Election Results for Davao del Norte
July 6, 2010
MEMBER, HOUSE OF REPRESENTATIVES of DAVAO (DAVAO DEL NORTE) – SECOND LEGDIST
Candidate Party Votes Percentage
LAGDAMEO, Antonio Jr F. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 31526 100.00%
Statistics
Total number of Voters who actually voted 42732
PROVINCIAL GOVERNOR of DAVAO (DAVAO DEL NORTE)
Candidate Party Votes Percentage
DEL ROSARIO, Rodolfo P. LIBERAL PARTY 33145 100.00%
Statistics
Total number of Voters who actually voted 42732
PROVINCIAL VICE-GOVERNOR of DAVAO (DAVAO DEL NORTE)
Candidate Party Votes Percentage
SUAYBAGUIO, Victorio, Jr. R. LIBERAL PARTY 23578 75.08%
ISRAEL, Rogelio E. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 7824 24.92%
Statistics
Total number of Voters who actually voted 42732
MEMBER, SANGGUNIANG PANLALAWIGAN of DAVAO (DAVAO DEL NORTE) – SECOND PROVDIST
Candidate Party Votes Percentage
AYUSTE, Araceli L. LIBERAL PARTY 18545 16.54%
SAN JUAN, Artemio V. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 18275 16.30%
GAVINA, Janet G. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 11678 10.42%
DACALUS, Ely C. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 11170 9.96%
DUJALI, Alan R. INDEPENDENT 11108 9.91%
DUCO, Hernanie L. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 11054 9.86%
ROYO, Salvador R. INDEPENDENT 10152 9.06%
LU, Daniel A. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 8579 7.65%
MALIGRO, Demetrio C. LIBERAL PARTY 5655 5.04%
STA. ANA, Rolando A. LIBERAL PARTY 4249 3.79%
COCAMAS, Conrado D. INDEPENDENT 1629 1.45%
Statistics
Total number of Voters who actually voted 42732
Election Results for Davao del Norte – Reresentative
July 6, 2010
MEMBER, HOUSE OF REPRESENTATIVES of DAVAO (DAVAO DEL NORTE) – FIRST LEGDIST
Candidate Party Votes Percentage
DEL ROSARIO, Antonio Rafael G. LIBERAL PARTY 121296 74.20%
ALVAREZ, Emelita A. NACIONALISTA PARTY 42170 25.80%
Statistics
Total number of Voters who actually voted 173155
MEMBER, HOUSE OF REPRESENTATIVES of DAVAO (DAVAO DEL NORTE) – SECOND LEGDIST
Candidate Party Votes Percentage
LAGDAMEO, Antonio Jr F. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 154870 100.00%
Statistics
Total number of Voters who actually voted 185273
PROVINCIAL GOVERNOR of DAVAO (DAVAO DEL NORTE)
Candidate Party Votes Percentage
DEL ROSARIO, Rodolfo P. LIBERAL PARTY 296453 100.00%
Statistics
Total number of Voters who actually voted 358428
PROVINCIAL VICE-GOVERNOR of DAVAO (DAVAO DEL NORTE)
Candidate Party Votes Percentage
SUAYBAGUIO, Victorio, Jr. R. LIBERAL PARTY 230220 74.19%
ISRAEL, Rogelio E. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 80075 25.81%
Statistics
Total number of Voters who actually voted 358428
MEMBER, SANGGUNIANG PANLALAWIGAN of DAVAO (DAVAO DEL NORTE) – SECOND PROVDIST
Candidate Party Votes Percentage
GAVINA, Janet G. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 80000 12.95%
LU, Daniel A. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 75112 12.16%
DUJALI, Alan R. INDEPENDENT 72138 11.68%
DACALUS, Ely C. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 68176 11.04%
DUCO, Hernanie L. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 61045 9.88%
AYUSTE, Araceli L. LIBERAL PARTY 59247 9.59%
ROYO, Salvador R. INDEPENDENT 55398 8.97%
SAN JUAN, Artemio V. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 51732 8.37%
MALIGRO, Demetrio C. LIBERAL PARTY 37306 6.04%
STA. ANA, Rolando A. LIBERAL PARTY 29975 4.85%
COCAMAS, Conrado D. INDEPENDENT 27585 4.47%
Statistics
Total number of Voters who actually voted 185273
MEMBER, SANGGUNIANG PANLALAWIGAN of DAVAO (DAVAO DEL NORTE) – FIRST PROVDIST
Candidate Party Votes Percentage
AALA, Shirley Belen R. LIBERAL PARTY 95283 15.69%
MILLAN, Raymond Joey D. LIBERAL PARTY 88691 14.60%
ELIOT, Vicente, Sr. C. LIBERAL PARTY 77073 12.69%
LAGUNZAD, Antonio M. LIBERAL PARTY 72533 11.94%
DE VEYRA, Alfredo D. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 53723 8.84%
ZULUETA, Arniel D. PARTIDO DEMOKRATIKO PILIPINO LAKAS NG BAYAN 52242 8.60%
OBERO, Ernesto Y. LIBERAL PARTY 51553 8.49%
LIM, Simeon R. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 36805 6.06%
LAGUNA, Roger A. INDEPENDENT 27706 4.56%
MALACASTE, Oliver O. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 22943 3.78%
LACSON, Bezer P. PWERSA NG MASANG PILIPINO 14817 2.44%
NATOR, Huberto M. PWERSA NG MASANG PILIPINO 7528 1.24%
LLAMADA, Arlene E. PWERSA NG MASANG PILIPINO 6524 1.07%
Statistics
Total number of Voters who actually voted 173155
· · · · ·
Copyright © 2000-2010 Smartmatic Corporation. All rights reserved.
