EXECUTIVE SUMMARY

INTRODUCTION
The Home Development Mutual Fund (HDMF or Pag-IBIG Fund) was created on June
11, 1978 by virtue of Presidential Decree (PD) No. 1530 primarily to generate savings
through membership in an integrated nationwide savings and to help the Filipino family
in achieving its dream of “a home for every Filipino family.” With the issuance of PD No.
538 on June 4, 1979, the funds for private and government workers, which were
previously administered by the Social Security System (SSS) and the Government
Service Insurance System (GSIS) were merged into what is now known as Pag-IBIG
Fund, which stands for Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at
Gobyerno.
Executive Order (EO) No. 35 issued on July 30, 1986 marked the return, effective
August 1, 1986, of the mandatory membership to HDMF that was temporarily suspended
by the former President. With the passage of EO No. 90 on January 1, 1987,
membership with HDMF became voluntary. However, Republic Act (RA) No. 7742
issued on June 17, 1994 reverted back the mandatory membership to HDMF for all SSS
and GSIS members effective January 1, 1995.
On July 21, 2009, RA No. 9679, otherwise known as the HDMF Law of 2009, was
approved for the furtherance and strengthening of the HDMF goals and objectives.
Section 2 of the Act expressly states that HDMF is created as a mutual provident
savings system suitable to the needs of the employed and other earning groups and to
motivate them to better plan and provide for their housing needs.
The corporate powers of HDMF are vested in its Board of Trustees with 11 members as
at December 31, 2023. The policies of the Board are implemented into action by the
senior management team headed by the Chief Executive Officer with the assistance of
three Deputy Chief Executive Officers, six Senior Vice Presidents, 20 Vice Presidents
and five Acting Vice Presidents.
As at December 31, 2023 HDMF has a total of 8,732 employees consisting of the
following:
Agency-Hired Direct Hired
Job
Location Regular Contractor/ Contractuals Consultants Total
Order
Allied Services (Overseas)
Corporate Headquarters 626 481 0 15 81 1,203
Member Services
Operations Sector 1,903 2,659 10 8 133 4,713
Home Lending
Operations Sector 1,079 1,636 0 0 101 2,816
3608 4,776 10 23 315 8,732

At present, HDMF has 10 Housing Business Centers including National Capital Region
(NCR), 17 Technical and Administrative Support Groups, 107 Member Service
Branches, 43 Member Service Offices,10 Overseas Posts and one OFW Center. The
creation of housing hubs and housing business centers in strategic locations in the
country was approved by the Board of Trustees on January 27, 2013. HDMF has 18
complete sets of books including the head office and 17 branches in different locations in
Luzon (including NCR), Visayas and Mindanao.

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HDMF operated on a total corporate budget of P55.815 billion for CY 2023. HDMF
budget utilization is shown below:
(In Million Pesos)
Corporate
Amount of Savings
Operating
Disbursement (Variance)
Budget
Personnel services 6,066.487 5,725.922 340.565
Maintenance and other operating
expense 9,833.910 9,016.004 817.906
Capital outlay 1,844.489 355.658 1,488.831
Statutory* 38,070.091 48,760.169 (10,690.078)
Total 55,814.977 63,857.753 (8,042.776)
*Dividends declared which are credited proportionately to the Members’ Total Accumulated Value.

FINANCIAL HIGHLIGHTS (In Million Pesos)

I. Comparative Financial Position
Increase/
Particulars 2023 2022
(Decrease)
Assets 925,610.404 827,400.564 98,209.840
Liabilities 247,838.069 198,477.467 49,360.602
Equity
Members' equity 574,953.912 531,625.306 43,328.606
Other comprehensive loss (1,374.815) (2,333.344) 958.529
Retained earnings 104,193.238 99,631.135 4,562.103
Total Equity 677,772.335 628,923.097 48,849.238

II. Comparative Results of Operations

Increase/
Particulars 2023 2022
(Decrease)
Income 77,210.183 69,117.524 8,092.659
Expenses
Lending cost 17,128.535 13,611.188 3,517.347
Fund administration cost 10,292.030 11,002.667 (710.637)
Investment Contract Benefit 8,047.079 5,437.240 2,609.839
Total expenses 35,467.644 30,051.095 5,416.549
Net income 41,742.539 39,066.429 2,676.110
Other comprehensive gains (losses) 958.529 (2,218.435) 3,176.964
Total comprehensive income 42,701.068 36,847.994 5,853.074

SCOPE OF AUDIT
Our audit covered the examination, on a test basis, of the accounts and transactions of
the HDMF for the period January 1 to December 31, 2023 in accordance with
International Standards of Supreme Audit Institutions to enable us to express an opinion
on the fairness of presentation of the financial statements for the years ended December
31, 2023 and 2022. Also, we conducted our audit to assess compliance with pertinent
laws, rules and regulations, as well as adherence to prescribed policies and procedures.

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AUDITOR’S OPINION
We rendered an unmodified opinion on the fairness of presentation of the financial
statements of the HDMF for the years ended December 31, 2023 and 2022.

