Professional Documents
Culture Documents
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
On the
3.) The efficiency of implementing various projects, programs and activities (PPAs)for
CY 2012 funded under 20% Development Fund and Locally Funded amounting to
P 41,179,366.30 and P51,893,320.72, respectively, is doubtful due to inadequate
policy, planning, budgeting, execution and monitoring mechanism.
To ensure that the resources are managed in the most effective and efficient
manner to meet the needs of the constituents and stakeholders of the City, we
recommended the following:
1. Carefully plan and organize the projects management plan. Often, project
planning is ignored in favor of getting on with the work.
2. Prepare Annual Procurement Plan (APP) that are duly linked to Annual
Investment Plan (AIP) to ensure that every procurement is cost effective
and efficient.
3. Fast track the implementation of unimplemented PPAs.
4. Evaluate whether the programs and projects funded from prior years
budget are still relevant otherwise revert the fund to other programs and
projects which are more needed and applicable upon recommendation of
Local Chief Executive and approval by the Sanggunian concerned (Section
322 of RA No. 7160)
5. The City Development Council (CDC) should strictly monitor and evaluate
PPAs (Section 112 of RA 7160) and provide for project support or program
maintenance.
6. Strictly abide by the provisions of Section 4, Annex A of IRR of RA 9184.
Feasibility study and detailed engineering should be conducted first before
implementing any project.
4.) The agency failed to prepare and submit an Annual Procurement Plan for
Common-use Supplies and Equipment (APP-CSE) for 2012 and 2013 as required
under Department of Budget Management (DBM) Circular Letter No. 2011-06
and 2011-06A. As a result, the procurement of common used supplies and
equipment were acquired thru piecemeal scheme, thus, the agency was not able to
obtain the most advantageous price in its purchases.
a. Strictly comply with the requirements under DBM Circular Letter Nos.
2011-6 and 2011-06A, to ensure inclusion of agency procurement activities
for common-use supplies and equipment in the Consolidated APP-CSE, and
afford complete and accurate projection by the Procurement Services-
Department of Budget Management (PS-DBM) of inventory requirements
of government.
b. Submit its Annual Procurement Plan for common-use supplies and equipment
(APP-CSE) on or before November15 of each year to DBM using the
prescribed format as provided under DBM Circular Letter No. 2011-6.
EXECUTIVE SUMMARY
Introduction
Tacurong was once a barangay of the Municipality of Buluan, of the then Empire
Province of Cotabato. Tacurong was separated from its mother town of Buluan and
became a newly created municipality by virtue of Executive Order No. 462 signed by
then President Elpidio Quirino on August 3, 1951.
The financial profiles of the City for CY 2012 with comparative figures for CY
2011 are as follows:
A. Financial Condition
Increase/(Decrease)
2012 2011
Amount %
Assets 580,401,201.27 607,216,971.57 (26,815,770.30) (4.42%)
Liabilities 61,969,274.37 61,361,433.13 607,841.24 1%
Equity 518,431,926.90 545,855,538.44 (27,423,611.54) (5%)
B. Operating Income
Increase/(Decrease)
2012 2011
Amount %
C. Utilization of Funds
Increase/(Decrease)
2012 2011 Amount %
Appropriation 437,959,780.42 413,632,877.53 24,326,902.89 5.88%
Obligated 355,624,841.35 346,735,169.63 8,889,671.72 2.56%
Unobligated 82,314,939.071 66,897,707.90 15,417,231.17 23.05%
Scope of Audit
Financial and compliance audit was conducted on the accounts and operations of
the City of Tacurong for the calendar year 2012. The audit consisted of verification,
reconciliation and analysis of accounts and such other procedures considered necessary.
A Value for Money Audit was likewise conducted on the overall Comprehensive
Development Plan of the City for CY 2012 and its implementation of the 20%
Development Fund and Locally Fundedprojects
The Auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements as of December 31, 2012 due to the following:
1. The validity, existence and accuracy of the Property, Plant and Equipment
accounts totaling P100,779,138.00, could not be ascertained due to the
discrepancy between the GSO and Accounting records and the result of
inventory-taking. This is attributed to the non reconciliation of balances,
absence of evidence of ownership of Lands, failure to conduct a complete
physical inventory and failure to properly maintain the ledger and property
cards.
2. The yearend balances of the Real Property Tax (RPT) and Special Education
Tax (SET) Receivables amounting to P 4,752,940.22, are unreliable due to the
failure of the City Treasurer to submit the certified list showing the name of
taxpayers and the amounts due and collectible for the year.
Recommendation:
We recommended that the City issue policy guidelines in the hiring of job
order in accordance with Section 2, Rule XI of the Revised Omnibus Rules
Implementing Book V of EO No. 292, COA rules and regulations and existing
labor and tax laws specified.
2. The implementation of the Department of Social Welfare and Development
(DSWD) Supplemental Feeding Program (SFP) was not completed on the
intended date of December 31, 2012 due to the delay in the release of funds to
the City, delay in the distribution of the menu cycle from DSWD and in the
procurement process of the City.
Recommendations:
Recommendations:
To ensure that the resources are managed in the most effective and efficient
manner to meet the needs of the constituents and stakeholders of the City, we
recommended the following:
1. Carefully plan and organize the project management plan. Often, project
planning is ignored in favor of getting on with the work.
2. Prepare Annual Procurement Plan (APP) that are duly linked to Annual
Investment Plan (AIP) to ensure that every procurement is cost effective
and efficient.
3. Fast track the implementation of unimplemented PPAs.
4. Evaluate whether the programs and projects funded from prior years
budget are still relevant otherwise revert the fund to other programs and
projects which are more needed and applicable upon recommendation of
the Local Chief Executive and approval by the Sanggunian concerned
(Section 322 of RA No. 7160)
5. The City Development Council (CDC) should strictly monitor and
evaluate PPAs (Section 112 of RA 7160) and provide for project support
or program maintenance.
6. Strictly abide by the provisions of Section 4, Annex A of IRR of RA
9184. Feasibility study and detailed engineering should be conducted
first before implementing any project.
4. The agency failed to prepare and submit an Annual Procurement Plan for
Common-use Supplies and Equipment (APP-CSE) for 2012 and 2013 as required
under Department of Budget Management(DBM) Circular Letter No. 2011-06
and 2011-06A. As a result, the procurement of common used supplies and
equipment were acquired thru piecemeal scheme, thus, the agency was not able
to obtain the most advantageous price in its purchases.
Recommendations:
a. Strictly comply with the requirements under DBM Circular Letter Nos.
2011-6 and 2011-06A, to ensure inclusion of agency procurement
activities for common-use supplies and equipment in the Consolidated
APP-CSE, and afford complete and accurate projection by the
Procurement Services-Department of Budget Management (PS-DBM) of
inventory requirements of government.
b. Submit its Annual Procurement Plan for common-use supplies and
equipment (APP-CSE) on or before November 15 of each year to DBM
using the prescribed format as provided under DBM Circular Letter No.
2011-6.
Recommendation:
The City Government should always strictly abide by the Implementing Rules
and Regulations (IRR) of RA 9184, the team makes the following
recommendations to be more effective and efficient in processing procurement
activities of the City and fully improve the procurement procedures to attain the
principles of transparency, competitiveness and economy.
6. The yearend balances of the Real Property Tax (RPT) and Special Education
Tax (SET) Receivables amounting to P 4,752,940.22, are still unreliable due to
the failure of the City Treasurer to submit the certified list showing the name of
taxpayers and the amounts due and collectible for the year pursuant to Section
20, Volume I of the NGAS Manual.
