Annex A Republic of the Philippines COMMISSION ON AUDIT Commonwealth Avenue, Quezon City INDEPENDENT AUDITOR'S REPORT The Secretary Department of Social Welfare and Development Batasan Hills, Quezon City Unqualified Opinion We have audited the accompanying financial statements of Additional Financing for the Kapit-Bisig Laban sa Kabirapan - Comprehensive and Integrated Delivery of Social Services: National Community Driven Development Project (KC-NCDDP) - World Bank/International Bank for Reconstruction and Development (WB/IBRD), which comprise the Statement of Financial Position, as at December 31, 2022, and Statement of Financial Performance, Statement of Cash Flows and Statement of Changes in Net Assets/Equity for the year then ended, and Notes to the Financial Statements, including a summary of significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements presents fairly, in all material respects, the financial position ofthe AF KC-NCDDP-WB/IBRD as at December 31, 2022, and of its financial performance, statement of cash flows and statement of net assets/equity, for the year then ended and Notes to Financial Statements, including a summary of significant accounting policies in accordance with the International Public Sector Accounting Standards (IPSAS). Basis for Opinion We conducted our audit in accordance with the International Standards of Supreme Audit Institutions (ISSAIs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the agency in accordance with the Revised Code of Conduct and Ethical Standards for Commission on Audit Officials and Employees (Code of Ethics) together with the ethical requirements that are relevant to our audit of the financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the [PSAS, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAls will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISSAIs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the agency's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit observations, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. CONMISSION ON AUDIT By: AL MAAB. CULI State Auditor V Supervising Auditor April 17, 2023 A14NEX R DSWD DSWD-GF-010JIREVOJ I 17AUG 2022 STATEMENT OF MANAGEMENT'S RESPONSIBIL17Y FOR FINANCIAL STATEMENTS Additional Financing - KC-NCDDP (IBRD 9191-PH) The management of Department of Social Welfare and Development is responsible for all information and representations contained in the accompanying Statement of Financial Position as of December 31, 2022 and the related Statement of Financial Performance, Statement of Cash Flows, Statement of Comparison of Budget and Actual Amounts, Statement of Changes in Net Assets/Equity and the Notes to Financial Statements for the year then ended. The financial statements have been prepared in conformity with the Philippine Public Sector Accounting Standards and generally accepted state accounting principles, and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration to materiality. In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized. NIO CID CRISANTO, JR. Director IV, Finance and Management ndersecretary for General A ministration and Support Services Group 10 FEB 2023 10 FEB 2023 Date Signed Date Signed ANNEX C DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Regional Offices Condensed Statement of Financial Position Fund Cluster 02- Foreign Assisted Project AF-KC-NCDDP (IBRD 9191-PH) As of December 31, 2022 Account TRt UAC Object 2022 2021 (restated) Code ASSETS Current Assets 3,758,670,049.68 1,404,866,638.82 Cash and Cash Equivalents 2,678,906,507.TT 1,372,865,895.12 Receivables 1,074,131,623.09 28,129,344.64 Inwetories 5,631,918.82 3,861,299.06 Total Current Assets 3,758,670,049.68 1,404,86,538.82 Non Current Assets Property, Plant and Equipment 61,156,696.56 11649,771.16 Machinery and Equipment 34,714,792.87 5,347,411.16 Trnsportation Equipment 23,798,770.49 3,920,200.00 Furniture, Fixtures and Books 2,343,934.52 2382160 Other Property, Plant and Equipment 115.847.68 - Other Non-Current Assets 110,000.00 124108.74 Prepayments 110,000.00 124,108.74 Deposlts - Total Non-Current Assets 61,156,695.56 11,773,879.90 TOTAL ASSETS 3,819,826,745.24 1,416,630,418.72 IABILITIES Current Liabilities Financial Liabilities 56,647,36058 249,714,863.19 Inter-Agency Payables 240,338.86 4,697,901.44 Intra-Agency Payables 0.00 706,941.00 Total Current Liabilities 56,887,700.44 256,119,705.63 Non-Current Liabilities Other Payable* 907,247.65 390,665.62 Total Non-Current Liabilities 1,612,227.65 390,665.62 TOTAL LIABILITIES 58,499,928.09 256,510,371.25 Net AssetlEquity Equity 3,761,326,817.15 1,161,120,047.47 Total Net AssetWlEquity 3010101000 3,761,326,817.15 1,161,120,047,47 Suplus (Deficit) for the period Total Labilities and Net AssetaEquity 3,761,326,817.15 1,161,120,047-47 TOTAL LIABILITIES AND NET ASSETBIEQUITY 3,81926,745.24 1,41,630,418.72 ANNEX D DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consoildated Centrai Office and Regional Offices Condensed Statement of Financial Performance Fund Cluster 02- Foreign Assisted Project AF-KC-NCDDP (IRD 9191-PH) As of December 31, 2022 Account Title 2022 2021 (restated) Revenue Service and Business Income 1,028,686.93 684,477.70 Service bcome 585,305.44 - Business Income 443,381.49 664.477.70 Total Revenue 1,028,686.93 664,477.70 Le: Curnnt Operating Expenses Total aintenance and Other Operang Expenses 57,146,044.64 171,190,389.25 Total Non-Cash Expenses 7,410,6857 Current Operating Expenses 64,556,729.71 871,190,389.25 Surplus (Deficit) from Current Operations (63,28,042.78) (870,525,911.55) Net Financial Assistance/Subsidy to NGAs, LGUs, GOCCs 2,664,438,352.35 2,032,049.811.53 Suplus (Deficit) forte period 2,600,900,309.57 1,161,523,899.98 ANNEX E DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Regional Offices CONDENSED STATEMENT OF CASH FLOW Fund Cluster 02- Foreign Assisted Project AF-KC-NCDDP (IBRD 9191-PH) December 31, 2022 2022 2021 restated Cash Flows From Operating Activities Cash Inflows Receipt of Notice of Cash Allocation 3,394.326,079.55 3.362,997,242.06 Collection of Income/Revenues 443,381.49 664,477.70 Receipt of Intra-Agency Fund Transfers 3,214,014,266.85 3,223,554,544.48 Other Receipts 30,168,874.07 311,584.57 Adjustments 493,116.32 202.386.78 Total Cash Inflows 6,639,445,718.2B 5.607,730.235.59 Cash Outflows Remittance to National Treasury 693,539.89 403,852.51 Payment of operating expenses 954,076,171.56 1,162,892,374.28 Purchase of Inventories 5,089,510.50 1,139,029.59 Grant of Cash Advances (Unliquidated During the Year) . 