2011

Annual Financial Report

LOCAL GOVERNMENT UNITS

Volume III-B

INDIVIDUAL SUMMARY REPORT

TABLE OF CONTENTS

Region Page National Capital Region (NCR)

City of Caloocan 1 City of Las Pias 3 City of Makati 5 City of Malabon 8 City of Mandaluyong 10 City of Manila 11 City of Marikina 18 City of Muntinlupa 20 City of Navotas 23 City of Paraaque 25 City of Pasay 28 City of Pasig 30 Quezon City 33 City of San Juan 39 City of Taguig 42 City of Valenzuela 43 Municipality of Pateros 47 Pamantasan ng Lungsod ng Maynila 50 Quezon City General Hospital 52

Cordillera Administrative Region (CAR)

Mountain Province 55 Province of Abra 57 Province of Apayao 61 Province of Benguet 64 Province of Ifugao 66 Province of Kalinga 68 City of Baguio 69 City of Tabuk 75

Region I Ilocos Region

Province of Ilocos Norte 77 Province of La Union 78 Province of Pangasinan 81 City of Alaminos 83 City of Batac 84

Region Page

City of Candon 86 City of Dagupan 87 City of Laoag 89 City of San Carlos 90 City of San Fernando 91 City of Urdaneta 93 City of Vigan 94

Region II Cagayan Valley Region

Province of Batanes 96 Province of Cagayan 98 Province of Isabela 100 Province of Nueva Vizcaya 104 Province of Quirino 106 City of Cauyan 108 City of Santiago 109 City of Tuguegarao 112

Region III Central Luzon

Province of Aurora 114 Province of Bataan 115 Province of Bulacan 117 Province of Nueva Ecija 119 Province of Pampanga 120 Province of Tarlac 121 Province of Zambales 123 City of Angeles 125 City of Balanga 126 City of Cabanatuan 128 City of Gapan 130 City of Malolos 131 City of Meycauayan 133 City of Olongapo 135 City of Palayan 137 City of San Fernando 140 City of San Jose 143 City of San Jose Del Monte 144 City Science of Muoz 148 City of Tarlac 150

Region IV Southern Tagalog Province of Batangas 153 Province of Cavite 156 Province of Laguna 159 Province of Marinduque 160 Province of Palawan 165 Province of Quezon 168 Province of Rizal 170 Province of Romblon 173 Province of Oriental Mindoro 175 Province of Antipolo 177 City of Batangas 179 City of Tanauan 181 City of Bian 183 City of Calamba 185 City of Calapan 187 City of Cavite 188 City of Dasmarias 190 City of Lipa 193 City of Lucena 198 City of Puerto Princesa 200 City of San Pablo 202 City of Santa Rosa 206 City of Tagaytay 209

Region V Bicol Region

Province of Albay 212 Province of Camarines Norte 214 Province of Camarines Sur 217 Province of Catanduanes 223 Province of Sorsogon 231 City of Iriga 235 City of Legazpi 247 City of Ligao 241 City of Masbate 243 City of Naga 246 City of Sorsogon 250 City of Tabaco 252

Region VI Visayas Region Province of Guimaras 259 Province of Iloilo 261 Province of Negros Occidental 264 City of Himalayan 266

Region Page City of Iloilo 267 City of Kabankalan 270 City of la Carlota 273 City of Roxas 274

Region VII Central Visayas

Province of Bohol 276 Province of Negros Oriental 278 Province of Siquijor 280 City of Bais 282 City of Bayawan 284 City of Canlaon 285 City of Danao 288 City of Dumaguete 289 City of Lapu-lapu 291 City of Mandaue 296 City of Tagbilaran 303 City of Talisay 306 City of Tanjay 310 City of Toledo 312 City of Guihulngan 315 City of Bogo 317 City of Carcar 319 City of Cebu 321 City of Naga 325

Region VIII Eastern Visayas

Province of Biliran 328 Province of Eatern Samar 329 Province of Leyte 332 Province of Northern Samar 336 Province of Samar 338 Province of Southern Leyte 342 City of Calbayog 343 City of Maasin 345 City of Ormoc 347 City of Tacloban 349 City of Baybay 351 City of Borongan 356 City of Catbalogan 357

Region IX Western Mindanao Province of Zamboanga Del Norte 359 Province of Zamboanga Del Sur 360 Province of Zamboanga Sibugay 364 City of Dipolog 366 City of Pagadian 369 City of Zamboanga 370 City of Dapitan 372 City of Isabela 374

Region X Northern Mindanao

Province of Bukidnon 377 Province of Camigin 379 Province of Lanao del Norte 380 Province of Misamis Occidental 382 Province of Misamis Oriental 383 City of Cagayan de Oro 386 City of El Salvador 389 City of Guingoog 389 City of Iligan 390 City of Malaybalay 393 City of Oroquieta 394 City of Ozamis 396 City of Tangub 397 City of Valencia 398

Region X Southern Mindanao

Province of Compostela Valley 400 Province of Davao del Norte 401 Province of Davao del Sur 405 Province of Davao Oriental 406 City of Davao 409 City of Digos 411 Island Garden City of Samal 413 City of Mati 416 City of Panabo 417 City of Tagum 418

Region XII Central Mindanao

Province of North Cotabato 420 Province of Sultan Kudarat 421 Province of Sarangani 423 Province of South Cotabato 425 City of Cotabato 426

Region Page City of General santos 427 City of Tacurong 429 City of Koronadal 431

Region XII CARAGA

Province of Agusan del Norte 433 Province of agusan del Sur 435 Province of Dinagat Isaland 436 Province of Surigao del Sur 437 City of Bislig 439 City of Butuan 441 City of Tandag 443 City of Bayugan 445 City of Cabadbaran 447

Autonomous Region in Muslim Mindanao (ARMM)

Province of Basilan 449 Province of Lanao del ur 450 Province of Maguindanao 452 Province of Sulu 453 Province of Tawi-tawi 454 City of Marawi 455

Volume III B

Individual Summary Report

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CITY OF CALOOCAN

A. BACKGROUND 1. Legal Basis Republic Act No. 3278 February 6, 1962 2. Key Officials City Mayor Hon. Enrico R. Echiverri City Treasurer Ms. Evelina M.Garma City Accountant Edna V. Centeno 3. Personnel Complement Permanent 1,585 Temporary/Casual/Contractual/

Co-terminus/Job Order

2,922 Elective Officials 14 Total Personnel Complement 4,521 4. No. of Barangays 188 B. FINANCIAL PROFILE Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 9,449,447 8,586,280 863,167 Liabilities 3,750,637 3,429,176 321,461 Government Equity 5,698,810 5,157,104 541,706 Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 3,368,120 3,101,805 266,315 Expenses 2,608,509 2,460,286 148,223 Net Income 759,611 641,519 118,092 Cash Flows (In Thousand Pesos) 2011 2010 Inc./(Dec.) Net Cash from Operating Activities 1,157,176 1,157,176 (388,787)

Cash from Investing Activities (736,057)

(1,286,948) 550,891 Cash from Financing Activities 302,200

163,110 139,091

Net Cash Provided (Used) 334,533

33,338 301,195

Cash Bal. Beg. 1,046,130 1,012,792 33,338 Cash Bal. End 1,380,663 1,046,130 334,533 C. RESULTS OF AUDIT 1. Auditor's Report on the Financial Statements The Auditor rendered a Qualified Opinion on the fairness of presentation of the financial statements due to the effects of the noted deficiencies on the balances of some accounts as follows: a. The book and bank balances of eighteen (18)

depository accounts disclosed a discrepancy of P271.74 million for lack of bank reconciliation statements since 1997.

b. Depreciation was not provided for buildings totaling

P1.39 billion due to the absence of property subsidiary records and other supporting documents.

c. The expenses relating to the Katipunan Bond

amounting to P38.86 million were not reported in the books due to unavailability of documents.

2. Significant Audit Findings and Recommendations The Due to Other Funds (Code 424) and Due from

Other Funds (Code 144) reciprocal accounts for all funds were overstated by the amount of P5.647 million and P2.437 million, respectively, due to erroneous recording of intra-agency transactions.

We reiterated our recommendation that the City Accountant effect the necessary correcting entries to adjust the balances of the accounts Due to Other Funds and Due from Other Funds and to monitor and review transactions for accuracy.

Balances of funds amounting to P3.595 million received from the National Government for various specific project/purposes which have already been completed have not been remitted to the National Treasury contrary to Executive Order No. 431 dated May 30, 2005.

NATIONAL CAPITAL REGION

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We reiterated our recommendation that the unused balance of the fund be remitted to the National Treasury to be used for other developmental projects.

Ad valorem tax at the rate not exceeding five per

cent of the assessed value of the property pursuant to Section 236 of RA 7160 was not imposed and collected on 1,745 real property units (RPUs) of idle lands due to absence of ordinance prescribing the imposition and collection of the same, depriving the City of additional revenue of an approximate amount of P132.658 million.

