Detailed Audit Observations and Recommendations
DETAILED OBSERVATIONS AND RECOMMENDATIONS
A. Financial and Compliance Audit
1. Unascertained validity and accuracy of Property, Plant and Equipment (PPE) – P908.604 million, depreciation expense – P11.667 million, and accumulated depreciation – P96.580 million
As observed in prior years, the following deficiencies still subsist in CY 2013:
1.1 Unreconciled variance of P690.949 million between the Report on Physical Count of PPE (RPCPPE) and accounting records for the PPE account.
By virtue of Office Order No. 345-12A dated November 5, 2012, the City Inventory Team conducted a periodic inventory of supplies, property and equipment on various dates in CY 2013. The result of the physical count, which was reported in the RPCPPE as of December 31, 2013, showed a PPE balance of P3,128,861,304.76. Comparison of this amount with the PPE recorded in City’s books of accounts of P3,819,810,473.24 disclosed a net variance of P690,949,168.48. This variance remarkably increased by P654,234,994.32 from the 2012 figure of P36,714,174.16. The substantial variance was mainly due to the decrease in the value of Land as of December 31, 2013 by P592,758,534.15 per RPCPPE.
In lieu of the property cards to be maintained by the City General Services Office (CGSO), the said Office developed the Property Management System to facilitate the centralized recording of all properties acquired by the City. The data in the System are the basis in their periodic inventory of PPE. Any discrepancy that arises between the data and result of physical count is timely reconciled by the City Inventory Team.
As of date, the City Inventory Team and the City Accounting Office (CAO) are still undertaking reconciliation of their records, particularly on Land and Building accounts, which partook the biggest chunk of variance amounting to P266,670,564.79 and P223,025,645.02, respectively.
The importance of reconciliation is to ensure that the PPE in the accounting records actually exist and that all PPE in the RPCPPE are recorded in the books of accounts. This is espoused in Section C.3, Chapter V of the Manual on Property Custodianship, quoted as follows:
“After the physical inventory taking, the Inventory Committee shall reconcile the results of the count with the property and accounting records. The inventory listing of the supplies and materials shall be checked against the stockcards maintained by the Accounting and finally against the control accounts. On the other hand, the inventory listing of the equipment shall be checked with the property card maintained by the Property as against the equipment ledger cards maintained by the Accounting and total therefore shall be compared with those in the general ledger.”
Due to the unreconciled balances of the RPCPPE and the accounting records, the existence of assets and the correctness of the recorded PPE account balances as of December 31, 2013 could not be ascertained.
2. “Reconciling Items” totaling P589.139 million recognized in the books of accounts as PPE
One of our previous year’s findings was the recording of various PPE as “Reconciling Items” totaling P589,138,913.23, which up to this date, the CAO failed to provide the details/breakdown, contrary to Section 111 of P.D. 1445, which states that:
“The accounts of an agency shall be kept in such detail as is necessary to meet the needs of the agency and at the same time be adequate to furnish the information needed by fiscal or control agencies of the government.”
These reconciling items enumerated in Table 1 contributed to the cause of the non-reconciliation of the RPCPPE and the accounting records.
Table 1
|Particulars |Acquisition Cost |Accumulated Depreciation as|
| | |of December 31, 2013 |
|General Fund | | |
|Land | 207,695,291.59 |Not Applicable |
|Land Improvements | 225,143,346.22 | 0.00 |
|Office Buildings | 116,034,657.03 | 0.00 |
|Market and Slaughterhouse | 6,712,410.33 | 0.00 |
|Other Structures | 14,253,501.19 | 0.00 |
|Office Equipment | 1,642,988.65 | 0.00 |
|Watercrafts | 1,095,303.03 | 0.00 |
|Sub-total |572,577,498.04 |0.00 |
|Special Education Fund | | |
|Other Structures | 849,362.51 | 0.00 |
|Office Equipment | 271,834.99 | 0.00 |
|IT Equipment and Software | 92,240.00 | 0.00 |
|Other Machineries and Equipment | 267,251.60 |0.00 |
|Other Transportation Equipment | 478,000.00 |0.00 |
|Other Property, Plant & Equipment | 14,602,726.09 | 1,683.00 |
|Sub-total | 16,561,415.19 | 1,683.00 |
|Totals | 589,138,913.23 | 1,683.00 |
The accumulated depreciation amounting to P1,683.00 as of December 31, 2013 for the Other Property, Plant and Equipment was understated since the reconciling items, which were part of the PPE, were not depreciated since 2004 for the reason that their details could not be identified. As a result, the net book value of such account was overstated due to the unapplied amount of depreciation, while the depreciation expense for the period ended December 31, 2013 was, likewise, understated, and consequently, the equity for the period were overstated by the same amount.
3. Tangible assets worth P0.679 million small enough to be considered as PPE classified in the accounting records as PPE.
COA Circular No. 2005-002 dated April 14, 2005, provides the list of small tangible assets with corresponding estimated useful life which shall be recorded as inventories upon acquisition and expense upon issuance.
Despite our previous year’s findings, we still noted that several tangible assets totaling P679,306.99, detailed in Table 2, with estimated serviceable life of more than one year but small enough to be considered as PPE, were included in the inventory report and still classified in the books of accounts as PPE instead of the inventory/expense account.
Table 2
|PPE Account |To be classified as |
| |
|Office Equipment |
|IT Equipment and Software | 16,309.00 | - |
|Particulars |Acq. Date |Est. Life |Amount | |
| | | | | |
|Marikina Sports Center Library, West Grandstand |31-Dec-2007 |30 |1,921,759.70 | 57,652.79 |
|Two-storey Health and Livelihood Center, Libis Bulelak,|1-Aug-2006 |0 |5,383,631.78 | 242,263.43 |
|Barangay Malanday | | | | |
|Market Mall, E. Jacinto St., Barangay Sta. Elena |1-Aug-2006 |30 |1,097,086.89 | 32,912.61 |
|Market Mall, Kapitan Vencion, Barangay Sta. Elena |1-Aug-2006 |30 |3,344,586.57 |100,337.60 |
|Market Mall, P. Dela Paz St., Barangay Sta. Elena |1-Aug-2006 |30 |19,757,993.67 |592,739.81 |
|Multi-Purpose Hall, Pugad-Lawin Champaca, Barangay |9-Dec-2004 |10 |27,690.00 |2,492.10 |
|Parang | | | | |
|BMX Bike |26-Apr-2004 |10 |3,000.00 | 270.00 |
| Total | | | |1,028,668.34 |
Table 4
|Particulars |Accumulated Depreciation As of |
| |December 31, 2013 |
| | |
|Hospital and Health Centers |1,776,598.49 |
|Markets and Slaughterhouses |5,323,926.77 |
|Other Structures |5,159,456.32 |
|Medical, Dental and Laboratory Equipment |450,000.00 |
|Technical and Scientific Equipment |78,491.25 |
|Other Machineries |60,138.00 |
|Motor Vehicles |1,558,834.25 |
|Other Transportation Equipment |2,610.00 |
|Other PPE |1,684,323.12 |
| Total |16,094,378.20 |
Review disclosed that various PPE accounts with useful lives that have already elapsed were not fully depreciated up to this date. Also, the depreciation applied to other PPE accounts with remaining useful lives was inadequate. These inadequate provision and lack of full depreciation understated the expense account and total operating expenses by P10,638,786.58, and overstated operating income by the same amount. On the other hand, the Government Equity account was overstated by P80,485,703.20 and the Accumulated Depreciation account was understated by the same amount. Details of the overstatement and understatement are shown in the following table:
Table 5
|Account Name |Per Books |Per Audit |Under/Over Depreciation |
| |Depreciation for |Accumulated |Depreciation for |Accumulated |Depreciation for |Accumulated |
| |CY 2013 |Depreciation |CY 2013 |Depreciation |CY 2013 |Depreciation |
| | | | | | | |
| | | | | | | |
|General Fund | | | | | | |
|Land Improvements |15,357.84 | 16,637.66 | 15,357.87 | 76,789.35 | (0.03) | (60,151.69) |
|Office Buildings |4,846,009.21 | 26,164,234.63 | 7,504,393.96 | 33,730,844.22 | (2,658,384.75) | (7,566,609.59) |
|School Buildings |2,365,748.57 | 15,969,745.84 | 4,751,915.64 | 21,912,320.66 | (2,386,167.07) | (5,942,574.82) |
|Hospitals and Health|4,088,057.28 | 20,342,463.68 | 4,088,057.20 | 20,653,749.84 | 0.08 | (311,286.16) |
|Centers | | | | | | |
|Markets and |2,349,867.65 | 2,900,869.49 | 846,425.80 | 6,446,751.78 | 1,503,441.85 | (3,545,882.29) |
|Slaughterhouses | | | | | | |
|Other Structures |16,361,130.07 | 52,807,314.41 | 16,661,208.62 | 60,821,617.49 | (300,078.55) | (8,014,303.08) |
|Office Equipment |254,320.93 | 2,389,439.25 | 287,218.38 | 2,835,004.81 | (32,897.45) | (445,565.56) |
|Furniture and |1,601,678.61 | 9,838,967.81 | 1,666,702.16 | 11,027,741.63 | (65,023.55) | (1,188,773.82) |
|Fixtures | | | | | | |
|IT Equipment and |6,920,522.58 | 26,137,033.38 | 8,549,969.66 | 27,531,258.84 | (1,629,447.08) | (1,394,225.46) |
|Software | | | | | | |
|Library Books |27,058.32 | 2,969,106.77 | 32,358.12 | 4,026,243.69 | (5,299.80) | (1,057,136.92) |
|Machineries |65,281.08 | 1,190,233.56 | 65,281.13 | 1,465,825.35 | (0.04) | (275,591.79) |
|Communication |660,627.48 | 3,604,230.94 | 723,755.31 | 4,589,305.58 | (63,127.83) | (985,074.64) |
|Equipment | | | | | | |
|Construction and |9,421,776.06 | 50,109,877.02 | 12,887,203.41 | 62,081,970.14 | (3,465,427.35) |(11,972,093.12) |
|Heavy Equipment | | | | | | |
|Disaster Response | - | 209,972.22 | 6,373.68 | 258,618.60 | (6,373.68) |(48,646.38) |
|and Rescue Equipment| | | | | | |
|Medical, Dental and |1,006,221.36 | 3,960,575.30 | 357,375.72 | 1,909,037.16 | 648,845.64 |2,051,538.14 |
|Laboratory Equipment| | | | | | |
|Military and Police |75,523.45 | 569,184.31 | 62,671.16 | 617,994.44 | 12,852.29 |(48,810.13) |
|Equipment | | | | | | |
|Sports Equipment |189,380.16 | 470,877.38 | 189,375.83 | 479,270.97 | 4.33 |(8,393.59) |
|Technical and |189,978.67 | 1,693,005.89 | 188,959.72 | 1,809,242.62 | 1,018.95 |(116,236.73) |
|Scientific Equipment| | | | | | |
|Other Machineries |212,364.39 | 2,658,283.53 | 212,364.99 | 3,635,093.15 | (0.60) | (976,809.62) |
|and Equipment | | | | | | |
|Motor Vehicles |9,108,681.60 | 68,398,615.37 | 9,550,210.26 | 79,203,189.55 | (441,528.66) |(10,804,574.18) |
|Watercrafts |151,341.12 | 766,410.99 | 151,341.09 | 780,660.93 | 0.03 | (14,249.94) |
|Other Transportation|225,978.81 | 2,570,657.20 | 212,100.52 | 3,278,763.61 | 13,878.29 | (708,106.41) |
|Equipment | | | | | | |
|Other Property, |10,884,526.71 | 52,306,903.39 | 12,323,308.78 | 62,144,768.99 | (1,438,782.07) | (9,837,865.60) |
|Plant and Equipment | | | | | | |
|Sub-total | 71,021,431.95 |348,044,640.02 | 81,333,929.00 |411,316,063.39 |(10,312,497.05) |(63,271,423.37) |
|Account Name |Per Books |Per Audit |Under/Over Depreciation |
| |Depreciation for |Accumulated |Depreciation for |Accumulated |Depreciation for |Accumulated |
| |CY 2013 |Depreciation |CY 2013 |Depreciation |CY 2013 |Depreciation |
| | | | | | | |
|Special Education | | | | | | |
|Fund | | | | | | |
|School Buildings | 24,683,346.16 | 81,383,663.07 | 26,948,131.99 |102,709,095.27 | (2,264,785.83) |(21,325,432.20) |
|Office Equipment |115,050.60 | 1,455,399.81 | 115,050.60 | 1,456,662.90 | - | (1,263.09) |
|Furniture and |280,147.22 | 981,129.49 | 307,424.20 | 1,006,485.12 | (27,276.98) | (25,355.63) |
|Fixtures | | | | | | |
|IT Equipment and |1,306,129.98 | 7,592,730.21 | 1,328,511.83 | 9,049,874.26 | (22,381.84) | (1,457,144.05) |
|Software | | | | | | |
|Construction and | - | 160,312.50 | 25,650.00 | 256,500.00 | (25,650.00) | (96,187.50) |
|Heavy Equipment | | | | | | |
|Technical and |4,398,085.44 | 13,284,931.32 | 2,391,287.64 | 7,230,988.16 | 2,006,797.80 |6,053,943.16 |
|Scientific Equipment| | | | | | |
|Motor Vehicles | - | 2,279,861.36 | - | 2,364,300.00 | - | (84,438.64) |
|Other Property, |1,508,265.85 | 5,975,152.37 | 1,501,258.53 | 6,253,554.25 | 7,007.32 |(278,401.88) |
|Plant and Equipment | | | | | | |
|Sub-total | 32,291,025.25 |113,113,180.13 | 32,617,314.78 |130,327,459.96 | (326,289.53) |(17,214,279.83) |
|Total |103,312,457.20 |461,157,820.15 |113,951,243.78 |541,643,523.35 |(10,638,786.58) |(80,485,703.20) |
The understatements of the Depreciation Expense and Accumulated Depreciation accounts, therefore, aggregated P11,667,454.92 and P96,580,081.40, respectively, which resulted in the incorrect valuation of PPE.
