Professional Documents
Culture Documents
9 June 2003
Contents
Part I
Page
Executive Summary
Introduction 2
Agency Background 3
Overall Audit Objective and Scope 4
Specific Audit Objective and Scope 5
Justifications for Choice of Area 5
Audit Approach and Methodology 6
Audit Conclusion 6
Part II
Chapter 1
Risk Management
Introduction 10
Observation 11
Recommendation 12
Management Comment/Reaction 12
Chapter 2
Introduction 15
Observation 16
Recommendations 17
Management Comment/Reaction 19
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PART I
Executive Summary
EXECUTIVE SUMMARY
INTRODUCTION
Providing for the housing needs of the people especially those belonging to the
poor sector of the society is a big and challenging task the government has to
embrace. Significant effort and resources have been devoted to addressing the
housing problems in the country, yet much still remains to be done.
Provision of affordable housing requires government intervention, and the
degree of such intervention needs to be defined. This is to ensure a balance in
the roles/participation among agencies/sectors involved in the housing program
of the government. In the process of meeting the housing needs of the people,
the government must also focus on its ultimate objective of eventually
empowering the people to enable them to address their own housing needs.
The Medium-Term Philippine Development Plan or the MTPDP for the plan
period 2001-2004 reported that the supply of houses has not been increasing
and the costs of available housing are unaffordable, especially to low-income
families who have no access to credit markets for housing. This matter is
exacerbated by a land market that limits reallocation of rights to the most
valuable use of land. As a result, informal settlements continue to persist. Past
housing programs have enabled non-poor households to have access to the
formal housing markets. However, socialized housing is inaccessible to the
poor, especially those in the urban areas. The bottom 40 percent of urban
households had to resort to informal housing or informal settlements
characterized by congestion and very poor living conditions.
Under the MTPDP for the above stated plan period, the housing sector targets
the provision of shelter security to 1,200,000 households that translates to a
funding requirement of P215.16 billion. The target adopts a 73 percent to 27
percent ratio in favor of socialized housing, principally for the bottom 40
percent of households because of their inability to access the formal housing
markets. This will mean providing these households with affordable socialized
housing through efficient production of housing units for ownership and
sustainable housing finance.
Executive Order (E.O.) No. 90, s.1986 identified the four key agencies for
housing as follows: the National Housing Authority (NHA), the National Home
Mortgage Finance Corporation (NHMFC), the Human Settlements Regulatory
Commission (now called the Housing and Land Use Regulatory Board or
HLURB) and the Home Financing Corporation (renamed as the Home
Insurance and Guaranty Corporation then as the Home Guarantee Corporation
or HGC under Republic Act No. 8763 dated 29 March 2000.)
EXECUTIVE SUMMARY
The NHA is mandated as the sole government agency engaged in direct shelter
production focused on providing housing assistance to the lowest 30 percent of
urban income-earners through slum upgrading, squatter relocation, and
development of sites and services and construction of core-housing units.
The NHMFC is the major government home mortgage institution and is tasked
to operate a viable home mortgage market, utilizing long-term funds principally
provided by the Social Security System, the Government Service Insurance
System, and the Home Development Mutual Fund to purchase mortgages
originated by both private and public institutions.
The HLURB is the sole regulatory body for housing and land development. It
ensures rational land use for the equitable distribution and enjoyment of
development benefits.
The HGC mobilizes all necessary resources to broaden the capital base for the
effective delivery of housing and other related services, primarily for the lowincome earners through a viable system of credit insurance, mortgage guarantee
and securitization.
Charged with the main function of coordinating the activities of the government
housing agencies to ensure the accomplishment of the National Shelter Program
(NSP) of the government is the Housing and Urban Development Coordinating
Council or HUDCC.