Facilitate the passage of an ordinance treating on ad valorem tax to be levied on idle lands for purposes of attaining potential revenue which should not exceed five per cent of the assessed value of property. Likewise, we reiterated our previous recommendation that the City Assessors Office facilitate the identification and submission of complete list of idle lands for audit reference and guide once the ordinance is passed by the Council.

The decision to release or defer the P330.205

million funds withheld from the Citys Business Tax Income intended for Barangay shares was not made in a timely manner pending the authority from the Sangguniang Panlungsod on the implementation of Section 272(b) of Caloocan City Revenue Code of 2004 and the issuance of an approved Implementing Rules and Regulations (IRR) to support the withholding of the barangay shares.

We recommended that the position and authority from the Sangguniang Panlungsod be sought for the release or deferment of implementation of Section 272(b) of Caloocan City Revenue Code of 2004 and on the utilization of such funds for the meantime that an approved IRR is not yet in place.

Follow up the creation of the required oversight committee for the immediate preparation and issuance of the subject IRR since majority of the recommended members under Section 317 of the said Revenue Code are members of the Sangguniang Panlungsod.

The lack of survey funds for the revision of the

subdivision plan of lots donated by the National Housing Authority (NHA) for socialized housing program prevented the transfer to target-beneficiaries while the guidelines on the disposition of said lots still need the approval of the Local Inter-Agency Committee (LIAC). Due to the delay, informal settlers now occupy the property.

We reiterated our recommendation that needed survey funds be programmed by the City for the revision of the subdivision plan. Also, the LIAC should facilitate the submission of procedures and guidelines governing the disposition of the socialized lots to support Sangguniang Panglunsod Resolution No. 1777, series of 2006, authorizing the City Mayor to facilitate the disposition of Camarin I and II projects.

The reconciliation on the intra-agency accounts

Due to Other Funds (Code 424) and Due from Other Funds (Code 144) for all funds showed an accumulated balance of P137.218 million due to non-settlement of intra-agency receivables and payables and subsequent elimination of these interfund accounts leave an unsettled liability under the General Fund in the amounts of P52.606 million for Trust Fund and P31.966 million for the Special Education Fund.

To eliminate the inter-fund receivables and payables, we recommended that the City Accountant should strengthen the monitoring and review of Journal Entry Vouchers (JEVs) to ensure that all financial transactions are properly and accurately taken up in the books. On the other hand, the City Treasurer should strengthen the control in the payment of transactions to ensure that funds disbursed correspond to the fund charged in the disbursement vouchers. Likewise, we recommended the immediate settlement of intra-agency payables of General Fund of P52,605,986 for Trust Fund and P31,966,066 for the Special Education Fund.

Cash advances of P106.499 million granted in

previous years remained unliquidated as of year-end due to continued non-adherence to the rules and regulations on cash advances, as embodied in COA Circular No. 97-002 dated February 10, 1997.

We recommended that accountable officers strictly comply with the general guidelines in the liquidation of cash advances under COA Circular No. 97-002 dated February 10, 1997.

We further recommended that the City Accountant and the City Treasurer strictly monitor the liquidation of cash advances by sending demand letters regularly, particularly to accountable officers and employees who are still in active service, and in case of failure to liquidate the same despite demand, withholding of the payment of any money due them

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may be made pursuant to the afore-cited Circular which states:

Additional cash advances in the total amount of

P1.578 million were granted to Special Disbursing Officers (SDOs) with unliquidated cash advances, contrary to Section 89 of Presidential Decree (PD) No. 1445, and rules and regulations on the grant and utilization of cash advances under COA Circular No. 97-002 dated February 10, 1997.

Grant of additional cash advances without liquidating prior cash advances and non-observance of the laws, rules and regulations may cause accumulation of unliquidated cash advances. Thus, we recommend that the accountable officers and the management should strictly comply with the guidelines in the grant and liquidation of cash advances.

The accuracy of accounts Due to BIR, PAG-IBIG

and PHILHEALTH totaling to P89.821 million, P.760 million and P3.963 million, respectively, recorded in the books since 2007 & prior years could not be ascertained due to non-completion of the reconciliation of the records of the City and the concerned agencies.

Form a composite team who will be tasked solely to conduct the reconciliation of these payable accounts and to closely coordinate with the concerned agencies to facilitate the same; set a timeline to complete the reconciliation activities by the team to establish the accuracy of the account and immediately settle the subject obligations.

The City Government implemented local development projects amounting to P81.911 million and P979.057 million under the 2011 Annual Appropriation and Supplemental Budget No. 1, respectively, which are not covered with specific authorization from the Sangguniang Panlungsod, contrary to Section 287 of Republic Act No. 7160.

We recommended that in cases of lump sum appropriations containing general terms, the local chief executive must secure authority from the Sangguniang Panlungsod that will cover the implementation of specific projects sourced from the lump-sum appropriations with its corresponding cost.

The City could have generated potential revenue

of at least P311.49 million for the amount paid for the expropriated Manotok Property had the sale of subject property or refund for the cost thereof, through its socialized housing program has been

undertaken and/or awarded to qualified informal settlers or beneficiaries.

We recommended that Management facilitate the survey for the subdivision of lots, approval of rules, procedures and guidelines for the distribution of the Manotok Property through its socialized housing program so that the City will be able to attain its objective for the program.

3. Implementation of Prior Years' Audit Recommendations

No. of Audit Recommendations 14 Implemented 5 Not Implemented 4 Partially Implemented 5

CITY OF LAS PIAS A. BACKGROUND 1. Legal Basis Republic Act No. 8251

March 27, 1997 2. Key Officials City Mayor Hon. Vergel A. Aguilar City Treasurer Mr. Rizal Y. Del Rosario City Accountant Ms. Nida M. Aranda 3. Personnel Complement Permanent 315 Temporary/Casual/Contractual/

Co-terminus/Job Order

1,847 Elective Officials 16 Total Personnel Complement 2,166

4. No. of Barangays 20 B. FINANCIAL PROFILE Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 3,160,806 3,005,238 155,568 Liabilities 689,013 508,377 180,636 Government Equity 2,471,793 2,496,861 (25,068)

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Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 1,716,993 1,601,012 115,981 Expenses 1,631,704 1,389,288 242,416 Net Income 85,289 211,724 (126,435) Cash Flows (In Thousand Pesos) 2011 2010 Inc./(Dec.) Net Cash from Operating Activities

134,449

152,023

(17,574)

Cash from Investing Activities

(100,624)

(33,144)

(67,480)

Cash from Financing Activities

-

-

-

Net Cash Provided (Used)

33,825

118,879

(85,053)

Cash Bal. Beg. 1,158,077 1,039,198 118,879 Cash Bal. End 1,191,902 1,158,077 33,825 C. RESULTS OF AUDIT 1. Auditor's Report on the Financial Statements The Auditor rendered an Adverse Opinion on the fairness of presentation of the financial statements due to the following reasons: a. Uncollected Real Property Tax (RPT) and Special

Education Tax (SET) aggregating P979.217 million were not presented in the financial statements.

b. The stated balance of the Property, Plant and

Equipment (PPE) is unreliable because there is discrepancy of P628.863 million between the PPE inventory is understated by P33.431 million, and; Drugs and Medicines Inventory.

c. Unissued drugs and medicines totaling P20.971

million at year-end were recorded as expense instead of Drugs and Medicines Inventory.

2. Significant Audit Findings and Recommendations Share of the City Government from the Lotto

Charity Fund of the PCSO in the aggregate amount of P21.799million were recorded as trust liability instead of Other General Income and were not appropriated for its intended purpose.

We recommend that the Chief Accountant record the receipts from PCSO of the five (5%) share from the thirty (30%) percent Lotto Charity Fund of as Other General Income - Share from PAGCOR/PCSO and should be made available for appropriation for the maintenance of the city hospitals, and for other health, social welfare, and charitable work.

The City failed to collect business taxes of at least

P3.120 million from its own contractors and suppliers and from contractors and suppliers of other government agencies with business address in the City of Las Pias.

We recommend that business taxpayers doing

business with the City be required to submit certification of payment from the City's Chief Accountant to serve as one of the basis in the computation of their business taxes.

Expenditures with total amount of P67.68 million

were not recorded in the appropriate expense accounts resulting to the misstatement of these accounts in the Statement of Income and Expenses.

We recommended that the City Accountant ensure that financial transactions are recorded following the description in the prescribed Chart of Accounts.

The appropriated 20% Development Fund for CY

2011 was P9.20 million short of the amount required by Section 287 of the Local Government Code.

We recommended that the City Budget Officer computes the 20% Development Fund based on actual amount of IRA received during the year. Adjust any discrepancy between the amounts appropriated at the beginning of the year and what should be appropriated based on actual IRA. Advise City Planning Officer of revision as basis for preparation of a supplemental plan to support the utilization of the Fund.

3. Implementation of Prior Years' Audit Recommendations

No. of Audit Recommendations 7 Implemented 2 Not Implemented 1 Partially Implemented 4

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CITY OF MAKATI

A. BACKGROUND 1. Legal Basis Republic Act No. 7854

January 2, 1995 2. Key Officials City Mayor Hon. Jejomar Erwin S.