Recommendation:
7. The validity, existence and accuracy of the Property, Plant and Equipment (PPE)
accounts worth P100,779,138.00 could not be ascertained due to the discrepancy
between the accounting records and the result of the inventory-taking. This is
attributed to the non-reconciliation of balances, absence of evidence of
ownership of Lands, failure to conduct a complete physical inventory and failure
to properly maintain the ledger and property cards).
Recommendations:
1
PART I
2
Republic of the Philippines
COMMISSION ON AUDIT
OFFICE OF THE SUPERVISING AUDITOR
Local Government Sector
(Sultan Kudarat Province & Tacurong City)
Tel. No./Telefax No. (064)201-4797
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with Generally Accepted Accounting Principles. This
responsibility includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement.
Auditors Responsibility
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes assessing the accounting principles used and
reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
3
4
3
CITY GOVERNMENT OF TACURONG
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period Ended December 31, 2012
(With comparative figures for CY 2011)
In Philippine Peso
2012 2011
Cash Flow From Operating Activities
Cash Inflows
Collection from Taxpayers 28,876,960.41 25,129,662.09
Share from Internal Revenue Collection 253,260,357.00 315,249,772.00
7
NOTES TO THE FINANCIAL STATEMENTS
1. General/Agency Profile
The City of Tacurong was created by Republic Act No. 8805 signed by former
president Joseph E. Estrada on August 16, 2000 and unanimously approved by the
people of Tacurong in a Plebiscite held on September 18, 2000.
The consolidated financial statements have been prepared in accordance with the
Generally Accepted State Accounting Principles and Standards.
8
b. Modified Obligation System is used to record allotments received and
obligations incurred. Separate registries are maintained to control allotments
and obligations for each class of allotment.
c. Petty Cash Fund account is maintained under the Imprest System through
Administrative Assistant IV as petty cash fund disbursing officer.
g. Share from Internal Revenue Collections is accounted for under the accrual
method of accounting. All expenses are recognized when incurred and
income recognized when earned. Real Property Taxes are accounted
following the modified accrual method of accounting.
i. Cash Advances for official travel, seminars and other time bound activities
are taken up as receivables from the concerned official or employee. Cash
advances of regular disbursing officers for payment of salaries and wages
and other personnel benefits are recorded as debit to Payroll Fund. Refunds
are credited to receivable account previously set-up.
Fundamental errors of prior years are corrected using the Prior Years Adjustment
account while errors affecting the current years operations are effected to the current
year accounts.
5. Cash
9
Payroll Fund - -
Cash in Bank-Local Currency, CA 47,062,264.85 53,713,087.36
Cash in Bank-Local Currency, SA 2,187,326.53 2,293,097.95
Cash in Bank-Local Currency, TD 136,906,383.65 178,512,696.02
Total P187,063,251.02 P234,845,836.27
Cash in Vault in the amount of P207,616.66 represents share of the City Government
deposited in the Provincial Treasurers Office, as of December 31, 1993.
6. Receivables
7. Inventories
The balance under inventory account is for Gasoline, Oil and Lubricants Inventory
account amounting to P 1,092,781.09 which remains unliquidated as of
December 31, 2012. This is a cash deposit of different offices for their Gasoline, Oil
and Lubricants expenses. This is created to effectively control over expenditures for
fuel consumption and to ensure the effective conservation of energy and proper
utilization of government motor transportation. The said inventories are stored with
New Isabela Petron Service Center and Nuestra Seora De Lourdes Petron Service
Center major gasoline station in Tacurong. However, this procedure has long been
stopped.
10
The supplies and materials requested and purchased are released to different offices
by GSO through the stockroom custodian.
8. Prepayments
Depreciation is not provided for buildings and other movable assets acquired in 2001
and earlier for lack of details as to construction/acquisition cost and date of
completion/acquisition.
For the year 2012, the decrease of P8,155,396.07 in Construction in Progress account
is due to the completed projects which were closed to its particular Public
Infrastructures account. Subsequently, the decrease in Public Infrastructures of
P11,770,285.16 is due to the transfers in registry.
11
10. Other Assets
Other Asset in the amount of P639,875.00 is composed of Work Animals under Trust
Fund. These are Carabao purchased under the Cattle Dispersal Program from the
Priority Development Assistance Fund.
Deferred Real Property Tax Income and Deferred Special Education Tax Incomeare
reciprocal accounts of Real Property Tax Receivable and Special Education
TaxReceivable during the set-up of RPT andSpecial Education Taxreceivable for the
year.
12
14. Government Equity
13
16. Expenditure Accounts
The LDRRMF represents the amount set aside by the LGU to support its disaster risk
management activities pursuant to R.A. No. 10121 otherwise known as the
Philippine Disaster Risk Reduction and Management Act of 2010. The amount
available and utilized during the year totaled P15,855,885.00 and P7,083,278.10,
respectively, breakdown as follows:
Amount
Particulars
Available Utilized Balance
Current Year Appropriation:
Quick Response Fund(QRF) P4,756,765.50 P 199,430.60 P4,557,334.90
Mitigation Fund (MF) -
MOOE 6,733,470.50 3,860,964.00 2,872,506.50
Capital Outlay 4,365,649.00 3,022,883.50 1,342,765.50
Total P15,855,885.00 P7,083,278.10 P8,772,606.90
14
PART II DETAILED FINDINGS AND
RECOMMENDATIONS
14
Detailed Findings and Recommendations
A. Favorable Observations
a. City Hall sa Barangay Project - all offices of the LGU are brought to the
Barangay for one day and for delivery of their services.
b. Business One Stop Shop Program all government agencies involved in the
processing of business permits are gathered in one area inside the City Hall
premises.It regulated the immediate processing of business permit
application or renewal of business or operation.
15
Findings and Recommendations
Legal Framework
16
Laws, Rules and Pertinent Provisions/Particulars
Regulations
Sections 209, 2010, accomplish the specific work or job under their own
211 and 517 of Volume responsibility with minimum direction or
I of the Government supervision
Accounting and
Auditing Manual Section 210. Compensation of contractual
(GAAM) personnel.- When hiring of contractual personnel is
authorized in the appropriation of the agency, they
may be paid compensation inclusive of fees,
honoraria, per diems compensation and allowances
not exceeding 120 percent of the minimum salary of
an equivalent position in the National Classification
and Compensation Plan except as may be authorized
by the Department of Budget and Management in the
following instances:
a. x x x
b. In no case shall contractual appointments or
contracts of personnel services be issued to
non-technical personnel or those whose duties
and functions are clerical or administrative in
natureand those who will hold positions in the
labor or trades and crafts group. If such
services are needed in support of the job or
project, the regular staff or personnel may be
augmented by hiring casual or emergency
staff.
17
Laws, Rules and Pertinent Provisions/Particulars
Regulations
Section 517. Contracting activities. Agencies may
enter into contracts with individuals or organizations,
both public and private, subject to the provisions of
law and applicable guidelines approved by the
President: Provided that contracts shall be for specific
services which cannot be provided by the regular
staff of the agency, shall be for a specific period of
time, and shall have a definite expected output.
Article 99 of PD No. The minimum wage rates for agriculture and non-
442 (Labor Code of the agricultural employees and workers in all regions in
Philippines) the country shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards (RTWPBs)
18
Laws, Rules and Pertinent Provisions/Particulars
Regulations
effective April 18, 2012 pursuant to Wage Order No.
RB XII-17.
SC Ruling, Traders This Court has ruled that the existence of employer-
Royal Bank vs. NLRC, employee relationship cannot be proved by merely
G.R. No. 127864, showing the agreement of the parties. It is a question
December 22, 1999. of fact which should be supported by substantial
evidence. And in determining the existence of such
SC Ruling, GR No. relationship the elements usually considered are: (a)
G.R. No. 154472 dated the selection of the employee; (b) the payment of
June 30, 2005. wages; (c) the power of dismissal; (d) power to
control the employees conduct, with the control test
CSC Resolution No. generally assuming primacy in the over-all
030102 dated January consideration.
