Republic of the Philippines COMMISSION ON AUDIT

Regional Office No. I City of San Fernando, La Union

MANAGEMENT LETTER

on the Audit of the

NATIONAL CONCILIATION AND MEDIATION BOARD

REGIONAL OFFICE No. 1 City of San Fernando, La Union

For the Year Ended December 31, 2013

Republic of the Philippines COMMISSION ON AUDIT

National Conciliation apd Mediation Board Regional Office No. 1

San Fernando City, La Union

CONFIDENTIAL

Ms. Brenda Rose C. Odsey Director II National Conciliation and Mediation Board Regional Branch No. I San Fernando City, La Union

Dear Ms. Odsey:

September 26, 2014

Management Letter on the Audit of the National Conciliation and Mediation Board -RB-I

For the Period January 1 to December 31, 2013

I. Pursuant to Section 2, Article IX-D of the Constitution of the Philippines and Section 43 of the Government Auditing Code of the Philippines (PD No. 1445), we have audited the accounts and operations of the National Conciliation and Mediation Board, Regional Branch No. I (NCMB RB I) San Fernando City, La Union, for the period ended December 31, 2013. The audit was conducted in accordance with applicable legal and regulatory requirements, and generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable basis for our conclusions.

The audit was conducted by the Audit Team headed by Mr. Antonio L. Gopez, State Auditor V, Supervising Auditor of the DOLE - Attached Agencies, Audit Group G, as Supervising Auditor and Ms. Bella E. Aquisap, State Auditor III, as Audit Team Leader, to (a) verify the level of assurance that may be placed on management's assertion on the financial statements; (b) recommend agency improvement opportunities; and (c) determine the extent of implementation of prior year's audit recommendations.

The agency's financial condition, results of operations and cash flows as of December 31, 2013 are shown in the attached Audited Financial Statements, marked as Annexes B-E.

Minor deficiencies observed in the course of audit were verbally communicated at once and were immediately corrected I acted upon. Audit Observations on the year-end financial statements were .likewise taken up with the Accountant and immediate adjustments/remedial measures/proper disclosures on the Notes were accordingly undertaken. These were thoroughly discussed during the exit conference conducted on February 19, 2014 with concerned agency officials and employees.

I. Introduction

The Regional Branch I had a new Director II, in the person of Ms. Lourdes P. Estioco, former Chief, FMSD of NCMB-Central Office. She was promoted to the position of Director II and assumed Office on September I 9, 2013. Ms. Helena R. Flores, who was then the Officer-in-Charge assumed as Conciliator­Mediator of the branch and assisted Director Estioco together with the five staff in the operation of the agency.

We are pleased to note that the agency was able to attain its programs of service to the public regarding labor relations enhancement and dispute resolution. The agency was able to facilitate 7 Labor Management Cooperation (LMC), one from the organized establishments and six from the unorganized companies resulting in 100% accomplishment.

The branch was able to forge a Memorandum of Agreement with the Social Security System which requires the SSS to coordinate with DOLE Offices and its attached agencies in monitoring the implementation of its mandatory deductions and compliance with updated remittances of employers.

There were 66 Requests for Assistance (RF A) received and handled, 65 of which were disposed within the duration of an average of ten days. A total of P775,241.90 monetary award benefitting 115 workers was facilitated.

Cash advances for payroll fund were all liquidated and the designated cashier always made sure that payrolls were properly signed and the payment thereof effected within the prescribed period.

II. Summary of Recommendations

0. For the significant deficiencies observed in the course of the audit, we recommended that Management:

• Prepare the necessary Waste Material Reports (WMRs) for all waste materials for proper disposal in accordance with Sec. 79 of PO No. 1445.

• Require the acting Property Officer to prepare the Inventory and Inspection Report of Unserviceable Properties for the disposal of these~

assets to prevent further deterioration and to derive income from salvage value; and

• Instruct the Accountant to use the proper accounts to record the collection in order to have a correct presentation of the accounts in the financial statement.

