01-HimamaylanCity08 Audit Report

7/31/2019 01-HimamaylanCity08 Audit Report

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ANNUAL AUDIT REPORT

ON THE

CITY OF HIMAMAYLAN

FOR THE YEAR ENDED DECEMBER 31, 2008


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Republic of the Philippines

COMMISSION ON AUDITOffice of the Regional Director

Regional Office No. VI

Ungka I, Pavia, Iloilo

May 29, 2009

Hon. Carminia G. Bascon

City Mayor

Himamaylan City, Negros Occidental

Madam:

Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section

43(2) of Presidential Decree No. 1445 otherwise known as the Government AuditingCode of Philippines, and in line with this Commissions efforts towards informing

Management on how fiscal responsibility has been discharged, we are pleased to transmit

the report of our Auditor on her audit on the accounts and operations of the CityGovernment of Himamaylan, Negros Occidental, for the year ended December 31, 2008.

The audit was conducted to ascertain the propriety of financial transactions andcompliance of the local government unit to prescribed rules and regulations. It was also

made to ascertain the accuracy of financial records and reports, as well as the fairness of

presentation of the financial statements.

A value for money audit was likewise conducted to determine whether the localgovernment units programs/projects/activities and/or the management of its resources

had been carried out economically, efficiently and effectively.

We request that the comments and observations contained in the attached report

be appropriately acted upon and would appreciate being informed of the actions takenthereon within one (1) month from receipt hereof.


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We acknowledge the cooperation and support extended to our Auditor and her

staff during the audit.

Very truly yours,

Copy furnished:

Sangguniang PanlungsodCity of Himamaylan, Negros Occidental

The Regional DirectorDepartment of Interior and Local Government, Region VI

The Regional Director

Department of Budget and Management, Region VI

The Regional DirectorBureau of Local Government Finance, Region VI


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COMMISSION ON AUDITSub-Cluster III, Local Government Sector

Office of the Supervising Auditor



February 28, 2009

MEMORANDUM FOR:

Atty. Sheila U. Villa

Director-In-Charge



In compliance with Section 2, Article IX-D of the Philippine Constitution and

pertinent section of Presidential Decree No 1445, we conducted a financial and

compliance audit on the accounts and operations of the City of Himamaylan, Province ofNegros Occidental, for the year ended December 31, 2008.

The audit was conducted to ascertain the propriety of financial transactions andcompliance of the Local Government Unit to prescribed rules and regulations. It was

also made to ascertain the accuracy of financial records and reports, as well as the

fairness of the presentation of the financial statements.

A value for money audit was likewise conducted to determine whether the LGUsprograms/projects/activities and/or the management of its resources had been carried out

economically, efficiently and effectively.

Our attached report consists of four parts. Part I contains the Audit Certificate, the

Statement of Management Responsibility for Financial Statements, Audited ConsolidatedFinancial Statements and Notes to Financial Statements. Part II presents the Detailed

Findings and Recommendations which were discussed with concerned Management

officials and staff, for: a) Financial and Compliance Audit, and b) Value for Money

Audit. Part III contains the Status of Implementation of Prior Years AuditRecommendations. Part IV presents the Annexes, which includes: a) Financial

Statements by Funds, b) Status of Appropriations, Allotments and Obligations, and c)Other Supplementary Schedules and Related Supporting Documents.


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There is a reasonable assurance that the financial statements are free of material

misstatements and were prepared in accordance with applicable laws, rules and

regulations and in conformity with generally accepted state accounting principles.

The LGU still failed to conduct a physical inventory and render a report thereon,of its property, plant and equipment valued at P105,381,789.25 at year end. Theinadequacy of its records did not permit us to apply adequate alternative procedures to

determine the validity of these accounts. Nonetheless, the LGUs transactions were in

accordance with generally accepted accounting principles (GAAP).

In our opinion, except for the effect of any adjustments which might have been

made had the LGU conducted a physical count of its property, plant and equipment as of

December 31, 2008 or had the record allowed us to apply alternative procedures, theaccompanying financial statements present fairly, in all material respects, the financial

position of the City of Himamaylan, Negros Occidental, as of December 31, 2008, and

the results of its operations and cash flows for the year then ended in conformity withgenerally accepted state accounting principles.