We have recommended that the City Accountant:
a. Provide depreciation on the assets of the City following the guidelines provided under COA Circular No. 2004-003; and
b. Adjust the understatement of Accumulated Depreciation in previous years to be able to present the PPE at its proper valuation.
Management replied that in compliance with the recommendation, depreciation charges on assets were already reflected in the books of accounts. They also commented that while electronically, depreciation is system generated, any PPE therefore which were not provided with depreciation is due to system error. However, they assured that, periodically, they will look into the errors so that the prescribed depreciation for each PPE will be provided.
1.5 Completed projects recorded as Construction-in-Progress not reclassified to proper PPE accounts.
The NGAS Manual defines Construction-in-Progress (CIP) account as the cost or accumulated value of the assets that are still under construction. Hence, projects that are not yet completed at the end of the period are reported in the books of accounts as CIP. As soon as the project is completed, the CIP for agency assets is closed to the appropriate asset account, and for public infrastructures funded from the City’s revenue, the CIP is transferred to the Public Infrastructures account, which is closed to Government Equity at the end of the year.
Comparison of the accounting and engineering reports relative to the infrastructure projects implemented by the City disclosed that various CIP accounts totaling P217,655,133.67 as of December 31, 2013, which were reported as 100 percent complete by the City Engineering Office (CEO), were still recorded in the accounting reports as CIP. Based on the report of the CEO, these CIP accounts had been completed between CYs 2009 to 2013. Given this condition, the provision for depreciation on the affected PPE accounts was deferred resulting in the understatement of the Depreciation Expense and Accumulated Depreciation accounts and overstatement of Government Equity.
The table below summarizes the afore-said completed CIP accounts and the year of their reported completion.
Table 6
|Account |Year Completed | |
| |2009 |2010 |2011 |2012 |2013 |Total |
| | | | | | | |
|Agency Assets |50,579,174.79 |4,406,126.65 |5,444,997.28 |1,617,476.73 |113,378,844.42 |175,426,619.87 |
|Roads, Highways & Bridges | | |19,532,272.42 |3,292,338.08 |10,060,853.98 |32,885,464.48 |
| |- |- | | | | |
|Other Public Infrastructures | | |421,202.28 |1,198,627.98 |7,723,219.06 | 9,343,049.32 |
| |- |- | | | | |
| Total |50,579,174.79 |4,406,126.65 |25,398,471.98 |6,108,442.79 |131,162,917.46 |217,655,133.67 |
Moreover, the project costs of CIP accounts in the accounting records were not the same as the costs reported by the CEO, showing a difference of P41,163,909.22. This indicated a probability that the figures recorded in the books of accounts may not reflect the correct costs of the assets, which may result in the misstatement of the affected PPE accounts and the Registry of Public Infrastructure upon reclassification.
On the other hand, the CEO did not identify the status of some CIP accounts. Disclosure of project status is important for facility of determination if the corresponding projects are still ongoing or are already completed.
We have recommended that:
a. The City Accounting and the City Engineering Offices reconcile their records to determine the status and correct balances of the affected CIP accounts;
b. The City Engineering Office provide the City Accounting Office with copies of the report of completed projects and other necessary documents; and to cause the transfer of these projects from the CIP accounts to the appropriate PPE accounts and Registry of Public Infrastructures; and
c. Based on the adjusted data, the City Accounting Office compute for the required depreciation on the completed projects, and accordingly adjust the balances of the affected accounts.
Management commented that the CEO have already provided the City Accounting Office with copies of reports of the completed projects and other necessary documents needed to update reports relative to the infrastructure projects implemented for CYs 2009-2013. Also, they are now in the process of reconciling their records to determine the status and correct balances of the affected CIP accounts.
2. Drugs and Medicines Inventory
2.1 Unsubstantiated balance of Drugs and Medicines Inventory – P4.444 million
Section 124, Volume I of the NGAS Manual provides that: “the local chief executive shall require periodic physical inventory of supplies or property. Physical count of inventory items by type shall be conducted semestrally and reported in the Report of the Physical Count of Inventories (RPCI) ….”
Pursuant to the above provision, the City Inventory Team (CIT) assigned at the City General Services Office (CGSO) conducted a periodic inventory taking of supplies and property and equipment for the semesters ending June and December 2013. We noted, however, that the count was confined to the stock in the warehouse, such as construction materials, office supplies, property and equipment with Property Acknowledgement Receipts, like motor vehicles and heavy equipment.
Drugs and medicines were not counted since, based on interview, these were already transferred to the City Health Office (CHO). On the other hand, while the CHO prepared its report on a monthly basis for the inventory of drugs and medicines, such report was not submitted to the CGSO or CAO for reconciliation and adjustment. This set up is not consistent with Section C.3, Chapter V of the Manual on Property Custodianship which provides that the result of the physical inventory taking shall reconcile with the property and accounting records.
As of December 31, 2013, the accounting records showed a balance of P4,443,804.53 of the Drugs and Medicines Inventory account. This balance is supported with the details in the Supplies Ledger Cards (SLCs) maintained under the e-NGAS. However, the balance is not supported with an inventory report prepared by the CIT to serve as basis for reconciliation of details of drugs and medicines on hand with the SLCs.
We had recommended and Management agreed that the:
a. CIT include drugs and medicines in the conduct of physical inventory taking, prepare the corresponding report, and reconcile the data with the CGSO and CAO records; and
b. CHO submit the monthly report on the inventory of drugs and medicines to the CGSO or CAO for reconciliation and adjustment.
2. Inappropriate basis in recording issued drugs and medicines
The City Warehouse of the CGSO serves as the centralized stockroom for its supplies, including drugs and medicines, and property items. It is also the site of deliveries and inspections before these assets are issued to the requesting office.
In the case of drugs and medicines, after inspection and tagging of the items at the City Warehouse, these are transferred and stored at the stockroom of the Supply Section, CHO, as this has air-conditioned room facilities and refrigerators suited for storing drugs and medicines. The transfer is documented by a Requisition and Issue Slip (RIS), which serves as reference in the preparation of the Summary of Supplies and Materials Issued (SSMI) submitted to the CAO by the CGSO. On the basis of the SSMI, with the RIS as supporting document, the CAO records the drugs and medicines as issued. By this process, the transferred drugs and medicines to the CHO are already expensed in the accounting records when, actually, there are still available stocks in the CHO Supply Section for distribution to the various end-user sections of the CHO and the City Health Centers upon request.
At the CHO, the issuance of the drugs and medicines are supported with an accomplished RIS prepared by the requesting end-user sections and City Health Centers. The RIS is filed by the Supply Officer and not submitted to the CGSO. The above existing practice in recording the issuances of drugs and medicines was not reflective of the actual utilization of the said supplies. Had the CIT counted the remaining inventory at the CHO for the semester ending June and December 2013, and reported it to the CAO, the correct balance of such inventory could have been reflected in the books of accounts. The non-recording of the ending inventory, therefore, overstated the reported drugs and medicines expenses and correspondingly understated the respective inventory account balances.
We had recommended and Management agreed that the CHO, CGSO and CAO undertake proper coordination for the complete and accurate recording of issuances and ending inventory of drugs and medicines.
3. Non-moving Drugs and Medicines Inventory sub-accounts
Review of the accounting records disclosed that various sub-accounts of the Drugs and Medicines Inventory account totaling P1,046,243.11 were non-moving for a year to seven years, indicating that there was neither procurement nor issuance of the items. Based on past observation, the regular shelf life of medicines is two years. This condition suggests, therefore, that the corresponding items could already have expired.
Ocular inspection conducted by the City Auditor’s Office on sample non-moving inventories disclosed a negative result, which meant that there were no expired items on hand. The non-existing, non-moving balances of the sub-accounts, therefore, overstated the Drugs and Medicines Inventory account and understated the corresponding expense account.
We have recommended that the City Accounting Office:
a. Analyze the details of the affected accounts and make the appropriate adjustments; and
b. Coordinate with the concerned offices for the appropriate action to be undertaken.
4. Subsequent procurement of drugs and medicines undertaken despite adequate available stocks on hand
Verification of reports of the Supply Section, CHO disclosed that as of December 31, 2012, drugs and medicines have an adequate ending stock balances, which would cover the needs for CY 2013. In spite of the availability of stocks, the City procured additional stocks based on the 2013 Project Procurement Management Plan (PPMP) of the CHO. Table 7 shows the stock balances at the beginning of CY 2013, quantity of procured stocks, issuances during the year, and balances at year end.
Table 7
|Particulars |Unit of |Stock on Hand as |Receipt for |Total |Total |Stock on Hand as |
| |Measure |of |CY 2013 | |Issued |of |
| | |Dec. 31, 2012 | | | |Dec. 31, 2013 |
|Amoxicillin Caps. |Piece |3012 |2500 |5512 |1997 |3515 |
|Cefalexin Caps. |Box |868 |400 |1268 |452 |816 |
|Cotrimoxazole Tab. |Box |1175 |825 |2000 |1018 |982 |
|Mefenamic Acid Tab. |Box |2164 |1100 |3264 |1594 |1670 |
|Multivitamins Caps. |Box |2550 |1500 |4050 |2345 |1705 |
The preparation of the PPMP, as provided under Section 7 of R.A. 9184, requires a judicious and meticulous planning in accordance with the planned projects and activities of the office. Past data of issuances and utilization as well as the available balances of the items at the time of procurement, among other matters, are important inputs to be considered prior to procurement. These requirements could be addressed with the conduct of inventory taking at periodic intervals and review of past data.
If these planning attributes are not objectively employed and considered, the procured items may be excessive or deficient than what is needed and may not suitably address the requirements for the City health programs and projects. This condition may cause delay or hamper the accomplishment of the project, with impact on the prioritization in the use of City resources to the detriment of the intended beneficiaries.
