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 We have audited the accompanying financial statements of Kapit-Bisig Laban sa Kahirapan - 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, 2020, 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 of the KC-NCDDP-WB/IBRD as at December 31, 2020, and of its financial performance, statement of cash flows and statement of net assets/equity, for the year then ended in accordance with Philippine Public Sector Accounting Standards (PPSAS). 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. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the IPSAS, 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 eixor. 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 ISSAIs 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 eiror, 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 detennine 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. COMMISSION ON AUDIT By: ELEANOR G;J0VES State Auditor IV OlC/Supervising Auditor October 28, 2021 hnnt)^ ^ l^DSWD D*p*rtm#frt ot 8oci»l and Orv*k>pman( FMS-GF-0005 REV 01 /06 NOV 2019 STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Department of Social Welfare and Development is responsible for ail information and representations contained in the accompanying Statement of Financial Position as of December 31, 2020 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. LIZAR JOSE ERNESTO B. GAVIOLA •Director, Finance and Management Service Undersecretary for General Administration and Support Services 0^/ Date Signed Date Signed Annex C Or i'Alt lMIM OK.SOdAt- WI’I.KAMK. AIVI) DKVM.OI'MKM STM KM KM or IINANflAl. I'OSlllOV CONSOMRATKI) rUNDCUiSTKH «I AS or DKCKMIIKK 31, Z020 Notes 1024I 2010 (rr.klalciJ) ASSKTS <.'Mrr«itl Amc(s C.'usli uhJ Ciwh r.i|uivnlcnls 6 404.D02.-tl 5. W 943.297, lOfl. 30 Kcccivnbics 7 r*5')Jfy!t10H5.06 504.199,631 W iiivciicorio S 32.427,270 05 20.65-1,565 86 {>lhcr Current A^scit 10 2D7,li20.l)0 483,912 81 T»1j1 (-urrtfll Avvf l» l.im.0«7.6IW-IMl 1.567,635.210,S7 Non-Currcni Aiit«t^ I’rciiwriy, I'lnni unii tuiui|Hiifiti Mk.5Mi.332.76 75,248,883-64 InlaiigiMc AsivCls •)l 46.560.67 135,23.3.33 Ollter Non-CurrciU Assets II Wkl.5X-I.sk 852,333.86 Tulal Nttft-C'urrent Assets .t7.Tti4.4S4.3l 76.2.Mt.4 56.83 TOTAL A.SSKTS 1.134,452.004,11 1.643,871,661.70 I.IARILI riKS Current I^FtlrllUlts r'lnaiKiJil t.inhililies 12 (71.363.H72 00) <1IKI.206.314-70) lntcr-A(!oiicY I'ayuhlcs 13 (K,277,7D2.I9) (l0,l7l,lXi6 22) Intrn-Ageitey Faynhles 14 (386.653 ID) (146,052 74) Trust I,tnbililies 15 (85,1X10 00) Tnliil ('urrcal l^iabtlitks t»0. 113.31». 101 tll0.523.43.U61 Nnn^'urrrnt l.inhlllties Inisl Linlnlitics DelerrcJ CTedils {Hiker INiynhlcs 16 .^___^il.-526l935JiU__11,HI.CI2L44)_ Tolu I Non-<«rrfn{ l.inbllitin tl.-126.035.111 (1.141.027.441 ToIeI l.inlkiUllts (81.540.2 53.301 (111.664.46 MO) Tninl Aucis less ‘Intal l.iEbililies 1.052.011.S40JM 1.532.207.200,60 NT T ASSKT'S/KOl’ITY Accumulnlcd Sar|i1*is/(l)eneU> 1.052.011.840.SI 1.532.207.200.60 ToIeI rScI AMCi&i'Kquiiy 1.052.011.S40. SI 1.532.207.2110.60 . 7Ail .vxurt'jwertf .hiioiM Ac rcuJ in eortf im'/ran with fh- /MrimifMiny^'in]; ttiXi'-i Annex D DKI'ARTMKNT OK SOCIAL WKI.KAHK AND DKVKI.Ol'MKNT STATKMKNT OK KINANCIAI, I'KKKOKMANCK CONSOUDATKI) KUNI) CI.IIS I KIt 02 AS OK DKClCIVIRKK 31, 2020 Note 2020 2019 (restated) Revenue Service mid business liieonie 17 711.294,11 994,183.52 Other Non-Opcraling Income 18 198.00 116.920.63 Total Revenue 711.492.11 1,111,104.15 Less: ( hirrent Operating Kxpenses Miiinteniince and Other Operating Expenses 19 703.348,488.83 1,359,649,132.24 I' lnanclal lixpenscs 20 459.31 2,370.32 Non-Cash Hxpcnscs 21 1.3,627,001.82 10,475.413.53 Current Operating Kxpenses 716.975.949.96 1.370.126.916.09 Surpliis/(l)encit) from ('urrent Operations (716.264.457.851 (IJ69.015.811.94) Net I’lnancial Asslstancu/Subsldy to NGAs, LG Us, (iOCCs 294,052,536.26 898,784,645.60 Sale of Assets (ialns 5.168,547.29 5,387.533.34 l.osscs (56,3.34,613.42) (.38,226.758.14) Surplus/IDcficit) for the period (473,377,987.72) (503,070.391.14) This siatemuni should he read in anijunclion with die accompanying notes. Annex E DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT VI A I'KMKN r or CASH M.OWS (COMI»AHA riVK) RIND CMISTKK 02 rOK TIIK VKAlt KNDKD DR.'KMHKK 31, 2020 2020 2019 (rv.sliitoil) <-»sli Mows From ()|>crii(iiie Acllvlllc« Cusli Inflows Kcccipl ol'Nulicc ufCush Alloctilion 3.289,522,519.«4 4,939,260.601.51 CulIcclKin of liicumc/Kcvcnucs 715,695.17 913,927.90 Kcccipl of Assislancc aiul Subskly from Olhcr NGAs. f.OUs and GOCCs ('ollcctlon of Kcccivabics 8,639 09 101.185.57 Kcccipt of Inlcr-Agcncy l;und fninsfcrs Kcccipl of liiini-Agcncy Tund I runsfcrs 625,212,265.11 1.989.531.905,05 Trust Kcccipis Other Receipts 25,846.48'! 