EXECUTIVE SUMMARY

A. INTRODUCTION

The Metropolitan Manila Development Authority (MMDA) was created by virtue

of Republic Act No. 7924. In accordance with its mandate, the MMDA, as a special
development and administrative region, shall plan, monitor and coordinate and in the
process, exercise regulatory and supervisory authority, the delivery of metro-wide
services within Metro Manila without diminution of the autonomy of the Local
Government Units (LGU’s) concerning purely local matters.

Seven basic services are lodged with MMDA. These are development planning,
transport and traffic management, waste disposal and management, flood control and
sewerage management, urban renewal, zoning, land use, planning and shelter
services; health and sanitation, urban protection and pollution control; and public
safety.

Aside from the above services, the Traffic Management Improvement

Components and the Secondary Roads and Institution of Building Component under
the Metro Urban Transport Integration Project (MMURTRIP), which is jointly
funded by the Philippine Government and the International Bank for Reconstruction
and Development (IBRD) under Loan Agreement No. 7058 PH, is being
implemented by the MMDA.

The Authority is headed by Chairman Bayani F. Fernando and assisted by a

Deputy Chairman, a General Manager, Assistant General Manager for Finance and
Administration and an Assistant General Manager for Planning. It has a total
personnel complement of 6,828, consisting of five presidential appointees, 1,386
permanent, three temporary, 1,125 casuals, 4,284 job orders and 25 consultants.

FINANCIAL HIGHLIGHTS

The Metropolitan Manila Development Authority’s financial condition and results

of operations for Calendar Year 2008 (in thousand pesos) compared with that of
preceding year are as follows:

2008 2007 Inc/(Dec)

Total Assets P 5,791,721 P 5,490,811 P 300,910
Total Liabilities 1,201,249 1,571,083 (369,834)
Government Equity P4,590,472 P3,919,728 P 670,744
Sources and Application of Funds
1. General Fund
2008 2007 Inc/(Dec)
Allotment Received:
Current
Appropriations P3,480,116 P2,837,412 P642,704
Continuing
Appropriations 185,998 210,081 (24,083)
Additional Funds 62,781 62,781
Special Purpose 255,060 1,137,445 (882,385)
Total Allotment 3,983,955 4,184,938 (200,983)
Total Expenditures 3,828,755 4,024,573 (208,599)
Unexpended Balance P 155,200 P160,365 P(7,616)

C. OPERATIONAL HIGHLIGHTS

The projects and activities of the MMDA were mostly geared towards the promotion
of safe and convenient movement of persons and goods like the development and
improvement of major roads, and construction of footbridges and U-turn slots, among
others.

D. SCOPE OF AUDIT

The audit covered the accounts and operations of the Metropolitan Manila
Development Authority for the Calendar Year 2008. Examination was done to
ascertain the fairness of presentation of the Authority’s financial position and results
of operations, the reliability of accounting records and the propriety/validity of
disbursements and, the extent of compliance by the MMDA with applicable laws,
rules and regulations. Likewise, the audit was conducted to determine whether the
agency’s resources were used economically and efficiently and its intended objectives
were achieved.

The following were some of the constraints and/or limitations in the audit of accounts
and transactions for the year 2008:

1. Delayed/non-submission of financial reports/documents prevented the

determination of the propriety of certain disbursements.

2. Failure of the management to fully establish subsidiary ledger account

balances as of January 1, 2005 for the purpose of implementing the e-NGAS
prevented substantiation of some accounts.

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E. AUDITOR’S REPORT

The Auditor rendered an adverse opinion on the fairness of presentation of the

financial statements mainly because of the significance of audit findings on the:

• Existence of dormant account totaling P3.16 billion for over 20 years;

• Presence of negative and abnormal balances of Accounts Payable of
P22.16 million and Due to Pag-ibig and Philhealth totaling P15.48 million;
• Long outstanding Loans Payable of P88.36 million; and
• Undocumented Construction in Progress-Agency Assets account
amounting to P308.26 million.
• Unliquidated cash advances of P16.32 million;
• Motor Vehicle User’s Charge (MVUC) of P10.21 million disbursed for
projects not within the intended purpose;
• Procurement of supplies and materials of P49.57 million for Trabaho-
Trabaho project not in accordance with the MOA and Letter of Advice of
Allotment.

SUMMARY OF SIGNIFICANT OBSERVATIONS AND

RECOMMENDATIONS

The observations and recommendations were discussed with the concerned MMDA
officials whose views and/or comments were considered in the preparation of this
report. These observations and recommendations are summarized as follows:

1. The existence of dormant account totaling P3.16 billion for over

20 years; abnormal balances of Accounts Payable of P22.16 million; non
availability of documents to support the Construction in Progress-Agency Assets
account amounting to P308.26 million; long outstanding Loans Payable of
P88.36 million and negative balances of Due to Pag-ibig and Philhealth totaling
P15.48 million rendered the reliability and accuracy of the financial statements
doubtful.