Our audit was conducted in accordance with generally accepted state auditing

standards and we believe that it provides reasonable basis for the results of audit.


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COMMISSION ON AUDITSub-Cluster III Local Government Sector

Team 8(Cities of Kabankalan and Himamaylan, and Municipalities of Candoni, Hinigaran and Binalbagan)

Province of Negros Occidental

February 28, 2009

MEMORANDUM FOR:

Arlene D. Togonon

Supervising Auditor

Sub-Cluster III, Local Government SectorCOA Regional Office No. VI


In compliance with Section 2, Article IX-D of the Philippine Constitution andpertinent section of Presidential Decree No. 1445, we conducted a financial and

compliance audit on the accounts and operations of the City of Himamaylan, Negros

Occidental for the year ended December 31, 2008.

The audit was conducted to ascertain the propriety of financial transactions and

compliance of the LGU to prescribed rules and regulations. It was also made to ascertainthe accuracy of financial records and reports, as well as the fairness of the presentation of

the financial statements.

A value for money audit was likewise conducted to determine whether the LGUsprograms/projects/activities and/or the management of its resources had been carried out

economically, efficiently and effectively.

Our attached report consists of four parts. Part I contains the Audit Certificate, the

Statement of Management Responsibility for Financial Statements, Audited Consolidated

Financial Statements and Notes to Financial Statements. Part II presents the DetailedFindings and Recommendations which were discussed with concerned Management

officials and staff, for: a) Financial and Compliance Audit, and b) Value for Money

Audit. Part III contains the Status of Implementation of Prior Years AuditRecommendations. Part IV presents the Annexes, which includes: a) Financial

Statements by Funds, b) Status of Appropriations, Allotments and Obligations, and c)Other Supplementary Schedules and Related Supporting Documents.


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There is a reasonable assurance that the financial statements are free of material

misstatements and were prepared in accordance with applicable laws, rules andregulations and in conformity with generally accepted state accounting principles.

The LGU still failed to implement the conduct of physical inventory and render areport thereon, of property, plant and equipment valued at P105,381,789.25 as at year

end. The inadequacy of its records did not permit us to apply adequate alternative

procedures to determine the validity of these accounts. Nonetheless, the LGUs

transactions were in accordance with generally accepted accounting principles (GAAP).


made had the LGU conducted a physical count of its property, plant and equipment as ofDecember 31, 2008 or had the record allowed us to apply alternative procedures, the

accompanying financial statements present fairly, in all material respects, the financial

position of the City of Himamaylan, Negros Occidental, as of December 31, 2008, andthe results of its operations and cash flows for the year then ended in conformity with

generally accepted state accounting principles.

Our audit was conducted in accordance with generally accepted state auditingstandards and we believe that it provides reasonable basis for the results of audit.


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EXECUTIVE SUMMARY

Highlights of Financial Operation

a. Sources and Application of Funds

Actual operating income realized during the year at P 316,916,653.71, is

P 13,996,156.60 or 4.62% higher than last years income P 302,920,497.11. The

increase is attributed to the increase in IRA.

Total operating expenditures incurred during the year at P 196,620,521.29 is

P 11,632,525.64 or 6.29% higher than last years expenses at P 184,987,995.65.

b. Appropriations

Total appropriation for the year at P 445,467,182.20, is 5.64% higher than last

years appropriation at P421,677,311.48, as shown below:

IncreaseFund 2008 2007 Amount

GF P 440,232,263.77 P 415,940,008.89 P 24,292,254.88SEF 5,234,918.43 5,737,302.59 (502,384.16)

------------------ ------------------ ----------------------

Total P 445,467,182.20 P 421,677,311.48 P 23,789,870.72

============ ============ ============

c. Obligations

Of the total obligation incurred during the year at P297,386,582.34,

P280,964,043.44 pertained to Current Appropriations, consisting of P 276,707,566.19from the General Fund and P4,256,477.25 from the Special Education Fund. The

amount of P16,422,538.90 pertained to Continuing Appropriations, consisting of

P16,357,038.90 from the General Fund and P65,500.00 from the Special EducationFund.