We have recommended that in planning for the procurement of drugs and medicines, the CHO consider past data on requirements of all end-users including the City Health Centers, and inputs from the Department of Health, so that available funds are more appropriately programmed for the needs of the City for its health programs and projects.
5. Unaccounted drugs and medicines and other items from the DOH – P8.679 million
Drugs and medicines, medical supplies, and medical equipment worth P4,384,701.73, P3,001,721.92, and P1,292,744.00, respectively, received from the Center for Health Development/Department of Health (DOH), National Capital Region, were not recorded in the books of accounts due to the absence of a document as basis by the City Accounting Office for such recording. The Supply Officer of the CHO was not able to submit to the CGSO a report or document covering the receipt of such goods, which in turn should have been submitted to the CAO.
The non-recording is not in accordance with the requirements of P.D. 1445 and R.A. 7160, as follows:
“Except as may otherwise be specifically provided by law or competent authority all moneys and property officially received by a public officer in any capacity or upon any occasion must be accounted for as government funds and government property. Government property shall be taken up in the books of the agency concerned at acquisition cost or an appraised value.” (Section 63, P.D. 1445)
“Every officer primarily accountable for government property shall keep a complete record of all properties under his charge and render his accounts thereof semi-annually to the provincial or city general services officer or the municipal mayor or punong barangay, as the case may be.” (Section 375.d, R.A. 7160)
The non-recording also extended to issuances of the goods to end-users. Such lack of recording of the receipt and issuances understated the balances of the affected accounts, Drugs and Medicines Inventory, Medical, Dental and Laboratory Supplies Inventory, and Medical, Dental and Laboratory Equipment and the related expense accounts, with consequential effect to the Government Equity account.
We have recommended that the Supply Officer of the CHO prepare and submit to the CGSO the corresponding report of receipt and issuances of drugs and medicines and all the other items from the DOH to adhere to Section 63, P.D. 1445 and Section 375.d of R.A. 7160. The CGSO, for its part, furnish a copy of the report to the CAO for proper and timely recording in the books of accounts.
3. Formulation and implementation of the program under the 20% Development Fund not in accordance with the provisions of RA 7160
1. Projects programmed for implementation under the City’s Local Development Plan (LDP) not initiated by the Local Development Council
Section 106 of R.A. 7160 provides that each local government unit shall have a comprehensive multi-sectoral development plan to be initiated by its development council and approved by its sanggunian. For this purpose, the development council at the provincial, city, municipal, or barangay level, shall assist the corresponding sanggunian in setting the direction of economic and social development, and in coordinating development efforts within its territorial jurisdiction.
Section 107 (b) of the same Act provides the composition of Local Development Councils, as follows:
“The city or municipal development council shall be headed by the mayor and shall be composed of the following members:
1. All punong barangays in the city or municipality;
2. The chairman of the committee on appropriations of the sangguniang panlungsod or sangguniang bayan concerned;
3. The congressman or his representative; and
4. Representatives of non-governmental organizations operating in the city or municipality, as the case may be, who shall constitute not less than one-fourth (1/4) of the members of the fully organized council.”
The City Mayor constituted through Executive Order No. 003-10 dated July 23, 2010 the composition of the City Development Council (CDC) to include those representations as specified in the above-mentioned provision.
The 20% DF budget for CY 2013 was approved by the CDC Executive Committee under Resolution No. 01 dated January 4, 2013, containing the enumeration of programs and projects that comprise the LDP. The Resolution indicated that the programs and projects formulated under the development plan of the City, and upon the directive of the CDC, the CDC Executive Committee conducted the review and assessment of the Plan. However, there are no available documents that would show that the LDP was initiated by the CDC. In the absence of such document, it would seem that the CDC has not carried out its function to represent the different sectors outlined in R.A. 7160 in the formulation of the projects funded out of the Fund. We also noted that the Plan was not approved by the Sangguniang Panlungsod, which is not in accordance with Section 106 of the same law.
We have recommended that Management comply strictly with Sections 106, 107 (b) and 111.3 (b) of R.A. 7160, and ensure that the City Development Plan is approved by the Sangguniang Panlungsod and that this be operationalized for the execution of envisioned programs/projects/activities for the City’s constituents’ benefits.
Management replied that the CDC passed Resolution No. 01, Series of 2014 on February 4, 2014 approving the 2014 DF Budget and that an Ordinance was enacted by the City Council on February 19, 2014 adopting the CDC Resolution.
2. No Annual Investment Program (AIP) formulated for programs with lump-sum appropriation of P27.000 million
The CDC did not convene for the formulation of the AIP. The AIP shall specifically identify the priority programs, projects and activities that are to be funded out of the 20% DF, including the detailed annual allocation for each program, project and activity which should be compliant with the policy and guidelines set forth under DILG-DBM Joint Memorandum Circular No. 2011-1.
Section 3.1.2 of the Local Budget Circular (LBC) No. 70 dated March 14, 2000, issued by DBM states that:
“The AIP shall be prepared by using AIP Form No. 1 and shall be submitted to the Sangguniang for approval.”
Verification revealed that CDC did not prepare the AIP of the City’s Local Development Plan (LDP) for CY 2013, as required under the above-cited LBC. Despite this, however, the City was able to implement the programs in the LDP as manifested in the utilization of funds for identified programs and projects.
We further noted that the Kaayusan and Kalikasan programs were allocated with lump-sum appropriations amounting to P21 million and P6 million, respectively, or a total of P27 million, which could not be validated in the absence of the detail/breakdown of projects that should have been included in the AIP. The related information is shown below:
Table 8
|Program |Projects |Amount |Total |
| | | | |
|Kaayusan |Various Infrastructure Projects |P15,000,000.00 |P21,000,000.00 |
| |Bikeways Program | 6,000,000.00 | |
|Kalikasan |Improvement of Public Parks |6,000,000.00 |6,000,000.00 |
| |Total | |P27,000,000.00 |
Review disclosed that there were projects implemented during the year, such as road and roadside improvements and development of parks, which could be associated under the Kaayusan and Kalikasan programs, despite the absence of an AIP. While this may be so, the reason for preparing an AIP could not be dispensed with in order to carry out the objective of the 20% DF. Without the AIP, the City is not guided with the specific programs and projects to be undertaken under the Fund.
We have recommended that the City Development Council: (a) prepare the AIP, as required under Section 3.1.2 of Local Budget Circular No. 70 dated March 14, 2000, that specifically identifies priority programs, projects and activities (PPA) including the detailed annual allocation for each PPA which is compliant with the policy and guidelines set forth under DILG-DBM Joint Memorandum Circular No. 2011-1; and (b) submit the AIP to the Sangguniang Panlungsod for proper approval.
3. Partially compliant and non-compliant projects and improper utilization
The City’s Local Development Plan (LDP) for CY 2013 approved by the CDC Executive Committee showed the different projects programmed for implementation under the 20% DF’s current year’s budget and continuing appropriations available for reprogramming in the amount of P112,225,630.80 and P25,214,941.54, respectively, or a total appropriation of P137,440,572.34.
Sections 3 and 4 of DILG and DBM Joint Memorandum Circular (JMC) No. 2011-1 dated April 13, 2011 specifically enumerates the different development projects which may be funded out of the 20% DF, categorized namely as social, economic and environmental development, and the expense items that are not related to and/or not connected with the implementation of development projects, programs and activities that shall not be paid out of the said Fund, respectively.
Out of the total appropriations of P137,440,572.34, projects programmed for the rehabilitation and repair of City Health Centers in the amount of P12.000 million, or 8.73 percent, were considered compliant with the JMC, while projects programmed for the rehabilitation and repair of other City government structures and facilities in the amount of P86.440 million, or 62.89 percent, were not compliant since these projects do not fall among the priority projects categorized in the JMC (see table below).
Table 9
[pic]
Further review disclosed that under the GF Proper, there were projects which maybe categorized under the JMC, such as rehabilitation/improvement of roads. Conversely, there were also projects programmed in the 20% DF which may be classified in the GF-Proper.
4. Projects implemented by the City not in accordance with Section 5 of DILG-DBM JMC No. 2011-1
The table below contains the projects implemented by the City out of the 20% Development Fund.
Table 10
| | | |Not Compliant |
| Particulars |Amount |Compliant |Total |Jan-June |July-Dec |
|Training Expenses | 1,616,488.00 | | 1,616,488.00 | 261,810.00 | 1,354,678.00 |
| | |- | | | |
|Office Supplies Expenses | 248,772.75 | | 248,772.75 | 216,944.00 | 31,828.75 |
| | |- | | | |
|Other Supplies Expenses | 1,426,365.00 | | 1,426,365.00 | 453,350.00 | 973,015.00 |
| | |- | | | |
|Advertising Expenses | 725,120.42 | | 725,120.42 | 70,400.00| 654,720.42 |
| | |- | | | |
|Printing and Binding Expenses |10,535,181.92 | |10,535,181.92 | 2,440,084.05 | 8,095,097.87 |
| | |- | | | |
|Environment/Sanitary Services |13,463,900.00 | |13,463,900.00 | |13,463,900.00 |
| | |- | |- | |
|Repair and Maintenance - | | | | | |
|Land Improvements | 1,335,660.93 | | 1,335,660.93 | 289,744.09 | 1,045,916.84 |
| | |- | | | |
|Office Buildings | 2,462,180.41 | | 2,462,180.41 | 107,232.00 | 2,354,948.41 |
| | |- | | | |
|Hospitals and Health Centers | 23,158.00| | 23,158.00| 19,478.00| 3,680.00 |
| | |- | | | |
|Other Structures | 1,733,747.86 | | 1,733,747.86 | 27,702.80| 1,706,045.06 |
| | |- | | | |
|Motor Vehicles | 34,443.60| | 34,443.60| 34,443.60| - |
| | |- | | | |
|Other Public Structures | 4,290,303.66 | | 4,290,303.66 | 1,049,309.15 | 3,240,994.51 |
| | |- | | | |
|Other MOOE | 1,597,877.26 | | 1,597,877.26 | 876,657.75 | 721,219.51 |
| | |- | | | |
|Office Supplies Inventory | 1,119,374.00 | | 1,119,374.00 | 433,888.00 | 685,486.00 |
| | |- | | | |
|Other Supplies Inventory | 34,753.00| | 34,753.00| | 34,609.00 |
| | |- | |144.00 | |
|Construction Materials Inventory |16,978,603.78 | 9,574,320.74 | 7,404,283.04 | 284,859.25 | 7,119,423.79 |
|Other Structures | 678,398.30 | | 678,398.30 | - | 678,398.30 |
| | |- | | | |
|IT Equipment and Software | 85,600.00| | 85,600.00| - | 85,600.00 |
| | |- | | | |
|Other Machineries and Equipment | 30,000.00| | 30,000.00| | 30,000.00 |
| | |- | |- | |
|Motor Vehicles |11,136,237.00 | |11,136,237.00 |10,276,000.00 | 860,237.00 |
| | |- | | | |
|Other Property, Plant and Equipment |2,068,825.00 | | 2,068,825.00 | 220,425.00 | 1,848,400.00 |
| | |- | | | |
|Construction in Program - | | | | | |
|Agency Assets |8,344,924.64 | 6,651,453.08 |1,693,471.56 | | 1,693,471.56 |
| | | | |- | |
|Roads, Highways & Bridges |5,715,932.51 | 5,715,932.51 | - | | -|
| | | | |- | |
|Parks, Plazas & Monuments |2,407,020.00 | |2,407,020.00 |1,034,769.30 | 1,372,250.70 |
| | |- | | | |
|Waterways, Aqueducts, | 830,661.45 | 249,870.00 | 580,791.45 | | 580,791.45 |
|Seawalls, River Walls and Others | | | |- | |
|Other Public Infrastructures | 233,882.90 | 86,400.00| 147,482.90 | | 147,482.90 |
| | | | |- | |
|Total |89,157,412.39 |22,277,976.33 |66,879,436.06 |18,097,240.99 |48,782,195.07 |
|In Percentage of: | | | | | |
|Compliant & Not-Compliant |100.00% |24.99% |75.01% | | |
|Not Compliant | | |100.00% |27.06% |72.94% |
In effect and as shown in Table 10, the projects implemented for CY 2013 in the total amount of P66,879,436.06, or 75.01 percent, utilizing the 20% DF, were not in accordance with the afore-cited JMC. In subsequent audit of transactions for the second semester of CY 2013, the same issues continued to subsist despite the recommendations contained in the interim audit report. The non-compliant projects implemented from July to December 2013 amounted to P48,782,195.07, or 72.94 percent of the total non-compliance. This high percentage of non-compliance does not adhere to Section 5.0 of the JMC which states that:
“It is the responsibility of every Provincial Governor, City and Municipal Mayor and Punong Barangay to ensure that the 20% of the IRA is optimally utilized to help achieve desirable socio-economic development and environmental outcomes…. Further, all concerned local chief executives are hereby reminded that utilizing such fund, whether willfully or through negligence, for any purpose beyond those expressly prescribed by law or public policy shall be subject to the sanctions provided under the Local Government Code and under such other applicable laws.” (Emphasis ours)
Moreover, despite our prior year’s audit recommendation, projects were not realigned to the proper fund/program charges.
