.
Unaccounted liability account balances - 705,192,805.59
71. The accuracy of year-end balances of liability accounts is unreliable due to the
presence of abnormal and unreconciled accounts.
72. Under prevailing general accounting principles, an account balance is abnormal when
the reported balance does not comply with the normal debit or credit balance established in
the Revised Chart of Accounts. An abnormal general ledger account balance is an accounting
irregularity caused by the incorrect posting of transactions or by an operational issue such as
over-obligation.
73. On the other hand, reconciling the accounts is a particularly important activity for
agencies because it is an opportunity to check for fraudulent activity and prevent financial
statement errors. Reconciliation is typically done at regular intervals, such as monthly or
101
quarterly, as part of normal accounting procedures. When reconciling an account, agencies
verify that every transaction sums to the correct ending account balance. Generally, there are
two ways to reconcile an account: reviewing documents and reviewing analytics.
74. Based on our review of accounts, it was noted that liabilities in the total amount of
705,192,805.59 either have abnormal or unreconciled balances. Details are provided in
Table XV.
Table XV. Summary of Abnormal and/or Unreconciled Balances of Liability Accounts

Region OU Accounts Affected Amount Remarks
SLRGH 1,063,810.52
ARMMC 12,183,358.29
NCR
SLRGH 1,063,810.52
MMCHD 4,195,212.51
II CVCHD Accounts Payable 726,447.02
III Dr. PJGMRMC 8,486,243.99
Existence of negative/ abnormal
CSGH 228,814.60
IV- B balances reflected in Subsidiary
ONP 6,945,764.72
Ledgers (SLs)
V BMC 45,802,742.12
Guaranty/Security
II CVMC 91,908.06
Deposits Payable
Due to Pag-ibig 12,697.00
NCR MMCHD
Due to BIR 3,982,341.04
V CHD Due to Operating Units 1,805,812.45
Sub-total 86,588,962.84
Due to BIR 120,366.96 Existence of negative/ abnormal
NCR DJFMH balances reflected in General Ledger
Due to GSIS 11,208.04
(GL)
Sub-total 131,575.00
II DATRC - Isabela 58,178.35
Accounts Payable
V BMC 3,026,908.73
Existence of unreconciled SL
Various Liabilities 60,056,702.57
balances
II CVMC Guaranty/Security
29,205,970.11
Deposits Payable
Sub-total 92,347,759.76
Accounts Payable 172,739,094.81
NCR POC Lack/non-preparation of SLs/
Other Payables 48,699,436.14
schedules to support the account
Guaranty/Security
I MMMHMC 48,271,027.13 balances
Deposits Payable
Sub-total 269,709,558.08
I CHD 10,958,603.60
CSGH 16,816,229.96
IV- B
ONP 3,728,822.13 Unreconciled balances of Due and
Accounts Payable
DOH CHD 12,155,054.43 Demandable Obligations between
V
BRTTH 23,932,233.18 Accounting and Budget Sections
TRC Malinao 2,110,255.58
Sub-total 69,701,198.88
Unreconciled amounts Accounts
I MMMHMC Accounts Payable 129,617.15 Payable Aging Schedule vs.
confirmation reply
Unreconciled and negative amounts
TRC Malinao Due to Philhealth 1,385.13
in FS and Aging of Accounts Payable
Sub-total 1,385.13
NCR FDA Accounts Payable 59,161,700.52 Unreconciled balances between the
VI WVMC Due to RO 2,546,474.72 DOH-RO and Hospital
Sub-total 61,708,175.24
102
Region OU Accounts Affected Amount Remarks
WVS 3,272,363.24 Accounts Payable without DVs &
VI Accounts Payable
WVCHD 89,499.99 supporting documents
Sub-total 3,361,863.23
Due to BIR 4,597.77
NCR DJFMH
Due to PhilHealth 4,853.63 Existence of unaccounted balances
TRC Malinao Due to GSIS 4,694.85
Sub-total 14,146.25
XIII CRH Accounts Payable 120,151,705.03 Unpaid Obligations
Sub-total 120,151,705.03
NCR MMCHD Accounts Payable 1,346,859.00 Double Maintenance of SLs
Sub-Total 1,346,859.00
Grand Total 705,192,805.59
75. The OUs continued neglect in ascertaining and addressing the reasons/factors that led
to these balances has resulted in the unreliability of affected account balances and accuracy
of DOH s financial reporting.
76. We recommended and the SOH, through the AFMT, agreed to direct the OU
Accountants, through the AFMT, to review, analyze and reconcile all liability
accounts/balances and prepare necessary adjustments in the books of accounts.
77. Management commented that the DOH through the AFMT will direct the OU
Accountants compliance on the noted deficiencies pertaining to liability accounts -
reconciliation of balances and recognition of necessary adjusting entries.
Non-elimination of intra-agency accounts
78. The balances of intra-agency receivables/payables and subsidy from/to accounts,

577,556,094.51 18,379,692,578.50, ,
thereby casting doubt on the correctness and reliability of their balances.
79. Section 8, Chapter 20 of the GAM for NGAs, Volume I, states that one of the steps to
be taken in order for the consolidated FS to present information about the economic entity as
that of a single entity, balances, transactions, revenues, and expenses between entities within
the economic entity shall be eliminated in full.
80. Section 3.2.3 of Government Accounting and Financial Management Information

System (GAFMIS) Circular Letter No. 2003-007 dated December 19, 2003 requires that at
the Central Office level and in the process of consolidation, the Central Office Chief
Accountant shall eliminate the reciprocal accounts between the Central Office and the
Regional Offices, and between the Central Office and the Provincial Offices/Operating Units,
if any.
81. Review and analysis of the reciprocal accounts intra-agency receivables/payables and
subsid from/to, respectivel showed total differences of 577,556,094.51 and
18,379,692,578.50, with details shown below:
103
Table XVI. Differences in Amounts of Intra-Agency Receivable/Payable Accounts
Reciprocal Accounts
Particulars Difference
Due from Due to
Central Office ₱192,747,132.48 ₱625,017,690.31 (₱432,270,557.83)
Bureaus 332,091,542.58 3,189,661.07 328,901,881.51
Regional Offices 55,606,602.95 169,651,476.86 (114,044,873.91)
Operating Units 752,160,068.24 13,649,227.16 738,510,841.08
Other Funds 1,769,659,955.75 1,713,201,152.09 56,458,803.66
Total ₱3,102,265,302.00 ₱2,524,709,207.49 ₱577,556,094.51
Table XVII. Differences in Amounts of Subsidy From/To Accounts

Reciprocal Accounts
Particulars Difference
Subsidy From Subsidy To
Other Funds ₱5,489,031,876.08 ₱949,109,610.49 ₱4,539,922,265.59
Central Office 701,507,027.13 24,396,101,193.45 (23,694,594,166.32)
Regional Office/Staff 1,313,983,705.29 539,004,383.06 774,979,322.23
Bureaus
Total ₱7,504,522,608.50 ₱25,884,215,187.00 (₱18,379,692,578.50)
82. With the differences in balances of the corresponding reciprocal accounts, same were
not properly eliminated during the consolidation process of the FS of the CO and OUs. Said
condition indicates accounting errors and omissions which were not promptly detected and
corrected due to the lack of regular reconciliation between the CO and OUs records at interim
periods. As disclosed, the breakdown of the intra-agenc accounts ear-end balances were
likewise not provided by the Accountants of various OUs.
83. It bears stressing that while subsidy accounts are closed to Revenue and Expense
Summary account at year-end and closed to the accumulated surplus account, its non-
elimination will still result in the retention of contra-accounts debited and credited, thus,
understating and overstating the balances found in the FS.
84. The condition further contributes to the doubtful reliability of the amounts presented
in the consolidated FS of the DOH.
85. We recommended and the SOH, through the AFMT, agreed to direct:
a. CO OIC-Chief Accountant, through the AFMT and FMS, to

conduct regular quarterly reconciliation activities for reciprocal accounts
with the Accountants of various OUs in order to immediately rectify any
discrepancy and to show the correct financial condition and results of
operation of the Department as a single entity;
b. require the Accountants of the OUs, through the AFMT, to:
i. prepare schedules of reciprocal accounts and undertake an analysis,

reconciliation and elimination thereof; and
104
ii. effect accounting entries to take up the reconciling items noted to correct
the balances of the accounts affected after reconciliation; and
iii. direct the OIC-Chief Accountant, through the AFMT and Finance
Management Service (FMS), to prepare consolidation working papers
and adjusting entries to eliminate in full the balances of reciprocal
DOH FS.
86. Management commented that the Reconciliation with the OUs is in place. As a result
of the reconciliation conducted in July 2021, balances/items needing adjustment were
identified of which, one is the receipt of Notice of Transfer of Cash Allocation (NTCA). It
was raised during the reconciliation that some OUs recognized the NTCA transactions as
Subsidy from Central Office while others as Subsidy from National Government. This concern
is subject to COA GAS proper guidance to have a uniform accounting entry, and to lessen the
reconciling balance/item during the elimination of accounts on consolidated FS. The DOH-
CO had partially effected adjustment in the books of the identified reconciling items based on
the submitted reports/documents from OUs.
Deficiencies in the Notes to the FS
87. The Notes accompanying the FS are wanting accurate and adequate disclosures
M DOH FS,
OU FS, thus, depriving
Management and other users thereof with the right information that could be considered
D
resources.
88. Paragraph 127 of IPSAS 1 states that the Notes to the FS shall, among others, provide
additional information that is not presented on the face of the statement of financial position,
statement of financial performance, statement of changes in net assets/equity, or cash flow
statement, but that is relevant to an understanding of any of them.
89. Section 29, Chapter 2 of the GAM for NGAs, Volume I, states that the notes provide
narrative descriptions or disaggregation of items disclosed in those FS and information about
items that do not qualify for recognition in those statements. Section 30 further provides that
an entity shall present information including accounting policies in a manner that meets a
number of qualitative characteristics such as understandability, relevance, materiality,
reliability and comparability. These qualitative characteristics are the attributes that make the
information provided in the FS useful to users.
90. We observed that the Notes accompan ing the DOH s FS are wanting of adequate
information necessary to provide Management and other users/stakeholders an understanding
of the Department s statements of financial position, financial performance, changes in net
assets/equity and cash flows, such as the following:
105
a. explanations on the reasons for the movements (i.e. increases/decreases) of the
account balances during the year for the Property, Plant and Equipment
accounts;
b. details of the movement (e.g. additions/acquisitions during the year, expensed
during the year (cost of sales, expenses involving distribution of inventories)
except write-down, write-down during the year, reversal of write-down during
the year) of the increases or decreases of Inventory accounts;
c. details of the movements of the account Cost of Sales in CY 2019 and 2020;
and Cost of Sales was included as deduction to Revenue in the Statement of
Financial Performance instead of being presented as separate expense account;
d. details of the movement (e.g. additions/acquisitions, disposals, impairment
loss, accumulated depreciation, amortization recognized, allowance for
impairment) of the increases or decreases of PPE, Intangible Assets and
Accumulated depreciation/ amortization accounts;
e. carrying amount of temporarily idle PPE, fully depreciated PPE still in use and
PPE retired from active use and held for disposal, and the fair value of PPE
when this is materially different from the carrying amount;
f. details of the movements of the Construction in Progress accounts
g. a reconciliation of the carrying amounts at the beginning and end of the year
for intangible assets as required in paragraph 117(e) of IPSAS 31, Intangible
Assets; and
h. information on the cash and in-kind donations received relative to Disaster Risk
Reduction and Management (DRRM) as required under COA Circular No.
COA Circular No. 2014-002 dated April 15, 2014.
91. As gathered, the required disclosures were not provided due to unavailability of the
breakdown, details and explanation of the nature of the accounts which were either not
provided by various OUs or non-disclosure in the latter s FS used as reference for
consolidation.
92. With the Notes to the FS disclosing inadequate information, as described in the
preceding paragraphs, the DOH s consolidated FS ma not be considered to possess the
qualitative characteristics of financial reporting. Hence, Management and other users thereof
(taxpayers, donors, lenders, other resource providers, service recipients, etc.) were not
afforded with the right information that could be considered useful in making effective
decisions and informed judgements on the Department s resources, claims to those resources,
how it used the resources to achieve its objectives, and its liquidity.
93. It bears stressing that the pro-forma notes to FS presented in Annex F of GAM for
NGAs, Volume I, prescribes and does not in any way preclude government agencies from
providing in the notes additional information not presented in any of the FS but relevant to
better understanding of the same.
106
94. We recommended and the SOH, through the AFMT, agreed to direct :
a. enjoin all OUs to provide the necessary details/disclosures in their respective

FS and impose appropriate sanctions on erring officials/employees who are
remiss in the performance of their duties and responsibilities; and
b. direct the AFMT to ensure that the Notes provide additional information not
presented on the face of the FS, but relevant to full understanding of any of
them and that such information be adequate to afford users thereof sufficient
basis for making effective decisions and informed judgements, and to consider
affecting revisions/modifications in the Notes to achieve this end.
95. In summary, the total misstatements in Asset accounts amounted

to 70,894,401,298.55 which represents 26.97% of the total assets, while the Liabilities and
Net Assets/Equity accounts were misstated by 944,035,967.72 or 3.66%
and 70,171,552,317.53 or 29.60%, respectivel . Moreover, accounting deficiencies were
noted in Cash, Receivables, Inventor and PPE accounts totaling 95,140,718,253.12
representing 36.19% of the total assets, in Liabilit accounts of 3,229,902,013.08 or 12.51%
of total liabilities and 33,388,737,795.50 or 14.08% of total equit . (Details of accounting
errors and omissions per operating unit and details of accounting deficiencies are shown in
Annex I.) Due to the significant impact of these misstatements and deficiencies on the
financial statements, we rendered an Adverse Opinion on the financial statements of the DOH
as at year-end.
Management and Governance Issues
96. Section 123 of PD No. 1445 defines internal control as the plan of organization and
all the coordinate methods and measures adopted within an organization or agency to
safeguard its assets, check the accuracy and reliability of its accounting data, and encourage
adherence to prescribed managerial policies. Section 124 further provides that it shall be the
direct responsibility of the agency head to install, implement, and monitor a sound system of
internal control.
97. Internal controls are integral mechanisms of good management processes, which are
established in order to provide reasonable assurance that the operations are carried out
efficiently and effectively, financial reports and operational data are reliable, and the
applicable laws and regulations are complied with so as to achieve organizational objectives
of the Agency.
98. COA rules and regulations and Internal Control Policies prescribes that the agency
should adopt internal control over safeguarding of assets against unauthorized acquisition, use
or disposition. These should be effected by the Head of the Agency, Inventory Committee and
employees designed to provide reasonable assurance regarding prevention or timely detection
of unauthori ed acquisition, use or disposition of the entit s assets that could have a material
effect on the financial statements. A measure to ensure the prevention and early detection of
loss of assets is best exercised among others through proper monitoring.
107
99. In the course of our audit, several deficiencies were observed that negate the existence
of a sound internal control system in the CO and OUs of the DOH, as discussed in the
following paragraphs.
Deficiencies in the management of COVID-19 Funds - 67,323,186,570.57
100. 67,323,186,570.57 worth of public funds

and intended for national efforts of combating the unprecedented scale of the COVID-
19 crisis were noted. These deficiencies contributed to the challenges encountered and
missed opportunities by the DOH during the time of state of calamity/national
emergency, and casted doubts on the regularity of related transactions.
101. COVID-19 is an infectious disease caused by a newly discovered coronavirus.

According to the World Health Organization (WHO), the COVID-19 virus spreads primarily
through droplets of saliva or discharge from the nose when an infected person coughs or
sneezes. Most people infected with the virus experience mild to moderate respiratory illness
and recover without requiring special treatment. Older people, and those with underlying
medical problems like cardiovascular disease, diabetes, chronic respiratory disease, and
cancer are more likely to develop serious illness.
102. The Research Institute for Tropical Medicine (RITM) developed the capability to
conduct confirmatory tests for COVID-19 in response to the emergence of suspected COVID-
19 cases. It started conducting confirmatory tests on January 30, 2020. On the same day, the
first case of COVID-19 in the Philippines was confirmed. The diagnosed patient was a 38-
year-old Chinese woman from Wuhan, who had arrived in Manila from Hong Kong on
January 21. She was admitted to the San Lazaro Hospital in Manila.
103. Several measures were imposed to mitigate the spread of the disease in the country,
including travel bans. On March 7, 2020, the DOH raised its "Code Red Sub-Level 1" with a
recommendation to the President of the Philippines to impose a "public health emergency"
authorizing the DOH to mobilize resources for the procurement of safety gear and the
imposition of preventive quarantine measures. On March 9, 2020, President Rodrigo
Duterte issued Proclamation No. 922, declaring the country under a state of public health
emergency.
104. On March 12, 2020, President Rodrigo Roa Duterte declared "Code Red Sub-Level 2"
issuing a partial lockdown on Metro Manila to prevent a nationwide spread of COVID-19.
The lockdowns were expanded on March 16, 2020, placing the entirety of Luzon under an
"Enhanced Community Quarantine" (ECQ). Other local government units outside Luzon
followed in implementing similar lockdowns. On March 17, 2020, President Duterte issued
Proclamation No. 929, declaring the Philippines under a state of calamity for a tentative period
of six months.
105. Additional health facilities started to conduct confirmatory testing. On March 20,
2020, four facilities, namely: the Southern Philippines Medical Center in Davao City, Vicente
Sotto Memorial Medical Center in Cebu City, Baguio General Hospital and Medical
108
Center in Benguet, and the San Lazaro Hospital in Manila (where the first COVID-19 patient
was admitted), began conducting tests as well, augmenting the RITM. Other public and
private facilities began operations as well in the following days.
106. On March 25, 2020, the President signed RA No. 11469 or the Bayanihan to Heal as
One Act, which gave him additional powers to handle the outbreak. The government then
imposed varying community quarantine levels in the provinces in the ensuing months.
107. The President then signed RA No. 11494 or the Bayanihan to Recover as One Act into
law on September 11, 2020. The period of the state of calamity was extended until September
2021, through his Proclamation No. 1021 filed on September 18, 2020. COVID-19 has spread
to all provinces in the Philippines by September 28, 2020, when Batanes Province recorded
its first case.
108. In mid-December 2020, a new variant of SARS-CoV-2 known as VOC-

202012/01 was identified in the United Kingdom and is reportedly more contagious than
earlier variants of the virus. This has led to several countries to restrict or ban travel from the
United Kingdom, including the Philippines. The Philippines also banned travel from 19 other
nations which has reported cases of more-infectious variants of SARS-CoV-2.
109. The DOH is one of the leading government agencies tasked in the implementation of
various programs and projects aimed at fighting the deadly COVID-19. By virtue of Section
1 of Executive Order No. No. 168, s. of 2014, the Secretary of Health sits as the Chairperson
of the Inter-Agency Task Force on Emerging Infectious Diseases (IATF-EID).
110. In our audit of the COVID-19 funds, various deficiencies presented in Annex IV were
found. These deficiencies involving public funds aggregating 66,287,336,325.31 are mainly
caused by non-compliance of pertinent laws, rules and regulations and contributed to the
challenges encountered and missed opportunities by the DOH during the time of state of
calamity/national emergency. It, likewise, casted doubt on the regularity and propriety of
related transactions. A Consolidated Management Letter (CML) on the audit of COVID-19
funds for the year ended December 31, 2020 was transmitted to Management on May 4, 2021
containing our detailed audit observations and recommendations to the SOH.
111. Our continuous audit also disclosed additional deficiencies involving COVID-19
funds in the aggregate amount of 1,036,390,245.26 which were not included in the CML and
these are presented in Annex V.
112. Most importantly, the billions of pesos in the coffers of the DOH that have remained
not obligated and disbursed as at year-end is counter-beneficial to the Department s
continuing efforts towards controlling the spread of COVID-19 through provision of quality
health services. It can, thus, be said that these funds that remained idle as at year-end were
not translated to much-needed health supplies, equipment and services that could have
benefited both the health workers and the general public during the critical times of the
pandemic.
109
113. We requested that the SOH implement the recommendations contained in the
CML and submit a status report on the actions taken on the audit recommendations
stated therein, as enumerated in the table below:
Table XVIII. Recommendations in Consolidated Management Letter for COVID-19 Findings
Fund Utilization
We recommended that the Secretary of Health:
a) Remind the heads of various operating units (CHDs, Hospitals, TRCs and Bureaus) to act with urgency and efficiency in the utilization
of COVID-19 funds;
b) Direct concerned officials, especially the program directors and heads of operating units, to immediately address the challenges
and roadblocks currently impeding the efficient use of COVID-19 funds and come up with proper courses of action;
c) Instruct the Administration and Financial Management Team and program directors to closely coordinate and conduct
regular/periodic assessment on the Page 15 of 49 utilization of COVID-19 funds to prevent delays in downloading of funds and project
implementation; and
d) Order the concerned program directors to extend guidance and assistance to the operating units as to the proper implementation of
programs and utilization of funds.
Implementation of foreign-assisted projects
a) Direct the TWC/PMT to hasten the conduct of procurement through proper planning, supervision and monitoring of scheduled
activities;
b) Instruct the Project Directors to make use of alternative modes of procurements presently allowed by existing laws and regulations,
define specific schedule of deliveries for proper compliance by the suppliers and conduct thorough evaluation on all possible roadblocks
that may be encountered in project implementation in order to lay-out specific courses of actions;
c) Require the recipient health facilities/institutions, in writing and within a specific time-frame, to submit promptly all the technical
documents such as DAED, BOQ and other relevant documents, otherwise the funds will be offered to other health institutions who are
also in need of additional funding;
d) Remind the TWC/PMT to consider decentralizing the implementation of the Project by downloading the funds to intended beneficiary
health facilities/institutions, subject to proper liquidation and submission of Fund Utilization Reports, and proper monitoring/guidance
by the TWC; and
e) Order the PMT to properly fill in the columns provided for “time-frames” and “targets” for each activity/output indicated in the Work
and Financial Plan Matrices and submit corrected copies to the COA Office.
Deficiencies in Procurement
a) Remind the Heads of various operating units to comply strictly with existing procurement laws, rules and regulations through the
issuance of a Department Memorandum;
b) Direct the Heads of various DOH Programs based in the Central Office to strengthen monitoring of procurement activities vis-à-vis
compliance with laws, rules and regulations, and provide guidance whenever needed;
c) Conduct thorough investigation on irregularities noted through the Internal Audit Service and impose proper administrative sanctions
when warranted;
d) Instruct the concerned operating units to submit written explanations on the deficiencies noted, evaluate the same and implement
corrective actions when deemed necessary; and
e) Consider the deficiencies noted in the performance evaluation of operating units concerned and their officials/employees and in the
granting of future funds for project implementation.
a) Require the concerned operating units to submit written explanations on the deficiencies noted, evaluate the same and implement
corrective actions when deemed necessary;
b) Remind program directors and heads of operating units to, henceforth, conduct proper procurement planning and consider all factors
in the use of medical equipment prior to actual purchase;
110
c) Instruct the concerned officials in the Central Office to monitor the procurement of medical equipment by operating units and
determine actual usage thereof so that immediate assistance can be extended in case of non- use; and
d) Direct the heads of operating units to immediately address the challenges encountered in the use of procured medical equipment
and submit reports to the Central Office for monitoring purposes.
Lapses in the handling of Petty Cash Funds
a) Remind the Heads of various operating units to comply strictly with existing
laws, rules and regulations on the handling of cash advances and petty cash funds through the issuance of Department Memorandum;
b) Direct the Legal Service and Internal Audit Services to conduct thorough investigation on irregularities noted in the handling of Petty
Cash Funds and non-liquidation of cash advances, and impose proper administrative sanctions
when warranted;
c) Order in writing the Heads of operating units to submit complete documentation (certification on previous liquidation, liquidation
documents, procurement records such as Mayor’s or business permits, income/Business tax returns, Omnibus Sworn Statements of
the suppliers/contractors, etc.) and strengthen internal controls involving funds management and enforce on time liquidation of cash
advances at all times; and
d) Instruct the concerned operating units to submit written explanations on the deficiencies noted, evaluate the same and implement
corrective actions when deemed necessary.
Management of Fund Transfers
We recommended that the Secretary of Health to:
a) Direct the Heads of the OUs to prepare/amend and submit the duly signed MOAs and henceforth, require MOAs prior to
transfer/receipt of funds;
b) Instruct the various DOH OUs to require PLGUs to comply with the directive to submit the dedicated LGU-owned lot where the
Temporary Treatment Monitoring Facility (TTMF) will be constructed; and
c) Strictly comply with the rules and regulations in the grant, utilization and liquidation of funds transferred.
Implementation of Financial Assistance Programs
a) Require the Finance Management Service and Accounting Division of the Central Office to explain in writing why there is delay in
the release of allotments and cash back-ups for the payment of assistance to health workers as authorized by RA 11494;
b) Remind the concerned officials to hasten the processing and release of financial assistance to qualified beneficiaries and henceforth
download without further delays the funding necessary for the purpose; and
c) Instruct the WVCHD to submit written explanation on the deficiency noted, evaluate the same and implement corrective actions
when deemed necessary.
Payment of COVID – 19 Allowances
We recommended the Secretary of Health to:
a) Direct the operating units, including the Central Office, to submit an explanation as to why sufficient documentation was not submitted
in support of the disbursement transactions and thereby present the required records/documents
which will afford the Audit Team a thorough validation on the full compliance with pertinent guidelines:
b) Require the Administration and Financial Management Team to submit explanation in what way does “ECQ still characterizes
MECQ”;
c) Instruct the Heads of operating units to submit written explanations/ justifications on the deficiencies noted, evaluate the same and
implement corrective actions whenever necessary;
d) Provide policies/guidelines that clearly provide the true intention of the government in granting additional benefits to health workers
and without further interpretation; and
e) Remind all officials concerned to, henceforth, ensure that all transactions are adequately supported with required documents, refrain
from processing those with incomplete documentation and comply fully with pertinent laws, rules and regulations.
Unauthorized grant of meal allowances
111
a) Require the Heads of concerned operating units to cause the refund of the meal
allowances distributed without legal basis;
b) Direct the Heads of concerned operating units strictly adhere to the provisions of RA No. 11494 and pertinent issuances of the DOH
or other competent authorities concerning the provision of life insurance, accommodation, transportation, and meals during the state
of national emergency; and
c) Remind operating units to ensure that funds received by them are utilized exclusively for their intended purposes.
Incomplete Documentation for Death and Sickness Compensation
a) Require the heads of concerned operating units to cause the immediate submission of required documents and explain in writing
their failure to attach the same in the disbursement vouchers, with the explanation subject to the evaluation of the DOH Audit
Committee;
b) Remind operating units to ensure that there should be proper approval prior to payment of the benefits as part of internal controls;
and
c) Instruct the operating units to, henceforth, strictly comply with existing rules and guidelines on the matter.
Failure to prepare the required reports and documents for COVID-19 related donations in-kind
We recommended the Secretary of Health to remind the operating units through a