Tagum City 2008 COA Audit 11
July 4, 2010
2. Controls over cash advances were deficient, as payment of expenses incurred out of cash advances were not reported by the accountable officer, whose cash advances of P5,183,341.02 have remained unliquidated, contrary to the provisions of COA Circular No. 97-002, thereby overstating the cash and understating the expenditure accounts.
Paragraph 5 of COA Circular No. 97-002 dated February 10, 1997, provides the rules on the liquidation of cash advances hereby quoted as follows:
1. 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.
2. All cash advances shall be fully liquidated at the end of each year. Except for petty cash fund, the accountable officer shall refund any unexpended balance to the Cashier/Collecting Officer who will issue the necessary official receipt.
3. Official Travel – Within sixty (60) days after return to the Philippines in case of foreign travel or within 30 days after return to this permanent official station in the case of local travel, as provided for in EO 248 and COA Circular No. 96-004.
Failure of the Accountable Officer to liquidate his cash advances within the prescribed period shall constitute a valid cause for the withholding of his salary and the institution of other sanctions as provided for under paragraph 9.2 and 9.3 hereof.
In addition, Section 89 of Presidential Decree No. 1445, provides that:
“No cash advances shall be given unless for 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.
Financial records disclosed an outstanding balance of cash advances granted to officials and employees in the amount of P5,291,133.29 as of December 31, 2007 (Annex 6).
Moreover, the audit revealed that the purpose of all these expenses were already served but concerned accountable officers failed to liquidate their cash advances.
As a result, expenses were unreported and unrecorded thus, overstating the cash and understating the expenditure accounts.
The issue of unliquidated cash advances of officials and employees has been one of the areas discussed in the yearly audit reports. Likewise, demand letters were sent to every official and employee concerned. However, officials and employees who had failed to settle their account and outstanding cash advances were still granted additional cash advances, resulting in the existence of numerous unliquidated cash advances.
During the exit conference, the Special Disbursing Officer for the Intelligence Fund stated that the necessary liquidation had been sent to COA Central Office. She promised to furnish our office a copy of the transmittal letter. The City Treasurer, on the other hand, assured us that he will follow up the liquidation of the cash advances of the concerned accountable officers.
Recommendation for Tagum City Government:
Demand the immediate liquidation of all outstanding cash advances as of December 31, 2007 by directing the City Accountant to send demand letters to the employees concerned.
In case of non-compliance, the local chief executive should direct the City Accountant to withhold salaries of the official or employee until such time that the cash advances made have been fully liquidated in compliance with COA Circular No. 97-002, without prejudice to the filing of appropriate charges for failure to settle accounts.
Adherence to Section 89 of PD 1445 is strongly recommended so that unreasonable balances of cash advance at the end of the month shall be avoided.
Tagum City 2008 COA Audit 10
July 4, 2010
3. The interest charges amounting to P1,727,059.70 or 7.57% of the P22,803,000.00 loan used to purchase the 64,693 square meter lot for the City Employees’ Village or City Homes were not capitalized but charged to the different responsibility centers under the General Fund. This resulted to understatement of the total cost of the project which is envisioned to be recovered from the employee-beneficiaries of the City. Likewise, the funds available for the delivery of basic services of the responsibility centers were reduced by the interest expenses.
City Ordinance No. 233, S-2006 is the ordinance which promulgated the guidelines for the establishment of the City Employees’ Village to be known as “City Homes”.
The City loaned the amount of P22,803,000.00 to acquire from Mr. Herminigildo Baluyot the 64,693 square meter lot located in Tipaz Magugpo East. The purchase price was P22,642,550.00 or P350.00 per square meter.