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d. Financial Ratios

2008 2007 Increase/

(Decrease)

Current Ratio 16.35:1 8.7:1 7.65

Net Working Capital P376,268,598.64 P285,476,036.63 P90,792,562.01

Quick Ratio 16.27:1 8.65:1 7.62

Debt Ratio .25:1 .22:1 .03Debt Equity Ratio .09:1 .09:1 -

Scope of the Audit

A financial and compliance audit was conducted on the accounts and operations

of the City Government of Himamaylan, Negros Occidental for the year ended December31, 2008. The audit was conducted to ascertain the propriety of financial transactions

and compliance of the agency to prescribed laws, rules and regulations. It was also made

to ascertain the accuracy of financial records and reports, as well as the fairness of the

presentation of the financial statements.

A value for money audit was also conducted to ensure economy, efficiency and

effectiveness in the carrying out of the Citys plans and targets and/or in the managementof its resources.

Auditors Opinion on the Financial Statements

The auditor, taking exception on the effect of any adjustments which might havebeen made had the city conducted the physical count of its property, plant and equipment

amounting to P 105,381,789.25 as of December 31, 2008 or had the record allowed her to

apply alternative procedures, rendered an unqualified opinion on the accompanying

financial statements as they present fairly, in all material respects, the financial positionof the City of Himamaylan, Negros Occidental, as of December 31, 2008, and the results

of its operations and cash flows for the year then ended in conformity with the generally

accepted accounting principles.


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Significant Findings and Recommendations

1. The balances of Property, Plant and Equipment (PPE) accounts totaling

P105,381,789.25 remained doubtful due to the inability of the management toconduct physical inventory, maintain property/ledger cards and reconcile

records of the City Accountants Office and General Services Office, contrary toSections 119, 120 and 124 of NGAS Manual, Vol. 1.

We recommend that the City Mayor issue an Executive Order creating aninventory committee instructing them to conduct the physical inventory taking

of the properties owned by the city. The inventory taking shall be made as of

December 31 and an inventory report shall be prepared in General Form 41(A)and submitted to Auditor not later than January 31 of each year.

The General Services Office and the Accounting Office shall religiously

maintain property cards and property ledger cards, respectively. Both records

shall be reconciled by them.

2. Ownership title for the lot purchased with an area of 5,000 square meters

situated at Barangay To-oy which the city paid an advance payment ofP200,000.00 representing 40% of the cost of lot, was not transferred in the name

of the City and the procedures in the acquisition of real property was not

observed in violation of Section 449 of the Government Accounting andAuditing Manual Volume (GAAM, Vol. 1), Section 23(2) Title I-B Book V of

the 1987 Administrative Code, and Section 88 of PD 1445; hence, the interest of

the government was not protected, exposing them to possible loss of rights overthe asset.

We recommend that the city stop making any advance payment for purchases of

lot unless the Transfer Certificate of Title (TCT) has been transferred in thename of the government.

To protect the interest of the government, we recommend that the local chiefexecutive immediately demand from the vendor the delivery of the TCT already

registered in the name of the City of Himamaylan and pay the corresponding

balance of the cost; otherwise, recover from the vendor the amount of

P200,000.00 including the supposed interest earned from the bank had theamount not withdrawn from the depository account of the city. The interest

earned shall be computed based on the prevailing interest rate of the depository

bank at the transaction date until date of refund.


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In the event that the vendor failed to deliver the TCT upon demand or refunded

the amount, the city shall resort to appropriate legal remedies to protect the

interest of the government.


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3. There are transactions paid and posted in which the amount were higher than

that of the Obligation Requests generated for the purpose.

We recommend that the accounting personnel in charge in recording the

transactions carefully check the amount of ObRs attached to the claims before

the same shall be carried. No transactions with amount more than the amount ofthe ObR shall be posted. Likewise, the City Accountant shall also carefully

review the transactions before the same shall be approved.

4. Four (4) lots purchased by the City for P7,722,062.00 did not serve the purposefor which they were acquired, depriving the recipients of the intended benefits.

We recommend that government programs/projects be prioritized in accordancewith its urgency and necessity so that fund allocation can be done wisely.

The LGU shall utilize the lots purchased in accordance to the purpose they wereacquired the soonest in order that the intended beneficiaries will be benefited and

to realize the result of the program.

Status of Implementation of Prior Years Audit Recommendations

Of the five (5) recommendations advanced in prior years report, two (2) werefully implemented, two (2) were partially implemented, one (1) is not implemented,

which is being reiterated in this years report.


