Mindanao Daily

MEMBER, HOUSE OF REPRESENTATIVES of DINAGAT ISLANDS – LONE LEGDIST

Candidate Party Votes Percentage
ECLEO, Ruben, Jr. B. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 33582 86.05%
ROJAS, Francisco Sr. G. LIBERAL PARTY 5443 13.95%
Statistics
Total number of Voters who actually voted 48292
PROVINCIAL GOVERNOR of DINAGAT ISLANDS

Candidate Party Votes Percentage
ECLEO, Glenda B. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 33895 87.08%
MESO, Harry E. LIBERAL PARTY 5029 12.92%
Statistics
Total number of Voters who actually voted 48292
PROVINCIAL VICE-GOVERNOR of DINAGAT ISLANDS

Candidate Party Votes Percentage
VILLAROMAN, Geraldine E. INDEPENDENT 23077 53.77%
DELA MERCED, Elvis A. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 19388 45.17%
PARK, Sangkil H. LIBERAL PARTY 455 1.06%
Statistics
Total number of Voters who actually voted 48292
MEMBER, SANGGUNIANG PANLALAWIGAN of DINAGAT ISLANDS – SECOND PROVDIST

Candidate Party Votes Percentage
ECLEO, Joslyn I. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 13814 17.86%
MENIL, Mario P. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 10882 14.07%
GULFO, Nilo P. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 10401 13.45%
ALCARIA,, Bernardino Jr. F. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 9749 12.60%
SARITA, Norberto Sr. A. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 9692 12.53%
ECLEO, Jurry E. INDEPENDENT 5760 7.45%
ECLEO, Lourdes G. INDEPENDENT 5505 7.12%
SECO, Sanny D. INDEPENDENT 4921 6.36%
MAS-ING, Eduardo L. INDEPENDENT 3645 4.71%
LANCIN, Roberto L. LIBERAL PARTY 976 1.26%
LLAMERA, Nicolas U. LIBERAL PARTY 754 0.97%
GAMAL, Bonifacio G. LIBERAL PARTY 534 0.69%
GASES, Wenefredo Jr. P. LIBERAL PARTY 412 0.53%
HERNANDEZ, Remy E. LIBERAL PARTY 306 0.40%
Statistics
Total number of Voters who actually voted 22730
MEMBER, SANGGUNIANG PANLALAWIGAN of DINAGAT ISLANDS – FIRST PROVDIST

Candidate Party Votes Percentage
LADAGA, Rolizareth T. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 11292 17.04%
LAGROMA, Merlinda D. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 10185 15.37%
BALTAR, Floro Jr. F. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 9880 14.91%
SALCEDO, Richard E. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 9099 13.73%
ECLEO, Romeo P. LAKAS KABALIKAT NG MALAYANG PILIPINO CHRISTIAN MUSLIM DEMOCRATS 8988 13.57%
EDERA, George Sr. A. INDEPENDENT 6312 9.53%
PERTOS, Aurora C. LIBERAL PARTY 2789 4.21%
BAKET, Agripino Jr. L. LIBERAL PARTY 2493 3.76%
BAG-AO, Leonardo C. LIBERAL PARTY 2366 3.57%
MESO, Harel D. LIBERAL PARTY 1676 2.53%
RUBIO, Nelson A. LIBERAL PARTY 1174 1.77%
Statistics
Total number of Voters who actually voted 25562

Value for Money Audit
7. A total of P1,794,900 or 99.67% of the total appropriation of P1,800,931.43  for the period covered January to September, 2008 for Other Maintenance and Operating Expenses were spent exclusively for meals and snacks by the eight (8) members of the Legislative Body, this City, for various purposes and  during Committee Hearings which practice manifests unnecessary, excessive and extravagant use of government funds in violation of Sections 163, 164 and 165 of GAAM, Vol. 1 and Section 343 of RA 7160, resulting in wastage of funds.Sec. 163, 164 and 165 of Government Accounting and Auditing Manual (GAAM), Volume 1, state:Section 163. Unnecessary expenditures. The term “unnecessary expenditures” pertains to expenditures which could not pass the test of prudence or the obligation of a good father of a family, thereby non-responsiveness to the exigencies of the service. Unnecessary expenditures are those not supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation. This could also include incurrence of expenditure not dictated by the demands of good government, and those the utility of which cannot be ascertained at a specific time. An expenditure that is not essential or that which can be dispensed with without loss or damage to property is considered unnecessary. The mission and thrusts of the agency incurring the expenditure must be considered in determining whether or not the expenditure is necessary.Section 164. Excessive expenditures.  