22, 2003
Personnel Profile
VACANT
Personnel Plantilla Funded Filled Up
Unfunded Funded Total
Permanent 621 328 309 293 19 312
Elective 14 14 14 0 0 0
Co-terminus 16 16 13 0 3 3
Casual 0 68 62 0 6 6
Job Order 0 311 311 0 0 0
Total 651 426 698 293 28 321
19
From the budget, a total of P148,747,500.25 was expended, as shown in
the table:
Review of the submitted List of Job Order personnel, post audit of the
corresponding Payroll and interviews with the concerned City officials, we have
observed the following deficiencies:
a. The daily rates of 84 Job Orders are below the minimum wage rate
(P200 to 250/day < P270/day) approved by the Regional Tripartite
Wages and Productivity Board.
20
3. Non-compliance with COA rules and regulations. Upon review of the
Job Order Contracts, it was revealed that the hiring of Job Order
employees does not cover specific lump sum work, piece of work,
intermittent job that is identified with a specific project, job requiring
special or technical skills, for a specific period of time, and/or have a
definite expected output. Instead the City resorted to hire job orders in
the following instances:
b. The 243 job order personnel assigned in the various offices are all
non-technical personnel and their duties and functions are clerical or
administrative in nature.
The continuous hiring of job order personnel by simply renewing the same
has denied deserving employees appropriate remuneration, security of tenure and
other non-compensation benefits had their services been duly considered for
permanent status, if warranted.
In addition, the total PS appropriation showed that the same is below the
55 percent limitation rule under Section 325(a) of R.A. 7160, an indication that
the City has adequate funds for the regularization of qualified and competent job
order employees.
21
Managements Comment
The management took well the findings and commits to implement our
recommendations.
Recommendations:
We recommended that the City issue policy guidelines in the hiring of job
order in accordance with Section 2, Rule XI of the Revised Omnibus Rules
Implementing Book V of EO No. 292, COA rules and regulations and existing
labor and tax laws specified above.
If possible, plan further on how to achieve the ideal and realistic personnel
complement of the City otherwise follow the Organizational Structure of the City
instead of resorting to Job Order scheme.
Further, if merited under existing Civil Service rules and regulations, the
performances of the said job order personnel should be evaluated for possible
appointment to permanent regular positions.
Legal Criteria
22
2. To improve knowledge, attitude and practices of children, parents and
caregivers through intensified nutrition and health education; and
Amount
Received
1st tranche (June 26, 2012) P 1,045,323.00
2nd tranche (Nov. 23, 2012) 1,006,677.00
Total P 2,052,000.00
Expenditure 810,104.56
Balance P 1,241,895.44
1. The first tranche of funds was received from the DSWD-R12 only on
June 26, 2012 and the implementation of the project only started in
October, four months after the target start date of June 2012.
2. The copy of the menu cycle which is integral in the preparation of the
meals was given late by the DSWD-R12.
23
supplier renders the supplier incapable of procuring and
delivering the food commodities necessary.
a. Procurement Planning.
b. Mandatory review and evaluation on the: (a) terms, (b) conditions, (c)
specifications, and (d) cost estimates and the
recommendations/decisions made possible revisions/adjustmentsand
technical requirements of the bid to determine the reason for every
failed bidding. (Section 35.2, IRR of RA 9184)
c. Maintenance of a registry of suppliers as basis for selecting the
suppliers for negotiations. (Section 53.1.2.2, IRR of RA 9184)
d. Invite and engage in negotiations with a sufficient number of
suppliers. (Section 53.1.2, IRR of RA 9184)
e. Negotiation, submission of offer and selection of suppliers. (Section
53.1.3-5, IRR of RA 9184)
f. Validation whether it is entering into a contract with a technically,
legally and financially capable supplier. (Section 53, IRR of RA 9184)
g. Invitation to observers in all stages of the negotiation. (Section 53.1.6,
IRR of RA 9184)
3. Lack of documented methods and procedures from the City that show
systematic flow of operation to ensure the efficiency and effectiveness of
the program.
a. No clear agreement between the LGU and the daycare center worker
and the volunteer parents regarding their roles in the implementation
of the program as well as their commitment to the success of SFP.
Incidents of uneaten meals and absentees were observed. During days
where there were no classes, some mothers do not bring their children
24
to the center for feeding schedule. Cooperation of the parents in the
operation of the program is not assured.
25
g. The City Nutrition Committee was not tap to assist in monitoring and
providing technical assistance to the implementers of the program.
Managements Comment
The management took well the findings and commits to implement our
recommendations and fast tract the implementation of the program.
Recommendations:
4. Closely coordinate with the partner agency (DSWD) to fast track the
release of fund and cycle menu upon signing of the Memorandum of
Agreement and for the smooth implementation of the program.
26
7. Following the guidelines set by the DSWD on the implementation of
SFP, the Agency should write a set of guidelines to be followed by all
day care centers to ensure uniformity in the implementation of SFP from
the receipt of the food commodities to monitoring and evaluation of the
program implementation.
27
Transfer of Funds Grants/Donations to NGOs/POs
Criteria
Article II, Section 23 of the Philippine Constitution provides that the State
shall encourage non-governmental, community-based, or sectoral organizations
that promote the welfare of the nation. Also, Section 34 of RA 7160
institutionalized the partnership of these organizations and the local government
units.
Released Funds
During the year-under audit, the team noted the following deficiencies on
how the City releases the funds to NGOs/POs:
28
a. Lack of transparency. The City Government did not make public via
newspapers, agencys website, bulletin boards and the like, at least three
months prior to the target date of commencement of the identified priority
projects which may be implemented by NGOs/POs (Section 4.5.1, COA
Circular No. 2007-001).
NGOs/POs Deficiencies
Dumaguil Farmers No authenticated copy of the latest Articles
Multi Purpose of Cooperation
Cooperative No Disclosure by the NGO/PO of the other
related business, if any, and extent of
ownership therein
The liquidity ratio is under 1 (0.80). This
shows that the Cooperative is not in good
financial condition. See computation
below:
29
NGOs/POs Deficiencies
City of Tacurong No authenticated copy of the latest Articles
Agriculture Multi- of Cooperation
Purpose Cooperative
Sultan Kudarat Multi- Disclosure by the NGO/PO of the other
Cab Operators Multi- related business, if any, and extent of
Purpose Cooperative ownership therein
Quipolot Multi-
Purpose Cooperative
Tacurong Hat Makers All documents prescribed were not present.
SKA
2. It was observed that funds granted to two (2) cooperatives were used
for lending activity, prohibited under Section 6.2 of COA Circular No.
2007-001. The funds were lent to its members and charge with interest
as shown in the table below:
30
Managements Comment
The management took well the findings and commits to implement our
recommendations.
Recommendations:
b. Strictly enforce the guidelines prescribed in the COA Circular No. 2007-
001.
Legal Framework
31
Under the Philhealth Capitation Fund (now PFPR), LGUs can enrol
thousands of indigent residents to one year coverage.
Essentially, the scheme involved the LGU allotting a portion of its annual
budget as subsidy to poor constituents for Philhealth coverage.
As incentive, Philhealth pays back the sponsoring LGUs P300 per enrolled
family under the PCF (additional incentive of P100 for timely submission of
reports).