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TABLE OF CONTENTS

Part I Page No.

Audit Certificate 1

Statement of Management Responsibility 3

for Financial Statements

Financial Statementsa. Consolidated Balance Sheet 4

b. Consolidated Statement of Income and Expenses 5

c. Consolidated Statement of Cash Flows 6 Notes to the Financial Statements 7

Part II

Detailed Findings and Recommendations

Financial and Compliance Audit 15

Value for Money Audit 20

Part III

Status of Implementations of Prior Years Audit 22

Recommendations

Part IV

Annexes

a. Financial Statements by Funds

b. Status of Appropriations, Allotments and Obligations

c. Others


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COMMISSION ON AUDITOffice of the Regional Director

Regional Office No. VIUngka I, Pavia, Iloilo

AUDIT CERTIFICATE

HON. CARMINIA G. BASCON

City Mayor

Himamaylan CityNegros Occidental

Pursuant to Section 2, Article IX-D of the Philippine Constitution and pertinent

provisions of Presidential Decree No. 1445, we have audited the accompanyingconsolidated balance sheet of the City of Himamaylan, Negros Occidental as of

December 31, 2008, and the related consolidated statement of income and expenses and

cash flows, for the year then ended. These financial statements are the responsibility ofthe Himamaylan Citys management. Our responsibility is to express an opinion on these

financial statements based on our audit.

Except as discussed in the following paragraph, we conducted our audit in

accordance with laws, COA and INTOSAI standards, and applicable Generally Accepted

Auditing Standards (GAAS). Those standards require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements are free of material

misstatements. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing

accounting principles used and significant estimates made by management, as well asevaluating the overall financial statements presentation. We believe that our audit

provides reasonable basis for our opinion.

As presented in our Comments and Observations, the local government unit still

failed to conduct physical inventory and render a report thereon, of its property, plant and

equipment valued at P105,381,789.25 as of December 31, 2008. The inadequacy of its

records did not permit us to apply adequate alternative procedures to determine thevalidity of these accounts. Nonetheless, the agencys transactions were in accordance

with generally accepted accounting principles (GAAP).


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made had the agency conducted a physical count of its property, plant and equipment asof December 31, 2008 or had the record allowed us to apply alternative procedures, thefinancial statements referred to above present fairly, in all material respects, the financial

position of the City of Himamaylan, Negros Occidental, as of December 31, 2008, and

the results of its operations and cash flows for the year then ended in conformity with the

generally accepted accounting principles.

COMMISSION ON AUDIT

February 28, 2009


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Province of Negros Occidental

Statement of Management Responsibility for

Financial Statements

The Management of the CITY GOVERNMENT OF HIMAMAYLAN is

responsible for all information and representation contained in the Balance Sheet as of

December 31, 2008 and the related Statement of Income and Expenses and Statement of

Cash Flows for the period then ended. The financial statements have been prepared in

conformity with generally accepted accounting principles and reflect amounts that are

based on best estimates and informed judgment of management with an appropriate

consideration of materiality.

In this regard, management maintains a system of accounting and reporting

which provides for the necessary internal controls to ensure that transactions are

properly authorized and recorded, assets are safeguarded against unauthorized use or

disposition and liabilities recognized.


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Consolidated Balance Sheets for CY 2008 and 2007City of Himamaylan


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Consolidated Income Statements for CY 2008 and 2007

City of Himamaylan


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Consolidated Statements of Cash Flows for CY 2008 and 2007

City of Himamaylan


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PART II - DETAILED FINDINGS AND RECOMMENDATIONS

Financial and Compliance Audit

1. The balances of Property, Plant and Equipment (PPE) accounts totaling

P105,381,789.25 remained doubtful due to the inability of the management toconduct physical inventory, maintain property ledger/cards and reconcile

records of the City Accountants Office and General Services Office, contrary to

Sections 119, 120 and 124 of NGAS Manual, Vol. 1.

Pertinent provisions of the NGAS Manual, Volume I, relating to the

accountability and responsibility of government officials/employees over property,

plant and equipment (PPE) state the following:

Sec. 119. Property Records Maintained. The General

Services Officer shall number each type of supplies and

maintain Stock Cards per stock number. He shall likewisemaintain Property Cards per category of property, plant and

equipment.