Binay, Jr. City Treasurer Ms. Nelia A. Barlis City Accountant Mr. Cecilio P. Lim III 3. Personnel Complement Permanent 3,919 Temporary/Casual/Contractual/

Co-terminus/Job Order 3,663 Elective Officials 20 Total Personnel Complement 7,602 4. No. of Barangays 33 B. FINANCIAL PROFILE Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 34,945,159 32,672,268 2,272,891 Liabilities 6,575,120 6,362,048 213,072 Government Equity 28,370,039 26,310,220 2,059,819 Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 10,006,974

9,157,917 849,415

Expenses 7,166,134 6,917,311 249,181 Net Income 2,840,840 2,240,606 600,234 Cash Flows (In Thousand Pesos) 2011 2010 Inc./(Dec.) Net Cash from Operating Activities 3,037,477

3,115,568 (78,091)

Cash from Investing Activities (2,571,,776)

(1,756,638) (815,138)

Cash from Financing Activities (29,538)

(137,945) 108,407

Net Cash Provided (Used) 436,164

1,220,985 (784,821)

Cash Bal. Beg. 4,606,800 3,385,816 1,220,984 Cash Bal. End 5,042,964 4,606,801 436,163 C. RESULTS OF AUDIT 1. Auditor's Report on the Financial Statements The Auditor rendered a Qualified Opinion on the fairness of presentation of the financial statements due to the effects of the noted deficiencies on the balances of some accounts as discussed in the Significant Audit Findings and Recommendations below: 2. Significant Audit Findings and Recommendations The book balances of some Property, Plant and

Equipment (PPE) accounts excluding Construction in Progress account were materially bigger by P1.468 billion over the Report of Physical Count of Property, Plant and Equipment (RPCPPE) while there were some PPE accounts with book balances that were materially lesser by P1.268 billion than the RPCPPE, thus making the PPE balance of P27.856 billion unreliable.

Form a Team composed of Accounting and Property personnel to reconcile the book and property records and to determine the causes of the discrepancy and for the Accounting Department to effect correcting/adjusting entries when necessary.

The book balances of some Inventory accounts in

the total amount of P309.772 million were materially bigger by P74.856 million over the Report of Physical Count of Inventories (RCPI) while there were some inventory accounts with book balances that were materially lesser by P2.206 million than the RCPI, thus, rendering the account balance doubtful.

We recommended that the GSD and Accounting Department continue to reconcile discrepancies between book and physical inventory balances and draw adjusting entries when necessary.

The City Government recorded the payments for

tax deficiencies on withholding tax on compensation, expanded and value added taxes totalling P421.869 million as Other Maintenance and Operating Expenses (OMOE) account instead of receivables from the concerned employees and sellers, thus overstating the OMOE account and

6

understating the Due from Officers and Employees and Other Receivables accounts.

We recommended that management:

a. Verify the accounting records and determine who

among its employees and sellers have insufficient withholding taxes;

b. Set up receivable accounts for the tax

deficiencies of employees and sellers concerned and use the Due from Officers and Employees and Other Receivables accounts and correct overstatement of OMOE account.

c. Require the employees and sellers to pay the tax

deficiencies. If the employees are still connected with the City Government, deduct from their subsequent pay slips the tax deficiencies. If the sellers have existing contracts with the City Government, deduct the tax deficiencies from their subsequent contract payments. Otherwise, the City Government may institute legal actions to recover the amounts it had earlier paid for tax deficiencies.

Expended balances of Advances to Officers and

Employees remained outstanding for over one year to more than three years, thus, expenses incurred remained unrecorded and overstated the total reported cash account by P97.604 million, in violation of Section 89 of P.D. No. 1445 and Sections 4.1.3 and 5.8 of COA Circular No. 97-002 dated February 10, 1997.

Strictly enforce the provisions of Section 89 of P.D. No. 1445 and COA Circular No. 97-002.

Cash advances that were not used for two months

or more totaling P2.188 million were not refunded immediately to the City Cashier, thus, exposing the said funds to the risk of loss and misappropriation in violation of Section 5.7 of COA Circular No. 97-002 dated February 10, 1997. Compel the concerned AOs to immediately liquidate their cash advances and refund the unused balance to be able to record expenditures incurred from the advances and reduce the balance of the receivable accounts.

Require the AOs to refund cash advances that are not used for two months or more. Limit the amount of cash advance to the actual need of the activity or program.

Cash advances for special projects amounting to P22.288 million were recorded as Petty Cash Fund (PCF) instead of Advances to Officers and Employees account in violation of COA Circular No. 2006-001 dated November 9, 2006 and COA Circular No. 2004-008 dated September 20, 2004, specifically on the correct usage of Advances to Officers and Employees account and PCF.

Require the Accounting Department to record cash advances for special projects/activities as Advances to Officers and Employees instead of PCF.

The erroneous recording of ongoing school building projects directly to the School Buildings and Other Equipment accounts amounting to P15.695 million and P3.621 million, respectively, coupled with the failure to classify completed school buildings amounting to P181.586 million, to School account violated the provisions of Paragraphs 3-5 of Section 50, Volume 1 of the Manual on the NGAS. These also overstated the Construction in Progress-Agency Assets and the Other Equipment accounts by P162.269 million and P3.621 million, respectively, and understated the School Buildings account by P165.891 million and the accounts Allowance for Depreciation and Depreciation Expense. We recommended that the Accounting Department draw adjusting entries to reflect the correct balances of CIPAgency Assets, School Buildings, Other Equipment, Accumulated Depreciation and Depreciation Expense accounts in the financial statements.

Projects which were already completed in the total amount of P245.655 million were not closed to their proper asset accounts resulting in the overstatement of the accounts CIP - Agency Assets (Code 264) by P101.826 million, CIP - Plaza, Parks and Monuments (Code 267) by P3.035 million, CIP - Other Public Infrastructures (Code 273) by P140.794 million and understatement of accounts School Building (Code 212) by P52.430 million, Hospital and Health Centers (code 213) by P44.966 million, Other Structures (Code 215) by P4.430 million, Roads, Highways and Bridges (Code 251) by P45.144 million and Parks, Plaza and Monuments (Code 252) by P98.685 million.

We recommended that the Accounting Department effect the necessary adjustments to reflect the correct balances of the accounts CIPAgency Assets, CIP-Roads, Highways and Bridges, CIP-Plaza, Parks and Monuments, CIP-Other Public Infrastructures, Other

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Structures, Hospital and Health Centers, School Building, Parks, Plaza and Monuments and Roads, Highways and Bridges, Depreciation Expense and Accumulated Depreciation in the financial statements.

Several transactions taken up under Other Maintenance and Operating Expenses (OMOE) account totalling to P43.534 million were not charged to their proper account classifications, resulting in the overstatement of OMOE account and understatement of the affected accounts in the financial statements. We recommended that management implement strictly the Revised Chart of Accounts prescribed under COA Circular No. 2003-001 dated June 17, 2003 and its amendments.

Additional income of at least P2.713 million could

have been realized from the operation of the public market for CY 2011 had it issued cash tickets to ambulant peddlers, talipapas and transient vendors of District I, pursuant to Sections 6A.05 and 7C.05 of City Ordinance No. 2004-A-025 dated October 27, 2005. Moreover, income could have increased significantly had the unoccupied stalls been offered for lease at the Poblacion Market and stall rental arrearages collections been pursued intensely at Cembo Talipapa.

Instruct the Finance Department to issue cash tickets to talipapas, ambulant peddlers and transient vendors of District 1 and be aggressive in the collection of arrearages of stall fees in accordance with Section 6A.05 and 6A.06 of City Ordinance No. 2004-A-025 or the Revised Makati Revenue Code. Conduct a formal feasibility study to determine the viability of the City Markets operations.

The City Government erroneously remitted to the Bureau of Treasury (BTr) for the account of the National Meat Inspection Service (NMIS) the amount of P0.453 million from slaughter permit fees/inspection fees for CYs 2008-2011 already collected by NMIS Special Collecting Officers directly from the slaughterhouses.

Require the Accounting Department to hold the remittance of the remaining balance of P29,679.00 to the BTr; Instruct the Accounting Department to draw prior years adjusting entries to correct the misclassification of income account;

Request the BTr to refund the erroneous remittance. The City Cashier failed to reconcile the cashbook

balances of the Cash in Bank- Local Currency, Current Accounts (LCCA) and Cash in Bank - Foreign Currency Account (FCA) with the accounting records, contrary to the provision of Section 181(c), Volume 1 of the Government and Accounting and Auditing Manual (GAAM) and No. 5 of the Guide of Accountable Officer (AO) in Maintaining the Records as provided in the Handbook on Cash Examinations.

We recommended that the City Cashier reconcile completely the cashbooks with the accounting records in order to present the updated balances of the Cash in Bank-LCCA and Cash in Bank- FCA of the City Government.