III. Detailed Observations and Recommendations

niceoble Prqoerlies

bJe properties with a residual valued of P41,503.40 have not been provided under Sec. 79, PD No. 1445, thus exposing them to

t rio ration and loss to the government and depriving the agency

o. 1445 provides that:

Olemment property has become unserviceable for any cause, or is no - ded, it shall upon application of the officer accountable therefore, be

J the head of the agency or his duly authorized representative in the --=""="'"~ o the auditor concerned and, if found valueless or unusable, it may be '.:!I"C'.......,,'!Orl in their presence. If found to be valuable, it may be sold at public

o the highest bidder under the supervision of the proper committee of or similar body in the presence of the auditor or other duly authorized

-::-o"?<:P.<-Dntative of the Commission on Audit "

"""" ....... .... ~ in pection conducted in the premises of the agency showed that various . i eable properties were stored in the stockroom of the agency. These . i eable properties are recorded as "Other Assets", while awaiting disposal.

e er. delay in the disposal of its assets would allow them to lose their resale to earn additional income. Likewise, the agency is also deprived use ofthe

- occupied by the unserviceable properties which could be more beneficial to

- .. as also noted that management did not prepare the Waste Material Report . ~ 1R) as required under Sec. 63, Vol. II of the New Government Accounting

-. em (NGAS) to report all waste materials such as destroyed spare parts and ~her materials considered scrap due to replacement, thus, even properties which ~ already valueless are still kept in the stockroom.

[n order to avoid further deterioration and loss to the government and also to maximize the area for office use, we recommended Management to:

• Prepare the necessary Waste Material Reports (WMRs) for all waste materials for proper disposal in accordance with Sec. 79 of PD No. 1445.

• Require the acting Property Officer to prepare the Inventory and Inspection Report of Unserviceable Properties for the disposal of these assets to prevent further deterioration and to derive additional income if sold through public auction.

16. During the exit conference, Management committed to dispose the unserviceable properties in the 1st quarter of the next calendar year and to clear the stockroom of waste materials.

Cash- Collection

Collections amounting to P6,000.00 was erroneously recorded as Cash­Disbursing Officer (Account 107) instead of the Cash-Collecting Officer (Account 106), thus, collections could not be easily monitored and properly recorded in the books.

17. Sec. 16 ofthe MNGAS, Vol. III describes Cash-Collecting Officer (106) as the account used to record collections and deposits made by the Collecting Officers to the National Treasury and/or Authorized Government Depositary Banks (AGDBs).

18. Sec. 17 describes Cash-Disbursing Officer (I 07) as the account used to record the amount of cash advances granted to designated Regular or Special Disbursing Officers and Disbursements made to payment of authorized official expenditures.

9. Our audit of the accounts showed that collections amounting to P6,000.00 was recorded as Cash-Disbursing Officer instead of Cash-Collecting Officer thus information as to the collection of the agency could not be immediately determined. The incorrect classification and recording of the transaction affects the fair presentation of the accounts in the financial statement.

_o. We recommended that the Accountant should use the proper account to record the collections in order be able to monitor the account and to have a correct presentation of the account in the financial statement.

_ I. Management agreed with the audit recommendation and committed to make the necessary correction.

Gender and Development (GAD)

The agency prepared and submitted its GAD Plan and Budget to their Central Office for review and evaluation of the Philippine~

Commission for Women (PCW) and to be endorsed to the DBM. However, it was not yet approved so management implemented their GAD program through conducting Team building seminars, Women's Month Celebration and other physical activities and seminarsiconferences with GAD topics, disseminating GAD IEC materials to their clients. The total amount of P 113,691.25 was disbursed representing 2% of their total budget.

