Dapitan City 2007 COA Audit on Gender and Development
July 8, 2010
Gender and Development
9. The livelihood assistance in the form of trainings and materials given to various women’s group did not provide the benefit for which the funds were intended due to the failure of CSWDO to monitor its project implementation and lack of seed capital to pursue the project.
The City Government recognizes the vital role of women in nation building. In its effort towards integration especially the disadvantaged and distressed women in economic, social, political, and cultural development, priority thrust program were conceptualized in the areas of economic and livelihood development to facilitate and maximize its participation in community affairs.
With the increasing number of unemployed women of working age, it felt that there is a clamor to provide them with comprehensive economic and livelihood development training program. An appropriation of P500,000.00 was set aside for these trainings and/or undertakings.
The training’s objectives are to gain access to employment through the provision of skills training and capital for self-employment; inculcate the value of positive work habit; productivity and self reliance; and to draw them to maximum participation in all community development undertakings.
Targeted beneficiaries for the practical skills development training require at least twenty-five (25) women members per barangay who will embark on intensive skills training and small scale entrepreneurship for self-employment and capability and to be technically assisted by the City Social Welfare & Development Office.
A total of thirty-seven (37) women’s groups were trained involving different project proposals from meat/food processing, dressmaking, handicraft, garment/dried fish trading, sewing, cosmetology, etc., which cost the city government of P289,250.00 of which P264,051.40 (See Annex “N”) are livelihood assistance in the form of various materials used for their projects.
Verification of the project proposals submitted revealed that before the group are trained and given the materials, the co-approval of a Sanggunian Panlungsod member who sits as the chairman of the Committee on Women and Family Relation is required, a move shrouded with political biases considering that the trainings were launched near election time.
After the training, materials used were given. The determination of the group’s loan obligation was based on the assessment or valuation of the materials. A Memorandum of Agreement was signed by the president of the association containing, among others, the following: (1) That the loan shall be paid on installment basis for one (1) or two (2) years, depending on the rate of return; (2) Submission of report by the women’s association to the CSWDO; (3) That the materials given shall be used solely for its intended purpose; and (4) That the funds generated shall be deposited in the bank and that the CSWDO shall be notified when these are withdrawn.
A selective post-evaluation and interviews with the women’s group (beneficiaries) revealed that out of the thirty-seven group proponents, a handful only were successful and some were not started at all for which the materials received remained idle in the barangay. The reasons given why the projects were not started or unsuccessful were the following:
1. Lack of monitoring on the part of the CSWDO to the projects;
2. Lack of seed capital and interest/involvement of members in the undertakings;
3. Trainings require enhancement;
4. Absence of product display center where these could be marketed and to create public awareness;
5. Personal attitude of members (some prefer to have his own project); and
6. Collection problems for those products sold on credit.
From the successful projects, to date the City Social Welfare and Development Office has yet to receive the installment payment.
The failure to monitor the project implementation and the inadequate funds given to the beneficiary deprived them of the purpose for which these are given.
Management Comment:
The social workers in charge in all units of the city promised to monitor the program and assured us that the issue on non-compliance with the program implementation be brought during the women’s month celebration. On the other hand, management is willing to provide additional space to be given to women’s group to serve as their display center of their product.
Recommendation for Dapitan City:
Direct the City Social Welfare and Development Office to intensify monitoring of project implementation. Integrate women’s group with the same project proposal to assess viability and marketability of the product. Provide additional funds to those projects that require additional capital. Likewise, the City Government should provide enough space that will serve as its product display center to create public awareness and marketability of their produce.