17 38.178.239.34 Adjuslrncnls 33 1,016,88 1.056,244 14 'loljil ('ash Inflows 3.941.636.620.26 6.969.042.103.51 Cash Oiilflow.H Kcptcnislimcnl of Negotiated MI2S Checks (for BTr) Kemitlance to Nalional freosury 5.626.796.73 4.597.322.26 Payment of I*K|>en.ses 971,450,687.00 1.560,205,517.67 Purchase of Inventories 2.285.758.77 4,048,915.83 Grant of Cash Advances 1.140.170.77 25.464.906.85 Prepayments 48,1.34.26 30,382.31 Refund oflX’posiis Payment of Accounts Payables 4,579.973 79 255.753.276,44 Remittance of Personnel Bencnt Contributions and Mandatory Deductions 19.354,496.27 30,218.639.36 Grant of Pinancial Assisiance/Siibsidy 1.081.3.30,961.74 2,121.688.70405 Release of Inter-Agency Pund rransfers 1.255.200.076.14 1.341.761.829 74 Release of Intra-Agency l,‘iind Transfers 625.212.265.11 1.900.135.253,85 Other Disbursements 1,520,188.273 19 Adjustments 462,6.34.520.08 436.448.465.06 Total Cush Outflows 4.42&863.K40.66 9.290.541,486.61 (‘ash Provided by (Usetl in) Openiting Activities (487,227,220.40) (2,321,499,383.10) C'asli Hows rmiii Investing Activities C'usli Inflows Proceed from Sulc/Disposal of Property. Plant and liquipmcnt Total C'asli Inflows C’usli Outflows Purcliase/C'onslruction of Profierly. Plant and lu|uipmcnl 6.735.382 87 I'otal Ciisli Outflows 6,735,382.87 Net C'tisb Provided lly (li.scd In) Investing Activities (6,735,382.87) c rcaJ in ct/njunciian with the accostt/Hmyin^ ttotvx. Annex F Department of Social Welfare and Development Statement of Changes in Net Assets/Equity Fund Cluster 02 - Foreign Assisted Project As of December 31, 2020 2020 2019 restated Balance at December 31, 2019 Carried Forward 1,532,207,200.60 2,039,874.914.00 Add/(Deduct): Changes in Accounting Policy Prior Period Adjustments/Unrecorded Income and Expenses Other Adjustments Restated Balances 1,532,207,200.60 2,039,874,914.00 Add/(Deduct): Changes in Net Assets/Equity for Calendar Year Adjustment of Net Revenue recognized directly in Net Assets/Equityr Closing of Cash - Treasury/Agency Deposit - Regular {5,917,372.07) (4,597,322.26) Surplus/(Deficit) for the Period (473,377,987.72) (503,070,391.14) Total Recognized Revenue and Expenses for the Perios (479,295,359.79) (507,667,713.40) Others Balance at December 31, 2020 1,052,911,840.81 1,532,207,200.60 Annex G UfcPAKIMfcNT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 /. General Information/Agency Profile PI>SAS I The financial statements of Department of Social Welfare and PPSAS 1.63(b) Development Office of the Secretaiy were authorized for issue on PPiSAS 14.26 Februaiy 14. 2020 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 Jose Ernesto B. Gaviola. Office of the Undersecretary for General Administration and Suppoit Seivices Group. On 15 February 1915, upon creation of the Public Welfare Board PPSAS 1.150 during the American Regime, the government started to get involved in social welfare. The board was established to coordinate, regulate and supervise social services activities and other 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, tne original Public Welfare Board of the year 1915 became The Department of Social Welfare and Development (DSWD). 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 M/as made into a Department, whose responsibility was to provide comprehensive program of social welfare seivices 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 M/as 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". I. / Programs/Projects/Activities Page 1 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 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 Januaty 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 empo\A/ered 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 of Preparation of Financial Statements 2.1 The financial statements have been prepared in accordance PPSAS 1.129 with and comply with the Philippine Public Sector Accounting PPSAS 2 Standards (PPSAS) issued by the Commission on Audit per COA PPSAS 6 Resolution No. 2014-003 dated January 24, 2014. The financial statements are presented in Philippine Peso, which is the functional and reporting currency of the DSWD. 2.2 The financial statements have been prepared on the basis of historical cost, unless stated otherwise. The Statement of Cash Flows is prepared using the direct method. Page 2 of 30 UtPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 3. Summary of Significant Accounting Policies 3.1 Basis of accounting The financial statements are prepared on an accrual basis in accordance with the Philippine Public Sector Accounting Standards (PPSAS). 3. 2 Financial instruments^ Cl. Financial assets Initial recognition and measurement Financial assets within the scope of PPSAS 29 Financial PPSAS 29.10 Instruments: Recognition and Measurement are PPSAS 30.31 classified as financial assets at fair value through surplus or deficit, loans and receivables as appropriate. The 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. Subsequent measurement The subsequent measurement of financial assets depends on their classification. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, PPSAS 29.10 such financial assets are subsequently measured at PPSAS amortized cost using the effective interest method, less 29.48(a) Impairment. Amortized cost is calculated by taking into PPSAS 29.65 account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. Losses arising from impairment are recognized in the surplus or deficit. Derecognition The DSWD derecognizes a financial asset or, where applicable, a part of a financial asset or part of DSWD of similar financial assets when: Page 3 of 30 UtHAK IMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 I • The rights to receive cash flows from the asset have expired or is waived PPSAS 29.19 PPSAS 29.20- • The DSWD has transferred its rights to receive cash 22 flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third paiiy: 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 of the asset, but has transferred control of the asset. Impairment of financial assets The DSWD assesses at each reporting date whether there is objective evidence that a financial asset or a PPSAS 29.67- group of financial assets is impaired. A financial asset or 68 a group