The NSP is the government's comprehensive strategy to address the country's
housing problem. It rests on three basic principles, namely: (1) reliance on the
initiative and capability of beneficiaries to solve their housing problem with
minimum assistance from the government; (2) the private sector as the principal
player in providing decent and affordable housing; and (3) the government as
enabler, facilitator and catalyst in the housing market, while focusing assistance
to families within the poverty line. (The State of Philippine Housing Programs:
A Critical Look at How Philippine Housing Subsidies Work by Llanto and
Orbeta, Jr., 2001)
AGENCY BACKGROUND
The HLURB was formerly known as the Task Force on Human Settlements
(TFHS) created in 1973 under Executive Order (E.O.) No. 419. In 1976, it was
renamed Human Settlements Commission (HSC) under Presidential Decree
(P.D.) No. 933. It was further renamed Human Settlements Regulatory
Commission (HSRC) in 1978 by virtue of P.D. No. 1396 and was designated as
the regulatory arm of the Ministry of Human Settlements. In 1986, E.O. No. 90
again renamed the HSRC as the Housing and Land Use Regulatory Board and
EXECUTIVE SUMMARY
designated the office as the regulatory body for housing and land development
under the Housing and Urban Development Coordinating Council (HUDCC).
The HLURB is the sole regulatory body for housing and land development. It is
mandated to encourage greater private sector participation in low cost housing
development through the liberalization of development standards, simplification
of regulations and decentralization for permits/licenses. Foremost among its
functions is the protection of buyers of housing units and homelots, and
condominium units against unscrupulous practices in the industry. As a
regulatory body, the HLURB is in charge in the registration of subdivision lots
and condominium projects as well as in the issuance of licenses to sell
subdivisions lots and condominium units.
The HLURB is under the administrative supervision of the Office of the
President. Policy-making is vested in a nine-member Board of Commissioners,
with the Chairman of the HUDCC at the helm. It has fifteen (15) regional
offices (ROs) with each RO headed by a Regional Field Officer who oversees
the operations of HLURB at the regional level.
EXECUTIVE SUMMARY
Selected socialized housing projects in the City of Pasig
(Community Mortgage Program or CMP), and in the Municipality
of Rodriguez, formerly Montalban, Province of Rizal (Resettlement
Program)
Shelter security units valued at/costing P180,000 and below
Intended beneficiaries with annual income below P60,000
With regard to funding, the team focused only on the verification of whether the
intended funds were made available and remitted for the housing program of the
government.
The audit was undertaken in six agencies: HUDCC, NHA, NHMFC, HLURB,
City of Pasig, and Municipality of Rodriguez in the Province of Rizal. Surveys
and interviews were also conducted in the Department of Budget and
Management (DBM), the Bureau of the Treasury (BTr), and the National
Economic Development Authority (NEDA) to confirm data/information
gathered during the audit of the six agencies.
It was conducted from 22 July to 30 October 2002 pursuant to Assignment
Order No. 2002-020 issued by the Commission on Audit on 18 July 2002.
EXECUTIVE SUMMARY
Congressional concern
Media interest (regular media/news coverage)
File review
Interviews and discussions with agency officials and personnel
Collection and analysis of data
Review of results of analyses of data
Assessment of risk management/controls testing
AUDIT CONCLUSION
The audit concluded that the risk management and the monitoring and
coordinating mechanisms and strategies of the HLURB have not totally
contributed to the overall objective of the government in providing shelter
security units to the targeted low-income group. The audit noted the existence
of risks and weaknesses in the implementation of the 20 percent requirement by
HLURB as follows:
Multi-application of the same socialized housing units (SHUs) or
usage of housing units of SHU developers as 20 percent
compliance; and
Housing units sold at over P180,000 established price for socialized
housing units.
EXECUTIVE SUMMARY
The foregoing risks were not adequately managed in the sense that there is no
adequate monitoring of the 20 percent requirement as discussed in the pertinent
portion of the report.
PART II
Observations
and
Recommendations
CHAPTER 1
Risk Management
RISK MANAGEMENT
STRUCTURED PROCESS FOR MANAGING PROGRAM RISKS
INTRODUCTION
Risk is the chance of something happening that will have an impact upon
objectives. The happening of risks would most likely affect operational activity
and would result to unnecessary costs and losses. Thus, the development of an
organizational risk management policy and support mechanism is necessary to
provide a framework for identifying, analyzing, evaluating, treating, monitoring
and communicating risks associated with any activity, function, or process in a
way that will enable organizations to minimize losses and maximize
opportunities. To be able to serve as a better effective guide, the Risk
Management Plan should be documented and assignment of responsibility must
be clearly established. It should also be updated from time to time.