The term “excessive expenditures” signifies unreasonable expense or expenses incurred at an immoderate quantity or exorbitant price. It also includes expenses which exceed what is usual or proper as well as expenses which are unreasonably high, and beyond just measure or amount. They also include expenses in excess of reasonable limits.Section 165. Extravagant expenditures. The term “extravagant expenditures” signifies those incurred without restraint, judiciousness and economy. Extravagant expenditures exceed the bounds of propriety. These expenditures are immoderate, prodigal, lavish, luxurious, wasteful, grossly excessive, and injudicious.Section 343 of RA 7160 states: Prohibition Against Expenses for Reception and Entertainment. No money shall be appropriated, used, or paid for entertainment or reception except to the extent of the representation allowances authorized by law or for the reception of visiting dignitaries of foreign governments or foreign missions, or when expressly authorized by the President in specific cases.      Post-audit of transactions disclosed that various disbursements were made by some members of the Legislative Body, this City, exclusively for meals and snacks for different purposes and during Committee Hearings. Disbursements totaled to P1,794,900 or equivalent to 99.67% covering the period January to September, 2008, (Annex M to M-8) out of the total appropriations for Other Maintenance and Operating Expenses (OMOE) of P1,800,931.43, (Annex N to N-8, as highlighted) specifically for the eight (8) members of the Legislative Body. The annex even showed that four (4) SP Members even exceeded in  their amount appropriated and expended solely for meals and snacks. The Annual Procurement Plan (APP) showed that the appropriations for OMOE was not exclusively for meals and snacks but it was also for mobile telephone bills, information disseminations, publications, laundry, etc. However, the amount were almost consumed  exclusively for meals and snacks, thus, with this trend of disbursement, it showed that only a little amount was left to support their other maintenance and operating expenses.      Moreover, audit also disclosed that the disbursements were not properly supported with proof/evidence or minutes of the proceedings of committee hearings or other activities conducted and the participants were not clearly and properly identified. We also observed that some activities undertaken were not within their mandated duties and functions.      Such practices are manifestations of unnecessary, excessive and extravagant use of government funds which violated the provisions of Sections 163, 164 and 165 of GAAM, Vol. 1 and likewise in violation to Section 343 of RA 7160.       Such condition showed that there was wastage of government funds which could have been programmed for projects that provides more benefits to the constituents of this City.       The City Mayor together with the SP Secretary and one of the members of the Sanguniang Panlungsod present during the exit conference agreed to this finding and assured COA to be observant in the disbursement of government funds and not to incur again unnecessary , excessive and extravagant expenses.Recommendation for Surigao City Government:      Stop the practice of using appropriations for OMOE exclusively for meals and snacks during Committee Hearings, meetings and conferences. If possible, meals and snacks should be avoided in compliance to Section 343 of RA 7160 and to avoid incurrence of unnecessary, excessive and extravagant expenditures.       If inevitable, that meals and snacks should be served, purpose or project profile of which should be clearly indicated and minutes of the proceedings should be attached to every transaction and participants should be properly and clearly identified.