264,950.00 Prepayments - 16,930.40 Payment of Accounts Payable 164,828,058.95 Remittance of Personnel Benefit Contributions and Mandatory Deductions 6,707,959.41 13,232,516.69 Grant of Financial Assistance/Subsidy 901,678,188.94 009,099,506.56 Release of Inter-Agency Fund Transfers 68,462,062.98 31,655,893.62 Release of intra-agency fund transfers 3,214,014,266.85 3,223,554,544.48 Adjustments 7,405.257.75 (7,405,257.75) Total Cash Outflows 5.322,855.016.83 5.234,864,340.47 Cash Provided by (Used in) Operating ActivIties 1.316.590.701.45 1,372,869,85.12 Cash Flows from Investing Activities Cash Outflows Purchase/Construction of Property, Plant and Equipment 10,550,088.80 * Total Cash Outflows 10,550,088.80 - Cash Provided by (Used in) Financing Activities (10.550.088.50) - Effects of Exchange Rate Changes on Cash and Cash Equivalents Total Cash ProvIded by (Used in) Operating, Investing and Financing Activities 1.306.040.612.65 1.372865,895.12 Add: Cash Balance, Beginning January 1, 2022 1,372,865,895.12 Cash Balance, Ending December31, 2022 2.878.906.507.77 1.372.865.895.12 ANNEX F DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Regional Offices STATEMENT OF CHANGES IN NET ASSETIEQUITY Fund Cluster 02- Foreign Assisted Project AF-KC-NCDDP (IBRD 9191-PH) As of December 31, 2022 2021 as restated Balance at December 31, 2021 1,161,120,047.47 Changes in Accounting Policy Prior Period Adjustment OtherAdjustments Restated Balance 1,161,120,04747 0.00 Changes in Net AsselWEquty for the Calendar Year Adjushment of net revenue recognized directly In net assetslequity Closing of Cash - Treasury/Agency Deposit - Regular (693.539.89) (403,852.51) Surplus for the period 2.600,900,309-57 1.161,523.899-98 Total recognized revenue and expense for the period 2,600,206,769.68 1,161,120,047.47 Balance at December 31, 2022 3,781.326.817.15 1,161,120,04747 Annex G DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2022 Fund Cluster 02 - Foreign Assisted Projects AF-KC-NCDDP (IBRD 9191-PH) 1. General Information/Agency Profile The financial statements of Department of Social Welfare and Development Office of IPSAS I the Secretary were authorized for issue on February 10, 2023 as shown in the Statement of Management Responsibility for Financial Statements signed by Director Wayne C. Belizar, Director for Finance and Management Service and Undersecretary Antonio Cid Crisanto Jr. Office of the Undersecretary for General Administration and Support Services Group. On 15 February 1915, upon creation of the Public Welfare Board during the American IPSAS 1.63(b) Regime, the government started to get involved in social welfare. The board was established to coordinate, regulate and supervise social services activities and other IPSAS 14.26 charitable works rendered by religious orders and organizations. Finally in 1917, the first government orphanage was established. As a result of several changes by the government in its bureaus and departments, the original Public Welfare Board of the year 1915 became The Department of Social Welfare and Development (DSWD). IPSAS 1.150 After which, The Social Welfare Administrator was formally created by virtue of Executive Order No. 396 dated 13 January 1951. Republic Act No. 5416 known as the Social Welfare Act was approved in 1968. It was made into a Department, whose responsibility was to provide comprehensive program of social welfare services designed to ameliorate the living conditions of distressed Filipinos, particularly those who are handicapped by reason of poverty, youth, physical and mental disability, illness and old age, or who are victims of natural calamities including assistance to members of the cultural minorities. With the provision of DSWD Mandate under Executive Order No. 15, DSWD was transformed from the rowing to steering role that usher in the new vision, mission and goals for the Department. The Department's vision is directed towards the attainment of "all Filipinos free from hunger and poverty, have equal access to opportunities, enabled by a fair, just, and peaceful society". In the pursuit of its vision, the DSWD mission is to "lead in the formulation, implementation, and coordination of social welfare and development policies and programs for and with the poor, vulnerable and disadvantaged". 1.1 Programs/Projects/Activities + Foreign Assisted Program * KALAHI-CIDSS National Community Driven Development Project (NCDDP) - a poverty alleviation program of the National Government [ implemented by the DSWD. It is supported by the Philippine Development Plan (2011-2016). Approved on 18 January 2013, it is the expansion into a national scale of the operations of community-driven development (CDD), a strategy that has been tried and proven effective in Kalahi-CIDSS (Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services), the parent project of KC-NCDDP. The development objective of KC-NCDDP is to have barangays/communities of targeted municipalities become empowered to achieve improved access to services and to participate in more inclusive local planning, budgeting, and implementation. KC-NCDDP will also be aligned into a program to support community-driven post-disaster response and development in Typhoon Yolanda-affected municipalities within provinces covered by KC-NCDDP. DSWD Central Office registered office address is located in Constitution Hills, Batasan Pambansa Complex, Main Road, Quezon City, Philippines. 2. Statement of Compliance and Basis ofPreparation ofFinancial Statements 2.1 The financial statements have been prepared in accordance with and comply with IPSAS 1.129 the International Public Sector Accounting Standards (IPSAS) issued by the Commission on Audit per COA Resolution No. 2014-003 dated January 24, 2014. IPSAS 2 The financial statements are presented in Philippine Peso, which is the functional and reporting currency of the DSWD. IPSAS 6 2.2 The fnancial statements have been prepared on the basis ofhistorical cost, unless stated otherwise. The Statement ofCash Flows is prepared using the direct method. 3. Summary ofSignificant Accounting Policies 3.1 Basis ofaccounting The financial statements are prepared on an accrual basis in accordance with the International Public Sector Accounting Standards (IPSAS). 3.2 Financial instruments a. Financial assets Initial recognition and measurement Financial assets within the scope of IPSAS 29 Financial Instruments: IPSAS 29.10 Recognition and Measurement are classified as financial assets at fair value through surplus or deficit loans and receivables as appropriate. The IPSAS 30.31 Department of Social Welfare and Development determines the classification of its financial assets at initial recognition. The DSWD's financial assets include cash and other receivables. 2 Subsequent measurement IPSAS 29.10 The subsequent measurement of financial assets depends on their classification. IPSAS 29.48(a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or IPSAS 29.65 determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part ofthe effective interest rate. Losses arising from impairment are recognized in the surplus or deficit. Derecognition IPSAS 29-19 The DSWD derecognizes a fmancial asset or, where applicable, a part of a IPSAS 29.20- financial asset or part of DSWD of similar financial assets when: 22 * The rights to receive cashflowsfrom the asset have expired or is waived * The DSWD has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in ful without material delay to a third party; and either: (a) the DSWD has transferred substantially all the risks and rewards of the asset; or (b) the DSWD has neither transferred nor retained substantially all the risks and rewards ofthe asset, but has transferred control ofthe asset. Impairment of financial assets IPSAS 29.67- 68 The DSWD assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. A IPSAS financial asset or a group of financial assets is deemed to be impaired if and 30.PAG5(t) only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include the following indicators: * The debtors or a group of debtors are experiencing significant financial difficulty; * Default or delinquency in interest or principal payments; * The probability that debtors will enter bankruptcy or other financial reorganization; 3 * Observable data indicates a measurable decrease in estimated future cash flows (e.g. changes in arrears or economic conditions that correlate with defaults). Financial liabilities Initial recognition and measurement Financial liabilities within the scope of IPSAS 29 are classified as financial IPSAS 29.10 liabilities at fair value through surplus or deficit. The entity determines the classification of its financial liabilities at initial recognition. The DSWD's financial liabilities include other payables. Subsequent measurement The measurement of financial liabilities depends on their classification. Derecognition A financial liability is derecognized when the obligation under the liability IPSAS 29.41 is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same IPSAS 29.43 lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in surplus or deficit. 