COA-AOM No. RA-2014-020 (2013) Dated 08 April 2014

April 28, 2014 BIR MEMORANDUM FOR : DCIR Celia C. King Resource Management Group HREA Lucita P. Oandasan Finance Service Teresa A. Cancino Chief, Disbursement Accounting Division Nelly S. Ibo Chief, Procurement Division All Revenue Officials and Employees Concerned RE : COA-AOM No. RA-2014-020 (2013) Dated 08 April 2014 In line with the recommendations of the COA-BIR in its AOM No. RA-2014-020 (2013) dated 08 April 2014, Re: Unreliable Balance of Accounts Payable (copy attached), the following officials are hereby directed to: (1) The Chief, Disbursement Accounting Division, in coordination with the Procurement Division and other concerned offices, to determine which of the items listed in AOM No. RA-2014-020 (2013) as long-outstanding accounts payable have actual valid claims, including the amount set up as reconciling items and revert those which could not be fully documented, in line with Section 98 of Presidential Decree (PD) No. 1445. For observance and strict compliance of all concerned. ICacDE (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ATTACHMENT Commission on Audit Office of the Auditor AOM No.: RA-2014-020 (2013) Date: April 8, 2014 AUDIT OBSERVATION MEMORANDUM (AOM) For: HON. KIM S. JACINTO-HENARES Commissioner Bureau of Internal Revenue Quezon City Attention: MS. CELIA C. KING Deputy Commissioner Resource Management Group MS. LUCITA P. OANDASAN Head Revenue Executive Assistant Finance Service MS. TERESA A. CANCINO Chief, Disbursement Accounting Division Subject: Unreliable balance of Accounts Payable We have audited the Accounts Payable of the Bureau of Internal Revenue National Office (BIR-NO) and noted the following deficiency: The balance of Accounts Payable amounting P626,004,889.01 as of December 31, 2013 includes accounts which had been outstanding for two to five years and items for reconciliation totaling P131,765,017.57 or 21.049 percent and P4,542,033.41 or .726 percent of the total balance, respectively, thus, validity and reliability of the account balance cannot be ascertained. Section 98 of PD 1445 states that " the Commission, upon notice to the head of agency concerned, may revert to the unappropriated surplus of the general fund of the national government, any unliquidated balance of accounts payable in the books of the national government, which has been outstanding for two years or more and against which no actual claim, administrative or judicial, has been filed or which is not covered by perfected contracts on record. . . . " Verification showed that the balance of Accounts Payable as of December 31, 2013 under various funds is comprised of the following: DAaHET Fund Active Accounts Unreleased Reconciling Aged 2 to Total Checks Items 5 yrs. Fund 101 - RA 415,996,664.97 35,318,017.82 4,289,633.43 104,264,449.66 559,868,765.88 General Fund Fund 101 - 65,883,723.15 65,883,723.15 NPSTAR Fund 102 6,372.00 6,372.00 Fund 152 246,488.88 246,488.88 Fund 153 (460.90) (460.90) Total 481,880,388.12 35,318,017.82 4,542,033.41 104,264,449.66 626,004,889.01 ============ =========== =========== ============ ============ Review of the subsidiary ledgers (SLs) revealed that payables numbering 44 with a total of P131,765,017.57 have remained outstanding for two to five years now. Details are as follows: SEACTH Account Name ObR No. Amount No. of Years Outstanding MOOE Fund 101 1 AC Corporation 10-03-0677 20,141,777.73 3 2 Advance Computer Forms 10-01-0067 923,135.33 3 11-03-0582 83,100.00 2 3 CEC Industries 10-10-3184 19,440.00 3 11-07-2274 8,440.00 2 4 Central Bookstore, Inc. 10-06-1564 11,200.00 3 5 Centurian International Corp. 10-07-2229 35,752.48 3 6 EBDI Philippines 11-07-1999 23,549.72 2 7 eCopy Corp. 10-06-1566 11,227.00 3 11-12-5314 300,742.96 2 8 Elecol Engineering Equipment 11-06-1548 28,771.43 2 9 Eliteworks Marketing 10-11-3653 10,000.00 3 10 ePLDT, Inc. (MOOE) 10-09-2932 1,890,222.00 3 11-03-0494 2,367,888.00 2 11 ERG'S Glass & Aluminum Supply 08-10-3032 9,450.00 5 12 Front Cargo Forwarders 10-06-1481 91,374.00 3 13 Green Trade Commercial 10-11-4005 12,780.00 3 11-11-4229 2,055.00 2 14 INDRA PHILS., INC. 11-12-5515 2,672,232.00 2 (formerly SOLUZIONA PHILS.) 