of financial assets Is deemed to be impaired if, PPSAS and only if. there is objective evidence of impairment as 30.PAG5(0 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; • Observable data indicates a measurable decrease in estimated future cash flows (e.g. changes in arrears or economic conditions that correlate with defaults). h. Financial liabilities Initial recognition and measurement Financial liabilities within the scope of PPSAS 29 are classified as financial liabilities at fair value through PPSAS 29.10 surplus or deficit. The entity determines the Page 4 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 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 PPSAS 29.41 under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another PPSAS 29.43 from the same 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. 1.3 Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash PPSAS 2.8 in bank for local and foreign currencies, and PPSAS 2.9 treasLiiy/agency accounts. PPSAS 2.56 3.4 Inventories Inventoiy is measured at cost upon initial recognition. To the extent that 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 of PPSAS 12.15 acquisition. PPSAS 12.17(a) After initial recognition, inventory is measured at the lower of cost and net realizable value. However, to the extent that a class of inventoiy is distributed or deployed at no charge or for a nominal charge, that class of inventory is measured at the lower cost and current replacement cost. Net realizable value is the estimated selling price in the ordinary course of operations, less the estimated costs of Page 5 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 completion and the estimated costs necessary to make the sale, exchange, or distribution. Inventories are recognized as an expense when deployed PPSAS 12.35 for utilization or consumption in the ordinary course of PPSAS 12.20 operations of the DSWD. PPSAS 12.21 PPSAS 12.9 3.5 Property, Plant and Equipment Recognition An item is recognized as property, plant, and equipment (PPE) if it meets the characteristics and recognition criteria PPSAS 17.13 as a PPE. The characteristics of PPE are as follows: • tangible items: • are held for use in the production or supply of goods PPSAS 17.14 orseivices, 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 will flow to the entity: and • The cost or fair value of the item can be measured reliably. Measurement at Recognition An item recognized as property, plant, and equipment is PPSAS 17.26 measured at cost. A PPE acquired through a non-exchange transaction is PPSAS 17.27 measured at its fair value as at the date of acquisition. The cost of the PPE is the cash price equivalent or, for PPE acquired through non-exchange transaction its cost is its PPSAS 17.37 fair value as at recognition date. Page 6 of 30 UtKAKI MtNT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 Cost includes the following: PPSAS 17.30 • Its purchase price, including impoit 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 having used the item during a particular period for purposes other than to produce inventories during that period. Measurement After Recognition After recognition, all property, plant and equipment are PPSAS 17.43 stated at cost less accumulated depreciation and PAG2 or impairment losses. PPSAS 17 When significant parts of property, plant and equipment are PPSAS 17.24 required to be replaced at inteivals, the DSWD recognizes PPSAS 17.25 such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major repair/replacement is done, its cost is recognized in the carrying amount of the plant and equipment as a replacement If the recognition criteria are satisfied. All other repair and maintenance costs are recognized as PPSAS 17.23 expenses in surplus or deficit as incurred. Depreciation Each part of an item of property, plant, and equipment with PPSAS 17.59 a cost that is significant in relation to the total cost of the item is depreciated separately. The depreciation charge for each period is recognized as PPSAS 17.64 expense unless it is included in the cost of another asset. initial Recognition of bepreciation Depreciation of an asset begins when it is available for use PAG3 of such as when it is in the location and condition necessary PPSAS 17 Page 7 of 30 uch-AK I MtN I Ul- bUUIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 for it to be capable of operating in The 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, if the PPE is available for use after the 15th of the month, depreciation is for the succeeding month. Depreciation Method Each part of an Item of property, plant, and equipment with PAG4 of a cost that Is significant in relation to the total cost of the PPSAS 17 item Is depreciated separately. The depreciation charge for each period is recognized as expense unless it is included in the cost of another 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 PAG5 of Life of PPE by classification prepared by COA. PPSAS 17 The DSWD uses a residual value equivalent to at least five PAG6 of percent (5%) of the cost of the PPE. PPSAS 17 Impairment An asset's canying 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 PPSAS 17.82 equipment and/or any significant part of an asset upon PPSAS 17.83 disposal or when no future economic benefits or service PPSAS 17.86 potential is expected from its continuing use. Any gain or loss arising 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 surplus or deficit when the asset is derecognized. Page 