Republic of the PhilippinesDepartment of Social Welfare and Developroentf

IBP Road, Batasan Pambansa Complex, Constitution Hills, Quezon City 11.21Telephone Nos. (632) 931-8101 to 07; Telefax (632) 931-8191

e-mail: G3ec(?dawd.cyvphWebsite: http://vww.dsv:,d gov,phi

June 29, 2016

MS. PATRICIA MARIA FERNANDESTask Team Leader and Social Development SpecialistUrban, Rural and Social Development Global SpecialistWorld Bank Office ManilaBonifacio City, Taguig City, Philippines

Dear Ms. Fernandes:

We are submitting the Audited Financial Reports for the period January 01 to

December 31, 2015 for the following projects:

1. KALAH1 CIDSS - National Community Driven Development Project

(NCDDP) Loan No. 8335-PH;2 Japan Social Development Fund Grant No TF012886 for Community

Enterprise Development as Pathway out of Poverty Project; and

3. Annual Statement of Receipts and Disbursement (SORD) and Certificateof Status of Funds (CSF) - NCDDP No. 8335-PH and JSDF No.TF12886

We hope you find the documents in order.

Very truly yours,

G4 MONTANO, CESO IUndersecretary

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

ION

Republic of the Philippines

Commission on AuditA HE, Commonwealth Avenue, Quezon City

IManagement Letter

I on the

Japan Social Development FundGrant for Community Enterprise

Development Pathway Out of Poverty Project(SLP-CED)

Grant No.: TF012886

Department of Social Welfare and Development

U

I For the Year Ended December 31, 2015

II

IAnnex A

Reptiblic of the Philippines

Commission on AuditConmmonwealth Avenue, Quezon City

INDEPENDENT AUDITOR'S REPORT

The Department SecretaryDepartment of Social Welfare and DevelopmentBatasan Hills, Quezon City

We have audited the accompanying financial statements of Japan Social DevelopmentFund Grant for Community Enterprise Development as Pathway out of PovertyProject which comprise the statement of financial position as at December 31, 2015, andthe statement of financial performance, statement of cash flows and statement of changesin net assets/equity for the year then ended, and a summary of significant accountingpolicies and other explanatory information.

1lanagement's Responsibility.for the Financial Statenents

Management is responsible for the preparation and fair presentation of these financialstatements in accordance with Philippine Public Sector Accounting Standards, and forsuch internal control as management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud orerror.

Auditor s Responsibility

Our responsibility is to express an opinion on these financial statements based on our3 audit. We conducted our audit in accordance with Philippine Public Sector Standards inAuditing. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances. but not for the purpose of expressing an opinion on the effectiveness ofthe entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.

I

I

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects the financial

position of the Japan Social Development Fund Grant for Community EnterpriseDevelopment as Pathway out of Poverty Project as of December 3 1, 2015 and of itsfinancial performance, statement of cash flows and statement of net assets/equity for theyear then ended in accordance with Philippine Public Sector Accounting Standards.

COMMISSION ON AUDIT

MARILYN B. MIRANOIC-Supervising AuditorDSWD Audit Group

June 30, 2016

I

II.III

I 9

UI

Annex B

Republic of the PhhiippinesDepartRnent of Social "Welfare and Development

IP Road, Batasan Pambansa Complex, Constitution Hills, Quezon City 1326Te!ephone Nos. (623) 9318101 to 07; Telefax 4632) 931-8191

E-mail:

ASTATEMENT OF MANP CEMENT'S RESPONSIBILITY

FOR FINANCIAL STATEMENTSJSDF foi Community Enterprise Leelopment Pathway Out of Poverty

(SL-,ED)

The management of Department of Social Welfare andDevelopment is responsible for all information and representationscontained in the accompanying Statement of Financial Position as ofDecember 31, 2015 and the related Statement of FinancialPerformance. Statement of Cash Flows, Statement of Comparison ofBudget and Actual Amounts, Statement of Changes in NetAssets/Equity and the Notes to Financial Statements for the year thenended. The financial statements have been prepared in conformity withthe Philippine Public Sector Accounting Standards and generallyaccepted state accounting principles, and reflect amounts that arebased on the best estimates and nformed judgment of managementwith an appropriate consideration ao materiality.

In this regard, managemen, maintains a system of accountingand reporting which provides for he necessary internal controls toensure that transactions are properly authorized and recorded, assetsare safeguarded against unauthorized use or disposition and liabilitiesare recognized.