Election Results For Dapitan City
July 6, 2010
MAYOR of ZAMBOANGA DEL NORTE – DAPITAN CITY
Candidate Party Votes Percentage
JALOSJOS, Dominador Jr G. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 25506 73.06%
CARDINO, Agapito J. LIBERAL PARTY 9403 26.94%
Statistics
Total number of Voters who actually voted 37454
VICE-MAYOR of ZAMBOANGA DEL NORTE – DAPITAN CITY
Candidate Party Votes Percentage
CHAN, Patri B. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 23202 73.75%
CHIONG-TALEON, Gugma S. INDEPENDENT 8258 26.25%
Statistics
Total number of Voters who actually voted 37454
MEMBER, SANGGUNIANG PANLUNGSOD of ZAMBOANGA DEL NORTE – DAPITAN CITY – LONE DIST
Candidate Party Votes Percentage
CAD, Ruben E. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 21915 8.33%
AGOLONG, Apple Marie A. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 20980 7.97%
ZAMORA, Joven H. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 20780 7.90%
CABASAG, Randy B. NACIONALISTA PARTY 20731 7.88%
JAMOLOD, Efren Q. NACIONALISTA PARTY 20307 7.72%
SARDANE, Noel B. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 19086 7.25%
DINI-AY, Wendelin D. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 18228 6.93%
PALPAGAN, Cresencio Jr. N. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 18218 6.92%
FERNANDEZ, Mercy A. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 18024 6.85%
JOHNSON, Rosalina J. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 17068 6.49%
ABAD, Manuel P. LIBERAL PARTY 9741 3.70%
ABILA, Lernito J. INDEPENDENT 9030 3.43%
PAGE, Ellen H. INDEPENDENT 7980 3.03%
BAIT-IT, Zaldy G. LIBERAL PARTY 6909 2.63%
CABILIN, Ebaldwin N. INDEPENDENT 5874 2.23%
PADAO, Conchita S. INDEPENDENT 5686 2.16%
FERNANDEZ, Jacinto D. INDEPENDENT 5610 2.13%
PAMPILO, Magno Jr. T. INDEPENDENT 5088 1.93%
NIELO, Filipinas S. INDEPENDENT 4936 1.88%
DEL MAR, Antonio L. INDEPENDENT 3541 1.35%
GALLEPOSO, Basilides R. INDEPENDENT 3444 1.31%
Statistics
Total number of Voters who actually voted 37454
· · · · ·
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Election Results for Zamboanga del Norte
July 6, 2010
MEMBER, HOUSE OF REPRESENTATIVES of ZAMBOANGA DEL NORTE – FIRST LEGDIST
Candidate Party Votes Percentage
JALOSJOS, Seth F P. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 26557 76.48%
ADASA, Lex Archee T. LIBERAL PARTY 8166 23.52%
Statistics
Total number of Voters who actually voted 37454
PROVINCIAL GOVERNOR of ZAMBOANGA DEL NORTE
Candidate Party Votes Percentage
YEBES, Rolando E. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 21759 66.04%
AMATONG, Isagani S. LIBERAL PARTY 10024 30.43%
FERAS, Carlito A. PARTIDO DEMOKRATIKO SOSYALISTA NG PILIPINAS 690 2.09%
UBAY, Franklin R. INDEPENDENT 248 0.75%
ARBOIZ, Bernardo, Jr. T. INDEPENDENT 153 0.46%
GUMANAS, Rogelio I. INDEPENDENT 72 0.22%
Statistics
Total number of Voters who actually voted 37454
PROVINCIAL VICE-GOVERNOR of ZAMBOANGA DEL NORTE
Candidate Party Votes Percentage
OLVIS, Francis H. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 22958 74.91%
PINSOY, Roberto N. LIBERAL PARTY 7254 23.67%
MALANDAY, Elena R. INDEPENDENT 315 1.03%
SEÑORON, Maria Clara M. INDEPENDENT 120 0.39%
Statistics
Total number of Voters who actually voted 37454
MEMBER, SANGGUNIANG PANLALAWIGAN of ZAMBOANGA DEL NORTE – FIRST PROVDIST
Candidate Party Votes Percentage
CABIGON, Fernando, Jr. R. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 19481 37.72%
OLVIS, Jose Joy H. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 17535 33.95%
ADASA, Henry D. LIBERAL PARTY 7513 14.55%
CARIN, Lawrence C. INDEPENDENT 7119 13.78%
Statistics
Total number of Voters who actually voted 37454
Dapitan City 2008 COA Audit Findings 8
July 1, 2010
DETAILS OF SIGNIFICANT FINDINGS
AND RECOMMENDATIONS
Finding No. 8
The construction of the city government center with contract cost of P159.594 million was not completed within the stipulated contract period of Five Hundred Forty (540) days, in violation of the provision of approved agreement, hence, depriving it of the benefit that could have been derived from early completion.
The city government together with the WTG-MCDC Joint Venture signed a contract agreement (See Annex “I”) of March 15, 2007 for the completion of the city government center at a contract price of P159.494 million.
The project is to be completed within Five Hundred Forty (540) calendar days which was officially started or effective on March 26, 2007.