8 of 30 DEPARTMfcNT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 1 i PPSAS 13.42 ( PPSAS 13.13 1 j The depreciation policy for PPE is applied to similar asset by the entity. PPSAS 13.63 PPSAS 13.66 3.6 Intangible Assets Recognition and Measurement Intangible assets are recognized when the items are PPSAS 31.26 identifiable non-monetary assets without physical substance: it is probable that the expected future 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. Intangible assets acquired separately are initially PPSAS 31.31 recognized at cost. Intangible Assets Acquired through Non-Exchange Transactions The cost of intangible assets acquired in a non-exchange PPSAS 31.42- transaction is their fair value at the date these were 43 acquired. Internally Generated Intangible Assets Internally generated intangible assets, excluding PPSAS 31.49 capitalized development costs, are not capitalized and PPSAS 31.55 expenditure is reflected in surplus or deficit in the period in which the expenditure is incurred. 1 Recognition of an Expense Expenditure on an intangible item shall be recognized as an expense when it is incurred unless it forms part of the cost of an intangible asset that meets the recognition criteria of an intangible asset. Page 9 of 30 DEPARTMbNT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 Subsequent Measurement The useful life of the intangible assets is assessed as either PPSAS 31.87 finite or indefinite. PPSAS 31.96 Intangible assets with a finite life is amortized over its PPSAS 26.22 useful life: The straight line method is adopted in the amortization of PAG3 of the expected pattern of consumption of the expected future PPSAS 31 economic benefits or service potential. PPSAS 31.117 An intangible asset with indefinite useful lives shall not be PPSAS 31.106 amortized. Intangible assets with an indefinite useful life or an PPSAS 31.107 intangible asset not yet available for use are assessed for impairment whenever there is an indication that the asset may be impaired. The amofiization period and the amortization method, for PPSAS 31.103 an intangible asset with a finite useful life, are reviewed at PPSAS 31.108 the end of each repoding period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amoilization period or method, 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 of the intangible asset. Gains or losses arising from derecognition of an intangible PPSAS 31.112 asset are measured as the difference between the net disposal proceeds and the canying amount of the asset and are recognized in the surplus or deficit when the asset is derecognized. 3.1 Changes in accounting policies and estimates PPSAS 3.27 PPSAS 3.30 The DSWD recognizes the effects of changes in accounting policy retrospectively. The effects of changes in accounting policy are applied prospectively if PPSAS 3.41 retrospective application is impractical. The DSWD recognizes the effects of changes in accounting estimates prospectively by including in surplus PPSAS 3.47 or deficit. Page 10 of 30 utPAKlMtlMT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 The DSWD correct material prior period errors retrospectively in the first set of 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 PPSAS 4.24 by applying the spot exchange rate between the function currency and the foreign currency at the transaction. At each reporting date; ® Foreign currency monetary items are translated PPSAS 4.27 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 the transaction: and • Nonmonetary items that are measured at fair value PPSAS 4.32 in a foreign currency shall be translated using the exchange rates at the date when the fair value was determined. Exchange differences arising (a) on the settlement of monetary 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 pad of a repoding 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, PPSAS 23.31 other than services in-kind, that meets the definition of an Page 11 of 30 utKAK IMLNI Oh SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 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. An asset acquired through a non-exchange transaction is PPSAS 23.42 initially measured at its fair value as at the date of acquisition. Recognition Revenue from Non-Exchange Transactions 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 in respect of PPSAS 23.44 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, it reduces PPSAS 23.45 the carrying amount of the liability recognized and recognizes an amount of revenue equal to that reduction. Measurement of Revenue from Non-Exchange Transactions Revenue from non-exchange transactions is measured at the amount of the increase in net assets recognized by PPSAS the entity, unless a corresponding liability is recognized. 