3.3 Cash and cash equivalents IPSAS 2.8 Cash and cash equivalents comprise cash on hand, cash in bank for local and IPSAS 2.9 foreign currencies, and treaswy/agency accounts. IPSAS 2.56 3.4 Inventories IPSAS 12.15 Inventory is measured at cost upon initial recognition. To the extent that IPSAS 12.17(a) inventory was received through non-exchange transactions (for no cost or for a nominal cost), the cost of the inventory is its fair value at the date ofacquisition. 4 After initial recognition, inventory is measured at the lower of cost and net IPSAS 12.35 realizable value. However, to the extent that a class of inventory is distributed or deployed at no charge or for a nominal charge, that class of inventory is IPSAS 12.20 measured at the lower ofcost and current replacement cost. IPSAS 12.21 Net realizable value is the estimated selling price in the ordinary course of operations, less the estimated costs of completion and the estimated costs necessary to make the sale, exchange, or distribution. Inventories are recognized as an expense when deployed for utilization or conswnption in the ordinary course ofoperations ofthe DSWD. 3.5 Property, Plant and Equipment Recognition An item is recognized as property, plant, and equipment (PPE) if it meets the IPSAS 17.13 characteristics and recognition criteria as a PPE. The characteristics of PPE are as follows: IPSAS 17.14 * tangible items; * are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and * are expected to be used during more than one reporting period. An item of PPE is recognized as an asset if * It is probable that future economic benefits or service potential associated with the item willflow to the entity; and * The cost or fair value ofthe item can be measured reliably. Measurement at Recognition An item recognized as property, plant, and equipment is measured at cost. IPSAS 17.26 A PPE acquired through non-exchange transaction is measured at its fair value IPSAS 17.27 as at the date ofacquisition. The cost of the PPE is the cash price equivalent or, for PPE acquired through IPSAS 17.37 non-exchange transaction its cost is its fair value as at recognition date. Cost includes the following: IPSAS 17.30 * Its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; * expenditure that is directly attributable to the acquisition of the items; and * initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired, or as a consequence of 5 having used the item during a particular periodfor purposes other than to produce inventories during that period. Measurement After Recognition IPSAS 17.43 After recognition, all property, plant and equipment are stated at cost less PAG2 of accumulated depreciation and impairment losses. IPSAS 17 When signicant parts of properry, plant and equipment are required to be IPSAS 17.24 replaced at intervals, the DSWD recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major IPSAS 17.25 repairl*eplacement is done, its cost is recognized in the carrying amount ofthe plant and equipment as a replacement ifthe recognition criteria are satisfied IPSAS 17.23 All other repair and maintenance costs are recognized as expense in surplus or deficit as incurred Depreciation Each part of an item of property, plant, and equipment with a cost that is IPSAS 17.59 signifcant in relation to the total cost of the item is depreciated separately. The depreciation charge for each period is recognized as expense unless it is I IPSAS 17.64 included in the cost of another asset. Initial Recognition ofDepreciation Depreciation ofan asset begins when it is available for use such as when it is PAG3 of in the location and condition necessary for it to be capable of operating in the IPSAS 17 manner intended by management. For simplicity and to avoid proportionate computation, the depreciation is for one month if the PPE is available for use on or before the 15th of the month. However, ifthe PPE is available Depreciation Method Each part of an item of property, plant, and equipment with a cost that is PAG4 of significant in relation to the total cost of the item is depreciated separately. IPSAS 17 The depreciation charge for each period is recognized as expense unless it is included in the cost ofanother asset. The straight line method of depreciation shall be adopted unless another method is more _appropriate for agency operation. Estimated Useful Life The DSWD uses the Schedule on the Estimated Useful Life of PPE by PAG5 of classification prepared by COA. IPSAS 17 6 The DSWD uses a residual value equivalent to at least five percent (5%) ofthe PAG6 of cost ofthe PPE. IPSAS 17 Impairment An asset's carrying amount is written down to its recoverable amount, or recoverable service amount, if the asset's carrying amount is greater than its estimated recoverable service amount. Derecognition The DSWD derecognizes items of property, plant and equipment and/or any IPSAS 17.82 signficant part of an asset upon disposal or when nofiture economic benefits or service potential is expectedfrom its continuing use. Any gain or loss arising IPSAS 17.83 on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the IPSAS 17.86 surplus or deficit when the asset is derecognized 7he depreciation policy for PPE are applied to similar assets leased by the IPSAS 13.42 entity. IPSAS 13.13 IPSAS 13.63 IPSAS 13.66 3.6 Intangible Assets Recognition and Measurement Intangible assets are recognized when the items are identifiable non-monetary IPSAS 31.26 assets without physical substance; it is probable that the expected future I economic benefits or service potential that are attributable to the assets will flow to the entity; and the cost or fair value of the assets can be measured reliably. Intangihie assets acquired separately are initially recognized at cost. IPSAS 31.31 Intangible Assets Acquired through Non-Exchange Transactions The cost of intangible assets acquired in a non-exchange transaction is their IPSAS 3142-43 fair value at the date these were acquired. Internally Generated Intangible Assets IPSAS 31.49 Internally generated intangible assets, excluding capitalized development IPSAS 31.55 costs, are not capitalized and expenditure is reflected in surplus or deficit in the period in which the expenditure is incurred. 