Memorandum to: (i) ensure proper monitoring of all donations in-kind received from all sources by maintaining records of receipts and
issuance/ distribution thereof, and (ii) to
prepare the required reports with the necessary supporting documents and submit to the NDRRM Council, through the OCD.
Lapses in the management of IRM funds
We recommended the Secretary of Health:
a) Consider making representations with PHIC to facilitate the approval of utilizing IRM Fund for reimbursement of HCIs’ claims related
to the COVID-19 cases;
b) Remind the Heads of various operating units to comply strictly with existing PHIC regulations on the IRM and effect the required
adjustments;
c) Instruct the operating units concerned to submit written explanations on the deficiencies noted, evaluate the same and implement
corrective actions when deemed necessary; and
d) Direct the Legal Service and Internal Audit Service to conduct thorough investigation on the noted irregularities in the management
of IRM Funds and impose administrative sanctions when necessary under the circumstances.
Lapses in the implementation of the Health Facilities Enhancement Program (HFEP) -

4,057,650,623.82
114. E 1,225,260,566.29
HFEP were found to be either undelivered, unutilized, and/or without calibration and
preventive maintenance, while several HFEP infrastructure projects with total value of
2,832,390,057.53 were either idle/unutilized or with substantial delay in
implementation, thus, exposing these properties to the risks of deterioration, loss, lapse
of warranty period and wastage of government funds, thus, depriving the public of the
benefits they could have derived from the immediate and maximum use of said facilities
and resulted to the non-attainment of the program objectives.
115. Section 2 of PD No. 1445 states as a declared policy of the State that all resources of
the government shall be managed, expended or utilized in accordance with law and
regulations, and safeguarded against loss or wastage through illegal or improper disposition
with a view to ensuring efficiency, economy and effectiveness in the operations of
112
government. The responsibility to take care that such policy is faithfully adhered to rests
directly with the chief or head of the government agency concerned.
116. Included b the DOH in its Kalusugan Pangkalahatan'' strategic program is the
improvement of access to quality health services by all Filipinos through the HFEP. This
program aims at (a) improving primary health facilities (RHUs, BHS) to gatekeep and deliver
preventive health services; (b) improving quality of LGU hospitals to comply with DOH
licensing and PhilHealth accreditation requirements as quality referral centers; and (c)
decongesting DOH hospitals to be able to provide affordable quality tertiary care and
specialized treatments (DOH Department Order [DO] Nos. 2015-0287 and 2016-0045).
117. In the implementation of the HFEP, the DOH had issued DO No. 2012-0065 dated
May 03, 2012 to provide guidelines on the management of procurement, delivery, receipt,
inspection, acceptance, training, issuance and payment of various equipment under the HFEP.
118. Table XIX shows that various equipment funded under the HFEP with total value of
37,391,241.29 and were undelivered, while a total of 296,415,888.00 were unutili ed and
those without calibration and preventive maintenance totaled 873,469,437.00.
Table XIX. Deficiencies on management of HFEP Equipment

DOH
Region Operating Amount Cause Management's Comments
Unit
Undelivered Equipment
VI WVCHD 22,721,437.54 Equipment for delivery were still in Management agreed with the recommendations
transit due to problems in logistics and
shipment.
VIII EV-CHD 2,978,543.75 Deed of Donation is a pre-requisite in All equipment were already delivered to the
the delivery of HFEP Equipment which recipient facilities as of July 12, 2021. Notarized
causes delay on the previous deliveries. Deeds of Donation will be submitted to the Audit
Team for their reference.
XIII CRH 11,691,260.00 The elapsed time from the preparation Management committed strict adherence to the
of PO to the issuance of NTP and/or audit recommendations.
conformance of suppliers ranging from
12 to 78 days greatly attributed to the
delays in the delivery of the equipment
as the reckoning date for the delivery
was also delayed.
Subtotal 37,391,241.29
Unutilized Equipment
NCR LPGH-STC 3,598,000.00 Lack of consumable supplies that were At present, the hospital is operating on a new
needed to run it, one of which is a normal situation. There are services that are
cassette for irrigation and aspiration of being sacrificed like closing of Out-Patient
the machine Department and limiting surgeries only to
Emergency Cases (in which Ophthalmology
Service is affected) .This is to accommodate the
increasing number of COVID cases admitted and
referred to the hospital.
V BRTTH 85,000,000.00 Assigned personnel received their Due to COVID restrictions, the assigned
training last March 2021 only. personnel received their training last March 2021
only.
VI WVCHD 9,033,000.00 Nobody was available to install the Management agreed with the recommendations
equipment and the BHS/RHUs were
under renovation such that the areas for
the equipment were not yet ready.
113
DOH
Unit
VIII EVRMC 188,864,888.00 1. The buildings where these machines For the 3 units autoclave that is for the Support
are to be installed remained under Building which construction is on-going
construction; 2. No License to Operate management will identify other areas where the
yet from FDA. Application is currently in equipment can be installed/utilized. The hospital
process and the supplier is currently license has been approved and is for initial
facilitating the calibration of the testing. The Cardiac Unit Head confirmed that the
machine. equipment will be ready for use before end of
March 2021. The Trauma Building where the OR
lights were to be installed is currently being
constructed and is now at 92% of completion.
XIII ASTMMC 9,920,000.00 Defective equipment, no appropriate Management agreed on the audit observation and
instruction and proper documentation committed strict adherence to the audit
from the DOH-CO except for a copy of recommendations. Communication with the
PO. Accounting Department of the DOH-CO will
immediately be made by Management to come up
with appropriate decision on the equipment.
Subtotal 296,415,888.00
Non-conduct of Calibration and Preventive Maintenance
VIII EVRMC 839,482,437.00 1. The Biomedical Unit is not aware of a. The Biomedical Section already coordinated
the responsibilities of the suppliers with MMD regarding the medical equipment under
regarding preventive maintenance of warranty. It was also established during the
the equipment because they were not conference that the Biomedical Section will be
furnished with copies of the POs and notified regarding the deliveries of new Medical
warranty certificates. Equipment; b. The Biomedical Section has the
2. Suppliers/Manufacturers were not copy of the PO/Contract of some medical
required to comply with the terms and equipment under warranty. The coordination with
conditions in the contracts regarding MMD is ongoing to get all the copies of the
corrective preventive maintenance. necessary documents such as PO/Contract,
3. The Biomed Unit conducted periodic Warranty, Certificate, Preventive Maintenance
check-up of all the medical and and Calibration Schedule of these Medical
laboratory equipment of the hospital. Equipment. The section will also submit a status
However, whether or not actually report to HOPSS regularly; and c. MMD
undertaken, the check-ups made could committed to regularly furnish the EFMD thru the
not be verified because they failed to HOPSS a certified photocopy of PO/Contract and
provide the Audit Team with copies of Calibration of Medical equipment for all delivered
the periodic maintenance reports. equipment.
VIII SCRH 33,987,000.00 1.Suppliers failed to conduct repair or Due to travel restrictions set by the IATF and
preventive maintenance in CY 2020 due LGUs requirements, they cannot perform their
to Inter-Agency Task Force restrictions obligation to conduct preventive
such as travel restriction and some of maintenance/calibrations on schedule due to the
their engineers reportedly got infected COVID-19 pandemic travel restrictions. But as of
with COVID-19, but will comply probably current year, 2021 the supplier is already
this 1st quarter of CY 2021; scheduling their site visit for preventive
2. They are requiring the supplier/s to maintenance/calibration because of recent IATF
conduct/fulfill the unperformed and LGUs fewer documentary requirements for
calibration/preventive maintenance as easier travel. Because of this, the suppliers will be
stipulated before payment of the able to perform preventive
retention, in case of failure; maintenance/calibrations on schedule.
3.The Engineering Facility Management
Section (EFMS) is conducting regular
preventive maintenance on equipment
only after the warranty period.
Subtotal 873,469,437.00
Non-compliance with conditions of donations by recipient LGUs:
V CHD 17,984,000.00 (a) Delays in the recording of said Letters were already sent to the recipient LGUs of
transactions in the books of recipient Land Ambulances informing them of their non-
LGUs ranging from 1 to 8 months; compliance to the agreements set forth in the
(b) only 2 recipient LGUs (Camarines Deed of Donation, and demanding from them
Norte and Pioduran) had applied for the their compliance, especially with the licensing in
licensure of 3 land ambulance while 59 accordance with DOH Administrative Order on
or 95 percent of the donations made Licensure of Ambulance.
have no application for license by the
recipient LGUs; (c) They were also informed of the noted errors in
erroneous recording in LGU books; their accounting entries in recording their receipt
(d) absence of supporting documents of the ambulance. CHD Bicol requested for copies
114
DOH
Unit
of the correcting entries.
Sub-total 17,984,000.00
TOTAL 1,225,260,566.29
119. Moreover, Table XX shows that an HFEP infrastructure project amounting to

52,849,000.00 was idle/unutili ed while several projects with aggregate cost of
2,779,541,057.53 encountered substantial dela s in implementation.
Table XX. Deficiencies on management of HFEP Infrastructure projects

Region CHD / Hospital Amount Cause Management's Comments
Idle/ Unutilized projects:
XIII CHD-Caraga 52,849,000.00 Insufficient funds allocation Management furnished the audit team the proposed
infrastructure projects under HFEP 2022 submitted to
Central Office and to NEDA for endorsement to DBM
which includes the non-functional and unutilized
projects that needs additional funds for completion.
Sub-total 52,849,000.00
Delayed implementation of the projects:
XII CHD - 179,750,000.00 a.) Failure to secure all the necessary For the Quick Response Fund, the SAA amounting to
Soccsksargen documents. 218,845,049.92 was released only on December 19,
b.) Lapses in the conduct of the Detailed 2020. Further reasons for delay are the following:
Architectural and Engineering Design
(DAED) a. Delayed preparation of DAED and POW by the
c.) Leniency of the agency in granting recipient Local Government Units (LGUs). Because of
extensions/suspension of work to the the delay, the office decided that the HFEP engineers
contractors, will prepare the necessary document to fast track the
d.) Failure to adhere to the recommended implementation.
procurement timeline by the RA 9184; and
e.) Delayed release of the Sub-Allotment b. A moratorium of all activities including bidding and
Advice (SAA) monitoring of facilities was issued effective March 16,
2020 due to COVID-19.
For succeeding releases of HFEP Funds, the

management will try its best to conduct early
procurement activities to avoid low utilization and
delayed implementation of projects. Request for early
release of sub-allotment will also be done in order to
fast tract implementation of HFEP Projects.
VII CHD Central 203,710,562.23 Not completed within contract time. The Management undertake to perform the following
Visayas delay or failure to act on time by the improvement actions:
Contract Termination Review Committee
(CTRC) 1. Set aside Monday afternoon for the CTRC meeting.
2. Request assistance from the Legal Section in the
formulation of Internal Rules of Procedure.
3. Conduct its proceedings from Verification to its Final
Recommendation to the HoPE.
4. Review the degree of participation of the Health
Infrastructure Services Unit (HISU) during the contract
termination stages.
5. Recommend to the HoPE additional hiring of
Engineers and other competent staff to be stationed on
every Provincial DOH Office to closely and regularly
monitor the DOH infra projects.
6. Assign additional members to the CTRC secretariat.
XI CHD - Davao 108,333,338.88 (1.) pending permits or clearances from the The Regional Engineer admitted that the project was
LGUs and other National Government problematic at the start. The Legal Office already wrote
Agencies to start the project; (2.) lack of a Show Cause Order to the contractor due to the undue
manpower provided by the contractor; (3.) delays. The project was undermanaged as evidenced
delayed in purchasing construction by the absence of a Project Engineer at the project site
materials; (4.) solvency of the contractor; The Regional Engineer is also considering to terminate
and (5.) COVID-19 pandemic. the contract since the contractor was unable to meet
their acceleration/catch up plan.
115
XI CHD - Davao 97,000,000.00 Financial constraint of the contractor Management is weighing their option whether to
terminate the contract due to the undue delay.
Management wrote a Show Cause Letter to the erring
contractor and received a reply with the intent to finish
the project by March 31, 2021. Management takes the
risk of giving a chance to the contractor to fulfill their
intent to finish the project and liquidating damages will
be imposed in the final billing.
I R1MC 286,480,599.59 Poor planning by management, buildings The conversion of Cancer Center Administrative
are used for other than intended purpose Building and Dormitory as temporary facilities to
and possible negative slippages by the increase the accommodation of COVID-19 patients. It
contractors. may not serve the very purpose of it for now but with the
situation today under pandemic, the said facilities
temporarily as it seemed, served greater purpose than
ever. Meantime, the
Construction of Cancer Center (LINAC and
Brachytherapy) and its Dormitory Building is still not
fully completed because Management is still currently
waiting for the delivery of equipment for installation of
the LINAC and Brachytherapy and, for the testing and
commissioning of the elevator of the dormitory.
VI CHD Western 898,058,214.00 1. lack of closer monitoring of project The management agreed with the recommendation.
Visayas implementation, thus, time lags were not
promptly addressed;
2. delayed commencement of the project
implementation;
TRC- Iloilo 68,490,749.60 3. non-conformity of the contractor to the Constructions for partially-completed projects are on-
agreed plans and specifications resulting in going. Completion and utilization are delayed due to the
time extensions and corrections of the work following reasons:
done; 1. Procurement for current infra projects
4. unacceptable plan revisions/modification conducted short of award;
and inadequate planning; 2. Lot donation has been approved.
5. delayed downloading of funds; Processing of documents for titling on the
6. geographically hazardous site locations; registry of deeds is on-going and
7. unstable weather conditions; Illegal settlers gradually vacated the vicinity.
8. unavailability of the documents to prove
ownership of the land; and
9. various defects in the facilities.
DJSMMCEH 141,195,189.17 Delayed release of funds from DOH-CO; The delay of transfer from the old OR/DR
approved suspensions/ extension of works; Complex to the new complex was due to non-
delay in the transfer by the management to completion of ground floor of new complex. The
the Old OR/DR Complex management fast tracked the contractor to complete
necessary work items for the transfer of the Department
to the new area and to commensurate the remaining
works to be done on the old OR/DR since it is attached
as the new NICU, HRPU and portion of the labor room
for the DR complex. As of March 2021, the OR/DR
Department transferred to the new complex and
operational since. As for the remaining works, for 3
weeks, it was done by the contractor.
WVMC 56,000,000.00 Transfer of fund to other GoPs (PS-DBM) The remaining projects are projects that were to be
procured by PS DBM as per MOA between DOH and
PS DM. The 26M for Renovation of Pototan Mental
Health Unit which is for issuance of Notice of Award by
the PS DBM. And, the 30M, for the Oxygen
Generating Plant project is for rebidding of PS DBM
because of failure of bidding last year 2020. The
management will follow up PS DBM for the schedule of
bidding for the said project as well as the issuance of
the Notice of Award for the PMHU renovation.
X CHD-Northern 99,724,998.26 Poor planning; detailed engineering The HFEP Coordinator expressed her willingness to
Mindanao investigations and surveys were not confer with the Infrastructure Unit on the causes of
sufficiently carried out delay of these projects and institute measures to
resolve the issues.
XII CHD - 559,798,558.00 a.) Failure to secure all the necessary Management commented that for the Quick Response
Soccsksargen documents. Fund, the Sub Allotment Advice was downloaded and
b.) Lapses in the conduct of the DAED released on December 19, 2020 amounting to
218,845,049.92. Furthermore, the reasons for delay
are the following:
116
c.) Leniency of the agency in granting
extensions/suspension of work to the a. Delayed preparation of DAED and POW by the
contractors,
d.) Failure to adhere to the prescribed decided that the HFEP engineers will prepare the
procurement timelines under RA 9184; and necessary document to fast tract the implementation.
e.) Delayed release of SAA
b. A moratorium of all activities including bidding and
monitoring of facilities was issued effective March 16,
2020 due to COVID.
For succeeding releases of HFEP Funds, the
management will try its best to conduct early
procurement activities to avoid low utilization and
delayed implementation of projects. Request for early
release of sub-allotment will also be done in order to
fast tract implementation of HFEP Projects.
XVI CLMMRH 80,998,847.80 No exact timelines currently established for A copy of the detailed breakdown of contract cost
the completion of the including the detailed breakdown estimates and/or unit
renovation/improvement works. Thus it is costs analysis/derivation for each work item expressed
understood that the Hospital Management in volume/area/lump sum/lot was already submitted to
have not yet established the new and COA on March 2, 2021 along with the copies of bidding
doable construction timeline for the documents of the winning bidder.
implementation of the project after eight (8)
years it was started. Variation orders for the project has not exceeded 10%;
hence, additional performance security is not needed.
The Management will facilitate the submission of the

documents not yet submitted as required in the AOM.
Sub-total 2,779,541,057.53
GRAND TOTAL 2,832,390,057.53
120. These occurrences manifested poor strategic planning and inadequate monitoring by
the OUs and runs contrary to the policy of the State that all resources shall be used
appropriately. Further, the prolonged idleness of these equipment/infrastructure project entail
risks of diminishing their value and effectiveness due to deterioration while non-performance
of calibration and preventive maintenance may endanger the equipment to malfunction as well
as result in unserviceability prior to the life expiration; which likewise may result in additional
costs for possible major repairs/replacement. In effect, the main goal of HFEP to improve the
delivery of basic, essential, as well as specialized health services through the revitalization,
rationalization, and upgrading of health facilities was not attained.
a. require the HFEP Team to:
i. properly plan, assess and evaluate the equipment to be procured in terms

of availability of space, facilities and immediate needs of the recipient
hospitals to attain the maximum use of the HFEP equipment;
ii. immediately address the implementation challenges in various

infrastructure projects and come up with detailed plan on how to address
the problems encountered; and
iii. closely coordinate with the concerned OUs in planning, monitoring and
supervision of HFEP projects;
117
b. instruct the heads of OUs to:
i. demand the suppliers to deliver the equipment immediately and in

accordance with the terms and specifications so that these can be utilized
by the intended beneficiaries;
ii. ensure readiness of the recipient facilities in receiving the equipment (i.e.
enough power supply, availability of the space/location, availability and
trainings of necessary personnel, and availability of turn-over documents)
during the procurement and before implementation;
iii. ensure that the suppliers regularly conduct calibration and preventive
maintenance of the equipment; and
c. instruct both the HFEP Team and concerned OUs to facilitate the full
operation of the newly-built infrastructures and ensure the immediate
installation of needed equipment, electrical power, and all other needed
utilities.
Lapses in the management of centrally-procured (procured by DOH Central Office) assets -

65,356,720.70
122. Deficiencies were noted in the distribution of centrally-procured assets to various

OU 65,356,720.70 and which reflected deficient asset
distribution systems in the CO.
123. DOH Department Memorandum (DM) No. 2016-0220 dated June 23, 2016 with
subject: Reiteration of and Compliance to DM No. 2015-0197 dated June 17, 2015 and DM
No. 2015-0197-A dated July 3, 2016 and Additional COA Recommendation
on HFEP Implementation provides to direct the DOH Regional HFEP Teams to extend their
validation and monitoring of equipment up to its proper disclosure in the books of accounts
and use the Journal Entry Voucher (JEV) drawn by the source agency and end-user to link the
accounting records.
124. We have sent confirmation letters to various OUs in order to confirm the status of
deliveries of centrally-procured inventories for distribution, comprising of various equipment,
supplies and computer software, under the various programs/offices of the CO.
125. Results of said confirmation showed that several inventories in the total amount of
65,356,720.70 were either not received by the concerned OUs, unrecorded in their books of
accounts, received but with no supporting documents and/or not covered with necessary
transfer documents. Details are provided in Table XXI.
118
Table XXI. Summary of Deficiencies Noted in the Audit of Centrally-Procured Assets
Item Number of
Program PO Number Date of PO No. of Units Amount in PhP Region Deficiencies
Description Recipients
HPCS GOP-2018-03-011 4/25/2018 Healthbeat 6,000 167,400.00 NCR, 9 Not received -
Magazines (2018 CAR, V, Inventories
issues) VII
DPCB GOP-2019-04-050 5/17/2019 Manual of 1,347 94,963.50 I, II, VII, IX, 6
Operations on X, XII
the Philippine
National
Standards for
Drinking Water
GOP-C-2019-075 10/01/2019 Condoms 3,890,700 7,532,395.20 I, II, VII, IX,
6
X, XII
GOP-2019-05-067 06/04/2019 Personal 530 914,250.00
I, II, V, IX,
Protective 5
XII
Equipment
GOP-2019-06-080 6/25/2019 Fliptarps 900 663,120.00 I, II, V,VII,
7
IX, X, XII
GOP-2019-06-081 6/25/2019 Revised IRR of 265 10,600.00 I, II, IX, X,
RPRH Handbook 5
XII
Adolescent 528 220,334.40
Health and
I, II, VII, IX,
Development 6
X, XII
Program Manual
of Operations
Antenatal Care 915 56,455.50 I, II, VII, IX,
5
Guidelines X
WHO Medical 8,600 84,968.00
I, II, IX, X,
Eligibility Criteria 5
XII
(MEC) Wheel
GATHER 4,200 19,656.00
Approach
I, II, VII, IX,
Counseling Cue 6
X, XII
Card for Family
Planning
GOP-2019-07-180 8/20/2019 Health Beat 400 11,120.00
Magazine
HPCS NCR 1
(January - June
2019 Issue)
GOP-2018-03-007 3/13/2018 Metal Plates 1,502 635,706.48
KMITS NCR 1
Total Amount of Inventories 10,410,969.08