15 Infobahn Communications 11-12-5196 798,880.00 2 16 International Elevator & Equipment 11-03-0625 25,120.00 2 11-03-0665 42,650.00 2 17 JV of Infomax Systems & U-bix Corp. 09-02-0300 13,338,004.71 4 11-02-0287 684,486.41 2 11-09-2957 707,955.03 2 18 JV of Indra Phils. & Philcox, Inc. 11-12-5558 800,221.31 2 19 JV of Pilipinas Micro-Matrix & Asticom 11-12-5484 7,972,110.00 2 20 LBL Power Tech. Corp. 10-11-4009 18,850.00 3 21 Lettered L Canteen 11-12-5285 14,915.00 2 11-12-5312 2,280.00 2 22 Litany Commercial 11-04-0997 1,125.00 2 23 MARCO, Inc. 10-08-2323 11,393.00 3 24 MCCD Engineering Services 10-04-0775 12,767.32 3 25 Modern Business Methods 10-06-1565 9,801.00 3 11-03-0712 10,798.50 2 26 Optimal Systems Distribution 10-12-4231 4,464.00 3 08-11-3174 7,420.00 5 27 PLDT Co. 10-12-4275 3,444.44 3 10-12-4793 927.24 3 10-12-4821 2,075.24 3 10-12-4845 3,156.30 3 11-11-4189 26,239.62 2 11-12-4480 37,591.48 2 11-12-4481 38,310.01 2 11-12-4562 32,372.83 2 11-12-4749 25,483.73 2 11-12-4751 40,564.85 2 11-12-5403 6,825.37 2 11-12-5404 7,672.33 2 11-12-5406 38,412.82 2 11-12-5632 19,414.22 2 28 R Hinayo Newspaper 10-11-3808 1,468.00 3 29 Racing Masters 10-04-0803 3,561.41 3 30 Rational Lumber 11-08-2526 30,520.00 2 31 Social Science & Philosophy Research 11-03-0727 448,000.00 2 32 Technologies Specialist, Inc. 11-12-4515 15,276.10 2 33 Toyota Cubao, Inc. 09-02-0226 14,879.70 4 09-04-0840 15,361.16 4 34 Toyota Pasong Tamo 10-11-3806 6,618.35 3 11-11-4133 62,805.60 2 35 Toyota Quezon Ave. 08-10-2919 18,048.93 5 10-11-3575 6,625.00 3 NPSTAR 36 INDRA PHILS., INC. 2011-08-2547 8,491,700.00 2 37 JV of Indra Phils. & Philcox, Inc. 2011-12-5516 16,920,000.00 2 38 Sycip Gorres Velayo & Co. 2011-10-3561 1,375,000.00 2 CO Fund 101 39 Advance Solutions 10-11-4007 4,185.00 2 40 Logic Solutions 11-12-5514 8,899,351.20 2 41 Micro-D International, Inc. 11-12-5478 5,987,318.00 2 42 Phil-Data Business Systems 11-11-4164 154,361.80 2 43 SunPhilcox JV, Inc. 08-12-4340 35,207,200.00 5 NPSTAR 44 Eurolink Network 2011-12-5619 713,867.91 2 International Corporation Total 131,765,017.57 =========== Inquiry with concerned accounting personnel disclosed that the claims pertaining to the abovementioned payables were not processed and returned back to the Procurement Division due to lack of supporting documents. However, said claims together with the supporting documents were not yet re-submitted for processing to date, thus, casting doubt on their validity. On the other hand, when the accounts of the Bureau were converted under the eNGAS in 2004, there were accounts which could not be fully supported with subsidiary records. To facilitate the conversion, subsidiary ledger account "Reconciling Items" was temporarily created for the discrepancy between each General Ledger (GL) account and its subsidiary records with the understanding that these items would later be documented and reconciled to their respective GL accounts. Review of the SLs showed that there were four SL account "Reconciling Items" totaling P4,542,033.41 under Accounts Payable which to date have not been reconciled thereby, adversely affecting the reliability of the subject accounts. In view of the foregoing, we recommend that Management require the Chief, Disbursement Accounting Division, in coordination with the Procurement Division and other concerned offices, to determine which of these listed long-outstanding accounts payable have actual valid claims, including the amount set up as reconciling items and revert those which could not be fully documented, in line with Section 98 of PD 1445. TDcEaH May we have your comments on the foregoing audit observation within five (5) working days from receipt hereof. (SGD.) ANNIELY P. IBAEZ Audit Team Leader Audit Team 2-Disbursements (SGD.) GLORIA M. BACANI Supervising Auditor Audit Group F-BIR