7 Recognition of an Expense Expenditure on an Intangible item shall be recognized as ar expense when it is incurred unless it forms part of the cost of an intangible asset that meets the recognition criteria ofan intangible asset. Subsequent Measurement IPSAS 31.87 The useful ife of the intangible assets is assessed as either finite or indefnite. IPSAS 31.96 Intangible assets with a finite ife is amortized over its useful life: IPSAS 26.22 The straight line method is adopted in the amortization of the expected pattern PAG3 of ofconsiumption ofthe expected future economic benefits or service potential. IPSAS 31 IPSAS 31.117 An intangible asset with indefinite useful lives shall not be amortized. IPSAS 31.106 Intangible assets with an indefinite usefid life or an intangible asset not yet IPSAS 31.107 available for use are assessed for impairment whenever there is an indication that the asset may be impaired. The amortization period and the amortization method, for an intangible asset IPSAS 31.103 with a finite useful lfe, are reviewed at the end of each reporting period. Changes in the expected usefid life or the expected pattern of consumption of IPSAS 31.108 future economic benefits embodied in the asset are considered to modify the amortization period or methot as appropriate, and are treated as changes in accounting estimates. The amortization expense on an intangible asset with a finite life is recognized in surplus or deficit as the expense category that is consistent with the nature ofthe intangible asset. Gains or losses arising from derecognition ofan intangible asset are measured I IPSAS 31.112 as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the surplus or deficit when the asset is derecognized. 3.7 Changes in accounting policies nJ estimates The DSWD recognizes the effects of changes in accounting policy IPSAS 3.27 retrospectively The effects of changes in accounting policy are applied prospectively if retrospective application is impractical. IPSAS 3.30 The DSWD recognizes the effects of changes in accounting estimates IPSAS 3.41 prospectively by including in surplus or deficit. 8 The DSWD correct material prior period errors retrospectively in thefirstset of IPSAS 3.47 financial statements authorized for issue after their discovery by: * Restating the comparative amounts for prior period(s) presented in which the error occurred; or * If the error occurred before the earliest prior period presented restating the opening balances of assets, liabilities and net assets/equity for the earliest prior period presented. 3.8 Foreign currency transactions Transactions in foreign currencies are initially recognized by applying the spot IPSAS 4.24 exchange rate between the function currency and the foreign currency at the transaction. At each reporting date: IPSAS 4.27 * Foreign currency monetary items are translated using the closing rate; * Nonmonetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of IPSAS 4.32 the transaction; and * Nonmonetary items that are measured at fair value in a foreign currency shall be translated using the exchange rates at the date when the fair value was determined. Exchange diferences arising (a) on the settlement ofmonetary items, or (b) on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements, are recognized in surplus or deficit in the period in which they arise, except as those arising on a monetary item that forms part ofa reporting entity's net investment in a foreign operation 3.9 Revenue from non-exchange transactions Recognition and Measurement of Assets from Non-Exchange Transactions An inflow of resources from a non-exchange transaction, other than services IPSAS 23.31 in-kind, that meets the definition of an asset are recognized as an asset if the following criteria are met: * It is probable that the future economic benefits or service potential associated with the asset will flow to the entity; and * The fair value of the asset can be measured reliably. IPSAS 23.42 An asset acquired through a non-exchange transaction is initially measured at its fair value as at the date of acquisition. Recognition Revenue from Non-Exchange Transactions 9 An inflow of resources from a non-exchange transaction recognized as an asset is recognized as revenue, except to the extent that a liability is also recognized IPSAS 23.44 in respect of the same inflow. As DSWD satisfies a present obligation recognized as a liability in respect of an inflow of resources from a non-exchange transaction recognized as an asset, IPSAS 23.45 it reduces the carrying amount of the liability recognized and recognize an amount of revenue equal to that reduction. Measurement of Revenue from Non-Exchange Transactions IPSAS 23.48-492 Revenue from non-exchange transactions is measured at the amount of the increase in net assets recognized by the entity, unless a corresponding liability is recognized Measurement of Liabilities on Initial Recognition from Non-Exchange Transactions The amount recognized as a liability in a non-exchange transaction is the best IPSAS 23.57 estimate of the amount required to settle the present obligation at the reporting date. Fees and fines not related to taxes The DSWD recognizes revenues from fees and fines, except those related to taxes, when earned and the asset recognition criteria are met. Other non-exchange revenues were recognized when it is probable that the IPSAS 23.89 future economic benefits or service potential associated with the asset will flow to the entity and the fair value of the asset can be measured reliably. Transfers from other government entities Revenues from non-exchange transactions with other government entities and IPSAS 23.95 the related assets are measured at fair value and recognized on obtaining control of the asset (cash, goods, services and property) if the transfer is free from IPSAS 23.96 conditions and it is probable that the economic benefits or service potential related to the asset will flow to the [Name of Entity] and can be measured IPSAS 23.97 reliably. I IPSAS 23.96 IPSAS 23.98 PAG3 of IPSASI 23 IPSAS 23.42 IPSAS 23.44 10 3.10 Budget information The annual budget is prepared on a cash basis and is published in the government IPSAS 24 website. A separate Statement of Comparison of Budget and Actual Amounts (SCBAA) was prepared since the budget and financial statements were not prepared on comparable basis. The SCBAA was presented showing the original and final budget and the actual amounts on comparable basis to the budget Explanatory comments are provided in the notes to the annual financial statements. 3.11 Impairment of Non-Financial Assets Impairment of non-cash-generating assets The DSWD assesses at each reporting date whether there is an indication that IPSAS 21.26 a non-cash-generating asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the DSWD estimates the asset's recoverable service amount An asset's recoverable service amount is the higher of the non-cash generating asset's fair value less costs to sell and its value in use. Where the carrying amount of an asset exceeds its recoverable service amount, I IPSAS 26.14 the asset is considered impaired and is written down to its recoverable service amount The DSWD classifies assets as cash-generating assets when those assets are held with the primary objective generating a commercial return. Therefore, non-cash generating assets would be those assets from which the DSWD does not intend (as its primary objective) to realize a commercial return. 