The City Government failed to implement fully the

projects to be financed out of the Community Development Fund (CDF) for CYs 2010-2011 with an unspent balance of P34.942 million, thus, affecting the optimal attainment of the desired socio-economic development and environmental outcomes from the intended projects as required under DILG/DBM Joint Memorandum Circular No. 1, s. 2005 dated September 20, 2005. Further, payments of various contracts charged to the CDF for CY 2011 in the total amount of P24.919 million lacked the required supporting documents, thus, affecting the validity of the said contracts.

We recommended that management implement the projects outlined in the AIP for CYs 2010 and 2011 and require complete submission of documents for eligibility check and claims for payment.

The Priority Development Assistance Fund (PDAF)

of the City Government totalling P29.907 million remained unused as of year-end, thus, defeating the very purpose for which the funds were entrusted to the City Government.

We recommended that management immediately utilize the PDAF Funds in accordance with their covering SAROs for the City of Makati and to execute the MOA for the utilization of funds intended for the Taguig-Pateros constituents.

The required financial reports for the Livelihood/Housing Projects entrusted to Kaakbay Buhay Foundation, Inc. (KBFI) and Gawad Kalinga Community Development Foundation, Inc. (GKCDF) in the total amount of P11.000 million were not submitted upon completion of the

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projects in violation of the projects Memorandum of Agreement (MOA) and COA Circular No. 2007-001 dated October 25, 2007 thus, the project implementation and results thereof to the intended beneficiaries were not validated and the amounts entrusted were not liquidated.

The liquidation report for the P15.00 million fund entrusted to Gabay at Pag-asa ng Masa Foundation (GPMF) for the Urban Vermi composting and Backyard Gardening Livelihood Project submitted at year-end was not supported with complete documentation, thus the validation of the project was not conducted. Require the KBFI and the GKCDF to submit financial, liquidation and status of implementation reports with the listing of constituents in the thirteen Barangays in the 2nd Legislative District of Makati who were designated as beneficiaries by the Proponent of PDAF; Ensure strict compliance with the conditions provided in the MOA and Terms of Reference for the projects and with the provisions of COA Circular 2007-001 in the entitlement of NGOs/POs to government funds and that the procedures provided therein for the availment, release and utilization of funds be strictly adhered to.

The actual amount utilized on the Gender and

Development (GAD) mainstreaming activities for CY 2011 could not be ascertained and validated vis--vis the GAD Plan and Budget for the year due to non-costing of several implemented programs and projects of the different departments as indicated in the GAD Accomplishment Reports. We recommended that the City GAD Council and various departments submit the GAD Accomplishment Reports showing the corresponding actual cost for particular programs/projects for the proper evaluation of the accomplishments versus GAD Plan and Budget.

Management failed to settle the audit suspensions

and disallowances amounting to P4.771 million and P15.482 million, respectively, as required under the provisions of Sections 7.1.1, 9.4, 10.4 and 17 of the COA Rules and Regulations on the Settlement of Accounts (RRSA). We recommended that the concerned persons liable submit the requirements indicated in the Notices of Suspension and refund/settle the amounts reflected in the Notices of Disallowance.

3. Implementation of Prior Years' Audit Recommendations

No. of Audit Recommendations 15 Implemented 7 Not Implemented - Partially Implemented 8

CITY OF MALABON

B. BACKGROUND 1. Legal Basis Republic Act No. 9019

March 5, 2001 2. Key Officials City Mayor Hon.Antolin A. Oreta City Treasurer Ms. Amalia C. Santos, Ph.D. City Accountant Mr. Jose Philip S. Cabalum, III 3. Personnel Complement Permanent 647 Temporary/Casual/Contractual/

Co-terminus/Job Order

783 Elective Officials 16 Total Personnel Complement 1,446 4. No. of Barangays 21 B. FINANCIAL PROFILE Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 1,469,892 1,174,718 295,174 Liabilities 682,803 660,177 22,626 Government Equity 787,089 514,541 272,548 Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 1,018,957

850,426 168,531

Expenses 813,038 655,824 157,214 Net Income 205,919 194,602 11,317

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Cash Flows (In Thousand Pesos) 2011 2010 Inc./(Dec.) Net Cash from Operating Activities 222,476

76,432 156,044

Cash from Investing Activities -

- -

Cash from Financing Activities (60,761)

(30,941) (19,820)

Net Cash Provided (Used) 161,715 45,491 116,224 Cash Bal. Beg. 142,514 156,693 (14,179) Cash Bal. End 304,229 202,184 102,045 C. RESULTS OF AUDIT 1. Auditor's Report on the Financial Statements The Auditor rendered a Qualified Opinion on the fairness of the presentation of the financial statements due to the following reasons: a. Discrepancy of P21.779 million between the general

ledger and bank balances as a result mainly of prior years unidentified reconciling items of P27.206 million and unrecorded disbursements of P4.302 million rendered doubtful the accuracy of the Cash in Bank account balance of P299.917 million as of December 31, 2011.

b. The validity of PPE items pertaining to unaccounted

discrepancies totaling P101.361 million could not be ascertained due to the inability of Management to complete the reconciliation of Accounting and General Services Department records as of December 31, 2011.

c. The recorded value of the Amphitheater building of

P11.340 million, based on the Accounting Departments appraisal value of said property, was not based on historical cost as stated in the Notes to Financial Statements, hence, of doubtful validity.

d. Adjustments of accumulated depreciation of various Property Plant and Equipment accounts totaling P32.403 million were debited to Prior Years Adjustments account instead of to Depreciation Expense account, thus affecting the fair presentation of net income in the Statement of Income and Expenses.

e. The balances of RPT and SET receivables and the corresponding Deferred RPT and SET Income accounts as of the end of the year are of doubtful validity since the set up at the beginning of the year were recorded based only on estimates and not on the City Treasurers certified list showing the name of taxpayers and the amount due and collectible during the year as required under Section 20, Volume I of the NGAS Manual due to the inability of the Real Property Tax computerized system to generate the City Treasurers certified list.

2. Significant Audit Findings and Recommendations

The slow utilization of legislators financial

assistance funds for implementation of the Citys priority development programs and projects resulted in the delayed realization of set objectives/purposes.

We recommended that the City improve on its performance in the utilization of financial assistance funds to serve the purposes for which the funds were received. Moreover, we advised that, in the future, receipts of said funds be directly deposited to the Trust Fund account and recorded in the Trust Fund books.

Cash advances totaling P20.332 million remained

unliquidated at year-end due to the failure of concerned accountable officers to settle their accountabilities as provided under pertinent provisions of Presidential Decree No. 1445 and COA Circular No. 97-002.

We recommended that the City Accountant initiate the settlement of prior years cash advances, evaluate properly the explanation/s made by the accountable officers in reply to the notices and/or demand letters served, and if no explanation is received or the explanation received was not satisfactory, cause the withholding of the payment of any money due the concerned accountable officer and institute other sanctions, pursuant to COA Circular No. 97-002 dated February 10, 1997.

Audit suspensions and disallowances in the

amounts of P6.144 million and P2.217 million, respectively, remained unsettled as of yearend.

We recommended that Management require all persons held responsible/liable to settle immediately all suspensions within the prescribed period as required under COA Circular 2009-006 dated September 15, 2009, to prevent these from maturing into disallowances. Further, the disallowances be

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acted upon within the required timelines, otherwise these will become final and executory.

3. Implementation of Prior Years' Audit Recommendations

No. of Audit Recommendations 9 Implemented 2 Not Implemented - Partially Implemented 7

CITY OF MANDALUYONG

A. BACKGROUND 1. Legal Basis Republic Act No. 7675

February 9, 1994 2. Key Officials City Mayor Hon. Benjamin C. Abalos, Jr. City Treasurer Ms. Crispina D. Espedido City Accountant Mr. Charito J. Magpantay

3. Personnel Complement Permanent 1,172 Temporary/Casual/Contractual/

Co-terminus/Job Order 1,893 Elective Officials 14 Total Personnel Complement 3,891 4. No. of Barangays 27 B. Financial Profile Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 3,583,135 3,571,235 11,900 Liabilities 2,027,003 2,035,702 (8,699) Government Equity 1,556,132 1,535,533 20,599 Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 2,535,842

2,310,411 225,431

Expenses 2,366,515 2,161,739 204,776 Net Income 169,327 148,672 20,655

Cash Flows (In Thousand Pesos) 2011 2010 Inc./(Dec.) Net Cash from Operating Activities 133,726

608,532 (474,806)

Cash from Investing Activities (184,691)

(341,544) 156,853

Cash from Financing Activities (81,573)

(43,813) (37,760)

Net Cash Provided (Used) (132,538)

223,175 (355,713)

Cash Bal. Beg. 596,179 373,004 223,176 Cash Bal. End 463,641 596,179 (132,538) C. RESULTS OF AUDIT 1. Auditor's Report on the Financial Statements The Auditor rendered a Disclaimer of Opinion on the fairness of presentation of the financial statements due to the following: a. Failure to update and complete the bank reconciliation

statements due to absence of bank statements, subsidiary records and other documents, resulted in a material unaccounted discrepancy of P101.957 million between book and bank balances, thereby casting doubt on the accuracy and validity of the consolidated Cash in Bank account totaling P377.591 million as of December 31, 2011.

