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Executive Summary EXECUTIVE SUMMARY A. Introduction The Optical Media Board (OMB), under the direct supervision of the Office of the President, was created pursuant to Republic Act (R.A.) No. 9239, the Optical Media Act of 2003 which was approved on February 10, 2004. The Board is composed of five regular and four ex-officio members. The agency is mandated to regulate the mastering, manufacture, replication, importation and exportation of optical media in all forms. Coverage of authority is the entire territory of the Republic of the Philippines including the economic zones as defined both under R.A. Nos. 9239 and 7916. It is headed by a Chairperson who is also the Chief Executive Officer (CEO). It has a Secretariat headed by an Executive Director who assists the Chairperson/CEO in the day-to-day operations. OMB has complement of 60 plantilla personnel and four contractual. It operates under four divisions and two units namely: Administrative and Finance Division, Legal Division, Registration and Licensing Division, Enforcement and Investigation Division, Public Information and Communication Unit and the Planning Unit. B. Financial Highlights The comparative financial condition, results of operations and sources and utilization of funds of the OMB are as follows: Increase Particulars 2013 2012 (Decrease) Financial Conditions Assets 74,361,951.95 76,278,103.34 (1,916,15139) Liabilities 1,097,581.09 6,191,949.24 (5,094,368.15) Equity 73,264,370.86 70,086,154.10 3,178,216.76 Results of Operations Income 46,441,966.23 45,830,237.90 611,728.33 Expenses 41,428,424.87 38,278,349.16 3,150,075.71 Excess of Income Over Expenses 5,013,541.36 7,551,888.74 (2,538,347.38) i Increase Particulars 2013 2012 (Decrease) Sources/Utilization of Funds Appropriations 47,263,272.16 46,912,000.00 351,272.16 Allotment Received 44,905,500.00 48,193,000.00 (3,287,500.00) Continuing Appropriations 2,357,772.16 1,281,000.00 1,076,772.16 Obligations Incurred 46,495,201.28 45,817,321.35 677,879.93 Unobligated Balances 768,070.88 2,375,678.65 (1,607,607.77) The Statement of Appropriations, Allotments, Obligations, Disbursements and Balances as of December 31, 2013 is shown in Annex A. C. Operational Highlights The OMB clearly made its presence for public to know of how piracy of intellectual property rights affects economic growth, specially the media industry and public interest in pursuit of the mandated task as provided under R.A. No. 9239, the “Optical Media Act of 2003. As reported by Management, the accomplishments for CY 2013 include the following: 1. Partnered with one of the giant broadcast media TV network ABS-CBN The Filipino Channel (TFC) in launching the “BAWAL KUMOPYA” campaign with the Chair Ronnie Ricketts as the global face for anti-piracy campaign rolled out in regions where TFC is broadcasting such as United States, Canada, Middle East, Europe, Australia, Asia-Pacific, and Japan; 2. Collaborated with the Annual Metro Manila Film Festival (MMFF) in close coordination with the Motion Picture Association (MPA) and Motion Picture Anti-Film Piracy Council (MPAFPC) in accordance with the Anti-Camcording Law (R.A. 10080) which contributed to the increase of gross box office receipts from ₱767,800.000.00 to ₱986,000,000.00 or an increase of ₱218,200,000.00 or 28.42 per cent through vigilant inspection of participating cinemas during the period of the festival; 3. Conducted actual inspection of 2,705 establishments which resulted into confiscation of optical media products and accessories with estimated market value of ₱811,812,025.00; and 4. Conducted various advocacy campaign to various schools, colleges and universities as well as media establishments in TV and radio using the current OMB slogan “Bawal Komopya” to create awareness of the importance of intellectual property rights protections which serves as a provision for incentives necessary to encourage specially on investments and inventions as well as other productive endeavors for economic growth and well-being of man. ii D. Scope of Audit The audit was made on the accounts and operations of OMB for the CY 2013. The objectives of the audit were to ascertain the propriety of financial transactions and determine the fairness of presentation of the financial statements and to ascertain compliance with laws, rules and regulations. E. Auditor’s Report on the Financial Statements The Auditor rendered an unqualified opinion on the fairness of presentation of the financial statements of OMB as of December 31, 2013. F. Observations and Recommendations The following are the audit observations and the corresponding recommendations, which were discussed with Management officials concerned, details of which are further discussed in the report. Management views and comments were incorporated in the report, where appropriate. 1. Four units of garbage mill/shredder with acquisition cost of P3,000,000.00 were rarely used and one unit motorcycle, big type, Honda 2007 Model No. XR 200L costing P109,900.00 was not used since its acquisition and left idle in the parking lot area exposed to the elements, thus, resulting to wastage of government funds. We recommended that Management dispose thru public bidding the four shredding machines and one unit motorcycle as soon as possible to avoid further deterioration and decrease of its saleable value, remit the proceeds thereof to the National Treasury in accordance with existing regulations. 2. Unpaid obligations of P37,103.30 remained outstanding for over three years and had been determined to be of doubtful validity due to absence of supporting documents to the claim which overstated the Accounts Payable account as of December 31, 2013. We recommended that Management require the Chief Accountant to revert the Accounts Payable account of P37,103.30 to the Government Equity in accordance with DBM-COA Joint Circular No. 99-06. 3. OMB Management was still using the traditional cash payroll scheme in paying the salaries, allowances and other personal benefits of its officers and employees instead of availing the services offered by the Authorized Government Depository Banks (AGDBs) through the use of Automated Teller Machine (ATM), thus, incurring additional cost on manpower resources. iii We recommended that Management consider adopting payment of salaries and other benefits thru the ATM scheme to strengthen internal control on cash on hand and to promote operational efficiency. Initiate arrangements/coordination with government depository bank on the payment of payrolls thru ATM. G. Implementation of Prior Year’s Audit Recommendation Of the four prior’s audit recommendations contained in the CY 2012 Annual Audit Report, three were implemented and one was not implemented by Management. The details are presented in Part III of this report. iv .
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