Sec. 120. Recording of deliveries of Supplies or Property in

the Books of all Accounts. The Chief Accountant shall

maintain Supplies Ledger Cards per stock number. Property,Plant and Equipment Ledger Cards for each category of assets;

and Real Property Ledger Cards for land. x x x x.

Sec. 124. Inventory of Supplies or Property. The local chief

executive shall require periodic physical inventory of supplies orproperty. x x x

Physical count of property, plant and equipment by type shall be

made annually and reported on the Report on the Physical Count

of Property, Plant and Equipment (RPCPPE). This shall besubmitted to the Auditor concerned not later than January 31 of

each year.

Verification of the PPE accounts as of December 31, 2008 showed a balanceofP105,381,789.25, broken down as follows:

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Office Equipment, Furniture

And Fixtures P 30,072,845.24

Machineries and Equipment 37,809,218.48Transportation Equipment 31,246,671.31

Other Property Plant and Equipment 6,253,054.22

Total P105,381,789.25=============

Our audit showed that the Accounting Office did not maintain the SuppliesLedger Cards for each type of supplies, and Property, Plant and Equipment Ledger

Cards for each category of assets and Real Property Ledger Cards for land. The

absence of these records deprived the Auditor to determine the correctness of theamount of the PPE reported in the financial report as there is no documents to be

made as basis in reconciling the account.

The Office of the General Services did not maintain a complete property

records per category of property, plant and equipment. Likewise no stock cardsmaintained for each type of supplies.

Also, no physical inventory taking was made and no inventory report was

prepared and submitted to the Auditor. The importance of the conduct of physical

inventory cannot be over-emphasized. This does not only ensure the correctness ofvalue of these assets in the books, but also checks the integrity of property

custodianship as well as the physical existence of the property. Thus, the balances

and physical existence of these assets as shown in the financial statements aredoubtful.

Recommendations

We recommend that the City Mayor issue an Executive Order creating an

inventory committee, instructing them to conduct the physical inventory taking of the

properties owned by the city. The inventory taking shall be made as of December 31and an inventory report shall be prepared in General Form 41(A) and submitted to

Auditor not later than January 31 of each year.

The General Services Office and the Accounting Office shall religiously

maintain property cards and property ledger cards, respectively. Both records shall be

reconciled by them.

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2. Ownership title for the lot purchased with an area of 5,000 square meterssituated at Barangay To-oy which the city paid an advance payment of

P200,000.00 representing 40% of the cost of lot, was not transferred in the name

of the City and the procedures in the acquisition of real property was not

observed in violation of Section 449 of the Government Accounting and

Auditing Manual Volume (GAAM, Vol. 1), Section 23(2) Title I-B Book V of the

1987 Administrative Code, and Section 88 of PD 1445; hence, the interest of thegovernment was not protected, exposing them to possible loss of rights over the

asset.

On May 14, 2008, a Deed of Sale for a Portion of Land was executed between

Jose Tad-y, Jr. as Vendor and the City Government of Himamaylan, represented by

Hon. Carminia G. Bascon, City Mayor, as Vendee. The lot is situated at BarangayTo-oy, Himamaylan City, with an area of 5,000 square meters with a purchase price

of P500,000.00, bearing Lot No. 850, intended for Barangay Site of Barangay To-oy.

Our audit revealed that on May 16, 2008, the city made an advance payment

of P200,000.00 to the vendor representing 40% of the price of lot, paid under checkno. 477021, drawn against Land Bank of the Philippines Kabankalan Branch.

Until to date, the Transfer Certificate of Title (TCT) of the property is not yet

transferred in the name of the government. As noted, it has been almost ten (10)

months that a contract was executed and initial payment was made, but the TCT ofthe property was not delivered yet by the vendor to the City Government of

Himamaylan. Likewise, possession over the property was not effected. The area is

not yet utilized for the purpose it was bought, as barangay site of Barangay To-oy.

Verification from the Office of the City Assessor, Himamaylan City, revealed

that the property is not registered in the name of the vendor, Jose Tad-y, Jr., but toPatricia Toledanes. This situation exposes the government to risk of possible loss of

rights over the property considering that the vendor is not the rightful owner. There

was no document attached to the payment that Jose Tad-y, Jr was given a special

power of attorney by the legitimate registered owner to enter into negotiation on theproperty.