32
Rules and Pertinent Provisions
Regulations
Section V (G), The disposition and allocation of PFPR shall be as
Philhealth Circular follows:
No. 10, s. 2012
1. Eighty percent (80%) of PFPR is for operational
cost and shall be divided, as follows:
a. Minimum of forty percent (40%) for drugs
and medicines (PNDF) (to be dispensed at
the facility) including drugs and medicines
for Asthma, AGE and Pneumonia; and
b. Maximum of forty percent (40%) for
reagents, medical supplies, equipment
(i.e., ambulance, ambubag, stretcher, etc),
information technology (IT equipment
specific for facility use needed to facilitate
reporting and database build-up), capacity
building for staff, infrastructure or any
other use related, necessary for the
delivery of required service including
referral fees for diagnostic services if not
able in the facility.
2. The remaining twenty percent (20%) shall be
exclusively utilized as honoraria of the staff of the
PCB facility and for the improvement of their
capabilities as would enable them to provide
better health service:
33
The PCF allocation and spending priorities of the City
A closer look at the PCF spending as detailed in the table below shows
that 48% went to Maintenance and Operating Expense while 30% of the fund
was spent on Capital Outlay and 23% for honoraria of personnel.
Actual Expenditure
Rank Object of Expenditure
Amount %
1 Maintenance & Operating Expense
Drugs & Medicines 721,759.25
Laboratory & Medical Supplies 623,345.00
Office Supplies 546,043.25 48%
Training Expense 9,900.00
Total 1,901,047.50
2 Capital Outlay
Medical Equipment (BTS Machine, etc) 487,950.00
Office Equipment (Aircon, LCD TV, etc) 471,510.00
IT Equipment (PC, Digicam, etc) 125,792.00 30%
Furniture & Fixtures (patients bed, table, etc) 71,970.00
Other PPE (Washing Machine, etc) 14,029.00
Cellular phone 4,850.00
Total 1,176,101.00
3 Honoraria
(2) Physicians 591,331.29
Rural Health Personnel 240,642.21 23%
Pathologist 66,000.00
Total 897,973.50
During the year-under audit, the team noted the following deficiencies on
how the City manages and utilize the Philhealth Capitation Fund:
34
a. No Budget Preparation and Planning
2. Also, the fund was not integrated in the City Development Plan and Annual
Investment Plan concerning the health department/issues.
- The budget (General Fund) of the City revealed that only P68,000 was
allotted for office supplies of the City Health Office, yet, the office has
spent a total of P546,043.25. Due to lack of APP from the office, the
necessity of spending more than what was budgeted for the office is
questionable.
35
Joint Resolution (JR) No. 4 dated June 17, 2009 which stipulates that
salaries, wages, allowances and other emoluments and benefits of officials
and employees of local government units shall be determined by their
respective Sanggunians in accordance with pertinent provisions of R.A.
No. 7160. As a result, we observed the following deficiencies:
Managements Comment
The management acknowledges the findings and will be discuss with the
Local Health Board as to the manner of disbursing the fund.
Recommendations:
Given the findings described above, the team makes the following
recommendations toimprove the undertakings of the Local Health Boardand
ensure that the PCF (now PFPR)is managed in the most effective and
efficientmanner for the advancement of the health services, responsive to the
needs of indigents in the City:
36
C. Value for Money Audit
The Local Development Council (LDC), created under Section 106 of the
RA 7160, shall initiate the formulation of a comprehensive multi-sectoral
development plan to be approved by the Sanggunian. Such plans/programs
specifying the proposed projects are required under Article 410 of the IRR of the
Act to be submitted to the local finance committee before the calendar for budget
preparation, for inclusion in the local government budget, as well as, in the
budgets of National Government Agencies (NGAs) or Government-Owned or
Controlled Corporations (GOCCs) concerned. The matrix below shows the
planning frameworks of LGUs:
37
Law, Rules and Relevant Provisions/Particulars
Regulations
should be duly linked in the budget and AIP of the City.
These documents serve as guide to the LGUs in ensuring the
effective and efficient utilization of their meager resources
Annex A, IRR Detailed engineering shall proceed only on the basis of the
of RA 9184 feasibility or preliminary engineering study made which
establishes the technical viability of the project and
conformance to land use and zoning guidelines prescribed by
existing laws
38
Table 1.
PPAs Schedule of Expected Output Amount
Implemen-
tation
Installation and Maintenance January to Installed and 1,652,071.00
of City Streets and Brgy. December maintained 90% of
Lighting System city & barangay
lighting system
Progressive Construction/ January to Constructed/ Rehab/ 13,000,000.00
Rehabilitation/ Improvement December Improved at least
of City Cultural & Sports 75% of City Cultural
Center & Sports Center
Concreting of City Road/ January to Concreted at least 10,000,000.00
Streets December 100olnm. More of
less of road annually
Construction of City Drainage January to Constructed at least 3,000,000.00
Canal-City Wide December 900 lnm. Drainage
canal annually
Construction/ Rehabilitation January to Constructed/ Rehab 5,000,000.00
of Barangay Roads/ Drainage December at least 1km. more or
Canal less of barangay road
Constructed/ Rehab
at least 500lnm.of
barangay drainage
canal
Tri-Media Program January to To have promoted 200,000.00
December and informed the
community of the
accomplishment of
the city
Sports Development Program January to Improved, discovered 1,500,000.00
December and enhanced the
ability of youth in
Sports Devt program
Cultural Enhancement January to To have conducted/ 800,000.00
Program & Operation Services December participated various
cultural enhancement
program
Gender & Development January to Strengthened gender 800,000.00
Program (GAD) December biases issue
Senior Citizen Program January to To have served at 700,000.00
December least 80% of the total
number of senior
citizen members
Peacekeeper /Social Security January to Reduced criminal 2,500,000.00
Program December rate by 30% and
maintained peace and
Traffic Enforcement Program January to 2,500,000.00
order in the area
December
None
Security Program January to 4,000,000.00
December
Cooperative Assistance January to To have increased 200,000.00
Program December number of
Cooperatives assisted
39
PPAs Schedule of Expected Output Amount
Implemen-
tation
by 30%
40
PPAs Schedule of Expected Output Amount
Implemen-
tation
Conduct/Attendance to January to To have conducted/ 700,000.00
relevant Trainings/ Seminars December attended various
trainings/ seminars
Conduct/ Participation to January to To have conducted/ 1,000,000.00
Sports Activities December participated to all
sports activities
Total 69,602,071.00
AIP was not supported with comprehensive data and information that
will show the extent of the problems of the City and how to address it. The
expected outputs of projects, plans and activities were not properly identified
and prioritized to achieve the Millennium Development Goals (MDG). The
quantitative and qualitative results that the agency is aiming for were not
determined. Further, the results whether immediate or long-term which
refer to the change that will occur after implementing the activity were not
stated.
41
Table 3 shows 33% and 9% of current and continuing funds,
respectively were not fully implemented.
Table 3. Not fully implemented
PPAs/Source of Obligated Amount Percentage
Fund Disbursements Balance Disb Bal
Current
20% DF 38,753,968.50 19,853,000.99 18,900,967.51 51% 49%
Locally Funded 47,809,254.24 37,734,996.36 17,084,646.41 79% 21%
Total 86,563,222.74 57,587,997.35 28,975,225.39 67% 33%
Continuing
20% DF 3,323,171.86 3,029,335.11 293,836.75 91% 9%
Locally Funded 2,879,345.86 2,598,482.16 280,863.70 90% 10%
Total 6,202,517.72 5,627,817.27 574,700.45 91% 9%
Grand total 92,765,740.46 63,215,814.62 29,549,925.84 68% 32%
Note: Balance=Not fully implemented projects
Also, prior years (CY 2011 & below) projects funded under the 20%
Development Fund and Locally Funded (continuing appropriations)
amounting to P12,781,170.43 and P6,885,404.67, respectively remain
idle/unutilized, thus the necessity of these projects are questionable.
