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Malaybalay City 2008 COA Audit

II. VALUE-FOR-MONEY AUDIT
The Audit Team had also conducted a Value-for-Money (VFM) Audit, also known as Performance Audit, to determine the efficiency, economy and effectiveness of the Agency’s utilization and usage of its funds and resources and to ascertain the Agency’s level of accomplishment in relation to its objectives and projected outputs.
For CY 2008, the audit was focused on the Agency’s implementation of its infrastructure projects. Taking into consideration the impact and effect of infrastructure projects to the majority of the component barangays of the City, the Audit Team deemed it proper to evaluate the City’s performance n this area.
For the year in review, the City Government was able to successfully complete ninety-two (92) infrastructure projects with an aggregate amount of P 46,100,104.78. These projects covers concreting of roads, electrification projects, construction of post-harvest facilities, barangay health stations, school buildings, office buildings and barangay multi-purpose halls. A complete list of these projects is attached hereto as Annex G.
Of the ninety-two (92) projects completed, thirty of these were funded from prior years’ appropriation (CY 2006 and 2007) and the sixty-two (62) remaining projects are funded from the current year’s appropriation.
To conclude, the Audit team is of the opinion that the City Government of Malaybalay had judiciously and efficiently managed and utilized its funds and resources to address the needs of its constituents. With effective planning, the Management was able to identify the proper priority projects and in the implementation of these projects, they employed fiscal prudence in the utilization of their funds.

Malaybalay City 2008 COA Audit 1

I. FINANCIAL AND COMPLIANCE AUDIT
Pursuant to Section 2 (1) of Article IX-D of the 1987 Philippine Constitution, we had examined and audited the accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property of the City Government of Malaybalay for the calendar year ended December 31, 2008. Our audit was performed following the prescribed government auditing standards and other applicable laws, rules and regulations which we deemed appropriate for the prevailing conditions.

The audit was primarily made to determine the Agency’s conformance with the Constitution, the Local Government Code of 1991 and other laws, rules and regulations in the conduct of their financial and fiscal operations and to ascertain that the financial statements present fairly the results of its operations and its financial status for the year then ended. It was also made to ascertain whether or not the management had judiciously and prudently used and utilized its Agency’s funds and properties. The reliability and adequacy of the Agency’s internal control system was also evaluated in the course of the audit.

We had employed the regular audit methodologies and techniques to attain the aforementioned audit objectives. Financial transactions were examined and audited to ensure its legality and propriety, completed infrastructure projects and delivery of goods and services procured were inspected and validated, receipts collected were checked and verified. The propriety of the processes for procurement and real property tax assessments were confirmed by walking through the processes.

After having performed the audit for CY 2008, the Audit Team noted that, except for the audit finding of the non-submission of disbursement vouchers and supporting documents covering disbursements for the construction of the Malaybalay City Public Market, Bus Terminal and Commercial Building, the City Government of Malaybalay had substantially complied, in all material respect, with the laws, rules and regulations in the conduct of their fiscal operations and that the financial statements fairly presented its financial status and the results of the operations for the year then ended.

Further, it was also noted that for CY 2008, the City Government was able to implement various projects and activities for the benefit of its constituents, noteworthy among these are:

* The grant of City Scholarship Program to 275 college students, 312 high school students and 42 Indigenous People grantees;
* Provided free immunization to infants and children against common childhood diseases;

* Distribution of vitamins and micro-nutrient supplements (Vitamin A, Iodine, Iron) to infants and children;
* Free pre-natal check-up for pregnant women;
* Enrollment of indigent residents to Philippine Health Insurance Company(PHIC);
* Grant P200.00 monthly assistance to all senior citizens of the City;
* Provided trainings and livelihood to various women’s organizations;
* Provided financial and livelihood assistance to differently-abled persons;
* National Awardee of DOH’s Sandugo Award for Outstanding Blood Letting Program
* Roll-out (100% complete) of the e-NGAS as prescribed by the Commission on Audit.
Our audit also disclosed significant lapses in the financial operations of the City of Malaybalay, and of these lapses, the audit team had chosen to disclose the audit finding discussed below considering the materiality of the amount involved.

1. The City Government failed to submit disbursement vouchers and supporting documents covering the disbursements amounting to P115, 134,069.57 representing disbursements from the proceeds of the Malaybalay City Bonds entrusted with the Land Bank of the Philippines, Trust Banking Group.

Article IX-D, Sec. 21 (1) of the 1987 Philippine Constitution provides, among others, that the Commission on Audit (COA) shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.

Further, the Manual on Certificate of Settlements and Balances (Revised 1993) which was prescribed to be used by all government agencies pursuant to COA Circular No. 94-001, dated January 20, 1994, states that-

“Sec. 8 – Responsibilities of the Accountant- The Chief Accountant, xxx, shall ensure that: (a) the reports as submitted by the accountable officers are immediately recorded in the books of accounts and submitted to the auditor within ten (10) days from such receipt, xxx”

For CY 2008, the City Government failed to submit disbursement vouchers and supporting documents covering disbursements amounting to       P 115,134,069.57 from the proceeds of Malaybalay City Bonds entrusted with the Land Bank of the Philippines Trust Banking Group. (Annex E)

While Sec. 7 of the Trust Indenture provides that the Trustee (LBP) shall prepare and submit to the Trustor (LGU-Malaybalay City) Statements of assets, liabilities, expenses and summary of investment changes of the Trust Fund, such provision does not include the custody and preservation of the disbursement vouchers and supporting papers pertaining thereto.

It is our opinion that the proceeds of Malaybalay City Bonds held in trust by the Trustee (LBP) are funds of the City Government of Malaybalay and therefore any and all disbursements pertaining thereto are well within our audit jurisdiction.

While we respect the Trustee’s responsibility to prepare the aforementioned financial and accounting reports (see Sec. 7.1.1 of the Trust Indenture), it is the Constitutional duty and responsibility of our Office to conduct post-audit on the disbursements from the said Fund.

Management Comment:
The City Accountant stated that her Office had already sent a letter, attached hereto as Annex F, to the Land Bank of the Philippines Trust Banking Group requesting for the submission of the subject disbursement vouchers and supporting documents.

Recommendation:
Direct the City Accountant to make further representation with the Land bank of the Philippines Trust Baking Group for the submission of the said disbursement vouchers and supporting documents to the Audit Team.