ANNUAL AUDIT REPORT ON THE CITY OF HIMAMAYLAN

FOR THE YEAR ENDED DECEMBER 31, 2008

Republic of the Philippines COMMISSION ON AUDIT

Office 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 Auditing Code 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 City Government 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 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 local government 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 taken thereon within one (1) month from receipt hereof.

We acknowledge the cooperation and support extended to our Auditor and her staff during the audit. Very truly yours,

Copy furnished: Sangguniang Panlungsod City of Himamaylan, Negros Occidental The Regional Director Department of Interior and Local Government, Region VI The Regional Director Department of Budget and Management, Region VI The Regional Director Bureau of Local Government Finance, Region VI

Republic of the Philippines COMMISSION ON AUDIT

Sub-Cluster III, Local Government Sector Office of the Supervising Auditor Regional Office No. VI Ungka I, Pavia, Iloilo February 28, 2009 MEMORANDUM FOR: Atty. Sheila U. Villa Director-In-Charge Regional Office No. VI Ungka I, Pavia, Iloilo 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 of Negros Occidental, for the year ended December 31, 2008. The audit was conducted to ascertain the propriety of financial transactions and compliance 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 LGUs programs/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 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 Audit Recommendations. 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.

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

Republic of the Philippines

COMMISSION ON AUDIT
Sub-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 Sector COA Regional Office No. VI Ungka I, Pavia, Iloilo 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, 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 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 LGUs programs/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 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 Audit Recommendations. 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.

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 implement the conduct of physical inventory and render a report 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). 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, 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, and the 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 auditing standards and we believe that it provides reasonable basis for the results of audit.

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: Fund GF SEF Total 2008 P 440,232,263.77 5,234,918.43 -----------------P 445,467,182.20 ============ 2007 P 415,940,008.89 5,737,302.59 -----------------P 421,677,311.48 ============ Increase Amount P 24,292,254.88 (502,384.16) ---------------------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 276,707,566.19 from 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 Education Fund.

d. Financial Ratios 2008 Current Ratio Net Working Capital Quick Ratio Debt Ratio Debt Equity Ratio 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 December 31, 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 management of its resources. Auditors Opinion on the Financial Statements The auditor, taking exception on the effect of any adjustments which might have been 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 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. 16.35:1 P376,268,598.64 16.27:1 .25:1 .09:1 2007 Increase/ (Decrease)

8.7:1 7.65 P285,476,036.63 P90,792,562.01 8.65:1 7.62 .22:1 .03 .09:1 -

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 to conduct 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.

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 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 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 the government was not protected, exposing them to possible loss of rights over the 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 the name of the government. To protect the interest of the government, we recommend that the local chief executive 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 the amount 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.

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. 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 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 purpose for which they were acquired, depriving the recipients of the intended benefits. 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 they were acquired 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) were fully implemented, two (2) were partially implemented, one (1) is not implemented, which is being reiterated in this years report.

TABLE OF CONTENTS

Part I

Page No. 1 3 4 5 6 7

a. b. c.

Audit Certificate Statement of Management Responsibility for Financial Statements Financial Statements Consolidated Balance Sheet Consolidated Statement of Income and Expenses Consolidated Statement of Cash Flows Notes to the Financial Statements Part II Detailed Findings and Recommendations Financial and Compliance Audit Value for Money Audit Part III

15 20

Status of Implementations of Prior Years Audit Recommendations Part IV

22

a. b. c.

Annexes Financial Statements by Funds Status of Appropriations, Allotments and Obligations Others

Republic of the Philippines

COMMISSION ON AUDIT
Office of the Regional Director Regional Office No. VI Ungka I, Pavia, Iloilo AUDIT CERTIFICATE HON. CARMINIA G. BASCON City Mayor Himamaylan City Negros Occidental Pursuant to Section 2, Article IX-D of the Philippine Constitution and pertinent provisions of Presidential Decree No. 1445, we have audited the accompanying consolidated 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 of the 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 audit to 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 as evaluating 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 the validity of these accounts. Nonetheless, the agencys 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 agency 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, the financial 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

Republic of the Philippines 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.