HFSRB GOP-2019-03-01 5/23/2019 Feeder Scanner 2 35,978.00 NCR, XIII 2 Not Received -
Equipment
KMITS GOP-2019-05-063 5/29/2019 Queueing Printer 1 16,500.00 NCR 1
GOP-C-2019-068 09/09/2019 Servers for 27 NCR, 22
Document 11,792,885.58 CAR, IVB,
Archiving, V, VI, VII,
iHOMIS and IX, X, XI,
Active Directory XIII
HEMB Donation 5/20/2019 Tent 6 279,240.00 NCR, II, 5
IX, XII
12,124,603.58
119
Item Number of
Program PO Number Date of PO No. of Units Amount in PhP Region Deficiencies
Description Recipients
KMITS GOP-C-2019-068 09/09/2019 Server for 1 436,773.54 NCR 1 Unrecorded -
Document Equipment
Archiving,
iHOMIS and
Active Directory
436,773.54
HFEP GOP No. 2017- 12/20/2017 Ambulance Type 2 41,760,000.00 VIII 1 Incomplete
12-0325 III Advance Life Supporting
Support Vehicle Documents -
Equipment
41,760,000.00
Total Amount of Equipment 54,321,377.12
KMITS GOP-2019-03-032 5/17/2019 Additional 1 312,187.25 NCR 1 No
InfoRouter Memorandum
Licenses for of Agreement /
DOH Document Unutilized -
Management Computer
and Archiving Software
System
KMITS GOP-2019-03-032 5/17/2019 Additional 1 312,187.25 NCR 1 Unrecorded
InfoRouter Computer
Licenses for Software
DOH Document
Management
and Archiving
System
Total Amount of Computer Software 624,374.50
GRAND TOTAL ₱65,356,720.70
126. The deficiencies are caused by lack of procurement planning and proper coordination
among various offices and between the CO and recipient agencies, which resulted in delayed
transfers, absence of appropriate transfer and other supporting documents, and unrecorded
property values both in the books of accounts of the CO and the recipient agencies.
a. require concerned offices to establish coordination among themselves to

ensure that all the equipment and inventories are delivered immediately within
a reasonable period of time to the intended recipients by closely monitoring
the status of deliveries of supplies and equipment, facilitate the immediate
distribution of the items not yet received by the recipients, submit explanation
on the cause/s for the non- or late delivery thereof to the intended recipients,
and execute MOAs, deeds of donation or other equivalent documents in the
transfer of centrally-procured items to ensure clear terms regarding their
utilization;
b. direct the concerned offices in the CO to provide the pertinent

documents/records to the recipient facilities to establish property
120
books of accounts of transferred accountabilities by the CO, and require them
to record said equipment immediately upon receipt of the equipment and
documents;
c. instruct the Knowledge Management and Information Technology Service

(KMITS) to issue policies and procedures to extend validation and monitoring
of equipment up to the proper recording in the books of accounts, coordinate
with the Accounting Division of the CO and forward the JEVs made by the
latter to the end-users/recipients to ensure proper establishment of the
property custodianship for equipment and computer software distributed by
CO, and ensure that the actual needs of intended recipients or end-users are
considered in the allocation list of computer software for distribution to avoid
idleness and non-utilization;
d. direct concerned offices to submit an action plan as to specific courses of

action that will be undertaken in order to avoid the deficiencies from
recurring again, officials/employees responsible and specific timelines
thereof; and
e. impose appropriate sanctions to officials/employees responsible for the

deficiencies, in accordance with PD No. 1445, the Administrative Code and
other applicable laws, rules and regulations.
128. Management commented that in order to effectively monitor the flow of logistics, a
Logistics Committee was created to coordinate with the SCMS. In an unnumbered
Memorandum dated December 3, 2020 issued by the Director of HPCS, it was stated that the
late delivery of the Health Beat Magazines was due to the following reasons: expired contract
with the official courier, Taal Volcano eruption and the COVID-19 pandemic.
129. A d d :
The creation of the Logistics Committee is a welcome development but the importance
of communication and strong coordination between and among various CO offices
must be recognized in order to institute mechanisms that will enhance the efficiency
and effectiveness of delivery of public health services.
The e piration of the courier s contract is determinable and so proper monitoring and
planning activities should have been done. On the other hand, natural calamities such
as the eruption of Taal Volcano and the pandemic must, on the contrary inspire the
DOH all the more to exert effort in ensuring on-time deliveries.
Expired, over-stocked, idle, slow-moving and nearly expired inventories - 95,151,889.46
130. Drugs, medicines and other types of inventories with a total value of
95,151,889.46 were found to be nearly expired and/or have expired due to deficient
121
procurement planning, poor distribution and monitoring systems, and identified
weakness in internal controls. This recurring problem of the DOH has resulted in
indiscriminate wastage of government funds and resources, and impedes the attainment
DOH ctive, resilient,
equitable and people-centered health system.
131. Section 25, General Provisions of RA No. 11465 or the GAA FY 2020 requires that
the inventory of supplies, materials and equipment spare parts to be procured shall not exceed
the agenc s two-month requirement.
132. DOH Administrative Order (AO) No. 9-B s. 1996 (Guidelines for Acceptance of
Drugs and Medicines, Reagents, and Other Medical Supplies Relative to the Expiration Dates)
provides that expiration dates should not be less than two (2) years from date of manufacture
and not less than one and a half years (1½) years from the date of delivery. DOH AO No.
2019-0058, on the other hand, mandates that the expiration dates of items for consignment
shall not be less than 12 months from the date of the delivery.
133. In the World Health Organi ation s (WHO) Guidelines for Drug Donations, it is
clearly stated that all donated drugs should have a remaining shelf-life of at least one year.
134. The mission of the DOH is to lead the country in the development of a productive,
resilient, equitable and people-centered health system.
135. Despite our observations and recommendations in previous years, it was found that
various drugs, medicines and other types of inventories are nearly-expired or had already
expired in DOH warehouses and OUs. Details are presented in Annex VI.
136. The presence of these overstocked, idle and slow-moving inventory items evidences
excessive spending as the procured items constitute volume far more than what the OUs
presently need. As in the past years, the problem is exacerbated by breakdown of the
inventory/supply management system such as deficient procurement planning, poor
distribution and monitoring systems, and identified weakness in internal controls.
137. While it cannot be denied that there are a lot of Filipinos in need of drugs and
medicines, especially in the countryside, millions-worth of DOH inventories were allowed to
expire, thereby constituting indiscriminate wastage of government funds/resources.
138. Over-all, the problem e posed Management s inabilit to safeguard, manage and
utilize health funds and resources economically and effectively. Slow-moving drugs and
medicines are exposed to the risk of losing their efficacy prior to distribution to intended
beneficiaries. Idle inventories, meanwhile, takes up expensive warehouse space and ties up
valuable health resources which could have benefitted government s health programs for the
poor.
122
a. take immediate action/concrete steps in resolving all issues associated with the
recurring problem such as improvement of procurement planning,
strengthening of distribution and monitoring systems, and review of internal
controls; and
b. direct the Legal Service and AFMT to conduct thorough investigations and
impose appropriate sanctions on all erring officials and employees whose
neglect caused wastage of government funds.
140. Management commented that the Legal Service conducts preliminary investigation
pursuant to the DOH AO 2015-0048 and the 2017 Revised Rules of Administrative Cases in
the Civil Service. For a proper conduct of preliminary investigation, we suggest to refer first
to IAS for fact-finding investigation to gather relevant documents and identify officials
responsible.
141. A d d :
The SOH is not precluded from directing the IAS or even creating a task force to
conduct fact-finding investigation which could be used by the Legal Service in
determining and recommending the appropriate sanctions to be imposed on erring
officials and employees.
Denied and Return to Hospital (RTH) Claims from the Philippine Health Insurance
Corporation (PHIC)
142. C PHIC 118,943,357.63 (6) OU

PHIC for various reasons resulting in the loss of hospital income. Moreover, claims
8,778,846.00 pital pose possible additional loss
of income.
143. RA No. 7875, as amended by RA Nos. 9241 and 10606, otherwise known as the
National Health Insurance Act (NHIA) of 2013 aims to: (1) provides all citizens of the
Philippines with the mechanism to gain financial access to health care services; (2) establish
the Program to serve as the means to help the people pay for health care services; and (3)
prioritize and accelerate the provision of health services to all Filipinos, especially that
segment of the populations who cannot afford these services.
144. Section 47e, Rule II, Title IV of the law provides that the PHIC shall penalize health
care providers for claims attended by any of the circumstances enumerated therein. Section
47f further provides that when the claim is denied, its amount shall not be recovered from the
member.
145. Item IV of PhilHealth Circular No. 2019-001 dated January 10, 2019 defines the
following:
123
Return to Hospital (RTH) claims - deficient claim after due adjudication and
validation, redirected back to health care institution (HCI) with instructions to
comply with certain requirements, but from which the action of returning the
complied claim to PhilHealth may result in the reversal of the deficiency into a good
claim or non-compliance that may result into the denial of the claim.
Denied claims - those that have been determined to be invalid and unworthy of
payment/reimbursement due to an absolute deficiency that cannot be remedied
through RTH or due to a finding of an unmet requirement.
146. Despite previous ears audit recommendations, cases of denied and RTH claims
totaling 118,943,357.63 and 8,778,846.00, respectivel , were still noted in CY 2020
manifesting persistent failure to address the identified causes/challenges leading to such
conditions and continuous non-compliance with existing regulations. Details are presented in
Annex VII.
147. The denied claims meant a loss of income for the OUs considering that under Sections
47e and 47f of the Revised IRR of the NHIA, it is the health care provider which shall be
penalized and that the amount of denied claim shall not be recovered from the member. In
effect, the OUs lost the amount of 118,943,357.63 which could have been used to augment
their maintenance and other operating expenditures, or for the repair of existing hospital
facilities. On the other hand, the RTH claims rendered the hospital as vulnerable to possible
loss of income.
148. We recommended and the SOH agreed to direct the OUs to:
a. ensure strict compliance with the requirements for PHIC claims as set forth
under the NHIA and pertinent PHIC rules and guidelines;
b. study and consider possible courses of action towards the recovery of the
amounts of denied claims; and
c. conduct periodic orientation/reorientation seminar to all personnel involved in

the documentation and processing of PHIC claims particularly on PHIC
Circulars and its updates.
Deficiencies in property management - 9,566,727,164.08
149. The non-conduct of physical count and other deficiencies in the management of
PPEs manifested the failure of some OUs to fully observe the prescribed policies and
procedures promoting accountability and responsibility towards safeguarding
government assets against loss or wastage.
150. Chapter 10 of the GAM for NGAs, Volume 1, provides policies and procedures that
will ensure that said assets are properly accounted for and safeguarded against loss or wastage.
Such policies and procedures include the regular conduct of physical count of PPEs as well as
124
the preparation and submission of prescribed forms to document the physical count, receipts,
issuance and disposal of said assets.
151. Our audit, however, revealed deficiencies in the management of PPEs by some OUs
such as failure to conduct physical inventory, non-observance of pertinent procedures in the
conduct thereof, non-disposal of unserviceable properties and other deficiencies affecting
PPEs aggregating at least 9,566,727,164.08. Details are provided in Table XXII.
Table XXII. Compliance/Governance issues in property management
Failure to conduct physical inventory taking of NCR CO 1,746,415,542.91 Section 38, Chapter 10 of the GAM, Volume I, states that
all its PPE and prepare Report on Physical NCR MMCHD 24,852,801.66 the entity shall have a periodic physical count of PPE,
Count of PPE (RPCPPE) NCR NCMH 1,005,529,527.33 which shall be done annually and presented on the Report
I ITRMC 1,433,606,834.43 on the Physical Count of Property, Plant and Equipment
IV-B ONP 482,084,175.50 (RPCPPE) as at 31 December of each year. It further
VI WVS 153,013,184.60 states that the RPCPPE shall be submitted to the Auditor
VI WVMC not stated concerned not later than 31 January of the following year.
VI DJSMMCEH not stated Equipment found at station and losses discovered during
XII CS 161,220,123.42 the physical count shall be reported to the Accounting
Division/Unit for proper accounting/ recording.
Late conduct of physical inventory and NCR POC 2,148,410,208.24
submission of RPCPPE
Section 42.g, Chapter 10 of the GAM, Volume I, describes
Non-inclusion of some PPEs in the RPCPPE NCR QMMC 1,814,123.88
RPCPPE as the form to be used to report the physical
Non-observance of pertinent procedures, NCR SLRGH not stated count and condition of PPE by type as at a given date,
rules and regulations in the conduct of the I MMMHMC not stated including those which are unrecorded and those which
physical count of PPEs III Bataan 333,540,224.84 could not be accounted for. It shows the balance of PPE
GHMC per property cards and per count and the
VI WVS not stated shortage/overage, if any. It shall be rendered by the
VII CSMC 477,515,152.12 Inventory Committee, on its yearly physical count of
PPEs not presented/not found during physical NCR SLRGH 1,327,535.00 properties owned by the entity.
count CAR CHD 127,409.44
X MHARSMC 72,651.33
Non-renewal/update/preparation of PAR NCR DOH-CO not stated Section 21, Chapter 10 of the GAM, Volume I, requires the
NCR SLRGH 162,251,489.83 Supply and/or Property Custodian to prepare the Property
NCR NCMH not stated Acknowledgement Receipt (PAR) to support the issue of
I R1MC not stated property to end-user. The PAR shall be renewed at least
III CHD not stated every three years or every time there is a change in
Accountability/custodianship not transferred to I MMMHMC 108,151.74 accountability or custodianship of the property.
the incoming personnel
Turned-over/distributed PPE lacks I CHD 154,751,659.00
documentary requirements for the donations
NCR NCMH 5,976,964.27
Non-disposal of unserviceable property III CLCHD 1,497,610.80 Section 79 of PD No. 1445 states that when government
IV-B ONP 22,232,635.13 property has become unserviceable for any cause, or is
XII CRMC 29,719,987.19 no longer needed, it shall, upon application of the officer
Disposal of unserviceable government IX LGH not stated accountable therefor, be inspected by the head of the
property were made without strict adherence agency or his duly authorized representative in the
to the provision of Section 79 of PD 1445 presence of the auditor concerned and, if found to be
valueless or unsalable, it may be destroyed in their
presence. If found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of the
proper committee on award or similar body in the
presence of the auditor concerned or other duly
authorized representative of the Commission, after
advertising by printed notice in the Official Gazette, or for
not less than three consecutive days in any newspaper of
general circulation, or where the value of the property
does not warrant the expense of publication, by notices
posted for a like period in at least three public places in
the locality where the property is to be sold. In the event
that the public auction fails, the property may be sold at a
private sale at such price as may be fixed by the same
125
committee or body concerned and approved by the

Commission.
Failure to prepare Inventory and Inspection VII ECSGH 5,560,262.75 Section 40.d, Chapter 10 of the GAM, Volume 1, requires
Report of Unserviceable Property (IlRUP) that all unserviceable property shall be reported in the
Inventory and Inspection Report of
Unserviceable Property (IIRUP).
Section 42.h thereof describes IIRUP as the report to be

used to account for all unserviceable property of an entity
which is subject to disposal. It also serves as the basis in
derecognizing the unserviceable properties carried in the
PPE accounts.
Existence of property items subject for repair NCR SLRGH 1,923,740.00
since 2018 to 2019 in the RPCPPE
Non-conduct of periodic preventive VIII EVRMC 839,482,437.00
maintenance of PPE SCRH 33,987,000.00
Idle/Unutilized PPE NCR DJFMH 6,890,100.00 Section 2 of PD No. 1445 states that is the declared
NCR LPGH-STC 3,598,000.00 policy of the State that all resources of the government
CAR CDH 13,250,000.00 shall be managed, expended or utilized in accordance
with law and regulations, and safeguarded against loss
CAR FNLGHTC 11,349,500.00
or wastage through illegal or improper disposition, with a
I MMMHMC 2,796,347.33
view to ensuring efficiency, economy and effectiveness
VII CSMC 540,000.00
in the operations of government. The responsibility to
VIII EVRMC 188,864,888.00 take care that such policy is faithfully adhered to rests
XIII CHD 52,849,000.00 directly with the chief or head of the government agency
XIII ASTMMC 9,920,000.00 concerned.
Unaccounted/non-existing PPE III Bataan not stated
GHMC
IX DJRMH 214,455.79
XII CRMC 1,268,643.00
Undistributed Property and Equipment for XIII CHD 43,414,797.55
Distribution items
Non-presentation of property tags, I MMMHMC not stated -do-
damaged/worn out tag or data/information
indicated in the tags varying with that of the
RPCPPE
Failure to renew Motor Vehicle's registration III JBLMGH 4,750,000.00 Sec.5, Article I, Chapter II of RA No. 4136 states that all
motor vehicles and trailer of any type used or operated on
or upon any highway of the Philippines must be registered
with the Bureau of Land Transportation for the current
year, and that any registration of motor vehicles not
renewed or before the date fixed by the Bureau of Land
Transportation shall become delinquent and invalid.
Vehicles did not carry government plates and X APMC not stated COA Circular No. 75-6 dated November 7, 1975 and
had no logo/seal or not properly marked Administrative Order No. 239 s. 2008 both provide that all
government motor vehicles shall bear government plates
only.
TOTAL 9,566,727,164.08
152. These conditions coupled with the leniency of the CO and OUs in complying with
pertinent rules have caused doubt on the existence of the said assets and exposes them to loss
or wastage. There is also evidence that the internal controls established for PPEs are weak and
that sound policies, guidelines, systems and processes for PPE are lacking.
153. We recommended and the SOH agreed to direct the CO and OUs:
a. to address the gaps noted by improving its internal controls, and strictly
comply with the pertinent rules, laws and regulations to ensure that PPEs are
properly accounted and safeguarded; and
126
b. impose administrative sanctions on all erring officials/employees responsible
for the recurring problems, whenever appropriate.
Other deficiencies in internal control system
154. The observed breakdown/inadequacy of internal control systems of some DOH

OUs has exposed governmental funds, properties and other resources to risks of
malversation, theft, wastage, obsolescence and loss of government funds.
155. COA rules and regulations and Internal control policies dictate that the agency should
adopt internal control over the safeguarding of assets against unauthorized acquisition, use or
disposition. These should be effected by the Head of the Agency, Inventory Committee, and
employees designed to provide reasonable assurance regarding prevention or timely detection
of unauthori ed acquisition, use, or disposition of the entit s assets that could have a material
effect on the financial statements. Measures to ensure the prevention and early detection of
loss of assets are best exercised among others through proper asset tagging and physical
inventory-taking. The Property & Supply Management System Manual (PSMSM) embodies
the specified COA rules and regulations.
156. The following deficiencies were also observed in some OUs which indicate the lack
of sound internal control system:
Table XXIII. Deficiencies in internal control

Region OU Deficiencies
CAR FNLGH Collections were not deposited intact because part of the collections of the hospital was sometimes used
sometimes used for emergency purchases other than dietary expenses; and the wages of various laborers
were sometimes disbursed out of collections pending the issuance/encashment of their checks by the
Cashier.
I ITRMC The Financial Management Officer (FMO) was designated as one of the signatories of checks issued
which could make an impression that the concerned official has control over the accounting and cash
divisions of the agency. Evidently, there is no segregation of duties contrary to existing internal control
standards. Also, as the FMO is designated as one of the signatories of all checks issued while being the
accountability. As it is, the payments made on the Fidelity Bond could be considered as
unauthorized/unnecessary in accordance with COA Circular 2012-003 dated October 29, 2012.
I ITRMC 277 prepared checks for issuance from the period October 2019 to September 2020 were cancelled due
to various errors which included typographical errors, misspelled names of payees, incorrect entries on
the face of the checks, among others. This resulted not only in the incurrence of unnecessary expenses
pertaining to the cost of the cancelled check but also showed inefficiency of the concerned employee in
performing the job assigned. In the parlance of good internal control, this is a non-compliance with existing
standards pertaining thereto.
III BGHMC The Agency has 11 designated warehouses that were located remotely to each other. All of the
warehouses did not contain any labels or signages. One of the most important aspects of proper
warehouse management is the implementation of warehouse labels and signs because without them,
finding inventories and managing issuances and receiving in-bound deliveries will be much more
disorganized and challenging for the Agency. It also increases the risk of damage to property since
hazards are not clearly labelled and identified. Overflowing of stocks were also visible during the
inspection of hospital auditors; boxes and packs of supplies were not properly placed on the shelves,
while some inventories were stored not within the warehouse but in the hallways. Moreover, some of the
warehouses were not properly ventilated and lighted.
127
Region OU Deficiencies
IV-B ONP Significant inventory supplies of I.V. fluids and garbage bags were stacked in the alley and staircase of
the Communicable Building, with some I.V. fluid boxes already opened. It was also observed that the
areas are unsecured as the entry points to the building were left open even after office hours and there is
no CCTV installed in the building premises.
VII DEVMH The disbursing officer requested a stoppage of payment for the check lost by the payee amounting to
122,839.23. There was negligence in issuing a replacement check without requesting a stoppage of
payment for the lost check. It would seem like there was a double payment for the said transaction since
there were two checks issued. The accountant should have verified first the validity of the claim of the
payee and requested a stoppage of payment for the lost check before processing the request for a
replacement check.
VII GCGMH Inspection and Acceptance Report (IAR) and Property Acknowledgment Receipt (PAR) attached to
disbursement vouchers have incomplete information.
157. The failure to install a sound internal control system runs contrary to the directive to
safeguard and promote accountability and responsibility for government assets and
unnecessarily exposes them to possible risks of loss or misuse.
158. We recommended and the SOH agreed to direct the OUs, in writing, to institute,
continually enhance and conduct regular evaluation of internal control systems strictly
in accordance with the Property and Supply Management System Manual (PSMSM),
Annex A and B of DOH Administrative Order No. 2013-0027 dated October 2, 2013,
with respect to management of personnel, premises, warehousing, storage, and
distribution of pharmaceuticals products, Government Accounting Manual with respect
to the documentation of hospital transactions and COA Circular No. 2012-003 dated
October 29, 2012 for the rules on Fidelity Bond.
Unutilized funds at year-end
159. C 24,641,119,764.42 as
D 31, 2020, D
access to basic public health services to all Filipinos and further buttressing the health
care delivery system, were noted. This condition affects the efficient utilization of public
funds vis-à- se to the urgent
healthcare needs during the time of state of calamity/national emergency.
160. Section 70 of the General Provisions of RA No. 11465 or the GAA of FY 2020 states
that as a general rule, departments, bureaus and offices of the National Government xxx shall
spend what is programmed in their respective appropriations . This provision is
mentioned and repeated in similar terms in Section 3.10 of the DBM NBC No. 578 dated
January 6, 2020 or the Guidelines on the Release of Funds for FY 2020.
161. On March 8, 2020, the President issued Proclamation No. 922 and declared a state of
public health emergency throughout the country. This was followed by Proclamation No. 929
which declared a state of calamity throughout the Philippines due to COVID-19 and
Proclamation No. 1021 which extended the period of state of calamity throughout the country
due to said virus disease. All these presidential issuances provided that all government
agencies and LGUs are enjoined to continue rendering full assistance to and cooperation with
each other and mobilize the necessary resources to undertake critical, urgent, and appropriate
128
disaster response aid and measures in a timely manner to curtail and eliminate the threat of
COVID-19.
162. Section 2 of RA No. 11469 declared a state of national emergency in the entire country.
Section 3 thereof stresses the urgent need to, among others, mitigate if not contain the
transmission of COVID-19; undertake measures that will prevent the overburdening of the
healthcare system; immediately and amply provide healthcare, including medical tests and
treatments to COVID-19 patients, Persons Under Investigation (PUIs), or Persons Under
Monitoring (PUMs); ensure that there is sufficient, adequate and readily available funding to
undertake the foregoing; and promote the collective interests of all Filipinos in these
challenging times.
163. In Section 4 of the law, the President was authorized to exercise powers that are
necessary and proper to carry out the declared national policy. One of these powers is to
reprogram, reallocate, and realign from savings on other items of appropriations in the FY
2020 GAA in the Executive Department, as may be necessary and beneficial to fund measures
that address and respond to COVID-19 emergency. Accordingly, all amounts so
reprogrammed, reallocated or realigned shall be deemed automatically appropriated for such
measures to address the COVID-19 situation within the period specified.
164. Moreover, RA No. 11494 affirmed the existence of continuing national emergency.
The provision of adequate social services was emphasized as part of the policy of the State.
The President was once again authorized to realign and reprogram funds from PAPs which
cannot be utilized effectively as a result of COVID-19 outbreak.
165. Section 2.1.1 of the Implementing Rules and Regulations (IRR) of RA No. 11494
states that release of funds to the implementing agency shall be based on implementation-
ready work programs and supporting budget documentary requirements.
166. Records show the following allotments, obligation of funds, disbursements and
balances of the DOH as of December 31, 2020:
Table XXIV. Analysis of Receipts and Utilization of Agency Funds in CY 2020