6. Payment of salaries and wages for daily wage earners were made to other persons by virtue of power of attorney or other forms of authorization. But persons appointed as attorney in-fact or so authorized to claim were not properly identified thus, they cannot be easily determined as immediate member of the family of the claimant. This exposes management to risk of loss of funds occasioned by payment of wages not to the proper parties.      COA Circular No. 85-248 and COA Circular No. 86-248A, state:
COA Circular No. 85-248, paragraph 3-4:      “It has been observed that some employees delegate the collection of their salaries to attorneys-in-fact on the strength of powers of attorney of other forms of authority in favor of other persons, evidently in satisfaction of obligations contracted by them. This practice should be discouraged in view of its adverse effects on the efficiency and morale of employees whose incentive to work is necessarily impaired, since their salary or a portion thereof goes to other persons.      To curb this unwholesome practice, it is hereby directed that henceforth no cashier or disbursing officer shall pay to attorney-in-fact or other persons who may be under a power of attorney or other forms of authority to collect the salary of employee, except when the persons so designated and authorized is an immediate member of the family of the employee concerned. x x x”      Paragraph 9 of the same circular further provides:      As herein contemplated, the term immediate member of the family shall include the spouses, the children whether legitimate, illegitimate natural by legal fiction or acknowledged natural children, parents and/or brothers and sisters in case of unmarried government official or employee as the case may be pursuant to the pertinent provisions of Art. 291 of the New Civil Code.      COA Circular No. 86-248A was also issued to clarify the issue, on which is to include the Duly Designated Liaison Officer, herein quoted: In order not to cause undue prejudice  to employees, the nature of the work of which requires them to be on field assignments most of the time and in view of the numerous requests for exemption from the coverage of COA Circular No. 85-248 dated Dec. 18, 1985 which prohibits the payment of salary, allowances and other emoluments of government official or employee to any person other than the employee concerned, the 4th paragraph of subject circular is hereby amended to read as follows: “Accordingly, it is hereby directed that cashiers, disbursing officers or other officials entrusted with the task of paying the salary or any money due the government official or employee or issuing the treasury warrant/check covering the amount, shall pay the same directly to such official or employee except when authority to collect the salary or any money due him/her has been given to another person under a power of attorney or other forms of authority and the person so authorized is an immediate member of the family of the official or employee concerned or is the liaison officer duly designated by the Chief or Head of unit, office or agency”. (emphasis supplied)      Another observation made is the payment of money to other persons and not to the payee himself by virtue of the special power of attorney (Annex K) or other forms of authorization (Annex L). Verification disclosed that some Special Power of Attorney and/or Authorizations attached to the payrolls did not properly identify the relationship of the Attorney-in-fact or the authorized person to the payee, thus, relationship of the claimant to the payee cannot be easily determined, whether he/she is an immediate member of the family of the claimant, thus violating the provisions of COA Circular Nos. 85-248 and 86-248A.      The City Mayor was amenable to this finding and commented to strictly implement the provisions above-stated.Recommendation for Surigao City Government:   It is highly recommended that provisions of COA Circular Nos. 85-248 and 86-248A be strictly observed, and relationship of the attorney-in-fact or of the person so authorized should be properly identified as an immediate member of the family of the official or employee concerned.

5. Signature or Thumb Mark Column of the Time Book and Payroll Form duly used for claims of laborers/casual employees and other daily wage earners, were already signed even if payment were not yet received, in contrary to Section 35 of NGAS Manual, Vol. 2.Section 35 of the Manual on New Government Accounting System, Volume 2, provides – The Daily Wage Payroll (annex 27) shall be used for claims of laborers/casual employees and other daily wage earners.Annex 27, no. 9 of the said manual also provides – Workers receiving payment hereon shall affix their signature or thumb mark in column 10 to acknowledge receipt of payment.      On June 16, 2008, cash examinations were conducted to all the Disbursing Officers of this City, as part of the COA’s mandated tasks.      Part of the process of the examination is to verify the unposted paid vouchers/payrolls. For partially paid payrolls, total cash on hand plus total payments already made should be the amount considered as cash items. In the course of verification of the total cash on hand at the time of the cash examination, the auditor should base the amount on the Time Book and Payroll Sheet, Column 10 (Signature or Thumb Mark Column), not signed/not yet paid to the payee. However, it was observed that most of the partially paid payrolls presented were already signed by the payees even if payment were not yet received. Please see Annex J, encircled with red ballpen. The only way to distinguish who is paid and who is not yet paid is the initial of the Disbursing Officer, affixed either on the left side or right side of the signatures of the payee (Annex J – in red ballpen with rectangular shape). This system has been practiced by all the disbursing officers and has been existing even in the previous years, which violated Section 35 and Annex 27, no. 9 of the Manual on New Government Accounting System (NGAS), Volume 2.      Anent to this observation, this Office requested for a meeting with the City Officials and employees, namely:1. Ms. Jocelyn E. Monteros, City Accountant2. Ms. Sarah P. Yamit, Asst. City Treas.-ICO3. Mr. Nelson Alcala, MAA III4. Ms. Consolacion U. Babatid, DO (des.)5. Ms. Amalia Yuamador, DO, and6. Ms. Anabelle E. Diaz, DO      During the said meeting, observation was properly discussed and the above-named officials and employees were amenable to this erroneous practice and are willing to correct the wrong procedures and to adhere to guidelines stated above.      Moreover, during the exit conference, the City Mayor was grateful that this issue has been raised though the audit observation memorandum has been served on August 4, 2008 and immediately he will issue another Memorandum immediately to stop the practice of pre-signing the payrolls.Recommendation for Surigao City Government:      It is strictly recommended that Column 10 – Signature or Thumb Mark Column of the Time Book and Payroll Sheet for Daily Wage Earners be signed by the payees only upon receipt of payment.      By following this procedure, Disbursing Officers can guarantee that payment was made to the right person, since they can identify properly the payee.