If based on the approved contract date of affectivity, its completion could have been estimated on October 1, 2008, more or less, granting that there are no work suspensions requested by the contractor and approved by the procuring entity.
Under Section 9(1) of Annex “E” of the Implementing Rules and Regulations of RA 9184, re: Contract Implementation Guidelines for the Procurement of Infrastructure Project, the procuring entity or the city government shall have the authority to suspend the work wholly or partly by written order for such period as may be deemed necessary, due to force majeure or any fortuitous event for failure on the part of the contractor to correct bad conditions which are unsafe for workers.
On the other hand, the contractor shall have the right to suspend work operation on the project along the critical path of activities after fifteen (15) calendar days from date of receipt of written notice to the City Engineer due to (1) existence of right-of-way problems; (2) construction plans not submitted to the contractor; (3) peace and order conditions; (4) failure of the procuring entity to deliver government furnished materials and equipment; and (5) delayed payment of contractor’s claim for progress billing.
Engineering Office admittedly claimed that it received request for work suspension from the contractor but on a delayed basis thus depriving them of the proper assessment as to its validity. These requests remained un-acted by the City Engineer, hence, the remaining days to complete the project could not be accurately determined.
Likewise, Section 10(2) of Annex “E” of RA 9184 provides that no extension of contract time shall be granted the contractor due to (a) ordinary unfavorable weather conditions and (b) inexcusable failure or negligence of contractor to provide the required equipment, supplies or materials.
An interview with the City Engineer noted that a change order was made on the project. However, the changes to the specification, as of this writing, is undocumented and was observed to have already been implemented by the contractor without the benefit of a proper issuance of an Order accompanied with notices from the Project Engineer containing the plans, its computations as to the quantities of the additional work involved per item indicating the specific stations where such works are needed, detailed estimate of the unit cost of such items of work together with his justifications for the need of such Change Order for consideration and approval of the City Mayor being the Head of the Procuring Entity.
The reported accomplishment as certified by the City Engineering Office as of December 31, 2008 is only 41.75% marked as Annex “J” hereof and has been observed that the target date of completion is not indicated thereon.
The non-completion of the project within the stipulated contract period deprived the city government of the benefit that could have been derived from its early completion. Likewise, perception and doubts from the general public that this project was uncompleted because of lack of fund could not be avoided or eliminated especially that this is financed from bank loan.
Management Comment:
The City Engineering Office disclosed that the causes of the completion delay were due to the unworkable rainy days and unavailable supply of deformed steel bars in the local market. The unavailability of the consultant on the project site likewise, was contributory to the delay because problems on specifications and designs raised by the contractor which the CEO could not immediately be acted upon by the LCE without the consultants advise.
Rejoinder:
Management should have already considered the unworkable rainy days in the determination of the days to complete the project before the contract signing.
Recommendation:
Direct the City Engineer to compute the remaining days to complete the project and if found that the contractor is in negative slippage, impose liquidated damages in accordance with Section 8, Annex “E” of the Implementing Rules and Regulations of RA 9184 by way of deducting from the succeeding claim of the contractor.
Require the contractor to submit the request for work suspension of the project right after the conditions for suspension exist for immediate and proper evaluation of the Project Engineer. Change Order must be documented as basis for the accurate inspection of Project Engineer on the accomplishment made.
Project consultant who is also contracted the building supervision by the city government must also be visible in the project for the periodic evaluation of the contractor’s performance on the compliance to the plans and specifications so that defects that maybe found thereon are immediately communicated and corresponding corrections are instituted.
Dapitan City 2008 COA Audit Findings 7
July 1, 2010
DETAILS OF SIGNIFICANT FINDINGS
AND RECOMMENDATIONS
Finding No. 7
Withdrawal of supplies carried in stock from the warehouse of the City General Services Office valued in the books at P729,808.09 were made thru vales instead of the required Requisition and Issue Slip, contrary to Section 116 of the New Government Accounting System (NGAS). Its failure to report the issuance to the Accounting Office causes the inventory cost at year-end to be overstated.
Procedures under Section 116 of the New Government Accounting System for requisition of supplies carried in stock require that it shall be made thru the preparation by the department or office of the Requisition and Issue Slip (RIS). Once supplies are available, an Obligation Slip (OS) must be attached containing certification from the department head as to the necessity of the supplies for official use and the availability of appropriations from the Budget Officer. Approved RIS and OS are bases for the supply officer in charge of the custody of the supplies for the issuance to end-user.