Consolidated Balance Sheets for CY 2008 and 2007 City of Himamaylan

Consolidated Income Statements for CY 2008 and 2007 City of Himamaylan

Consolidated Statements of Cash Flows for CY 2008 and 2007 City of Himamaylan

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 to conduct 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 likewise maintain 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 or property. 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 be submitted to the Auditor concerned not later than January 31 of each year. Verification of the PPE accounts as of December 31, 2008 showed a balance of P105,381,789.25, broken down as follows:

15

Office Equipment, Furniture And Fixtures Machineries and Equipment Transportation Equipment Other Property Plant and Equipment Total

P 30,072,845.24 37,809,218.48 31,246,671.31 6,253,054.22 P105,381,789.25 =============

Our audit showed that the Accounting Office did not maintain the Supplies Ledger 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 the amount 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 cards maintained 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 of value 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 are doubtful. 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 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.

16

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 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 the government 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 Barangay To-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 check no. 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 of the 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 to Patricia 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 the property. The book Philippine Laws of Local Government Finance Annotated by 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 no payment 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.

17

Section 449 of the GAAM, Vol. I clearly provides: Land purchased by agencies of the Government shall be evidenced by 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 not be obliged to make an advance payment for services not yet rendered for supplies and materials not yet delivered under any contract therefore. No payment, partial or final, shall be made on any such contract except upon a certification by the head of the agency 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-B Book 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 purchases of lot unless the Transfer Certificate of Title (TCT) has been transferred in the name of the government.

18

To protect the interest of the government, we recommend that the local chief executive 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 the amount 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. 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 Government Accounting 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 the obligations 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 were disbursements 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 situation makes 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 ObR shall be posted. Likewise, the City Accountant shall also carefully review the transactions before the same shall be approved.

19

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 thereto were 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:
Date Purchase d 4/13/2005 11/3/2005 Location Area(sq.m) Amount Purpose

Cr. Antolo, Suay So. Bita, Su-ay Brgy. Mambagaton Brgy. To-oy

25,817 10,365

4,801,962.00 720,100.00

Site housing project/ Relocation Site Site housing project/ Relocation Site Relocation Site Barangay Site

9/17/2007 5/16/2008 Total

20,000 5,000 P

2,000,000.00 200,000.00 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 Barangay To-oy. During the on-site validation of the implementation of the program and verification 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, then government funds were not utilized in accordance to the needs in delivering services to the constituents.

20

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 they were acquired the soonest in order that the intended beneficiaries will be benefited and to realize the result of the program.

21

PART III - STATUS OF IMPLEMENTATION OF PRIOR YEARS AUDIT RECOMMENDATIONS Status of Implementation Reason for Partial/ NonImplementation

Audit Observation

Recommendation

Ref

Management Action

22

1. The agency still failed to conduct physical inventory of its property, plant and equipment at year end for its movable assets valued in the books at P104,008,297.31, and render a report thereon, contrary to Section 124 of NGAS Manual, Vol. 1, thus, the existence, propriety and validity of the account is doubtful.

We recommend that the City Mayor issue an Executive Order to the inventory committee instructing them to conduct the physical inventory taking of the properties owned by the agency. The inventory taking shall be made as of December 31 and an inventory report prepared in General Form 41(A) and submitted to Auditor not later than January 31. This should be completed in CY 2008. This report should also be reconciled with accounting records to ensure the correctness of the fixed asset account in the financial statements.

AAR 2007

The Office of the General Partially Services submitted only a Implemented. copy of Inventory Report as of December 31, 2007 which was received by Ms. Guillerma G. De Paula dated July 10, 2008.

The inventory report submitted is only partial inventory list of properties owned by the City. For CY 2008, the City failed to submit the updated report. Due to lack of manpower in the General Services Office, this cause the delay in the preparation and submission of updated inventory report.

2. The agency failed to submit to the Auditor copies of contracts and Letter/Purchase Orders (LO/PO) and Acceptance of

We recommend that the Department Head of the General Services Office be directed to comply with the cited regulations. It is also advised that the contracts and purchase orders should contain all the basic data

AAR 2007

The City Mayor has already Implemented. issued a Memorandum order to the General Services Officer and thru the Bids and Awards Committee (BAC)

23

PART IV ANNEXES

A. Financial Statements by Fund General Fund Balance Sheet Statement of Income and Expenses Statement of Cash Flows Special Education Fund Balance Sheet Statement of Income and Expenses Statement of Cash Flows Trust Fund Balance Sheet Statement of Income and Expenses Statement of Cash Flows B. Status of Appropriations, Allotments and Obligations General Fund Special Education Fund C. Others Transactions Paid in Excess of Obligation

Annex A-1 Annex A-2 Annex A-3 Annex.A-4 Annex A-5 Annex A-6 Annex.A-7 Annex A-8 Annex A-6 Annex B-1 Annex B-2 Annex C-1 to Annex C-22