The improper utilization of the 20% DF resulted in the non-achievement of the purpose/objective for which the said Fund was established to the disadvantage of the intended beneficiaries.
We have recommended that Management:
a. Allocate the 20% DF for development projects that shall contribute to the attainment of desirable socio-economic development and environmental management outcomes and shall partake the nature of investment or capital expenditures;
b. Utilize the Fund to finance priority development projects and programs, as embodied in the duly approved Local Development Plan that directly support the Philippine Development Plan, the Medium-Term Public Investment Program and the Annual Investment Program; and
c. Effect the necessary adjusting entries for the amount totaling P66,879,436.06 and P38,727,524.33, which pertains to the projects funded under the 20% DF for CYs 2013 and 2012, respectively, that did not comply with the requirements for projects under the Fund.
During the exit conference, Management informed that in its CY 2014 Development Plan, projects are already in conformity with the JMC.
4. Priority Development Assistance Fund (PDAF)/Disbursement Acceleration Program (DAP)
4.1 Non-conformity of the utilization of PDAF/DAP funds to the intended purpose
Trust Funds shall consist of private and public monies which have officially come into the possession of the local government or of a local government official as trustee, agent or administrator, or which have been received as a guaranty for the fulfillment of some obligation. A trust fund shall only be used for the specific purpose for which it was created or for which it came into the possession of the local government units. (Section 309 (b) of RA 7160)
Prior to the Supreme Court Decision declaring the PDAF as unconstitutional, the Department of Budget and Management issued National Budget Circular No. 547 dated January 18, 2013 which prescribed the guidelines on the release of funds chargeable against the PDAF for FY 2013. The PDAF shall be used to fund priority development programs and projects identified by the Members of Congress from the PDAF project menu in accordance with the said Circular. Fund releases, as a rule, are covered by Special Allotment Release Orders (SAROs) which indicate the intended purpose of the PDAF.
Review showed that utilization of the fund covered by three SAROs did not conform to the intended purpose. In our analysis and as enumerated in Table 11, total utilization amounted to P3,035,537.89, but expenses totalling P933,955.89, such as but not limited to, printing of various tarpaulin for various activities, procurement of polo/t-shirts as assistance to various organizations, office supplies, spare parts and mass cards, were not compliant to the purposes stated in the SAROs.
Table 11
|SARO No. |Purpose |Available Balance |Total Utilization |Expenses Not |
| | | | |Compliant |
| | | | | | |
|BMB-G-13-T00000013|1. |Financial assistance to indigent and |3,575,000.00 |2,656,307.89 | 867,475.89 |
|3 | |displaced families, families in crisis | | | |
| | |situations, community organizations, | | | |
| | |Civic and community Activities, etc., | | | |
| | |includes but not limited to the | | | |
| | |following: | | | |
| | | | | | |
| | |Financial assistance; | | | |
| | |Burial assistance; | | | |
| | |Medical assistance; | | | |
| | |Balik probinsya/transportation | | | |
| | |assistance; | | | |
| | |Educational assistance; and | | | |
| | |Other anti-poverty assistance programs | | | |
| | | | | | |
| |2. |Assistance to the City Government of | | | |
| | |Marikina for the purchase of one (1) unit| | | |
| | |Patrol/Multi-purpose Vehicle for | | | |
| | |deployment to the Office of the City | | | |
| | |Mayor | | | |
| | | | | | |
| |3. |Assistance to the City Government of | | | |
| | |Marikina for the purchase of one (1) unit| | | |
| | |Patrol Motorcycle for deployment to the | | | |
| | |Office of the City Mayor. | | | |
| | | | | |
|BMB-G-12-T00000280|Implementation of social services to indigent | | | |
|5 |and displaced families, families in crisis | | | |
| |situation |309,499.21 |280,820.00 |65,320.00 |
| | | | | |
|BMB-G-11-T00000453|Assistance to Indigents and displaced families,| | | |
|1 |families in crisis situations |1,190,544.92 |98,410.00 |1,160.00 |
| | Total |5,075,044.13 |3,035,537.89 |933,955.89 |
Further verification disclosed that a release out of the DAP of the government, covered by SARO No. G-12-00423 in the amount of P6,000,000.00 was recorded in the books of accounts as PDAF. Our review of the documents on this release showed the following purposes:
a. Support and financial assistance to indigents and displaced families, families in crisis situations, community organizations, civic and community activities, etc. (includes financial assistance, burial assistance, balik-probinsiya/transportation assistance).
b. Sports Development Program, which includes (1) support for medals, trophies and uniforms for local sports/youth events and (2) assistance for local and exercise events like Basketball Liga, Marathon, Biking, Chess and other Board Games, Darts, Badminton, Walkathon, Traditional Sports and Game community aerobics and other recognized sports.
However, expenses charged to this release disclosed that the funds were instead used to procure items which were not supportive of the stated purpose of the release. Among others, the procured items and services totalling P1,052,394.00 were spare parts, office and other supplies, various appliances for gift giving, health benefit package for employees of national office and other supplies for various activities.
Such utilization of the PDAF/DAP funds on items and activities which were not related or aligned to the purposes of their release defeated its objectives to the detriment of the intended beneficiaries.
We have recommended that Management:
a. Cause the return or refund from the General Fund to the Trust Fund the amount of P933,955.89 on PDAF and P1,052,394.00 on DAP, which were used to procure items and services not aligned with the purpose of the respective releases of the funds; and
b. Pursuant to the Supreme Court Decision promulgated on November 11, 2013: (1) include the P933,955.89 PDAF funds as part of the balance to be reverted to the National Treasury; while (2) the DAP funds remain as Trust Fund to be utilized for the purpose it was intended.
Management agreed to comply with the recommendations and requested the grant of sufficient time to raise the required wherewithal to fully comply with the recommendations.
4.2 Unexpended PDAF not reverted to the National Treasury – P20.449 million.
The balances of the unexpended PDAF are as follows:
Table 12
|Fund/ |Balance |Receipt |Utilization |Unpaid |Unexpended Bal. As |
|Status and Details/SARO No. |as of |in CY 2013 | |Obligation |of |
| |31-Dec-2012 | | | |31-Dec-2013 |
|GENERAL FUND- | | | | | |
| |No SARO | | | | |
| | |G-10-08272 | 1,428,430.00 | | 80,000.00 |
| | |Cong. Rafael Mariano | 1,000,000.00 | | |
| | | | |- |- |
| | | | | | |
| |LCCA: | | | | |
|PVB |01001-000162-7 |Various accounts |87,638,674.89 |365,333.91 | |
|LBP |2722-1013-00 |World Health Organization | 723,254.57 |568.61 | |
|LBP |2722-1018-82 |Food Safety II | 40,822.56 |20.90 | |
|LBP |2722-1015-30 |Healthy Tourists Parks | 36,185.49 |18.54 | |
| | | |88,438,937.51 |365,941.96 |17,148,174.01 |
|PVB |TD: 1015-90042-3 | |58,713,929.74 |1,136,473.63 |10,115,603.40 |
| |Total | | | |27,263,777.41 |
The interests earned were recorded in the books in lump sum amounts based on the bank book/bank statements, but were not recorded in the subsidiary ledgers reflecting the breakdown of the respective interests earned for each Trust Fund sub-account.
We also noted that the utilization of the trust fund monies were limited only to the principal amounts received, excluding any interests earned therefrom. Trust Fund balances of existing or on-going projects remain deposited in the designated bank accounts, thus, continuously earning interest income that accumulated in the books of accounts.
The largest deposits are under LCCA No. 01001-000162-7 and the Time Deposit, sources of which were trust funds from the National Government, like the Priority Development Assistance Fund that was recently decided upon by the Supreme Court as unconstitutional.
Moneys that accrue as trust funds in the custody of the City are to be utilized in the implementation of the particular programs and projects identified to be funded for the benefit mainly of the City constituents. As there are other priority projects implemented or lined up to be implemented by all sectors of the government that needs the infusion of funds, the available interest income earned from the deposits of the Trust Fund sourced from the National Government, just like the PDAF, may need to be returned to the government, rather than left stagnating in the bank.
We have recommended that the City Accountant:
a. Pro-rate the total interests earned based on the respective principal deposits per trust fund source per bank account. This follows with all future interests earned from trust fund bank accounts unless a pronouncement is made by a competent authority on the appropriate action to be taken; and
b. Record in the respective subsidiary ledgers the pro-rated interests corresponding to each trust fund.
6. Undisposed donations with specific purpose
Local Government Units are not prohibited to receive from and donate to other LGUs, organizations, constituents or others, for legitimate purposes. One particular instance in which this activity is done pertains to disaster-related donations.
Section 21 of Republic Act No. 10121 provides that upon the recommendation of the LDRRMO and approval of the sangguniang concerned, the Local Disaster Risk Reduction and Management Council (LDRRMC) may transfer the said fund to support disaster risk reduction work of other LDRRMCs which are declared under state of calamity. Further to this, Section 4.1.4 of COA Circular 2012-002 dated September 12, 2012, explicitly enumerated the sources and allocation of the LDRRM Fund. Among the stipulated sources are funds received from other LGUs and other sources.
As regards the receipt of monies from other government agencies or private entities, Section 309 (b) of Republic Act No. 7160 required that it shall be maintained in the Trust Fund books to account for such receipt only to be used for the specific purpose for which it was created or for which it came into the possession of the LGU.
The Trust Fund-Other Payables account as of December 31, 2013 included donations received as early as 2005 to the current year from different sources for various specific purposes in the total amount of P1,571,294.83. The summary is shown below.
Table 14
| |Year of Receipt | |
|Nature |2005 |2006 |2007 |2009 |2012 |
|Acting Assist Chief of |No. 040-10 dated July 27, 2010 |129,600.00 |64,800.00 |64,800.00 |Jan to Dec 2013 |
|the BPLO | | | | | |
|Acting Assistant City |No. 0078-09 dated March 5, 2009 |129,600.00 |64,800.00 |64,800.00 |Jan to Dec 2013 |
|Accountant | | | | | |
|Acting Chief of Parks |No. 0044-07 dated Feb. 28, 2007 |108,000.00 |54,000.00 |54,000.00 |Jan to Sept 2013 |
|and Recreation Office | | | | | |
| |Total | 367,200.00 | 183,600.00 |183,600.00 | |
In the case of the Acting Chief of Parks and Recreations Office, aside from RATA, he was issued a service vehicle duly acknowledged by him on January 9, 2013. Item 8.2.1 of Local Budget Circular No. 103 dated May 15, 2013 does not allow claim for transportation allowance when the official is issued a service vehicle.