An examination of stock inventory for supplies carried in stock disclosed that as of December 31, 2008, there were issuances thru vales that were made by the General Services Office without the duly approved RIS. There are vales that bear only the signature of staff employees hence, were not approved by the Head of Office or Department needing the supplies.
Total amount of supplies already withdrawn from the warehouse is valued at P729,808.09. Breakdown of the withdrawals as to who were the end-user and supply classification, are as follows:
Total Amount
Accounting Office
P 25,132.46
City Mayor’s Office
449,070.04
General Services Office
108,543.34
Tourism
31,929.59
Barangays
73,600.70
Treasurer’s Office
10,619.70
Dapitan City Resort Hotel
8,434.25
Human Resource Management Office
6,672.00
Sangguniang Panlungsod
5,733.00
Other Offices
10,073.01
TOTAL
P 729,808.09
The irregular withdrawal of supplies from stock without the prescribed approved requisition form overstated the inventory account as of December 31, 2008 because the usual Supplies and Materials Issued Report which consolidates all issuances of supplies coming from stocks, are not yet prepared for the purpose, hence, the same were not duly recorded in the books of accounts.
The uncontrolled and unauthorized issuances of supplies coming from stock of the General Services Office have to be properly reviewed by the City General Services Office in order to enhance proper accountability of those persons in charge of the custody, otherwise, losses to the city government will remain unchecked.
Management Comment:
The General Services Office justified that it decided to issue these supplies out of immediate necessity to end-users of the different offices in order not to hamper its normal operations. Nevertheless, the Requisition and Issue Slips are already routed for approval by concerned Department Heads.
Rejoinder:
The practice of stock issuances without duly approved RIS is devoid of any administrative policy and is a complete breakdown of existing control measures to safeguard its assets. This practice continues to thrive because preparation of requisitions of supplies needed by the departments or offices is made only as the need arise without observing the normal procurement processes, thus substantial delays could not be avoided.
Recommendation:
Direct the General Services Office to stop the practice of issuing stock unless an approved RIS is presented. Essential items may be issued only in exceptional cases such as emergency where vale maybe entertained provided an RIS will follow. Also require those personnel in charge in the custody of stocks to periodically reconcile stocks with records. Any variances should be looked into.
Dapitan City 2008 COA Audit Findings 6
July 1, 2010
DETAILS OF SIGNIFICANT FINDINGS
AND RECOMMENDATIONS
Finding No. 6
The failure of the BAC Secretariat to consolidate the approved Purchase Request submitted by each department/office heads resulted in the piecemeal acquisition of goods and services, thus advantages in bulk procurement could not be availed of. Likewise, the old practice of sending Price Quotation or personal canvass to known suppliers by the personnel of GSO or BAC Secretariat is still observed, thus, favoritism with suppliers could not be discounted.
Each procuring entity shall prepare, maintain and update an Annual Procurement Plan that includes Project Procurement Management Plan (PPMP) and approved by the City Mayor consistent with the duly approved yearly budget. Consistent with the government fiscal measures, only those crucial to the efficient discharge of government functions or those required in the day-to-day operations or in pursuit of the principal mandate of the city shall be included in the APP.
The function to consolidate the APP is lodged with the Bids and Awards Committee Secretariat in accordance with Section 7, Rule 1, of the Implementing Rules and Regulations of Republic Act No. 9184.
Likewise, the sending of Price Quotations to suppliers is now discontinued as Section 21 of RA 9184 provides that the Invitation to Apply for Eligibility and to Bid for public bidding is mandated to be posted in conspicuous places in the premises of the procuring entity in addition to the posting in its website and the Government Electronic Procurement Service (GEPS).
The only instance where the price quotation is obtained is when shopping, as the alternative mode of procurement, is applied provided the conditions for its application is present and when the Bids and Awards Committee recommends and approved by the City Mayor.
In the verification of various procurements made by the City Government and during interview, it was observed that the serving of “Price Quotation” by personnel of the Bids and Awards Committee to suppliers is still being practiced. The preparation of price quotation by the BAC is based on individually approved purchase request, thus voluminous documents are being processed by BAC during the bid opening, instead of consolidating it and preparing only one Invitation to Apply for Eligibility and to Bid, to give them sufficient time to conduct the detailed evaluation and review of the bid tender of participating and complying bidders; comply with the rules and regulations on RA 1984 and improve the necessary procurement process of the City Government.