23. Management committed to comply with the audit recommendations.

Compliance with Tax Laws

In adherence to BIR regulations and the government's drive toward efficient revenue generation, the Agency has been consistently withholding taxes from compensation, expanded withholding tax and value added percentage taxes. During the year, taxes withheld from compensation amounted to P272,841.69 and all other required taxes due for government purchases of goods and services amounted to P84,469.72. These were all remitted to the BIR thru Tax Remittance Advices (TRAs) in the total amount ofP357,311.41.

We commended management for the favorable accomplishment and encourage them to continue adhering to tax laws, rules and regulations.

IV. Status of Implementation of Prior Year's Audit Recommendation

_6. We made a follow-up on the actions taken by management to implement the three recommendations of prior years and we are happy to note that all the audit recommendations had been implemented.

The results of validation on the implementation of prior year's recommendation are presented in Annex F.

V. Acknowledgement

We wish to express our gratitude to the Management and staff of the National Conciliation and Mediation Board, RB - I for the cooperation and assistance extended to our Audit Team during the audit.

Very truly yours,

COMMISSION ON AUDIT

I ANTON

Supervising Auditor

ANNEXES

Annex Particulars

Letter

A Statement of Management's Responsibility for Financial Statements B Detailed Balance Sheet for CY 2013 with Comparative Figures for

CY 2012 c Detailed Balance Sheet oflncome and Expenses for CY 2013 with

Comparative Figures for CY 2012 0 Statement of Cash Flows for CY 2013 with Comparative Figures for

CY 2012 E Audit Observation for Correction F Status of Implementation of Prior Year's Audit Recommendations

~at.ivnal C()ndliativn and Mediativn Uvard

Republic of the Philippines Department of Labor and Employment REGIONAL BRANCH NO. I 2nd Floor, Unison Bldg., Quezon Avenue City of San Fernando, La Union Tel. Nos. 888-46101 700-4990

STATEMENT OF MANAGEMENT RESPONSIBILITY .FOR FINANCIAL STATEMENTS

The management of NATIONAL CONCILIATION AND . 1EDIATION BOARD, Regional Branch No. I is responsible for all mformation and representation contained in the accompanying Balance

heet as of December 3 l , 2013 and the related Statement of Income and Expenses and Cash Flow for the year then ended. The financial statements have been prepared in conformity with generally accepted state of accounting principles and reflect amounts that are based on the best

timate and informed judgment of management with an appropriate onsideration to materiality.

In this regard, management maintains a system of accounting and eporting which provides for the necessary internal controls to ensure that