Balances
Unobligated
Source of Funds Appropriation Allotment Obligation Disbursement (Unpaid
Allotment
Obligation)
Current Year Appropriations CY 2020:
New Appropriation 100,298,232,357.00 98,804,603,307.00 86,771,604,051.17 12,032,999,255.83 70,045,046,460.87 16,714,418,511.91
Automatic
2,481,031,804.48 2,401,611,804.48 2,130,717,215.61 270,894,588.87 1,193,054,719.61 937,662,496.00
Appropriation
Special Purpose
72,392,069,315.46 72,392,069,315.46 64,523,609,944.30 7,868,459,371.16 55,721,095,339.51 8,802,514,604.79
Fund
Sub-Total 175,171,333,476.94 173,598,284,426.94 153,425,931,211.07 20,172,353,215.87 126,959,196,519.99 26,454,595,612.70
Continuing Appropriations (CONAP) CY 2019:
Specific Budget 15,371,631,418.03 12,179,342,649.67 10,982,015,035.08 1,197,327,614.59 6,556,082,146.12 4,425,932,888.96

Automatic
5,312,369.21 5,312,369.21 1,714,971.45 3,597,397.76 1,652,819.99 62,151.46
Appropriation
129
Balances
Unobligated
Source of Funds Appropriation Allotment Obligation Disbursement (Unpaid
Allotment
Obligation)
Special Purpose
15,072,509,057.58 15,072,509,057.58 11,804,667,521.38 3,267,841,536.20 8,201,547,463.00 3,603,120,058.38
Fund
Sub-Total 30,449,452,844.82 27,257,164,076.46 22,788,397,527.91 4,468,766,548.55 14,759,282,429.11 8,209,115,098.80
Grand Total 205,620,786,321.76 200,855,448,503.40 176,214,328,738.98 24,641,119,764.41 141,718,478,949.10 34,483,710,711.50
167. Based on the foregoing data, the over-all Allotment Utilization Index (AUI) is 0.8773,
computed b dividing the 176,214,328,738.98 or the total amount obligated during the ear
b 200,855,448,503.40 or the total amount of allotments.
168. It is important to state that the index measures the extent to which the agency has
utilized the allotments that are actually made available by the DBM. Thus, the AUI is
primaril affected b the agenc s implementation capabilities.
169. On the other hand, it appears that on the basis of the above-presented figures in Table
XVI sourced from the official records of the DOH, the rate of disbursement over allotments
and obligations are 70.56 percent and 80.42 percent, respectively.
170. While the computed AUIs and disbursement rates are relatively high, the unobligated
allotments and unpaid obligations totaling 24,641,119,764.42 and 34,483,710,711.50,
respectively, as of December 31, 2020 are considered as very material and are more than
enough to affect the level of efficiency put into managing the COVID-19 funds vis-à-vis the
agenc s implementation capabilities and its response to the urgent healthcare needs during
the time of state of calamity/national emergency. Based on our assessment, this condition is
caused by challenges encountered in the procurement processes, the belated downloading of
funds to the Centers for Health Development (CHDs) and other operating units and volume
of transactions handled by procurement and implementing partners.
171. According to the Accounting Division, the additional Notices of Cash Allocations
(NCAs) for Special Allotment Release Orders (SAROs) specifically for COVID-19 Response
issued by the DBM were not fully utilized because big ticket commodities such as medical
equipment and various improvement of facilities have to be delivered and completed first
before payment. Thus, NCAs in the DOH-CO amounting to 9,117,786,369.44 lapsed and
was reverted back to the BTr.
172. It was further explained that the processing of the DVs is not within the exclusive
control of the Accounting Division, considering that the completion of the supporting
documentary requirements is the responsibility of the end-user or to the program implementer.
Accordingly, the DVs of all the suppliers/contractors with valid claims are immediately
processed by the Accounting Division. It was also justified that the testing positive with
COVID-19 of some employees as well as the imposition of lockdowns impeded the more
efficient processing of transactions and may be considered as one factor as to why there was
low fund utilization in the DOH.
130
173. The billions of pesos in the coffers of the DOH that have remained not obligated and
disbursed as at year-end and funds that were reverted back to the national treasury are counter-
beneficial to the Department s continuing efforts towards ensuring access to basic public
health services to all Filipinos, further buttressing the health care delivery system, and most
importantly controlling the spread of COVID-19 through provision of quality health services.
It can, thus, be said that these funds that remained idle as at year-end were not translated to
much-needed health supplies, equipment and services that could have benefitted both the
health workers and the general public during the critical times of the pandemic. These
billions-worth of public funds could have saved many lives if only these were translated into
meaningful PAPs during the state of calamity/national emergency.
174. While RA No. 11520 amended Section 60 of the General Provisions of RA No. 11465
by extending the availability of the FY 2020 appropriations up to December 31, 2021, with
the DOH s current rate of fund utili ation, it becomes doubtful if it will be able to full utili e
its remaining unutilized CY 2020 allotments considering that new appropriations totaling
134,453,462,000.00 were again provided to the DOH under RA No. 11518 which also need
to be utilized by the end of CY 2021.
a. facilitate the completion of PAPs within the periods provided under existing
D
spending rate in terms of disbursement of allotments received and avoid any
adverse effect on future budget levels of the agency;
b. immediately address the perennial factors impeding project implementation

through a written plan, such as bidding process and contractor selection and
performance monitoring, improvements in preliminary and detailed
engineering, project monitoring and evaluation system, conduct of early
procurement activities as sanctioned by law and guidelines, more efficient
system of downloading funds to the CHDs and other operating units,
partnerships and coordination with the DOH on project/program
implementation as well as organizational strengthening especially with
respect to project management offices with the end view of rationalizing or
standardizing their sizes either in terms of number, components or total costs
of projects/programs handled;
c. coordinate with the various operating units, procurement partners, and

implementing agencies, in the form of written communications and series of
meetings (with copies/minutes furnished to the COA Office), on the following
matters:
i. possible reforms that will improve budget determination and

programming,
131
ii. linkage between fiscal framework and budget preparation so that funds
will be available for use by the operating units, procurement partners,
and/or implementing agencies, and released on time,
iii. need to institutionalize monitoring of fund utilization and the use of

DBM ,
and
iv. greater flexibility in the provision of technical assistance in project

preparation/planning, design and management, installation of incentive
systems in project management offices for early or on schedule
completion of projects and sanctions for delays if delays are caused by
inefficiencies.
Low obligation of DRRM Funds in time of state of calamity/national emergency
176. The non- 306,734,289.77

Disaster Risk Reduction and Management (DRRM) and during the state of
calamity/national emergency in CY 2020 demonstrates that not enough programs and
condition faster to recovery.
177. The responsibility of delivering health care and services was transferred by RA No.
7160 or the 1991 Local Government Code, as amended, from the DOH to the LGUs. One of
the functions that remained with the DOH, however, is disaster management focused on
preparedness and prevention. The LGUs have the primary responsibility of providing
immediate and direct response to disasters, but in cases where disasters have
reached proportions beyond the capability of the LGUs, the national government takes control
as stipulated under Section 1051 of the law.
178. Over the past two decades, the DOH has come up with salient policies and guidelines
that further defined its roles and functions in disaster response management in addition to the
laws and executive orders that were passed over the same period.
179. In Section 22 (e) of RA No. 10121, it is provided that all departments, bureaus, offices
and agencies of the government are authorized to use a portion of their appropriations to
implement projects designed to address DRRM activities in accordance with the guidelines to
be issued by the National Disaster Risk Reduction and Management Council (NDRRMC) in
coordination with the DBM. This was reiterated in Section 5, Rule 19 of the law s IRR.
180. Section 36, General Provisions of RA No. 11465 (GAA FY 2020) mandates that all
agencies of the government shall plan and implement programs and projects, taking into
consideration measures for climate change adaptation and mitigation, and disaster risk
reduction, based on climate and disaster risk assessments.
1
In the Department of Health may,
upon the direction of the President and in consultation with the government unit concerned, temporarily assume direct
supervision and control over health operations in any LGU for the duration of the emergency.
132
181. Section 2.1.1 of the IRR of RA No. 11494 states that release of funds to the
implementing agency shall be based on implementation-ready work programs and supporting
budget documentary requirements.
182. The three (3) main components of the DOH s DRRM Fund are the following: (1)
Health Emergency Preparedness and Response Fund (HEPR); (2) Quick Response Fund
(QRF); and (3) Calamity Fund. These funds support the implementation of various Programs,
Activities, and Projects (PAPs) under the Health Emergency Management Program (HEMP)
of the Department.
183. Based on official records, the DOH was appropriated2 with 308,897,654.58 and
1,392,069,000.00 worth of public funds for its HEMP in CYs 2019 and 2020, respectivel .
The same amounts were released to the DOH in the form of allotments.
184. In CY 2020 when the country was ravaged by the COVID-19 pandemic, only
236,745,340.59, 719,877,500.64 and 437,609,523.58 or 84.71 percent, 86.98 percent and
76.39 percent of the HEPR, QRF and Calamity Fund allotments were obligated, respectively.
Table XXV shows the details of the appropriation, allotments received, obligations and
disbursements (both for the Current Year and Continuing Appropriations or CONAP)
concerning said funds.
Table XXV. Analysis of Utilization of DRRM Funds

HEPR QRF CALAMITY
Particulars Total
CY 2020 CONAP 2019 CY 2020 CONAP 2019 CY 2020 CONAP 2019
A Appropriation
PS 8,285,120.00 2,288,818.00 - - - - 10,573,938.00
MOOE 221,783,880.00 47,134,833.22 300,000,000.00 15,232,001.21 500,000,000.00 31,836,046.12 1,115,986,760.55
CO - - 300,000,000.00 212,405,956.03 62,000,000.00 - 574,405,956.03
230,069,000.00 49,423,651.22 600,000,000.00 227,637,957.24 562,000,000.00 31,836,046.12 1,700,966,654.58
Total
279,492,651.22 827,637,957.24 593,836,046.12
B Allotment
PS 8,285,120.00 2,288,818.00 - - - - 10,573,938.00
MOOE 221,783,880.00 47,134,833.22 300,000,000.00 15,232,001.21 500,000,000.00 31,836,046.12 1,115,986,760.55
CO - - 300,000,000.00 212,405,956.03 62,000,000.00 - 574,405,956.03
230,069,000.00 49,423,651.22 600,000,000.00 227,637,957.24 562,000,000.00 31,836,046.12 1,700,966,654.58
Total
279,492,651.22 827,637,957.24 593,836,046.12
C Obligations
PS 8,283,699.05 2,179,272.70 - - - - 10,462,971.75
MOOE 186,062,217.44 40,220,151.40 279,935,017.82 13,558,821.90 405,781,300.46 31,828,223.12 957,385,732.14
CO - - 216,839,583.78 209,544,077.14 - - 426,383,660.92
194,345,916.49 42,399,424.10 496,774,601.60 223,102,899.04 405,781,300.46 31,828,223.12 1,394,232,364.81
Total
236,745,340.59 719,877,500.64 437,609,523.58
Unobligated
D
(B-C)
PS 1,420.95 109,545.30 - - - - 110,966.25
MOOE 35,721,662.56 6,914,681.82 20,064,982.18 1,673,179.31 94,218,699.54 7,823.00 158,601,028.41
CO - - 83,160,416.22 2,861,878.89 62,000,000.00 - 148,022,295.11
Total 35,723,083.51 7,024,227.12 103,225,398.40 4,535,058.20 156,218,699.54 7,823.00 306,734,289.77
2
RA Nos. 11260 and 11465, DOH Office of the Secretary
133
HEPR QRF CALAMITY
Particulars Total
CY 2020 CONAP 2019 CY 2020 CONAP 2019 CY 2020 CONAP 2019
E Disbursements
PS 8,283,599.05 2,179,272.70 - - - - 10,462,871.75
MOOE 129,310,734.05 27,382,007.77 244,447,243.39 6,168,393.90 345,365,749.91 31,038,556.05 783,712,685.07
CO - - 126,628,100.89 157,047,822.34 - - 283,675,923.23
137,594,333.10 29,561,280.47 371,075,344.28 163,216,216.24 345,365,749.91 31,038,556.05 1,077,851,480.05
Total
167,155,613.57 534,291,560.52 376,404,305.96
Unpaid
F Obligation
(C-E)
PS 100.00 - - - - - 100.00
MOOE 56,751,483.39 12,838,143.63 35,487,774.43 7,390,428.00 60,415,550.55 789,667.07 173,673,047.07
CO - - 90,211,482.89 52,496,254.80 - - 142,707,737.69
Total 56,751,583.39 12,838,143.63 125,699,257.32 59,886,682.80 60,415,550.55 789,667.07 316,380,884.76
Allotment Utilization
Index (AUI) C/B
0.8471 0.8698 0.7369 0.8197
Disbursement /
Obligation E/C 70.61% 74.22% 86.01% 77.31%
Disbursement /
Allotment E/B
59.81% 64.56% 63.39% 63.37%
Legend: PS Personnel Service; MOOE Maintenance and Other Operating Expenses; CO Capital Outlay
185. Allotment for HEPR was obligated and disbursed by the CO and various DOH CHDs
and other OUs for the implementation of HEMP, specifically the (1) procurement of various
drugs and medicines, medical supplies, laboratory expenses; and (2) cover hospital bills,
response operations and other logistical augmentation to the affected populations.
Corresponding guidelines on the sub-allotment and utilization of these funds were issued.
186. On the other hand, the amount of 600,000,000.00 appropriated in the GAA of FY
2020, serves as a standby fund to be used for rehabilitation and repair of health facilities,
replacement of medical equipment, as well as provisions for emergency medical assistance,
including pre-positioning of medical aids and personal hygiene kits. These are intended at
improving the situation and living conditions of people in communities or areas stricken by
calamities, epidemics, crises and catastrophes which occurred in the last quarter of the
immediately preceding year and those occurring during the year, so that they may be
normalized as quickly as possible.
187. While the computed AUIs and disbursement rates are relatively high, the unobligated
funds totaling 306,734,289.77 (Current and CONAP) as of December 31, 2020 are
considered very material, enough to affect the level of efficiency put into managing the DRRM
funds vis-à-vis the agenc s implementation capabilities and its response to the urgent
healthcare needs during the time of state of calamity/national emergency. The condition
demonstrates that not enough programs and projects were implemented during the year in
order to mitigate related risks and alleviate the people s condition faster to recover . It
likewise manifests that there was no efficient use of fiscal resources despite hefty fund
appropriations/allocations and that program implementation was not maximized during the
state of calamity/national emergency, a time when an effective health delivery system is most
needed by the people.
188. For a pandemic-stricken country with prevailing risks and delicate vulnerabilities, the
DOH s DRRM funds were underutili ed and not all scheduled programs were implemented.
134
189. The HEMB Administrative Officer of HEMB explained that the COVID-19 pandemic
led to the slow mobilization of DOH personnel and processing of documents, while some of
the activities indicated on their WFP were not continued. There was likewise failed/cancelled
HEMB procurement activities. It was stressed that the DRRM funds were obligated and
disbursed by the CO and OUs who received the funds through SAA, hence, the utilization of
SAAs is beyond the control of the DOH-CO because the responsibilities are already lodged
to the recipients.
190. It was noted in the audit that funds released through SARO No. BMB-20-0020677
dated November 27, 2020 amounting to 62,000,000.00 and intended to cover the site
development and landscaping for the construction of the Marawi City General Hospital in
Marawi City were not obligated in CY 2020.
191. Based on the auditors verification, the identified reasons for low utili ation of funds
released under SARO No. BMB-20-0002174 (Calamity Fund) by the OUs are as follows: (1)
lapses in the conduct of procurement activities; (2) absence of trainings conducted face to
face, all is done virtually; (3) prevailing travel restrictions; (4) no takers; (5) complicated and
hazardous work; (6) low compensation and high standard qualifications; (7) low hiring for
COVID-19 related personnel; and (8) late receipt of SAA and voluminous claims that Human
Resource (HR) Units have difficulty in preparing the payroll.
192. It was further justified by Management that the DRRM funds were not solely utilized
by the HEMB. The other programs/bureaus may charge their expenditures to the QRF and
Calamity Fund, provided that such expenditures are for the use of rehabilitation and repair of
health facilities, replacement of medical equipment, as well as provisions for emergency
medical assistance, including pre-positioning of medical aids and personal hygiene kits.
193. On the contrary, we are of the view that the presence of the COVID-19 pandemic must
inspire the DOH to do more and cause the overspending of the DRRM funds because these
are specifically appropriated for the purpose and health services currently play a vital role in
saving the lives of Filipinos. Mechanisms and systems are available in order to avoid or at
least, minimize the other identified reasons for non-utilization of budget. There is only one
DOH under the SOH and proper coordination between and among its programs and bureaus
is imperative to ensure efficient delivery of needed health services.
194. A source agency which transferred funds to an implementing agency retains and is not
divested of responsibility over such funds. In Section 5.4 of COA Circular No. 94-013 dated
December 13, 1994, the source agency has the duty and responsibility to require the
implementing agency to submit the reports and furnish the latter with a copy of the journal
voucher taking up the expenditures.
a. facilitate the completion of PAPs within the periods provided under RA No.
11520, Section 3.4 of DBM National Budget Circular (NBC) No. 585 and
135
DOH
spending rate in terms of disbursement of allotments received and avoid any
adverse effect on future budget levels of the agency;
b. immediately address the perennial factors impeding project implementation

through a written plan;
c. Coordinate with the various operating units, procurement partners, and

implementing agencies, in the form of written communications and series of
meetings (with copies/minutes furnished to the COA Office), on the
downloading of funds, PAPs implementation and preparation/submission of
the FURs and other required reports;
d. Direct the HEMB to monitor the movement and balances of the DRRM
commodities and current allotment, obligation and disbursements which
may be used in making informed decisions for the formulation of reasonable
WFP and PPMP.
Low utilization/allocation of hospital income
196. The utilization of at least 25 percent allocated hospital income of four OUs
169,578,991.42
facilities had not been fully maximized, with only 37.43 63,467,670.77
, OU 4,102,375.65 3.54
116,037,875.84, ,
care services that could have been provided to them had the required percentage of said
income been properly allocated, and plans for the efficient utilization thereof were
formulated and implemented.
197. Special Provision No. 2 of the Appropriations of the DOH Office of the Secretary of
RA No. 11465 (GAA FY 2020), partly provides that at least 25 percent of hospital and other
facilities income shall be utilized to purchase and upgrade hospital equipment used directly in
the delivery of health services.
198. In Section 3.5 of DOH-DOF-DBM Circular No. 2003-01 dated July 16, 2003, the use
of hospital income is authorized to augment the requirement of the hospitals for maintenance
and other operating expenditures, including repair and maintenance of existing hospital
facilities provided that at least 25 percent of said income shall be used to purchase and upgrade
hospital equipment used directly in the delivery of health services and that it shall not be used
for salaries and other allowances and benefits whether in cash or in kind.
199. It was noted that in five (5) OUs, the utilization of hospital income totaling
169,578,991.42 was not fully maximized, with only 37.43 percent or 63,467,670.77 utilized
for the procurement of hospital equipment and upgrading of existing facilities, leaving an
unutili ed balance of 106,111,320.65, as shown in Table XXVI.
136
Table XXVI. Unutilized or low utilization rate of hospital income
Income with
Utilized Unutilized
Regio Hospital Income Authority to Use
OU
n % Amount Amount % Amount %
a b c=axb d e = d/c f =c - d g = f/c
CAR CDH 18,615,926.10 31.61% 5,885,394.22 0 0.00% 5,885,394.22 100.00%
I MMMHMC 79,972,397.35 25.00% 19,993,099.34* 3,778,759.24 18.90% 16,214,340.10 81.10%
42,358,505.77* 42,358,505.77 100.00% 0.00 0.00%
DJSMMCEH 73,113,511.65 25.00% 18,278,377.91 7,071,765.55 38.69% 11,206,612.36 61.31%

VI
WVMC 210,254,456.72 25.00% 52,563,614.18 9,518,299.00 18.11% 43,045,315.18 81.89%
WVS 140,577,370.00 21.70% 30,500,000.00* 740,341.21 2.43% 29,759,658.79 97.57%
Total 522,533,661.82 169,578,991.42* 63,467,670.77 37.43% 106,111,320.65 62.57%

*Beginning balance of hospital income with authority to use for MMMHMC
200. The non-/under-utilization of hospital income of these OUs was attributed to: (a)
receipt of separate funds from LGUs and DOH-CO despite the availability of allocated
hospital income; (b) the projected budget was not achieved since the hospital did not generate
much cash to support the plans for the year; and (c) inadequacies and inability of OUs in
setting up plans and targets in the use of hospital income, and majority of procurements were
obligated only towards the end of the year.
201. Moreover, it was found that SLRGH had allocated onl 4,102,375.65 or 3.54 percent
of its hospital income of 116,037,875.84, for equipment/upgrading of facilities,
notwithstanding that its income covered with authorit to use amounted to 29,009,468.96.
Evidently, the low allocation of hospital income was due to the failure of the hospital to
allocate additional funds in accordance with the guidelines set in DOH-DOF-DBM Circular
No. 2003-01.
202. The non-maximization of allocation and utilization of hospital income denied the
intended beneficiaries of quality health services that could have been provided to them had
the required percentage of said income been allocated, and plans for the efficient utilization
thereof were formulated and implemented by the concerned OUs.
203. We recommended and the SOH agreed to direct the heads of concerned OUs to:
a. plan carefully through proper and complete identification of all

equipment/facilities needed by the hospitals to deliver quality health care
services to intended patients and prioritize the utilization of the allocated
hospital income;
b. require the submission of explanation/justification on the deficiencies noted,

evaluate the same and impose appropriate sanctions to concerned
officials/employees; and
137
c. henceforth, ensure that at least 25 percent of the hospital income is allocated
for the procurement of necessary equipment and upgrading of hospital
facilities to provide the intended patients with access to better health care
services.
Other Governance-related issues
204. Seven OUs failed to comply with the requirements of existing laws, rules and
regulations related to unpaid obligations, utilization of MAIP funds, delegation of
functions to JO personnel, proper maintenance of official website, maintenance of bank
accounts, and improper transfer of funds to a private organization due to laxity in
controls and absence of organizational review of existing agency practices/processes,
thus affecting the regularity of related transactions and exposing resources to the risk of
wastage and misuse.
205. Other governance-related deficiencies were also noted in some OUs such as long-
outstanding unpaid obligations, assigning the functions of monitoring and technical
inspections and evaluation of infrastructure to Job Order (JO) personnel, and unauthorized
transfer of funds to a private organization, as detailed in Annex VIII.
206. The noted gaps are indicative of the OUs la it in controls and absence of
organizational review of existing agency practices/processes. All these adversely affected the
regularity of related transactions and exposed resources to the risk of wastage and misuse.
207. We recommended and the SOH, through the AFMT, agreed to direct in writing
all concerned OUs to:
a. strictly comply with existing laws, rules and regulations; and
b. impose administrative sanctions on erring officials/employees in accordance

with PD No. 1445, Administrative Code of the Philippines and other applicable
laws.
Unauthorized/idle cash and non-remittance of collections to the Bureau of the Treasury (BTr)
208. Unauthorized and unnecessary balances in depository accounts as well as fees

