Mindanao Daily

Value for Money Audit (  VFM  )

1.   Projects funded from 20 percent  Development Fund, enumerated in the Consolidated Project Accomplishment Report of the Provincial  Government,  as of December 31, 2008, were not embodied in their  2008 Annual  Investment Plan.
        Development Fund, the President of the Philippines issued  Executive Order No. 189,  which is implemented under LBC No. 70  of the Department Budget and Management, prioritizing projects to be incorporated in the Annual Investment Plan   ( AIP ) , subject to the approval of the Provincial Development Council  and adoption of the Sangguniang Panlalawigan, which shall form part of the Provincial Annual Budget.

        In compliance therewith, the Province prepared and submit the 2008 AIP   indicating horizontal and vertical projects. However, upon verification of the completed projects to the Annual Investment Plan, it was noted that most of the projects as embodied in their AIP were deviated to another projects of the Provincial Government, thus depriving the constituents in designated places of the benefits to be derived  therefrom.

     Recommendation forTawi-tawi Government:

       Require management to submit explanations as to why projects listed in the Annual Investment Plan for CY 2008 were deviated to another projects. Henceforth, strictly adhere to the provisions of executive Order NO. 189, as implemented  under  LBC  No. 70 of the DBM, in the proper utilization of their 20 percent Development Fund.

6. The annual Procurement program was not prepared as required in Sec. 8 of COA Circular No. 92-386 and RA 9184.

       The agency frequently purchases supplies and materials for the agency’s operations on the reimbursement basis as evidence by various Disbursement Voucher submitted for post-audit covering assorted purchases of supplies and materials. This situation renders ineffective the timely inspection to be conducted by the representation of the Commission on Audit as provided for in COA Circular no. 94-006 requiring the assigned representative to be notified by the agency officials concerned on all deliveries of the agency within 24 hours.
  
       The absence of an Annual Procurement Program resulted to numerous purchases by personal canvass rather then through public bidding as required under RA 9184.

Recommendation forTawi-tawi Government:

       Require the General Services Officer and/or Accountable Officer concerned to prepare an Annual procurement Program to ensure that the requirements of the agency as to supplies and materials are adequately met and in accordance with the provision of Section 8 of COA Circular No. 92-386 and RA 9184.

5. Current Liabilities totaling Php 9,088,419.29  have remained in the  books for years, its validity is doubtful, thus, may overstate the said account balance.

       COA rules and regulation requires that only valid claims should be             booked up and considered as regular government obligations.

       In our review of prior years annual audit report and financial statements, it was noted that various current account liabilities have remained unchanged for a  long  period. It is quite unlikely for a claimant not to collect payment of those  payables if indeed are valid claims.

       The following may overstate the current liabilities accounts if these are not  valid obligations, Viz:
Particulars Amount   1.  Accounts Payables
2.  Due to Officers & Employees
 3.  Due to Other NGAS 
4.  Due to LGUs  
       5.  Due to Other GOCCs 124,337.05   
 334,714.88 864,740.50           
 7,749,685.24
  14,941.62 Total 9,088,419.29
       Recommendation forTawi-tawi Government:

       The Provincial Accountant should re-examine the available records   pertaining to these payables. If these are not valid claims, these should be   adjusted so to reflect the correct balance.

4. No depreciation was provided for property, plant and equipment totaling  Php 169,274,223.13, thus PPE account maybe overstated and expenses understated.
 
       The New Government Accounting System (NGAS) provides for the computation of depreciation expenses on all property, plant and equipment.

       In our review of the agency’s financial statements, it was noted that no depreciation was provided on the following PPE  accounts, as provided in the NGAS, to wit:
Particulars Amount  1.   Land Improvements       
 2.   Office Building               
 3.   Other Structures             
 4.   Office Equipment          
 5.   Furniture’s & Fixtures    
 6.   IT Equipment & Software                                   
 7.   Library Books                  
 8.   Other Machineries & Equipment                   
 9.   Watercrafts                                           
 10. Other Transportation Equipment                      
 11. Other Property, Plant & Equipment                      
        73,061,334.05
       38,421,696.33
       12,702,308.09
        3,639,422.75
       454,838.00
       331,068.00
       3,600.00
       13,327,783.41
       15,000,000.00
       2,432,284.00
       9,899,888.50
 Total  169,274,223.13

       The failure of the accountant to provide allowance for depreciation resulting in the overstatement of the PPE accounts and the understatement of the depreciation expenses and accumulated depreciation.

    Recommendation forTawi-tawi Government:

       The provincial accountant should immediately compute the depreciation  of  the PPE based on the available records. Thereafter, an adjustment should be   made after a physical inventory is conducted.

3. Non payment  of  year-end bonus and/or 13th month  pay,  in violation of  budget circular No. 2005-6 and other laws which requires the appropriation and payment of the same.