transactions are properly authorized and recorded. assets are safeguarded against unauthorized used or disposition and liabilities are recognized.

- ~~~ !' ·~ ~~r.~~~~ ,·

VII(~REMULAR Accountant Designate

. -'

LOURD~~TIOCO Director II

Republic of the Philippines NATIONAL CONCILIATION AND MEDIATION BOARD

Regional Branch No. I San Fernando City, La Union

DETAILED BALANCE SHEET As of December 31 , 2013

(With Comparative Figures for CY 2012)

~ent Assets :ash

ASSETS

Petty Cash Fund

., entories Office Supplies Inventory Other Inventories

=>repaid Expenses Prepaid Rent Prepaid Insurance

--·at Current Assets

=- oerty, Plant and Equipment Office Equipment ==u rniture and Fixtures T Equipment and Software

otor Vehicles TOTAL _ess: Accumulated Depreciation

- at Property,Piant and Equipment

CY 2013

p

p 66,757.41 2,255.37

50,400.00 1,951.27

p 121 ,364.05

p 412,735.20 374,884.54 703,308.00

1 '155,000.00 p 2,645,927.74

1,684,674.11 961,253.63

p

p

p

p

p

ANNEXB

CY 2012

47,085.68

50,400.00 2,091.86

99,577.54

390,711.40 336,330.79 739,840.95 425,000.00

1,891,883.14 1 '159,425.77

732,457.37

....- er Assets Other Assets

-otat Other Assets P 90,715.09 P __ ....:.4.=...;9,~2..:....11....:.. 6.=..;9=--

90,715.09 49,211.69

-orAL ASSETS 1,173,332.77 881,246.60

CY 2013 CY 2012

LIABILITIES AND EQUIT-Y

_ aoilities _--·s Payable

= - 31R es

ILITIES AND EQUITY

p

p

120,213.00 p 27,823.04 1,762.50

120,213.00 p --=2..:;..,9,c.;:..5.:;_85:....:..5.:;_4.;_

p 1,053,119.77 p 851,661 .06 -----'---

p 1,053,119.77 p 851,661 .06 ----::::-=-:--=-:-::-::-::-

p 1 '173,332. 77 p 881 ,246.60 ==========

Republic of the Philippines NATIONAL CONCILIATION AND MEDIATION BOARD

Regional Office No. I City of San Fernando, La Union

DETAILED STATEMENT OF INCOME AND EXPENSES For the Year Ended December 31, 2013 (With Comparative Figures for CY 2012)

e from National Government -- :;-sion of Unused NCA

p

CY 2013

5,291 ,240.05 p

ANNEXC

CY 2012

4,644,862.93 130,350.67

p 5,291 ,240. 05 p _ ___;_4 '!.::.5....:....14.:...!.,.=..51.:...=2:..:.:.2:..::6:.....

centive Bonus Awards and Incentives us and Cash Gift

-: es Expenses - '"' and Lubricant Expenses

p 2,104,029.20 p 147,225.81

35,000.00 25,500.00 24,727.28 12,000.00

214,256.00 252,855.50

7,500.00 21,199.88

7,200.00 249,200.42

173,331.00 41,590.00

127,674.10 141,323.12

7,727.00 151,689.23

11,757.00 73,120.70 24,100.00 26,995.54

201,600.00 132,498.10

2,064,287.71 171,034.48

35,000.00

12,000.00 35,000.00

171,915.00 250,521.93

8,600.00 21,887.50

8,590.88 50,000.00

0.88 183,517.50 108,300.00 121,686.91 108,740.62

5,385.00 151,149.90

16,062.00 64,225.26 18,600.00 27,096.83

201,600.00 113,334.38

CY 2013 CY 2012 Expense 5,050.32 6,679.68

Services 51,783.75 8,675.00 = -:essional Services 10,000.00

aintenance - Office Equipment 13,716.00 5,034.00 aintenance - Furniture & Fixture

maintenance - IT Equipment 4,150.00 40,642.00 aintenance - Motor Vehicles 85,434.90 63,793.80

:::- d Premiums 6,016.00 5,641 .00 =- ::Xpenses 5,994.18 6,345.39

Binding Expense 1,176.00 7,000.00 - Office Equipment 25,929.00 86,749.72 - Furniture & Fixture 13,123.20 777.84 - IT Equipment 71,464.84 87,920.73

- -·enance and Operating Expenses 307,026.69 279,815.56 = penses p 4,814,964.76 p 4,547,611 .50

- I COME OVER EXPENSES p 476,275.29 p (33,099.24)

-

Republic of the Philippines CONCILIATION AND MEDIATION BOARD

Regional Branch No. I . City of San Fernando, La Union

STATEMENT OF CASH FLOWS F seal Year Ended December 31, 2013 , h Comparative Figures for CY 2012)

CY 2013

ra ·ng Activities

ANNEX D

CY 2012

- ::e ' ransfer of Allocation (NTA) P p

5,276,048.22 p 4,528,176.75 5,276,048.22 p 4,528,176.75

'0 erating Expenses p 2,950,218.39 p 2,417,844.10 SIS Pag-ibig, Philhealth 288,755.38 289,601.19

nventories 136,126.90 99,174.70 ance/Petty Cash Fund 1,198,524.46 1,384,084.72