441,239,379.94 remained unremitted
to the National Treasury contrary to law and regulations.
209. Section 4 of the General Provisions of GAA of FY 2020 provides that, as a general
rule, all fees, charges, assessments, and other receipts or revenues collected by departments,
bureaus and offices of the National Government, including Constitutional Offices enjoying
fiscal autonomy in the exercise of their mandated functions, as such rates as are now or may
be approved by the appropriate approving authority shall be deposited with the National
Treasury as income of the General Fund.
138
210. Section 10 thereof requires departments, bureaus, offices, and instrumentalities of the
National Government to close and revert all balances of Special Accounts, Fiduciary or Trust
Funds, and Revolving Funds to the General Fund in any of the following instances: (i) when
there is no legal basis for its creation; (ii) when their terms have expired; or (iii) when they
are no longer necessary for the attainment of the purposes for which said funds were
established.
211. Paragraph 2.1 of the DOF-DBM-COA Permanent Committee Joint Circular No. 4-
2012 dated 11 September 2012 states that, unless otherwise specifically provided by law, all
income collected by agencies of the government by virtue of the provisions of law, orders and
regulations shall be deposited in the National Treasury, and shall accrue to the unappropriated
surplus of the General Fund of the Government.
212. Item 3 thereof defines unauthorized accounts as cash account balances maintained by
agencies without specific authority or legal basis, while unnecessary special and trust funds
refer to authorized special and trust funds maintained by government agencies with authorized
government depository banks (AGDBs) but which are no longer necessary for the attainment
of the purposes for which said funds were established, i.e., specific projects/programs, the
implementation of which have been completed or abandoned.
213. Item 5.5.1 thereof further requires the immediate transfer to the National Treasury of
the cash balances of the unauthorized accounts.
214. COA Circular No. 2015-001 dated January 29, 2015 prescribes the guidelines and
procedures in the reversion to the General Fund of all dormant cash, unauthorized accounts,
unnecessary special and trust funds and related accounts, in conformity with the Permanent
Committee Joint Circular No. 4-2012 dated September 11, 2012 implementing EO No. 431
dated May 30, 2005. Section 3 thereof provides the procedural guidelines to be undertaken
by NGAs with dormant cash/unauthorized accounts and unnecessary special and trust funds
including recipients of inter-agency fund transfers, starting from the thorough analysis of the
cash accounts, providing cash account mapping and/or grouping the cash accounts up to the
disposition of the said accounts/funds.
215. We observed that seven OUs, as shown in Table XXVII, continuously maintained the
following balances totaling 441,239,379.94 in their depositor banks contrar to the above-
cited law and regulations. These are recorded in the OUs books under the account Cash in
Bank Local Currency, Current Account.
Table XXVII. Unauthorized/ Unnecessary Accounts

Amount
Description Region OU Remarks
(in PhP)
Unauthorized cash in XIII CHD 5,762,129.78 Unauthorized trust funds deposited and maintained with
bank account the Land Bank of the Philippines (LBP) were not reverted
to the BTr
139
Idle cash VI WVS 83,704.84 Development Bank of the Philippines (DBP) Account Nos.
0755-002847-030 and 0755-002847-032 with balances
amounting to ₱56,745.93 and ₱26,958.91, respectively,
which had been dormant for more than three years were
not closed. The Accountant sent a letter-request to DBP
dated November 8, 2019 for the closure of the dormant
remaining cash balance. However, as of date, for

unknown reasons, the bank had not acted on the request.
No further information was provided by the Management,
when necessary follow-ups were made to the bank.
Fees, and other NCR FDA 432,509,658.11 Collections of fees under the SAGF and excess proceeds
receipts or revenues from seminars and trainings amounting to
collected not remitted ₱408,361,714.99 and ₱24,147,943.12, respectively,
in BTr which accumulated for several years were not remitted to
the BTr as at year-end.
III MMWGH 679,313.07 Collections from the sale of bid documents and forfeited
performance security bond were not reverted to the BTr
Bataan GHMC 1,442,053.25 Collections from the sale of bid documents and forfeited
performance security bond i were not reverted to the BTr
IV-B CSGH 372,500.25 Unutilized collections from the sale of bidding documents
were not remitted to the BTr
VI TRC Pototan 161,965.23 Collections of non-hospital income in the aggregate
amount of ₱2,800.00 remained in the ADGB and excess
of the proceeds from the sale of bid documents amounting
to ₱159,165.23 at the end of the year, after the payment
of honoraria to BAC members, were not deposited with
the BTr
XIII CHD 44,500.00 Collections derived from the sale of unserviceable assets
were deposited at the Land bank of the Philippines
Current Account as Trust Fund which should have been
remitted in the National Treasury as income to the
General Fund.
IX MRH 183,555.41 Interest income not remitted to the BTr
Total 441,239,379.94
216. The failure to remit to the National Treasury the aforementioned cash balances
deprived the National Government of the use of idle cash deposited in AGDB for other priority
projects and defeated the purpose of the Government of maximizing the use of its financial
resources.
217. It is worth noting that the FDA already remitted the accumulated balance of its
collected fees to the BTr totaling 432,509,658.11 and these were recorded under JEV Nos.
21-02-340 to 345 and JEV No. 21-01-55 dated January to February 2021. The FDA
Management informed that, henceforth, remittance of collected fees will be done on a
quarterly basis.
218. We recommended and the SOH agreed to direct the concerned OUs to cause the
immediate transfer/remittance of their unauthorized/unnecessary cash balances and
collected fees to the BTr in compliance with law and regulations.
140
Non-compliance with rules and regulations on cash advances - 230,844,376.47
219. Policies in the grant, utilization and liquidation of cash advances were not fully
complied due to the lenient implementation and laxity in monitoring, thereby, exposing
government funds to risks of loss and misuse.
220. Section 89 of PD No. 1445 provides that a cash advance shall be reported on and
liquidated as soon as the purpose for which it was given has been served3. Section 107 of the
law, on the other hand, mandates that all accountable officers shall render their accounts,
submit their vouchers, and make deposits of money collected or held by them at such times
and in such manner as shall be prescribed in the regulations of the Commission.
221. COA Circular No. 97-002 dated February 10, 1997 provides the rules and regulations
on the granting, utilization and liquidation of cash advances including the reglementary
periods within which the different types of cash advances are to be liquidated or reported on.
222. In the review of operations of the CO and various OUs, deficiencies were noted
relative to the management of cash advances aggregating 230,844,376.47, more notable of
which are the existence of unliquidated and dormant cash advances and cases of delayed
liquidation. Details are provided in Annex IX.
223. The presence of said deficiencies is a result of weak financial controls, absence of
policy enforcement and laxity of monitoring by the Accountants of the liquidation by officers
and employees, and exposes government funds to risks of loss and misuse.
a. direct the CO and OUs, through the AFMT, to immediately settle all
deficiencies found in cash advances within three (3) months after receipt of this
Report;
b. enjoin all OUs to henceforth, strictly comply with all pertinent laws, rules and
regulations in the handling of cash advances and liquidation thereof through
the issuance/restatement of internal guidelines and strict monitoring; and
c. impose appropriate sanctions on erring officials/employees whenever

warranted.
Failure to observe policies in the handling of Petty Cash Fund (PCF) - 9,332,504.77
225. The non-compliance of existing rules and regulations in the management of PCFs
exposed government resources to risks of fund misuse.
3
Reiterated in Sec. 14 (b) of the GAM for NGAs, Volume I, page 74
141
226. COA Circular No. 97-002 dated February 10, 1997 and Sections 35 and 36, Chapter 6
of the GAM for NGAs, Volume I, provide the policies in the grant, utilization and
replenishment of PCFs.
227. Our audit found that these policies were not fully complied with by the OUs in the
management of PCFs aggregating at least 9,332,504.77. Among the deficiencies noted were
the excessiveness or insufficiency of the amount granted as PCF, issues in replenishment and
irregular charges to PCF. Details of the deficiencies noted are presented in Annex X.
228. The continuous failure of the OUs to conform their practices and transactions with
existing rules exposed government resources to risks of fund misuse.
a. direct the OUs, through the AFMT, to immediately settle all deficiencies
found in PCFs within three (3) months after receipt of this Report;
b. enjoin all OUs to, henceforth, strictly comply with all pertinent laws, rules
and regulations in the management of PCFs through the issuance/restatement
of internal guidelines; and
c. impose appropriate sanctions on erring officials/employees whenever

warranted.
Deficiencies noted in procurement process and implementation of contracts -

3,967,249,291.33
230. Procedural deficiencies in the procurement process and lack of documentation in

various contracts entered into and implemented by the DOH as well as lapses in
implementation of its various projects in the aggregate amount of at least
3,967,249,291.33, RA N . 9184
RIRR, thus, deprived the government of the most advantageous prices and resulted in
doubtful payment transactions and significant delays in project completion.
231. RA No. 9184, its RIRR and related issuances apply to the procurement of
infrastructure projects, goods and consulting services, regardless of source of funds, whether
local of foreign, by all branches and instrumentalities of government, its departments, offices
and agencies, including GOCCs and LGUs.
232. Section 2, Rule I of the 2016 RIRR of RA No. 9184 provides that the provisions therein
are in line with the commitment of the Government of the Philippines (GoP) to promote good
governance and its effort to adhere to the principles of transparency, accountability, equity,
efficiency, and economy in its procurement process. It is the policy of the GoP that
procurement of goods, infrastructure projects and consulting services shall be competitive and
transparent, and therefore shall undergo competitive bidding, except as may be provided by
law.
142
233. Consistent thereto, the Supreme Court in the case of Philippine Sports Commission, et
al. v. Dear John Services, Inc., G.R. No. 183260 dated 04 July 2012, held that the law on
public bidding is not an empty formality. A strict adherence to the principles, rules and
regulations on public bidding must be sustained if only to preserve the integrity and the faith
of the general public on the procedure.
234. In the procurement of goods, consultancy services, and infrastructure projects by the
CO and various OUs totaling 3,967,249,291.33, the provisions of R.A. No. 9184, its RIRR
and related issuances were not strictly complied with as several procedural deficiencies in the
procurement process and lack of documentation as well as lapses in implementation of various
projects were observed. Specific deficiencies with corresponding amounts are shown in Table
XXVIII.
Table XXVIII. Summary of Deficiencies in Procurement

Audit Observations Region DOH OU Amount in PhP
Deficiencies in Procurement Process:
Absence of Certificate of Availability of Funds XII CHD 268,565,489.56
XIII CRH 300,091,461.67
Abstract of Bids as Calculated prepared before the scheduled opening of bids CAR FNLGHTC 1,162,364.00
Attendance of observers not strictly observed IX MCS 50,713,259.60
Contract awarded to ineligible bidder NCR FDA 48,250,000.00
Criteria for evaluation of bid not followed CAR LHMRH 20,072,019.60
Deficiencies / inconsistencies in the executed OSS NCR RMC 136,926,314.07
Delayed procurement process NCR DOH CO 680,000,000.00
MMCHD 17,597,539.20
VI WVMC 56,000,000.00
IX MCS 19,407,251.50
XIII CARAGA CHD 253,037,086.00
Delivery and installation schedule not specified in the contract NCR RITM 15,400,000.00
Erroneous mode of procurement XIII ASTMMC 19,823,182.81
Expired PCAB License X CHD-NM 36,274,627.09
Failure to disqualify bidder VII DEVMH 46,125,000.00
Failure to negotiate for the most advantageous price NCR JRRMMC 4,959,200.00
Grant of request for reconsideration tantamount to acceptance of alternative bid/offer IX MCS 2,450,000.00
Incomplete / inadequate technical specifications NCR DOH CO 354,420,000.00
IX ZCMC 29,388,250.00
Incomplete information in Abstract of Bids IX MCS 4,556,280.00
Inconsistencies between PO and Schedule of Requirements IX MCS 15,599,260.00
Invitations to observers not sent within the prescribed number of days IX MCS 29,582,077.10
Issuance of invalid Notices of Award VII VSMMC 14,102,765.80
Lapses in bid evaluation and post-qualification CAR CDH 2,870,645.00
VII VSMMC 8,874,000.00
No pre-procurement conferences were conducted IX MCS 7,724,825.60
No PS DBM Certificate of Non-Availability of Stocks I CHD 5,624,351.34
NOA issued beyond the prescribed period CAR FNLGHTC 2,268,880.00
Non-compliance with the rules on alternative methods of procurement NCR DOH CO 590,363.03
RMC 7,560,400.00
Non-observance of post-qualification procedures and pass and fail criteria in bid I MMMHMC 4,864,087.62
evaluation
Non-posting of relevant NCR MMCHD 17,041,960.87
Perfected contract prior to posting of performance securities CAR FNLGHTC 55,232,797.12
Posting of warranty security not enforced IX MRH 49,144,217.93
Price Schedules without complete details of costs IX MCS 48,263,259.60
Procurement of commonly used supplies not done thru PS-DBM I ITRMC 4,836,507.00
Procurement of goods not supported by warranty security NCR MMCHD 531,539.20
IX DJRMH 7,241,752.90
MCS 11,582,920.00
MRH 9,358,471.54
Procurement without public bidding II DATRC Isabela 180,149.51
143
VI WVCHD 708,150.00
WVS 4,473,237.65
Provision on Bid Data Sheet restricts competitiveness of procurement process IX MCS 29,868,899.00
Purchase Order do not indicate date of acceptance by suppliers NCR LPGH-STC 1,571,042.75
Unreasonableness of ABC of the project. I MMMHMC 4,864,087.62
Signing of contract beyond the prescribed period 55,188,660.00
Sub-total 2,764,968,633.28
Lack of Documentation:
CAR CHD 3,370,100.00
Permit, OSS, etc. V MTRC 287,790.00
Documentary requirements lacking in necessary information such as the estimated IX MCS 29,514,085.60
Incomplete / inadequate supporting documents such as Scope of Work, Design and IX LGH 3,754,009.00
Materials Quantities, Income Tax Returns, etc. MCS 27,050,397.69
XI SPMC 37,160,340.84
Incomplete bidding process documents XIII CARAGA CHD 123,648,713.28
OSS not supported by duly notarized Special Power of Attorney, Board/Partnership IX MCS 2,818,501.31
Sub-total 227,603,937.72
Lapses in Implementation:
Advance deliveries prior to issuance of Notice of Award VII GCGMH 960,000.00
Advance payment exceeding threshold VI WVS 2,300,000.00
Delayed completion of projects NCR FDA 2,520,000.00
I MMMHMC 120,375,523.95
VII CVCHD 203,710,562.23
VSMMC 4,385,000.00
Delayed execution / implementation of contract VII CSMC 83,996,461.44
Delay in the delivery of goods and services III BGHMC 5,029,076.37
TRC 509,326.50
MMWGH 7,278,126.02
Erroneous computation of retention money IX MRH 3,999,497.00
Variation orders, work suspensions, and time extensions granted near the end of VI WVMC 10,391,128.52
contract expiry dates, for periods double the original contract time, and for
reasons/circumstances contrary to related laws
Suspension of work by the contractor in the initial implementation of the project due to VI WVS 93,933,266.27
the delay of payment by agency
Failure to terminate contract despite incurrence of negative slippage of more than 15% CAR CDH 9,970,445.78
Non-completion of infrastructure projects VI CHD 2,706,391.76
Non-extension of performance security IX BasGH 5,374,000.00
Over-recoupment of mobilization fee V BMC 375,625.71
Payment of mobilization fee despite indefinite suspension of the project NCR LPGH-STC 1,611,612.96
Payment of progress billing not in accordance with the contract agreement IX MCS 27,050,397.69
-compliance with the specifications in the CAR CDH 2,114,378.57
Purchase Order
Premature and unauthorized substitution of retention money with Surety Bond III JBLMGH 258,211,899.56
Stipulations of the contract not fully complied with NCR NCMH 127,874,000.00
Sub-total 974,676,720.33
Grand Total 3,967,249,291.33
235. Deficiencies, as detailed in Table XXIX, were also noted though information on the
amounts involved were not readily made available to the Auditors.
Table XXIX. Summary of Other Deficiencies Noted in Procurement

Region DOH OU Audit Observations
NCR DOH CO Absence of Certificate of Availability of Funds
Failure to consider use of publicly on venue
FDA Failure to terminate contract / take-over completion of project with 15% negative slippage
RITM Delayed procurement process
I MMMHMC Awarded contract not duly supported with documentary requirements
OSS not supported by duly notarized Special Power of Attorney, Board/Partnership Resolution, or
Post-qualification process not strictly observed

Statement of all ongoing government and private contracts lacking some required information
144
Region DOH OU Audit Observations
R1MC Attendance of observers not strictly observed
Non-observance of guidelines governing use of Ordering Agreements
Non-observance of mandatory periods for each stage of procurement
Non-observance of post-qualification procedures and pass and fail criteria in bid evaluation
III CLCHD Erroneous mode of procurement

JBLMGH Erroneous mode of procurement
IX MCS Procurement Documents not properly dated
MRH Excessive liquidated damages
XII CHD Absence of Certification of conduct of DAED
Absence of Performance Security
Absence of PERT/CPM computation
Contracts without proof of computation of ABC
Delayed completion of projects
Delayed procurement process
Failure to stipulate contract duration
Irregularity in the awarding of supplemental contract
No NFCC attached to supplemental contracts
XIII CARAGA Delayed procurement process
CHD
236. The noted deficiencies were not only contrary to the pertinent provisions of RA No.
9184 and its RIRR but also deprived the government of the most advantageous prices in the
procurement of goods, consultancy services, and infrastructure projects and resulted in
doubtful payment transactions and significant delays in project completion.
237. We recommended and the SOH agreed to direct the CO and OUs to:
a. henceforth, strictly comply with the requirements of RA No. 9184 and

pertinent laws, rules and regulations, particularly on the conduct of public
bidding and other procurement activities and on the preparation and
submission of required documents;
b. submit explanation/justification on the various deficiencies noted, evaluate the

same and take appropriate actions;
c. conduct periodic assessment of processes and procedures to streamline

procurement activities pursuant to Section 3(c) of this 2016 Revised IRR; and
d. consider the imposition of proper liquidated damages on delayed delivery

and/or completion of procured goods, services and infrastructure projects to
encourage faithful adherence and timely execution of contracts.
Irregular, unnecessary and excessive expenditures
238. D DOH OU 557,699,748.22 did

not comply with established rules, procedural guidelines, policies, principles or
practices, resulting in the incurrence of irregular, unnecessary, and excessive
expenditures.
145
239. Section 33 of PD No. 1445 states that the Commission shall promulgate such auditing
and accounting rules and regulations as shall prevent IUEEU expenditures of funds or uses of
property.
240. COA Circular No. 2012-003 dated October 29, 2012 provides the guidelines for the
prevention and disallowance of IUEEU expenditures.
241. In CY 2020, pa ment of the IUEEU e penditures of 557,699,748.22 was made by

some OUs, as summarized below:
Table XXX. Summary of IUEEU Expenditures Incurred

Expenditure Amount in PhP
Irregular 549,409,866.60
Unnecessary 1,221,613.57
Excessive 7,068,268.05
Total 557,699,748.22
242. Details of observations noted are provided in Table XXXI.
Table XXXI. List of IUEEU Expenditures

