Idea Transcript
EXECUTIVE SUMMARY A.
Agency Background
The Intellectual Property Office – Philippines (IPOPHL) was created by virtue of Republic Act No. 8293 also known as the “Intellectual Property Code of the Philippines”, which was signed into law on June 6, 1987 and took effect on 1 January 1998. Said law abolished the Bureau of Patents, Trademarks and Technology Transfer (BPTT) of the Department of Trade and Industry (DTI). All unexpended funds, properties, equipment, records and personnel of BPTT were transferred to the IPOPHL. It is headed by a Director General (DG), who manages and directs all functions of the Office, subject to the supervision of the Secretary of DTI. The DG is assisted by two Deputy Directors General (DDG) and the Directors of the six (6) operating bureaus. IPOPHL has 300 authorized permanent plantilla positions approved by the DBM, with only 252 filled up as of December 31, 2011. IPOPHL was mandated to perform the following major functions: (a) examine applications for grant of letters patent for inventions and register utility models and industrial designs; (b) examine applications for the registration of marks, geographic indication, integrated circuits; (c) register technology arrangements and settle disputes involving technology transfer covered by the provisions of Republic Act No. 8293 on Voluntary Licensing and develop/implement strategies to promote and facilitate technology transfer; (d) promote the use of patent information as a tool for technology development; (e) publish regularly in its own publication the patents, marks, utility models and industrial designs; issued and approved, and the technology transfer arrangements registered; (f) administratively adjudicate contested proceedings affecting intellectual property rights; and (g) coordinate with other government agencies and the private sector efforts to formulate and implement plans and policies to strengthen the protection of intellectual property rights in the country. In an effort to provide a conducive work environment for its employees and a more modern and safe venue for its clients, IPOPHL moved from Makati City to its new home in McKinley Hill at Fort Bonifacio, Taguig City in May 2011. B.
Financial Highlights
The Intellectual Property Office - Philippines (IPOPHL) financial condition, results of operation and sources and application of funds for the year compared with that of the previous year are as follows:
Particulars Financial Condition Assets Liabilities Government Equity
2011
P 1,000,033,207.95 46,193,416.27 953,839,791.68
2010
P 936,267,921.59 31,796,644.78 904,471,276.81
Increase (Decrease) P 63,765,286.36 14,396,771.49 49,368,514.87
Particulars
2011
Results of Operations Income Expenses Net Income
2010
P 402,465,857.34 351,837,851.98 P 50,628,005.36
Increase (Decrease)
P 377,161,287.24 319,564,451.42 P 57,596,835.82
P 25,304,570.10 32,273,400.56 (P 6,968,830.46)
P 414,000,000.00 317,417,538.81 P 96,582,461.19
P 106,000,000.00 100,932,882.83 P 5,067,117.17
Sources and Application of Funds Agency Operating Budget Utilization Balance
P 520,000,000.00 418,350,421.64 P 101,649,578.36
The IPOPHL derived its income from registration fees on patents for inventions, trademarks, technology transfers, and the interest income on short-term investments placed in government depository banks. As authorized under RA 9293, the IPOPHL deposited the fees collected in a separate account or fund, from which disbursements for its operations were sourced. The IPOPHL also disbursed the amount of P4,519,029.56 out of the P10 million funds received from the DTI Central Office in CY 2010 for the implementation of the operations of the National Committee on Intellectual Property Rights (NCIPR) in CY 2011.
C.
Operational Highlights
For the year under audit, IPOPHL reported the following significant accomplishments: Performance Indicator
CY 2011
CY 2010
Increase (Decrease)
3,196 1,135
4,852 2,170
(1,656) (1,035)
35.51%
44.72%
(9.22%)
18,611 13,486
16,823 11,780
1,788 1,706
72.46%
70.02%
2.48%
674 395
614 375
60 20
58.61%
61.07%
(2.40%)
1,112 665
847 642
265 23
59.80%
75.80%
(16.20%)
Patent Applications
Received Granted % Over Quantity Received
Trademarks
Applications
Received Registered % Over Quantity Received
Utility Model
Applications
Received Granted % Over Quantity Received
Industrial Design Applications
Received Granted % Over Quantity Received ii
Performance Indicator
CY 2011
CY 2010
Increase (Decrease)
556 243
350 142
206 101
43.71%
40.57%
3.13%
IP Cases Filed/ Disposed
Received Disposed % Over Quantity Received
Other special projects/activities conducted and accomplished by the IPOPHL were: o Established Innovation and Technology Support Offices (ITSOs) as a pioneer project of IPOPHL with the assistance of the World Intellectual Property Organization (WIPO) to strengthen local institutional capacity to access patent information and the use of the patent system. o Launched three (3) more IP Satellite Office (IPSOs) in the cities of Cagayan de Oro, Tuguegarao, and Tacloban City bringing the total number of IPSOs to ten (10) to make IP services accessible to IP stakeholders in the regions. o Amended the Implementing Rules and Regulation on Patents, Utility Model, and Industrial Design in 2011 after more than two years of study and deliberation with examiners and stakeholders to streamline to patent registration process, clarify ambiguous provisions in the law and standardize certain practices that were found effective in raising the quality and transparency in granting registrations. o Entered into an agreement with several agencies and organizations for the effective enforcement of Intellectual Property as a move to combat counterfeiting and piracy. o Signed a Memorandum of Agreement with Ateneo Law School launching and implementing the Master of Laws in IP Program to maintain an international standard of relevant knowledge and skills pertinent to IP Law in the Philippines and to generate a steady stream of research and thesis output in IP.