b. Erroneous recording and/or cash shortage of prior

years remained undocumented and unresolved resulting in material overstatement of Cash in vault account by P55.619 million.

c. The annual physical inventory of Property, Plant and

Equipment (PPE), reconciliation with accounting records was not undertaken and ledger cards were not maintained by the Accounting Department, resulting in unaccounted differences amounting to P2,669.005 million between the physical inventory report and balance per books which rendered the balance of the PPE account of doubtful validity.

d. The 10 per cent residual value was not deducted from

the carrying amount or acquisition cost and the remaining useful life was not applied in the computation of depreciation expense of PPE accounts, contrary to the provisions of COA Circular No. 2003-007 dated December 11, 2003, as amended by COA Circular No. 2004-005 dated August 9, 2004

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and Section 2.2 of COA Circular Letter No. 2004-003 dated October 04, 2004.

e. Supplies ledger cards and subsidiary records

materials that will support the balances per books were not maintained and physical inventory of supplies and materials was not conducted, resulted in a material discrepancy of P130.888 million, between the balance per books and inventory reports, thereby casting doubt on the fairness of presentation in the financial statements of the inventory accounts totaling P147.977 million.

f. Construction in Progress (CIP) accounts include

unaccounted/unidentified balances totaling P73.559 million due to non-maintenance of subsidiary ledgers on a per project basis, thus, the reliability and validity of the account balance and other related accounts could not be ascertained.

g. Long outstanding receivables and payables of

P16.916 million and P47.631 million, respectively, could not be substantiated due to the absence of pertinent records, such as, individual subsidiary ledgers, billing documents and disbursement vouchers.

h. Postings in the subsidiary ledgers of Due to BIR

account was not updated, hence the balance of P72.040 million could not be completely verified and substantiated.

2. Significant Audit Findings and Recommendations:

Failure to prepare and maintain lapsing schedule on depreciation expense and ledger cards for each category of property and equipment casts doubt on the fairness of presentation of the depreciation expense for the year totaling P210.669 million.

Apply the remaining useful life of PPE and deduct 10 per cent residual value on the carrying amount or acquisition cost in the computation of depreciation expense as provided for in COA Circular No. 2003-007 as amended by COA Circular No. 2004-005 and COA Circular Letter No. 2004-003 dated October 4, 2004. Maintain ledger cards for every category of PPE item; and prepare lapsing schedule to support depreciation expense.

3. Implementation of Prior Years' Audit Recommendations

No. of Audit Recommendations 24 Implemented 6 Not Implemented 13 Partially Implemented 5

CITY OF MANILA

A. BACKGROUND 1. Legal Basis Philippine Commission

Act No. 409 June 18, 1949

2. Key Officials City Mayor Hon. Alfredo S. Lim City Treasurer Ms. Vicky R. Valientes City Accountant Ms. Ma. Lourdes S. Manlulu 3. Personnel Complement Permanent Temporary/Casual/Contractual/

Co-terminus/Job Order Elective Officials 38 Total Personnel Complement 3. No. of Barangays 897 B. FINANCIAL PROFILE Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 17,568,251 15,825,122 1,743,129 Liabilities 6,791,413 6,200,980 590,433 Government Equity 10,776,837 9,624,142 1,152,695 Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 7,692,211

7,133,013 559,198

Expenses 6,975,742 6,644,559 331,183 Net Income 716,469 490,454 226,015

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Cash Flows (In Thousand Pesos) 2011 2010 Inc./(Dec.) Net Cash from Operating Activities 765,259

1,041,817 (276,558)

Cash from Investing Activities (806,206)

(1,849,013) 1,042,807

Cash from Financing Activities (60,496)

223,004 (283,500)

Net Cash Provided (Used) (101,443)

(584,192) 482,749

Cash Bal. Beg. 1,311,540 1,895,732 (584,192) Cash Bal. End 1,210,097 1,311,540 (101,443) C. RESULTS OF AUDIT 1. Auditor's Report on the Financial Statements The Auditor rendered a Disclaimer of Opinion on the presentation of the financial statements due to the following: a. Unreconciled discrepancy of P7.060 billion between

the results of the physical count of the Property, Plant and Equipment (PPE) and the property and accounting records, thus, the validity, accuracy and existence of PPE accounts with an aggregate acquisition cost of P13.778 billion cannot be ascertained.

b. The validity and correctness of Land account

amounting to P2.184 billion could not be determined because the City has no evidence of ownership thereof due to the failure of management to have the titles of the said properties transferred in the name of the City Government upon acquisition.

c. The year-end balances of the inventory accounts

totaling P1.103 billion were of doubtful accuracy due to the absence of physical inventory and complete Summary of Supplies and Materials Issued (SSMI) as basis of the City Accountant to adjust the recorded value of the ending inventories.

d. The Cash in Bank Local Currency, Current Account

(Code 111) is understated by P15.795 million as a result of non-reconciliation of the records of the City Accountant and City Treasurer.

e. The reconciling items already identified in the Bank

Reconciliation Statements for all funds totaling P27.002 million remained unrecorded due to the insufficiency of documents to support the preparation

of adjusting entries. As such, the balance of Cash in Bank-Local Currency, Current Account (Code 111) amounting to P851.077 million could not be relied upon.

f. The validity and correctness of Real Property Tax

(RPT) and Special Education Tax (SET) Receivables amounting to P1.127 billion and P382.593 million, respectively, at the end of the year cannot be ascertained due to absence of certified list of taxpayers showing realty taxes due that shall be used as the basis in setting up of receivables at the beginning of the year.

g. The legality, validity and propriety of 915

Disbursement Vouchers (DVs) amounting to P479.034 million under the General Fund (GF), 13 DVs totaling P0.449 million under the Special Education Fund (SEF) paid in January to August 2011, and all paid DVs for the months of September to December 2011 totaling P2.522 billion could not be ascertained because they were not submitted yet to the City Auditors Office (CAO) for post-audit. Failure to do so may constitute a ground for administrative disciplinary action on the personnel liable thereof and permanent disallowance of the subject claims.

2. Significant Audit Findings and Recommendations The cash advances taken up in the books under

the accounts Petty Cash Fund, Payroll Fund and Advances to Officers and Employees accumulated to P114.596 million, contrary to the rules and regulations on the granting, utilization and liquidation of cash advances provided under COA Circular No. 97-002 dated February 10, 1997. The said practice exposes government funds to possible loss or defalcation. Enjoin all accountable officers to liquidate their cash advances on time as required by law, rules and regulations. Avoid excessive cash in the custody of the accountable officers. Impose sanctions for failure to liquidate their cash advances within the prescribed period.

The mandatory procedures and remedies in addressing tax delinquencies provided under R.A. 7160 were not strictly enforced and strategies to improve revenue collection were not formulated, thus, delinquent taxes reached at least P1.904 billion, inclusive of interest, as of December 31, 2011.

Considering that RPT and SET are among the major sources of revenue of both the City and the

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barangays, we recommended that management undertake efficient and aggressive tax collection efforts and formulate strategies to improve the collection efficiency. Since the barangays are receiving their shares from the realty tax collections of the City, their assistance may be sought in the implementation of the Citys tax campaign program, particularly in the dissemination of notices of delinquency and serving of warrants of levy to the delinquent real property owners within their territorial jurisdiction.

In case all the mandatory procedures and strategies in handling tax delinquencies were undertaken but still the collection efficiency does not improve, the remedies and sanctions provided under Section 256 of R.A 7160 should be availed of to enforce collections.

The Real Property Units (RPUs)

constructed/renovated/improved in CY 2010 covered by Building Permits and Certificates of Occupancy (COO) were not inspected and assessed for taxation purposes due to inadequate coordination between the Offices of the City Assessor and Building Official, contrary to Sections 204 and 210 of the Local Government Code of the Philippines, otherwise known as R.A. 7160.

Deficiencies in the computation of the Fair Market

Value (FMV) of RPUs generated by the Citys Real Property Taxation System (RPTS) for Assessment and non-compliance of the concerned personnel of the Office of the City Assessor (OCA) to the existing rules and regulations on assessment were prevalent. These will result in inaccurate assessment and collection of RPT.

a. The data used in the computation of

depreciation of buildings were not indicated in the Field Appraisal and Assessment Sheet (FAAS), contrary to the instructions on the manner of accomplishing the said document as prescribed under Section 1.A.1.g.2.h, Chapter VI of the Manual on Real Property Appraisal and Assessment Operations (MRPAAO). As such, the amounts of depreciation applied on buildings were not reliable, hence, erroneous assessment of properties and inaccurate collection of RPT are inevitable.

b. The structure type, building class, building

type and market value per square meter were not uniformly applied in the appraisal of RPUs

situated within the same buil ding, hence, the computed appraised value is unreliable.