23.48-49 Measurement of Liabilities on Initial Recognition from Non-Exchange Transactions The amount recognized as a liability in a non-exchange transaction is the best estimate of the amount required to settle the present obligation at the reporting date. PPSAS 23.57 Fees and fines not related to taxes Page 12 of 30 UhPAKTMtNT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 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 future economic benefits or service PPSAS 23.89 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 PPSAS 23.95 government entities and the related assets are measured PPSAS 23.96 at fair value and recognized on obtaining control of the PPSAS 23.97 asset (cash, goods, services and property) if the transfer is PPSAS 23.96 free from conditions and it is probable that the economic PPSAS 23.98 benefits or service potential related to the asset will flow to PAG3 of the [Name of Entity] and can be measured reliably. PPSAS 23 PPSAS 23.42 PPSAS 23.44 3.10 Budget information The annual budget is prepared on a cash basis and is PPSAS 24 published on the government website. A separate Statement of Comparison of Budget and Actual Amounts (SCBAA) was prepared since the budget and financial statements were not prepared on a comparable basis. The SCBAA was presented showing the original and final budget and the actual amounts on a 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 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 PPSAS 21.26 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. PPSAS 26.14 Page 13 of 30 utPAKIWItN I U\- SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 Where the carrying amount of an asset exceeds its I recoverable service amount, 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 PPSAS 26.14 the DSWD does not intend (as its primary objective) to realize a commercial return. 3.12 Measurement uncertainty The preparation of financial statements in conformity with PPSAS, 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 of the 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 of the financial statements and were reviewed annually to reflect new information as it becomes available. Measurement uncertainty exists in these 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 PPSAS had been adopted beginning January 1, 2014 as per COA Resolution No. 2014-003 dated January 24, 2014. 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. Page 14 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 6. Cash and Cash Equivalents Account Name 2020 2019 (restated) Cash Collecting Officer 6,947,240.88 405,775.65 Petty Cash 198,814.59 254,111.22 Cash in Bank - Local Currency, Current Account - Land Bank of the Philippines 103,809,319.18 340,432,917.17 Cash in Bank - Foreign Currency, Savings Account 293,947,041.14 602,204,296.26 Total 404,902,415.79 943,297,100.30 7. Receivables 7.1 Loans and Receivable Accounts Accounts 2020 2019 (restated) Accounts Receivable 237.50 237.50 Total 237.50 237.50 7.2 Inter- Agency Receivables Accounts 2020 2019 (restated) Due from National Government Agencies 2,456,886.55 1,624,307.60 Due from Local Government Units 232,564,978.70 170,804,445.33 Total 235,021,865.25 172,428,752.93 Due from National Government Agencies pertains to advance payments to Procurement Service for the purchase of commonly used office supplies. 7.3 Intra- Agency Receivables Accounts 2020 2019 (restated) Due from Other Funds 411,139.50 445,142.13 Total 411,139.50 445,142.13 Page 15 of 30 DEPARTMtNT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 The account Due from Other Funds pertains to the following: FOX — P 411,139.50 Due From Other Funds are composed of receivable from RJJWC account of Fund Cluster 7 due to incorrect charging from GOP fund for 7,817.50 and another receivable from the Fund Cluster 1 for 13,250.00 and a receivable from WB Account for 13,072.00 and due to mischarging of training expenses for 377,000.00. 7.4 Other Receivables Accounts 2020 2019 (restated) Receivables - Disallowances/ Charges 3,500.00 3,500.00 Due from Officers and Employees 35,770.00 1,490.00 Due from Non-Government Organizations/People’s Organizations 423,340,390.30 419,038,192.79 Other Receivables 547,182.51 2,282,316.55 Total 423,926,842.81 421,325,499.34 The account Receivables-Disallowances/Charges in Field Office (FO) V, represents the disallowance issued by the Commission on Audit on various types of expenses. The account Due from Officers and Employees pertains to the amount receivables from employees due to overpayment and to be deducted from their salaries. This account Due from Non-Government Organizations/People’s Organizations represents funds released to non-formal organizations/groups like the DCSPGs for the Supplementary Feeding Program and KALAHI-CIDSS projects under Bottom-Up-Budgeting and National Community Driven Development Program. The account Other Receivables includes advances granted to former DSWD employees and officials for official travel or as disbursing officers of the Department. Re-classification of these balances were undertaken due to impossibility of collection from separated employees and collectibles from resigned employees who have not secured clearance for their accountabilities and who cannot be located anymore. In FO CARAGA account balance, is the agency’s receivable from Sword & Flame amounting to 102, 059.50 addressed at Taguig City. The said account was erroneously credited last April 26, 2016. The office made continued follow up regarding the refund and still waiting for the supplier’s response. The remaining amount of 17,526.69 represents the overpayment to creditors. Page 16 of 30 UtKAK I IWtlM I Ul- SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 8. Inventories Inventory items of the Department includes the following: Inventory Held for Consumption 2020 2019 (restated) Office Supplies Inventory 24,649,394.10 22,621,590.18 Accountable Forms, Plates and Stickers Inventory 20,111.30 36,011.30 Construction Materials Inventory 735.00 Other Supplies and Materials Inventory 2,830,906.90 2,120,611.73 Sub-total 27,501,147.30 24,778,213.21 Semi - Expendable Machinery and Equipment Semi - Expendable Office Equipment 858,445.00 860,561.00 Semi