Mindanao Daily

VALUE FOR MONEY AUDIT
1.  The objectives of the City Government in uplifting the economic condition of the barangay officials of the 26 barangays by providing livelihood assistance of P230,000.00 for each barangay or a total of P5,980,000.00 were not achieved due to the failure of the recipients to utilize the said amounts for the purposes specifically stated in their project designs.
       During the year, one of the thrusts of the City Government of Digos is to provide economic services to all sectors of the community through livelihood assistance with the sole purpose of uplifting their economic conditions.  During the year, livelihood programs were extended to the barangay officials through a Memorandum of Agreement executed between the City Government of Digos and the Association of Barangay Captains of Digos City on March 11, 2007.  As agreed, the City Government will provide a livelihood assistance program in the amount of P230,000.00 for each barangay which will be supported with specific project designs for projects like cattle fattening, goat raising and hog raising.  The amount of P230,000.00 per barangay will be divided among the 11 barangay officials.
   
       It was observed that in the barangay level, the financial assistance were distributed to the barangay officials thru payroll system and cash was received individually by the beneficiaries.  The procurement of hogs, cattle or goat, depending on their project designs were to be undertaken by each of the recipient.
   
       Based on the ocular inspection we conducted and interviews we made with the different barangay officials who were recipients of the livelihood assistance/program of the city government, we learned that out of the 26 barangays, 21 barangays  had no livelihood projects implemented or realized.
   
       It was stated in the Memorandum of Agreement that the Liga ng Barangay shall actively participate in the distribution, implementation, monitoring and evaluation to ensure that usage of funds are in accordance with the duly approved project designs and shall see to it that every barangay shall comply the submission of their quarterly report to the Office of the Mayor.  These responsibilities of the Liga ng mga Barangay were not given due attention and compliance was neglected.  On the other hand, the City Government also failed to monitor the proper implementation of the livelihood projects, hence their objectives in uplifting the economic conditions of their barangay officials were not realized.
      
       Had these livelihood projects been fully implemented, monitored and supervised, the benefits that could be derived therefrom can be extended to the constituents of their respective barangays.
      
       During the conference, the City Mayor shared his disappointment on the poor outcome of the said projects.  He informed us that considering the fact that the projects were not implemented, they will require the barangay officials concerned to refund the amount so that the same could be used by the other constituents of the city.
   

Recommendation for Digos City Government:
   
       Require the Barangay Officials of the 26 barangays who were recipient of the livelihood projects but had not implemented the project to refund the amount received by them to the City Government of Digos City and require them to submit written justification/explanation for failure to implement their proposed project.
      
       Financial assistance for livelihood projects should be properly monitored and on site inspection should always be conducted.

4.   Approval of the disbursement vouchers made by the City Administrator as authorized by the Honorable Mayor had no limitations as to the amount and nature of transactions as required in the provision of Section 39 of New Government Accounting System.

       Provision of Section 39 of the New Government Accounting System, Volume I, is hereby reproduced as follows, thus:
      
“Approval of disbursements by the Local Chief Executive (LCE) himself shall be required whenever local funds are disbursed, except for regularly recurring administrative expenses such as:  payroll for regular or permanent employees, expenses for light, water, telephone and telegraph services, remittances to government creditor agencies such as GSIS, BIR, PHILHEALTH, LBP, DBP, NPO, PS of the DBM and others where the authority to approve may be delegated.  Disbursement vouchers for expenditures appropriated for the operation of the Sanggunian shall be approved by the provincial Vice Governor, the city Vice Mayor or the municipal Vice Mayor, as the case may be”.
       
      
       In the review and post-audit of the disbursement vouchers of the City Government, it was observed that most of the disbursement vouchers and checks were  signed and approved by the City Administrator with the word “By Authority of the City Mayor” irrespective of the amounts and nature of transactions.  Pursuant to the regulations of Section 344 of Republic Act No. 7160, the approval of disbursements involving regularly recurring administrative expenses can be delegated and the rest of the disbursement vouchers shall be approved by the local chief executive himself.
      
       While the provisions of Section 345 of Republic Act No. 7160 and Section 40 of the New Government Accounting System allows the City Administrator to countersign checks drawn in settlement of obligations of the local government, irrespective of the amounts, the approval of the disbursement vouchers by the local chief executive himself is mandatory.
      
       When the matter was discussed with the City Administrator, he informed us that the authority given to him by the City Mayor was very broad and that he thought that as long as he was instructed by the City Mayor to act on the transactions of the agency, it was regular and legal.  He further informed us that he never signed any disbursement vouchers if the City Mayor is out of office and an Officer in Charge was designated.
      