Discrepancies between the Total Floor Area (TFA)

indicated in the COO and that appearing in the Declaration of Real Property Value (DRPV) for buildings were noted, hence, the computed assessed values for buildings were understated, thus, resulted in the undercollection of RPT by at least P9.441 million.

Require the City Building Official, City Assessor and the Officer-in-Charge of the City Treasurers Office to closely coordinate to ensure the completeness and propriety of data that will be used in the computation of the assessed values for buildings. Require strict compliance by the City Building Official to the provisions of Section 210 of R.A. 7160 on the transmittal to the City Assessor of copies of approved Building Permits and COO to serve as sources of information in the assessment of RPUs subject to tax. Require strict compliance by the OCA to the provisions of Section 204 of R.A. 7160. Direct the City Assessor to strictly enforce the rules and regulations under the MRPAAO, particularly, in the accomplishment of the prescribed application forms and assessment records to ensure that all important information on properties subject to tax are readily available. Cause the necessary enhancement of the existing RPTS for Assessment to ensure the accuracy and propriety of the assessed values of the RPUs and the computation of RPT due. Require the City Assessor to see to it that ocular inspections are conducted on RPUs to validate the information appearing in the application for Building Permits, COO and DRPV submitted by their owners/administrators and to discover undeclared/unassessed properties, if any. Further, the City Assessor should inform the Building Official of the buildings/structures found undeclared/unassessed so that the corresponding fees for building permits and COO may be collected from their owners/administrators.

Direct the City Assessor to review the computation of assessed value on buildings which were found to be inaccurately assessed and inform the City Treasurer of the results thereon. The City Treasurer, on the other hand, should include the amount of uncollected taxes resulting from inaccurate assessments in the

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future tax obligations of the real property owners concerned.

The tax discounts of P40.812 million granted in CY

2010 without legal basis to the owners of business establishments who paid their business taxes, fees and charges within the extension period were not recovered yet by the City Treasurer.

Direct the Chief, License Division and the City Treasurer to include the amount of unpaid business taxes in the computation of the future tax obligations of the concerned business owners to recover the discounts granted to them without legal basis.

The examination of the books of accounts of

business taxpayers or the confirmation of the declared gross receipts in their application for renewal of business licenses with other government agencies were not conducted, thus additional income of at least P12.815 million and interest and surcharges of P7.048 million were not realized, contrary to Section 44 of City Ordinance No. 7794 (Revenue Code of the City of Manila) and Section 171 of R.A. 7160. The City Treasurer or her authorized representatives should conduct examination of the books of accounts of the business taxpayers to ascertain the accuracy of the declared gross receipts subject to tax. If the examination of the books could not be conducted immediately, the taxpayers may be required to submit their preceding years audited financial statements and BIR Form No. 1701 or 1702, or complete Monthly Value Added Tax (VAT) Returns (BIR Form No. 2550M) or Quarterly VAT Returns (BIR Form No. 2550Q) for VAT registered individual, partnership and corporation and Percentage Tax Returns (BIR Form No. 2551M) for non-VAT registered. The aforementioned documents maybe added in the list of requirements printed in the application form for renewal of business permit/license. From these documents, the City Treasurer or her representatives may be able to determine the reasonable amount of their gross receipts subject to tax. In the absence of complete supporting documents, the application for the renewal of business permit/license and payment thereof may be accepted but the financial data stated therein should be validated with the records of other government agencies, such as, the Bureau of Internal Revenue (BIR) and Philippine Contractors Accreditation Board (PCAB). In case of any discrepancy/misdeclaration resulting in inaccurate

collection of taxes, notices should be sent to the taxpayers concerned requiring them to settle their unpaid taxes, including interests and surcharges.

The management was unable to eliminate the

insufficiency of cash incurred in the previous year, hence, the cash available totaling P1.006 billion is still insufficient to cover the Citys current liabilities including cash withheld for remittance to the BIR, GSIS, PhilHealth, PAG-IBIG and other agencies amounting to P3.553 billion. Moreover, the practice of using part of cash withheld or received for remittance to the said agencies or for the implementation of specific project/program for other purposes violated Section 309 (b) of Republic Act (R.A.) 7160, Section 122, Volume I of the GAAM, and Section 337 of R.A. 7160.

We reiterated our recommendation that the Local Finance Committee and the officials concerned should closely monitor the cash inflows against outflows using the Cash Flow Analysis prepared by the City Accountant to ensure that trust funds are used only for their intended purposes. Likewise, management was advised to continue implementing cost-cutting measures and strategies to improve the cash position of the City.

The City of Manila appropriated and incurred

expenses for Personal Services in excess of the 45 per cent of the total annual income from regular sources realized in the next preceding fiscal year limitation by P1.092 billion and P966.243 million, respectively, contrary to Section 325 (a) and Article 20 (a) of R.A. 7160.

We recommended that management see to it that the appropriation and expenses for Personal Services are limited to the required 45 per cent of the total annual income from regular sources realized by the City in the next preceding fiscal year.

The City of Manila has granted financial

assistance in the amount of at least P1.404 billion to its officials and employees and national government personnel stationed in or assigned to the City from CY 2009 to June 2011 despite the Citys cash deficit. Payments were erroneously charged against the appropriations of the City for maintenance and other operating expenses, contrary to Section 289, Volume I of the GAAM.

Refrain from granting financial assistance and additional benefits without legal basis.

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Copies of the loan agreements pertaining to the Loans Payable-Domestic account with a balance of P627.881 million were not submitted to COA for verification and audit. Confirmation of the loan balances as of December 31, 2011 with the creditor banks disclosed a difference totaling P25.160 million, contrary to Section 39 (1) of PD 1445. Submit copies of Loan Agreements entered into by the City with DBP and LBP and other financial institutions including Reports of accomplishments and/or status of the projects undertaken funded by the loans and all other pertinent documents.

The Local Disaster Risk Reduction Management Plan (LDRRMP) of the City Government specifying the proposed disaster risk reduction programs, projects and activities to be undertaken and their corresponding estimated costs was not developed yet, hence, the economy, efficiency and effectiveness of its accomplishments could not be evaluated. Further, the programs/projects/activities undertaken pertaining thereto, and the report on the utilization of the Local Disaster Risk Reduction Management Fund (LDRRMF) were not submitted, hence, the accuracy of the unexpended balance of the LDRRMF at the end of the year could not ascertained, contrary to Article 419 (d) of the Implementing Rules and Regulations of the Local Government Code of 1991, R.A. 7160 and Section 21 of R.A. 10121. We recommended that the management direct the Local Disaster Risk Reduction and Management Council to submit the following: a. Composition of the City Disaster Risk Reduction

and Management Council; b. Citys LDRRMP; c. Annual Work and Financial Plan; d. Programs/Projects Activities undertaken and

status thereof; and e. Report on the utilization of the LDRRMF and

other dedicated disaster risk reduction and management resources.

The remittances of the 30 per cent share of the 896

barangays from the basic RPT collections of the City Government of Manila totaling P511.391 million were not made on a timely basis due to the

delay in the computation of the individual share. Hence, the delivery of basic services and implementation of the proposed development projects and programs for their constituents were hampered, contrary to the provisions of Section 271 (d) of R.A. 7160. We reiterated our recommendation for management to enjoin the accounting personnel concerned to expedite the computation of the share of each barangay from real property tax collections so that timely release thereof directly to the barangay treasurer on a quarterly basis could be made.

The funds withheld for the BIR, GSIS, PAG-IBIG

and PhilHealth in the amounts of P237.826 million, P97.664 million, P0.172 million and P20.794 million, respectively, were not remitted on time which in effect, may cause forfeiture of claims/benefits due the members/employees of the City and deprive the agencies concerned of the timely use of the funds due them, contrary to BIR Revenue Regulation No. 2-098, Government Service Insurance System (GSIS) Act under Section 6(b), the Implementing Rules and Regulations (IRR) of R.A. 7875 and R.A. 7742, an Act amending PD 1752, known as the PAG-IBIG Fund Law. We advised management to immediately remit all the withheld funds due the BIR, GSIS, PAG-IBIG and PhilHealth within the prescribed period to enable these agencies to use the needed funds for its operations in a timely manner. The City Accountant and the City Treasurer should facilitate the remittance of all withholding taxes and contributions to the respective government agencies, particularly, those pertaining to prior years to preclude delay in the processing of members/employees claims and prevent possible forfeiture of the benefits due them.

The proposed projects/programs to be financed by the Priority Development Assistance Fund (PDAF) under the Trust Fund amounting to P46.734 million have remained unimplemented, thus, defeating their specific purposes and depriving the intended beneficiaries of the socio-economic benefits that could be derived therefrom. We reiterated our recommendation that management expedite the implementation of the various socio-economic and livelihood programs and projects to be funded by the PDAF for the benefit of the Citys

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constituents. Regarding the releases for Tondo General Hospital and DOH or other devolved hospitals totaling P1.250 million, transfer the funds to the concerned implementing agencies for the benefit of the Citys residents.