Expendable Information and Communications Technology Equipment 2,122,444.10 2,070,548.10 Semi Expendable 4,890.00 4,890.00 Communication Equipment Semi Expendable Disaster Response and Rescue Equipment 387,250.00 387,250.00 Semi Expendable Medical 5,065.00 5,065.00 Equipment Semi Expendable Sports Equipment 4,100.00 4,100.00 Semi Expendable Furniture and Fixtures 1,543,938.55 1,543,938.55 Sub-total 3,382,194.10 3,332,414.10 Page 17 of 30 DEPARTMfciMT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 9. Property, Plant and Equipment Property, Plant and Equipment for CY 2020 are summarized as follows: Other Machinery and Furniture, Transportation Property i Equipment Equipment Fixtures and Plant and TOTAL Books 1_______ Equipment Carrying Amount, January 1, 2020 49,917,976.87 21,625,395.40 3,453,770.01 251,741.36 75,248,883.64 Additions/ Acquisitions 16,028,952.5 1,483,481.92 119,700.00 17,632,134.44 Reclassification (2,557,595.56) (872,942.04) (3,430,537.60) Total 63,389,333.83 22,235,935.28 3,573,470.01 251,741.36 89,450,480.48 Disposals (6,559,701.82) (4,222,233.00) (146,398.00) (10,928,332.82) Depreciation (As per Statement of Financial Performance) (10,969,843.46) (2,004,570.54) (607,152.78) (45,435.04) (13,627,001.82) Adjustments (21,812,563.05) (6,268,779.39) | (115,379.35) (142,091.29) (28,338,813.08) 1 Impairment Loss (As per Statement ! of Financial i Performance) 1 Carrying Amount, December 31,2020 i (As per Statement of Financial 1 Position) 24,047,225.50 9,740,352.35 2,704,539.88 64,215.03 36,556,332.76 Gross Cost (Asset Account Balance per Statement of Financial Position) 103,906,903.48 32,852,314.08 5,533,519.42 386,007.00 142,678,743.98 Less: Acc. Depreciation (79,859,677.98) (23,111,961.73) (2,828,979.54) (321,791.97) (106,122,411.22) Allowance for Impairment .j Carrying Amount, December 31, i 2020 (As per Statement of Financial Position) 24,047,225.50 9,740,352.35 2,704,539.88 64,215.03 36,556,332.76 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). Page 18 of 30 UtKAKTMtNT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 9.1. Intangible Assets Intangible asset of the Department is composed of Computer Software only to wit: Particulars Computer Software Carrying Amount, January 1, 2020 55,066.67 Additions-Purchased/Acquired thru exchange on non­ exchange transaction - Adjustment Impairment Loss Reversed (As per Statement of Financial Performance) Total Disposals - Amortization recognized (As per Statement of Financial Performance) 8,500.00 Impairment Loss (As per Statement of Financial Performance) - Other Changes - Carrying Amount, December 31, 2020 (As per Statement of Financial Position) 46.566.67 Gross Cost (Balance per Statement of Financial 296,000.00 Position) Less ; Accumulated Amortization (including accumulated impairment loss) (249,433.33) Carrying Amount, December 31, 2020 (As per Statement of Financial Position) 46.566.67 10. Other Current Assets 10.1 Advances Accounts 2020 2019 (restated) Advances to Special Disbursing Officer 294,863.00 181,705.81 Advances to Officers and 2,966.00 302,207.00 Employees Total 297,829.00 483,912.81 Page 19 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 11. Other Non-Current Assets 11.1 Prepayments Account Name 2020 2019 (restated) Prepaid Rent 535,711.90 589,711.90 Prepaid Registration 3,112.02 5,060.85 Prepaid Insurance 26,367.21 15,167.36 Other Prepayments 180,000.00 180,000.00 Total 745,191.13 789,940.11 11.2 Deposits Account Name 2020 2019 (restated) Guaranty Deposits 116,393.75 62,393.75 Total 116,393.75 62,393.75 The Guaranty Deposits include payment to various service providers which serves as custom Facility Deposits for the release of shipments consigned with the Department, and as guaranty deposits for the procurement of Fuel, Oil and Lubricants with fleet card facility. 12. Financial Liabilities Account Name 2020 2019 (restated) Accounts Payable 55,220,827.98 95,556,665.81 Due to Officers and Employees 15,786,542.51 4,293,146.48 Tax Refund Payable 356,502.41 356,502.41 Total 71,363,872.90 100,206,314.70 The Accounts Payable pertains to unpaid obligations to various external creditors for services rendered and items delivered as of December 31, 2020. Due to Officers and Employees pertains to expenses incurred consist of unpaid salaries and reimbursement of transportation and per diem and communication allowances as of December 31, 2020. Tax Refund Payables refers to over withholding of taxes to employees for refund in the ensuing year. Page 20 of 30 DtPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 13. Inter-Agency Payables Account Name 2020 2019 (restated) Due to BIR 7,140,808.73 9,695,499.67 Due to Pag- ibig 287,543.11 204,188.55 Due to Philhealth 595,925.88 149,723.31 Due to GOCCs 246,769.67 114,909.89 Due to LCDs 6,744.80 6,744.80 Total 8,277,792.19 10,171,066.22 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 Philhealth consist of employees contributions deducted from salary to be remitted in the first month of the ensuing year. 14. Intra-Agency Payables Accounts 2020 2019 (restated) Due to Other Funds 386,653.10 146,052.74 Total 386,653.10 146,052.74 15. Trust Liabilities Accounts 2020 2019 (restated) Guaranty/Security Deposits 50,000.00 Payable Other Deferred Credits 35,000.00 Total 85,000.00 16. Other Payables Account Name 2020 2019 (restated) Other Payables 1,426,935.11 1,141,027.44 Total 1,426,935.11 1,141,027.44 Other Payables in the Central Office include member's contribution and loans to SSS, SWEMC, SWEAP, and MBA and other agency's cooperative association Page 21 of 30 UtKAK I MbN I Uh SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 for employees of regional offices deducted from their salaries to be remitted in the ensuing year. 17. Service and Business Income Account Name 2020 2019 (restated) Fines and Penalties - Service Income 3,945.99 22,085.62 Interest Income 667,802.57 913,927.90 Other Business Income 39,545.55 58,170.00 Total 711,294.11 994,183.52 The account Fines and Penalties - Service Income 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. 