       Review of the CY-2008 Financial Statements of the Provincial Government of Tawi-Tawi revealed that the year-end bonus and/ or 13th months pay were not paid despite the availability of appropriations. Further review showed no payment was made for prior year’s year-end benefits.

       Various laws, including the above cited budget circular reiterated the payment for the year-end bonus not just as an incentive but in the current financial crisis, would help alleviate the plight of the employees. Non-payment of these benefits would be tantamount to technical malversation considering that there is an existing appropriation.
 
       Management justified despite their limited resources which they mostly depend on their Internal Revenue Allotment (IRA)  were able to give only the Cash Gift.
 
       Recommendation forTawi-tawi Government:

       Management should exert more effort in making a monthly savings to meet some amount in granting the employees their regular year-end benefits, in compliance to some laws and circular regarding the year-end benefits.

2. Reliability and accuracy of the Property, Plant and Equipment accounts with the total net book value of P200,951,488.57,  as of December 31, 2008 cannot be ascertained due to the failure of Management to conduct physical inventory of its assets.
 
       COA rules and regulations calls for the annual inventory of property, plants  and equipment to ascertain its existence and to be assured of the correctness and veracity of the said account.

       Section 124 of the Manual of the New Government Accounting System   (NGAS) provides “Inventory of Supplies or Property -The Local Chief Executive shall require periodic physical inventory of supplies or property x x x Physical count of property, plant and equipment by type shall be made annually and reported on the report on the Report of the Physical Count of Property, Plant and Equipment (RPCPPE)”. This shall be submitted to the Auditor concerned not later than January 31, of each year.

       Section 119 of the NGAS also provides “Property records to be maintained. – The General Services Officer or the Local Treasurer as the case maybe x  x x  shall x x x maintain Property Cards per category of plant, property and equipment x  x  x . “

       As of the audit period / report, no physical inventory was conducted on the property, plant and equipment totaling  Php200,951,488.57 (See Annex “E” for details)  of the provincial government. Although there are subsidiary records for each items under the PPE, it has not been updated. Physical inventory report may have been submitted in the past but it was not based on an actual count but was merely copied from existing record on file.

       The PPE account may be overstated because there is no certainty that all these assets are still in existence after years of  failure to conduct  physical inventory.

v    Recommendation forTawi-tawi Government:

       Conduct a complete physical count on all properties of the provincial   government and reconcile the result thereof with the accounting record in order to obtain an account and reliable account of the property, plant and equipment asset accurate.

       To be able to do this, the Local Chief Executive should create a Team to conduct an immediate physical inventory of its property, plant and equipment. The Team maybe composed of the heads or a representatives of the General Services Officers, the Provincial Treasurer, the Provincial Accountant, the Provincial Engineer and a representative  of the Provincial Government

DETAILED FINDINGS AND RECOMMENDATION FORTAWI-TAWI GOVERNMENT:S
 

A.    Financial and Compliance Audit

1. Cash advances totaling P 45,262,374.43 granted to disbursing officers and other officers have remained unliquidated at year-end, resulting in the overstatement of the cash account and understatement of total expenditures.

     Section 89 of PD 1445 requires the liquidation of cash advances as soon as the purpose for which the same was granted has been served. Presidential Decree No. 1445 provides. “Limitation of Cash advances – No cash advance shall be given unless for a specific purpose. A cash advance shall be reported  on and liquidated as soon as the purpose for which it was given has been served. No additional cash advance shall be allowed to any official or employee unless the previous cash advance is first settled or a proper accounting thereof is made.”

     The summary of cash advances below showed that the cash advance under General and Trust Funds were granted to Disbursing officer and/or OIC-Provincial Treasurer   and other officers of the Province and the same have remained unliquidated far longer than necessary, and even increased. To wit:
Table  1. 1
Schedule of Cash Advances
Acct 103 – Disbursing  Officers
As of December 31, 2008

Name of AO GF TF Total Patricia Mar 1,274,860.40 42,649,994.01 43,924,854.41 Other Officers 0.00 1,337,520.02 1,337,520.02 Total 1,274,860.40 43,987,514.03 45,262,374.43
Table  1 .   2
Comparative Cash Advances
For CY 2008  and  2007
 
Particulars 2008 2007 Inc./Dec. General Fund 1,274,860.40 11,334,623.76       (10,059,763.36 ) Trust Fund 43,987,514.03 20,322,514.03     23,665,000.00 Total 45,262,374.43 31,657,137.79 13,605,236.64
    Recommendation forTawi-tawi Government:
  
       Management should exercise the diligence of a good father of a family in  granting cash advance.  Only permanent appointed employees should be designated disbursing officers and follow rules and regulations pertaining to granting and liquidation of cash advances. Hence management must require the accountable officers to submit their liquidation or a proper accounting thereof.