We have recommended that Management:
a. Consider the issuance of a revised Office Order for the concerned officials with the provision that they are authorized to collect RATA, with ratification pertaining to the previous claims, except for Mr. Maderal who is assigned a government vehicle hence, not authorized to claim TA; and
b. Require the refund of the paid TA of the Acting Chief of Parks and Recreation Office in the total amount of P54,000.00.
In response to our recommendation, the City Accounting Office requested for the issuance of a revised Office Order with the provision to collect RATA for the Acting Assistant City Accountant.
2. Unauthorized claim of Transportation Allowance
Item 8.2.1 of Local Budget Circular No. 103 dated May 15, 2013 issued by the Department of Budget and Management provides that those who are assigned or who use government motor transportation shall no longer be entitled to the TA, but only to the commutable RA for the month. This is supported by the Supreme Court in its Decision in Aida Domingo versus the Commission on Audit (G.R. No. 112371 October 7, 1998), which states that:
"The transportation allowance … shall not be granted to officials who are assigned a government vehicle or use government motor transportation, except as may be approved by the President of the Philippines. …”
Verification of disbursements for CY 2013 disclosed officials who have been issued with government-owned motor vehicles for official use, as documented in the Property Acknowledgment Receipts, were still paid TA. Table 18 shows the details of the payment.
Table 16
|Position/Office |Total |Allowable |Not Allowable |Reason |
| | | |Amount |Period |With Vehicle Issued |
|City Mayor/Mayor’s Office |114,000.00 | | 114,000.00 |Jan to Dec 2013 |since July 2, 2010 |
| | |- | | | |
|City Vice Mayor/Vice-Mayor’s | 90,000.00 | -| 90,000.00 |Jan to Dec 2013 |since July 2, 2010 |
|Office | | | | | |
|City Councilor/City Council’s | 42,000.00 | 37,500.00 | 4,500.00 |July 8 to 31, 2013 |since July 8, 2013 |
|Office | | | | | |
|City Councilor/City Council’s | 6,000.00| 3,000.00 | 3,000.00 |July 15 to 31 2013 |since July 15, 2013 |
|Office | | | | | |
|City Councilor/City Council’s | 6,000.00 | 1,500.00 | 4,500.00 |July 9 to 31, 2013 |since July 9 2013 |
|Office | | | | | |
|City Councilor/City Council’s | 6,000.00 | 1,500.00 | 4,500.00|July 9 to 31, 2013 |since July 9, 2013 |
|Office | | | | | |
|CGDH III/City Planning Office | 72,000.00 | 31,500.00 | 40,500.00 |Jun 7 to Dec 2013 |since June 7, 2013 |
|CGDH III/City Transportation | 72,000.00 | | 72,000.00 |Jan to Dec 2013 |since Oct 21, 2002 |
|Management Development Office | |- | | | |
|CGDH III/Business Permits and | 72,000.00 | 16,500.00 | 55,500.00 |Mar 26 to Dec 2013 |since March 26, 2013 |
|Licensing Office | | | | | |
|CGDH III/City Assessor’s Office | 72,000.00 | 16,500.00 | 55,500.00 |March 26 to Dec 2013 |since March 26, 2013 |
|CGDH III/City Personnel Office | 72,000.00 | | 72,000.00 |Jan to Dec 2013 |since July 8, 2010 |
| | |- | | | |
|CGDH III/City Environment | 72,000.00 | | 72,000.00 |Jan to Dec 2013 |since Oct 30, 2009 |
|Management Office | |- | | | |
|City Accountant/Accounting Office | 72,000.00 | | 72,000.00 |Jan to Dec 2013 |since July 6, 2010 |
| | |- | | | |
|CGDH III/City Health Office | 72,000.00| | 72,000.00 |Jan to Dec 2013 |since Nov. 5, 2009 |
| | |- | | | |
|CGDH II/Parks Development Office | 66,600.00 | | 66,600.00 |Jan to Dec 2013 |since July 6, 2010 |
| | |- | | | |
|CGADH III/City Treasurer’s Office | 66,600.00 | 14,850.00 | 51,750.00 |March 26 to Dec 2013 |since March 26, 2013 |
|CCADH III/City Council Office | 72,000.00 | 66,000.00 | 6,000.00 |December 2013 |since Dec. 3, 2013 |
|CGADH III/Center for Excellence | 64,800.00 | | 64,800.00 |Jan to Dec 2013 |since July 21, 2010 |
| | |- | | | |
|CGADH III/City Budget Office | 64,800.00 | 58,050.00 | 6,750.00 |Nov 28 to Dec 2013 |since Nov. 28, 2013 |
|CGDH III/Marikina Sports Park | 72,000.00 | | 72,000.00 |Jan to Dec 2013 |since July 7, 2010 |
| | |- | | | |
|ABC President/City Council Office | 3,483.72| -| 3,483.72 |Dec 1-18, 2013 |since June 2011 |
|ABC President/City Council Office | 2,516.02 | | 2,516.02 |Dec 19-31, 2013 |since 2008 |
| | |- | | | |
|Former CB Officer | 66,000.00 | -| 66,000.00 |Jan to Nov 2013 |since July 5, 2010 |
|Former City Treasurer | 48,000.00 |- | 48,000.00 |Jan to Aug 2013 |since Jan. 28, 2010 |
| Total |1,366,799.74 |246,900.00 |1,119,899.74 | | |
The following section of the DBM-LBC Circular, likewise, provides the responsibility of the Local Chief Executives for the proper implementation of the afore-cited Section.
“15.0 Responsibilities of Local Chief Executives
Local Chief Executives shall be held responsible for the proper implementation of this Circular. They shall be held liable for any grant of RATA not in accordance with the provisions of this Circular, without prejudice, however, to the refund of any undue payments received by the officials and employees concerned.”
The non-compliance by the City to the express provision of the regulation caused the inappropriate disbursement of funds totaling P1,119,899.74 for CY 2013, to the prejudice of the City.
We have recommended that Management:
a. Stop the granting/payment of Transportation Allowances to officials who are issued government vehicles pursuant to Item 8.2.1 of the DBM Local Budget Circular No. 103; and
b. Require the refund by the concerned officials of the Transportation Allowances received for CY 2013 in the total amount of P1,119,899.74.
Some officials commented that the service vehicle is used by the designated liaison officer in transacting official business with other government agencies such as the GSIS, Pag-IBIG, DBM and PhilHealth.
8. Pamantasan ng Lungsod ng Marikina (PLMar)
1. Appointees to executive positions not qualified pursuant to Civil Service Commission Memorandum Circular (CSC MC) No. 27, s. 2001 (amending and clarifying Section 12 of Rule XIII of CSC MC No. 15, s. 1999)
The PLMar originally engaged the services of a Vice President (VP) for Academic Affairs and a VP for Administrative Affairs covered by contracts of employment with specific terms that ended on May 31, 2013 and May 15, 2013, respectively. Prior to the expiration of the two contracts, the PLMar Board of Trustees held that, in the exigency of the service, both incumbent VPs would continue their services in the university in hold-over capacities until the selection of qualified appointees. Consequently, the President of PLMar issued Office Orders No. 24 and 25 both dated July 19, 2013, designating the two VPs in Officers-in-Charge-Vice President (OIC-VP) capacities for Academic Affairs and for Administrative Affairs. Both directly report to the University President and were responsible for the University’s over-all academic development program.
In our evaluation of the appointments of the two OIC-VPs, we noted that these were not in accordance with Section 12.a of the CSC MC No. 27, s. 2001, which provides that, “(a) No person who has reached the compulsory retirement age of 65 years can be appointed in the government, subject only to the exception provided under sub-section (b) hereof.” Section 12.b further states that, “A person who has already reached the compulsory retirement age of 65 can still be appointed to a coterminous/primarily confidential position in the government.”
Both appointees were already more than the retirement age of 65 years at the time of their current appointments, therefore, the exceptions mentioned in the issuance did not apply because they were no longer qualified for such positions. The appointments were neither co-terminus nor the positions held were primarily confidential in nature, but rather permanent positions based on the plantilla of PLMar. In the case of OIC-VP for Administrative Affairs, we further noted that she was already 65 years old when she was hired under contractual status as VP for Administrative Affairs.
2. Designation as OIC-VP not compliant with CSC MC No. 5, s. 1985
Further review disclosed that the respective contracts of employment of the appointees embodied the following duties and responsibilities:
a. As OIC-VP for Academic Affairs -
▪ Work closely with the deans, graduate program coordinators and directors of the different colleges of the University to facilitate the university-wide curriculum development program;
▪ Implement, exercise, and preserve the University’s mission and vision for academic excellence;
▪ Recommend academic policies to the President;
▪ Attend conferences and seminars, and whenever designated, represent the President in external affairs and meetings concerning academic affairs and development programs; and
▪ Perform other duties that may be assigned by the President.
b. As OIC-VP for Administrative Affairs -
▪ Implement administrative orders and policies, and initiate the development of plans for strategic change;
▪ Exercise general supervision and control of offices in the administrative department;
▪ Recommend administrative policies, pertaining to business administration of the different offices and departments;
▪ Review all types of correspondence pertaining to administrative matters;
▪ Attend conferences and seminars and, whenever designated, represent the president in external affairs and meetings concerning administrative affairs and development; and
▪ Perform other duties that may be assigned by the president.
Aside from being over their retirement age, both officers were hired under contracts of employment; hence, they were both considered contractual employees. The duties and responsibilities assigned to them confirmed that they both exercised control or supervision over teaching and non-teaching personnel of PLMar, who were holders of plantilla positions or whose positions in the service were permanent. This set up is contrary to Item No. 6 of CSC MC No. 5, s. 1985, which rules that:
“Contractual employees and consultants …. In no case should they be designated Officers-in-Charge or Executive Directors or the like wherein they exercise control or supervision over regular personnel in the hiring agency. ….”
The appointees actually performed the duties and responsibilities called for by the positions. The OIC-VP for Academic Affairs exercised control over teaching and non-teaching personnel. Among other functions performed, she issued various memoranda governing the conduct of the affairs of the various colleges of PLMar, as well as the designations of professors and other personnel to certain committees or undertakings. She held meetings with the Deans and other officials of the academe, and issued guidelines indicating the order by which activities were to be accomplished.
On the other hand, the OIC-VP for Administrative Affairs performed various tasks, such as, among others, acted as member of the hiring committee, partook in the decision-making over audit committee concerns, called meetings, ordered specific assignments to the different colleges and offices, decided on matters or issues brought before her office, and issued memoranda containing specific instructions for compliance of employees.
The acts performed indicated that the appointed OIC-VPs have discretion over school operational matters, and exercised supervision and control over teaching and non-teaching personnel of PLMar, thus, contradicted Item No. 6 of CSC MC No. 5, s. 1985.
We have recommended that the PLMar Board of Trustees ensure compliance to the CSC requirements in all future Contracts of Employment to be issued.
The PLMar President replied that the above-mentioned audit observations will be discussed in their next Board meeting.
Inquiry from Management disclosed that the PLMar Board has appointed new vice-presidents who are qualified in the executive position effective June 2014 in compliance with Section 12.a of the CSC MC No. 27, s. 2001.