We recommend that Management exert best effort to reconcile the accounts with
the concerned LGUs and collect the amount due therefrom or for possible
offsetting with the payables to LGUs. Trace and validate records with source
documents in order that the Construction in Progress-Agency Asset account could
be closed to appropriate account. Exert extra effort to locate the documents
pertaining to loan payables and reconcile the loan account with the banks.
Reconcile the account balances with the PAG-IBIG and PHILHEALTH and
prepare the necessary adjustments for any difference that may be noted.

2. Cash advances amounting to P16.32 million remained

unliquidated at year-end, of which P6.84 million have been outstanding for over

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10 years, contrary to Section 89 of Presidential Decree No. 1445, otherwise
known as the Government Auditing Code of the Philippines.
We reiterate our prior year’s audit recommendations that Management take
appropriate administrative/ legal action against accountable officers who have not
liquidated nor initiated the settlement of their long outstanding cash advances. For
accounts of those accountable officers who could not be located after exerting all
efforts, management may request authority from COA for the write-off.

3. The agency procured the printing of 1,178 tarpaulins at a cost of

P.93 million containing a message on “Kaayusan” with the picture of the agency
head occupying 55 percent of the tarpaulin area which could have been dispensed
with without diminishing the value of the message.

We recommend that Management exercises prudence in the utilization or use of

government funds to avoid incurrence of unnecessary expenditures.

4. Bidding for the procurement of paints lacks competitiveness as,

in most cases, the bids were participated by lone bidder, contrary to R.A. 9184.
Moreover, the program of work and estimates for the procurement of paints were
seldom attached to the claim, thereby making it difficult to evaluate the
procurement and validate the issuance thereof.

We recommend that Management make the conduct of bidding more competitive

by inviting all prospective bidders through advertisements in the newspapers of
general circulation and other forms of advertisements aside from placing the
invitation in the website of the PhilGEPS. Prepare program of work and
estimates before making procurement and attach the same to the purchase orders
and claims for payment.

5. Out of the P94 million received from DPWH which was sourced
from the Motor Vehicle User’s Charge (MVUC), P10.21 million was disbursed
for projects/activities which are not within the intended purpose of the MVUC.

We recommend that Management strictly observe the provisions of RA 8794,

more particularly Sec. 7 thereof, and disburse the funds in accordance with the
intended purpose indicated in the SARO.

6. Of the total amount of P418.74 million used for Trabaho-

Trabaho project, P 49.57 million was used in the procurement of various supplies
and materials which is not in accordance with the Memorandum of Agreement
(MOA) and Letter of Advice of Allotment (LAA) issued for the project.
Moreover, there were no programs of work for the project undertaken, thereby
precluding the determination of the reasonableness of the number of workers
hired and evaluation of their accomplishments.

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 We recommend that Management disburse the funds solely in accordance with
the intended purpose for which such funds had been released or transferred to the
agency. Request for re-alignment of excess funds before they are used for other
purpose.

7. Payment through “reimbursements” of procured services,

supplies and materials aggregating to P31.31 million had been a regular practice,
contrary to COA Circular No. 90-331. Moreover, procurement of supplies and
materials was recorded as outright expense instead of the Inventory account.

We recommend that Management discourage the existing practice of paying the

expenses through reimbursements, designate another Special Disbursing Officer
to handle cash advance for miscellaneous operating expenses, if necessary, and
pay claim by check, if the amount exceeds P15,000.00, unless allowed by law or
there is specific authority from the Commission on Audit.

8. The construction and the subsequent removal of seven loading

bays and sidewalk pavements due to lack of proper planning and thorough studies
on the necessity of putting up the structures along Commonwealth Avenue
resulted in the wastage of government funds totaling P9.59 million.

We recommend that Management conduct proper planning and thorough studies

on the necessity of any structure to be put up or built before they are installed or
constructed to prevent similar occurrence in the future.

9. Road safety measures for motorcycles, which during the year

registered the highest vehicular fatalities, need further improvement/study to
minimize road accidents.

We recommend that MMDA revisit/consider improving its present road safety

measures by assigning lane for motorcycles or design lane for the exclusive use of
motorcycles, if feasible.

Other equally significant audit observations and recommendations were also

noted and discussed in detail under Part II of this report.

The above findings which are discussed in details in the report were discussed
with the concerned officials of the agency. Management views and reaction were
considered in the report, where appropriate.

F. IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Out of the 12 audit recommendations contained in the 2007 Annual Audit Report,
10 were partially implemented, and two were not implemented at all.

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