DESEREE D. FAJARDO MAtE G. MONTANODirector Financipl Management Service Undersecretary, GASSG

Date Signed Date Signed

10

Annex C

IDEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT

Statement of Financial PositionConsolidated Central and Regional Offices

JSDF for Community Enterprise Development Pathway out of Poverty Project (SLP-CED)For the Period Ending December 31, 2015

NOTE 2015 2014ASSETS

Current AssetsCash and Cash Equivalents 6 33,979,933.54 12,731,857.03Receivables 7 591,564.11 546.43Inventories 10,48076 -Other Current Aspets 460,599.00 347,298.76

Total Current Assets 35,042,577.41 13,079,702.22

Non -Current AssetsProperty, Plant and Equipment 8 242,093.21 177,735.07

Total Non-Current Assets 242,093.21 177,735,07

Total Assets 35,284,670.62 13,257,437.29

LIABILITIESCurrent Liabilities

Financial Liabilities 9 2,049,365.08 579,608.66Inter-Agency Payables 45,959.55 18,894.10Trust Liabilities 30,000.00 30,000.00Other Payables 10 550.00 2,970.00

- Total Current Liabilities 2,125,874.63 631,472.76Non-Current Liabilities -

Other Payables 9 100,680.441 * Total Non-Current Liabilities 100,680.44 -

Total Liabilities 2,226,555.07

NET ASSETSIEQUITYAccumulated Surplus/Deficit) 33,058,116.55 12,625,964.53

Total Net Assets/Equity 33,058,115.55 12,625,964.53

Total Liabilities and Net Assets/Equity 35,284,670.62 13,257,437.29

I

II 11

II

Annex D

DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENTStatement of Financial Performance

Consolidated Centiral and Regional OfficesJSDF for Community Enterprise Develooment Pathway out of Poverty Project (SLP-CED)

For the Year Ended December 31, 2015

Note 2015 2014

RevenueService and Business Income 11 32,569.69 15,405.89

Total Revenue 32,569.69 15,405.89Less: Current Operating Expenses

Maintenance and Other Operating Expenses 12 11,142,124.89 13,452,388.84Financial Expenses 13 7,131.49 449.94Non-Cash Expenses 14 34,926.86 4,357.93

Total Current Operating Expenses 11,184,183.24 13,457,196.71

Surplus/(Deficit) from Current Operations (11,151,613.55) (13,441,790.82)

Net Financial Assistance/Subsidy 15 32,583,854.80 5,738,833.64Gains 16.1 2,085,210.44 44,414.56Losses 16.2 (371,971.25) (106,920.70)

Surplus/(Deficit) for the period 2317454A4 76543)

I.I.IIII

IAnnex E

DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENTStatement of Cash Flows

Consolidated Central and Regional OfficesJSDF for Community Enterprise Development Pathway out of Poverty Project (SLP-CED)

For the Year Ended December 31, 2015

NOTE 2015 2014Cash Flows From Operating ActivitiesCash Inflows

Receipt of Notice of Cash Allocation 32,583,854.80 5,738,833.64Receipt of Intra-Agency Fund Transfers 5,209,431.01 8,056,078.98Collection of Income/Revenues 32,569.69 15,405.89Collection of Receivables .00 5,280.00Other Receipts 2,238,674.89 192,519.00Adjustments 126,919.03 122,721.12

Total Cash Inflows 40,191,449.42 14,130,838,63Cash Outflows

Remittance to National Treasury .00 2,250.00Payment of Expenses 12,199,812.50 12,034,589.24Purchase of Inventories 12,457.00 26,603.50Grant of Cash Advances 717,623.03 613,552.76Payment of Accounts Payable - 47,421.50Remittance of Personnel Benefit Contributions and 202,209.04 453,861.24Mandatory DeductionsRelease of Inter-Agency Fund Transfers 585,574.34 -Release of Intra-Agency Fund Transfers 5,209,431.01 8,056,078.98Other Disbursements 13,295.99 971,572.91Other Disbursements 2,970.00 -

. Total Cash Outflows 18,943,372.91 22,205,930.13Cash Provided by (Used in) Operating Activities 21,248,076.51 (8,075,091.50)Cash Flows from Investing Activities

*! Cash OutflowsPurchase/Construction of Property, Plant and Equipment .00 29,000.00