9. 5% MMDA Contribution
9.1 Appropriated amount for the five percent MMDA contribution was less by P17.364 million
Section 10 of R.A. 7924, otherwise known as An Act Creating the Metropolitan Manila Development Authority, states that:
“Five percent (5%) of the total annual gross revenue of the preceding year, net of the internal revenue allotment, of each local government unit mentioned in Section 2 hereof, shall accrue and become payable monthly to the MMDA by each city or municipality. …”
Review of the City Budget for CY 2012 showed that the above provision was not strictly complied with, hence, the amount appropriated for the 5% statutory contribution to MMDA was short by P17,364,400.38, computed as follows:
Table 17
|Total Operating Income for CY 2012 |1,520,865,353.00 |
|Add: Discount on Real Property Tax |169,358,194.55 |
|Total Gross Revenue for CY 2012 |1,690,223,547.55 |
|Less: IRA realized for CY 2012 | 518,291,220 |
|Total Gross Revenue Net of IRA for CY 2011 |1,171,932,327.55 |
|Section 10 of R.A. 7924 |5% |
|5% Subsidy to MMDA for CY 2012: | |
| Per Audit | 58,596,616.38 |
| Per Annual Budget |41,232,216.00 |
|Short in Appropriation |17,364,400.38 |
Although the five percent contribution to MMDA was already deducted by the DBM from the Internal Revenue Allotment of the City, the corresponding appropriation should be correctly applied to reflect the true budget and for the accurate allocation of the City’s resources.
We have recommended that Management:
a. Re-compute the appropriation of the statutory contribution to MMDA for Budget Year 2014 to ensure full compliance with R.A. 7924; and
b. Reconcile the total payments by the City with the books of accounts of MMDA. Any unpaid balance should be appropriated and correspondingly remitted to MMDA.
Management remarked that the five percent contribution to MMDA appropriated for Budget Year 2014 is P43,000,000.00.
10. Annual Procurement Plan (APP)
10.1 Non-compliant APP
The City’s APP for CY 2013 was prepared by the Bids and Awards Committee (BAC) Secretariat, reviewed by the BAC Chairman, and approved by the City Mayor, with an amount of P186,730,139.90. The APP was based from the consolidated Project Procurement Management Plan (PPMP) from each Department of the City.
a. Inconsistent item categories and amounts per APP as against the consolidated PPMPs
Analysis showed inconsistencies in categorizing items and amounts carried forward from the PPMP to the APP. These inconsistencies are summarized in Table 20.
Table 18
|Project/Particulars |Per APP |Per Audit |Difference |
| | | |Over/(Under) |
| | | | |
|Office Supplies | 13,052,451.83 | 16,789,236.93 |(3,736,785.10) |
|Janitorial Supplies | 4,892,964.00 | 3,085,667.88 | 1,807,296.12 |
|Office Equipment |0.00 | 919,354.60 | (919,354.60) |
|Other Maintenance and Other Operating Expenses (OMOOE) |0.00 | 15,717,013.25 |(15,717,013.25) |
|Property, Plant and Equipment (PPE) |0.00 | 21,258,739.72 |(21,258,739.72) |
|Medicines and Drugs & Medical Supplies | 14,745,170.00 | 14,515,113.00 | 230,057.00 |
|Services | 30,800,000.00 | 25,360,170.00 | 5,439,830.00 |
|Other Supplies/Foods | 8,444,968.00 |0.00 | 8,444,968.00 |
|Accountable Forms | 2,162,435.00 |0.00 | 2,162,435.00 |
|Capital Outlay | 8,529,968.00 |0.00 | 8,529,968.00 |
|Public Works |104,102,183.07 |104,102,183.07 |0.00 |
| Total |186,730,139.90 |201,747,478.45 |(15,017,338.55) |
The total APP and the audited amount based from the PPMPs supporting the APP differed by P15,017,338.55. The difference was caused by various reasons noted in our review, as follows:
▪ There were expense categories included in the APP which were not found in the consolidated PPMPs and vice versa. As shown in Table 18, the requirement for other supplies/foods, accountable forms and capital outlay were included in the APP, but these were not categorized as such in the PPMPs of the Departments. On the other hand, there were expense categories (like office equipment, PPE and OMOOE) that were included in the PPMPs which were not grouped as such in the APP.
▪ There were items improperly categorized in the PPMPs, thus, were consolidated as such in the APP. For instance, the requirement for the improvement of the Multi-purpose Recovery Facility and the exhibit area were categorized in the PPMP of the City Environment Management Office as IT equipment and software. In the APP, this was included as an item for Public Works.
▪ There were inaccurate footings of totals indicated in the consolidated PPMPs, as against the audited amounts (Table 19).
Table 19
|Department |Per Consolidated |Per Audit |Difference |
| |APP | |Over (Under) |
|MCDC and other offices |55,106,118.20 |55,111,618.20 |(5,500.00) |
|PIO and other offices |18,854,874.00 |18,854,874.00 |0.00 |
|VMO and other offices |11,745,560.48 |11,746,360.48 |(800.00) |
|Accounting and other offices |5,799,985.00 |2,922,824.50 |2,877,160.50 |
|MISCC and other offices |4,230,710.45 |6,089,211.45 |(1,858,501.00) |
|Treasury and other offices |2,887,646.75 |2,920,406.75 |(32,760.00) |
|Total |98,624,894.88 |97,645,295.38 |979,599.50 |
b. APP not completely accomplished
Section 6, Article I of R.A. 9184 prescribed the standardization of the procurement process and the forms. It states, “(t)o systematize the procurement process, avoid confusion and ensure transparency, the procurement process, including the forms to be used, shall be standardized insofar as practicable.” It further provides that, “for this purpose, the GPPB shall pursue the development of generic procurement manuals and standard bidding forms, the use of which once issued shall be mandatory upon all Procuring Entities.”
The City’s APP was prepared using the prescribed GPPB form and contained the consolidated requirements from each Department of the City. However, review disclosed that the APP summary did not indicate the complete information required to be indicated in the prescribed form. This was also true in the case of the APP form prescribed per category that supported the APP summary. The undisclosed information was as follows:
1. APP summary
▪ PAP code
▪ PMO/end-user
▪ Schedule of the procurement activities to be undertaken (from pre-procurement conference to acceptance/turnover)
▪ Brief description of the related program/project
2. APP supporting schedule
▪ monthly quantity requirement per item of procurement
▪ PS-DBM itemized price catalogue
It is emphasized under Section 7, Article II of R.A. No. 9184 that all procurement should be meticulously and judiciously planned by the Procuring Entity. Following such guideline, government agencies are encouraged to prepare an APP for their operational requirements in order to properly organize and schedule the procurement activities and to completely consider the needs and obtain the most reasonable price for the City. Non-compliance with the governing guidelines defeats the intent and objective of the regulation to the disadvantage of the City.
We have recommended that:
a. The BAC Secretariat, who is responsible for the preparation of the APP pursuant to Section 7.3.4 of R.A. 9184, strictly comply with the requirement under Section 7 of the same law; and
b. All concerned Departments undertake proper review and coordination in all levels of the preparation of the APP in order to prevent the occurrence of errors.
Management replied that the 2014 APP will be prepared in compliance with Section 7 of RA 9184. It also informed that:
a. The BAC will call a procurement officers meeting to appraise them with the use of the prescribed form and the appropriate entries to be made on the relevant forms.
b. The BAC is now consolidating anew all PPMPs to include all the expense categories under MOOE, Capital Outlay, Public Works and Services.
11. Gender and Development (GAD)
11.1 GAD Plan and Budget
To promote women empowerment and pursue equal opportunities for women and men, equal access to resources and development outcome, and elimination of any forms of discrimination and inequality, the City needs to develop plans, programs and mechanisms to realize these endeavors. To achieve this, the City must provide funds to be utilized for such purpose.
Section 36.a of the Magna Carta for Women, or R.A. No. 9710, authorizes government agencies and local government units to allocate at least five percent of the agency’s or the local government unit’s total budget appropriations, which reads as follows:
“… The cost of implementing GAD programs shall be the agency’s or the local government unit’s GAD budget which shall be at least five percent (5%) of the agency’s or the local government unit’s total budget appropriations.”
Despite our previous year’s findings on the audit of GAD, we still noted that the amount appropriated for CY 2013 was short by P53,859,706.11 (Table 22).
Table 20
|Particulars |Amount |
|Total Appropriations per Annual Budget for CY 2013 |1,626,822,558.17 |
|Section 36.a of RA 9710 |5% |
|Appropriations- | |
| Per Audit | 81,341,127.91 |
| Per Budget |27,481,421.80 |
|Difference | 53,859,706.11 |
As a result of under-budgeting, the funds originally budgeted maybe inadequate to address various gender issues; hence, the City’s pursuit to gender equality and women empowerment could not be fully attained.
We have recommended that the City Budget Office appropriate the correct amount to ensure that the budget for the GAD is adequate to address various gender issues.
2. No GAD Code
The third paragraph after Section 36(a) of R.A. No. 9710 encourages LGUs to develop and pass a GAD Code, herein quoted as follows:
“…
Local government units are also encouraged to develop and pass a GAD Code based on the gender issues and concerns in their respective localities based on consultation with their women constituents and the women’s empowerment and gender equality agenda of the government. The GAD Code shall also serve as basis for identifying programs, activities, and projects on GAD.”
To help LGU in the preparation of the GAD Code, the Philippine Commission on Women (PCW), Department of the Interior and Local Government, Department of Budget and Management and National Economic and Development Authority issued Joint Memorandum Circular (JMC) No. 2013-01 for the Guidelines on the Localization of the Magna Carta of Women.
Item 5.E. of the JMC states that:
“1) All LGUs shall formulate and pass their GAD Codes or ordinances to support the LGU’s efforts in promoting, protecting and fulfilling women’s human rights, women’s economic empowerment and gender-responsive governance towards the attainment of gender equality and women’s empowerment.
2) The LGU GFPS shall assist the Local Sangguniang in the formulation of a GAD Code or ordinance.….”
Interviews conducted disclosed that to date, the City Council has yet to formulate the policies that express adherence to GAD concepts relevant to the City’s efforts towards the attainment of gender equality and women’s empowerment and pass the GAD Code. Without the GAD Code, some gender issues were not addressed due to lack of support and commitment of some City personnel as shown in the table below. Hence, the City, particularly the GAD Management Team (The City’s GAD Focal Point System), may not be able to sustain its effort in promoting, protecting and fulfilling women’s human rights, women’s economic empowerment and gender-responsive government towards the attainment of gender equality and women’s empowerment. Also, commitment/ participation of officers and employees and other concerned personnel may not be established due to the absence of enabling ordinance or GAD Code to encourage their participation/commitment.
Table 21
|Gender Issues |GAD Activity |Performance Indicator |Target |Actual Result |Variance/ |
| | | | | |Remarks |
| | | | | | |
|GAD main-streaming|Continuing gender and |Attendance to Gender |Two batches of GST |Not Conducted |Difficulty of |
| |legal education |Sensitivity Training of |for PNP-Marikina, | |coordinating GAD |
| | |PNP-Marikina, PCP |PCP Commanders | |initiatives with |
| | |Commanders | | |PNP |
| | |Conduct of training and |Training series for|Not Conducted |Sensitizing the |
| | |attendance of target |selected LGU | |institution was in|
| | |personnel |officers/employee | |slow process due |
| | | |on “Advanced Gender| |to personnel’s |
| | | |Concepts” & | |lack of interest |
| | | |“Planning using | |in GAD |
| | | |Gender analysis” | | |
|Prevention of |Continuing Capacity |Legal Education |Gender and Legal |Not Conducted |Barangay Officials|
|Violence Against |Building and other | |Education for | |disinterested in |
|Women and Their |Support Services for | |Barangays | |attending GAD |
|Children (VAWC) |Barangay VAW Desk | | | |related trainings |
| |Officers (BVDOs) and | | | |while most BPOWs |
| |Barangay Peace and | | | |heads acted |
| |Order Workers (BPOWs) | | | |positively |
| | | | | |compared to BVDOs,|
| | | | | |even with the |
| | | | | |latter’s |
| | | | | |attendance to GAD |
| | | | | |related trainings |
| |Establishment, |Establish an operation |Established |Meeting with |Experienced |
| |Operation, and |Referral System for VAWC |operational |identified |difficulty in |
| |Maintenance of VAW | |Referral Network |members, |establishing |
| |Referral Network | |System for VAWC |discussions of |commitment of |
| |System | |victims-survivors |possible service |members, |
| | | | |protocols, and |especially from |
| | | | |agreement for MOA |line agencies in |
| | | | |signing of members|Marikina |
| | | | |to formalize | |
| | | | |network | |
We have recommended that GAD Code should be formulated and be passed pursuant to the afore-cited provisions of the law and rule.