3.12 Measurement uncertainty IPSAS 26.14 The preparation of financial statements in conformity with IPSAS, requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities, at the date of the financial statements and the reported amounts ofthe revenues and expenses during the period. Items requiring the use of significant estimates include the useful life of capital assets. Estimates were based on the best information available at the time of preparation I of the financial statements and were reviewed annually to reflect new I information as it becomes available. Measurement uncertainty exists in these I financial statements. Actual results could differ from these estimates. 4. Changes in Accounting Policies DSWD has not adopted any change in Accounting Policies for CY 2015. The 25 IPSAS had been adopted beginning January 1, 2014 as per COA Resolution No. 2014-003 dated January 24, 2014. 11 5. Prior Period Adjustments The DSWD has determined transactions relating to the previous year which have cumulative effect on surplus/deficit of the prior year. The description of the prior period adjustments, including peso amount, its effect for each financial statement line item affected in current and prior year, and cumulative effect on opening accumulated surplus/(deficit) in current and prior year, and cumulative effect on surplus/deficit in prior year are shown on this notes to financial statements. 6. Cash and Cash Equivalents Account Name 2022 2021 (restated) Cash Collecting Officer 134,427.12 16,787.50 Petty Cash 100,000.00 Cash in Bank - Local Currency, Current 2,678,772,080.65 1,372,749,107.62 Account - Land Bank of the Philippines I [Total 2,678,906,507.77 1,372,865,895.12 Cash-Collecting Officers Total collections of that were all remitted to the National Treasury or with Authorized Government Depository Bank (AGDB) except for the amount of P134,427.12 which was deposited/remitted on the first banking day of the ensuing year. Cash in Bank- Local Currency Current Account includes the funds that were deposited with Authorized Government Depository Bank (AGDB) in accordance with GAFMIS Circular Letter No. 2003-005 dated November 21, 2003 as follows: o National Community Driven Development Project (Peso)- WB IBRD Cash-Treasury/Agency Deposit, Regular pertains to the remittance to the Bureau of Treasury (BTr) the (1) collections of refunds from the excess of cash advances and overpayment of cost of services of officers and employees; and (2) interest earned from peso current account maintained in AGDB accounts. 7. Receivables 7.1 Inter- Agency Receivables Accounts 2022 _ _ 2021 (restated) Due from National Government Agencies 13,235.88 Due from Local Government Units 411,812,430.29 14.657,677.31 Totals 411.812,430.29 14.670.913.19 Due from Local Government Units pertains to the funds transferred to the Barangay for the implementation of various Sub-Projects under the KALAI - CIDSS NCDDP. 12 7.2 Other Receivables Accounts 2022 2021 (restated) Due from Officers and Employees 3,627.25 4,177.25 Due from Non-Goverment Organizations/Civil Society Organizations 662.300.154.14 11,636,494-25 Other Receivables 15,411.41 1,817,759.55 Totals 662,319,192.80 13,458,431.45 The account Due from Officers and Employees pertains to the amount receivables from employees due to overpayment and to be deducted from their salaries. Due from Non-Government Organizations/Civil Society Organizations pertains to the fund transferred to Barangays for the implementation of various Sub-Projects under Kalahi-CIDSS NCDDP World Bank-Additional Financing (WB-AF). The account Other Receivables used to recognize amounts due from debtors and other agencies not falling under any of the specific receivable accounts. Credit this account upon collection of receivables, transfers, or write-off. 8. Inventories Inventory items of the Department includes the following: Inventory Held for Consumption 2022 2021 (restated) Office Supplies Inventory 2570,477.82 3,587,296.06 Other Supplies and Materials Inventory 869,453.00 42,770.00 Sub-total 3,439,930.82 3,630,066.06 Semi - Expendable Office Equipment 922,214.00 68,825.00 Semi Expendable Information and 321,182.00 5,598.00 Communications Technology Equipment Semi Expendable Printing Equipment 120,800.00 Semi Expendable Furniture and Fixtures 827,792.00 156,810.00 Sub-total 2,191,988.00 231,233.00 Total Inventories 5,631,918.82 3,861,299.06 Office Supplies Inventory pertains to the office supplies, printed special forms and IT supplies in stockpile ofthe KC Regional Project Management Office. Other Supplies and Materials Inventory pertains for the supplies and deliveries of batteries and tires for stockpile. Tangible items which are classified as PPE but below the capitalization threshold of P15,000.00 are considered semi-expandable properties 13 9. Property, Plant and Equipment Property, Plant and Equipment for CY 2022 are summarized as follows: Machner an Trnsprtaion Furniture. PoOther Machinery and Trensportation F and Proety Plant Intangible TOTAL Equipment Equipment and Assets Carying Amount, January 1, 5,347,411.16 3,920,200.00 2,382,160.00 11,649,771.16 2022 Additions/ Acquisitions 34,727,162.59 21826.306 88 39,99000 132,65000 81,50000 56,807,609.47 Reclassification Total 40,074,573.75 25,746,506.88 2,422,150.00 132,650.00 81,500.00 68,457,380.63 Disposals Depreciation (As per (5,359,780.88) (1,947,736 39) (78,1548) (16,802.32) (8,15.00) (7,410,685.07) Statement of Financial Performance) Adjustments Impairment Loss (As per Statement ofFinancial Performance) Carrying Amount, December 34,714,792.87 23,798,770.49 2,343,934.52 115,847.68 73,350.00 61,046,695.56 31, 2022 (As per Statement of Financial Position) Gross Cost (Asset Account 40,074,573-75 25,746,506.88 2,422,150.00 132,65000 81,50000 68,457380.63 Balance per Statement of Financial Position) 88____ Less r Acc. Depreciation (5.359,780.88) (1,947,736 39) (78.215 48) (16.802 32) (8,150.00) (7.410.685,07 Allowance for Impairment Carrying Amount, December 31, 2022 (As per 34,714,792.87 23,798,770.49 2,343,934.52 115,847.68 73,350.00 61,046,695.56 Statement of Fltancial Position) Property, Plant and Equipment is carried at cost less accumulated depreciation. Regular maintenance, repair and minor replacements are charged against Maintenance and Other Operating Expense (MOOE). 10. Other Non-Current Assets 10.1 Prepayments Account Name 2022 2021 (restated) Prepaid Rent 110,000.00 110,000.00 Prepaid Insurance _ 14,108.74 TOTAL 110,000.00 124,108.74 Prepaid Rent pertains to FO X for the three month's security deposit to Golden Uptown Arcade / Khu Felicisimo Jr in the amount of Php 110,000.00 under check no. 1355448 dated 12/31/2021. 