Total Cash Outflows .00 29,000.00Net Cash Provided By (Used In) Investing Activities . .00 (29,000.00)Cash Flows from Financing Activities

Cash Inflows .00Cash Outflows .00

Net Cash Provided by (Used in) Financing Activities .00Increase (Decrease) in Cash and Cash Equivalents 21,248,076.51 (8,104,091.50)Effects of Exchange Rate Changes on Cash and Cash .00 (62,506.14)

I EquivalentsAdd: Cash Balance, Beginning January 1, 2015 12,731,857.03 20,898,454.67Cash Balance, Ending December 31, 2015 33,979,933.54 12,731,857.03

I* 13

I

Annex F

DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENTStatement of Changes in Net Assets/Equity

Consolidated Central and Regional OfficesJSDF for Community Enterprise Development Pathway out of Poverty Project (SLP-CED)

For the Year Ended December 31, 2015

2015 2014

Balance at December 31, 2014 12,625,964.53 20,405,706.15Changes in Accounting Policy

Restated Balance 12,625,96433 20,405,706.15Changes in Net Assets/Equity for 2014Adjustment of net revenue recognized directly in netassetslequity (2,710,037.52) (14,278.30)

Surplusi(Deficit) for the period 23,145,480.44 (7,765463.32)

Total recognized revenue and expense for the period 20,435,442.92 (7,779,741.62)

Others (3,291.90)

Balance at December 31, 2014 carried forward 33,058,115.55 12,625,964.53

23,14,48044 (,7654.2

I.III

* 14

IAnnex G

NOTES TO FINANCIAL STATEMENTSFund 171 - CED

CY 2015

1. General Information/Agency Profile

The financial statements of Department of Social Welfare and Development-Office of the Secretary were authorizeu :or issue on February 5, 2016 as shown in theStatement of Management Responsibility for Financial Statements signed by DirectorDeseree ). Fajardo, Director for Financial Management Service and UndersecretaryMateo G. Montaio. the Undersecretary for General Administrative and Support Services.

On 15 February 1915, upon creation of the Public Welfare Board during theAmerican Regime, the government started to get involved in social welfare. The boardwas established to coordinate, regulate and supervise social services activities and othercharitable works rendered by religious orders and organizations. Finally in 1917, the firstgovernment orphanage was established. As a result of several changes by thegovernment in its bureaus and departments. the original Public Welfare Board of the year1915 became The Department of Social Welfare and Development (DSWD). Afterwhich, The Social Welfare Administrator was formally created by virtue of ExecutiveOrder No. 396 dated 13 January 1951. Republic Act No. 5416 known as the SocialWelfare Act was approved in 1968. It was made into a Department, whose responsibilitywas to provide comprehensive program cf social welfare services designed to amelioratethe living conditions of distressed Filipanos, particularly those who are handicapped byreason of poverty, youth, physical and mntal disability, illness and old age, or who arevictims of natural calamities including assistance to members of the cultural minorities.

With the provision of DSWD Mandate under Executive Order No. 15, DSWDwas transformed from the rowing to steering role that usher in the new vision, missionand goals for the Department.

The Department's vision is directed towards the attainment df a "society wherethe poor. vulnerable and disadvantaged individuals, families and communities areempowered for an improved quality of life".

I In the pursuit of its vision, the DSWD mission is to "provide social protection andpromote the rights and welfare of the poor, vulnerable, and disadvantage individuals,family and community to contribute to poverty alleviation and empowerment throughSWD policies, programs, projects .cnd services implemented with or through LocalGovernment Units (LGUs), Non-Gevernment Organizations (NGOs), Peoples'Organization and other members of civii society".

1.1 Programs/Projects/Activities

+ Foreign Assisted Program

15

II

Japan Social Development Fund Grant for Community EnterpriseDevelopment as Pathway out cf Poverty Project (JSDF Grant No. TF012886)--This is a financial assistance provided by Japan under the JSDF, administeredby the Worldbank with the objcctive of improvement of livelihood and qualityof life of poor houscholds in tne six (6) target municipalities through increasedincome and access to financial services, development of community-drivenenterprises linked to markets. and local economic development support. Theproject is composed of four (4) parts namely: (A) Community Enterprise andValue Chain Development (Sub-grants); (B) Access to Financial Services; (C)Market Integration and Local Economic Development; and (D) ProjectManagement, Monitoring and Evaluation, and Knowledge Dissemination.