Some of the audit observations have impact on the balances of the accounts presented
in the financial statements. However, in aggregate, they do not exceed the materiality
level set for the CY 2023 audit of accounts and transactions to warrant a modified
opinion. The uncorrected misstatements of the following observations have financial
impact on the balances of the affected accounts: (1) non-utilization of PHP Bloomberg
Valuation (BVAL) Service Reference Rates in the measurement of investment of bonds;
(2) non-integration of the required base date for TAV offsetting in the Short-Term Loan
Management System (STLMS), immediate TAV offsetting without requests from
member-borrowers and improper allocation of amortizations; (3) long-outstanding
provisions; (4) erroneous capitalization of various costs as part of Right-of-Use (ROU)
Assets and non-derecognition of the related Accumulated Depreciation; (5) long
outstanding Performance Guarantee Deposit and AP-Other Financial Liabilities; and (6)
semi-expendable items still booked as Property and Equipment (PE).
For the above observation we recommended, among others, that Management:
1. For non-utilization of PHP BVAL Service Reference Rates in the measurement of
investment of bonds
a. Use the PH BVAL Service Reference Rates in the determination of fair market
values of investment in bonds at FVOCI; and

b. Update the AMO No. 2014-007 to integrate the guidelines concerning the
usage of the closest or nearest to yearend PHP BVAL Service Reference
Rates in the computation of fair value of investment in bonds.

2. For non-integration of the required base date for TAV offsetting in the STLMS,
immediate TAV offsetting and improper allocation of amortizations
a. Reconfigure the base dates in the STLMS used for TAV offsetting, which shall
be on the 10th month past due status of the STL accounts, as stated in the
issued Clarificatory Memorandum on various issued HDMF Circulars; and

b. Recompute all penalties and interests for STLs that were offsetted from TAV
beginning from the automatic generation of base dates in STLMS, and make
the necessary adjustments to the affected accounts.

3. For long-outstanding provisions

a. Religiously monitor the movement and status of long outstanding provisions in
the Other Provisions account;

b. Instruct the concerned departments to determine whether the liabilities are still
valid, and provide the Audit Team with the supporting documents for
examination; and

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 c. Immediately settle the valid liabilities, otherwise reverse the accounting entry in
compliance with AMO No. 2018-023, or the amended guidelines on Accounting
Policies, Changes in Accounting Estimates and Errors.

4. For erroneous capitalization of various costs as part of ROU Assets and non-
derecognition of the related Accumulated Depreciation
a. Prepare the necessary adjusting journal entries to correct the ROU Assets-
Buildings and its related accounts; and

b. Ensure timely derecognition of the ROU Assets-Buildings and its related

accounts from the books at the end of the lease term.

5. For long outstanding Performance Guarantee Deposit and AP-Other Financial

Liabilities
a. Verify the unreleased performance and warranty securities with the
corresponding contract and Certificate of Final Acceptance; and

b. If found to be for refund, coordinate with the suppliers for the refund/release of
the performance and warranty securities, otherwise, implement the provisions
of AMO No. 2018-013 on the treatment of long outstanding payables.

6. For semi-expendable items still booked as PE

a. Adjust the carrying amounts of the semi-expendable properties to the Retained
Earnings account.

SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

1. Granting of loans beyond or higher than the desired loan amount to 352 member-
borrowers without documentary requirements to support the loans granted
amounting to P0.897 million, and approval of 766 STLs amounting to P12.015
million without authenticated documentary requirements and unregistered
signatories of employers in the Specimen Signature Forms (SSF) for STLs
application is contrary to Item 5 of HDMF Circular No. 448, Item 6 of HDMF
Circular No. 449, and Section 4 of Republic Act (RA) No. 3765, which may expose
the HDMF to complaints and the risk of non-recovery of loans and/or litigation for
incorrect loan processing and approval.

We recommended that Management:

a. Reconfigure the STLOS to disable the automatic loading of the maximum
loanable amount into the Desired Loan amount field, to enable the processor
to input the borrower’s desired loan amount in the application form;

b. Reconfigure the conversion of data from Virtual Pag-IBIG to STLOS to include

the desired loan amount feature in the Virtual Pag-IBIG upon STL application;

c. Furnish the member-borrowers with their loan details;

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 d. Require the employers to regularly update their SSF; and

e. Disapprove those STL applications with signatories not in the records of IRIMD.

2. The Fund’s collection facilities do not have a feature to determine the accuracy of
Membership Contribution remittances, as the Monthly Compensation of member
employees is not incorporated in the collection facilities to determine the MC and
employer’s counterpart. Also, for over-the-counter remittance, the template of
MSRF includes the Monthly Compensation column, but the same is not integrated
in the Tellering System and PFMS once uploaded. This may result in inaccurate
remittances and may deprive the members of the benefits due them.

We recommended that Management:

a. Include in the collection activities of BCD-TAS the determination of accuracy of

remittances from employers for a more effective collection;

b. Require the employers to include the monthly compensation of their employees

in their remittance list;

c. Device a monitoring mechanism for the BCD and MCAD-TAS to determine the
accuracy of remittances based on the monthly compensation of members; and

d. Enhance the collection facilities, Tellering System and PFMS, to incorporate a

feature that will ensure the individual contribution of members is not below the
required mandatory rate.

The other audit observations, together with the recommendations, are discussed in Part
II of this Report.

SUMMARY OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES

The balance audit suspensions, disallowances, and charges as at December 31, 2023,
amounted to P616.195 million.

This Period
Beginning Balance (January 1 to Ending Balance
(January 1, 2023) December 31, 2023) (December 31, 2023)
NS/ND/NC NSSDC
Notice of Suspension 7,695,050 0 3,210,930 4,484,120
Notice of Disallowance 611,034,371 90,365 22,100 611,102,636
Notice of Charge 607,807 0 0 607,807
619,337,228 90,365 3,233,030 616,194,563

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS

Out of 119 audit recommendations embodied in the CY 2022 Annual Audit Report, 68
were implemented, and 51 were not implemented, of which eight were reiterated in Part II
of this Report.