Region DOH OU Observations Amount
Irregular Expenditures
NCR BOQ Payment of Food and Incidental Allowance to its personnel in relation to COVID-19 response during the period 11,642,858.64
April to June 2020 without specific legal basis
I R1MC Members of Consignment Committee were paid with corresponding honoraria in relation to the completion of 88,000.00
various consignment contract despite them not being entitled as consignment contracts are not considered
procurement. The granting of the honoraria to the Consignment Committee is an infringement of the provisions
of DBM Budget Circular (BC) No. 2004-5A66 dated October 7, 2005 and COA Circular No. 2012-003 dated
October 29, 2012.
Bids and Awards Committee (BAC) honoraria were not supported with the required documents as mandated
under Section 5.7.1 of COA Circular No. 2012-001 dated June 14, 2012, hence, casting doubt on the propriety
and the validity of payments.
COVID-19 Hazard Pay (HP) and Special Risk Allowance (SRA) amounting to ₱2,021,190.00 and 2,408,106.75
₱386,916.75, respectively, were granted to personnel hired in response to the pandemic despite the
imposition of General Community Quarantine (GCQ) and Modified General Community Quarantine (MGCQ)
which is not in accordance with the provisions of Administrative Order (AO) Nos. 26 and 28 and DBM Budget
Circular (BC) Nos. 2020-1 and 2020-2.
Various disbursements other than those payments for professional services of public providers were charged 90,556,991.78
against the collected reimbursed claims from PhilHealth contrary to the provisions of Section 44 of the IRR of
RA No. 7875 as amended by RA Nos. 9241 and 10606, also known as the National Health Insurance Act of
2013 and DOH Administrative Order (AO) No. 2016 -033 dated June 30, 2016.
Fund for salaries and benefits of hired Human Resource for Health (HRH) were not utilized in accordance with 16,127,264.80
the guidelines set by DOH DO No. 2020-0731 dated November 26, 2020, thus, depriving the hired personnel
of salaries and benefits intended for them.
II CHD Payments for COVID-19 SRA for the period March 17, 2020 to April 30, 2020 even though the recipients are 914,982.68
not qualified as Public Health Workers as defined under Section 1 of AO No. 28 dated April 6, 2020 and
reiterated under Section 3 of DBM-BC No. 2020-2 dated April 7, 2020.
CVMC The funds intended for the benefits of health workers in response to COVID-19 Health Emergency was given 20,722,216.50
as meal allowance to CVMC Employees, HRH Personnel, and Service Contract Workers (SCWs), contrary to
Section 4 of RA No. 11494 and COA Circular No. 2013-003 dated January 30, 2013.
146
R2TMC Hazard Pay and SRA amounting to ₱3,418,250.00 and ₱404,569.40, respectively, were granted to HRH 3,822,819.40
employees during GCQ and Modified GCQ contrary to the provisions of Administrative Order (AO) No. 26. AO
No. 28, DBM BC 2020-1 and 2020-2.
III CHD Honoraria paid to members and secretariat of TB Medical Advisory Committee during consultative meetings 223,600.00
for the period January 1 to June 30, 2020 were not in accordance with Section 53 of the IRR of GAA for FY
2020 or RA 11465.
IV-A CHD 250 employees were granted hazard pay for the months/period where their exposure to high risk/low risk 2,188,862.48
hazards were less than 50% of their working hours hence resulting in overpayment
The grant of subsistence allowance to regular employees was not in conformity with Section 7.2, Rule XV of 1,170,000.00
the RIRR of RA No. 7305 or the Magna Carta of Public Health Workers and Section 8.3 of the DBM-DOH Joint
Circular (JC) No. 1 series of 2012 dated November 29, 2012, thus resulted in overpayment.
TRC- 131 employees were granted hazard pay for the months/period where their exposure to high risk/low risk 2,772,955.38.
Tagaytay hazards were less than 50% of their working hours, hence, resulting in overpayment.
City
IV-A TRC- Daily Subsistence Allowance were granted to officers/employees who were not physically present within the 472,811.65
Tagaytay premises of TRC or under the Work from Home (WFH) Scheme
City
IV-B CHD Personnel who have not physically reported to office were granted Hazard Pay Allowance despite the non- 563,118.06
exposure to risks and physical hardships contrary to the Magna Carta of Public Health Workers and DBM-
DOH JC No. 1 s. 2016.
ONP Disbursements for salaries and other personnel benefits were not supported with complete documentation 189,632,524.03
prescribed under item 4.2 of COA Circular No. 2012-001 dated June 14, 2012, resulting in irregular payments.
Payment of SRA to the officials and employees for the period March to April 2020 was contrary to the 2,433,315.44
provisions of AO No. 28 and DBM BC No. 2020-2
CSGH Payment of salaries and other personnel claims were not directly charged from the MDS, Regular account to 32,827,512.23
inconsistent with Item 4.1.2 of DBM Circular Letter No. 2018-14 dated December 28, 2018, and Section 57(3),
Chapter 6 of the GAM, Volume I, resulting in irregular payments of personnel claims.
648,976.82
Disease Affected/Afflicted persons (HDA's) were made without legal basis.
Payment of uniform assistance and incentives to COS and gratuity workers were contrary to Section 7.5 of 245,000.00
COA-DBM JC No. 2, s. 2020 and Rule XI of CSC Memorandum Circular No. 40, series of 1998.
V BRGHGMC Meals were improperly provided prior to the effectivity or reckoning date cited under Item V.F of DOH AO 142,500.00
2020-054, thus, resulting in unauthorized expenses
VI WVS Commutable or cash payment of Meals and Accommodation benefits given to personnel is contrary to DOH 13,955,040.00
AO No. 2020-0054 dated November 25, 2020.
Payment of SRA is contrary to Budget Circular No. 2020-2 and DBM-DOH JC No. 2, s. 2020 dated April 7, 7,723,993.59
2020 and November 25, 2020
The payment of Active Hazard Duty Pay (AHDP) is contrary to DBM-DOH JC No. 1, s. 2020 dated November 4,190,147.57
25, 2020, is considered as irregular disbursement of government funds.
WVMC Payment for services of a private lawyer as technical consultant on the procurement activities of the Medical 225,000.00
Center was without written conformity and acquiescence of the Office of the Solicitor General (OSG) and
written concurrence of the COA.
Commutable or cash payment of Meals and Accommodation benefits to personnel is contrary to DOH AO No. 63,784,674.50
2020-0054 dated November 25, 2020
TRC-Iloilo Payment of Living Quarters Allowance to ineligible/unqualified officers and employees for the period October 108,000.00
2019 to June 2020
Payment of Water and Electricity Allowance to ineligible officers and employees for the period January 2015 59,500.00
to December 2020
Payment of SRA was without legal basis 1,507,139.32
Payment of AHDP to personnel was without legal basis 574,090.65
VII CHD Payments of SRA to personnel for the period March 28, 2020 to May 31, 2020 was even though the recipients 17,575,715.45
are not qualified as Public Health Workers as defined under Section 1 of AO No. 28 dated April 6, 2020 and
Section 3 of DBM-BC No. 2020-2 dated April 7, 2020
TRC-Cebu Payment of Hazard Pay under RA 7305 to employees despite without physical presence in the premises of 169,339.08.
City the Center due to its alternative work arrangement of WFH contrary to New Rules on Hazard Pay provided in
Joint Circular No. 1 s. 2016 dated July 15, 2016, thus, cast doubt on the regularity of the disbursement of
transactions
147
VSMMC Payments of SRA for the period March 28, 2020 to May 31, 2020 was irregular since the recipients are not 2,307,683.31
qualified as Public Health Workers as defined under Section 1 of AO No. 28 dated April 6, 2020 and reiterated
under Section 3 of DBM-BC No. 2020-2 dated April 7, 2020.
VII VSMMC Payment of differential hazard pay amounting to ₱748,174.39 despite the personnel did not physically 2,115,069.17
reported to work, as well as Hazard Pay under RA 7305 amounting to ₱1,366,894.78 for those PHWs whose
accumulated leave of absence within a month were at least 11 days, contrary to provisions of AO No. 26 dated
March 23, 2020 and reiterated in DBM Budget Circular No. 2020-1 and DBM-DOH Joint Circular No. 1 dated
July 15, 2016, respectively, thereby, casting doubt on the regularity of the disbursement transactions.
GCGMH Advance delivery of laboratory supplies before the issuance of Notice of Award circumvents procurement 960,000.00
process under RA 9184 and its RIRR
IX BasGH Reimbursements for legal services were made to the legal counsel of the Hospital in addition to retainer fees 55,000.00
which is not in accordance with the amount allowed as concurred by the General Counsel of the COA under
Legal Retainer Review No. 2020-030.
X CHD Payment of Athletic Allowance was found to be contrary to the provisions of Section 43 of the FY 2020 GAA 199,500.00
and may result in overpayment of allowances/benefits.
Payment of hazard pay to PHWs who were under quarantine/treatment and with privilege leaves accumulating 166,262.71
11 days or more
TRC-CDO Payment for Productivity Enhancement Incentive (PEI) of separated/retired personnel, which is not in 15,000.00
accordance with Section 4.1 of DBM BC No. 2017-4 dated December 4, 2017 due to oversight in determining
entitlement resulting in overpaid incentives
Payment of hazard pay totaling 774,941.15 under the Magna Carta for Health Workers without adherence 909,237.80
to the requirements of Section 3.6 of DOH-DBM JC No. 1, s. of 2016 due to oversight on entitlement resulting
in overpaid hazard pay by the same amount. Further, a total of 12,709.25 was not paid despite having met
the required number of days to be physically present at work. Moreover, the amount of 15,431.80 was paid
pro-rata which is not in accordance with the rates provided under Section 3.3 of the same Circular. Lastly, the
payment amounting to 106,155.64 was made either without the corresponding Daily Time Records (DTR) or
conflicting DTRs entries, casting doubt as to the accuracy and propriety of the said payments.
XI DRMC Payment for the services of private lawyers without the written conformity and acquiescence of the OSG and 881,163.71
concurrence from the COA contrary to the provision of Paragraph 5, COA Circular No. 95-011 dated December
4, 1995 and paragraph 9.7, COA Circular 2012-013.
XI DRMC Renewal of 58 Physicians with Temporary Appointments for CY 2020 has exceeded the limit prescribed under 52,915,362.85
Paragraph C, Items 1.2 and 1.3 of DOH AO No. 2016-0032 dated June 30, 2016 casting doubt on legality and
validity of their appointments as well as the regularity of the corresponding expenditures.
XI DRMC 134 employees were granted Hazard Pay without physically reporting to work in the hospital contrary to 2,041,059.10
Paragraph 3.1 of DBM-DOH JC no. 1 s. 2016
XI NSC-Min Payments of Subsistence Allowance fixed at a rate of 1,500.00 per month were made contrary to the 292,136.36
provisions under DBM-DOH JC No. 1, s. 2012 dated November 29, 2012, resulting in an overpayment
XI NSC-Min Payments of Hazard Pay to 2 casual employees are not compliant with the rules provided in DBM-DOH JC 17,629.25
No. 1, s. 2016 dated July 15, 2016
Sub-total Irregular expenditures 549,409,866.60

Unnecessary Expenditures:
II CVMC Expenses, considered personal in nature, were charged against the Petty Cash Fund, contrary to Sections 2 141,269.70
and 4 of PD No. 1445.
VI CHD Catering Services were provided for virtual meetings, which were not essential in the conduct of the activities, 1,080,343.87
since the participants were in their respective work stations and performed their usual functions
Sub-Total – Unnecessary expenditures 1,221,613.57

Excessive Expenditures:
NCR DJFMH Payments of AHDP to JO personnel for the period September 15 to October 31, 2020 inclusive of the days 214,500.00
when personnel were under quarantine and prior to the reckoning date of September 15, 2020 and payments
of COVID-19 Hazard Pay during the implementation of MECQ, were contrary to the provisions of pertinent
laws and guidelines
CAR FNLGHTC The cost of three items of medical supplies procured by the hospital exceeded the maximum suggested retail 984,500.00.
prices prescribed under DOH Department Memorandum No. 2020-0250, as amended, with a total price
variance of ₱984,500.00.
148
II CHD Payments for COVID-19 Hazard Pay for the period March 17-31, 2020 exceeded the allowable amount set 3,093,329.00
under Section 1 of AO No. 26 dated March 23, 2020 and Section 4 of DBM BC No. 2020-1 dated March 24,
2020
II DATRC - Payments totaling ₱143,591.06 for COVID-19 Hazard Pay of sixty-nine (69) DOH DATRC personnel 143,591.06
Isabela covering the period March 17, 2020 to April 30, 2020 exceeded the proper amount of their rightful entitlements
due to non-adherence to Section 1 of Administrative Order No. 26 dated March 23, 2020 and reiterated under
Section 4 of Department of Budget and Management Budget Circular 2020-1 dated March 24, 2020, thus
disallowable in audit.
IV-B CSGH Payments of SRA to officials and employees for the period March to April 2020 was contrary to the provisions 1,627,204.90
of AO No. 28 and DBM BC No. 2020-2 resulting in excessive expenditure.
VI WVS The cost of the undelivered 8 units of electric needle burner and syringe destroyer was not deducted from the 39,400.00
payment to Winegard Marketing for the procurement of various housekeeping supplies amounting to
₱954,107.53, net of tax, thus, resulted in the overpayment of ₱39,400.00.
TRC-Iloilo The extraordinary and miscellaneous expenses paid to the Chief of Hospital for CYs 2019 and 2020 in the 12,286.21
total amount of ₱227,086.21 exceeded the amount authorized in the GAA for FYs 2019 and 2020, by
₱6,857.11 and ₱5,429.10, respectively
XI DRMC Payment of Subsistence Allowance amounting to P 1,500.00 per month per personnel was not in accordance
to Section 8.0 of DBM-DOH JC No. 1, S. 2012 dated November 29, 2012 resulting in an excessive 1,937,956.88
expenditures.
Sub-total Excessive expenditures 7,068,268.05

TOTAL 557,699,748.22
243. The apparent disregard of existing laws and regulations affected the regularity, validity
and propriety of covered transactions. Government funds and property were exposed to the
risks of loss or misuse. Notices of disallowances will be issued on said transactions.
244. We recommended and the SOH agreed to direct the OUs to comply fully with
established rules, regulations, procedural guidelines, policies, principles or practices and
avoid IUEEU expenditures to prevent disallowance in audit.
Disadvantageous payment of advances to contractor - 12,599,469.21
245. M 12,599,469.21
project sans determination of the fairness/reasonableness of payment, specifically on site
readiness, a condition deemed to be highly disadvantageous on the part of government.
246. Section 2 of PD No. 1445 mandates that all resources of the government shall be
managed, expended or utilized in accordance with law and regulations, and safeguarded
against loss or wastage through illegal or improper disposition, with a view to ensuring
efficiency, economy and effectiveness in the operations of government.
247. Section 7, Article II of RA No. 9184 expressly requires that all procurement should be
meticulously and judiciously planned by the Procuring Entity concerned.
248. No bidding and award of contract for infrastructure projects shall be made unless the
detailed engineering investigations, surveys and designs, for the project have been sufficiently
carried out and duly approved in accordance with the standards and specifications prescribed
by the HoPE concerned or his duly authorized representative, pursuant to the recommendation
of the end-user or implementing unit (Section 17.6, Rule VI of the 2016 RIRR of RA No.
9184). Site investigation is mandatorily required, among others, to be included in a schedule
of detailed engineering activities per Item 2, Anne A of the 2016 RIRR of RA No. 9184.
149
249. Anne F of the RIRR provides specific conditions for the allowance of advance
payment. One condition is that this arrangement must be requested in writing by the consultant
and subject to the approval of the Government if it deems such payment to be fair and
reasonable.
250. Our audit showed that the Cebu South Medical Center or CSMC (formerly Talisay
District Hospital) paid a mobilization fee in the amount of 12,599,469.21 for the project
One Job Order for Labor and Materials for the Construction of Talisa District Hospital
Building A Phase 1 . However, there was dela in the implementation of the project caused
by problems, foremost of which is the non-availability of the project site on account of an
existing building, the Emergency Room (ER) and the Out-Patient Department (OPD), which
the Medical Center was still using in 2019.
251. As of December 31, 2020, a total of 669 days had lapsed since the time the
mobilization fee was granted, a period wherein the contractor enjoyed the free use of
government funds without rendering services in return.
252. The failure of the CSMC Management to conduct proper procurement planning and
apparent desertion of its sacred task in determining reasonableness of advance payment has
put the government in a highly disadvantageous position.
253. We recommended and the SOH agreed to direct the Legal Service to conduct
thorough investigation on this matter, impose administrative sanctions to erring
officials/employees and enjoin the CSMC Management to immediately resolve all issues
in order to complete the infrastructure project for the benefit of intended beneficiaries.
254. Management commented that the Legal Service conducts preliminary investigation
pursuant to the DOH AO 2015-0048. For a proper conduct of preliminary investigation, the
FMS suggest to refer first to IAS for fact-finding investigation to gather relevant documents
and identify officials responsible.
They further explained that the CSMC has always been exercising prudence in the
disbursements of funds. As a matter of fact, the propriety of releasing the Mobilization Fee
(Advance Payment) was referred to the FMS for evaluation. Based on our record, the actual
accomplishment for the Project is at 10.07% and no progress billing was paid to the
Contractor. As of date, the project implementation is ongoing and the Implementing Office
will regularly report the physical & financial status of the project.
255. The CSMC Management is, as always been, committed to exert earnest efforts to
ensure speedy implementation of the project without sacrificing quality and integrity of the
structure. Likewise, will continuously endeavor to properly plan future projects and will not
acquiesce to causing undue damage to the government.
150
Delayed/Non-submission of financial reports and transaction documents
256. Various financial reports and transaction documents were not or belatedly
submitted, thereby prevented the timely conduct of thorough review, evaluation and
verification by the Auditors and deprived Management of relevant information for
decision-making.
257. In our audit, it was found that financial reports and transaction records/documents
were not or belatedly submitted to the concerned Audit Teams. Table XXXII enumerates these
reports/documents, the prescribed deadlines, pertinent rules, and the DOH office/OUs where
such deficiencies were observed.
Table XXXII. Analysis of submission of CY 2020 financial reports and transaction documents
Pertinent rules
Deadline for
Reports/ Documents prescribing the Region OU Remarks
Submission
deadline
Financial and other reports:
Consolidated Year-end February 14 of the Section 60, CO Not submitted
Trial Balances (TBs), following year Chapter 19 of the
Financial Statements GAM, Volume I
(FSs) and supporting
schedules (SSs)
Individual Year-end TBs, On or before 31st of NCR SLH 69 to 112 days delay in submission
FSs and SSs of OUs January of the following I MMMHMC 17 days delay in submission
year for year-end FS
IV-A CHD Not submitted
TRC 38 days delay in submission
V BRGHGMC 90 days delay in submission
VI WVS 45 days delay in submission
VIII CHD 26 days delay in submission
TRC 40 days delay in submission
IX MCS 70 to 86 days delay in submission
Quarterly TBs, FSs and Within 10 days after end -do- NCR CHD 122 to 175 days delay in submission
SSs of the quarter RITM Not submitted
SLH 69 to 214 days delay in submission
TRC Not submitted
V BRGHGMC Not submitted
VI WVS 90 to 270 days delay in submission
VIII CHD 26 to 112 days delay in submission
TRC 61 to 109 days delay in submission
EVRMC 7 to 97 days delay in submission
SCRH 26 to 322 days delay in submission
IX MCS Not submitted
X APMC 12 to 66 days delay in submission
Monthly TBs, FSs and Within 10 days after the -do- NCR CHD 99 to 258 days delay in submission
SSs end of the month FDA 1 to 56 days delay in submission
RITM Not submitted
SLH 69 to 245 days delay in submission
I MMMHMC 64 to 90 days delay in submission
TRC Not submitted
V BRGHGMC Not submitted
XII CHD 21 to 51 days delay in submission
151
Pertinent rules
Deadline for
Submission
deadline
Bank Reconciliation Within 20 days after Section 7, NCR CHD 52 to 279 days delay in submission
Statements receipt of the bank Chapter 21 of the BOQ 190 days delay in submission
statements GAM, Volume I LPGH-STC 16 to 213 days delay in submission
BRS and supporting documents (SDs)
for September to December 2020 not
yet submitted
RITM 39 to 215 days delay in submission
SLH 78 to 243 days delay in submission;
BRSs and SDs for December 2020 not
yet submitted
CAR CDH BRSs and SDs for January to December
2020 not submitted
II BGH BRSs and SDs for March to December
2020 not yet submitted
IV-B CHD 23 to 191 days delay in submission
V TRC Malinao BRSs and SDs for December 2020 for one
bank account not yet submitted
VII CSMC 120 days delay in submission
VIII CHD BRS and SDs not yet submitted as follows:
Three (3) bank accounts October to
December 2020;
Two (2) bank accounts January to
December 2020
X CHD 4 to 51 days delay in submission
BRS and SDs not yet submitted as
follows:
Account No. 1 November to
December 2020;
Account No. 2 September to
December 2020;
Account Nos. 3 and 4 June to
December 2020;
Account No. 5 August to December
2020
TRC Number of days of delay could not be
NMMC determined due to lack of information on
date of receipt of bank statements
from the AGDB
XIII TRC BRSs and SDs for March to December
2020 for one bank account not yet
submitted
Budget and Financial BAR No. 1, FAR Nos. Sec. 4.3, COA- I MMMHMC 25 to 55 days delay in submission
Accountability Reports, 1 to 2, FAR Nos. 5 to 6 DBM Joint Circular BAR No. 1 for 2nd and 4th Quarters not
Utilization Reports within 30 days after No. 2019-1 dated yet submitted
the end of each January 1, 2019 IV-A BatMC Reports on the Agency Budgets for the
quarter; COVID-19 Initiatives and Utilization as of
FAR No. 3- on or May 31, 2020 not yet submitted
before 30th day VI WVS 36 to 240 days delay in submission
following the end of the XII CHD 1 to 275 days delay in submission
year;
FAR No. 4 on or
before the 10th day of
the month following
the last month of the
covered reporting
period
Report on Physical Count Not later than January 31 Sec. 38, Chap. 10, NCR CO Not submitted
of Property, Plant and of the following year GAM, Vol. I BOQ Not submitted
Equipment (RPCPPE)
SLH 71 days delay in submission
152
Pertinent rules
Deadline for
Submission
deadline
III TGH Not submitted
VI TRC Not submitted
DJSMMCEH Not submitted
Report on the Physical Not later than July 31 and Sec. 17 (i), Chap. VI CHD Not submitted
Count of Inventories January 31 of each year 8, GAM, Vol. I X CHD Not submitted
(RPCI) for the first and second
semesters, respectively
Report of Accountability Within the first ten (10) Section 7.2.1 of V TRC Malinao RAAF for ORs for April to May, July to
for Accountable Forms days of the ensuing the Rules and August and October to December 2020 not
(RAAF) month Regulations on yet submitted
the Settlement of
Accounts (RRSA)
prescribed under
COA Circular No
2009-006 dated
September 15,
2009
Status Report on the Monthly Status Report Sections 3.9 and NCR SLH Not submitted
every 5th working day 3.10 of COA IV-B ONP
Salaries and other of the following month Circular No. 2018- and other personnel benefits in the total
Authorized Personnel Semestral Status 001 dated amount of ₱262,942.32 was not reported
Benefits (Monthly, Report on or before February 1, 2018 to the audit team
Semestral and Annual) July 15 of the same CSGH The balance of the savings account/status
year and January 15 of
the following year for personnel benefits in the total amount of
1st and 2nd semester; ₱142,451.07 was not reported to the audit
respectively team.
Annual on or before IX ZCMC Not submitted
the 15th day of the
given CY
Report on Donation On or before the 10th day Item V-B COA VI TRC Not submitted
of the ensuing month until Circular No. 2014- DJSMMCEH Not submitted
all donations are fully 002 dated April
consumed/utilized. 15, 2014 WVMC Not submitted
Transaction documents:
Reports of Checks Within the first ten (10) Section 7.2.1 of NCR CHD 4 to 122 days delay in submission
Issued (RCIs) / Report of days of the ensuing the RRSA BOQ 172 days delay in submission
ADA Issued (RADAIs) month prescribed under
with Disbursement COA Circular No FDA 1 to 336 days delay in submission
Vouchers (DVs) and SDs 2009-006 dated RMC 1 to 120 days delay in submission
September 15, 26 DVs and SDs for CY 2020 not yet
2009 submitted
RITM 42 to 199 days delay in submission;
RCIs, RADAIs, DVs and SDs for June to
September and November to December
RCIs, RADAIs, DVs and SDs for
November and December 2020 not yet
submitted
NCMH 41 to 113 days delay in submission;
RCIs, RADAIs, DVs and SDs for
December 2020 not yet submitted
I ITRMC 60 to 300 days delay in submission
MMMHMC 37 to 211 days delay in submission
IV-A CHD 64 to 149 days delay in submission
DVs and SDs for December 2020 not
yet submitted
V BRTTH Incomplete submission of DVs and SDs for
CY 2019 - 2020
153
Pertinent rules
Deadline for
Submission
deadline
CHD DVs and SDs for the following months for
CY 2020 not yet submitted:
Month No. of DVs

March 4
June 18
July 2
October 41
November 98
December 13
TRC Malinao DVs and SDs for the following month for
CY 2020 not yet submitted:
Month No. of DVs