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 with and complywith the Philippine Public Sector Accounting Standards (PPSAS) issued bythe Commission on Audit per COA Resolution No. 2014-003 dated January24, 2014. The financial statein unts are presented in Philippine Peso, which isthe functional and reporting cu:r2ncy 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 thedirect method.

3. Summary of Significant Accounting Policies

3.1 Basis of accounting

The financial statements are prepared on an accrual basis in accordance with thePhilippine Public Sector Accounting Standards (PPSAS).

3.2 Financial instruments

a. Financial assets

Initial recognition and measurement

Financial assets within the scope of PPSAS 29 Financial Instruments:Recognition and Measurement are classified as financial assets at fair valuethrough surplus or deficit, loans and receivables as appropriate. TheDepartment of Social Welfare and Development determines theclassification of its financial assets at initial recognition.

I16

II

The DSWD's financial assets include cash and other receivables.

Subisequem nmeasuremnent7

The subsequent measurement of financial assets depends on their

classification.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that arc uot quoted in anl act Ive market. After initialmeasurement, such financial assets are subsequently measured at amortized

I

cost using the effective intercst method. less impairment. Amortized cost iscalculated by taking Into aCCOUnt any discount or premnium on acquisitionand fees or costs that are an integral part of the effective interest rate. Lossesarising from impairment are recognized in the Surplus or deficit.

DJerecognition

The DSWD derecogrnizes a financial asset or, where applicable, a part of afinancial asset or part of DSWD of similar financial assets when:

a The rights to receive cash flows fromn the asset have expired or iswaivedH The DSWD has transferred its rights to receive cash flows from the

asse orhasassumed an obligation to pay the received cash flows in [tillwithout material delay to a third party; and either: (a) the DSWD has

transferred Substantially all the risks and rewards of the asset; or (b) theDSWD has neither transferred nor retained substantially all the risks and

rewards of the asset, but has transferred control of the asset.

Impairment offinancial assets

The DSWD assesses at each r-eporting date whether there is objectiveevidence that a financial asset or a group of financial assets is impaired. Afinancial asset or a group of Financial assets is deemed to be impaired if, andonly if, there is objective evidence of impairment as a result of one or moreevents 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 cashflows of the financial asset or the group of financial assets that can bereliably estimated.

Evidence of impairment may include the following indicators:

aThe debtors or a group of debtors are experiencing significant financialdiffictulty-,

17

II

* 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 correlatewith defaults).

b. Financial liabilities

Initial recognition and measurement

Financial liabilities within tL- scope of PPSAS 29 are classified as financialliabilities at fair value througi surplus or deficit. The entity determines theclassification 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 isdischarged or cancel led or cxpi:es.

When an existing financia! Pability is replaced by another from the samelender on substantially ditTerent terms, or the terms of an existing liabilityare substantially modified, such an exchange or modification is treated as aderecognition of the original liability and the recognition of a new liability,and the difference in the respective carrying amounts is recognized in surplusor deficit.

3.3 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash in bank for local andforcian currencies, and treasury/agency accounts.

3.4 Inventories

Inventory is measured at cost upon initial recognition. To the extent thatinventory was received through non-exchange transactions (for no cost or for anominal cost), the cost of the inventory is its fair value at the date ofacquisition.

18

II

After initial recognition, inventory is measured at the lower of cost and netrealizable value. However, to the extent that a class of inventory is distributedor deployed at no charge or for a nominal charge, that class of inventory is

measured at the lower of cost and current replacement cost.

Net realizable value is the estimated selling price in the ordinary course ofoperations, less the estimated costs of completion and the estimated costsnecessary to make the sale. e.change, or distribution.

Inventories are recognized as in expense when deployed for utilization orconsimption in the ordinary course of operations of the DSWD.

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 as a PPE.

The characteristics of PPE are as ftilows:

* tangible items;* are held for use in thU 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 potentialassociated with the item will How 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 measured at cost.

A PPE acquired through non-exchange transaction is measured at its fair valueas at the date of acquisition.

The cost of the PPE is the c psh rrice equivalent or, for PPE acquired through

non-exchange transaction its cos. is its fair value as at recognition date.

Cost includes the following:

* 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;

I19

I

I I

I andinitial estimate of the costs of dismantling and removing the item andrestoring the site on which it is located, the obligation for which anentity incurs either when the item is acquired, or as a consequence ofhaving used the item d. ring a particular period for purposes other thanto produce inventories during that period.