       Nonetheless, the Honorable City Mayor acknowledged our findings and assured us the proper implementation of our recommendations.

Recommendation for Digos City Government:

       Comply strictly with the provisions of Section 39 of the New Government Accounting System, Volume I.  Strictly limit the authority being given to the City Administrator and designated Officer in Charge as provided by the existing laws and regulations.

3.  Procurement of supplies, materials and equipment which can not be considered common use supplies in the total amount of P28,248,721.45, were done through shopping method which are not in accordance to the provisions of Section 52 of RA No. 9184.

       As a general rule, the procuring agencies shall adopt public bidding as the general mode of procurement.  However, they may, in order to promote economy and efficiency, resort to any of the alternative methods of procurement provided under Rule XVI of Republic Act No. 9184 otherwise known as the Government Procurement Reform Act.  And in all instances, the procuring entity shall ensure that the most advantageous price for the government is obtained.
      
       Provision of Section 52 of RA No. 9184 allows the shopping methods as one of the alternative modes of procurement of goods.  Shopping is a method of procurement of goods whereby the procuring entity simply requests for the submission of price quotations for readily available off-the-shelf goods or ordinary/regular equipment to be procured directly from the suppliers of known qualifications.  This method of procurement shall be employed only in any of the following cases:
      
a) When there is an unforeseen contingency requiring immediate purchase.  Provided, however, that the amount shall not exceed P50,000.00.

b) Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding Two Hundred Fifty Thousand Pesos (P250,000.00).  Provided, however, that the procurement does not result in splitting of contracts;  as provided in Section 54.1 of the IRR-A;  Provided, further, that at least three (3) price quotations from bonafide suppliers shall be obtained.

       Likewise, as defined under the Implementing Rules and Regulations of Republic Act No. 9184, common-use supplies refer to those goods, materials and equipment that are repetitively used in the day-to-day operations of procuring entities in the performance of their functions.  Common-use supplies shall be those included in the Price List of the Procurement Service (PS) of the Department of Budget and Management (DBM).

       Review of the transactions of the agency for CY 2007, particularly the disbursement vouchers involving procurement, purchase orders, inspection and acceptance reports, revealed that most of the procurement made were done through the shopping method.  Further review of the Disbursement Vouchers (DVs) involving amounts ranging from P50,000.00 to P250,000.00, showed that most of the items purchased were those that can not be considered commonly used supplies such as construction materials, medicines, streetlights, laptop computers, rice, spare parts, office equipment, etc. as shown in Annex III.B.  With this range, a total amount of P28,248,721.45 was incurred for the purchases using the shopping method, most of which do not satisfy the conditions set forth in the provisions of Section 52 of RA 9184 whereby shopping method can be resorted to.
      
       Inquiry with the management disclosed that they chose to adopt the shopping method of procurement the reason being they thought that all items below P250,000.00 could already be procured through this alternative method.
      
       While the law allows the use of the shopping method as an alternative mode of procurement, the same should be limited to those ordinary office supplies and materials not available in the Procurement Service attached to the Department of Budget and Management and those supplies/materials/equipment needed in times of unforeseen contingencies.  The use of shopping method in most of its procurement will limit participation of eligible and qualified suppliers or contractors since bid opportunities are not widely disseminated.  Moreover, this predisposes the management to split purchase requests and purchase orders.
      
       During the exit conference, the Bids and Awards Committee gave us the assurance that all purchase requests emanating from any department of the City Government will be thoroughly evaluated and that those supplies and materials that are not ordinary and are not regularly used in the daily operations of their agency will undergo bidding processes.
      

Recommendation for Digos City Government:
      
       Refrain from using the shopping method of procurement for those supplies and materials which are not ordinary or those that are not regularly used in their day to day activities and operations.  Follow strictly the provision of Section 52 of Republic Act No. 9184.  In the procurement of goods and infrastructure projects, public bidding should always be considered.

2.   Payment of  P416,000.00  to  four individual consultants hired by the  City were erroneously classified under  Other  Professional Services  (Account 799) instead of Consultancy Services (Account 793), thus overstating the former and understating the latter.

       Provisions of Section 112 of Presidential Decree No. 1445 provides that each government agency shall record its financial transactions and operations conformably with generally accepted accounting principles and in accordance with pertinent laws and regulations.
      