This practice not only violates the procedures in public bidding but also deprive the city government of any discounts that maybe given by suppliers in bulk procurement.
Management Comment:
The consolidation of duly approved purchase requests has already been made effective February 2009 by the BAC Secretariat, however, due to reluctance of some other suppliers to participate in the public bidding, the sending of consolidated PR/Price Quotations is still made for the procurement to be competitive.
Recommendation:
Direct the BAC Secretariat to consolidate all received approved Purchase Requests into one Price Quotation according to similar classification such as: Drugs & Medicines; 2. Construction Materials; 3. Office/Computer Supplies; 4. Office/Communication Equipment; 5. Furniture & Fixtures; Agricultural/Veterinary Supplies; (6) Spare Parts; and 7. Groceries/Janitorial Supplies as attachment to the Invitation to Apply for Eligibility and to Bid.
Discontinue the sending of Price Quotation to prospective suppliers to avoid favoritism by personnel assigned to distribute the same.
Dapitan City 2008 COA Audit Findings 5
July 1, 2010
DETAILS OF SIGNIFICANT FINDINGS
AND RECOMMENDATIONS
Finding No. 5
Unserviceable Property, Plant and Equipment valued in the books at P2.655,000.00 was not yet dropped from the books of accounts due to the failure of the Committee on Awards to dispose, thru public auction or negotiated sale, and submit the Inventory and Inspection of Unserviceable Motor Vehicle Report to the Accounting Office, hence, the reported property accounts as of December 31, 2008 was overstated.
Section 162 of Rule 21, Title V on the Rules and Regulations on Supply and Property Management in the LGU’s, provide:
“When Supplies or Property of any local government unit have become unserviceable for any cause or are no longer needed, the same shall be disposed of in accordance with the procedures prescribed.”
The City General Services Officer is responsible for the disposal of supplies or property of the city government which have become unserviceable or no longer needed. Public auction is the primary mode of disposal, however, for justifiable reasons, it may be also disposed either sale thru negotiations, transfer without cost to other offices or department or other government agencies; and or by destruction.
The disposal of unserviceable equipment/vehicles shall be made thru the preparation of Inventory, Inspection and Appraisal Report (General Form No. 17-A) which are submitted to the assigned local auditor for determination whether the same are with value or without value. If the same are found to be valuable, it will recommend its sale thru public auction, otherwise, he shall recommend its destruction. The report is then returned to the General Services Office thru the Committee on Awards who shall appraise and consider the floor price of the unserviceable property.
The Committee on Awards shall then prepare the Invitation to Bid which shall contain the date of issuance; location of the supplies or property; quantity and adequate description of the supplies and property to be disposed of; statement of reservation or option on the part of the LGU to accept or reject any or all bids and to waive any formal defects in the bid; and clear instruction on how the bids are to be accomplished and submitted.
Opening of bids shall be made at the time, date and place stated in the invitation. The Committee shall within three (3) days from the opening date, decide the award and notify the awardees. Award shall be given to the highest complying bidder provided that offer is not less than the appraised value of the property being sold.
When public auction is impractical, negotiated sale maybe resorted to as such price as determined by the Awards Committee.
The City General Services Office forwarded an Inventory and Inspection of Unserviceable Property containing seven (7) unserviceable vehicles of different make or brand. The reason for its consideration that the unit is unserviceable was due to “Beyond Economical Repair”. These unserviceable properties are valued in the books at P2.655 million (See Annex “H”) and was acquired by the city government twelve (12) years ago.
When the report was forwarded to the Auditor’s Office for inspection, it was returned requiring the city government to submit its appraisal report as the Inventory Report did not show the appraised valuation for the proper determination of the floor price when these are to be sold thru public auction or negotiated sale as the circumstances warrant. To date the report is now with the City General Services Office pending preparation of the appraisal report and has yet to be returned to COA for appropriate action.
The failure of the City General Services Office to act immediately on the Inventory and Inspection Report of Unserviceable Motor Vehicle valued in the books at P2.655 million, denied the City Accounting Office to drop from its books of accounts the value of these assets for lack of appropriate documents for disposal.