The bookPhilippine Laws of Local Government Finance Annotatedby Atty.Sofronio B. Ursal about the acquisition of real property by Local Government Unit

(LGU) prescribed that a report or certification of the provincial fiscal that the title is

in good order is required. Likewise, Director Salvador P. Isiderio, Director IV, Legal

and Adjudication, Office of legal Affairs, Commission on Audit opined that nopayment shall be made until and unless the concerned municipal attorney has

determined via a thorough examination of all pertinent documents, that the deed of

sale is correctly drawn and that the title is in good order. Pending such determination,no contract of the price may be validly made. If this procedure has been observed,

this situation could have been avoided and the interest of the government has been

protected.

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Section 449 of the GAAM, Vol. I clearly provides:

Land purchased by agencies of the Government shall be evidencedby a Torrens Title drawn in the name of the Republic of the

Philippines, or such other document satisfactory to the President of

the Philippines that the title is vested in the Government.

These titles and documents shall accompany the vouchers covering

the purchase of land after which they shall be forwarded to the

Records Management and Archives Office.

Also, Section 88 of PD 1445 states that:

PROHIBITION AGAINST ADVANCE PAYMENT ON

GOVERNMENT CONTRACTS. (1) Except with the prior

approval of the President (Prime Minister) the government shall notbe obliged to make an advance payment for services not yet

rendered for supplies and materials not yet delivered under anycontract therefore. No payment, partial or final, shall be made on

any such contract except upon a certification by the head of theagency concerned to the effect that the services or supplies and

materials have been rendered or delivered x x x.

The provision contained in this section is aligned with the policy of protecting

the interest of the government. The goods to be delivered is the TCT registered in the

name of the government before any payment can be affected. Section 23(2) Title I-BBook V of the 1987 Administrative Codes requires that the evidence of the

ownership over the property shall be submitted in support of the purchase, such as the

duplicate copy of the Transfer Certificate of Title.

Recommendation

We recommend that the city stop making any advance payment for purchasesof lot unless the Transfer Certificate of Title (TCT) has been transferred in the name

of the government.

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To protect the interest of the government, we recommend that the local chief

executive immediately demand from the vendor the delivery of the TCT alreadyregistered in the name of the City of Himamaylan and pay the corresponding balance

of the cost; otherwise, recover from the vendor the amount of P200,000.00 including

the supposed interest earned from the bank had the amount not withdrawn from the

depository account of the city. The interest earned shall be computed based on theprevailing interest rate of the depository bank at the transaction date until date of

refund.

In the event that the vendor failed to deliver the TCT upon demand or refunded

the amount, the city shall resort to appropriate legal remedies to protect the interest of

the government.

3. There are transactions paid and posted in which the amount were higher than

that of the Obligation Requests generated for the purpose.

The agency started the implementation of the electronic New GovernmentAccounting System (e-NGAS) and the electronic Budget System (e-Budget) in

January 2005. Linking the transactions of the e-Budget and the e-NGAS or theobligations against payments, showed that the amount of payments were more than

the amount of the Obligation Request (ObR). See annexes C-1to C-22 for the

schedules generated from the system.

The present practice makes the financial reports of the city erroneous,

misleading and unreliable. This could have an implication that there weredisbursements paid that were not obligated. Considering that payments are more than

the amount of obligations, this entails negative balance of obligations.

The Status of Appropriation, Allotment and Obligation (SAAOB) submitted

by the Budget Office showed no negative balances on obligations. However, linking

the e-budget transactions with the e-NGAS, it showed otherwise. The records of the

City Budget Office and the Accounting Office are not reconciled. This situationmakes the financial reports unreliable.

Recommendation

We recommend that the accounting personnel in charge in recording the

transactions carefully check the amount of ObRs attached to the claims before the

same shall be carried. No transactions with amount more than the amount of the ObRshall be posted. Likewise, the City Accountant shall also carefully review the

transactions before the same shall be approved.

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Value for Money Audit

4. Four (4) lots purchased by the City for P7,722,062.00 did not serve the purpose

for which they were acquired, depriving the recipients of the intended benefits.

Consistent with the goal of the LGU on human development with the aim to

alleviate the social life of the less privileged sector, various programs relative theretowere formulated. In response, management came to think where man can live a

dignified life, hence it gives emphasis on squatters resettlement program as an

immediate answer.