Section 6 of City Ordinance No. 233, S-2006 stipulates the Terms and Conditions of the Conditional Contract To Sell the lots to the qualified City employees. The employee-beneficiaries will purchase the lot at P727.00 per square meter. The total price is payable in equal monthly installment for five (5) years through payroll deduction commencing on January 2007 and ending on December 2011.
Loan ledger of the Employees’ Village showed that the City had paid the loan interests and amortization of principal as follows:
Date
Interest
Yearly Renewal
Principal
Balance
Remarks
1/01/07
P22,803,000.00
Loan release
1/04/07
P 441,991.06
22,803,000.00
Interest charged to CEO Administrative
4/ /07
330,447.65
22,803,000.00
P316,182.20 taken up as other payables and P14,265.45 as interest charged to
CEO Administrative
7/04/07
274,741.95
22,803,000.00
Interest charged to City Treasurer’s Office
9/26/07
256,404.53
P159,861.00
22,803,000.00
P256,404.53 interest and P159,831.00 bank charges charged to the
City Mayor’s Office
10/16/07
24,422.01
22,803,000.00
Interest charged to the City Mayor’s Office
12/13/07
399,052.50
1,425,187.50
21,377,812.50
Interest charged to City Engineer’s Office
Totals
P1,727,059.70
P159,861.00
P1,425,187.50
The different responsibility centers where the loan interests were charged are the City Engineer’s Office (CEO), Administrative; the City Treasurer’s Office and the City Mayor’s Office.
The City Homes project will incur more interest charges until the loan is fully paid. These financial expenses should be capitalized to form part of the total cost of the project so the City can quantify how much benefits will redound to its employees who will avail of the program. The opportunity given to the employees to acquire the lot at lesser cost is already a benefit the City has accorded to them. If interest charges for the loan used to acquire the City Homes are charged to the different responsibility centers, this will drain the funds available for the projects of these offices. Consequently, this will affect the delivery of basic services to the other beneficiaries of the City.
During the exit conference, the City Administrator stated that the price of P350 per square meter was indeed very low considering that the current selling price of lots around the Employees’ Village ranged from P1,000 to P1,500 per square meter. He added that the area is very near the new site of the Tagum City Hall. That once the new City hall rises, the price will be more. However, the City has come up with a plan to utilize a portion of the village for commercial use. The said plan deviated from its original plan of utilizing the area exclusively for the housing units of the City employees because many of these employees lacked the capacity to pay the monthly amortization. The Accountant stated that interest charges pertaining to the City Homes loan will be capitalized in CY 2008.
Recommendation for Tagum City Government:
Capitalize as part of the cost of the lot the interest expenses incurred for the loan used to acquire the City Homes. The P727.00 selling price per square meter should be reevaluated to ensure that the City will recover the total cost of paying off the loan in five (5) years. Ensure that the total cost of developing the area and the costs of borrowing are carefully evaluated to determine whether or not the current selling price will be advantageous on the part of the City and its employee-beneficiaries as well.
Tagum City 2008 COA Audit 9
July 4, 2010
4. There are 563 tangible items amounting to P1,518,327.00 with serviceable life of more than one year but small enough to be considered as plant, property and equipment that were included in the schedule of plant, property and equipment, contrary to the policies spelled out in COA Circular No. 2005-002 dated April 14, 2005.
COA Circular No. 2005-002 states that:
2. POLICY
2.1 The New Government Accounting System (NGAS) adopts the definition of Property, Plant and Equipment under the International Accounting Standards No. 16 which states that:
“Property, Plant and Equipment are tangible assets that:
(a) are held by an enterprise for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period.”
2.2 However, there are tangible assets with serviceable life of more than one year but small enough to be considered as PPE. To address this issue, the Commission hereby prescribes the following policies:
2.2.1 Small tangible items with estimated useful life of more than one year shall be recorded as inventories upon acquisition and expense upon issuance. The list of these items with corresponding estimated useful life is attached as Annex A, thereof.
2.2.2 Other tangible assets not included in the list per Annex A shall be classified as PPE, subject to depreciation.
2.3 For monitoring, control and accountability, an Inventory Custodian Slip ( ICS), attached as Annex B, shall be prepared upon issuance of small tangible items covered by approved Requisition and Issue Slip (RIS)
Annex 7 shows the details of the 563 items included in the schedule of plant, property and equipment under the Special Education Fund (SEF) account. Referring to the same annex, the value of the equipments ranged from a low of P26.00 to a high of P11,000.00 per The Financial Report of the City (Volumes 1 and 2)
In each page of the City’s Financial Report are listed 22 items, so the 563 items needed 26 pages. This has resulted to not only waste of time in keeping the records but also supplies, such as bond paper and computer ink, in printing the schedules.
During the exit conference, the City Accountant and the Budget Officer agreed to set the price ceiling of items to be taken up as plant, property and equipment. They agreed to drop from the records all the items considered to be small enough to be considered as plant, property and equipment.