In addition, these unserviceable motor vehicles, which are occupying enough space in the City General Services Office compound, will only diminish its salvage value owing to its exposure to various kind of element and that the space occupied could have been used for storage or garage for city-owned motor vehicles.
Management Comment:
Management agreed with our observation and promised that effective April, 2009, those inventory records of unserviceable properties will be duly acted with dispatch and appraisal report will be made immediately to facilitate disposal.
Recommendation:
Assign a responsible person from the Motor Pool Division of the City Engineering Office, preferably a Mechanical Engineer, to prepare immediately the appraisal report for the determination of the floor price of the unserviceable vehicle ready for auction sale. After the disposal, submit the report to the Accounting Office for the proper recording in the books of accounts.
Dapitan City 2008 COA Audit Findings 4
July 1, 2010
DETAILS OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS
Finding No. 4
Depreciation for calendar year 2008 was inadequately provided due to incomplete records of Property, Plant and Equipment acquired in prior years, thus, the reported expenses was understated by P2,545,232.24.
The provision of depreciation is in accordance with the International Accounting Standards and based on the concept that the cost incurred for the revenues and benefits should be recognized as expense over the same period when such revenue and benefits are realized.
Section 4(o) of the Manual on the New Government Accounting System for LGU’s (COA Cir. 2002-003 dated June 20, 2002) provides the method of depreciation that should be used for acquired property, plant and equipment.
Likewise, COA Circular No. 2003-007 December 11, 2003 adopted the revised estimated useful life in computing depreciation expense for the said acquired property, plant and equipment, as follows:
Property, Plant and Equipment
Estimated Useful Life
Buildings:
Wood
10
Mixed
20
Concrete
30
Office Equipment, Furnitures & Fixtures:
Office Equipment
5
Furnitures & Fixtures
10
IT-Equipment-Hardware
5
Library Books
5
Machineries and Equipment:
Machineries
10
Agricultural, Fishery and Forestry
10
Communication Equipment
10
Construction and Heavy Equipment
10
Medical and Dental Equipment
10
Sports Equipment
10
Technical and Scientific Equipment
10
Other Machineries and Equipment
10
Transportation Equipment
Motor Vehicles
7
Watercrafts
10
Other Property, Plant and Equipment
5
The computation of depreciation is based on straight-line method. A residual value equivalent to ten percent (10%) of the acquisition cost shall be deducted before effecting the depreciation by dividing over its estimated useful life.
The property, plant and equipment accounts subject to depreciation as of December 31, 2008 of the General Fund, are as follows:
Electrification, Power & Energy Structures P 8,259,004.65
Buildings 61,875,246.79
Other Structures 130,617,072.25
Office Equipment 4,940,809.74
Furniture and Fixtures 3,001,508.46
IT-Equipment 8,411,614.05
Agricultural, Fishery & Forestry Equipment 199,358.32
Communication Equipment 2,724,337.85
Construction and Heavy Equipment 65,638,962.66
Medical, Dental & Laboratory Equipment 201,201.00
Military & Police Equipment 30,543.00
Sports Equipment 146,806.10
Technical and Scientific Equipment 634,740.00
Other Machineries 445,023.00
Motor Vehicles 23,883,169.63
Watercrafts 483,132.00
Other Transportation Equipment 44,470.00
Other Property, Plant and Equipment 20,602,650.70
———————
TOTAL P332,139,650.20
============
Based on the account balances above, the computed depreciation expense (See Annex “G”) is P9,148,768.15, however, the accounting records revealed that as of December 31, 2008, only P6,603,535.91 were recorded, hence, an understatement of P2,545,232.24 of the accumulated depreciation at year end, thus the reported net income for the same period was overstated by the same amount.
The understatement of the depreciation expense was due to incomplete maintenance of records by the Accounting Department of the acquired property, plant and equipment. While the General Services Office is the one in charge in the custody of all property records, the same is not reconciled with the accounting. In addition, the Inventory Committee created by the Office of the City Mayor has yet to submit a report thereon.
Management Comment:
The City Accountant maintained that records of acquisition of property, plant and equipment were already collated, however, these have to be classified yet according to kind, nature and the proper office custodian, for easy location when inventory is to be made and for proper computation of depreciation expenses.