1. Certification that the detailed engineering surveys and designs have been
conducted according to the prescribed agency standards and
specifications(Section 4, Annex A of IRR, RA 9184).
2. The Design Plans, Program of Works (POW) and Approved Budget for
the Contract (ABC) are not supported with Detailed Unit Price Analysis
(DUPA) that contains/and or supported with the following to justify the
plans and cost estimates:
All the observations previously mentioned could have been brought about
by the following deficiencies:
42
2. Limited technical capacities in planning and project development.
3. Limited number of technical personnel to carry out feasibility studies and
detailed engineering (this was attributed to delays of formulating
Program of Works and Program Designs).
4. Lack of Budget Accountability (monitoring and evaluation mechanism)
It was observed that the CDC did not keep track of the implementation of
AIP; concerned offices did not report to the CDC either. There was no
conscious effort to evaluate the implemented projects vis--vis planned
targets.
The management said that the findings and recommendations were already
addressed thru various efforts such as issuing Executive Orders and SP
Resolutions to monitor the PPAs of the City.
However, the reports the team reviewed for this finding speak otherwise.
We suggest that the management review these unimplemented and delayed
projects vis--vis program/project plans to see where the problems lie. The team
also emphasized the need to carefully plan the PPAs with complete, specific and
comprehensive data and information that will show the extent of the problems of
the City and how to address them.
Recommendations:
Given the findings described above, the team makes the following
recommendations toimprove the programs and projects implementation of the
City andto help ensure that the resources are managed in the most effective and
efficientmanner to meet the needs of the constituents and stakeholders of the City.
43
f. Clearly describe how the project will be managed and controlled in its
delivery/execution phase
g. Fast track the implementation of unimplemented PPAs.
h. Evaluate whether the programs and projects funded from prior years
budget are still relevant otherwise revert the fund to other programs
and projects which is more needed and applicable upon
recommendation of the Local Chief Executive and approval by the
Sanggunian concerned (Section 322 of RA No. 7160)
i. Make sure that the timeline set for every program/project is realistic
and is strictly followed.
j. The timing of execution spells out the success of a program or a
project.
k. Close coordination among offices.
3. To enhance accountability
Revenue Generation
6. The agency has yet to effectively exercise its authority to generate and collect
taxes. A number of revenue options under RA 7160 were not fully
maximized. At present the agency is still greatly dependent on IRA to meet
around 79% of its requirements.
44
IRA Local IRA Local
Revenues Revenue
2008 205,720,714.42 54,405,421.58 79.17% 20.82%
2009 246,051,014.00 64,734,868.74 79.08% 20.91%
2010 275,048,514.00 55,267,932.70 83.27% 16.73%
2011 315,249,772.00 57,390,424.33 84.60% 15.40%
2012 253,260,357.00 67,224,610.23 79.02% 20.98%
However, these revenues along with the share from IRA have remained
insufficient to address their requirements. At present, the LGUhas resorted to
loans and borrowings to finance developmental projects.
Further analysis of records disclosed that the LGUhas not fully exercised
its taxing powers and has yet to explore potential revenue sources allowed under
existing laws and regulations. This is discussed in the following instances:
a. The collection system adopted on taxes being imposed by the City may
not be considered efficient and effective due to inadequate policies and
laxity by the Treasurers office to validate the gross sales or receipts of
business establishments.
45
b. Inefficient implementation of local tax laws such as the following:
1. Ad valorem tax on idle lands was still not imposed and collected by
the City as mandated under Section 236 of LGC and Section 85 of the
agencys Revenue Code, as amended.Uncollected yearly taxes on idle
lands covering sample selected areas already amounted to P
117,851.65
Note that this has been the subject of observation in the previous
years and has remained uncollected until now.Ocular inspections by the
team last CY 2011 revealed that there were idle subdivision lots and
agricultural lands which should have been subjected to ad valorem tax. As
can be gleaned in the tabulation below, yearly tax due on the sampled
subdivisions alone could have generated additional income to the City of
around P 117,851.65.
Section 10
56 Residential 551,150 5% 27,557.50
Lot
Section 4
Grio 70 Residential 353,870 5% 17,693.50
Lot
46
Lot 421
Calean 2 lot 50,680 5% 2,534.00
Agricultural
Lot (5 hec.)
Diamante
44 Res. Lot 612,210 5% 30,610.50
Section 14
1 Agri. Lot (5 80,540 5% 4,027.00
hec.)
Section 496
20 Res. Lot 230,600 5% 11,530.00
Calean Section 16
1 Res. Lot 95,760 5% 4,788.00
Section 14
Kalandagan 1 Res. Lot 87,563 5% 4,378.15
Section 3
15 Res. Lot 71,550 5% 3,577.50
Section 4
Total 117,851.65
47
association enjoying a franchise whether issued by the
national government or local government and doing
business in the City of Tacurong, shall pay a franchise tax
at the rate of fifty percent of one percent (50% of 1%) of
gross receipts and sales derived from the operation of the
business in Tacurong City during the preceding year.
48
Interview with the City Treasurer regarding the failure of the City
to collect Franchise Tax, specifically from PLDT, has revealed that this
franchise is exempted because their franchise contains in lieu of all
taxes clauses and they are already paying the business tax. As way of
rejoinder, it is already a settled jurisprudence, the first was in the 2001
case of PLDT vs. City of Davao, second, in case of PLDT vs. City of
Bacolod, et al and third, in the very recent case of PLDT vs. Province of
Laguna, that PLDT is not exempted from paying local franchise and
business taxes.
The management replied that the City Treasurers Office is exercising its power
and function in the validation and verification of the gross sales or receipts of the
taxpayers. They also reasoned that they are already implementing the Presumptive
Income Level Assessment and that further study or research will be made for the
enforcement of the Ad Valorem Tax and Franchise Tax.
Regarding the tax mapping, the management replied that this has already been
included in the plan of the City Treasurers Office and BPLO.
As a rejoinder, this team cannot find any evidence or any document that will show
that the CTO validated or verified the gross sales or receipts of the business
establishments, such as validating sworn statements with relevant information available
in other government agencies like the BIR such as audited financial statement and
monthly payments of business tax (VAT and non-VAT). Regarding the implementation
of the Presumptive Income Level Assessment, this team has not found any provision in
the Citys Revenue Code or any Tax Ordinance regarding the use of Presumptive Income
Level Assessment, hence we cannot rely on the statement that the agency is
implementing such.
49
With regard to the enforcement of Ad Valorem and Franchise Taxes, we would
like to emphasize that the City is duty bound to collect these taxes and should enforce
these without delay, unless there is an ordinance stopping such collection.
Recommendations:
In order to address the noted observations and increase collections, the Team
recommended that management:
a. Formulate a clear cut policy (SP Ordinance) that will improve the assessment
of business taxes such as:
7. The agency failed to prepare and submit an Annual Procurement Plan for
Common-use Supplies and Equipment (APP-CSE) for 2012 and 2013 as
required under DBM Circular Letter No. 2011-06 and 2011-06A. As a result,
the procurement of common used supplies and equipment were acquired
thru piecemeal scheme, thus, the agency was not able to obtain the most
advantageous price in its purchases.
50
Section 4 of DBM Circular Letter No. 2011-06 dated August 25, 2011
mandated that all National Government Agencies, including Military and Police
Units; GOCCs, GFIs, SUCs and LGUs are required to submit their Annual
Procurement Plan for Common-Use Supplies and Equipment (APP-CSE), using
the prescribed format. The submission of the APP-CSE, nonetheless, shall not
affect the responsibility of the procuring entity to submit their respective Annual
Procurement Plan pursuant to Section 7 of RA 9184 and its IRR.