18. Other Non-Operating Income Account Name 2020 2019 (restated) Miscellaneous Income 198.00 116,920.63 Total 198.00 116,920.63 19. Maintenance and Other Operating Expenses 19.1 Traveling Expenses Particulars 2020 2019 (restated) Traveling Expenses - Local 48,940,694.38 121,789,582.36 Total Traveling Expenses 48,940,694.38 121,789,582.36 Traveling Expenses includes airfare, accommodation and daily subsistence allowance of DSWD Officials and Employees during travels on official business to attend various trainings/seminars, consultation meetings and field monitoring visits for the period January to December 2020. Page 22 of 30 UhHAKiMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 19.2 Training Expenses Particulars 2020 2019 (restated) Training Expenses 51,771,882.41 279,421,316.35 Total Training Expenses 51,771,882.41 279,421,316.35 Training Expenses consists of payment of honorarium of persons, board and lodging and or hotel accommodation of participants to various seminar, training - workshops. It also includes course fee and or registration fees of DSWD Officials and Employees in enhancing training and seminars. 19.3 Supplies and Materials Expenses Particulars 2020 2019 (restated) Office Supplies Expenses 10,050,154.63 24,352,460.23 Accountable Forms Expenses 36,400.00 40,800.00 Medical, Dental and Laboratory Supplies Expenses 1,282,757.09 Fuel, Oil and Lubricants Expenses 2,635,102.15 2,534,588.55 Semi-Expendable Machinery and Equipment Expenses 363,383.76 501,109.00 Semi-Expendable Furniture, Fixtures and Books Expenses 26,400.00 Other Supplies and Materials Expenses 350,091.58 1,730,084.99 Total Supplies and Materials Expenses 14,717,889.21 29,185,442.77 Semi- Expendable Machinery and Equipment Expenses represents the issuance of Semi-Expendable Equipment based on Inventory Custodian Slip. 19.4 Utility Expenses Particulars 2020 2019 (restated) Water Expenses 402,482.97 685,208.31 Electricity Expenses 4,856,848.20 5,571,931.79 Total Utility Expenses 6,191,005.29 7,792,828.20 I Page 23 of 30 UtPAK I IWtlM I Uh bUUIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 Water Expenses in the Central Office are payments made to Maynilad Water Services, Inc. for the water consumption at DSWD Central Office and KALAHI CIDSS Building. Electricity Expenses in the Central Office are payments made to Meralco for the electric consumption at DSWD Central Office and KALAHI CIDSS Building. 19.5 Communication Expenses Particulars 2020 2019 (restated) Postage and Courier Services 480,308.44 66,125.05 Telephone Expenses 6,911,319.24 12,000,453.70 Internet Subscription Expenses 1,017,705.68 2,035,387.62 Total Communication Expenses 8,409,333.36 14,698,966.37 Telephone Expenses in the Central Office are payments made to the Philippine Long Distance Telephone Company (PLDT) for current charges of DSWD Telephone (Landlines) lines. It also includes mobile expenses made to Globe Telecom, Inc. and Smart Communications, Inc. and reimbursements of individual postpaid lines payments in lieu of prepaid cards. 19.6 Awards/Rewards and Prizes Particulars 2020 2019 (restated) Awards/ Rewards Expenses 64,000.0 Total Awards/ Rewards Expenses and Prizes 64,000.00 19.7 Professional Services Particulars 2020 2019 (restated) Auditing Services 4,500.00 137,306.24 Consultancy Services 11,027,912.05 108,209,368.23 Other Professional Services 538,814,854.23 747,657,654.15 Total Professional Services 549,847,266.28 856,004,328.62 Page 24 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 Auditing Services pertains to the liquidation of cash advances of the COA Auditors for the travelling expenses for the conduct of validation/inspection of various DSWD projects. 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 Contracts. 19.8 General Services Particulars 2020 2019 (restated) Janitorial Services 1,742,341.88 2,412,960.29 Security Services 2,258,869.41 4,448,562.57 Total General Services 4,001,211.29 6,861,522.86 Janitorial Services are payment for janitorial services rendered assigned at KALAHI CIDSS RPMO and in the Central Office. 19.9 Repairs and Maintenance Particulars 2020 2019 (restated) Repairs and Maintenance - Buildings and Other Structures 630,607.50 421,222.57 Repairs and Maintenance - Machinery and Equipment 812,090.96 381,296.78 Repairs and Maintenance - Transportation Equipment 4,550,687.45 4,620,866.56 Total Repairs and Maintenance Expenses 5,993,385.91 5,423,385.91 19.10 Taxes, Insurance Premiums and Other Fees 2019 Particulars 2020 (restated) Taxes, Duties and Licenses 4,660.39 Fidelity Bond Premiums 368,043.49 130,000.00 Insurance Expenses 396,711.15 216,832.23 I Total Taxes, Premiums and Other Fees Insurance 764,754.64 351,492.62 Page 25 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 Fidelity Bond Premiums in the Central Office of P124.068.49 are payment of fidelity bond premium of Ms. Consuelo O. Acosta, Jodellie V. Pacala and Dir. Janet P Armas as signatory of KC- NCDDP. insurance Expenses are the payments made to the GSIS for the insurance of the government vehicles assigned to the project. 