The city also considered community development geared towards

development of basic infrastructure facilities in the community.

In line with the thrust, records showed that the agency purchased various lots

in CY 2005-2008 in the aggregate amount of P7,722,062.00. Details below:

DatePurchase

d

Location Area(sq.m) Amount Purpose

4/13/2005 Cr. Antolo, Suay 25,817 P 4,801,962.00 Site housing project/

Relocation Site

11/3/2005 So. Bita, Su-ay 10,365 720,100.00 Site housing project/

Relocation Site

9/17/2007

Brgy.

Mambagaton 20,000 2,000,000.00 Relocation Site

5/16/2008 Brgy. To-oy 5,000 200,000.00 Barangay Site

Total P 7,722,062.00

The above lots were acquired in coordination with the concerned

Barangay Officials (Punong Barangay and Barangay Kagawads) as recipients of the

program. These barangays are Barangay Su-ay, Barangay Mambagaton and BarangayTo-oy.

During the on-site validation of the implementation of the program andverification of the intended purpose of the project, we noted that the properties were

not utilized for the purpose they were acquired, thus, it defeated the purpose of the

program and likewise deprived the supposed recipients of the intended benefits. If

this program is considered as an immediate solution but not implemented, thengovernment funds were not utilized in accordance to the needs in delivering services

to the constituents.

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Recommendation

We recommend that government programs/projects be prioritized in

accordance with its urgency and necessity so that fund allocation can be done wisely.

The LGU shall utilize the lots purchased in accordance to the purpose theywere acquired the soonest in order that the intended beneficiaries will be benefited

and to realize the result of the program.

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PART III - STATUS OF IMPLEMENTATION OF PRIOR YEARS AUDIT RECOMMENDATIONS

Audit Observation Recommendation Ref Management Action

Status of

Implementation

Reason for Partial/

Non-

Implementation

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1. The agency stillfailed to

conduct physicalinventory of its

property, plant and

equipment at yearend for its movable

assets valued in thebooks at

P104,008,297.31,

and render a reportthereon, contrary to

Section 124 of NGAS Manual, Vol.

1, thus, the existence,propriety and validity

of the account is

doubtful.

2. The agency failed to

submit to the Auditorcopies of contracts

and Letter/Purchase

Orders (LO/PO) andAcceptance of

We recommend that the City Mayor

issue an Executive Order to theinventory committee instructing

them to conduct the physical

inventory taking of the propertiesowned by the agency. The

inventory taking shall be made as ofDecember 31 and an inventory

report prepared in General Form41(A) and submitted to Auditor not

later than January 31. This should

be completed in CY 2008. Thisreport should also be reconciled

with accounting records to ensurethe correctness of the fixed asset

account in the financial statements.

We recommend that the DepartmentHead of the General Services Office

be directed to comply with the cited

regulations. It is also advised thatthe contracts and purchase orders

should contain all the basic data

AAR

2007

AAR2007

The Office of the General

Services submitted only acopy of Inventory Report as

of December 31, 2007

which was received by Ms.Guillerma G. De Paula

dated July 10, 2008.

The City Mayor has alreadyissued a Memorandum

order to the General

Services Officer and thruthe Bids and Awards

Committee (BAC)

Partially

Implemented.

Implemented.

The inventor

report submitted ionly partia

inventory list o

properties owneby the City. For CY

2008, the Citfailed to submit th

updated report.

Due to lack o

manpower in thGeneral Service

Office, this causthe delay in th

preparation an

submission oupdated inventor

report.

23


37/37

PART IV ANNEXES

A. Financial Statements by Fund

General Fund

Balance Sheet Annex A-1

Statement of Income and Expenses Annex A-2Statement of Cash Flows Annex A-3

Special Education Fund

Balance Sheet Annex.A-4Statement of Income and Expenses Annex A-5

Statement of Cash Flows Annex A-6

Trust Fund

Balance Sheet Annex.A-7

Statement of Income and Expenses Annex A-8Statement of Cash Flows Annex A-6

B.Status of Appropriations, Allotments and ObligationsGeneral Fund Annex B-1

Special Education Fund Annex B-2

C. OthersTransactions Paid in Excess of Obligation Annex C-1 to

Annex C-22