The aforesaid Circular Letter, under Sec. 4.2 thereof, specifies the
deadlines for the submission of the APP-CSE; however, said deadlines had been
subsequently amended under DBM Circular Letter No. 2011-06A, as quoted
hereunder:
3.0 Thus, the following provisions shall supersede Item Nos. 4.2 and
4.3 of CL 2011-6, to read as follows:
xxx
Procuring entities in the regions to the concerned DBM
Regional Office (RO).
51
procuring entity must conduct public bidding as provided by Section 10 of R.A.
9184 to procure such items in bulk.
Inquiry with the BAC officials of the agency revealed that the required
APP-CSE for 2012 and 2013 was neither prepared nor submitted nor was emailed
to the PS-DBM as likewise required.
It appeared that the agency was not able to carefully and properly schedule
its purchases even if there was a prepared APP. This year, it was able to procure a
few items from PS-DBM but was not able to fullyutilize its services and acquire
consumables, equipment and other similar goods in bulk. Instead, these were
again acquired piecemeal thru alternative methods of procurement such as small-
value procurement (SVP) and shopping, and even thru competitive bidding, which
were not efficient and economical and thus, disadvantageous to the City in so
many ways. The purchasing system of the agency also showed that the City
favored procuring from various local suppliers rather than obtaining commodities
from PS-DBM, which by far offers the most economical purchases. Table below
illustrates this:
The team would like to reiterate that this piecemeal scheme of procuring
common-use goods needed at or about the same time, or issuance of two or more
Purchase Orders based on common-use goods requisitions for items needed at
about the same time by the requisitioners is considered as Splitting of Purchase
Order which is contrary to Section 26 of COA Circular No. 92-386.
52
of transaction
st
Proc 1 2nd 3rd 1st 2nd 3rd
Qtr Qtr Qtr Qtr Qtr Qtr
Office Supplies CB 1 1 1 P. Bidding 25 37 30
Alternative mode 12 12 21
Total 37 49 51
The management replied that they have an APP-CSE for CY 2012 but was
prepared late due to late submission of PPMP by various offices; hence the
required submission to the DBM by November 15 was not met.
The management also reasoned that they tried to procure from PS-DBM in
Koronadal City and said that PS-DBM Koronadal could only supply 20-25
percent of their supply requirement. The prices of supplies from PS-DBM in
Koronandal City may be low but if the cost to procure in terms of gas and oil
expenses and traveling expenses of personnel are added, the total cost would be
higher.
Again, we would like to stand by our findings that purchasing from PS-
DBM would be more advantageous and economical to the agency, aside from the
fact that the law requires it. We also would like to reiterate the value of buying in
bulk to minimize additional cost of procurement. Also, we encourage the
Management to compute the price of the supplies needed + other costs that may
incur in purchasing from PS-DBM vis--vis prevailing lowest cost from other
supplier(s) to show the difference and to justify that purchasing from PS-DBM is
in fact disadvantageous to the agency.Regarding their argument that the PS-DBM
has limited supply, this team is not convinced that this is such the case. Because
the agency was unable to submit the required APP-CSE, obviously, the agencys
supply requirement will not be supplied by the PS-DBM because the agencys
actual and projected procurement of commonuse supplies and equipment in the
Consolidated APP-CSE for government were not included.
53
Recommendations:
a. Strictly comply with the requirements under DBM Circular Letter Nos.
2011-6 and 2011-06A, to ensure inclusion of agency procurement
activities for common-use supplies and equipment in the Consolidated
APP-CSE, and afford complete and accurate projection by the PS-
DBM of inventory requirements of government.
54
1. Transparency in the procurement process and in the implementation of
procurement contracts through wide dissemination of bid opportunities
and participation of pertinent non-government organizations.
55
b) The APP for Infrastructure projects were described in generic
terms, lump sum appropriation and lack specificity such as the cost
(ABC) and location(s) for each project.
c) The mode of procurement which the City utilized for gasoline and
repair and maintenance expense for motor vehicles is SVP, which
is not proper. This will result in splitting of contracts since the
Approved Budget Contract is higher than the threshold amount
allowed under RA 9184 to be considered as SVP as illustrated
below:
d) Some items in the APP do not match the budget allotment, per
appropriation ordinance (Annual Budget). Shown below are
sample comparisons with differences:
ABC Per
Procurement
APP Annual Difference
Program/Project
Budget
Office Supplies 3,896,852.00 3,634,000.00 262,852.00
Accountable Form Expense 469,900.00 870,000.00 400,100.00
Gasoline, Oil & Lubricants 8,167,130.00 7,197,374.00 969,756.00
56
Drugs & Medical a.) Jan. 17 c.) Apr. 10 c.) July 10 c.) Oct. 9
Expense b.) Feb. 20 d.) May 15 d.) Aug. 14 d.) Nov. 13
Gasoline, Oil & c.) Jan. 17 e.) Apr. 10 e.) July 10 e.) Oct. 9
Lubricants d.) Feb. 20 f.) May 15 f.) Aug. 14 f.) Nov. 13
g) Overall, the APP was not fully used or considered by the agency as
the main tool for procurement discipline of the agency.
57
We noted that no document was available to justify that the following
procurement procedures under negotiated procurement were undertaken:
1. Mandatory review and evaluation on the: (a) terms, (b) conditions, (c)
specifications, and (d) cost estimates and the
recommendations/decisions made possible revisions/adjustments and
technical requirements of the bid to determine the reason for every
failed bidding. (Section 35.2, IRR of RA 9184)
2. Maintenance of a registry of suppliers as basis for selecting the
suppliers for negotiations. (Section 53.1.2.2, IRR of RA 9184)
3. Invite and engage in negotiations with a sufficient number of
suppliers. (Section 53.1.2, IRR of RA 9184)
4. Negotiation, submission of offer and selection of suppliers. (Section
53.1.3-5, IRR of RA 9184)
5. Validation whether it is entering into a contract with a technically,
legally and financially capable supplier. (Section 53, IRR of RA 9184)
6. Invitation to observers in all stages of the negotiation. (Section 53.1.6,
IRR of RA 9184)
1. The procuring unit delegated to conduct shopping and SVP does not
conduct detailed procedures to validate whether it is entering into a
contract with a technically, legally and financially capable supplier,
contractor or consultant.
2. The procuring unit that was delegated to conduct shopping and SVP is
also the unit authorized to receive the goods. This constitutes a lack of
appropriate segregation of duties (check-and-balance) which will lead
to irregular/inappropriate procurement decisions.
58
purchases, competitive bidding was still used as mode of procurement which
is so impractical and uneconomical. (See separate findings for details)
b. A very limited number of offers received; biddings were unusually attended
by lone bidder on several occasions. This is unusual since the bid items are
common, regularly used and can practically be procured anywhere (not
specialized).