Improved market collections could have been achieved had the City made a concerted effort to: a. Finish all the market renovations as planned

for the convenience and advantage of the vendors who are the source of income/collections and the consumers/buyers who are the beneficiaries of good governance;

b. Initiate an aggressive collection of market

fees and charges so that the City will have enough funds for the implementation of its plans and projects for the effective rendition of basic services to its constituents; and

c. Explore all the opportunities that will increase

the market collections without adding burden to the taxpayers so that the return on investments made will be patently visible to the general public as a showcase of good fiscal management/governance by the City officials.

In view of the foregoing, we recommended the following: a. The City, thru the City Administrators Office and

other concerned Departments should conduct a survey with vendors to have basis in setting the stall fees that will be acceptable to them and the City, thus, both will not be deprived of the much needed income.

b. The City Planning and Development Office

(CPDO) should make the necessary representation for the provision of budget for the completion of all the phases of these projects. They should coordinate with the City Engineer and all the concerned Departments regarding the funding needed to complete the project without further delay.

c. The City Engineering Office should exert extra

effort to complete all the phases of the market renovations without sacrificing the quality of the projects not only because these are part of the Citys economic enterprise but because these markets showcase the Citys social responsibility of providing livelihood to its constituents.

Additional income to augment the Citys limited resources for the hospitals operational expenses and sustain the delivery of basic health services to the less fortunate constituents could have been generated had the available spaces in the hospitals premises been opened up for lease and the collection of minimal hospital charges/fees from well-off patients been enforced.

We recommended that the following measures be undertaken to augment the Citys limited resources needed in implementing this noble project: a. The concerned hospital officials should consider

seeking audience with the City Council for a legislative undertaking that would allow the hospitals to lease idle spaces within their respective premises and earn additional income to help in sustaining their operations and achieve their goals and visions for their constituents.

b. The hospital officials and professionals employed

by the City should be encouraged to invite other professionals to practice their expertise and be part of the hospital resident practitioners with the end-view of providing better services at a lesser cost to the needy constituents of the City.

c. The management is encouraged to revisit the

operations of the hospitals in the six Districts of the City and explore the possibility of collecting minimal or affordable service charges from their patients, particularly, those who are gainfully employed and non-residents of the City for using private rooms during their confinement in the hospitals or undergoing laboratory examinations or as out-patients under any medical procedure. The additional income generated may be appropriated for the maintenance of the hospital facilities and the procurement of necessary supplies and modern equipment, thereby, ensuring the continuous and efficient delivery of medical services.

d. Management should establish a set of

guidelines/policies for the rationalization of medical services offered to its residents or the public like who should be given free medical services, discounted rates or charged full rates and issue cards accordingly for presentation to the hospital whenever in need of hospital care. Management may make use of the database of the Department of Social Welfare and Development (DSWD) on the City indigents.

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The managements inability to formulate a comprehensive modernization plan and employ an effective preventive maintenance system for the Vitas Slaughterhouse resulted in the increase in maintenance costs and the continuous deterioration of its equipment and facilities.

We reiterated our recommendation that management adopt the following remedial measures: a. Formulate a comprehensive modernization plan

including a preventive maintenance system for the Vitas Slaughterhouse, using the advances in technology, to ensure a sustainable income-generating project for the City; and

b. See to it that the meat processing equipment is

properly utilized and maintained.

The Annual Procurement Plan (APP) for CY 2011 prepared by the City of Manila was not in accordance with the requirements of Section 7 of the Revised Implementing Rules and Regulations (RIRR) of R.A. 9184 since quarterly requirements for goods, supplies, materials and equipment were not consolidated, contrary to Section 7 of the RIRR of R.A. 9184. As such, conduct of bidding was on a per Purchase Request (PR) submitted by each office/end-user which may not promote efficiency and economy in the procurement process of the City. We recommended that the CGSO/BAC, prepare the required APP on time consistent with its approved budget and conduct public bidding in compliance with the provisions of R.A. 9184 and its RIRR. Further, the BAC should monitor and identify the cause/s of the relatively slow procurement process and undertake the necessary steps to streamline the same for the timely completion of the bidding activities and ensure the availability of the much-needed supplies, materials and equipment by the end-users.

The Internal Audit Unit/Service (IAU/IAS) under the Office of the City Accountant, performs function pertaining to the said office, contrary to Section 1.1 of Administrative Order No. 278 dated April 28, 1992 of the President, hence, efficient and effective fiscal administration and performance of City affairs and functions may not be achieved by management. We recommended to management the organization of the Citys IAU/IAS as required under AO Nos. 278 and 70 to improve and strengthen the internal control systems of the City.

A special account in the General Fund for the 20 per cent Development Fund was not maintained and separate year-end reports for the other special accounts being maintained were not prepared by the City Accountant, in violation of Sections 105 and 110, Volume I of the NGAS Manual, hence, the information on the results of operation and the financial capabilities of the economic enterprises of the City, which are needed by management for monitoring and decision-making purposes, are not readily available. A special account should be set up and maintained through the use of a subsidiary ledger for the 20 per cent Development Fund; Profits or income derived from the operation of economic enterprises, after deduction of the cost of improvement, repair and other related expenses of the economic enterprises concerned, shall first be applied to the return of the advances or loans taken out therefor, any excess shall form part of the General Fund; and Post-closing Trial Balance should be prepared for each special account. Year-end financial statements, such as Balance Sheet, Statement of Income and Expenses and Statement of Cash Flows, should be likewise prepared. These reports should form part of the schedules of the General Fund Trial Balance.

The registration of 254 or 80 per cent of the 317 City-owned motor vehicles, including motorcycles, were not renewed with the Government Service Insurance System (GSIS) in violation of Section 1 of Administrative Order No. 33. Moreover, they are not covered by any insurance policy, thus, the City may incur additional expenses in terms of penalties and damages to third parties in case of accidents arising out of the use of such vehicles, contrary to Section 5 of Batas Pambansa Bilang 74. In view of the foregoing, we advised the CGSO to renew the contracts of insurance with the GSIS and registration of all motor vehicles of the City with the Land Transportation Office (LTO) to avoid additional expenses in terms of penalties and payment of damages for third party liabilities in case of vehicular accidents.

The City of Manila, as of December 31, 2011, had a total of P76.663 million suspensions, disallowances and charges which remained unsettled or not acted upon by the concerned

18

officers and employees determined responsible/liable thereto. We advised the concerned personnel and officials to immediately settle/comply with the requirements of the subject NS, ND and NC.

3. Implementation of Prior Years' Audit Recommendations

No. of Audit Recommendations 20 Implemented 3 Not Implemented 8 Partially Implemented 9

CITY OF MARIKINA

A. BACKGROUND 1. Legal Basis Republic Act No. 8223

July 20, 1996 2. Key Officials City Mayor Hon. Del R. De Guzman City Treasurer Mr. Ricardo L. Castro City Accountant Ms. Erlinda G. Gonzales 3. Personnel Complement Permanent 514 Temporary/Casual/Contractual/

Co-terminus/Job Order 1,613 Elective Officials 20 Total Personnel Complement 2,147 4. No. of Barangays 16

B. FINANCIAL PROFILE Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 5,565,192 5,303,344 261,898 Liabilities 1,094,053 999,862 94,191 Government Equity 4,471,139 4,303,482 167,656

Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 1,514,775

1,516,364 (1,589)

Expenses 1,330,560 1,213,439 117,121 Net Income 184,216 302,925 (118,709) Cash Flows (In Thousand Pesos) 2011 20010 Inc./(Dec.) Net Cash from Operating Activities 344,456

316,361 28,095

Cash from Investing Activities (162,559)

(47,238) (115,321)

Cash from Financing Activities (106,507)

(145,055) 38,548

Net Cash Provided (Used) 75,389

124,068 (48,679)

Cash Bal. Beg. 1,115,672 991,604 124,068 Cash Bal. End 1,191,061 1,115,672 75,389 C. RESULTS OF AUDIT 1. Auditor's Report on the Financial Statements The Auditor rendered a Qualified Opinion on the fairness of the presentation of the financial statements for the following reasons: a. The variance of P96.252 million as of December 31,

2011 between the balance per books and balance per physical count of the Citys property and equipment which has not been reconciled.

b. No Physical Inventory Report of the Citys recorded inventory amounting to P63.540 million as of December 31, 2011 was submitted.

b. Various property and equipment as well as liability

accounts include reconciling items amounting to P732.328 million and P6.164 million, respectively. Consequently, the accumulated depreciation totalling P156.259 million of those property classifications with reconciling items is understated since depreciation was not computed.

c. The Other Receivables account includes dishonored

checks amounting to P7.388 million which have been outstanding for over three years. The inadequacy of records did not permit us to apply alternative

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procedures to establish the validity and correctness of the balances of the mentioned accounts.

d. The adjusting entry made on the cost of land with tax

declaration named under the City Government of Marikina debiting the Land account and crediting the Land-Reconciling items amounting to P570.231 million using market values rather than the purchase cost of the land is erroneous.

e. The non-reversal of the fully paid accounts of the 798 beneficiaries of the Relocation Program of the City resulted in the overstatement of the payable account and understatement of the Income account.