Measurement After Recognition

After recognition, all property, plant and equipment are stated at cost lessaccumulated depreciation and impairment losses.

When significant parts of' property, plant and equipment are required to bereplaced at intervals, the DSWD recognizes such parts as individual assets withspecific useful lives and depreciates them accordingly. Likewise, when a majorrepair/replacement is done. its cost is recognized in the carrying amount of theplant and equipment as a replacement if the recognition criteria are satisfied.

All other repair and maintenance costs are recognized as expense in surplus ordeficit as incurred.

Depreciation

Each part of an item of property, plant, and equipment with a cost that issignificant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognized as expense unless it isincluded in the cost of another asset.

Initial Recognition of Depreciation

Depreciation of an asset begins when it is available for use such as when it is inthe location and condition necessary for it to be capable of operating in themanner intended by managemeni.

For simplicity and to avoid proportionate computation, the depreciation is forone month if the PPE is available for use on or before the 15th of the month.However, if the PPE is avalable 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 a cost that issignificant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognized as expense unless it isincluded in the cost of another asset.

* 20

II

The straight line method of depreciation shall be adopted unless another methodis more appropriate for agency operation.

Estimated Usefid Life

The DSWD uses the Schedule on the Estimated Useful Life of PPE byclassitication prepared by COA.

The DSWD uses a residual value equivalent to at least five percent (5%) of thecost of the PPE.

Impairment

An asset's carrying amount is wNritten down to its recoverable amount, orrecoverable service amount, if the asset's carrying amount is greater than itsestimated recoverable service amount.

Derecognition

The DSWD derecognizes items of property, plant and equipment and/or anysignificant part of an asset upon disposal or when no future economic benefitsor service potential is expected from its continuing use. Any gain or loss arisingon derecognition of the asset (calculated as the difference between the netdisposal proceeds and the carrying amount of the asset) is included in thesurplus or deficit when the asset is derecognized.

3.6 Changes in accounting policies and estimates

The DSWD recognizes the effects of changes in accounting policyretrospectively. The effects of changes in accounting policy are applied

prospectively if retrospective application is impractical.

The DSWD recognizes the effects of changes in accounting estimates

prospectively by including in surplus or deficit.

The DSWD correct material prior period errors retrospectively in the first set offinancial statements authorized for issue after their discovery by:

* Restating the comparative amounts for prior period(s) presented inwhich the error occurred; or

* If the error occurred before the earliest prior period presented, restatingthe opening balances of assets, liabilities and net assets/equity for theearliest prior period presented.

3.7 Foreign currency transactions

Transactions in foreign currencies are initially recognized by applying the spot

* 21

I3 exchang"e rate between the function currency and the foreign currency at the

transaction.

3 At each reporting date:

Q Foreign currency monetary itemns are translated using the closing rate;*Nonmonetary items that are measured in terms of historical cost in a

foreign1 Currency shall be translated using the exchange rate at the dateof the transaction; and3 a Nonrnonetary items that tire measured at fair value in a foreign currencyshall be translatedl ich exchange rates at the date xvhen thle fair-value was determined.

I'xchange differences arising (a) on the settlement of monetary items, or (b) ontranslating monetary items at rates different from those at which they were

I

translated on initial recognition during the period or in previous financialstaterents, are recognized in Surplus or deficit in the period in which they arise,except as those arising on a monetary items that forms part of a reportingentitos net investment in a foreign operation.

3.8 Revenue from non-exchange transactions

Recognition and Measurement of mIssesfro Non-Exchange Transactions

sAn inflow Of resorsl from a nn-xchange transaction, other than services in-kind, that dieets the definition (f an asset are recognized as an asset if thefollowing criteria are mhet:

t lt is probable that the iture economic h enefits or service potentialassociated with the asset orill flow to the entity; and

* The fair value of the asset can be measured reliably.

An asset acquired through a non-exchange transaction is initially m redt

I

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 anrecognized as revenue, except to the e-xtent that a liability is-also recognized inI of the samne inflow.

As DSWD satisfies a present oblgation recognized as a liability in respect of aof resources from a non-exchinge transaction recognized as an asset, i reducarr ing amount o a the lia'ty recognized and recognize an amount of revenuto that reduction.

*g2

I

Measurement of Revenue fron Non-Exchange Transactions

Revenue from non-exchange transactions is measured at the amount of the increase innet 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 li ibility in a non-exchange transaction is the best estimateof the amount required to settic the present oblig at the reporting date.