B. Performance Evaluation
1. Special Education Fund (SEF) Utilization
Section 272 of R.A. No. 7160, otherwise known as the Local Government Code, states that “(t)he proceeds … accruing to the Special Education Fund (SEF) shall be automatically released to the local school boards: … the proceeds shall be allocated for the operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, educational research, purchase of books and periodicals, and sports development as determined and approved by the Local School Board.” (Underscoring ours)
Under the Code, the annual school board budget is prepared annually by the division superintendent, city superintendent or district supervisor, as the case may be, and approved by the Local School Board. The budget, under Section 100 (b) of the Code, shall be supported by programs, projects, and activities of the school board. The Code further states under Section 100 (c) that the budget shall give priority to the following:
a. Construction, repair, and maintenance of school buildings and other facilities of public elementary and secondary schools;
b. Establishment and maintenance of extension classes when necessary; and
c. Sports activities at the division, districts, municipal, and barangay levels.
The budget/appropriation pertaining to the SEF for three successive years covering CYs 2011 to 2013 is summarized in Table 22, and the significant information and observations noted as a result of our analysis and review are discussed thereafter.
Table 22
| |Budget/Appropriation | Average |
|Particulars |2011 |2012 |2013 | Total | Amount |% |
| | | | | | | |
|Personal Services | | | | | | |
| |Salaries and Wages and |42,094,938.92 |46,956,771.72 |51,655,462.00 | | | |
| |other personnel | | | | | | |
| |services-Casual Teachers | | | | | | |
| |and Other Non-teaching | | | | | | |
| |personnel | | | | | | |
| |Research and Evaluation |52,619,283.99 |54,104,746.57 |57,870,000.00 | | | |
| |Allowances | | | | | | |
| |Longevity Pay |2,823,000.00 |2,823,000.00 |3,075,600.00 | | | |
| |Hazard Pay |441,000.00 |465,000.00 |510,000.00 | | | |
| |Total |97,978,222.91 |104,349,518.29 |113,111,062.00 |315,438,803.20 | 105,146,267.73|70.90% |
|MOOE |51,983,061.08 |37,791,842.43 |37,665,882.53 |127,440,786.04 | 42,480,262.01|28.65% |
|Capital Outlay | | | | | | |
| |Other PPE |2,000,000.00 |0.00 |0.00 | 2,000,000.00 | |0.45% |
| | | | | | |666,666.67 | |
| |School Buildings |0.00 |0.00 |0.00 |0.00 |0.00 |0.00% |
| |Totals |151,961,283.99 |142,141,360.72 |150,776,944.53 |444,879,589.24 |148,293,196.41 |100% |
a. SEF budget not fully compliant with the prioritization set under RA 7160
The total budget/appropriation for the three-year period amounted to P444,879,589.24, broken down into Personal Services, Miscellaneous and Other Operating Expenses and Capital Outlay.
▪ Personal Services (PS)
The budget for PS consistently shared the biggest chunk with an average of P105,146,267.73, equivalent to 70.90 percent of the P148,293,196.41 average total budget for the three-year period. A substantial portion of the budget was spent on Research and Evaluation Allowances (REA). For CY 2013, the budget for PS was P113,111,062.00, of which REA’s allocation was P57,870,000.00, or 51.16% of the total PS.
▪ Miscellaneous and Other Operating Expenses (MOOE)
The average allocation for MOOE covering the three years amounted to P42,480,262.01, or 28.65 percent of the total budget for three years. Analysis showed a declining trend of allocation from P51,983,061.08 in CY 2011 to P37,791,842.43 in CY 2012, and down to P37,665,882.53 in CY 2013, as shown in the table.
▪ Capital Outlay – Other Property, Plant and Equipment
This item was allocated with a total of P2,000,000.00 in the CY 2011 budget, which is equivalent to 1.32 percent of the total budget for that year. We noted that in the succeeding two budget years, this item was no longer included in the budget allocation.
▪ Capital Outlay – School Buildings
For three straight years covered by the analysis, there was no allocation for construction and repairs of school buildings, thus, were not among the priorities in the SEF budget during those years. Review of records disclosed that there were reported additions totaling P386,261,564.53 to the School Buildings account in CY 2011, funded from various sources and completed in 2011.
▪ Capital Outlay – Continuing Appropriation
At the beginning of CY 2013, the continuing appropriation for Capital Outlay had a balance of P2,415,667.64. This was the source of funding in the procurement of chairs, tables and window blinds totaling P893,414.69, and IT equipment amounting to P128,600.00 during said year.
The above information about the budget does not support the concerns that were gathered during the interview with officials from selected six elementary and six secondary schools within the jurisdiction of the City. The following are the results of the interview:
▪ Budget needs for Capital Outlay
1. Additional school buildings and rooms, especially with the implementation of the K to 12 program that requires an additional 2 years in high school
2. Lot for the construction of additional buildings (Marikina Heights High School)
3. Completion of the 3-storey building at Kalumpang National High School which was delayed due to insufficient funding from the Priority Development Assistance Fund. The construction started two years ago, with the first and second floors already completed, but the third floor is still undergoing construction up to present
4. Space/Rooms to house students, laboratory equipment, computers and other educational properties and paraphernalia
5. Enough comfort rooms and service areas
6. Computer units for students under the Information and Communication Technology program, which is part of the Department of Education’s (DepEd) implementation of the Strengthened Technical-Vocational Education Program and Technology and Livelihood Education Curriculum for the Junior High School starting SY 2012-2013. Due to limited funds that resulted in the deficient number of available computer units and computer rooms, all secondary schools visited were not ready for the effective implementation of this program.
7. LCD TV or large LCD monitor with speakers and USB port for each classroom. Teachers who were interviewed explained that the LCD TV or monitor was more advantageous than putting up one computer room that could only house six LCD computer monitors and one mother server for the e-learning program (media presentation and reading assessment) that could only be utilized by six or so students at a time. If funds were limited, they suggested prioritizing the grades five and six levels, until all levels will be accommodated.
The interviewees further stated that using such type of equipment will result in a more realistic presentation, especially in the Science subject that is noted to be more interesting to students. Also, it requires less time for the teachers to prepare their lessons since some of the data are available online.
8. Equipment and facilities for the Home Economics, Agri-Fishery Arts and Industrial Arts in some schools, which were selected to implement the K to 12 program so that the goal of the DepEd to produce skilled and qualified individuals who are equipped with the appropriate knowledge in technology for new endeavors may be attained
9. Blackboards in the newly completed school building (Nangka Elementary School)
▪ Budget needs for the Operation and Maintenance of School Buildings and Facilities
1. Upgrading of the electrical power lines of Marikina and Sta. Elena High Schools, two of the biggest schools with huge electrical loads;
2. Rehabilitation of the dome to eradicate/minimize the noise from the outside surroundings of Marikina High School;
3. Treatment of the Rodriguez building at Kalumpang Elementary School that is infested by termites, and repair of its dilapidated ceiling and roof gutters; and
4. Unpaid telephone bills of the Marikina Heights High School in the amount of P7,000.00 due to unavailability of funds. This resulted in the disconnection of the telephone line.
While the above identified concerns are confronting the school authorities, we noted that these were not considered in the preparation of the budget. The Annual School Board budget for CYs 2011 to 2013 did not contain the prioritized projects set out under R.A. 7160. The issues raised, which were unaddressed, were setbacks that could hinder the successful realization of the purpose of the SEF as envisioned under the law.
We have recommended that the School Division Superintendent and the Local School Board:
a. formulate the budget for SEF following the priorities set under Sections 272 and 100(c) of R.A. 7160 with due consideration of the related concerns and issues reported by the school officials; and
b. encourage the school officials to formally report their issues and concerns for the proper consideration and deliberation of the Local School Board.
b. Utilization of the SEF budget not in accordance with RA 7160 and the DECS-DBM-DILG Joint Circular No. 01
Further to the provisions of R.A. 7160 relating to SEF, DECS-DBM-DILG Joint Circular No. 01 dated April 14, 1998 was issued for more detailed guidelines in carrying out its objectives of the fund. Section 4 thereof provides that, the Local School Board shall give priority to the following expenses:
“Operation and Maintenance of public schools, including organization of extension, non-formal, remedial and summer classes as well as payment of existing allowances of teachers granted by local government units chargeable against the SEF as of December 1997, provided that any additional allowances that may be granted to teachers by LGU shall be charged to the general fund of the LGUs subject to existing budgeting rules and regulations. …”
The obligated amounts pertaining to the SEF for three successive years covering CYs 2011 to 2013 is summarized in the Table 23.
Table 23
| Particulars |Obligation | Average |
| |2011 |2012 |2013 |Total |Amount |% |
|Personal Services (PS) | | | | | | |
|Salaries and Wages and |42,034,896.65 |45,534,921.18 |41,865,401.87 | | | |
|other personnel | | | | | | |
|services-Casual Teachers & | | | | | | |
|Other Non-teaching | | | | | | |
|personnel | | | | | | |
|Research and Evaluation |52,619,283.99 |54,011,017.15 |57,034,549.24 | | | |
|Allowances | | | | | | |
|Longevity Pay |2,823,000.00 |2,795,538.37 |2,546,909.35 | | | |
|Hazard Pay |441,000.00 |465,000.00 |510,000.00 | | | |
|Total Personal Services |97,918,180.64 |102,806,476.70 |101,956,860.46 |302,681,517.80 | 100,893,839.27 |73.83% |
|MOOE |44,020,229.25 |30,114,835.06 |31,129,959.53 |105,265,023.84 |35,088,341.28 |25.68% |
|Capital Outlay | | | | | | |
|Other PPE |1,999,500.00 |0.00 |0.00 |1,999,500.00 | 666,500.00 |0.49% |
|School Buildings |0.00 |0.00 |0.00 |0.00 |0.00 |0.00% |
|Totals |143,937,909.89 |132,921,311.76 |133,086,819.99 |409,946,041.64 |136,648,680.55 |100.00% |
▪ Allowances under Personal Services (PS)
The average PS of P100,893,839.27 is 73.83 percent of the P136,648,680.55 average total obligations for the three-year period 2011 to 2013. For CY 2013, the total obligation amounted to P101,956,860.46 of which, P97,655,510.20 were recorded as expenses for the following:
Table 24
| |Amount Obligated |
|Particulars | |
| | |
|Salaries and Wages- Casual and other related personnel benefits: |
|Casual non-teaching personnel |25,494,419.06 |
|Casual teaching personnel |5,649.432.55 |
|Financial Assistance to public school teachers |8,710,900.00 |
| Sub-total |39,854,751.61 |
|Paid to School Administrators, Teachers and Non-Teaching DepEd Personnel and Casual Teachers: |
|Other Bonuses and Allowances (Code 719) |54,361,332.59 |
|Longevity Pay (Code 722) |2,929,376.00 |
|Hazard Pay |510,050.00 |
| Sub-total |57,800,758.59 |
| Grand Total |97,655,510.20 |
Additional allowances are authorized to be granted pursuant to Section 458 (a.1.xi) of R.A. 7160 which provides that, “when the finances of the city government allow, provide for additional allowances and other benefits to …, public elementary and high school teachers, … stationed in or assigned to the city;” This provision was supported by the issuance of DECS-DBM-DILG Joint Circular No. 01, which specifically mentioned the allowances to be granted with the cut-off date of December 1997. Any additional allowances that may be granted after the cut-off date shall be charged against the General Fund of the City.
Table 26 shows that in CY 2013, other bonuses and allowances totalling P54,361,332.59 were paid and charged against the SEF. These were granted after the cut-off of December 1997 as provided in the afore-mentioned Joint Circular, thus, not allowed.