Recommendation for Tagum City Government:
Comply with the policies and guidelines of COA Circular No. 2005-002. Drop from the list of SEF plant, property and equipment the 563 items in order to save on office supplies and lessen the number of pages of the City’s Financial Report as well as the time spent in keeping the records. For monitoring, control and accountability of these items, prepare the Inventory Custodian Slip and the Requisition and Issue Slips.
Tagum City 2008 COA Audit 8
July 4, 2010
5. There are 20 construction and heavy equipment machineries valued at 42,439,761.57 that are stored in the City Motorpool because they are either unserviceable, under repair or awaiting for spare parts, thus affecting the City’s ability to fully utilize its equipment for its various projects.
Annex 8 shows the list of the 20 construction and heavy equipment and their corresponding values which summed up to P42,439,761.57 as of December 31, 2007.
We conducted an inspection of these equipments to verify not only their existence but also whether they are serviceable or unserviceable. Their status are indicated in the aforementioned annex . We interviewed the motor pool in-charge and he stated that there has been a problem in sourcing the spare parts of some equipment. These equipments had been idle for some time due to the said problem.
These equipments, although just lying idle, also cost money as they should be safeguarded against loss or any other unlikely event. Likewise, they occupy spaces that could have been used for other purposes.
Idle times contribute to the fast deterioration of the equipment. Allowing them to just lie idle due to unavailability of spare parts is not a wise alternative. A better option is to evaluate their present condition such as determining whether repairing them would be advantageous than outright disposing them to save on costs of storage.
During the exit conference, the City Engineer promised to evaluate the status of these heavy and construction equipment and to come up with the list for disposal. They are also aware that there is a need to dispose unserviceable equipment. They hinted to dismantle the equipment into small parts to facilitate the sale. They stated that it would be more profitable to dispose them this way than selling the equipments on “as is where is” basis.
The General Services Officer requested if COA can conduct a training detailing the mechanics on the proper disposal of properties, particularly the basis used in appraising the status of equipments, whether serviceable or unserviceable. They observed that the appraisal of the COA Technical Audit Specialists is sometimes very much lower or higher than the appraisal of the LGU’s appraisal committee.
Recommendation for Tagum City Government:
Evaluate the status of the construction and heavy equipments. If they are already unserviceable, dispose thru sale and drop them from the books. If they can be repaired, hasten the procurement of the spare parts so they can operate soon and avoid equipment downtimes.
Property management includes not only procurement of new equipment but also the disposal of those that are beyond economic repair.
In disposing unserviceable equipment, be guided by COA Circular No. 92-386 particularly Sections 162 to 166 as follows:
Sec. 162. When Supplies or Property shall be Disposed of. – 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 in these rules and regulations.
Sec. 163. Responsibility for the Disposal of Supplies or Property. – The provincial or city general services officer or municipal or barangay treasurer, as the case may be, shall be responsible for disposal of supplies or property of the local government.
Sec. 164. Responsibility for the Disposal of Real Property, Buildings and Other Physical Structures. – The local chief executive or punong barangay, as the case may be, shall be responsible for the disposal of real property, buildings and other physical structures.
Sec. 165. Public Auction as the Primary Mode of Disposal. – Supplies or Property which have become unserviceable or no longer needed shall be sold, whenever applicable, at public auction, subject to applicable rules and regulations.
Sec. 166. Other Methods of Disposal. – For justifiable reasons, disposable supplies and property may also be disposed of in the following manner:
d. sale thru negotiation;
e. transfer without cost to other offices or department or other government agencies; and
f. by destruction.
Tagum City 2008 COA Audit 7
July 4, 2010
Detailed Findings and Recommendations
A. Financial and Compliance Audit
1. The failure of the Assistant City Treasurer to remit her collections on time required under Section 29 of the Manual on the New Government Accounting System exposed government funds amounting to P161,296.75 to possible loss through theft, misappropriation and/or misapplication.
The aforecited Section of the NGAS states that:
“Reporting for Collections and Deposits. – Collectors/tellers shall issue a receipt to acknowledge collections made. The receipt maybe in the form of pre-numbered Official Receipts, or cash tickets and the like. At the close of each business day, these collectors/tellers shall accomplish the Report of Collections and Deposits (RCD) in four copies. The original and two copies, together with the duplicates of the official receipts issued shall be submitted to the treasurer/cashier to whom the cash collected shall be turned over. The fourth copy of the RCD shall be retained by the collector/teller concerned”.
x x. x. x. x.
An examination was conducted on the cash and accounts of Mr. Edgar C. de Guzman, City Treasurer, on June 18, 2007. Actual cash count and verification of unissued accountable forms was made on all the collectors, disbursing officers and other accountable officers of the Office of the City Treasurer.