Fees and fines not related to taxes

The DSWD recognizes revenues from fees and fines, except those related totaxes. when earned and the asset recognition criteria are met.

Other non-exchange revenues were recognized when it is probable that thefuture economic benefits or service potential associated with the asset will flowto the entity and the fair value of the asset can be measured reliably.

Gifts and Donations

The DSWD recognizes assets and revenue from gifts and donations when it isprobable that the future economic benefits or service potential will flow to theentity and the fair value of the assets can be measured reliably.

Goods in-kind are recognized as assets when the goods are received, or there isa binding arrangement to receive the goods. If goods in-kind are receivedwithout conditions attached, revenue is recognized immediately. If conditionsare attached, a liability is recognized, which is reduced and revenue recognizedas the conditions are satisfied.

On initial recognition, gifts and donations including goods in-kind are measuredat their fair value as at the date of acquisition, which were ascertained byreference to an active market, or by appraisal. An appraisal of the value of anasset is normally undertaken by a member of the valuation profession whoholds a recognized and relevant professional qualification. For many assets, thefair value are ascertained by reference to quoted prices in an active and liquidmarket.

Transfers

The DSWD recognizes an assdt in respect of transfers when the transferredresources meet the definition of an asset and satisfy the criteria for recognitionas an asset, except those arising from services in-kind.

* 23

I

Services in-Kind

Services in-kind are not recognized as asset and revenue considering thecomplexity of the determination of and recognition of asset and revenue and theeventual recognition of expenses.

Transfers from other government entities

Revenues from non-exchange transactions with other government entities andthe related assets are measured at fair value and recognized on obtaining controlof the asset (cash, goods, services and property) if the transfer is free fromconditions and it is probable that the economic benefits or service potentialrelated to the asset will flow to the [Name of Entity] and can be measuredreliably.

3.9 Budget information

The annUal budget is prepared on a cash basis and is -published in thegovernment 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 finalbudget and the actual amounts on comparable basis to the budget. Explanatorycomments are provided in the notes to the annual financial statements.

3.10 Impairment of Non-Financial Assets

Impairment of non-cash-generating assets

The DSWD assesses at each reporting date whether there is an indication that anon-cash-generating asset may be impaired. If any indication exists, or whenannual impairment testing for an asset is required, the DSWD estimates theasset's recoverable service amount. An asset's recoverable service amount isthe higher of the non-cash generating asset's fair value less costs to sell and itsvalue in use.

Where the carrying amount of an asset exceeds its recoverable service amount,the asset is considered impaired and is written down to its recoverable serviceamount. The DSWD classifies assets as cash-generating assets when thoseassets are held with the primary objective generating a commercial return.Therefore, non-cash generating assets would be those assets from which theDSWD does not intend (as its primary objective) to realize a commercial return.

3.11 Measurement uncertainty

The preparation of financial statements in conformity with PPSAS, requires

* 24

II

3 management to make estimates and asSUMptionS that affect thle reportingamounts of assets and liabilities, at the date of the financial statements and thlereported am1ounltS of the revenues and expenses dur-ing the period. Items3 requiring thle use of significant estimates include the useful life of capital assets.

Estimnates were based on the best information available at the timne ofpreparation of the financial statemnents and were reviewed annually to reflect

- new information as it becomnes available. Measurement uncertainty exists inthese fInancial statemnents. Actual results could differ from these estimates.

U 4. Changes in Accounting PoliciesDSWD has not adopted any chanige in Accounting Policies for CY 2015, The25 PFSAS had been adopted b..4nning January 1, 2014 as per COA Resolution

No. 20 14-003 dated JanuarN 24,,. 2014.I 5. Prior Period Adjustments

The DSWI) has determined transactions relating to the previous year whichhave CUMUlative effect on surplus/deficit of the prior year.

The desciription of thle prior period adjustments. including peso amount, itseffect 1or each financial statemnent. line itemn affected in current and prior year,

I

and cumulative effect on opening accumulated surplus/(deficit) in current andprior year, and Cumulative effect on surplus/deficit in prior year are shown onthis notes to financial statements.