Recommendation:
Require the accounting department to adjust the account by preparing Journal Entry Voucher (JEV) reflecting the correction, viz:
Debit Credit
Surplus Adjustment 2,545,232.24
Accumulated Depreciation-PPE 2,545,232.24
Direct the City General Services Office to reconstruct the records of those properties acquired in prior years. For newly acquired properties, require the records officer to maintain a log book containing information on the custodian’s name, date acquired, complete property description and other relevant data, for easy reference.
Dapitan City 2008 COA Audit Findings 3
July 1, 2010
DETAILS OF SIGNIFICANT FINDINGS
AND RECOMMENDATIONS
Finding No. 3
Cash advances as of December 31, 2008 amounting to P11,350,979.73 remained unliquidated, in violation of Section 89 of PD 1445 and COA Circular No. 97-002 dated February 10, 1997, hence, the reported expenses at year end is understated.
Section 89 of PD 1445 provides the limitations on cash advances which states that:
“No cash advances shall be given unless for a legally authorized specific purpose. A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been served. No additional cash advance shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made.”
COA Circular 97-002 dated February 10, 1997 provides for the restatement with amendments of the rules and regulations on the granting, utilization and liquidation of cash advances provided for under COA Circular No. 90-331 dated May 3, 1990 which requires that:
“4.1.1 No additional cash advance shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made.
A cash advance shall be reported on as soon as the purpose for which it was given has been served.
When a cash advance is no longer needed or has not been used for a period of two (2) months, it must be returned to or refunded immediately to the collecting officer, and
All cash advances shall be fully liquidated at the end of each year. Except for petty cash fund, the AO shall refund any unexpended balance to the Cashier/Collecting Officer who will issue the necessary receipt.”
Likewise, Sec. 3.1.2 of the same Circular provides that:
“the cash advance for travel shall be liquidated by the officials/employee concerned strictly within thirty (30) days after his return to his official station as required under Section 16 of Executive Order No. 248, as amended, otherwise, his salary shall be suspended until he complies therewith.”
The cash advances which remained outstanding as of December 31, 2008 in the total amount of P11,350,979.73 (Annex “F”) and classified according to position of the accountable officials are shown in pie chart presentation, as follows:
Breakdown of Outstanding Cash Advances
According to Position Classification of AO
Current elective officials P 523,719.35
Office/Department/Division Head 3,428,171.26
Other Officials and Employees 4,226,515.79
Retired Officials/Employees 1,341,231.16
National Officials & Employees 1,817,702.17
The balance of unliquidated cash advances of those retired/resigned/deceased officials and employees of P1,341,231.16 includes those granted to elected persons who have lost in the election in the total amount of P933,971.66.
Exhibited below, also in pie chart form, is the cash advances distributed according to number of years outstanding as of December 31, 2008, viz:
As shown above, P5,593,354.63 remained outstanding below one (1) year; P687,194.59 are more than one year; P1,009,129.24 above two years and P3,908,403.27 above three years.
The unliquidated cash advance aged more than three (3) years also includes those granted to the retired former chief of police of the city of P1,000,000.00 who was formally charged together with the former City Mayor, the case of which is now pending with the Sandiganbayan.
Likewise, records showed that there were officials and employees who were granted additional cash advances despite their failure to liquidate or render an accounting of the previous cash advances, in violation of Section 4.1.1 of COA Circular No. 97-002 dated February 10, 1997, as stated above.
In addition, despite the big amounts of outstanding cash advances, these officers were still granted additional cash advances, which further posed difficulties in accounting/liquidating thereof, that resulted to the overstatement of assets and understatement of the reported expenditures.
These Accountable Officers should have made a proper accounting of these cash advances granted to them as provided for under Section 5.8 of the said COA Circular.
Failure to properly monitor its settlement and the laxity in the granting of the same not only caused the accumulation of such account to millions of pesos but also deprived the city government on the use of the said amount.
Management Comment:
Management agreed with our comment and assured us that demand letters will be sent to those who have outstanding cash advances. Likewise, they contended that for cash advances granted in 2008 which remained outstanding as of December 31, 2008 of P5.593 million, 19.74% or P1,104,547.25 thereof were already liquidated as of January 31, 2009.
Recommendation:
The City Mayor should cause the issuance of demand letters, thru the initiative of City Accountant. If after two (2) notices these accountable officers still fail to liquidate, the matter should be brought to the City Attorney for proper disposition, copy furnished the Commission on Audit.