2. Significant Audit Findings and Recommendations Several items in the Property and Equipment

accounts without acquisition costs reflected in the Property, Plant and Equipment Schedule amounting to P4.118 million still have accumulated depreciation which resulted in negative net book values for the affected accounts. We recommended that Management analyze the affected accounts and accordingly prepare the adjusting journal entries to reflect the correct balances of the accounts at year-end.

Ownership for parcels of land totalling P44,365.14 square meters acquired by the City for the period from 2006 to 2011 are evidenced only by either Deed of Absolute Sale, Deed of Forfeiture of Memorandum Agreement with Conveyances. We recommended that Management take steps to have the land titled in the name of the City to prove legal ownership on these parcels of land.

The following deficiencies were noted in the audit of the Inventory account: a. Comparison between the Subsidiary Ledger

(Accounting records) and the Stock Card (Warehouse records) of sampled inventory items as of December 31, 2011, also disclosed variances in quantity.

b. The unit cost of cement purchased during the

year varied oddly from P195 per bag to P275 per bag while the price of cement was stable in CY 2011 per the Department of Trade and Industry price watch. We noted that the said prices varied depending on the supplier.

We recommended that: a. Reconcile variances between the balances per

books and the warehouse records and make necessary adjustments to reflect the correct balances of the inventory accounts; and

b. Look into the varied prices of the same inventory

items purchased from different suppliers.

Various payable accounts, which include Reconciling Items totalling P5.428 million, which are without details, casts doubts on the accuracy/correctness of the payable accounts as of December 31, 2011. We recommended that Management require the Accounting Office to analyze the Reconciling Items in the various payable accounts and to prepare necessary adjusting journal entries to reflect the correct balances of the accounts at year-end.

Guaranty Deposits Payable account totalling P1.413 million as of December 31, 2011 for which related transactions were undertaken in 2007 and earlier have been dormant for more than five years as well as abnormal (debit) balances totalling P1.979 million under the Special Education Fund which have a negating effect resulting in the understatement of the account. Moreover, Reconciling Items totalling P735,319 which are without details are included in the account balance. We recommended that Management require the Accounting Office to analyze the dormant and abnormal balances and accordingly make the necessary adjustments. Reconciling Items should likewise be analyzed and broken down to names of recipients/claimants. Existence of the claims should be determined.

Non-compliance with the full provisions of RA 10121, otherwise known as the Philippine Disaster Risk Reduction and Management Act of 2010, non-implementation of City Ordinance No. 32, Series of 2011, and unavailability of a Disaster Risk Reduction and Management Plan, precluded the City to effectively manage their budgeted fund for Local Disaster Risk Reduction and Management. We recommended that Management look into the immediate and full implementation of RA 10121 and City Ordinance No. 32, Series of 2011 in order that

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necessary plans for risk reduction and the proper utilization of the fund can be attained/achieved.

Priority Development Assistance Fund (PDAF) totalling P8.771 million granted to the City of Marikina by Congressional Representatives and Senators for specific purposes and recipients was not utilized or fully utilized, as to its purpose; thus, depriving the constituents of the maximum benefits that could be derived therefrom. We recommended that Management utilize fully the PDAF granted to the City. If the purpose of a certain PDAF is completed or is no longer needed, the City may request for realignment with the concurrence of the proponent legislator as provided for under National Budget Circular No. 529 dated February 21, 2011.

Surcharge and interest imposed on late payments of business tax were not in accordance with the provisions of Sections 167 and 168 of RA 7160 resulting in financial loss. We recommended that Management: a. impose and collect surcharge and interest from

business establishments who pay business taxes after the January 20 deadline or of each subsequent quarter in compliance with Section 168 of RA 7160; and

b. require that related provisions of Ordinance No.

12, s. 1998 on the procedures for the payment of license fees and fixing the date of payment be amended/revised to conform to Sections 167 and 168 of RA 7160.

Analysis of the submitted copies of CY 2011

Purchase Orders disclosed that the City outsourced the printing of tarpaulins despite the Citys own equipment (tarpaulin printer) and personnel in charge for the printing of the same. Also, bid documents and other pertinent supporting documents were not attached to the disbursement vouchers and said deliveries of tarpaulin materials were charged directly to expense. We recommended that Management properly plan its purchases to ensure availability of supplies in sufficient quantities and to avoid overlapping of transactions. Bid documents should be attached to the disbursement vouchers and the purchased tarpaulin materials should be recorded to the inventory account.

Copies of Contracts together with all supporting documents were not submitted to the City Auditors Office on time contrary to Section 3.1 of COA Circular No. 2009-001 dated February 12, 2009. We recommended that Management require officials concerned to submit on the prescribed time as stated under COA Circular No. 2009-001, copies of contracts and to set up a mechanism in the routing of the required documents.

3. Implementation of Prior Years' Audit Recommendations

No. of Audit Recommendations 12 Implemented 6 Not Implemented 1 Partially Implemented 5

CITY OF MUNTINLUPA A. BACKGROUND 1. Legal Basis Republic Act No. 9191

February 21, 2003 2. Key Officials City Mayor Hon. Aldrin L. San Pedro City Treasurer Mr. Romeo M. Pucyutan City Accountant Mr. Edwin T. Sultado 3. Personnel Complement Permanent 487 Temporary/Casual/Contractual/

Co-terminus/Job Order 1,590 Elective Officials 20 Total Personnel Complement 2,097 4. No. of Barangays 9 B. FINANCIAL PROFILE Financial Condition (In Thousand Pesos) 2011 2010 Inc./(Dec.) Assets 3,647,280 3,369,491 277,789 Liabilities 2,342,658 2,370,326 (27,668) Government Equity 1,304,622 999,165 305,457

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Financial Performance (In Thousand Pesos) 2011 2010 Inc./(Dec.) Income (incl. subsidies & extra Items) 2,701,300

2,204,988 496,313

Expenses 2,240,970 2,126,985 113,985 Net Income 460,330 141,292 319,039 Cash Flows (In Thousand Pesos) 2011 2010 Inc./(Dec.) Net Cash from Operating Activities 251,519

153,057 98,044

Cash from Investing Activities (29,361)

(68,645) 39,283

Cash from Financing Activities (218,401)

(57,256) (161,145)

Net Cash Provided (Used) 3,757

27,156 (23,399)

Cash Bal. Beg. 275,277 248,121 27,156 Cash Bal. End 279,034 275,277 3,757 C. RESULTS OF AUDIT

1. Auditor's Report on the Financial Statements The Auditor rendered a Disclaimer of Opinion on the fairness of presentation of the financial statements due to the following: a. The validity and accuracy of the Property, Plant and

Equipment accounts amounting to P2.794 billion could not be determined due to incomplete inventory records

b. The accuracy of the Cash in Bank Local Currency,

Current Account balance of P238.532 million could not be ascertained due to unrecorded book reconciling items totaling P20.914 million and the absence of supporting documents as basis for adjustments in the books.

c. Receivables and Payables accounts amounting to

P15.856 million and P26.753 million, respectively, were undocumented and remained dormant since 2005.

d. The non-submission of transaction documents as of

report date which amounted to P1.034 billion has precluded the audit of the transactions.

2. Significant Audit Findings and Recommendations The validity and accuracy of the balance of the

Property, Plant and Equipment (PPE) recorded at P3.439 billion is doubtful due to:

a. the inclusion of the value of burned

properties and unserviceable properties amounting to P158 million and P3.858 million, respectively;

b. donated fire truck with a value of P50 million

has not been taken up in the books; and c. land acquired amounting to P332.986 million

was still not transferred in the name of the City Government;

Facilitate the completion of documents for their Request for Relief from Accountability for properties destroyed by fire and cause its dropping from the books of accounts. Constitute a disposal committee to take charge of property/assets subject to disposal and prepare the Inventory and Inspection Report of Unserviceable Property (IIRUP) for semi-expendable materials and equipment and non expendable supplies pursuant to Section 79 of PD 1445. The Committee should file an application for disposal with complete documents to the COA Resident Auditor. Properties which are no longer unserviceable should be reclassified to Other Assets. Require the City Accountant to book up the cost of the fire truck and provide the corresponding depreciation; and the GSO to prepare and issue the Acknowledgement Receipt for Equipment (ARE) to the end user as well as include the item in the Inventory Report and to insure and register the unit with the GSIS and LTO, respectively. Require the City Accountant to record donated motor vehicles duly supported by documents and provide depreciation for the newly recognized vehicle in accordance with Section 04(o), Chapter 2, Volume I of the NGAS Manual, including PPEs not provided with depreciation charges and determine the remaining life and analyze the accumulated depreciation account of existing vehicle and make the necessary adjustment. Review all land titles including those which are only in the Citys custody to determine if ownership still rests with the original owner. This includes verifica