6. Cash and Cash Equivalents

Account Name 2015 2014 2

Cash in Bank - Local Currency, Current Account 3,709,12 1.13 3,614,551.99CZashin B-ank - Foreign Curr-ency, Savings Accoun [ 30,270,8 12.41 9,117,305.04Total 133,979,933.54 12,731,857.03

I'

Cash in Banik- Local Currency Ac.-ount includes the funds that were deposited withAuthorized Government Depository Bank kAGDB) in accordance with GAFMIS Circular

I

Letter No. 2003-005 dated November 21, 2003 as fol lows:

* Foreign Assisted Projects

o JSDF: Community Enterprise Development as Pathway Out of Poverty (Peso)Current Account

Cash in Banik Foreign Currency Savings Account includes the deposits FromGrants and Donations and loan proceeds received by DSWD from the following:

o JSDF:. Community Enterprise DeVelopmTent as Pathway Out of Poverty 4

(1)ollar)Account

I

I2

I7. Receivables

7.1 Inter-Agency Receivables

. _ 2015Account Name Current Non- Total

Current

[Due from National Government Agencies 5,443.34 5,443.34

Due from Local Government Units 585,574.34 585,574.34

Total 591,017.68 591,017.68

Due from National Government AgMocies are broken down as follows:

Name AmountIssued in CY 2015:Bureau of Internal Revenue (BIR) 3,043.34Bureau of Treasury 2,400.00

Sub-total 5,443.34Issued in CY 2014 and Prior Years:Grand Total 5,443.34

The Due from Local Governmert Units account represents the balance of funds

transfer-ed to LGUs for the implementation of various programs and projects.

8. Property, Plant and Equipment

Property, Plant and Equipment for CY 201 rXe summarized as follows:

Machinery and Total

Equipment

Carrying Amount, January 1, 20 15 orNet book Value 177,735.07 177,735.07Additions/Acquisitions 99,285.00 99,285.00Total 277,020.07 277,020.07Lessi:4

Depreciation (As per Statementof Financial Performance)

(34,926.86) (34,926.86)Impairment Loss (As perStetem ent of FinancialPerformance)..._

Carrying Amount, December 31,2015 (As per Statement of FinanecltPosition) 242,093.21 242,093.21Gross Cost (Asset AccountBalance per Statement of Financial 281,378.00 281,378.00Position) 28--378.00 2_7.

Less,: Acc. Dereciaion 39,284_79) 3,284.79

Allonance for ImpairmentCarrying Amount, December 31,2015 (As per Statement of FinAncialPosition) 242,093.21 242,393.21

Property, Plant and Equipment is cir-ied at cost less accumulated depreciation. Regular

maintenance, repair and minor replacements are charged against Maintenance and Other

Operating Expense (MOOE).26

I

I9. Financial Liabilities

.2015 2014Account Name Non- Non-

Curent Current Cret CurrentUAccounts Payable 2,035,1 35.58 100,680.44Due to Oficers and Employee 14,229.50Total 2,049,365.08 100,680.44

The Accounts Payable of P 2,035,135.58 includes unreleased checks subject for reversionon the ensuing year and various claims of creditors as of December 31, 2015.

Due to Officers and Employees consist of unpaid salaries, fringe benefits, reimbursementof transportation and per diem and unclaimed checks as of December 31, 2015.

10. Other Payables

2015 2014Account Name _______ _____

Current Non-Current Current Non-Current

Other Payables 55.0)

Total S.0.00

The Other Payables includes the mciber's contribution and loans to SWEMC. SWEAP.MBA, Prosper and SSS deducted from membr's salaries and to be remitted in ensuing year.

11. Service and Business Income

Account Name 2015 2014

Fines and Penalties - Service Income 69,47

Interest Income 32,569.69 15,336.42'Total 32,569.69 15,405.89

The account Fines and Penalties - Service Income is the amount charged or beingcollected by the Department from various contractors/ suppliers for late delivery of goods andservices as specified in the Purchase Order.

Interest Income represents income earned from various bank accounts of the Departmentwhich were remitted to the Bureau of Trce sury.

12. Maintenance and Other Operating F spenses

12.1 Traveling Expenses

Particulars 2015 2014

Traveling.Expenses.- Local 559,943.15 606,044.82

Total Traveling Expenses 559,943.15 606,044.82

27

I

Traveling Expenses - Local includes airfare, pre-travel allowance, accommodation anddaily subsistence allowance of DSWD Otfcials and Employees during travels on officialbusiness to attend various trainings/serninirs, consultation meetings for the period January toDecember 2015.