4. Supporting documents such as purchase requests, canvass and purchase orders on the disbursements of the City Mayor’s Office particularly for the purchase of meals and snacks were not provided with the primary information such as columns for quantity and unit cost, in violation to the Instructions provided in Annexes 29 and 30 of the NGAS Manual, Volume 2 and as the said documents are incomplete thereby making the transaction irregular under Article 2, Section 162 of GAAM, Volume 1.Annexes 29 (Nos. 12 and 14) and 30 (Nos. 6 & 10) of the New Government Accounting System (NGAS) Manual, Volume 2, provide:Annex 29. Instructions – Purchase Order. This form shall be accomplished as follows:12. Quantity – quantity of good to be ordered; 14. Unit Cost – cost per unit of the supplies/goods.Annex 30 . Instructions – Purchase Request. This form shall be accomplished as follows:6. Quantity – quantity of goods requested to be purchased7. Estimated Unit Cost – the estimated cost per unit of the goods being requested.      Furthermore, Article 2, Section 162 of the Government Accounting and Auditing Manual (GAAM) Volume 1 also provides:Irregular Expenditures. The term “irregular expenditure” signifies an expenditure incurred without adhering to established rules, regulations, procedural guidelines, policies, principles or practices that have gained recognition in law. Irregular expenditures are incurred without conforming with prescribed usages and rules of discipline. There is no observance of an established pattern, course, mode of action, behavior or conduct in the incurrence of an irregular expenditure. A transaction conducted in a manner that deviates or departs from, or which does not comply with standards set, is deemed irregular. An anomalous transaction which fails to follow or violate appropriate rules of procedure is likewise irregular.      Post-audit of transactions revealed that supporting documents such as   purchase requests (Annex F), canvass of prices (Annex G) and purchase orders (Annex H) attached to the purchases of meals and snacks particularly for the City Mayor’s Office did not bear the primary information needed to determine the total obligation of the City, samples as shown in Annex I.      Said supporting documents were not completely filled up as to its quantity and estimated unit cost, which should be the basis for the suppliers in making their quotations thru the Canvass of Prices. Then, said canvass will be the document to be used in determining who among the bona fide suppliers offer the most advantageous quotation to the government. Thus, we considered that in the absence of complete information, it is deemed that the transaction is irregular.      In view of this violation a Notice of Suspension No. 2009-180-101(2008) dated January 22, 2009 has been issued requiring the persons responsible to justify or make explanation on said transactions. Such practice did not only violate existing rules and regulations but also bring disadvantage on the part of the government since validity, propriety and the concept of economy for every transaction could not be determined.      The City Mayor positively admitted their lapses together with the City General Services Officer and assured COA to strictly adhere and observe rules and regulations.Recommendation for Surigao City Government:      It is strongly recommended that Purchase Requests, Canvass of Prices and Purchase Orders should be completely filled up pursuant to the Instructions on Annexes 29 and 30 of NGAS Manual, Volume 2 to avoid incurrence of irregular expenditures.