March 1
June 10
September 4
December 3
CHD 2 to 100 days delay in submission
NMMC 1 to 10 days delay in submission
Report of Collections and -do- -do- NCR CHD 4 to 122 days delay in submission
Deposits (RCD) with BOQ 114 days delay in submission
Official Receipts (ORs)
and deposit slips FDA 1 to 336 days delay in submission
RCDs, ORs and SDs for August to
RCDs, ORs and SDs for December
IV-A CHD 18 to 211 days delay in submission
V TRC Malinao RCDs, ORs and SDs for December 2020
not yet submitted
NMMC 1 to 10 days delay in submission
Payrolls -do- -do- NCR RITM 42 to 199 days delay in submission;
Payrolls for June to September and
November to December 2020 not yet
submitted
Liquidation Reports -do- -do- NCR CHD 83 to 124 days delay in submission
BOQ 175 days delay in submission
DJFMH 1 to 16 days delay in submission
154
Pertinent rules
Deadline for
Submission
deadline
Liquidation Reports for July to
Petty Cash Vouchers -do- -do- III CHD Not submitted
(PCVs), Report of Paid JBLMGH Not submitted
Petty Cash Voucher
(RPPCV), Petty Cash
Fund Report (PCFR)
Journal Entry Vouchers -do- -do- NCR CHD 4 to 279 days delay in submission
(JEVs) BOQ 187 days delay in submission
FDA 1 to 335 days delay in submission
JEVs and SDs for June to September
and November to December 2020 not
yet submitted
JEVs and SDs for December 2020 not
yet submitted
JEVs and SDs for December 2020 not
yet submitted
ITRMC 2,862 JEVs for January to June 2020 not
yet submitted
III BataanGHMC 45 to 360 days delay in submission
MMWGH 30 to 360 days delay in submission
V CHD JEVs and SDs recognizing 8 units of Land
Ambulance already transferred to the
recipient LGUs not yet submitted
Contracts and supporting Within five (5) working Section 3.1.1, NCR CHD 80 days delay in submission
documents (SDs) days from execution of COA Circular No. FDA 4 to 518 days delay in submission
contract 2009-001 dated
Feb 12, 2009 RMC 1 to 75 days delay in submission
11 contracts for CY 2020 not yet
submitted
CAR CHD Submitted as attachments to DVs
II SIMC Incomplete submission of supporting
documents (SDs)
III CHD 1 to 278 days delay in submission
JBLMGH 24 to 45 days delay in submission
Dr. PJGMRMC Incomplete submission of SDs
V BMC Medicine Consignment Agreements
(MCAs) , Consignment Orders (COs) and
supporting documents (SDs) for CY 2020
not yet submitted
VII CSMC 13 contracts not yet submitted
X APMC Days of delay in submission not stated
XII CHD Not submitted
Purchase Orders (POs) Within five (5) working Section 3.2.1, NCR FDA 4 to 518 days delay in submission
and SDs days from issuance of PO COA Circular No. DJNRMHS 1 to 262 days delay in submission
2009-001 dated
Feb 12, 2009 III JBLMGH 1 to 265 days delay in submission
MMWGH 1 to 358 days delay in submission
V BRTTH 12 POs and SDs for CY 2020 not yet
submitted
IX CHD 1,377 POs and SDs as of December 31,
155
Pertinent rules
Deadline for
Submission
deadline
X APMC Days of delay in submission not stated
XII CRMC 1 to 100 days delay in submission
Notices of delivery / Within 24 hours from Item 6.06, COA NCR CHD Incomplete submission of Notices of
Inspection and acceptance of delivery Circular No. 95- Delivery
Acceptance Report (IAR) 006 dated May 18, FDA 3 to 518 days delay in submission
1995; V BRTTH Incomplete submission of Notices of
Item A.2, COA Delivery
Circular No. 96- VI CHD 1 to 92 days delay in submission
010 dated August
15, 1996 WVS 6 days delay in submission
258. Identified causes of the delayed/non-submission of these records are the following: (a)
late submission of some DVs and reports by the Cashier Section and other offices; (b) late
receipt of the bank statements; (c) voluminous transactions; (d) late completion of the required
documents such as the receipt of ORs from the payees; (e) adoption of e-NGAS, wherein the
Accounting Division is still in the transition stage from manual recording to the computerized
system; (f) lack of coordination between the Accounting Office and other offices concerned
in the inspection; (g) lack of awareness in the prescribed period of submission; (h) lack of
personnel; and (i) declaration of enhanced community quarantine and the difficulties brought
about by the COVID-19 pandemic such as limitations in the mobility of personnel,
transportation of documents, work arrangements and the transmission of COVID-19 among
the personnel.
259. The inability of DOH and its OUs to submit the records on time precluded the auditors
from conducting timely audit and verification of financial transactions, propriety of
disbursements and analyzing correctness of accounting entries as well as from communicating
timely and relevant audit results to Management which could have been used as aid in
management decisions and inputs in enhancing financial accountability.
a. direct the OUs to submit immediately all the perfected contracts, purchase
orders and the related supporting documents and documentary requirements
to the respective COA Offices for auditorial and legal review, in compliance
with COA Circular Nos. 2009-001 and 2012-001;
b. require the concerned officers/employees to strictly and consistently observe

the timely submission of the required FS and financial reports and related
schedules and supporting documents as mandated under existing COA rules
and regulations; otherwise, consider the withholding of salaries of concerned
officials, if deemed necessary, until the timely submission of financial and
accounting reports has been complied with, pursuant to Section 122 of PD
1445;
c. expedite the use of e-NGAS in order to cope with the demand of voluminous
accounting transactions for a timely recording of accounting records and
156
submission of reports, and to have access to up-to-date information involving
financial data or transactions;
d. enroll the bank accounts to the online facility offered by Government Servicing
Banks to obtain the necessary electronic data in real time for the timely
preparation and submission of the BRS; and
e. address the lack of manpower in the Accounting Divisions to cope with the
voluminous transactions.
Non-submission of lists of on-going government PPAs
261. The failure of four OUs to submit necessary information on on-going PPAs
precluded the prompt verification on the validity and propriety of information,
implementation publicity and their efficient scheduling of inspection, validation and
monitoring.
262. Item 1.1 of COA Circular No. 2013-004 dated January 13, 2013 provides that the State
adopts and implements a policy of full disclosure of all transactions involving public interest
(Section 28, Article II, 1987 Philippine Constitution) and recognizes the right of the people to
information on matters of public concern (Section 7, Article III, 1987 Philippine Constitution).
263. Item 2.1 of the said Circular requires that at the beginning of the year, all government
agencies shall provide their respective assigned Supervising Auditors (SAs) and Audit Team
Leaders (ATLs) with a list of all on-going government projects/programs/activities ( PPA )
and those that are to be implemented during the year.
264. Further, Item 3.1 of the same Circular states that the Head of the Agency shall inform
its SA and ATL within ten (10) days after the award of the infrastructure project or before the
start of the program/activity that the appropriate project signboards and/or public notices are
already posted, and the SA and ATL shall validate the same.
265. It was noted that four OUs, as shown in Table XXXIII, failed to submit complete list
of their PPAs or to provide sufficient details thereon, contrary to the above-quoted provisions
of the COA Circular.
157
Table XXXIII. Summary of Deficiencies on List of All On-going Government PPAs
Amount
Region CHD / Hospital Deficiencies Management's Comments
(in Php)
NCR LPGH-STC 1,417,378.03 Non-reporting of the self- Being the only DOH hospital in the
constructed COVID Testing South, the Agency is mandated to
Laboratory at Las Piñas General put up a Molecular Laboratory in
Hospital and Satellite Trauma
Center contrary to the COVID-19 testing program. The
requirements provided under construction of the Laboratory was
COA Circular 2013-004 dated supposed to be done through
January 30, 2013, as amended negotiated procurement but no
by COA Circular 2015-006 dated contractor would want to take the
August 20, 2015, thus, prevented project. Being one of the
the Audit Team to conduct a benefactors of the Agency,
timely review and evaluation of Senator Cynthia Villar offered to
transactions and immediately take the project and to pay its labor
correct any deficiencies found expenses. The materials and
therein, if any equipment for the project were
Non-submission of the reports on Management submitted on

Programs/Projects/Activities February 8, 2021, the Report on
IV-A BatMC 203,924,376.88
(PPAs) at the beginning of the Programs/Projects/Activities
year (PPAs) for CY 2021.
A corresponding office order was
Failure to include the soft
issued to officers that are
XII DOH - CHD XII Not stated projects in the report of ongoing
responsible in accomplishing and
Government PAPs
submitting the required reports
Management submitted an
Insufficient details provided in updated report as of March 15,
XIII CHD - Caraga 75,785,437.51
the quarterly Report on GPPAs. 2021 providing information
required on the GPPA report.
Total 281,127,192.42
266. The failure of the OUs to submit the required listings, caused by apparent neglect of
responsible officials/employees, depicts weakness in the internal controls, creates doubt as to
the reliability of reports and precluded the prompt verification of the validity and propriety of
information and publicity on PPAs. The efficient scheduling of inspection, validation and
monitoring of PPAs was also not performed.
a. remind the OUs to cause the submission of lists of all ongoing PPAs and those
to be implemented during the year to the Audit Teams at the beginning of the
year;
b. direct concerned officials/employees of the OUs to inform the COA Auditors

within ten (10) days after the award of the infrastructure projects or before
the start of the program activity that the appropriate project signboards
and/or public notices are already posted; and
158
c. instruct the OUs to, henceforth, observe strictly the provisions of COA
Circular No. 2013-004 dated January 30, 2013.
Incomplete submission of documentary requirements - 45,849,113,881.05
268. G 45,849,113,881.05 were not

supported with complete documentary requirements contrary to law and regulations,
and casted doubts on the validity, regularity and propriety of transactions.
269. Section 4(6) of PD No. 1445 provides that claims against government funds shall be
supported with complete documentation.
270. COA Circular No. 2012-001 dated June 14, 2012 sets forth the specific documentary
requirements for each type of disbursement.
271. Various other issuances were released in order to guide the government agencies in
the processing of transactions, depending on the nature of the same.
272. Our audit found that several transactions were not supported with adequate documents
and DVs and other documents not stamped PAID . Details are shown in Annex XI.
273. Other than non-adherence of existing law and regulations, the incomplete submission
of supporting documents rendered the ascertainment of the propriety, regularity, and validity
of the transactions difficult. Moreover, the practice of not stamping PAID all disbursement
vouchers and its supporting documents after payment is susceptible to double payment of
claims and is not in line with sound internal control on disbursements of government funds.
274. We recommended and the SOH agreed to direct the CO and OUs, in writing, to:
a. submit complete documentary support on all transactions in compliance with

the law and existing regulations; and
b. PAID D
supporting documents after payment.
Non-provision of storeroom for safekeeping of records
275. The COA Offices in EV-CHD and TRC Dulag, Leyte were not provided with
adequate storeroom facility for safekeeping of records contrary to law and regulation,
and thus, exposed such records to risks of loss and damage.
276. Section 26 of PD No. 1445 provides that the authority and power of the Commission
shall extend to and comprehend all matters relating to auditing procedures, systems and
controls, the keeping of the general accounts of the Government, the preservation of vouchers
pertaining thereto for a period of ten years.
159
277. On the other hand, Section 20 of the law further states that there shall be in each agency
of the government an auditing unit which shall be provided by the audited agency with a
suitable and sufficient office space together with supplies, equipment, furniture, and other
necessary operating expenses for its proper maintenance, including expenses for travel and
transportation.
278. In line with the above provision, COA Circular No. 2011-001 dated July 5, 2011
requires that each agency shall provide all audit groups/teams assigned to them the following,
among others: (a) adequate office space as befits the representative(s) of the COA, well-
ventilated and properly maintained in terms of aesthetics, security, safety and cleanliness; (b)
storeroom for the vouchers and documents over which the COA has legal custody, which is
adequate in size and property secured from the elements, including from individuals/groups
with malicious/evil intentions. For the purpose, the auditees concerned shall include the
financial requirements for the above-mentioned audit support items in their respective budgets
for maintenance and other operating expenses (MOOE) and capital outlay pertaining to
COA/Auditing Services.
279. Although the COA Offices in EV-CHD and TRC-Dulag have storerooms, these are
not adequate to store the voluminous documentations which include transaction documents
with their supporting papers and other official documents submitted by the said OUs. All such
documentation accumulated monthly and could no longer fit in the storerooms provided to the
Audit Teams.
280. The inadequate storerooms provided by the said OUs expose their own documents to
risks of loss, deterioration and unauthorized interferences from interested entities/individuals
and outsiders. It must be emphasi ed that since the auditee s management is responsible for
the provision of stockroom to the auditing unit, the loss of any document caused by the
inadequate storage room will remain the accountability of the former.
281. We recommended and the SOH OU M

prioritize the provision of adequate storage facility through allocation of sufficient
budgetary requirements thereof.
Unauthorized removal of records from COA storage facility
282. The confidentiality of public records under COA custody in RMC was
compromised due to removal from the designated storage area without authority,
contrary to existing law and regulation.
283. Section 43 of PD No. 1445 mandates that the auditors in all auditing units shall have
the custody, and be responsible for the safekeeping and preservation of paid expense vouchers,
journal vouchers, stubs of treasury warrants or checks, reports of collection and disbursements
and similar documents, together with their respective supporting papers, under regulation of
the Commission.
160
284. Article 2 of the IRR of RA No. 9470 states that public records are essential to the
administration and operation of all government offices, whether national or local, including
GOCCs and GFIs. Such records need to be systematically managed to ensure preservation of
historically valuable materials, to provide ready access to vital information and to promote the
efficient and economical operation of government.
285. Article 133 thereof requires that all public records of the government, whether national
or local, and the political subdivisions thereof shall be kept in facilities maintained by the
agencies and offices responsible for the creation and maintenance of such records, unless the
consent of the National Archives of the Philippines is obtained for their transfer or storage
elsewhere.
286. The IRR further provides that the commission of acts in violation of RA 9470
constitutes an offense and provides penalties therefore stated in Articles 123 and 124.
287. On July 30-31, 2020, documents pertaining to transactions of the RMC under the
custody of the COA were transferred from the designated storage area in the dormitory
building to an area exposed to risks of destruction and loss. This was done without prior
communication or permission properly obtained from the Audit Team. The area to which the
documents were transferred to is a space between two buildings which is exposed to rainwater,
causing the destruction of the documents beyond recovery.
288. The incident was communicated to the RMC Management through a letter dated
August 3, 2020. In the said letter, the Audit Team requested a written communication
regarding the circumstances which resulted in the abrupt transfer of the documents from its
designated storage area. It was also requested that a written communication be provided for
similar incidents in the future. No response was received from the Management.
289. On December 3, 2020, documents under the custody of the Audit Team were again
transferred by Management without proper notice and authority to a makeshift storage area
enclosed by galvanized iron sheets. During the inspection conducted on March 18, 2021, it
was found out that the documents had been severely damaged due to exposure to moisture and
covered with dust. Furthermore, the completeness of the documents is now doubtful since
they were placed in an area easily accessible by any person.
290. The unauthorized transfer/removal of documents caused by lack of coordination and

communication with the Audit Team has compromised the confidentiality nature of the
documents and led to the damage and possible loss of said records.
a. direct the Legal Service to conduct a thorough investigation on the incident

that happened and impose sanctions to responsible officials/employees when
warranted; and
161
b. remind the RMC Management to henceforth, refrain from the unauthorized
transfer of records under COA custody and secure proper
authority/permission when the need to transfer the same arises.
292. Management commented that for a proper conduct of preliminary investigation

pursuant to DOH AO 2015-0048 and the 2017 Revised Rules of Administrative Cases in the
Civil Service, the Legal Service suggested to refer first to IAS for fact-finding investigation
to gather relevant documents and identify officials responsible.
Reporting on Disaster Risk Reduction and Management (DRRM) Funds and Donations
Received
293. The non-compliance with the requirements on reporting and publication of

receipts and utilization of DRRM funds as well as cash and in-kind donations as required
,
transparency and accountability.
294. Section 22 (d) of RA No. 10121 requires that all departments/agencies and LGUs that
are allocated with DRRM funds shall submit to the National Disaster Risk Reduction and
Management Council (NDRRMC) their monthly statements on the utilization of DRRM funds
and make an accounting thereof in accordance with existing accounting and auditing rules.
295. COA Circular No. 2014-002 dated April 15, 2014 provides the accounting and
reporting guidelines on the receipt and utilization of National Disaster Risk Reduction and
Management Funds (NDRRMF), cash and in-kind aids/donations from local and foreign
sources, and funds allocated from the agency regular budget for DRRM program, pursuant to
RA 10121. The prescribed reports are required to be submitted to the NDRRMC through the
Office of Civil Defense (OCD), copy furnished respective COA Auditors, and posted in the
official websites of the implementing/done-agency, OCD and NDRRMC.
296. COA Circular No. 2020-009 dated April 21, 2020 temporarily relaxed the application
of certain provisions of the aforementioned Circular in areas subject to quarantine in so far as
receipt, recording, distribution, reporting and direct release of donations in-kind and relief
goods to the beneficiaries are concerned during the period of the State of Calamity declared
under Proclamation No. 929 dated March 16, 2020. However, recipient agencies are still
required to submit within ten (10) working days after the end of the quarantine, or if the
quarantine exceeds three (3) months, within ten (10) working days after the end of each
quarter, a Summary/List of Donations Received, Distributed and Balances for donations in-
kind received from local and foreign sources, and a one-time report, separately for cash
donations and in-kind donations, to the NDRRMC, through the OCD (OCD), copy furnished
the respective COA Auditors.
297. In the course of our audit, we noted that there were cases of non-compliance with the
accounting and reporting guidelines on the receipt and utilization of DRRM funds and
donations received, as shown in Table XXXIV.
162
Table XXXIV. Deficiencies in reporting DRRM funds and donations received
Region OUs Observation Remarks
NCR CO Non-preparation/submission of reports to As verified with the Budget Division, the preparation of the reports
the NDRRMC through the OCD on the receipt and utilization of the DRRM Funds sourced from the
GAA and cash donations were accomplished monthly. The reports,
however, were directly submitted to the DBM instead of the
NDRRMC through the OCD and the COA Auditor.
Non-posting of reports in the DOH According to the Budget Division, the non-posting of the Cash
website Donation Report for the second quarter was already communicated
to the DOH Web Team. Accordingly, the 4th quarterly report was
not yet updated due to frequent revisions of the Statement of
Allotments, Obligations, Balances and Disbursements (SAOBD) for
CY 2020, hence, the request for web posting was not done.
Absence of inventory list of procured According to the Property Officer, only a partial report was prepared
DRRM items and the quarterly/one-time by their office because for March 2020, all donations were received
report was not officially submitted to the at the Central Office while from April 2020 to December 2020, the
NDRRMC through the OCD. donation in-kind and even the procured DRRM items were delivered
to the OCD. They already coordinated with the OIC Director for the
complete details of the report for CY 2020.
NCH Failed to submit the Summary/List of Management explained that they are not aware that the said reports
Donations Received, Distributed and are required to be submitted to the NDRRMC.
Balances of COVID-19 related donations
received with an aggregate amount of
₱70,926,691.80 to NDRRMC thru the
OCD. Moreover, the documentary
requirements for donations in-kind
related to COVID-19 were not
consistently submitted to the audit team
thus, precluding complete and proper
audit of the COVID-19 donations.
TMC Failure to prepare the necessary Lack of awareness of the COA guidelines that require the separate
documents/reports for the proper reporting and monitoring of COVID-19 related donations in-kind.
accounting of COVID-19 related
donations in-kind amounting to at least
77,924,303.58
SLH Failure to submit the Summary/List of The Management Materials Department (MMD) prepares on a
Donations Received, Distributed and monthly basis the Report of Donated Supplies and Report of
Balances of COVID-19 related donations Donated Drugs and Medicines. However, said report does not
received with an aggregate amount of provide details/information on the distribution and balances of the
1,298,553,978.24 to the NDRRMC, thru said donated items. Also, separate reports namely, Distribution List
the OCD of Equipment (Donation-COVID 19) and Distribution List of Semi-
Expendable Equipment (Donation-COVID 19) are prepared by the
MMD for equipment and semi-expendable equipment received
through donations which shows information on donated items
received and distribution thereof. Said reports were submitted to the
Accounting Department and to the Audit Team but not to NDRRMC
and OCD.
JRRMMC Failure to submit the required reports and The Health Emergency Management Committee (HEMC) explained
necessary supporting documents to that they were not able to submit the required supporting documents
properly account COVID-19 related to the Audit Team due to the enormous volume of supporting
donations in-kind valued at documents.
29,482,268.64 as of December 31,
2020.
X APMC Failure to furnish the Audit Team with the This failure can be attributed to the inadequate knowledge of the
one-time report, separately for cash and key personnel on the subject COA Circulars or the lack of personnel
in-kind donations on sources and due to the pandemic that occurred, considering that they are
utilization of DRRM funds to the frontline workers.
NDRRMC through the OCD
163
298. These conditions are counter-beneficial to the DOH s continued efforts of improving
transparency and accountability in the handling of DRRM funds and donations and also
precluded the Auditors from validating the receipts, distribution and balances of donations
received.
299. We recommended and the SOH agreed to direct concerned offices of the CO and
OUs to strictly comply with the provisions of COA Circular Nos. 2014-002 and 2020-009
and integrate the same in an internal DOH policy/issuance.
Uninsured properties with the GSIS - 34,869,776,746.18
300. Despite the mandatory requirement to insure all government properties with the
General Insurance Fund (GIF) of the Government Service Insurance System (GSIS)
pursuant to existing laws, rules and regulations, properties owned by the DOH with total
34,869,776,746.18 GSIS GIF,
government to unnecessary risk of not being indemnified for any damage or loss due to
any fortuitous events such as fire, earthquake, typhoon and/or flood.
301. RA No. 656, otherwise known as the Property Insurance Law, as amended by PD No.
245, requires all government agencies (except municipal governments below first class
category) to insure against any insurable risk their properties, assets, and interests with the
GIF, as administered by GSIS.
302. To strictly enforce this law, AO No. 33 was signed in 1987, requiring government
agencies to submit an updated inventory of properties of their respective offices to the GSIS
and to secure from the GIF an insurance covering all its properties.
303. In addition to AO No. 33, COA Circular No. 92-390 dated November 11, 1992 was
issued to assist GSIS in ensuring that all insurable assets and properties of the government
were adequately covered/insured with the GIF.
304. COA Circular No. 2018-002 dated May 31, 2018 was issued, setting up the guidelines
prescribing the submission of the Property Inventory Form (PIF) as basis for the assessment
of general insurance coverage over all insurable assets, properties and interests of the
government with the GIF of the GSIS. As defined in Item 4.1 thereof, the term property
includes vessels and craft, motor vehicles, machineries, permanent buildings, properties stored
therein (i.e. furniture, fixtures, equipment, supplies and materials, etc.) or in buildings rented
by the government, or properties in transit, the ownership of which had already passed to the
government.
305. In recent years, the weather conditions in the Philippines have drastically changed.
Typhoon and flooding incidents continue to increase and become more frequent while
earthquakes have become a major risk that the country also has to grapple with. Various
catastrophic perils have either damaged or destroyed buildings and other structures, especially
those belonging to the government. The DOH, given its considerable number of buildings
and health-care infrastructure, is of no exemption. To protect these DOH properties, Fire and
164
Allied Perils Insurance must be secured from the GSIS GIF to cover loss or damage of assets
and guarantee immediate damage control, repair and replacement thereby reducing
interruption of the DOH and its OUs deliver of public service through health infrastructure.
306. Our verification showed that properties amounting to 34,869,776,746.18 owned b

the CO and six OUs, as shown in Table XXXV, were not insured with the GIF due to: (a)
overlooked application for insurance of building structures; (b) misunderstanding between
offices on who should apply for the property insurance in one regional office; (c) budget
constraints; (d) neglect in the performance of prescribed procedures in order to insure assets
and the evident non-interest of what the law and pertinent regulations require; (e) absence of
internal policy/controls incorporating the relevant provisions of laws and regulations and
directing concerned officials/employees to comply strictly with those mandatory provisions;
and (f) observance of the cut-off period.
Table XXXV. Summary of Uninsured Properties

Amount in PhP
Region Office/Agency
Properties not insured
NCR CO 33,069,464,287.98
SLH 658,221,145.93
I MMMHMC 94,653,727.04
III JBLMGH 681,912,389.71
DOH CLCHD 148,645,000.00
X MHARSMC 95,859,782.57
APMC 121,020,412.95
Total 34,869,776,746.18
307. Other deficiencies noted in SLH are the following: (a) the insurance did not cover
other perils such as typhoons, flood, and theft; (b) untimely renewal of insurance; and (c)
delayed submission of PIF to the Audit Team for validation purposes. On the other hand,
APMC failed to submit PIF to its Audit Team.
308. The non-compliance with the requirements under the aforecited laws and regulations
denies the government adequate and reliable protection against any damage to or loss of its
properties or assets and interests due to any unforeseen events that may occur. It also deprived
the GSIS of substantial premium income that should have formed part of the GIF.
309. We recommended and the SOH agreed to require the CO and OUs to:
a. facilitate the provision of insurance coverage of the identified insurable

properties by allotting additional funds for the required cost of premiums to
ensure indemnification of the equivalent value thereof in case of eventuality
that may occur;
b. monitor and ensure the continuity of insurance coverage of all insurable

assets/properties;
165
c. formulate and issue internal policy/controls incorporating the relevant
provisions of laws and regulations and directing concerned officials/employees
to comply fully with those mandatory provisions;
d. ensure the timely submission of PIF and GIF to the GSIS, and to the Auditors
not later than April 30 of each year; and
e. henceforth, comply fully with the Property Insurance law and applicable
regulations.
Association of Southeast Asian Nations (ASEAN) Funds for FYs 2016 and 2017
310. The DOH has no remaining balance of funds intended for this program.
Typhoon Yolanda Funds
311. In CY 2020, the DOH received NCA amounting to 305,000.00 which was transferred
to the Philippine Institute of Traditional and Alternative Health Care (PITAHC) covering
financial assistance to PITAHC Tacloban Employees per Check No. 594058 dated December
9, 2020 and recorded under JEV No. 2020-12-000423 on the same date. On the other hand,
previously reported fund transfers to CHD VI and PhilHealth amounting to 9,233,757.23
remained unliquidated as of December 31, 2020, to wit:
Table XXXVI. Unliquidated Yolanda Fund Transfers to Implementing Agencies as of December 31, 2020
Unliquidated /
Agency/Office Date Released Amount Transferred Amount Liquidated unutilized
Balance
*DOH RO VI 04/08/2015 520,000.00 520,000.00
PhilHealth 29/10/2015 10,220,000.00 9,580,000.00 640,000.00
PhilHealth 29/05/2019 8,828,757.23 755,000.00 8,073,757.23
Total 19,568,757.23 10,335,000.00 9,233,757.23
*Per liquidation report recorded last April 1, 2021
Marawi Crisis Funds
312. For CY 2020, the DOH received NCA Nos. BMB-B-20-0006448 and BMB-B-20-
0009944 in the amounts of 1,688,800.00 and 2,499,000.00, respectivel , to cover trust
receipts representing donations made by the Chinese Embassy as financial assistance for the
Marawi crisis. The amount was likewise utilized for the procurement of light cargo truck and
light deliver van for the total amount of 4,145,130.00, leaving an unutili ed balance of
42,670.00 which lapsed and reverted to the BTr on December 29, 2020 per JEV No. 2020-
12-000458.
313. Further, DOH received NCA No. BMB-B-20-0014637 in the amount of

