Revised Guidelines in the Evaluation and Monitoring of Audit Reports and Clarifying Audit Coordinative Linkages

I.          OBJECTIVES

A.        To
facilitate effective and expeditious actions on audit reports and ensure
satisfactory compliance with the audit recommendations and auditees’
commitments

B.        To ensure that systems and procedures are properly aligned and linked between and among RCs concerned

C.        To ensure proper monitoring, evaluation and reporting of audit activities and result of audits

D.        To effect realignment of responsibilities as a result of the PPA 2001 Restructuring Plan

II.          SCOPE

The procedures and audit coordinative
linkages outlined herein shall be observed by the ICD, PDO ICS, audited
units and other RCs/units required to take action on ICD, ICS and COA
audit reports.

III.         PROCEDURES

Following are the procedures to be
adopted in matters of coordination between ICD and PDO ICS; handling of
audit reports and audit findings; and, monitoring, evaluating and
reporting actions taken thereon:

A.      Coordination and Monitoring

1.      Two (2)
months before the start of the succeeding year, the PDO ICS shall
furnish the ICD Monitoring Staff (MS), the PDO Plans and Programs for
the following year, particularly audit schedule of the ICS.

2.      ICD shall submit to A/GM-CASP a Consolidated Audit Schedule for ICD and PDO ICS.

3.      Based
on the PDO ICS audit plans, ICD MS shall conduct a monthly review of ICS
accomplishments per audit reports furnished the ICD.

4.      ICD and
ICS accomplishments shall be consolidated and reported through the
ICD/ICS Monthly Accomplishment Report (MAR) prepared by the ICD MS,
Annex “A.”^[1]

B. Review and Validation

The ICD MS shall review internal audits conducted by the ICD and ICS.  The review shall cover, among others, the following:

1.      Audit procedures and techniques applied;

2.      Proper
application of the Performance Appraisal System (PAS) for the PMOs; and
the Performance Standards and Rating System (PSRS) for Cargo Handlers
(PPA A.O. 13-96).

3.      Quality of the audit reports based on the following:

a.         Areas covered

b.         Extent of sampling conducted

c.         Completeness of supporting documents

d.         Comments/Commitments

e.         Report Format

C.      ICD/ICS Audit Report Flow

In order to streamline the ICD/ICS audit reporting system, the following procedure (Annex “B”^[2] shall be observed in the preparation of transmittal memoranda and submission of audit reports to the offices concerned:

1.      ICD Audit of H. O. RCs

a.         Audit team’s memo shall be prepared addressed to the ICD Manager, thru the Division Manager.

b.         ICD Manager shall submit the report to the General Manager through the A/GM-CASP.

c.         AGM concerned and auditee shall be officially informed of the result of the audit through a GM’s memo.

d.         For
auditee’s queries on policies, rules and regulations resulting to audit
observations and which are beyond the authority of ICD to resolve, ICD
MS shall prepare a department query to the RC concerned for
clarification/resolution of the query.

2.      ICD Audit of PDOs

In addition to the procedure (C.1)
above, the three (3) AGMs shall be officially informed of the result of
the audit under their areas of responsibility through an A/GM CASP memo.

3.      ICS Audit

a.       An audit team’s memo shall be prepared addressed to the PDM.

b.       The auditee shall be officially informed of the result of the audit through a PDM’s memo.

c.       The GM
shall be officially informed of the result of the audit through a PDM’s
memo. The memo, together with the audit report, shall be coursed through
the A/GM-CASP, attn: ICD.

d.       For
queries/requests for clarification arising out of audits, a PDO query
shall be forwarded to the RC concerned, thru A/GM CASP, attn: ICD.

D.      Compliance Reports of Audited Units

1.      ICD Audits

a.       For
audited Head Office Responsibility Centers, PDOs, Locally-Funded
Projects and other audited areas, systems or services, report of
compliance with audit commitments or rectifications/actions taken to
audit observations shall be contained in RCs Compliance with the Audit
Observations (RCAO), Annex “C,”^[3] prepared by auditee concerned.

b.       RCAO
shall be submitted by the audited RCs, PDOs, Locally Funded Projects
in-charge and other auditees concerned, directly to the ICD, within 30
days upon receipt of the audit report and every month thereafter until
all commitments have been complied with.