12.2 Training and Scholarship Expenses

Particulars 2015 2014Training Expenses 6,797,962,19 2,673,963.37

Total Training and Scholarship Expenses 6,797,962.19 2,673,963.37

Training Expenses consists of payment of honorarium of resource persons, board andlodging and or hotel accommodation of participants to various seminar, training - workshops. Italso includes course fee and or registration fees of DSWD Officials and Employees toenhancement training and seminars.

12.3 Supplies and Materials Expenses

Particulars 2015 2014OlFIce Supplies Expenses _ 52,239.35 16,052.50Accountable Forms Expenses 3,500.00 700.00Other Supplies and Materials Expenses 9,071.25Total Supplies and Materials Expenses 64,810.60 16,752.50

12.4 Professional Services

Particulars 2015 2014Consultancy Services 3,247,792.90 5,994,551.00Other Professional Services 182,494.05 4,096,329.55Total Professional Services 3,430,286.95 10,090,880.55

Consultancy Expenses includes payment to service providers engaged in thedevelopment of systems and the program/project consultants.

Other Professional Services are payments to DSWD hired workers under a Cost ofService Contracts.

12.5 Other Maintenance and Operating xpenses

Particulars 2015 2014Representation Expenses 91,899.00 0.00Other Maintenance and Operating Expenses 128,725.00 2,950.00Total Other Maintenance and Operating Expenses 220,624.00 2,950.00

13. Financial Expenses

Account Name 2015 2014Bank Charges 1 7,1 3 1.49 449.94Total 7,131.49 449.94

28

I

The account Bank Charges generally refers cable charges for electronic fund transfersof' Foreign Currency Account of JSDI: Community Enterprise Development as Pathway Out ofPovertv.

14. Non-Cash Expenses.

14.1 Depreciation

Particulars 2015 2014

Depreciation - Machinery and Equipment 34,926.86 4,357.93

Total Depreciation 34,926,86 4,357.93

The Depreciation for Land Imprrv ments, Buildings and Other Structures, Machineryand Equipment, Transportation Equipmrnt. Furniture and Fixtures and Books, Other Property,Plant and Equipment are periodic cost allocanon for the wear and tear the Department's PPE.

15. Net Financial Assistance/Subsidy

Financial Assistance/Subsidy from NGAs, LGUs. GOCCs

Particulars 2015 2014Subsidy from National Government 32.583,854.80 5,738,833.64

Subsidy from Other National Government Agencies 5,209,431.0 I 8,056,078.98Total Financial Assistance/Subsidy from NGAs, LGLs 37,793,285.81 13,794,912.62

Less: Financial Assistance/Subsidy to NGAs, LGUs, GOCCs, NGOs/POs

Particulars 2015 2014FEnancial Assistance to NGAs 5,209,431.0] 8,056,078.98Total Financial Assistance/Subskd. :o NGAs.LGUs 5,209,431.01 8,056,078.98

Net Financial Assistance/Subsidy 32,583,854.80 5,738,833.64

The account Subsidy from National Government is further broken down as follows:

Particulars AmountReceipt of Notice of Cash Allocation (NCA) 32,583,854.80Tax Remittance Advice (TRA) 0.00Less:Lapsed/Reversion of Lapsed NCA 0.00Total .32,583,854.80

The account Financial Assistance to NGAs pertains to transfer of funds throughfunding checks charged against Loan Proceeds and other Trust accounts to Field Officesfor the implementation of various projects/'programs/activities.

I* 29

II

16. Non-operating Income, Gain, or Losses

16.1 Non Operating Income/Gain

Particulars 2015 2014Gain on Foreign Exchange (FOREX) 2,085,210.44 44,414.56Total Non-Operating Income/Gain 2,085,210.44 52,870.99

16.2 Non Operating Losses

Particulars 2015 2014

Loss on Foreign Exchange (FOREX) 371,971.25 106,920.70No-OertigLosses 371,971.2

Total Non-Operating 371971. 106,920.70

I

Gains on Foreign Exchange results from the translation of foreign currency into

the presentation currency which the Philippine peso was Using the prevailing exchangerate at every end of the period. This is the excess of current exchange rate (closing rate) atthe reporting date over the rate initially or previously recognized multiplied by thebalance of the foreign currency account.

Loss on Foreign Exchange (FOREX) are results from the translation of foreigncurrency into the presentation currency which was the Philippine peso using theprevailing exchange rate at every end ofthe period. This is the excess of the rate initiallyor previously recognized over current e-change rate (closing rate) at the reporting datemultiplied by the balance of the foreign currency account.

I3

III

II 30