58,900,000.00 to cover the Site Development and Landscaping in preparation for the
construction of the Marawi City General Hospital per Office of the President's approval dated
November 17, 2020 with SARO NO. BMB-20-0020677 dated November 27, 2020 amounting
166
to 62,000,000.00. No obligation was made pertaining to these funds, thus, the same lapsed
and were reverted to the National Treasury.
Gender and Development (GAD) Program
314. Several OUs failed to submit their GAD reports and various other
lapses/deficiencies were noted, thus, casted doubts as to whether the DOH was able to
fully promote GAD and attain the intent and purpose of legislation to address gender
issues within their mandate.
315. Section 31 of the General Provisions of the FY 2020 GAA provides, among others,
that the GAD Plan shall be integrated in the regular activities of the agencies, which shall be
at least five percent (5%) of their budgets. For this purpose, activities currently being
undertaken by agencies which relate to GAD or those that contribute to poverty alleviation,
economic empowerment especially of marginalized women, protection, promotion, and
fulfilment of women s human rights, and practice of gender-responsive governance are
considered sufficient compliance with said requirement. Utilization of the GAD budget shall
be evaluated based on the GAD performance indicators identified by the said agencies.
316. In COA Circular No. 2014-001 dated March 18, 2014, it is stated that the audited
agency shall submit a copy of the Annual GPB to the COA Audit Team assigned to the agency
within five (5) working days from the receipt of the approved plan from the Philippine
Commission on Women (PCW) or their mother or central offices, as the case may be.
Likewise, a copy of the corresponding Accomplishment Report (AR) shall be furnished to the
said Audit Team within five (5) working days from the end of January of the preceding year.
317. The following lapses and deficiencies in the preparation and submission of the GPB
and GAD AR as well as in the implementation of GAD activities were observed:
Table XXXVII. Summary of other lapses and deficiencies in the implementation of GAD
Lapses/Deficiencies Region OUs
NCR DJFMH,POC,SLH,NCMH
I R1MC
Delayed/Non-submission of the CY 2020 GPB and GAD AR and supporting V BRTTH
documents to the Audit Team due to failure to strengthen the GAD Focal VI CHD; WVS
Point System. IX MRH; MCS
X APMC
XIII CRH
GAD activities not integrated and mainstreamed in its NCR FDA
program/projects/activities address gender related issues
CY 2020 GPB included the budget and programs intended for the senior NCR VMC
citizens and persons with disability
NCR LPGHSTC, SLRGH,
QMMC
All or some of the GAD objectives/activities not fully achieved/implemented CAR FNLGHTC; CDH
due to COVID-19 outbreak
III TRC-Bataan
IV-A TRC -Tagaytay City
167
Lapses/Deficiencies Region OUs
VI DJSMMCE
X CHD;NMMC; TRC-
Cagayan De Oro
XII CRMC
XIII ASTMMC
Failure to disaggregate data which is the basis in GAD planning, budgeting, CAR FNLGHTC
programming, and policy formulation
GAD Focal Point System not yet fully capacitated and functional I MMMHMC
Delayed institutionalization of GAD Database/Sex-disaggregated III CHD; JBLMGH
Data//Deficiencies in the formulation of GPB
Non-use of gender analysis tools such as HGDG in the preparation of GPB NCR SLH
and GAD AR IV-B OP; CSGH
Some activities in the GPB not found in the GAD AR while some activities in V BRTTH
the AR did
compared to the GPB
Realigned/repurposed 2020 PAPs to prioritize and refocus the resources in NCR RITM
response to Covid-19 Pandemic. VII CHD
No GAD Capacity Development Programs and policy/directives established IX ZCMC
GPB and GAD AR submitted were not sourced from the GMMS of the PCW IX BGH
and not submitted to the DOH Regional Office for review
Non provision of actual costs spent on the implementation of GAD projects, I TRC-Dagupan City
programs, and activities.
Lack of data needed for gender analysis V TRC -Malinao
318. The aforementioned deficiencies casted doubts as to whether the DOH was able to
fully promote GAD and attain the intent and purpose of legislation to address gender issues
within their mandate.
319. We recommended and the SOH agreed to direct the OUs to:
a. promptly submit to their respective Audit Teams the GPB as well as GAD AR
within the prescribed period pursuant to COA Circular No. 2014-001;
b. ensure that GAD planned activities are undertaken in the ensuing years;
c. orient and capacitate agency personnel involved in GAD planning and

budgeting through relevant trainings; and
d. establish/institutionalize the GAD database to include gender statistics and

sex-disaggregated data that have been systematically produced or gathered as
inputs or bases for planning, budgeting, programming, and policy
formulation.
168
320. Management commented that:
The total GAD budget utilization of the DOH as an agency (which includes the CO,
CHDs, DOH-managed hospitals, TRC, FDA and BOQ) was 82,428,288,688.31 or
56.35% of the DOH OSEC s 2020 GAA amounting to 146,277,881,630.00.
The submission of the GAD reports is dependent on the PCW s polic issuance and
timeline considering that the GAD report are submitted through their managed data
system, and undergoes a review process. With this may we respectfully recommend
that the COA and PCW harmonize the timeline of the GAD report submission.
The DOH GAD Focal Point System Secretariat chaired by the Health Policy
Development and Planning Bureau is currently prioritizing the finalization of the
DOH GAD Agenda for UHC which shall serve as the road map for the annual GAD
Plan and Budget of the DOH. The recommendations cited from b to d shall being
considered in the development process.
Senior Citizens (SCs) and Persons with Disability (PWDs)
321. The DOH generally complied with Section 32 of the General Provisions of the FY
2020 GAA intended to address the concerns of SCs and PWDs, however, some
lapses/deficiencies were observed in some OUs which affected the full attainment of the
purpose of said legislation.
322. Section 32 of the General Provision of the FY 2020 GAA states that all government
agencies shall formulate plans, programs and projects intended to address the concerns of SCs
and PWDs, insofar as it relates to their mandated functions, and integrate the same in their
regular activities. Moreover, all government infrastructures and facilities shall provide
architectural or structural features, designs or facilities that will reasonably enhance the
mobility, safety and welfare of persons with disability pursuant to Batas Pambansa Blg. 344
and R.A No. 7277, as amended.
323. In support of the RA Nos. 9257 (The Expanded Senior Citizens Act of 2003) and the
9994 (Expanded Senior Citizen Act of 2010), the DOH issued AOs for health implementers
to undertake and promote the health and wellness of SCs as well as to alleviate the conditions
of older persons who are encountering degenerative diseases.
324. Under the current Philippine Health Agenda (2017-2022), centralized health services
for care in all life stages, service delivery networks, and financial risk protection, geriatric
health are mentioned as areas of concern. All SCs are mandatorily covered by the Philippine
Health Insurance Corporation by virtue of RA No. 10642.
325. Among the activities continuously conducted for the Health and Wellness Program for
SCs is the development of the following: (1) Social Media Cards for Healthy ageing; and (2)
Geriatric Training Manual for Primary Health Services Providers.
169
326. On the other hand, activities for the implementation of programs for PWDs were also
conducted during CY 2020. Said activities include: Review and Updates on Disability
Inclusive Health, Rehabilitation Services, Peer Counselling and Homecare; National
Disability and Prevention Rehabilitation Week Celebration; and Training on the Philippine
Registry for Person with Disability Version 3.
327. Moreover, it is noteworthy that the OUs generally addressed the concerns of SCs and
PWDs in relation with their mandated functions through (a) free health care services such as
laboratory examination, rehabilitation medicines and inpatient/outpatient treatment, provision
of medical and laboratory supplies, drugs and medicines; (b) provision of access
ramp/handrails in all hospital buildings and priority lanes for SCs and PWDs; (c) financial
assistance and discounts on laboratory examinations, medicines and hospital bills; (c)
coordination with LGUs on allocation and inoculation of Pneumococcal and Influenza
vaccines to SCs; (d) conduct of webinar/orientation to SCs re: Caring for the Elderl in times
of COVID ; (e) conduct of Rehabilitation Week for PWDs ; (f) Medical Residents provided
orientation on Proper Care for Senior Citi ens ; and (g) Virtual Regional Convention of
PWDs, among others. These activities, for which a total of at least 685,732,250.84 was spent
by the concerned OUs, as shown in Annex XII, undoubtedly benefitted their clients and
personnel who are SCs and PWDs.
328. However, some lapses and deficiencies were observed in the following OUs:
Table XXXVIII. Lapses/Deficiencies in the implementation of programs for SCs and PWDs
Region OUs Lapses /Deficiencies
NCR SLH, FDA, NCMH, VMC and Did not formulate plans, programs/projects intended to
POC address the concerns and issues of the SCs and PWDs
JRRMMC Some activities included in the programs and projects and
activities for SC and PWDs were not related to the mandated
function of the Medical Center.
VI CHD, WVS Delayed/Non-submission of Plan and Budget and AR for SCs
and PWDs.
WVS Inclusion of activities that do not directly address the concerns
of SC and PWDs/ Non-measurability of accomplishments for
SCs and PWDs.
VI TRC- Pototan, Iloilo The agency did not allocate any budget for
VII TRC- Cebu City programs/activities for the SCs and PWDs.
VIII CHD, TRC-Dulag, Leyte Did not provide funds in their budget specifically for SC and
PWD Program.
IX CHD, MRH Activities/programs were cancelled/set aside as resources of
XIII CRH the hospital were focused on the programs and activities for
health emergency response to COVID-19 pandemic.
TRC- Caraga, Surigao City Did not formulate plans, programs/projects intended to
address the concerns and issues of the SCs and PWDs
329. The above conditions are due to poor planning by management where the GAD plan
and budget should have been integrated and mainstreamed in its program/projects/activities
address gender related issues. Said conditions have adversely affected the full attainment of
the purpose of the aforementioned laws of enhancing the mobility, safety and welfare of senior
citizens and PWDs.
170
330. We recommended and the SOH agreed to direct all its OUs to fully comply with
the requirements in the GAA of FY 2020 to allocate funds and formulate programs,
projects and activities that address the concerns of SCs and PWDs insofar as it relates
to their mandated functions and ensure that GAD Plan is integrated and mainstreamed
in its program/projects/activities to address gender issues and gender responsive
governance in compliance with the provisions of Sec. 31 of the GAA for FY 2020 and
Section 3.4 of PCW-NEDA-DBM Joint Circular 2012-01.
Programs and projects related to youth development
331. Section 33 of the General Provision of the FY 2020 GAA provides that all agencies of
the government shall provide allocation for youth development projects and activities within
the framework of the Philippine Youth Development Plan (2017-2022).
332. In CY 2020, only nine OUs had reportedly conducted activities for youth development,
as shown in the table below:
Table XXXIX. Summary of programs/activities related to youth development

Region OUs Programs/activities
Conducted the following activities:
a. Social Media Cards for Adolescent Health;
b. Online Foundational Course on Adolescent Health Care;
c. Enhance Standards on Adolescent-Friendly Health Facilities;
d. Strategic Communications Plan to address Teenage Pregnancy;
CO e. Community-based immunization for HPV Vaccine CY 2020;
f. Development Communication Plan and Materials for AHDP;
g. Support Bridging Leadership Project (CHD CAR for AHDP SAA No.
NCR 2020-07-1850 dated July 8, 2020 - PHM-Public Health Management;
and
h. Young Adult Fertility and Sexuality Study (YAFSS) 2020
Conducted the following activities:
a. Health Advocacy via Webinar;
b. Distribution of IEC material and Hygienic Kits to the community and Free
DJNRMHS RT-PCR Swab testing to 10 selected young individuals (Brgy. 187 and
188); and
c. Free psychological support and counseling via tele-counseling
Conducted Adolescent Health Development Program (AHDP)-Technical
II CHD Working Group cum Kamustahan Session held last July 30, 2020 via Google
Meet
Conducted teleconsultations to cater to patients including children and the youth
ZCMC in the midst of the pandemic
IX MRH via online platform for video and audio conferencing.

DRMC Various activities conducted for the adolescent and youth.
SPMC Provision of quantified free services to adolescents and youth.
Conducted consultative meeting with partner Local Government Units in
XI CHD connection with youth development
171
Region OUs Programs/activities
Conducted webinars on:
a. Drug Abuse Prevention and Control
TRC-Surigao b. Strengthening Family Relationships to Prevent Addiction
XIII
City c. Information Drive on COVID-19; and
d. Building Resilience in Time of Pandemic Crisis.
333. However, the following lapses/deficiencies were observed by the Auditors of some
OUs:
Table XL. Summary of Lapses/Deficiencies in the implementation of Youth Development Plan

Region OUs Lapses/ Deficiencies Reasons for Non-Implementation
NCH - The program and activities were incorporated
in the Work and Financial Plan for CY 2020 of the
Health Education and Promotion Organizing Unit
(HEPO).
SLH - No allotted fund for youth development program

Did not allot funds for and due to the COVID-19 pandemic, the hospital was
NCH, SLH,
programs and projects not able to implement any YDP-related activity.
NCR SLRGH and
related to youth
POC
development
SLRGH- The Budget officer stated that the Hospital
has no projects and activities funded intended for
youth development.
POC - did not formulate plans, programs and projects

intended for the youth development
Only one activity was Allocated funds were re-aligned to COVID-19
II CHD
undertaken in 2020. activities.
Did not conduct projects
and activities but instead Due to the pandemic, all of the projects/activities
DJRMH
offered free services to planned were cancelled.
youth patients
IX The budget was used to
purchase supplies and
BGH materials for the
response to the COVID-19 pandemic.
-19
response.
Programmed and/or
CRH All resources of the hospital were being
activities were set aside
poured/focused on the implementation of programs,
XIII No programs planned projects and activities for health emergency response
ASTMMC and implemented during to COVID-19 pandemic.
the year
334. We recommended and the SOH agreed to direct the OUs to fully comply with the
required allocation of funds for youth development projects and activities within the
framework of the Philippine Youth Development Plan (2017-2022).
172
Compliance with tax laws and on proper deduction/remittance of GSIS, Pag-IBIG and
PhilHealth premiums
335. In CY 2020, the DOH, in general, complied with the withholding and remittance of
mandatory deductions pursuant to the regulations issued by the BIR, GSIS, PHIC, and HDMF,
see Annex XIII for details.
336. However, deficiencies in the total amount of 287,190,152.30 were noted in some
OUs, as shown in Table XLI below.
Table XLI. Summary of Deficiencies noted on mandatory accounts

Affected Deficiencies
Area
Account Particulars Amount in PhP
Compliance with tax Due to BIR PYs balances not remitted / for reconciliation 3,523,745.34
laws Year-end balances not remitted / for 93,398,118.16
reconciliation
CY 2021 remittances for verification 47,361,739.65
Over-remittance to BIR 1,483,112.65
Unwithheld taxes 14,459,330.44
Withheld amounts for refund/adjustment 2,250,256.55
Late withholding/remittance of taxes 5,939,019.29
Deduction and Due to GSIS PYs balances not remitted / for reconciliation 3,684,675.79
Remittances of GSIS Year-end balances not remitted / for reconciliation 71,484,413.61
Premiums
Over-remittance to GSIS 828.96
Negative balances 133,738.99
Unremitted government's share 6,743,000.00
Withheld amounts for refund/adjustment 113,412.11
Deduction and Due to PYs balances not remitted / for reconciliation 290,171.26
Remittances of PHIC PhilHealth Year-end balances not remitted / for reconciliation 4,572,784.66
Premiums
Negative balances 491,013.87
1,575.75
Penalty for late remittance 659,100.16
Deduction and Due to Pag-IBIG PYs balances not remitted 1,025,537.09
Remittances of Pag- Year-end balances not remitted / for reconciliation 8,870,750.33
IBIG Premiums
CY 2021 remittances for verification 706,257.99
Negative balances 1,111,433.49
Government's share not remitted 55,599.20
Unremitted amounts due to lacking documents 181,662.51
Total 287,190,152.30
173
a. issue a memorandum calling the attention of concerned CO offices and heads

of concerned OUs and requiring them to submit explanations, conduct
investigations and immediate reconciliation/adjustment of affected accounts,
when warranted; and
b. direct the OUs to:
i. religiously remit the mandatory deductions withheld and applicable
penalties;
ii. for the OU Accountants to trace and verify the over-remittances/negative

balances and adjust accordingly; and
iii. for the OU Accountants to analyze, gather necessary supporting documents,

/ ,
necessary adjustments/refunds on the affected account/s to arrive at the
correct and reliable balances of the subject mandatory accounts.
Hiring of Job Order (JO)/Contractual/Consultants/HRH personnel
338. In CY 2020, the DOH had a total of 25,067 consisting of JOs, contractual, consultants,
and HRH personnel assigned in various OUs. These personnel served as additional workforce
to the regular plantilla employees to provide assistance in administrative/technical functions,
COVID-19-related response, and such other related functions. Their compensation
aggregating 3,854,817,927.44 were charged against the OUs respective maintenance and
other operating expenses (MOOE) allotments under the General Fund, hospital income, and
sub-allotments or fund transfers, as the case may be, and recognized in the books of accounts
as Other Professional Services and Janitorial Services.
Enforcement and Settlement of Suspensions, Disallowances and Charges
339. The non-compliance with laws, rules and regulations resulted in audit
disallowances and suspensions of various transactions in the aggregate amount of
8,801,030,021.45 D 31, 2020. E re those issued
prior to the issuance of the 2009 Rules and Regulations on the Settlement of Accounts
(RRSA).
340. The total audit suspensions, disallowances and charges found in the audit of various
transactions as at December 31, 2020 based on the Notices of Suspension (NS), Notices of
Disallowance (ND), Notice of Charge (NC) and Notices of Settlement of Suspensions and
Disallowances/Charges (NSSDC) issued to the DOH and its OUs, is summarized in Table
XLII.
174
Table XLII. Summary of NSs, NDs and NCs Issued and Settlements
Amount in PhP
Beg. Balance Movement during the This Period Ending Balance
Particulars year not disclosed in (January 1 to December 31,
(As of 2020) (As of December
O e a ing Uni
January 1, 2020) NS/ND/NC NSSDC 31, 2020)
Management Letters
NS 7,994,172,020.38 4,518,737.15 439,659,279.68 357,333,206.36 8,081,016,830.85
ND 712,884,980.74 9,557,007.17 29,659,723.63 33,344,199.57 718,757,511.97
NC 1,227,776.28 0.00 0.00 25,000.00 1,202,776.28
Total 8,708,284,777.40 14,075,744.32 469,319,003.31 390,702,405.93 8,800,977,119.10
341. Out of the total audit disallowances in the amount of 718,761,217.39, a total of
9,854,220.79 or 1.37 percent thereof are on appeal to COA authorities.
342. NSs/NDs/NCs issued prior to effectivit of the 2009 RRSA totaling 15,589,727.86
as at year-end are not included in the reflected balances but are deemed disallowances/charges,
which shall be enforced in accordance with Rules as provided under Sec. 28 thereof.
343. We recommended and the SOH agreed to issue a memorandum, reminding

concerned heads of OUs to immediately cause the settlement of audit disallowances and
charges that have attained finality, and compliance with the requirements of audit
suspensions issued, under their respective agencies and to require:
a. the Accountants to ensure that disallowances with issued Notices of Finality of

Decision (NFDs) pursuant to the RRSA are properly recorded in the books of
accounts, and the settlement of all suspensions, disallowances and charges are
continuously monitored;
b. those persons liable with NDs and NCs that are final and executory to settle,
in full, the amount due from them and/or direct the concerned offices to ensure
strict compliance with COA Resolution 2017-021 relative to the rules and
regulation in the settlement of disallowance; and
c. the officials concerned to comply with laws, rules and regulations to avoid
audit suspensions, disallowances and charges.
175

COA Audit On DOH For 2020 (Observations and Recommendations)

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COA Audit On DOH For 2020 (Observations and Recommendations)

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PART II - OBSERVATIONS AND RECOMMENDATIONS

1. We acknowledge the comments of the Department of Health (DOH) Management on

Accounting errors and omissions

3. Paragraph 15 of the International Public Sector Accounting Standards (IPSAS) 1,

a. Providing information about the sources, allocation, and uses of financial

a. Statement of Financial Position;

Table I. FS Assertions Affected

Details of accounting errors and omissions:

Misstatement in Cash accounts 46,236,726.50

9. The misstatements found in Cash accounts as at year-end are shown below.

Table III. Summary of Misstatements in Cash Accounts

TOTAL ACCOUNTING ERRORS PER CASH ACCOUNTS ₱46,236,726.50

12. We recommended and the Secretary of Health (SOH), through the

Misstatements in Receivable accounts 18,517,158,649.48

Table IV. Summary of Misstatements in Receivable accounts

15. These adversel affected Management s assertions on the completeness, accurac ,

a. immediately conduct reconciliation of records and accomplish the same

b. record the necessary adjusting entries in the books of accounts based on

c. henceforth, comply strictly with pertinent rules and regulations; and

Misstatements in Inventory accounts 49,009,035,591.17

b. after reconciliation, for the Accountants to effect necessary adjustments in

c. impose sanctions on erring personnel, on the basis of Section 127 of PD 1445,

Misstatements in Property, Plant and Equipment (PPE) accounts 3,279,845,596.09

Table VI. Summary of Misstatements in PPE Accounts

a. effect the necessary adjusting entries in the books of accounts based on

b. impose sanctions on erring personnel, on the basis of Section 127 of PD 1445,

Misstatements in Intangible Assets accounts 2,566,290.00

Table VIII. Summary of Misstatements in Other Asset Accounts

Misstatements in Liability Accounts 944,035,967.72

TOTAL ACCOUNTING ERRORS PER LIABILITY ACCOUNTS ₱944,035,967.72

Misstatements in Equity accounts 70,171,552,317.53

Table X. Summary of Misstatements in Equity Accounts

42. These misstatements, caused by non-compliance with pertinent accounting

The Accountants to:

c. observe the proper recording, adjustments and reclassifications of accounts

d. formulate and strictly implement internal control policies requiring timely

e. submit complete documentation and improve financial controls in their

The IAS to:

Table XI. Summary Table of Accounting Deficiencies

Unaccounted discrepancies in cash balances - 101,845,218.21

46. The existence of unaccounted discrepancies in Cash accounts totaling

statements for the months of CY 2016 were provided.

Collections received through banks (direct deposits) were

54. The accounting procedures on inter-agency transferred funds and write-off of

56. Other deficiencies such as unreconciled balances with debtors /implementing

57. These observations were mainly caused by the non-institutionalization of accounting

59. We recommended and the SOH agreed to:

a. issue appropriate orders/memoranda/circulars institutionalizing existing

64. These conditions, Management s assertions on the completeness, e istence and

a. ensure the conduct of semi-annual physical count of inventories and

c. consider assigning sufficient manpower in their accounting and supply units.

Deficiencies in PPE accounts - 29,274,787,446.69

Table XIII. Accounting Deficiencies in PPE Accounts

Deficiency Region OU Amount in PhP Criteria

Table XIV. Compliance/Governance Issues Noted in the Audit of PPE Accounts

Deficiency Region OU Amount Criteria

a. Lapses in PPE inventory-taking

c. after reconciliation and within a specific time-frame, direct the Accountants

Unaccounted liability account balances - 705,192,805.59

Table XV. Summary of Abnormal and/or Unreconciled Balances of Liability Accounts

Non-elimination of intra-agency accounts

78. The balances of intra-agency receivables/payables and subsidy from/to accounts,