·o Bureau of Treasury 296,380.19 130,350.67 :.as Out/Tows p 4,870,005.32 p 4,321 ,055.38

p 406,042.90 p 207,121 .37 :::a,an e- due to unreleased check 27,680.00

~ by Operating Activities 406,042.90 234,801.37

Investing Activities

p p

- tNS: ase of Property, Plant & Eqpt. p 406,042.90 p 234,801.37

Cash Outflows p 406,042.90 p 234,801.37

""om Financing Activities

from CBA Registration 6,000.00

Cash Inflows 6,000.00

ows --.,ce of CBA Registration 6 000.00 ~sh Outflows 6,000.00

ed by Financing Activities

Provided by Operating, Investing - cing Activities p p

- Dalance, Beginning Jan. 1, 2012 5 000.00

CE, ENDING December 31,2012 p p

·ices

296,380.19

2,645,927.74

1,684,674.11

Annex E

5,276,048.22 «taken from the statement of cash flows

357,311.41

5,633,359.63

296,380.19

5,336,979.44

« taken from ML: compliance with tax laws

<<taken from the statement of cash flows

5,291,240.05 « reported in the 1/S 45,739.39 «difference from the computed & reported

SING

5,336,979.44

4,814,967.76 «expenses are not classified into PS and MOOE

522,011.68

851,661.06 «taken from last year's equity- ending in 2012 8/S

522,011.68

1,373,672.74

121,364.05

961,253 .63

90,715.09

1,173,332.77

120,213.00

1,373,672.74

1,493,885.74

(320,552.97)

tation, taken up from the datas in the Management Letter submitted by NCMB R1

Annex F :tment of Labor and Employment

· nal Commission and Mediation Board- Branch I • -of Implementation of Prior Year's Audit Recommendations

Observations and Recommendations

mancial and Compliance

Procurement System

Ref.

The agency did not 2012 ure office supplies from ML

e Procurement Services o- DBM, instead resorted

alternative mode of urement through

opping in violation of the :nplementing Rules and ~egulations (IRR) of RA

. 4.

ecommendation:

We recommended that he agency procure its

office supplies with the PS-DBM and not resort to

lternative mode of procurement through -bopping as required

1l under the IRR of RA 11 9184.

Management Action

Status of Implementation

Procurement from Fully DMB was done Implemented effective this year.

The branch has just enrolled also with the PhiiGEPS.

Results of Auditor's Validation

Disbursement Vouchers and payments of Office Supplies to the Procurement Office were audited.

er and Development

The agency was ML to implement their 2012 r and Development

through the of team building

· ars, Women's Month - ~ e ration and other - -ical activities for a total

ount of P57,466.00 h is way below the

- ~dated amount of at least e per cent of their total

mmendation:

·e recommended that ement strictly

- -..-.."" ~ith the rules and nons regarding the

g aside of five per from the total

ent of the agency integrate its activities e GAD programs.

liance to tax laws

C · 20 12, RB I have ed with the existing

and regulations that ~ e d of the year, only

ount of Pl ,762.50 _ "" · ng tax withheld in

r remained -ed in the books.

endation:

651 _ -=e~ 6, 1981 requires

v"t official or show full and pliance with the

and regulations, e as model to the

Such

ML 2012

The Branch GAD Fully Plan and Budget Implemented was submitted to the Central Office on January 04, 2011 for consideration and eventual submission to the Philippine Commission on Women (PCW).

The unremitted amount represents the withheld tax for accounts payable for the month of December. The amount of Pl ,762.50 was remitted on Feb. 5, 2013.

Fully complied

The GAD activities ofthe Branch during the year were all aligned from the GAD Plan and Budget which the agency prepared for evaluation of the PCW. Although the branch was not able to comply with the mandated amount of at least 5% of its budget, it had undertaken activities which were client and organization oriented on GAD.

TRA covering the amount of Pl,762.50 dated Feb. 5, 2013.

directive was reiterated under Revenue Regulations l -87 dated April 2, 1987 and Revenue Memo Order , o. 8-2003 dated March 3, _003.