One of the Accountable Officers su
bjected to cash count was Ms. Dolores W. Fiesta, Assistant City Treasurer. Upon demand, she presented no cash/collections during that time and informed the Auditor that she had no unissued accountable forms in her possession. She then signed the Certification on the General Forms 74(A), Report of Cash Examination.
Verification made on the Report of Accountability for Accountable Forms as of cash count, June 18, 2007, revealed that Accountable Forms No. 51 with Serial Nos. 0237801-850 and 0207722-0207750 were included in the balances of unissued accountable forms as of that date. Further verification showed that AF 51 SN 0237801-850 and SN 0207701-750 were issued to Ms. Dolores W. Fiesta, on July 12, 2005 and July 20, 2005, respectively. Her latest Report of Collections and Deposits (RCD) was dated December 2, 2005 when she turned over the amount of P141,160.79 representing her collections for AF 51 SN 0207716-721. Thus, as of June 18, 2007, her accountability for these accountable forms, was as follows:
AF 51 SN 0237801-850 50 pcs. 0207722-750 29 pcs.
—–
Total 79 pcs.
===
In view hereof, a Demand Letter dated June 21, 2007 was issued to her demanding that she produce immediately the missing accountable forms and to submit a written explanation on the reason/s for her failure to turn-over said official receipts.
In her reply, Ms. Fiesta stated that she had allowed a casual clerk, Ms. Mona Garcia, to liquidate her collections and that she could not locate anymore the missing accountable forms. She further stated that all of these issued accountable forms were for bidder’s bond and that she is willing to pay whatever amount due for those lost accountable forms.
Verification of the records of the City Accountant’s Office revealed that 44 of the 79 accountable forms which were declared missing had been presented to the City Treasure’s Office for refund, totaling P161,296.75 (Annex 5). The other 35 pieces remained unlocated and not presented for refund.
On June 27, 2007, we issued a second Demand Letter to Ms. Fiesta. But it was only on July 12, 2007 when we received her reply, wherein she promised to pay in installment basis, at least P5,000.00 a month starting July 2007 and also to withhold one-half of the bonus due her. However, that same date, she again wrote us to inform that she will not be paying in installment but in lumpsum from the loan proceeds of her parcel of land.
A month after her reply dated July 12, 2007, our office followed up on whether Ms. Fiesta has already made the payment. It was learned that no payment was made.
Such being the scenario, Ms. Fiesta can be liable for malversation of public funds pursuant to provisions of Article 217 of the Revised Penal Code hereby quoted as follows:
“Any public officer who, by reason of the duties of his office, is accountable for public funds or property, shall appropriate the same, or shall take or misappropriate or shall consent, or through abandonment or negligence, shall permit any other person to take such public funds, or property, wholly/partially, shall otherwise be guilty of the misappropriation or malversation of such funds or property.”
However, during the exit conference, the City Treasurer stated that Ms. Fiesta had made partial payments and also promised to pay in installments the balance of her accountability.
We informed him and the other department heads who were present during the exit conference that we can not allow the mode of repayment that Ms. Fiesta desired. Ms. Fiesta has to remit all her remaining accountability sooner to avoid legal complications bearing this issue.
Recommendation for Tagum City Government:
Require Ms. Dolores W. Fiesta, Assistant City Treasurer, to immediately restitute the amount of P161,296.75.
Direct the Treasurer to monitor the liquidation of daily collections and deposit the same to authorized depository banks in the manner and within a period prescribed by Section 29, 32 and 33 of the Manual on the New Government Accounting System, Volume I.
The City Treasurer should take action against those collectors assigned in the office who had always been delayed in turning-over their collections. He should see to it that collections are promptly turned-over as required.
Tagum City 2008 COA Audit 6
July 4, 2010
6. The City could have saved funds for its various projects had it avoided incurring interest expenses amounting to P12,118,140.96 or 17.52% of the P69,170,670.00 loans it used to finance non-economic projects.
Ideally, borrowed funds should only be used to finance projects which are expected to yield income and cash collections to pay interest expenses, and thus offset the costs of borrowing.
The City borrowed funds for non-economic projects, as follows:
Type of Project
Loan Amount Total Interest from
Loan release up to
December 31, 2007 Loan Balance as of December 31, 2007
School Building
P30,000,000.00
P 4,487,207.58
P21,176,470.60 Technovan/Mini Bus
8,120,679.00
990,707.92
5,148,119.34 SP Building, Tagum National High School, Firetruck
31,050,000.00
6,640,225.46
20,704,712.60 TOTAL P69,170,679.00 P12,118,140.96 P47,029,302.54
The total interest from date of loan release up to December 31, 2007 had totaled P12,118,140.96. This is 17.52% of the total loans of P69,170,679.00.