The City Mayor, being the Local Chief Executive, who is primarily responsible for all government funds and property pertaining to the City and being the approving officer, should enforce the liquidation of these cash advances in accordance with COA Circular No. 97-002 and Sec. 89 of PD 1445.
Failure of the accountable officers to liquidate their cash advances within the prescribed period shall constitute a valid cause for withholding of their salaries and the institution of other sanctions as provided for under paragraph 9.3 of the said circular and Section 128 of PD 1445.
Dapitan City 2008 COA Audit Findings 2
July 1, 2010
DETAILS OF SIGNIFICANT FINDINGS
AND RECOMMENDATIONS
Finding No. 2
Procurement of goods in the total amount of P3,625,932.46 from January 1, 2008 to November 30, 2008 of different offices were made on a reimbursement basis, in violation of Section 3, Rule 1 of the Implementing Rules and Regulations of Republic Act No. 9184, thus depriving the Bureau of Internal Revenue of the taxes due thereon
The procurement of goods and services by the government is governed by fundamental principles. One of these principles is the so- called “Competitiveness” which extend equal opportunity to private contracting parties, who are eligible and qualified, to participate in public bidding, being the general rule in acquiring goods and services.
However, when justified by the conditions provided under Section 49 to 52 of R.A. 9184, the procuring entity may, in order to promote economy and efficiency, resort to any of the alternative methods of procurement, such as:
1. Limited Source Bidding;
2. Direct Contracting;
3. Repeat Order;
4. Shopping; and
5. Negotiated Procurement
The application of any of the alternative method shall be resorted to only in highly exceptional cases and is subject to the conditions that exist at the time of procurement and subject to the approval of the head of the procuring entity upon the recommendations of the Bids and Awards Committee provided under Section 12.1, Rule V of the same law.
In the verification of procurement of goods acquired by the different department of the city government, it was observed that a total of P3,625,932.46 disbursements were made in the name of various employees. These disbursements partake of a nature of a reimbursement by the employee concerned certifying that SHOPPING was made and that the price obtained at the time was most advantageous to the government.
The mere certification by the payee that “shopping” as the alternative mode of procurement, is inadequate in the absence of the signed price quotations from at least three (3) known suppliers. Likewise, the required conditions for the use thereof are not indicated which should be made only in any of the following cases:
1. Where there is an unforeseen contingency requiring immediate purchase; provided, however, that the amount shall not exceed fifty thousand pesos (P50,000); or
2. Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding two hundred fifty thousand pesos (P250,000) provided, however, that the procurement does not result in splitting of contracts, as provided in Section 54.1 of IRR-A; provided further, that at least three (3) price quotations from bonafide suppliers are obtained.
The failure of the Bids and Awards Committee to consolidate the Purchase Request is a manifestation that the same is acquired thru piecemeal when it has all the authority to act on said purchase requests expeditiously. The inaction and/or delayed procurement by the Bids and Awards Committee (BAC) aggravated the situation which justified the department heads decision to purchase the materials immediately in order not to hamper their operations.
Likewise, this practice deprived the Bureau of Internal Revenue of the withholding taxes that may be collected and/or due thereon.
Section 4 of Revenue Regulation No. 10-93 dated June 16, 1993, as amended, provides:
“Withholding Agents Charged with the Duty to Withhold and Remit.- All Local Government Units, represented by the Provincial/City/Municipal/Barangay Treasurer xxx or any person holding similar position and performing similar function, xxx shall deduct and withhold the prescribed creditable value-added tax before making any payment to seller of goods and services.
Management Comment:
Due to unavailable regular office supplies at the GSO and the delayed processing of purchase requests, department heads decided to immediately procure the supplies out of necessity.
Rejoinder:
The used of shopping, as the alternative mode of procurement, should be supported with at least three (3) price quotations from the suppliers to comply with the competitiveness aspect of RA 9184.
Recommendation:
1. Limit the procurement of goods on a reimbursement basis, unless the circumstances warrant its application.
2. Secure at least three (3) price quotation from known suppliers if reimbursement could not be avoided.
3. Direct the City General Services Officer to procure all supplies and materials in bulk in order for the department heads not to resort to shopping and to make the supplies readily available to them when the need arises.
4. Require the department heads to submit the Annual Procurement Program of their offices for consolidation by the Bids and Awards Committee and to procure the supplies and materials for stock purposes.