In some instances, the bid prices for certain items (office supplies) are the
same as the ABCs. This raises suspicion since the published ABC is the total
price of all office supplies and not per item. Also, this gives room for doubt
that the prices may be leaked since the item prices are not available to the
suppliers and are only stated in the PRs. This practice defeats the purpose of
competitive bidding since the bid price is practically the same thus, the agency
does not get the best deal (see Annex for sample Abstract of Bid)
RAQI Various Infrastructure Various 1. Latest Income Tax Return is for Tax
Builders & Projects totaling P dates Year 2010
Construction 1,927,619.70 2. No Latest Business Tax Return
Supply
59
Name of Awarded Deficiencies in eligibility and post
Bidder
GESACOM 32 units of Handheld September 1. Noqualification
Tax Clearancerequirements
Radio totaling P 17, 2012 2. No Latest Business Tax Return
207,360.00 3. No Certificate PhilGEPS
Registration
4. No Purchasers and dealers permits
from the National
Telecommunications Commission
(RA 3846, otherwise known as the
Radio Control Law)
La Forteza Various Drugs, Various 1. No Tax Clearance
Pharmacy medicines, medical and dates 2. Latest Income Tax Return is for Tax
dental supplies Year 2010 only.
totaling P 744,069.40 3. No Latest Business Tax Return
4. No CPR from BFAD
Managements Comments
Recommendations:
Given the findings above and our standing recommendation that the City
Government should always strictly abide by the Implementing Rules and
Regulations (IRR) of RA 9184, the team makes the following recommendations
to be more effective and efficient in processing procurement activities of the City
60
and fully improve the procurement procedures to attain the principles of
transparency, competitiveness and economy.
a. Strictly adhere to the PPMP and APP and make sure that these PPMPs
and APPs were carefully planned and scheduled to better manage the
resources, produce economical result, make the procurement
procedures more efficient and practical in the part of the government
and do away with redundancy.
b. In order to better appreciate the linkage between the APP and the
budget process, the LGU may refer to the pertinent provisions of the
Updated Budget Operations Manual (UBOM). Step 2.3 of the Budget
Preparation Process provides as follows:
61
The rules and regulation on withholding of income taxes on compensation
are prescribed under the following sections of Revenue Regulation No. 2-98:
SECTION 2.78. Withholding Tax on Compensation. The
withholding of tax on compensation income is a method of collecting
the income tax at source upon receipt of the income. It applies to all
employed individuals whether citizens or aliens, deriving income from
compensation for services rendered in the Philippines. The employer is
constituted as the withholding agent.
SECTION 2.78.1. Withholding of Income Tax on Compensation
Income.
(A) Compensation Income Defined. In general, the term
"compensation" means all remuneration for services performed
by an employee for his employer under an employer-employee
relationship, unless specifically excluded by the Code.
The name by which the remuneration for services is designated is
immaterial. Thus, salaries, wages, emoluments and honoraria,
allowances, commissions (e.g. transportation, representation,
entertainment and the like); fees including director's fees, if the
director is, at the same time, an employee of the
employer/corporation; taxable bonuses and fringe benefits except
those which are subject to the fringe benefits tax under Sec. 33 of
the Code; taxable pensions and retirement pay; and other income
of a similar nature constitute compensation income.
62
Post audit of Disbursement Vouchers for the CY 2012 revealed that the
personnel employed by the City Government on contractual/job order basis were
not subjected to withholding tax on compensation. A sample computation of
compensation of a few selected job order personnel as of October 15, 2012
subjected to withholding tax illustrates the following:
Managements Comment
The management took well the findings and commits to implement our
recommendation.
Recommendation
We recommended that the management strictly enforce the BIR Rules &
Regulations regarding the withholding of Compensation Income Tax (BIR RR 2-
98, as amended) and apply the appropriate taxes on the City personnel on
contractual/job order basis.
10. The validity, existence and accuracy of the Property, Plant and Equipment
accounts worth P100,779,138.00 could not be ascertained due to the
discrepancy between the accounting records and the result of the inventory-
taking. This is attributed to the non-reconciliation of balances, absence of
evidence of ownership of Lands, failure to conduct a complete physical
inventory and failure to properly maintain the ledger and property cards).
63
Section 114 of the same Manual requires the Chief Accountant to maintain
Property, Plant and Equipment Ledger Card (PPELC) for each category of
plant, property and equipment. The General Services Officer is required to
maintain property cards for property, plant and equipment in their custody to
account for the receipt and disposition of the same. The balance per property
cards should always reconcile with the ledger cards of the accounting unit.
64
c. Major improvements/renovations permanent or capital in nature
that appreciably extend the life of the infrastructure or equipment were
counted and recorded separately as a new structure or equipment by
the GSO in the RPCPPE instead of capitalizing it to the original cost
of the PPE and counting it as one.
1. Land (201)
65
6. Market and Slaughterhouse (214)
i.Unidentified
Other Structures 2002 5,929,198.39
Managements Comments
The management said that they will provide appropriation for the titling of
land and register it in the name of the City.
They added that the conduct of physical inventory of all City properties is
already ongoing. In addition they have already instituted measures to reconcile the
records. As a result, there has been a decrease in the discrepancy between the
GSO and Accounting records from P 319,172,030.08 to P 100,779,138.00.
Recommendations:
66
Annex 49, Volume II, NGAS Manual for the correct format of
RPCPPE)
Real Property Tax (RPT) and Special Education Tax (SET) Receivable Accounts
11. The yearend balances of the Real Property Tax (RPT) and Special
Education Tax (SET) Receivables amounting to P 4,752,940.22, are still
unreliable due to the failure of the City Treasurer to submit the certified list
showing the name of taxpayers and the amounts due and collectible for the
year pursuant to Section 20, Volume I of the NGAS Manual.
67
RPT/SET Receivable:
Recommendations:
68
We also recommended that the City Accountant maintain Subsidiary
Ledgers (SLs) in order to facilitate monitoring of tax collections and
delinquencies and at the same segregate duties between access to recording and
collection.
69
Ocular inspection at the General Services Office (GSO) stockroom and
other agencys premises revealedan undetermined amount of unserviceable
properties and waste materials (see picture below), most of which have remained
for more than five (5) years.
3. Not all waste materials were accounted for because its either they
were not returned (such as spare parts, batteries, tire etc) or they were
destroyed without the presence of the Auditor or its representative.
These properties may have lost their salvage values due tocontinuous
exposure to elements. Also, further deterioration could have been checked or
prevented had these been disposed of at the right time.
70
And although the waste materials may no longer be useful, it should have
been properly accounted for and protected from losses because of their value and
could be sold in the future.
Managements Comments
The management took well the findings and commits to implement our
recommendations.
Recommendations:
PPAs Budget
A. Client-focused
Strengthening and Monitoring of Barangay Council for 10,000.00
the Protection of Children
Strengthening of City Inter-Agency Council on Anti- 10,000.00
Trafficking & Violence Against Women & Children
(CIACAT-VAWC)
Capability Training of Barangay VAWC-Desk in Charge 20,000.00
18 Day Campaign to End Violence Against Women 15,000.00
71
PPAs Budget
Operation of Crisis Intervention Center for Women and 250,000.00
Children and Youth Detention Home
Symposiums about Sexual Health 80,000.00
Sagip Anghel Task Force Monitoring and Operation 25,000.00
Strengthening of Men Oppose Violence Against Women 10,000.00
(MOVE)
Gender Sensitivity Training of leaders of different Women 35,000.00
Organizations
B. Organization-focused
Gender Sensitivity Training for Newly hired employees 45,000.00
and officials
The total audit suspension, disallowances and charges found in the audit of
various transactions of the agency, as of December 31, 2012 is P0.00, based on the
Notice of Suspension (NS)/Notice of Disallowance(ND)/Notice of Charge (NC)
issued by this Commission, as summarized hereunder:
Particulars Notice of
Suspensions Disallowances Charges
Summary of Audit Suspensions, P87,000.00 P0.00 P0.00
Disallowances and Charges as of
December 31, 2011
Add: Issuances 803,897.21 0.00 0.00
Less: Settlements
Prior Year 87,000.00 0.00 0.00
Current Year 803,897.21 0.00 0.00
Balance, December 31, 2012 0.00 0.00 0.00
72
PART III
STATUS OF IMPLEMENTATION
OF PRIOR YEARS
RECOMMENDATIONS
0
PART III STATUS OF IMPLEMENTATION OF PRIOR YEARS
RECOMMENDATION
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
1. The validity, 1. Strictly observe C Provide Not There are still
existence and the rules and Y appropriation implemented Lands that are not
accuracy of the regulations in 2 for the titling of yet registered in the
Property, Plant the acquisition 0 Land. name of the City
and Equipment of real 1 Government.