D.
Scope of Audit
The audit covered the accounts and operations of the IPOPHL for CY 2011 and aimed to (a) determine whether the financial statements present fairly the financial position and results of operations; (b) ascertain the extent of compliance with pertinent laws, rules and regulations; (c) identify agency improvement opportunities to enhance operational processes/procedures; and (d) determine the extent of implementation of prior year’s audit recommendations.
iii
E.
Auditor’s Report
The Auditor rendered an unqualified opinion on the fairness of the presentation of the financial statements notwithstanding the errors and/or omissions noted which collectively do not have significant financial impact to the fairness of the balances in the financial statements of the IPOPHL taken as a whole. These errors are summarized as follows: Obs. No. 2 3
Nature of Errors/ Deficiencies Unrecorded deposits in bank Unrecorded issuances Erroneous recording of issuances PPEs not accounted/ missing included in the book balance
4 Unrecorded PPE
Accounts Affected Cash in Bank- Local Currency savings Account Other Supplies Inventory Other Supplies Inventory Office Supplies Inventory Office Equipment Furniture & Fixtures IT Equipment & Software Library Books Communications Equipment Other Machineries & Equipment Other PPE Total Cost Accumulated Depreciation Net Office Equipment Furniture & Fixtures IT Equipment & Software Library books Communication Equipment Other Machineries & Equipment Other PPE Cost
Net Errors Affecting Asset Accounts
Error & Effect on the FS (Over) Understatement P 305,857.22 (57,680.62) (165,000.00) 165,000.00 (408,302.62) (6,011,529.00) (3,772,556.87) (133,391.19) (319,019.50) (435,940.09) (459,073.59) ( 11,539,812.86) 7,307,773.37 (4,232,039.49) 407,079.88 2,285,221.43 1,888,579.37 16,258.52 17,900.00 727,500.00 93.069.75 5,435,608.95 1,451,746.06
Total Assets
P1,000,033,207.95
% to Total Assets
0.15%
For the errors summarized in the preceding paragraph, we recommended that the Chief Accountant: •
Coordinate with the IPSO for the issuance of Statement of Accounts so that Official Receipts can be issued by the Cashier and the appropriate adjustments made in the books of accounts.
•
Record the issuances of other supplies and correct the misclassification of issued other supplies.
iv
F.
•
Maintain and regularly update stock ledger cards, require the Supply Section to maintain the stock cards, reconcile the accounting records with the Supplies Section’s records and analyze/investigate any unreconciled items noted.
•
Require the end users to submit to the Supplies Section the approved RIS before supply items are issued to provide basis for recording in the stock cards and the books of accounts.
•
Establish accountability for the unaccounted property and equipment and hold the persons accountable for the lost items, if any, and together with Property Officer, review the previously disposed PPE and make the necessary recording and/or adjustments in their respective records to reflect the correct PPE balances, subject to the submission of the complete documentation of the disposal and subject further to the pertinent rules and regulations on the disposal of government property.
•
Make the necessary adjustments in the books for the previously acquired property and equipment. Other Significant Observations and Recommendations
1. Guaranty deposits totaling P4,228,614.76 consisting of deposits for the expired lease of the former IPO office and the construction bond for the completed leasehold improvements of the present IPOPHL Office remained uncollected. Moreover, excess rent of P624,252.74 was charged against the guaranty deposit of IPOPHL. (Observation No. 1) We recommended that IPOPHL collect from the Megaworld Corp. the amount of P2,545,5003.00 representing the construction bond for the leasehold improvement which has already been completed. We also recommended that IPOPHL immediately determine all issues and contested items relative to the rental of the former office which should be charged against the excess rental payment of P624,252.74 so that any overpayment thereof could be refunded. 2. Overpayment of P114,322.43 was incurred in the off-site records storage facility rental in 2011 due to Value Added Tax (VAT) imposed/added to each billing whereas the bid price offered by the supplier were all inclusive of VAT (Observation No. 6). We recommended that the terms and conditions of the contract be amended to conform to the bid offered by Lane Archives Technologies. 3. Receivables amounting to P120,000.00 or 45% of the total Other Receivables account balances had been past due for collection for more than two years, thus, depriving the government of additional resources to fund its projects. (Observation No. 5).
v
We reiterated our recommendation that management continue to exert efforts and initiate other measure/s to enforce the collection of the outstanding receivables. We further recommended that Management document every effort to collect the subject receivables, so that management can make appropriate legal action against the employees concerned. G.
Implementation of Prior Year’s Audit Recommendations
Of the eight prior year’s audit recommendations, three were fully implemented while four were partially implemented and one was not implemented as of the end of the year (details are shown in Part III of this report). The recommendations, which were not implemented and partially implemented, are reiterated in Part II of this report since these affect the presentation of the assets in the financial statements.
vi