We took note of the benefits derived from using borrowed funds to finance and hasten the construction of the schools and the government Sanggunian Panglungsod edifice, as well as the procurement of the fire truck. The schools constructed had provided adequate school rooms for the growing population of school children. On the other hand, the SP building orderly housed the different offices of the City. The fire truck also is a must to thwart fire incidents in a populated City.
The City’s Cash Flow Statements – General Fund from 2002 to 2007 (Annex 9) showed that over a 6-year period, the net cash provided from operating activities of the City had been used for investing particularly to procure plant, property and equipment and for financing activities such as payment of loans and interests. Despite the use of net cash from operations for investing and financing activities, the cash balance at year-end had remained on the average for 6 years at P87.8 million. However, this cash level may not be sufficient to finance calamitous events. If this event happens, this will greatly affect the City’s ability to pay on time the loans it contracted resulting to more interests and penalties.
The City had also borrowed funds amounting to P43.6 million to procure heavy equipments which may be considered as non-economic projects. These equipments were utilized for the construction of the City’s various infrastructure projects. We are of the opinion that the interest expenses incurred for the loan used to procure the said equipments can be offseted by the savings that the City realized from undertaking by administration its infrastructure projects. It is expected that the 15% contractor’s profit was avoided by the City. In addition, the infrastructure projects attracted investors resulting to the realization of increased business income over the years.
During the exit conference, the City Administrator queried if there is a prohibition on borrowing funds to finance non-economic projects. He opined that the bank would not give the loan to the City if it has no capacity to pay back. He also justified that the Mayor has always considered the immediate need of the school children and the teachers. That it was not wise to wait for the Department of Education to provide the funds for the construction of the school buildings. The need was immediate and urgent because the school buildings were beyond repair. That the technovan has really served the purpose for which it was procured – disseminating relevant information to the farthest barangay.
We replied that there is no prohibition on borrowing funds to finance non-economic projects. Our audit observation on the use of borrowed funds to finance non-economic projects was not meant to stop them from constructing school buildings. We emphasized that there is a need to exercise restraint in using borrowed funds for non-economic projects since there is no expected income or cash to pay the principal loan and to offset the costs of borrowing. The City’s ability to meet its contractual obligations in the future may be jeopardized if more of these types of projects are built out of borrowed funds.
They agreed to evaluate first the project that will be financed from borrowed funds. They requested that COA suggests to DepED to give to the City the funds for the construction of school buildings. They are confident that by undertaking the project by administration, the City can save some of the costs. It will appear more economical than giving the project to private contractors.
Recommendation for Tagum City Government:
Secure funds without cost or non-interest bearing to finance non-economic projects. Stop the practice of using borrowed funds to finance non-economic projects. Pay off these loans even before the scheduled due dates to avoid incurring more interest expenses as there are no expected income or no cash can be generated from these type of projects.
It is more advantageous for the City if the interest expenses it incurred are matched with income. That cash can be generated from the financed project to pay off the loan principal and interest.
II. Value for Money
1. There are no complete financial records on the operation of the Asphalt and Concrete Batching Plant which can be used to evaluate whether or not the purposes for which it was established as an economic enterprise were attained economically and efficiently.
City Ordinance No. 13, S-2001 is the ordinance which adopted policies and guidelines in the operation of the Tagum City Asphalt and Concrete Batching Plant and for other purposes.
Sections 2 and 3 of City Ordinance No. 13, S-2001 state as follows:
“Section 2. Statement of Policy. Pursuant to the powers and authority granted to the local government units by virtue of R.A. 7160, the City Government of Tagum shall endeavor to be self-reliant and shall establish viable economic enterprises in order to augment its resources, generate employment opportunities, and uplift the socio-economic well-being of the people of Tagum City.
Section 3. Asphalt and Concrete Batching Plant as an Economic Enterprise – The state of the art asphalt and concrete batching plant of the City Government of Tagum shall operate as viable economic enterprise by providing types of services which shall correspondingly be priced as determined by the Marketing and Advisory Committee. “
Section 9 of the same ordinance also spelled out the guidelines on the financial management of the Asphalt /Concrete Batching Plant as an economic enterprise.
Letter C. Others c) of Section 9 stipulates that the cost of materials including rental of Asphalt Plant Equipments for the implementation of the Project of the City shall be paid to the Asphalt Plant Operation.