2.      ICS Audits

a.       For
audited PMOs/TMOs, a PMO Compliance with Audit Observations (PCAO),
Annex “D,” shall be submitted to the PDO for evaluation/verification
within 30 days upon receipt of ICS audit report and every month
thereafter until all commitments have been complied with.

b.       For
audited cargo handlers and service agents, reports of compliance with
audit recommendations or rectifications/remarks to audit findings shall
be contained in Service Agent’s Compliance with the Audit Findings and
PMO Evaluation (SCAFE) Annex “E.”

c.       The
SCAFE shall be prepared by the cargo handler and submitted to the PMO
which has jurisdiction over the audited cargo handler or service agent
within 30 days upon receipt of the copy of the audit report and every
month thereafter until all commitments have been complied with.

d.       The PMO
concerned shall evaluate/verify the compliance/explanation in SCAFE,
accomplish the 4th column and transmit the same to the PDO within five
(5) days upon receipt of the SCAFE.

3.      COA Audits

COA audits shall be acted and reported
using the Comments and Actions Taken on COA Findings and
Recommendations (CATCOA) Annex “F”:

a.       Port
District Managers shall submit the CATCOA to the GM, through the A/GM
CASP, attn: ICD, within ten (10) days from receipt of the COA Annual
Report.

b.       Controllership
Department shall submit the CATCOA to ICD, also within ten (10) days
from receipt of COA Annual Report on matters pertaining to audit
findings on Head Office RCs.

c.       ICD MS shall review and participate in meetings/discussions with RCs concerned to thresh out problems and clarify COA findings.

d.       Based
on the review of PDO/RC CATCOA and results of meetings/discussions with
RC concerned, ICD prepares a consolidated CATCOA, (C-CATCOA) Annex “G”
and Executive Brief for the GM and submits this for signature of the
AGM-FA through the A/GM CASP.

E.      Monitoring Report of ICS Submitted to ICD

1.      Responsibility and Frequency

a.       The PDO ICS shall evaluate actions taken by the auditees through compliance reports (SCAFE and PCAO) from the PMOs.

b.       Based
on the RCAO of the PDO and the SCAFE and PCAO from the PMOs, the ICS
shall consolidate and prepare a quarterly Report of Actions Taken on
Audit Findings (RATAF) Annex “H.” This shall be submitted to the ICD on
or before the 15th day of the month following the quarter being reported
on.

2.      Content and Procedure

RATAF shall include the following:

a.       List of quarterly audited PMOs, cargo handlers and other service agents;

b.       Quarterly status of compliance of auditees, including that of the PDO, on their commitments;

c.       Evaluation/Verification made by the PDO on auditee’s and PMOs actions.

F.      Monitoring Report of the ICD Monitoring Staff

In order to provide management an
accurate status report on the audit of Head Office RCs, PDOs, PMOs,
Locally Funded Projects, Cargo Handlers and other service agents
conducted by ICD, PDO ICS and COA, the ICD Monitoring Staff shall
prepare and submit to management a quarterly Consolidated Audit
Monitoring Status Report (CAMSR) Annex “I^.[4]

The report shall include the following information:

1.       Consolidated list of audited units for the quarter

2.       Significant/Recurring/Prevalent findings in the RCs, PDOs, PMOs and CHOs/other service agents

3.       Status of compliance on auditee’s commitments including partially or unacted audit findings

4.       Actions taken by the AGMs and PDMs concerned

5.       Findings beyond the authority of the PDO/PMO to act

6.       Findings which require assistance of other RCs or government offices

7.       Findings
which require clarifications/ amendments/ formulation of systems and
procedures and strengthening internal control systems

8.       Evaluation/Comments of ICD Monitoring Staff

a.            On the actions taken by the PDO on the submitted audit compliance status report (PCAO and SCAFE)

b.            On the audit procedures/techniques used; application of rating systems; and, quality of audit reports

IV.        FORMS AND CHARTS

The following forms shall be used in preparing reports described in this Circular:

Systems charts are shown in the following Annexes, for guidance:

V.        NUMBERING OF AUDIT REPORTS

The following illustration in the numbering of audit reports shall be observed and reflected in the audit reports:

VI.        REPEALING CLAUSE

This Memorandum Circular supersedes
PPA M.C. 25-93 and accordingly amends PPA M.C. No. 36-98 and M.C. 04-99
on matters pertaining to handling, evaluating and monitoring of audit
reports.

VII.       EFFECTIVITY

This Circular shall take effect immediately.

Adopted: 21 Aug. 2002

(SGD.) ALFONSO G. CUSI
General Manager