19.11 Other Maintenance and Operating Expenses Particulars 2020 2019 (restated) Advertising Expenses 680,550.00 1,956,837.80 Printing and Publication Expenses 982,062.85 2,135,475.51 Representation Expenses 1,697,500.00 7,473,154.48 Transportation and Delivery Expenses 831,085.31 507,018.52 Rent/Lease Expenses 9,189,260.62 15,262,025.23 Other Maintenance and Operating Expenses 262,281.40 12,257,442.74 Total Other Maintenance and Operating Expenses 13,642,740.18 39,591,954.28 Advertising Expenses are payments for Lay-out and Production of Bottom-Up Budgeting Portfolio/Compendium, Tarpaulin and Editing for KC NCDDP Municipality Wall News of Social Marketing and Documentary Film Production for KC NCDDP Advocacy Campaign Program Video Documentation. Printing and Publication Expenses pertains to the design and printing of compendium of map and the geospatial data products and grievance redress system. Representation Expenses pertain to the food served during the conduct for official meetings/conferences with the DSWD stakeholders. Rent/Lease Expenses pertains to payment for the rental of motor vehicles for use during the conduct of official travels and various workshops for the implementation of the support mission. Page 26 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 20. Financial Expenses Particulars 2020 2019 (restated) Bank Charges 459.31 2,182.58 Other Financial Charges 187.74 Total 459.31 2,370.32 21. Non-Cash Expenses 21.1 Depreciation Particulars 2020 2019 (restated) Depreciation - Machinery and Equipment 10,969,843.46 5,707,880.37 Depreciation - Transportation Equipment 2,004,570.54 4,091.840.15 Depreciation - Furniture, Fixtures and Books 607,152.78 536,651.03 Depreciation - Other Property, Plant and Equipment 45,435.04 48,840.82 Total Depreciation 13,627,001.82 10,385,212.37 The Depreciation for Machinery and Equipment, Transportation Equipment and Furniture and Fixtures are periodic cost allocation for the wear and tear of the Department's PPE. 21.2 Amortization Particulars 2020 2019 (restated) Amortization - Intangible 27,500.00 Assets Total 27,500.00 21.3 Impairment Loss Particulars 2020 2019 (restated) Impairment Loss- Property, Plant and Equipment 62,701.16 Total 62,701.16 Page 27 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMtN I Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 22. Net Financial Assistance/Subsidy Financial Assistance/Subsidy from NGAs, LGUs, GOCCs Particulars 2020 2019 (restated) Subsidy from National Government 1,609,278,102.03 3.149,854,340.60 Total Financial Assistance/Subsidy from NGAs, LGUs 1,609,278,102.03 3,149,854,340.60 Less: Financial Assistance/Subsidy to NGAs, LGUs, GOCCs, NGOs/POs Particulars 2020 2019 (restated) Subsidy to Regional Offices (Staff Bureaus) Subsidies - Others 1,315,225,565.77 2,251,069,695.00 Total Financial Assistance/Subsidy to NGAs, LGUs 1,315,225,565.77 2,251,069,695.00 Net Financial 294,052.536.26 898,784,645.60 Assistance/Subsidy The account Subsidy from National Government is further broken down as follows: Particulars Amount Receipt of Notice of Cash Allocation (NCA) 2,028,174,206.35 Tax Remittance Advice (TRA) 18.654,281.04 Total 2,046,828,487.39 Less; NTA 0.00 Lapsed/Reversion of Lapsed NCA 437,550,385.36 Refunds 0.00 Total 1,609,278,102.03 23. Non-operating Income, Gain, or Losses 23.1 Non-Operating Income/Gain Particulars 2020 2019 (restated) 2,357.98 4,593.49 Other Gains Total Non-Operating Income/Gain 2,357.98 4,593.49 Page 28 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOKMLNI Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31, 2020 Fund Cluster 02 23.2 Non-Operating Losses Particulars 2020 2019 (restated) Loss on Sale of Property, Plant and Equipment 960.00 100,729.58 Total Non-Operating Losses 960.00 100,729.58 24. Budget Information The original budget per General Appropriations Act of 2020 is P1,000,000,000.00 including RLIP, while the total budget allocated to the Department, inclusive of Special Allotment Release Order (SARO) and other fund augmentation was P2,217,287,121.99 with a difference of PI,217,287,121.99. The following are the reasons of the variances between the original and the final budget: Difference of Original and Final Budget P 1.217.287.121.99 Realignments/Augmentation 673,214,750.00 Continuing Appropriations 544,072,371.99 Total P 1.217.287.121.99 25. 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 in over/under statement of Net Assets/Equity of 2019. The effect of restatement on those financial statements is summarized below. There is an effect on the 2019 Statement of Financial Performance and Financial Position. Effect on 2019 Statement of Financial Performance Particular Amount Net Decrease in Income Accounts (407,638.68) Net Increase in Expense Accounts 213,514,545.55 Decrease in Surplus/Deficit 213,922,184.23 Page 29 of 30 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT Consolidated Central Office and Field Offices Notes to Financial Statements for the Year Ended December 31,2020 Fund Cluster 02 Effect on 2019 Statement of Financial Position Particular Amount Net Decrease in Assets (194,523,146.21) Net Increase in Liabilities 10,865,261.08 Increase in Beginning Balance of Net 8,533,776.94 Assets/Equity Decrease in Net Assets/equity 213,922,184.23 26. Related Party Transactions 26.1 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. Page 30 of 30