The City’s inventory records of property, plant and equipment showed that the Asphalt Plant has two equipments directly used in its operations. These are the Nigata Asphalt Mixing Plant acquired at a cost of P27,355,851.60 on September 4, 1999 and the Remanufactured Jaw Crusher with Segregator Plant acquired on April 29, 1999 for P5,425,000.00. Both have estimated useful lives of 10 years with a yearly depreciation of P3,278,085.00. However, verification of the financial records, particularly the Statement of Income and Expenses CY 2007 of the Asphalt Plant Operation revealed that only P17,654.88 was taken up as depreciation for 2007. In CY 2006, depreciation taken up was the same amount at 17,654.88. Likewise, the property, plant and equipment (net of accumulated depreciation) shown in the Balance Sheet of the Condensed Asphalt Plant Operation were only P55,907.10 in 2007 and P59,829.78 in 2006.
Further verification disclosed that the depreciation and accumulated depreciation of the asphalt equipment were recorded in the General Fund Proper. As of December 31, 2007, the accumulated depreciation of the Mixing Plant is P20,311,719.92 and that of the Jaw Crusher, the accumulated depreciation is P4,231,890.00. Therefore, the net values of the two equipments totaled to P8,237,741.68.
From the City Engineering Office, we gathered the following data of the list of Asphalting Projects completed by the City from CY 2000 to 2007, as follows:
Total Amount Breakdown of Completed Projects Calendar No. of Of Completed No. of No. of Year Projects Projects Projects Tagum City Projects Other LGUs 2007 49 25,149,000.00 17 13,256,000.00 32 11,893,000.00 2006 35 20,829,658.60 22 15,581,704.26 13 5,247,954.34 2005 32 19,147,051.02 30 18,265,603.38 2 881,447.64 2004 35 18,187,084.72 33 18,187,084.72 2 - 2003 26 15,895,000.18 26 15,895,000.18 0 - 2002 28 23,551,349.64 26 17,551,349.64 2 6,000,000.00 2001 12 9,761,652.79 11 9,761,652.79 1 - 2000 14 6,304,826.57 12 6,304,826.57 2 - Totals 231 138,825,623.52 177 114,803,221.54 54 24,022,401.98
The above audit observations were not sufficient to evaluate the viability of the Asphalt Plant Operations. The income and expenses shown in the Statement of Income and Expenses are much lesser than what should be reflected based on the reported projects and the values of the equipments used.
Additionally, the disbursements for the procurement of supplies and materials, as well as labor and other expenses for the asphalt plant, were accounted under the general fund. Without separate ledgers for the asphalt operations, a thorough evaluation could not be made on whether the supplies and materials were utilized/acquired at lowest acceptable cost with due regard to appropriate quantity and quality time and adequate supply. We cannot also check whether the projects undertaken for other LGUs were properly priced; that all expenses incurred were recovered and profits therefrom were realized.
During the exit conference, the City Engineer cited several problems on the operation of the asphalt plant. First was the problem of securing the permit to operate the asphalt plant from the Philippine Contractors’ Administration Board (PCAB). Second was the lack of City Ordinance for fixing the rental rates of the asphalt plant equipment. The Accountant, on the other hand, explained that accounting of the asphalt plant operations was under the General Fund and these accounts are already closed. He was confident that the data to account in full the operations of the asphalt plant as an economic enterprise can still be generated. The City Administrator also informed us that the asphalt plant was not fully utilized during the past administration. It was only during the term of the present mayor that the operations went full swing.
The City Administrator stated that the employment of a Certified Public Accountant as cost accountant of the asphalt plant will be seriously considered as they saw the need to come up with complete financial records for decision making purposes. The Engineering Office will provide periodically the status of the asphalt plant operations so the Marketing and Advisory Committee can formulate the necessary guidelines for the projects entered into by the City.
Recommendation for Tagum City Government:
Reflect in the financial records of the Asphalt Plant Operations the equipment used in its operations and all the values of the projects completed by the City for its own use and that of the other local government units.
To ensure the continuity of the project, there is a need to come up with adequate records to evaluate the operational viability of the Asphalt/Concrete Batching Plant. The plant not only requires large amount of funds for the maintenance of its equipment. It will need more funds to replace the equipment once their useful lives are over.
The City should ensure that funds generated from operating the asphalt are accumulated so replacement of the fully depreciated equipment can readily be undertaken without the need to borrow funds or to secure funds from other sources.
Tagum City 2008 COA Audit 5
July 4, 2010
5. There are 20 construction and heavy equipment machineries valued at 42,439,761.57 that are stored in the City Motorpool because they are either unserviceable, under repair or awaiting for spare parts, thus affecting the City’s ability to fully utilize its equipment for its various projects.
Annex 8 shows the list of the 20 construction and heavy equipment and their corresponding values which summed up to P42,439,761.57 as of December 31, 2007.
We conducted an inspection of these equipments to verify not only their existence but also whether they are serviceable or unserviceable. Their status are indicated in the aforementioned annex . We interviewed the motor pool in-charge and he stated that there has been a problem in sourcing the spare parts of some equipment. These equipments had been idle for some time due to the said problem.