3. Inventory List for Property, Plant and Equipment of this City as of November 28, 2008 with a total amount of P808,708,117.23, as submitted by the Inventory Team appeared not reliable since it did not present the correct amount of depreciation, because depreciation charges for Buildings and Other Structures were computed based on the Market Value, in violation of Sec. 4 (o) of the NGAS Manual and also did not reconcile with the balances for property, plant and equipment per accounting records totaling P752,076,235.49, or a difference of P56,631,881.74. Also, some of the lots alleged to be acquired by the City were not supported with Transfer Certificate of Title, in violation of Sec. 58 of PD 1445.Section 4 (o) of the Manual on New Government Accounting System (NGAS), Volume 1 states:Depreciation – The straight-line method of depreciation shall be used. A residual value equivalent to ten percent (10%) of the COST shall be set-up and depreciation shall start on the second month after purchase/completion of the property, plant and equipment.Section 50 of said NGAS Manual also provides procedure on accounting of PPE - “Property, Plant and Equipment acquired through purchase shall include all costs incurred to bring it to the location necessary for its intended use, like transportation, freight, installation costs, etc. In the books of accounts, the purchase is immediately recorded as asset”.Section 58 of Presidential Decree No. 1445 –  Audit of Assets. The examination and audit of assets shall be performed with a view to ascertaining their existence ownership, valuation and encumbrances as well as the propriety of items composing the respective asset accounts, determining their agreement with records, proving the accuracy of such records; ascertaining if the assets were utilized economically, efficiently and effectively; and evaluating the adequacy of controls over the accounts.The 2005 IFAC Handbook of International Public Sector Accounting Standards (IPSAS), Volume II, IPSAS 17 No. 47, provides:A class of property, plant and equipment is a grouping of assets of a similar nature or function in an entity’s operations. The following are examples of separate classes:(a) Land;(b) Operational buildings;(c) Roads;(d) Machinery;(e) Electricity transmission networks;(f) Ships;(g) Aircraft;(h) Special Military equipment;(i) Motor vehicles;(j) Furniture and fixtures;(k) Office Equipment; and (l) Oil rigs      In the Annual Audit Report for Calendar Year 2007, one of the audit findings was the inaccuracy and unreliability of the Land and Land Improvement accounts in the amount of P120,222,187.92 for Land and P161,572,729.39 for Land Improvements or a total of P281,794,917.31 as of December 31, 2007, as well as the uncertainty on the veracity of its ownership and existence due to the absence of proof of ownership such as Transfer Certificate Titles and no Individual Property Ledger Cards . In order to address the issue, the Local Chief Executive issued a Memorandum dated February 5, 2008 creating a new inventory team to undertake said inventory, which was headed by Mr. Roberto F. Antolin Jr.      On December 17, 2008, this office received the Inventory List of Property, Plant and Equipment as of November 30, 2008 duly submitted by the created Inventory Team. However, we observed the following deficiencies:
Per Balance
Per Inventory   Sheet (e-NGAS
List   generated)   DIFFERENCE  Office Equipment, Fur. & Fix./Machineries & Eq./Medical, Dental & Lab. Eq./Trans. Eq./P       57,719,351.68  P      82,198,935.78  P     (24,479,584.10)Buildings 31,689,622.33 172,870,310.59(141,180,688.26)Land & Land Improvements  719,299,143.22 287,264,078.91  432,035,064.31 Public Infrastructures                          -        2,631,321.04   (2,631,321.04)Construction In Progress                         –   199,042,643.87(199,042,643.87)Other Property, Plant & Equipment                          -        8,068,945.30   (8,068,945.30)TOTALP  808,708,117.23 P  752,076,235.49 P     56,631,881.74       The figures above revealed that there is still a big difference between the Inventory Report and the Accounting records. It is also observed that the Market Value for Buildings and Other Structures was used as the base amount in computing the depreciated value, contrary to Section 4 (o) of the NGAS Manual, Volume 1.      It is further observed that still some lots were not provided with their Transfer Certificate of Titles, which should prove the ownership of the City Government of Surigao, thus violating the provisions of Section 58 of Presidential Decree No. 1445.       Further, said inventory list did not include public infrastructures, construction in progress and other property, plant and equipment, which formed part of the class of property, plant and equipment as provided in the 2005 IFAC Handbook of International Public Sector Accounting Standards (IPSAS), Volume II, IPSAS 17 No. 47.       Moreover, as prescribed in NGAS Manual, Volume II, Annex 49, the Report on the Physical Count of Property, Plant and Equipment should be prepared in this manner:ArticleDescriptionProperty NumberUnit of MeasureUnit ValueBalance Per Card (Quantity)On Hand Per Count (Quantity)Shortage/OverageRemarks   QuantityValue                     Per submitted inventory list it did not conform with the prescribed format, which even showed the depreciation particularly for the Buildings and Other Structures class of PPE.       As a result, the balances for property, plant and equipment still appeared inaccurate and unreliable      On the other hand, we greatly appreciate the effort exerted by the inventory team.      