11. Financial Liabilities Account Name 2022 2021 (restated) Accounts Payable 54,758,606.87 214.588,200.37 Due to Officers and Employees 1,888,753.71 35,126,662.82 Total 56,647,360.58 249,714,863.19 14 The Accounts Payable in Central Office of P 3,928,291 represents the various claims of creditors as of December 31, 2022. In Field Offices it represents the unpaid ubligations to suppliers and service providers for goods/ services delivered as of December 31, 2022 Due to Officers and Employees in Central Office, consist of unpaid salaries, reimbursements of communication load allowances and travelling expenses as of December 31, 2022. In Field Offices it represents unpaid salaries, additional premium, reimbursement oftransportation, communication and per diem as of December 31, 2022 12. Inter-Agency Payables Account Name 2022 2021 restated Due to BIR 166.253.28 3,784,621.81 1 Due to Pag-IBIG 17.500.00 195,555.81 Due to Philhealth 14,856.58 715,623.82 I Due to GOCCs I 41,730.00 2,100.00 Total | 240.339.06 4,697,901.44 Due to BIR consists of income tax deducted from employees, consultant, specialist and suppliers to be remitted to the Bureau of Internal Revenue during the first month of the ensuing year. Due to Pag-IBIG comprises Pag-IBIG Premiums, Multi-Purpose Loan and Housing Loan which were also remitted during the first month of the ensuing year Due to Philhealth consist of employee's contributions deducted from salary to be remitted on the first month of the ensuing year. Due to GOCCs in CARAGA refers to the amount withheld from the salaries of the staff and for remittance to the Social Security System. In FO X pertains to the contributions deducted from employees and will be remitted on CY 202. 13. Other Payables Account Name 2022 2021 restated Other Payables 907,247.65 390,665.62 Total 907,247.65 390,665.62 In Central Office - the Other Payables pertains to the unremitted premiums to SWEMC and MBA of MOA workers deducted from their salaries to be remitted in the ensuing year. In Field Offices, pertains to unremitted premiums to Social Security System (SSS), membership fees, monthly dues, savings account, MABF loans and other premiums for payment to SWEAP - the agency's cooperative association for employees. 14. Service and Business Income Account Name 2022 2021 restated Fines and Penalties - Service Income 585,305.44 15 Interest on NG Deposits 443,381.49 664,47770 Total 1,028,686.93 664,477.70 Fines and Penalties - Service Income in Central Office P352,114.17 is the amount charged or being collected by the Department from various contractors/ suppliers for late delivery of goods and services as specified in the Purchase Order. In Field Offices are the liquidated damages charged to suppliers for the delayed delivery of supplies. Interest Income represents income earned from various bank accounts of the Department remitted to the Bureau of the Treasury 15. Maintenance and Other Operating Expenses 15.1 Traveling Expenses Particulars 2022 2021 restated Travelinp Expenses - Local 2,000.000.00 1 74,165,857.86 Total Traveling Expenses 2,000,000.00 ! 74,165,857.86 Traveling Expenses includes airfare, accommodation and daily subsistence allowance of DSWD Officials and Employees during travels on official business to attend various trainingstseminars, consultation meetings and field monitoring visits for the period January to December 2022. 15.2 Training Expenses Particulars 2022 2021 restated Training Expenses 19,818,117.81 133,099,747.85 Total Training Expenses 19,818,117.81 133,099,747.85 Training Expenses - In Central Office, consist of payment of a pack meal for introduction to CDD- Livelihood Economic Development. In Field Offices consist of payment of honorarium of persons, board and lodging and or hotel accommodation of participants to various seminar, training- workshops. 153 Supplies and Materials Expenses Particulars I 2022 2021 restated Office Supplies Expenses 18,684,958.86 6,409,073.87 Accountable Forms Expenses 17,400.00 Medical, Dental and Laboratory Supplies 139,884.00 1,740,722.25 expenses Fuel, Oil and Lubricants Expenses 509,408.27 1,519,283.76 Semi-Expendable Machinery and Equipment 634,749.00 Expenses Semi-Expendable -Office Equipment 1,052,355.00 Semi-Expendable - Information and 2,727,442.17 Communication Technology Equipment Semi-Expendable - Communication Equipment |299,900.00 Semi-Expendable - Other Equipment 373,935.00 Semi-Expendable - Furniture and Fixtures 2,436,383.89 2.244.332.60 16 Other Supplies and Materials Expenses 2,056,153.00 656,083.49 Total Supplies and Materials Expenses 28,280,420.19 13,221,644.97 Office Supplies Expenses represents the issuance of office supplies with a Report of Supplies and Materials Issued. Medical, Dental and Laboratory Supplies expenses represents the issuance of Medical, Dental and Laboratory Supplies for the use of KC Staff CY 2022 Other Supplies and Materials Expenses represents the issuance of other supplies with a Report of Supplies and Materials Issued. Fuel, Oil, and Lubricants Expenses are the cost of fuel, oil, and lubricants issued for use of department's vehicles and other equipment in connection with the operations of the agency Semi- Expendable Machinery and Equipment Expenses represents the issuance of Semi- Expendable Equipment based on Inventory Custodian Slip. 15.4 Utility Expenses Particulars 2022 2021 restated Water Expenses ] 13,686.35 155,990.57 Electricity Expenses 453,254.40 1,966,771.24 Total Utility Expenses 466,940.75 2,122,761.81 Water Expenses pertains to the payments for the water consumption at DSWD Central Office and KALAHI CIDSS Building. Electricity Expenses pertains to the payment to MERALCO for the electric consumption at DSWD Central Office and KALAHI CIDSS Building. 15.5 Communication Expenses Particulars 2022 2021 restated Postage and Courier Services _ _ 834,155.60 Telephone Expenses -Mobile 1.097,548.00 9,672,500.68 Internet Subscription Expenses 692,717.11 Total Communication Expenses 1,097,548.00 11,199,373.39 Telephone Expenses pertains to the payment to Globe Telecom, Inc. and Smart Communications, Inc. and reimbursements of individual postpaid lines payments in lieu of prepaid card. 15.6 Professional Services Particulars 2022 2021 restated Legal Scrvicc 55,000.00 Consultancy Services 941,673.00 1 Other Professional Services 141,067.95 621,874,890.52 Total Professional Services 1,082,740.95 621,930.788.32 17 Consultancy Expenses includes payment to service providers engaged in the development of systems and the program/project consultants and payment to KC-NCDDP Specialists. Other Professional Services are payments to DSWD hired workers under Cost of Service Contract 15.7 General Services Particulars 2022 2021 restated I Janitorial Services 183.802.88 528,350.25 Security Services _ 897,440.00 Total General Services 183,802.88 1,425.790.25 Janitorial Services pertains to the payments of utilities and other job order workers for their services rendered to the field office and sub-regional offices. 15.8 Repairs and Maintenance Particulars 2022 1 2021 restated Repairs and Maintenance - Buildings and Other 1,089,605.32 232,128.64 Structures_I Repairs and Maintenance - Machinery and Equipment 69,800.00 Repairs and Maintenance - Office Equipment 151,224.00 | Repairs and Maintenance - Transportation Equipment 675,672.03 | 1,180,702.10 Total Repairs and Maintenance Expenses 1,916,501.35 1,482,630.74] Repairs and Maintenance accounts refers to ordinary repairs made to various assets to ensure that it continues to operate and maintains its functionality and performance. 