These equipments, although just lying idle, also cost money as they should be safeguarded against loss or any other unlikely event. Likewise, they occupy spaces that could have been used for other purposes.
Idle times contribute to the fast deterioration of the equipment. Allowing them to just lie idle due to unavailability of spare parts is not a wise alternative. A better option is to evaluate their present condition such as determining whether repairing them would be advantageous than outright disposing them to save on costs of storage.
During the exit conference, the City Engineer promised to evaluate the status of these heavy and construction equipment and to come up with the list for disposal. They are also aware that there is a need to dispose unserviceable equipment. They hinted to dismantle the equipment into small parts to facilitate the sale. They stated that it would be more profitable to dispose them this way than selling the equipments on “as is where is” basis.
The General Services Officer requested if COA can conduct a training detailing the mechanics on the proper disposal of properties, particularly the basis used in appraising the status of equipments, whether serviceable or unserviceable. They observed that the appraisal of the COA Technical Audit Specialists is sometimes very much lower or higher than the appraisal of the LGU’s appraisal committee.
Recommendation for Tagum City Government:
Evaluate the status of the construction and heavy equipments. If they are already unserviceable, dispose thru sale and drop them from the books. If they can be repaired, hasten the procurement of the spare parts so they can operate soon and avoid equipment downtimes.
Property management includes not only procurement of new equipment but also the disposal of those that are beyond economic repair.
In disposing unserviceable equipment, be guided by COA Circular No. 92-386 particularly Sections 162 to 166 as follows:
Sec. 162. When Supplies or Property shall be Disposed of. – 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 in these rules and regulations.
Sec. 163. Responsibility for the Disposal of Supplies or Property. – The provincial or city general services officer or municipal or barangay treasurer, as the case may be, shall be responsible for disposal of supplies or property of the local government.
Sec. 164. Responsibility for the Disposal of Real Property, Buildings and Other Physical Structures. – The local chief executive or punong barangay, as the case may be, shall be responsible for the disposal of real property, buildings and other physical structures.
Sec. 165. Public Auction as the Primary Mode of Disposal. – Supplies or Property which have become unserviceable or no longer needed shall be sold, whenever applicable, at public auction, subject to applicable rules and regulations.
Sec. 166. Other Methods of Disposal. – For justifiable reasons, disposable supplies and property may also be disposed of in the following manner:
d. sale thru negotiation;
e. transfer without cost to other offices or department or other government agencies; and
f. by destruction.
Tagum City 2008 COA Audit 4
July 4, 2010
4. There are 563 tangible items amounting to P1,518,327.00 with serviceable life of more than one year but small enough to be considered as plant, property and equipment that were included in the schedule of plant, property and equipment, contrary to the policies spelled out in COA Circular No. 2005-002 dated April 14, 2005.
COA Circular No. 2005-002 states that:
2. POLICY
2.1 The New Government Accounting System (NGAS) adopts the definition of Property, Plant and Equipment under the International Accounting Standards No. 16 which states that:
“Property, Plant and Equipment are tangible assets that:
(a) are held by an enterprise for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period.”
2.2 However, there are tangible assets with serviceable life of more than one year but small enough to be considered as PPE. To address this issue, the Commission hereby prescribes the following policies:
2.2.1 Small tangible items with estimated useful life of more than one year shall be recorded as inventories upon acquisition and expense upon issuance. The list of these items with corresponding estimated useful life is attached as Annex A, thereof.
2.2.2 Other tangible assets not included in the list per Annex A shall be classified as PPE, subject to depreciation.
2.3 For monitoring, control and accountability, an Inventory Custodian Slip ( ICS), attached as Annex B, shall be prepared upon issuance of small tangible items covered by approved Requisition and Issue Slip (RIS)
Annex 7 shows the details of the 563 items included in the schedule of plant, property and equipment under the Special Education Fund (SEF) account. Referring to the same annex, the value of the equipments ranged from a low of P26.00 to a high of P11,000.00 per The Financial Report of the City (Volumes 1 and 2)
In each page of the City’s Financial Report are listed 22 items, so the 563 items needed 26 pages. This has resulted to not only waste of time in keeping the records but also supplies, such as bond paper and computer ink, in printing the schedules.
During the exit conference, the City Accountant and the Budget Officer agreed to set the price ceiling of items to be taken up as plant, property and equipment. They agreed to drop from the records all the items considered to be small enough to be considered as plant, property and equipment.
Recommendation for Tagum City Government:
Comply with the policies and guidelines of COA Circular No. 2005-002. Drop from the list of SEF plant, property and equipment the 563 items in order to save on office supplies and lessen the number of pages of the City’s Financial Report as well as the time spent in keeping the records. For monitoring, control and accountability of these items, prepare the Inventory Custodian Slip and the Requisition and Issue Slips.