The Management agreed to the findings and further expressed that most probably the cause of difference for buildings and land and land improvements accounts were the exclusion in the conduct of inventory for all buildings and/or lands constructed and/or acquired by the City but situated in barangay areas. The inventory team focused only their conduct of inventory within city limits. Now, the City Mayor together with the Inventory Team will expedite the said conduct and to make adjustments, if necessary, to arrive at correct and reliable balances.Recommendation for Surigao City Government:      The Inventory Report should be furnished the Accounting Department to effect adjustments, if any, and reconcile with the balances in the agency books and should be prepared using the prescribed format per Annex 49 of the NGAS Manual, Volume II.      Transfer Certificate of Titles for lots acquired should be properly and completely accounted for.      Computation of depreciation charges should be based on the acquisition cost pursuant to Section 4 (o) of the Manual on New Government Accounting System (NGAS), Volume 1 and should be computed by the accounting office. But for PPE where acquisition cost cannot be determined and no evidence is available to determine the market value, the fair value of the item maybe established by reference to other items with similar characteristics in similar circumstances and location, pursuant to the guidelines provided in the 2005 International Federation of Accountants (IFAC) of International Public Sector Accounting Standards (IPSAS) 17, No. 42.

2.    Effect collection of the RPT/SET taxes collectible including penalties, if any, pursuant to Section 255 of RA 7160;  3. Direct the General Services Officer to submit the report on distribution/use/consumption on the cement withdrawn from PACEMCO since March, 2002, when the Memorandum of Agreement took effect on the payment of 1,000 bags of cement every week and for the cements withdrawn which were applied to RPT/SET for 2006, 2007, 2008 and part of 2009 in the amount of P16,110,638.99. The report should include the quantity/number of bags consumed and the name of the projects accomplished. Copy of the reconciliation and consumption reports shall be furnished the Commission on Audit and the City Accountant so that proper accounting/recording of income and also expenses on the use of cement  can be recorded in the Agency books.       We also recommend that the practice should be stopped as it is not advantageous on the part of the City Government. The City Government should receive cash collections in Real Property Taxes and Special Education Taxes and not cement so that it can be promptly accounted for  as income shall accrue to  General Fund.      We further recommend that  barangays shares be remitted the soonest possible time –  computed as P2,146,872.51 to the barangay where the property is located and P39,034.08 to each of the 53 barangays of the City in accordance with Section 271 of RA 7160.   2. Other Investments and Marketable Securities account (197) with an amount of P3,271,497.73 per Balance Sheet as of December 31, 2008 has no proof of existence in contrary to Section 58 of PD 1445 and has been dormant for several number of years.COA Circular No. 2004-002 dated April 29, 2004 defines Other Investments and Marketable Securities with account code of 197 as the amount placed on other investments and marketable securities.Section 58 of Presidential Decree No. 1445 provides: Audit of Assets. The examination and audit of assets shall be performed with a view to ascertaining their existence ownership, valuation and encumbrances as well as the propriety of items composing the respective asset accounts, determining their agreement with records, proving the accuracy of such records; ascertaining if the assets were utilized economically, efficiently and effectively; and evaluating the adequacy of controls over the accounts.State Audit Manual (SAM) No. 26.4.1 page 214 defines Investments as long-term assets of the government which are more or less permanent in nature and put into use primarily for the purpose of holding, or obtaining income or profit.      In our verification of year-end financial statements, it has been observed that the account Other Long Term Investments and now classified as Other Investments and Marketable Securities with account code 197 in the amount of P3,271,497.73 was for many years had been existing  and for the same amount, viz: AccountAccount  YearCodeName Amount 2002179Other Long-Term Investments   3,271,497.73 2003197Other Investments & Marketable Securities   3,271,497.73 2004197Other Investments & Marketable Securities   3,271,497.73 2005197Other Investments & Marketable Securities   3,271,497.73 2006197Other Investments & Marketable Securities   3,271,497.73 2007197Other Investments & Marketable Securities   3,271,497.73 2008197Other Investments & Marketable Securities   3,271,497.73       Through verbal inquiry from the City Accounting Office on the  existence and ownership of such investment, there was no document  that proves this account, neither  was there an income earned out of such investment. Then, we also made inquiry with the Acting City Treasurer – In-Charge of Office if she has knowledge on the whereabouts of this investment, but she also replied on the negative.      Thus, validity of the account on Other Investments and Marketable Securities of P3,271,497.73 as presented in the financial statements is doubtful and unreliable, thereby affects the presentation  of the financial statements.       Management was amenable to this finding and the City Accountant commented that there were actually no investments in marketable securities of the city but an error in the use of account which will be adjusted upon presentation of satisfactory proof or evidence. Recommendation for Surigao City Government:      We recommend that efforts should be exerted to determine the validity, existence and reliability of the account on Other Investments and Marketable Securities amounting to P3,271,497.73, and reclassify or adjust it to appropriate account, so that presentation of balances in the financial statements are accurate, valid and reliable.