accounts properties and 1
totaling take immediate A
P319,172,130.0 actions to A
8, which ensure that all R
represents the land and land
discrepancy rights acquired
between the are titled and
GSO and registered in the
Accounting name of the
records could City
not be Government.
ascertained due
to non 2. Transfer/drop Transferred/dro Fully
reconciliation from the books p from the implemented
of balances, the books
absence of completed/turne completed
evidence of d over projects projects to the
ownership of recorded as Registry of
Lands, failure Public Public
to transfer Infrastructures Infrastructures
completed (PI) accounts to
public the Registry of
infrastructure Public
projects, failure Infrastructures
to conduct a (RPI).
complete
physical 3. Conduct a Conducted a Partially Still on going
inventory and complete physical implemented
maintain a physical inventory of all
complete ledger inventory of all the City
and the City property.
property/stock property and
cards. accomplished
the RPCPPE
showing all the
vital
information.
73
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
(see Annex 49,
Volume II,
NGAS Manual
for the correct
format of
RPCPPE)
2. The yearend We recommend the C Required the Not The City Treasurer
balances of the management to Y City Treasurer implemented did not furnish the
Real Property strictly adhere to the 2 to submit City Accountant
Tax (RPT) and provision of Section 0 accurate list of the complete and
Special 20, Volume I of the 1 RPT accurate list of
Education Tax NGAS Manual in 1 Receivables to taxpayers
(SET) order to ensure the City
Receivables reliability of the Accountant.
74
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
amounting to P balances of Real A
7,417,618.14, Property Tax A
are unreliable Receivable and R
due to the Special Education
failure of the Tax Receivable
City Treasurer accounts. Setting up
to submit the of RPT/SET
certified list Receivable should
showing the be done based on
name of the Certified List of
taxpayers and Taxpayers.
the amounts due
and collectible We also recommend Not
for the year in that the City implemented
pursuant to Accountant maintain
Section 20, Subsidiary Ledgers
Volume I of the (SLs) in order to
NGAS Manual. facilitate monitoring
. of tax collections
and delinquencies
and to segregate
duties between
access to recording
and collection. Take
up on the books the
RPT/SET discounts.
75
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
implementation
of existing rules
and regulations
(PD 1445 &
NGAS Manual)
over the proper
cash handling,
thus resulting in
exposing the
cash to high
risks of loss,
misuse, or
misappropriatio
n.
76
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
alternative enhance the City
methods of Governments
procurement efficiency and
economy as this will
such as small-
free the agency from
value
the tediousness of
procurement attending to
(SVP) and recurring
shopping, and transactions, and
even thru provide greater time
competitive for the procurement
bidding. As a of high value, highly
result, the specialized
agency was not requirements for its
more significant
able to obtain
projects.
the most
advantageous The management is To submit the Not The required APP-
price also advised to APP-CSE to the implemented CSE was not
(economical submit its Annual PS-DBM submitted to the
procurement). Procurement Plan PS-DBM
Further, for common-use
numerous supplies and
Purchase equipment (APP-
CSE) on or before
Requests,
November 15 of
Purchase each year to DBM
Orders and using the prescribed
supporting format as provided
documents were under DBM Circular
prepared and Letter No. 2011-6.
processed daily, This will help the
resulting to DBM to anticipate
tedious the volume of
demand for the
procurement
different common
procedures use supplies of the
notwithstanding government for the
the incurrence ensuing year.
of more
expenses for the In case of non Procurement of Not The CSE are still
office supplies availability of items CSE will be in implemented acquired thru
used in printing in the PS-DBM, we bulk. piecemeal scheme.
the supporting recommend that
procurement of
documents.
these common use
goods should be
procured in bulk
quantities to avoid
piecemeal purchases
and Splitting of
Purchase Order.
77
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
We recommend the Make Not Not feasible due to
management thru representation implemented inability of the
the BAC to make a with the utility Utility providers to
providers. synchronized all
representation to all
billing statement
utility providers and
request to
synchronize release
of all billing
statements of all
offices, if possible.
While on paying
various utility
expenses, we
recommend the
management thru
the GSO to simplify
payment procedures
by consolidating all
statement of
accounts of every
office per utility
provider and issue a
single DV/Check for
each aggregate.
78
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
economy in its
procurement
process
79
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
stallholders and
validate their
lease contracts
and business
permits. Inspect
all the stalls if
they are
compatible with
their businesses,
the physical
structures of the
stalls and if they
conform to all
sanitary rules.
80
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
sections,
especially the
native section,
because this
will be a good
place to
showcase the
native products
of the Province
of Sultan
Kudarat and
allot stalls to
One Town One
Product (OTOP)
products
registered in the
DTI.
81
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
carenderia
section (waste
and sanitation)
82
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
under DILG- representative
DBM Joint in the planning
Memorandum process.
Circular No.1,
s. 2005. 6. Clearly describe No action taken Not Reiterated in
how the project implemented finding no. 5
will be
managed and
controlled in its
delivery/executi
on phase
83
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
monitor and executive order
evaluate PPAs to address this.
(Section 112 of
RA 7160) and
provide for
project support
or program
maintenance.
84
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
9. The budget 1. Have a better C Review the Fully
priorities for the linkage of Y 2012 SEF implemented
SEF were not planning and 2 Budget and
set relative to budgeting as 0 revise it in
targeted well as better 1 accordance with
improvements prioritization in 1 the prescribed
in student the use of SEF. A guidelines
performance Strictly A
because the prioritize the R
programs, programs,
projects and projects and
activities activities of the
funded through whole division
SEF by the of Tacurong
Local School City, as
Board were not stipulated in
clearly defined, DECS-DBM-
prioritized and DILG Joint
implemented in Circular Nos.
accordance with 01 s. 1998, 01-
DECS, DBM A s 2000, 100
and DILG Joint (c) of RA
Circular No. 01 7160and RA
s. 1998, RA No. 5447to address
5447 and the problems of
Section 99 (a) the students and
and 100 (c) of teachers and for
RA 7160. the operation
and
maintenance of
public schools,
and not for the
operation and
maintenance of
Division and
District offices.
85
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
teaching
personnel,
maintenance
and other
operating
expenses and
capital outlays
of the Division
and District
offices to the
SEF, or these
will be
disallowed in
audit.
86
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
the LSB budget
and instead
allocate more to
support the
instructional
needs of the
schools in order
to improve
learning
outcomes. We
do recognize,
however, the
importance of
physical
development
and sports in
the well-
rounded
development of
the child but it
should be
stressed that
there is a
difference
between
physical
education and
school athletics,
on the one
hand, and the
development of
athletes (which
is the objective
of the Palaro),
on the other.
87
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
bees, math
contests,
science fairs,
cultural contests
and other
academic and
non-academic
competitions.
These activities
are not only
costly to
support but also
because they
take the time of
teachers and
students away
from the
classroom.
88
Reason for
R Status of
Management Partial/
Audit Observation Recommendation e Implementat
Action Non
f ion
Implementation
Craft an
effective tax
campaign that
advertises to the
community
where the SEF
goes and the
plans of the
City to improve
the basic
education, and
consequently
improve tax
collection.
Introduce some
innovative ways
that show these
important
messages.
(Example,
showing of a
picture of
students with
laptop in the
classroom with
a caption that
reads: Our
investment to
good, quality
Education.
Please pay your
Real Property
Taxes. Note:
this can be
translated in
local dialects)
89
PART IV
ANNEXES