The benefits of effective risk management, insofar as the HUDCC as the
overall coordinative body on housing is concerned, include improved
coordination and monitoring of the activities of agencies involved in the
housing program of the government; and efficient and effective allocation of
resources, among others. On the part of the other key agencies involved in
housing, including the HLURB, the benefits include efficient and effective
implementation and monitoring of compliance with the provisions of Section 18
of the UDHA, identification and prequalification of qualified beneficiaries,
distribution of shelter security units to intended beneficiaries and their actual
occupancy of the units. Overall, this will assist in the effective implementation
of the housing program.
One of the requirements for the issuance of a license to sell subdivision lots
and condominium units is compliance with the provisions of Section 18 of the
UDHA on Balanced Housing Development, whereby developers of proposed
subdivision projects shall be required to develop an area for socialized housing
equivalent to at 20 percent of the total subdivision area or total subdivision
project cost, at the option of the developer, within the same city or municipality,
whenever feasible, and in accordance with the standards set by HLURB and
other existing laws.
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RISK MANAGEMENT
OBSERVATION
ABSENCE OF A STRUCTURED PROCESS FOR MANAGING
RISKS
1.
The agency could have greatly enhanced its ability to deal with
emerging issues and new risks that would have an adverse effect on the
housing program if it had a structured process for managing program
risks. Without a structured and systematic risk management approach,
there is a greater likelihood that risks would not be identified, analyzed,
treated and monitored in a timely manner, thereby affecting the overall
effectiveness of the housing program.
The audit noted that the HLURB does not have a documented nor a
structured risk management process specifically in the implementation of
the provisions of Section 18 of the UDHA on Balanced Housing
Development. The following risks were identified in relation thereto:
Multi-application of the same socialized housing units (SHUs) or usage
of housing units of SHU developers as 20 percent compliance; and
Housing units sold at over P180,000 established price for socialized
housing units.
If the risks are left untreated, this can lead to adverse exposure or loss and
prevent an agency from meeting its targets and objectives efficiently and
effectively. Thus, managing risks is an essential element of good
management practice. Managers need not only to identify significant risks
which impact upon the attainment of goals but to manage them to
mitigate their effect. The risk management policy shall be relevant to the
organizational strategic context and its goals, objectives, and the nature of
its business.
Without a structured process of managing risks, there is a great likelihood
and probability that the risks would not be identified, analyzed, treated
and monitored specifically in the area of monitoring the implementation
of the provisions of UDHA on Balanced Housing Development. This, in
turn, would frustrate the attainment of objectives of the socialized
housing program of the government.
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RISK MANAGEMENT
RECOMMENDATION
1.1
MANAGEMENT COMMENT/REACTION
The Managements Comment/Reaction, quoted verbatim, and the
Teams Rejoinder are shown below:
Management Comment/Reaction
Teams Rejoinder
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RISK MANAGEMENT
Management Comment/Reaction
Teams Rejoinder
13
CHAPTER 2
Monitoring
and
Coordination
14
15
OBSERVATION
WEAK MONITORING OFCOMPLIANCE ON BALANCED
HOUSING DEVELOPMENT
2.
16
RECOMMENDATIONS
2.1
17
2.3
18
MANAGEMENT COMMENT/REACTION
The Management Comments/Reactions and the Teams Rejoinders on the
foregoing observations and recommendations are presented below.
Management
Comments/Reactions
Teams Rejoinders
19
Closer
inter-department
coordination
or
continuous
exchanges of data between the
licensing and monitoring units,
and a reliable system of
documents-tracking is ideal but
still leaves much to be desired.
The system of maintaining
separate records or data for
license or permit evaluation, and
for monitoring or enforcement,
while vital to the maintenance of
a registry of records of projects
and for supervision of the
industry,
inevitably
create
situations where information
available to one operating unit
may not be readily accessible to
or would not be shared with the
other unit. Daily subjects of
project
evaluations
and/or
monitoring by both operating
units do not simultaneously or
uniformly transpire within the
premises of the Office. Also the
great
volume
of
records
undergoing review on a daily
basis by evaluators, both in the
licensing or monitoring units,
and the interferences of field
20
21
Submitted in compliance with COA Assignment Order No. 2002020 dated 18 July 2002.
MERCEDES E. CALERA
KIONISALA
Team Member
Member
FLORITA K.
EMELITA R. QUIRANTE
PAZ
Team Member
MANUELA
ADELINA L. ANCAJAS
Co-Team Leader
ISABEL D. AGITO
Team Leader
Team
E.
DELA
Team Member
CAROLINE V. IDOS
Director III
Team Supervisor
Noted by:
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