Detailed Findings and Recommendations
I – Financial and Compliance Audit1. The City Government of Surigao did not receive cash collection from the PACEMCO as payment for the Real Property and Special Education Taxes totaling P24,780,903.02. Instead, payments were in the form of cement totaling P16,110,638.99 which could not be accounted and resulted to unreconciled RPT/SET Receivables. Moreover, the barangays were deprived of their shares totaling P4,215,676.92.Section 60 of PD 1445 states: Audit of Revenue Accounts – The examination and audit of revenue accounts shall be performed with a view to ascertaining that earned revenues have been duly recorded; and all recorded revenues have been earned and appropriate classifications of revenues have been consistently followed.Section 4 of COA Circular No. 92-382 dated July 3, 1992 – For every payment receive, the collecting officer shall immediately issue an official receipt in acknowledgement thereof. The receipt may be in the form of cash tickets and the like, or officially numbered receipts subject to proper custody, accountability and audit.Section 246. Date of Accrual of Tax. – The real property tax for any year shall accrue on the first day of January and from that date it shall constitute a lien on the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be extinguished only upon the payment of the delinquent tax. Section 247. Collection of Tax. – The collection of the real property tax with interest thereon and related expenses, and the enforcement of the remedies provided for in this Title or any applicable laws, shall be the responsibility of the city or municipal treasurer concerned. The city or municipal treasurer may deputize the barangay treasurer to collect all taxes on real property located in the barangay: Provided, That the barangay treasurer is properly bonded for the purpose: Provided, further, That the premium on the bond shall be paid by the city or municipal government concerned. Section 255. Interests on Unpaid Real Property Tax. – In case of failure to pay the basic real property tax or any other tax levied under this Title upon the expiration of the periods as provided in Section 250, or when due, as the case may be, shall subject the taxpayer to the payment of interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid: Provided, however, That in no case shall the total interest on the unpaid tax or portion thereof exceed thirty-six (36) months.Section 271. Distribution of Proceeds. – The proceeds of the basic real property tax, including interest thereon, and proceeds from the use, lease or disposition, sale or redemption of property acquired at a public auction in accordance with the provisions of this Title by the province or city or a municipality within the Metropolitan Manila Area shall be distributed as follows:       (b) In the case of cities: (1) City – Seventy percent (70%) shall accrue to the general fund of the city; and (2) Thirty percent (30%) shall be distributed among the component barangays of the cities where the property is located in the following manner:(i) Fifty percent (50%) shall accrue to the barangay where the property is located; (ii) Fifty percent (50%) shall accrue equally to all component barangays of the city;       Verification was made on the Real Property Tax and Collection System (RPTACS) on delinquent taxpayers and it revealed that among the delinquents, it appeared that PACEMCO has the highest unpaid Real Property and Special Education Taxes.      Thus, to further verify said delinquents, we examined the RPT/SET ledger cards of PACEMCO as maintained by the City Treasurer’s Office  and we found out that no payments/collections were recorded for the part of  Year 2004 and for  the Years 2005  to 2008. The total tax due amounted to P24,780,903.02, excluding of penalties per computation in Annexes A to A-5. We made some interviews on the personnel concerned of the City Treasurer’s Office and it was disclosed that payment of RPT/SET by PACEMCO was in form of cement drawn by the City Government pursuant to the Memorandum of Agreement dated March, 2002  (Annex B) signed by and between PACEMCO represented by Jose L. Cortes, Jr.  and the City Government of Surigao represented by the Honorable City Mayor, Alfonso S. Casurra as authorized per Sanggunian Panglungsod Resolution No. 92-2002   dated April 4, 2003 (Annex C).      