▪ Financial Assistance charged to SEF and recorded under Salaries and Wages-Casual account
Further verification also disclosed that in CY 2013, the SEF was utilized in the grant/payment of financial assistance totaling P8,710,900.00 (Table 27) to public school teachers, contrary to Section 4 of the same Joint Circular, which is not allowed. Moreover, the grant was inappropriately recorded in the books of accounts as “Salaries and Wages-Casual”.
Table 25
|Date |Particulars |Reference |Amount |
|Dec. 26, 2013 |Payment of Salaries and Wages thru Bank – Mkna. |JEV-2013-12-000871/ | |
| |Public School Teachers - Financial Assistance CY 2013|RD-077-2013/ | |
| | |OBr No. 0042013-12-000320 |1,925,000.00 |
|Dec. 27, 2013 |To transfer of fund from PVB SEF Fund to LBP General |JEV-2013-12-000839 Ck#006117 | |
| |Fund for payment of Financial Assistance CY 2013 of |OBr No. 0042013-12-000319 | |
| |Mkna. Public School Teachers |DV No. 200-1312-000235 | |
| | | |6,446,000.00 |
|Dec. 27, 2013 |Liquidation of Cash Advance- Financial Assistance CY |JEV-2013-12-000850 | |
| |2013 of Marikina Public School Teachers |OBr No. 0042013-12-000321 | |
| | | |339,900.00 |
| |Total | |8,710,900.00 |
▪ Inappropriate funding and payment of Research and Evaluation Allowances (REA) from SEF
On February 17, 2010, the City Council issued Ordinance No. 021 which authorized the grant of monthly REA of P2,000.00 to all public elementary and secondary school teachers and other DepEd officials assigned in the City. Subsequently on December 4, 2013, the City Council issued Ordinance No. 35, which expanded the covered officials and increased the amounts of the allowance, with information presented in Table 26.
Table 26
| |Ordinance No. |
|Position | |
| |021 |35 |
| |(From) |(To) |
| | | |
|Superintendent |P2,000.00 |P9,000.00 |
|Assistant Superintendent |2,000.00 |7,500.00 |
|Division/District Supervisors |2,000.00 |6,000.00 |
|Div. Coordinators |0.00 |6,000.00 |
|Principal/School Heads/OIC |2,000.00 |6,000.00 |
|Dept./Unit Heads |0.00 |6,000.00 |
|Teachers |2,000.00 |2,000.00 |
|Non-Teaching Personnel |0.00 |2,000.00 |
As presented in the above table, the non-teaching personnel were authorized to be granted with the allowance. Under Section 458 (a.1.xi) of RA 7160, non-teaching personnel are not entitled to additional allowances.
In both Ordinances, the City Council allowed the charging of the allowances to SEF, which is not in accordance with DECS-DBM-DILG Joint Circular No. 01 dated April 14, 1998.
Moreover, in the audit of the paid payrolls for the monthly REA, we noted that the amounts paid for the period January to October 2013 exceeded the rates authorized under City Ordinance No. 21 series of 2010 by a total of P17,218,276.46.
▪ Lack of Legal Basis for Longevity Pay and Hazard Pay charged against SEF
The amount charged against the SEF for longevity pay and hazard pay totaled P2,929,376.00 and P510,050.00, respectively, in CY 2013. Management was not able to present the legal basis for the charging thereof to the said fund.
We have recommended that the Local School Board and concerned City Officials:
a. Refrain from utilizing the SEF for purposes other than those enumerated in Sections 272 and 100.c of R.A 7160 and Section 4 of DECS, DBM and DILG Joint Circular No. 01;
b. Stop the inappropriate charging of allowances and other benefits against the SEF. Seek authority from the City Council for the payment of salaries and wages, REA, longevity pay, hazard pay, and other personnel related benefits to be charged against the General Fund, subject to the availability of funds for the purpose and the ceiling limitation on Personal Services;
c. Submit authority for charging longevity pay, hazard pay and financial assistance against the SEF; and
d. Cause the restoration of the amounts inappropriately charged against the SEF from the General Fund.
Management commented that:
a. The allocation of the SEF budget drastically changed when an ordinance granting 50% discount on real estate taxes was enacted in 2009 due to the ravages brought by Typhoon Ondoy.
b. For the inappropriate utilization of the SEF budget:
• The research and evaluation allowance was authorized under City Ordinance No. 35;
• Salaries and wages and other personnel services such as clerks, guards, librarians and drivers are included in the operational and maintenance of school and that their presence is indispensable in the daily operations;
• The grant of financial assistance was authorized by the City School Board under Resolution No. 4 dated December 18, 2013.
By way of a rejoinder, the contention that the authority for the grant of the allowance emanates from the City Ordinance does not hold since the Ordinance is not absolute and not superior over what the law provides.
In addition, financial assistance is not among the allowable charges against the SEF, pursuant to Section 272 and 100.c of the same law and Section 4 of the DECS, DBM and DILG Joint Circular No. 01. It is not enough that the grant of assistance or allowance is covered by School Board Resolutions or City Ordinances for that matter. Such resolutions or ordinances must still be harmonized with the law, government rules and regulations.
If the Local School Board will not be able to present a legal basis for the grant of longevity and hazard pays, the same will be disallowed in audit.
C. Major Accomplishments versus Targets
The City’s most notable accomplishments for CY 2013 totaled P161,505,601.00. These are composed mainly of construction/improvements of roads and acquisition of disaster preparedness and rescue equipment broken down as follows:
|Projects/Activities |Accomplished Targets|Budget |Amount per Accomplishment |
| | | |Report |
|Roads, Highways and Bridges |
| |Road Concreting |
| | |Eden St. New Market Subd., Sto. Niño |3/4/2013-5/23/13 | 3,250,000.00 | 3,361,939.00 |
| | |Desseret St. New Market Subd., Sto. Niño |3/4/2013-5/20/13 | 3,200,000.00 | 3,079,890.00 |
| | |Manti St. New Market Subd., Sto. Niño |3/4/2013-5/25/13 |3,900,000.00 | 3,704,915.00 |
| | |Concreting of Alley at Princess Caroline HOA |8/30/2013-9/30/2013 | 251,561.67 | 251,562.00 |
| | | | | | |
| |Road and Roadside Improvement |
| | |Jasmin St., San Isidro, Con. Uno |2/18/2013-7/2/2013 | 7,318,314.90 | 7,529,627.00 |
| | |Rosal St., San Isidro, Con. Uno |2/28/2013-5/25/13 | 1,531,028.69 | 1,525,659.00 |
| | |Camia St., San Isidro, Con. Uno |2/28/2013-5/25/13 | 1,711,898.96 | 1,719,236.00 |
| | |Santan St., San Isidro, Con. Uno |2/28/2013-5/28/13 | 1,991,815.88 | 1,987,362.00 |
| | |Freedom Park Road, Sta. Elena | | 4,500,000.00 | |
| | |Victory Hills Subd., Pricess St., Brgy. Fortune | | 389,684.26 | |
| |Sub-total | 28,044,304.36 | 23,160,190.00 |
| | | | | | |
|Roadside/Sidewalk Improvement |
| |Roadside Improvement |
| | |Austin St., Jesus dela Peña | | 1,999,940.00 | |
| | |Riverside Drive-Austin to St. Mary | | 1,362,840.00 | |
| | |St. Anne St., Provident Village, Tañong |3/4/2013-7/22/2013 | 2,400,000.00 | 2,366,454.00 |
| | |1st Ave., Goodrich Villa., Concepcion Uno |2/28/13-5/31/2013 | 1,416,131.96 | 1,416,132.00 |
| |Sidewalk Improvement |
| | |Mansanas St., Marikina Heights | | 1,756,711.43 | |
| | |Mansinitas St., Marikina Heights | | 877,282.12 | |
| | |Senegal St., Greenheights Subd., Nangka |2/28/13-8/15/2013 | 1,196,293.80 | 5,544,568.00 |
| | |Rome St., Greenland Phase |3/4/13-6/11/2013 | 2,864,001.21 | 3,799,482.00 |
| | |St. Paul/St. Lazarus/St. Michael, Tierra Vista |3/4/2013-5/7/2013 | 1,746,932.68 | 2,073,663.00 |
| | |Buenmar St., Greenland Phase I, Nanka |2/28/13-8/15/2013 | 5,975,000.00 | 5,363,037.00 |
| | |St. Claire II Subd., Concepcion Uno | | 1,060,312.45 | |
| | |Tantiana St., Simeona Vill., Concepcion Uno |3/4/2013-5/21/2013 | 2,757,815.22 | 2,227,471.00 |
| | |Givenchy St., Simeona Vill., Concepcion Uno |3/4/2013-5/21/2013 | 2,843,136.11 | 2,834,648.00 |
| | |Drainage Outfall-Katipunan to Concepcion Creek, Con.| | 16,000,000.00 | |
| | |Uno | | | |
| | |Milky Way, Fortune | | 754,585.32 | |
| | |Uranus, Fortune | | 423,303.96 | |
| |Sub-total | 45,434,286.26 | 25,625,455.00 |
| | | | | | |
|Structures |
| | |Construction of Trade Center Building @ Sta. Elena | |16,000,000.00 | |
| | |(Tambakay Lim) | | | |
| | |Construction of Multipurpose Hall @ Ruby St., |7/15/2013-11/29/13 |1,262,658.62 | 1,269,956.00 |
| | |Malanday | | | |
| |Sub-total |17,262,658.62 | 1,269,956.00 |
| | | | | | |
|Purchase of tools and equipment for disaster preparedness |
| | |One unit Dredging Machine |12/2013 | 45,000,000.00 | 45,000,000.00 |
| | |One unit Crawler Type Excavation Backhoe |12/2013 | 10,700,000.00 | 10,700,000.00 |
| | |One unit Wheeler Dump Truck |7/2013 | 7,200,000.00 | 7,200,000.00 |
| | |Aerial Basket |7/2013 | 12,000,000.00 | 12,000,000.00 |
| | |Generator Set |7/2013 | 3,800,000.00 | 3,800,000.00 |
| | |200 units Handheld Radio |6/2013 | 1,600,000.00 | 1,600,000.00 |
| | |Test Messaging Alert System |6/2013 | 10,000,000.00 | 10,000,000.00 |
| | |One unit Medical Oxygen Refilling Machine |12/2013 | 550,000.00 | 550,000.00 |
| | |One lot Basic Fire Rescue Equipment |7/2013 | 1,500,000.00 | 1,500,000.00 |
| | |One set branded Hydraulic Shoring set |6/2013 | 2,600,000.00 | 2,600,000.00 |
| | |One unit brand new Tender Truck |6/2013 | 12,500,000.00 | 12,500,000.00 |
| | |Two units Ambulance w/ complete accessories |7/2013 | 3,000,000.00 | 3,000,000.00 |
| | |Medicines and Medical Supplies |12/2013 | 1,000,000.00 | 1,000,000.00 |
| | |Sub-total | |111,450,000.00 |111,450,000.00 |
|Total | |202,191,249.24 | 161,505,601.00 |
D. Status of Suspensions, Disallowances and Charges
The 2009 Rules and Regulations on the Settlement of Accounts in its Chapter IV, Section 17, Period to Appeal, provides that:
“17.1 Any person aggrieved by a disallowance or charge may within six (6) months from receipt of the notice, appeal in writing as prescribed in these Rules. A disallowance or charge not appealed within the period prescribed shall become final and executory.
…”
As reported in the Statement of Audit Suspensions, Disallowances and Charges (SASDC) for the period ending December 2013, the total disallowances of P826,527.91 pertains to payment for overtime services rendered by officials whose equivalent rank is higher than a chief of division. The corresponding Notices of Disallowances were received on various dates in September 2013 by the persons liable.
Pursuant to the cited Rules and Regulations, the persons liable filed their Appeal dated February 18, 2014 on February 25, 2014 to the Office of the Director, Local Government Sector, National Capital Region, Commission on Audit, on February 25, 2014.
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