15.9 Taxes, Insurance Premiums and Other Fees Particulars 2022 2021 restated Taxes, Duties and Licenses 4,518.12 Fidelity Bond Premiums 334,515.00 185,500.00 Insurance Expenses 14.108.74 226,049.00 Total Taxes, Insurance Premiums and Other Fees 348,623.74 416,067.12 Fidelity Bond Premiums pertains to payment for the premium of fidelity bond of the officials. Insurance Expenses - refers to premiums paid to insure government properties 15.10 Other Maintenance and Operating Expenses Particulars 2022 2021 restated j Advertising Expenses 32,240.00 1,253,019.55 Printing and Publication Expenses 422,942.97 1,025,055.50 Representation Expenses 715,746.00 I 1,439.600.00 Transportation and Delivery Expenses 39.785.08 Rent/Lease Expenses 6.357,079.71 18 Other Maintenance and Operating Fxpen sfs 62370.00 2.011.187.10 1 Total Other Maintenance and Operating Expenses 1,951,348.97 12.125726.94 Printing and Publication Expenses are payments made to various suppliers for advocacy materials of different programs and services of the department. Representation Expenses pertains to the food served during the conduct of meeting with the DSWD stakeholders. Rent/Lease Expenses pertains to payment for the rental of motor vehicles for use during the conduct of various workshops for the implementation of the support mission. Lease expenses of office and warehouse for the use of KC staff Other Maintenance and Operating Expenses refers to other expenses incurred for the operation, programs and activities of the agency 16. Non-Cash Expenses 16.1 Depreciation Particulars 2022 Depreciation - Machinery 949.92 Depreciation - Office Equipment 1,401,740.41 Depreciation - ICT Equipment 3,915,828.88 1 Depreciation - Communication Equipment 41,261.67 Depreciation - Motor Vehicles 1,947,736.39 Depreciation - Furniture, Fixtures and Books 78,215.48 Depreciation - Other Property, Plant and Equipment 16,802.32 Total Depreciation 7,402,535.07 The Depreciation for Machinery and Equipment, Transportation Equipment and Furniture and Fixtures are periodic cost allocation for the wear and tear the Department's PPE. 16.2 Amortization Particulars 2022 Amortization - Computer Software 8,150.00| Total 8,150.00 This pertains to FO DC amortization of computer software anti-virus covering period of July - December 2022 17. Net Financial Assistance/Subsidy Financial Assistance/Subsidy from NGAs, LGUs, GOCCs Particulars 2022 2021 Subsidy from National Government 3,394,736,456.75 3,382,997,242.06 Subsidy from Central Office 3,214,014.266.85 3,223,554,544.48 19 Total Financial Assistance/Subsidy from , NGAs, LG Us 6,608,750,723.60 6,606,551,786.54 Less: Financial Assistance/Subsidy to NGAs, LGUs, GOCCs, NGOs/POs Particulars 2022 ,2021 restated ISubsidy to Regional Offices (Staff Bureaus) 3,214,014,266.85 i3,223,554,548 Subsidies - Others 730,308,104.40 1,350,947,430.53 Total Financial Assistance/Subsidy to NGAs, 3,944,322,371.25 4,574,501,975.01 LGUs 3943231I 4,574,501,975.01 Net Financial Assistance/Subsidy 2,664,428,352.35 | 2,032,049,811.53 The account Subsidy to Regional Offices/Staff Bureaus pertains to transfer of funds through funding checks charged against Loan Proceeds to Field Offices for the implementation of KC- NCDDP. The Subsidies-Others is recorded upon the liquidation of the communities/LGUs of the grant provided to them for the implementation of the project The account Subsidy from National Government is further broken down as follows: Particulars Amount Receipt of Notice of Cash Allocation (CA) 3.394326,079.55 Tax Remittance Advice (TRA) 410,377.20 Total Less: Adjustment NTA Lapsed/Reversion of Lapsed NCA Refunds 0.00 Total 3,394,736,456.75 18. Loan Application IBRD Loan No. 9191-PH: KC-NCDDP-Additional Financing This is for the Additional Financing for the KALAI CIDSS - National Community Driven Development Project (KC-NCDDP), entered by the Republic of the Philippines and International Bank for Reconstruction and Development (1B RD) last December 21, 2020 with a total loan amount of US$300,000,000.00. The objective of the Project is to empower communities in targeted municipalities to achieve improved access to services and to participate in more inclusive local planning, budgeting and implementation. On December 12, 2022, the Department submitted to the IBRD the fourth WA for this loan for Advance to Designated Account amounting to US$129,222,147.34. Consequently, the said amount with an equivalent peso amount of PhP7,203,100,937.03 were credited to the Treasurer of the Philippines Foreign Currency Deposit - Dollar Account on December 16, 2022. As of December 31, 2022, the cumulative total withdrawal application is US$267,070,980.55. The balance amounting to US$32,179,019.45 will be withdrawn in FY2023 to cover the project implementation costs. 20 19. Budget Information Notice of Cash Allocation No. NCA BMB-B-22-0002021 with the amount of P 500,003,000.00 dated March 01, 2022 to cover the cash requirements for the implementation of Additional Financing for Kapit Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services-National Community Driven Develpment Program (AF-KC-NCDDP) Notice of Cash Allocation No. NCA BMB-B-22-0012956 with the amount of P 2,894,323,079.55 dated October 17, 2022 to cover the funding requirements for the implementation of Additional Financing for Kapit Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services-National Community Driven Development Program (AF-KC-NCDDP). 20. Prior Period Adjustment Liquidation of prior years' cash advances, other maintenance and operating expenses refunds and adjustments on the payment of prior years' not yet due and demandable are the prior period adjustments resulting to over/under statement of Net Assets/Equity of 2021. The effect of restatement on those financial statements is summarized below. There is an effect on the 2020 Statement of Financial Performance and Financial Position. Effect on 2021 Statement of Financial Performance Particular Amount Net Increase in Income Accounts 0.00 Net Increase in Expense Accounts 1,142,632,452.71 Decrease in Surplus/Deficit 1,142,632,452.71 Effect on 2021 Statement of Financial Position Particular 7 - Amount Net Decrease in Assets 1,104,944,792.49 Net Increase in Liabilities [ 37,687,660.22 Net Increase in Beg. Of Net Asset/Equity 0.00 Increase in Net Assets/equity 1.142,632,452.71 21. Related Party Transactions 21.1 Key Management Personnel The key management personnel of the DSWD are the Head of the Agency, the members of the Executive Committee which consists of the Undersecretaries and the Assistant Secretaries, and the members of the Management Committee which consists of the Directors of the Offices, Bureaus, and Services. 