The Memorandum of Agreement stipulated various conditions, and we would like to stress point on the following:1-a. The sum of P100,000.00 CASH payable every Friday of the week starting March 1, 2002 until the full amount due shall have been paid;1-b. ONE THOUSAND (1,000) bags of cement weekly, the equivalent value of which shall be credited as payment for the realty tax until the full amount shall have been paid;1-c. The CITY shall issue Official Receipts acknowledging the payments made by PACEMCO under any of the modes aforementioned.      We give emphasis on these three (3) conditions among all the conditions stipulated particularly on condition no. 3, wherein receipt will be issued even if payment is in the form of cement, because issuance of official receipt without receiving any amount would mean shortage on the part of the Accountable Officer. And it can be noted also that said MOA did not determine at what cost the cements will be recorded.      The Sanggunian Panlungsod Resolution No. 92-2002 authorized the Honorable City Mayor to enter into an agreement for an amount of only P8,928,999.15 of cement to start on March, 2002 to cover the obligation of PACEMCO. However, per letter from PACEMCO, the total cost of cement withdrawn by the City as of December, 2005, amounted already to P16,110,638.99 thus it exceeded the authority by P7,181,639.84.      The City Treasurer informed that per Memorandum of Agreement (MOA) signed on March, 2002, PACEMCO had made payments of P100,000.00 and the City Government have drawn cement of 1,000 bags every week. The payments were all acknowledged with Official Receipts. But it seemed there was contradiction in records because the ledger cards showed no payments from part of Calendar Year 2004 and Calendar Years 2005 to 2008.       Per computation signed by Ms. Sarah P. Yamit, OIC-City Treasury, (Annex D)  it showed the following computation as of December 31, 2005:Annex D – PACIFIC CEMENT PHILIPPINES, INC.(RPT Payable against excess payment)Excess payment (bal. of cement withdrawn as of  Dec. 31, 2005) P  16,110,638.99 Less: RP Taxes Payables:
2006  4,045,027.72 2007  4,620,243.20 2008  4,620,243.20 Business Tax Difference Payable
for 2003 to2006  2,666,003.86 15,951,517.98 Excess Cement Withdrawal (to be charged to 2009 RP Tax Payable) P       159,121.01       The condition therefore disclosed that there was non-reconciliation of records between the PACEMCO and the City Government. Records of the Accounting and the Treasury were not also reconciled as it showed no payments/collection of RPT/SET from PACEMCO.       As a result, cements were drawn by the City Government instead of collecting the RPT/SET in the form of cash collections and generate income. Such condition also resulted to unrecorded/unaccounted withdrawals of cement worth P16,110,638.99. No record can be traced or that could help account the cement withdrawn as to dates/period, quantity and who/how they were used/utilized. If the Cement were acquired through procurement, then it did not follow the normal mode of procurement pursuant to the provisions of RA 9184.      It also resulted to the deprivation of the barangay where the properties are located in receiving their share with an approximate amount of P2,146,872.51 and for the fifty-three (53) barangays of P 39,034.05 each. Computation is shown in Annex E.      During the exit conference conducted, the City Mayor explained that he already formed a team to conduct reconciliation of the account with PACEMCO together with the City Treasurer’s Office and hopeful that said reconciliation be done the soonest possible time.Recommendation for Surigao City Government:      The City Government through the able effort of the Honorable City Mayor should: 1.  Direct the City Treasurer to make reconciliation of accounts between the property ledger cards of the City   and the records of the PACEMCO, as well as with the Accounting Office to account the uncollected RPT/SET receivable of P24,780,903.02 as computed, pursuant to Section 246 and 247 of RA 7160.