21 Annex H PART III - STATUS OF IMPLEMENTATION OF PRIOR YEARS' AUDIT RECOMMENDATIONS We made a follow-up on the actions taken by the DSWD in the implementation of prior years' audit recommendations and noted the following: Implemented 8 Not Implemented1 Total9 The validation was made based on the Agency Action Plan and Status of Implementation (AAPSI) submitted by the DSWD management. Likewise, we recommended the continuing management actions to address the issues in order to fully implement the recommendations. These are as follows: Audit Observations/ Management Status of Results of Reo Comments/Actions Implements Recommendations Validation Taken tion Financial and Compliance 1. The government incurred 2021 additional obligations in the ML, form of commitment fees Paras. totaling to USD485,334.29 22-32 (PhP23,895,366.40) as of Pages December 31, 2021 which 9-10 could have been avoided had the loan proceeds of USD300,000,000.00) from the International Bank of Reconstruction and Development (LBRD) were availed of within the prescribed period as stated in the Loan Agreement. We recommend that The Management Implemented There was a FY 2021 Management should instruct stated factors that Recalibrated Work the Project Coordinator to: contributed to the and Financial Plan non-availment of dated July 30, 2021; a. provide the factors that loan proceeds as SARO and NCA contributed to non-availment follows: dated May 28, 2021, Audit Observations/ Management Status of Results of Recommendations Comments/Actions Implementa Recomm________ aeions Validation Taken tion of the loans and determine 1. Timing of amounting to strategies and activities to disbursement plan P3,382,997,243.00 overcome them to avoid 2. The SARO and out of the incurrence of additional NCA were P5,000,000,000.00 commitment fees in CY received only in planned budget in the 2022; June 2021 FOA; mobility 3. Significant change disruption due to in targeting and COVID-19 implementation plan 4. Limited Access and mobility disruption due to COVID-19. b. require to install The Management Implemented -There is an measures to avoid commits to ensure approved Catch-up incurrence of additional that the prescribed plan indicated commitment fees in CY timelines shall be therein are: 2022; and followed and - Mobilization of the delivered rigorously RPMO and act and vigorously. The STAFF Department shall - Close monitoring continue to formulate of conducted social strategies to ensure preparation that the activities and implementation of' capacity building projects follow its trainings operational -Pooling of qualified guidelines applicants -Implementation of procurement practices -Adjustments in the cost estimates c. provide or furnish the Accomplishment Implemented Accomplishment audit team of the project's Reports were Report for each monthly/quarterly/annual submitted loan were accomplishments reports. submitted 2. There were delays in the 2021 completion of the 3,678 ML, sub-projects (SPs) and -Management StatUX Of Audit Observatious/ I Mngm t SaunifResults of Recit Omendations/ Ref. Comments/Actions Implemento Valtion Recommendations Tae inValidation ______ ___ _ Taken tion failure to perform other Paras. related activities as defined 33-58 in the Loan Agreement and I Pages the FY 2021 Recalibrated 10-17 Work and Financial Plan (WFP) due to (i) non- release of programmed funds as provided in the Forward Obligational Authority (FOA) and delayed release of funds from the Department of Budget and Management (DBM) to the (DSWD, (ii) delayed transfer of funds 1 by the DSWD Central Office (CO) to Field Offices (FOs); and (iii) low fund utilization, thus, the project's purpose of scaling up the Original/Parent Project, to respond to COVID-19 and other crises or disasters were not fully attained. I We recommended that Management require the NPMO to: i. closely coordinate and The Loan Agreement Implemented There was fund represent with DBM, DOF became effective on release from the and WB/IBRD and submit Feb. 26, 2021 and the DBM through NCAs immediately required NPMO facilitated the amounting to compliance documents to request for SARO in P500,003,000.00 facilitate release of funds; Jan. 2021 amounting dated March 01, to PhP5billion 2022 and equivalent to the P2,894,323,079.55 FOA for FY 2021 i and dated Oct. 17, intended to fund the | 2022. Funds were 3,678 SPs. However, released to various funds was released FOs. on the 2rd quarter of 2021 amounting to P3,382,997,243.00. Due to the delayed release of funds, a Audit Observations/ Management Status of I Results of Recommendations Ret Comments/Actions Implementa Validation Taken tion Recalibrated WFP for CY 2021. ii. coordinate with the There were Implemented -There is an RPMO on the issues and Amplified approved Catch-up concerns encountered in the Mechanism plan indicated implementation of the SPs to Strategies such as: therein are: provide immediate a. Recalibrated - Mobilization of the remedy/solution and to Milestone Oriented RPMO and act avoid delay implementation Plan (MOP) STAFF of the Project; and a. Consultative - Close monitoring meetings and of conducted social monitoring and preparation technical assistance activities and to RPMOs capacity building I trainings -Pooling of qualified applicants -Implementation of . procurement practices -Adjustments in the cost estimates - iii. conduct a comprehensive The NPMO Implemented There is an review of the 2022-2023 WFP conducted a WFP Approved for the smooth Workshop for FY Recalibrated WFP implementation of the, 2022 with the RPMO dated Sept. 5, 2022 Project and to achieve its in the 3rd quarter of goals and objectives 2021 3. In FO V, of the 1,198 target 2021 SPs, only three were ML, completed, 27 were on-going Paras. and 1,168 were 59-62 unimplemented due to late Pages receipt of funds and late 17-18 implementation of SPs which consequently delayed the delivery of basic services to intended beneficiaries. We recommended that The Focal Person for Not Recommendation is Management to revisit and KALAHI committed Implemented partially enhance its planning and to enhance its implemented. It is . strategies, especially 1 noteworthy to Audit Observations/ Management Status of Results of Recommendations Ref. Comments/Actions Implementa Validation Taken tion monitoring strategies and in the mention however observe strict adherence to implementation of that the 1,267 the timelines in the the still unimplemented SPs implementation of SPs to unimplemented as of December 31, ensure timely delivery of projects. 2021, for this current ensue tmel delver ofyear 1,123 SPs were services to the intended already completed, beneficiaries. 63 SPs are still on- going, while the remaining 81 SPs were still not implemented for the reasons that it was either waived, deleted or no funds downloaded. At year-end, the percentage of accomplishment of the SPs is 94.73%. In FO VI, out of 14 sub- 2021 projects inspected amounting ML, to P29.056 million, two worth Paras. P2.661 million were found 63-66 with deficiencies that may Page compromise its effective use, 18 hence, may affect the functionality and sustainability of the KC sub projects. We recommended that Management to: a. require the KC RPMO The RPMO provided Implemented The KC-RPMO had to coordinate and provide assistance to the coordinated closely technical assistance to the concerned Barangays with the concerned concerned Community in monitoring the Community Group/Brgy. in the close status of the two the monitoring of the monitoring of the status of concrete road SP status of the two the two concrete road sub- with deficiencies. concrete road SPs projects, and with deficiencies. Concrete epoxy were applied. Audit Observations/ Management Status of Results of Recommendations Ret Comments/Actions Implementa Validation Taken tion b. require the contractor The contractor was Implemented The transverse to remove and replace the required to replace or cracks did not portion with defects if the repair the portion worsen due to the transverse cracks worsened with defects if the remedial measures within the defects liability transverse cracks undertaken by the period. worsened within the contractor. defects liability period.