       The Revised Chart of Accounts provided under COA Circular No. 2004-008 dated September 20, 2004 states that account Consultancy Services (793) shall be used to record the cost of hiring consultants for special/technical services not available to the concerned agency while account Other Professional Services (799) shall be used to record the cost of other professional services contracted by the agency not classified under specific professional services.
      
       In the review of the financial transactions of the agency, it was found out that the City Government hired the services of four (4) consultants to undertake services relative to Tourism, Education, Health and Youth Affairs with consultancy payment ranging from P12,000.00 – P20,000.00 per month.  Breakdown of the total payment for consultancy services amounting to P416,000.00 as shown on the next page:

      
      
       Erroneous recording of the expenses incurred for consultancy services resulted to the overstatement of account Other Professional Services (799) in the total amount of P416,000.00 and understatement of account Consultancy Services (793) in the same amount.
      
       During the exit conference, the City Accountant assured us the preparation of the necessary adjusting entries in their books of account.
Recommendation for Digos City Government:
      
       Advise the City Accountant to cause the immediate adjustments in the books of accounts for a fair presentation of the accounts in the financial statements.  Draw a Journal Entry Voucher (JEV) to correct the misclassified accounts.

FINANCIAL AND COMPLIANCE AUDIT
1.  The failure to record depreciation expenses totaling P5,117,829.30 for the period from January to April 2007 for all depreciable assets of the agency resulted to the overstatement of its net income and book value of Property, Plant and Equipment and understated the Accumulated Depreciation accounts.

       Provisions of Section 4, Letter O of the New Government Accounting system (NGAS) Manual, Volume I states that:
      
“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.  Public infrastructures shall not be charged any depreciation.”

       COA Circular Letter No. 2004-003 dated October 4, 2004 provides the guidelines in the computation of Depreciation Expenses of Government Property, Plant and Equipment with revised useful life and adjustments arising from revision pursuant to the provisions of COA Circular No. 2003-007 dated December 11, 2003.
      
       Review and analysis of the Property, Plant and Equipment accounts subject to depreciation disclosed that the agency had provided and recorded the total amount of P12,789,069.89 as depreciation expenses for all its depreciable assets for calendar year 2007.  Further verification revealed that the said amount of P12,789,069.89 represents depreciation expenses for the period from May to December 2007 only and the depreciation expense totaling P5,117,829.30 for the period from January to April 2007 were not recorded.  Please see Annex III.A for the details.
      
       Inquiry made with the City Accountant revealed that the failure to provide and record the depreciation expenses for the period January to April was unintentional and it was incurred due to some technical problems encountered during the installation of the Electronic New Government Accounting System (ENGAS).  When the ENGAS was introduced in the City last July 2007, the cut off period was April 30, 2007 and all balances of the accounts as of that date became the beginning balances.  Accordingly, they were previously using the ECPAC System of recording the accounting transactions wherein it only provides depreciation for the entire year only at the end of the year.  Hence, when they adopted the ENGAS with the cut off period of April 30, 2007, no depreciation was ever set-up and the depreciation was only set effective May 2007.  Moreover, she informed us that they had encountered so many problems during the ENGAS installation which causes undue delays in the submission of the trial balances and financial statements.
      
       The failure to record the depreciation expenses for the period from January to April 2007 for all its depreciable assets resulted to the overstatement of the reported income and correspondingly overstated the book value of property, plant and equipment and understated the Accumulated Depreciation accounts.
      
       During the exit conference, the City Accountant assured us that proper adjustments and corrections will be made in the ensuing year.
      
      
Recommendation for Digos City Government:
      
       Require the City Accountant to effect the necessary adjustments and corrections in their books of accounts.  Draw a Journal Voucher to record the unrecorded depreciation expenses totaling P5,117,829.30.

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22. The Office of the City Agriculturist of Koronadal incurred obligations and made disbursements for agricultural supplies for implementation of their various Projects/Programs for CY 2008 amounting to P3,753,988.75 without an approved project designs thus validity of transactions and its distribution to beneficiaries were doubtful.
Review of the Summary of Obligation for Agricultural Supplies Expense of the Office of the City Agriculturist disclosed that an amount of P3,753,988.75 was actually disbursed for CY 2008 the following projects:

Agricultural Supplies
Project/program                     Procured                 Amount        Total
1. Inland Fishery Project           Booster & Mash                   P  19,850.00
Feeds                                        13,650.00  P     33,500.00
2. Palyamanan Demo Project     – Lactating & Gestating Food      13,920.00
Organic Fertilizer                202,004.00       215,924.00
3. Nursery Demo Farm                 Materials                                 9,984.00
Seedling bag etc.                   21,354.40
Fertilizer/Insecticide              11,495.00
Cellophane                            32,124.45         74,957.95
4. Corn Program & Organic          Hybrid corn seed                                      1,989,850.00
Farming
5. Trichoderma Laboratory          Pure Culture                          19,980.00
Cellophane                             20,112.75         40,092.75
6. Nursery Development             Ornamental Plant                   10,400.00
Garden Soil                            15,000.00
Materials                                56,975.00         82,375.00
7. Vegetable Production             Vegetable Seedling               189,972.00
Assorted Seeds                       36,181.65       226,153.65
8. Rice Production                       Animals                                  60,000.00

Certified Seeds                      458,000.00       518,000.00
9. Earwig Production                  Dog Food                                                           7,600.00
10. Agro Forest Development    Tuba2 Seeds                               2,000.00
Durian & Rambutan                 17,000.00
Assorted Fruit Seeds                43,000.00
Coconut Seed                         300,000.00
Cacao Seedling                      150,000.00
Coffee Seedling                       48,000.00      560,000.00
11. Others                                   Utility Supplies                                         P       5,535.00
TOTAL                                                                                P3,753,988.75

To ascertain the validity of the above disbursements we required for an approved project profile for each program for CY 2008 but the City Agriculturist furnished us a copy of 4 approved project profile for prior years of the following programs:

Projects                              Amount        Period Covered         Beneficiary
1.) Support to Rice Production   P292,000.00      CY 2007            5 farmer
Program                                                                               cooperators
2.) Agro-Forest Development       435,047.00      CY 2006     100 hilly farmers
Project                                                                               11 barangays
3.) Operation & Maint. of             179,508.00      CY 2006         Rice, Corn &
Trichoderma                                                                     HVCC Farmers
4.) Operation & Maint. of City     587,376.00      CY 2006              Farmers
Demo Farm                                                                         Constituents

Since the City of Agriculturist failed to provide us of their Approved Project Design for all their programs for CY 2008, validity of their disbursements and distribution of agricultural supplies to intended beneficiaries were considered doubtful.

We also reviewed and verified the distribution of fruit seedlings based on their Logbook which the data were reencoded and the name of recipients were arranged alphabetically (Annex “Q”). Based on the Schedule of Distribution of fruit seedlings which we have prepared, the following deficiencies were noted contrary to the mission and vision of the City and disadvantageous to the government.

1. The beneficiaries of fruit seedlings includes the officials and employees of the City or their relatives, viz;
Name/Relative              Designation            Seedlings            Quantity
Gastala, Roderick                                            Coffee                   500
Miguel, Fernando          City Mayor              Durian                    100
Coffee                  1,500
Rambutan                  100
Pomelo                   100
Mangosteen                100
Coffee                 1,000
Lucido, Bing            City Administrator        Coffee                    150
Morales, Sergio Jr.      City Councilor           Coffee                    200
Pomelo                     40
Mango                      33
Durian                        8
Panza, Amor          City Gen. Ser. Officer     Coffee                    550
Pomelo                       2
Mangosteen                  4
Lanzones                    3
Aguirre, Jose Maria                                         Coffee                     50
2. There were Fruit Seedlings which were distributed in bulk to selected individual beneficiaries;
Name                        Address              Seedlings            Quantity
Jamero, Teresa             Brgy. San Jose        Tuba-Tuba              100
- do -                         – do -                    – do -                    100
Jamero, Jim                       – do -                    – do -                    100
Jamero, Wilma                  – do -                    – do -                    100
KGD. Leal Ricardo    New Pangasinan         – do -                    100
KGD. Leal Ricardo    New Pangasinan         – do -                    110
Mangosteen               20
KGD. Leal Ricardo           – do -                    Mango                 200
Coffee                  500
Simtim, Jason            Brgy. San Jose           Coffee                2,500
Anoche, Alma            Brgy Topland            Durian                    50
Mango                   50
Coffee                    30
Rambutan                 40

Pomelo                     20
Mangosteen              10
Arorong, Gemma                                        Tuba-Tuba              332
CAGO                                                         Coffee                  5,135
Carpa, Bernando                                         Durian                       60
Mango                       75
Rambutan                  60
Pomelo                      60
Drilon, Marilou                                            Durian                       25
Mango                       25
Rambutan                  25
Pomelo                      25
Gabac, Jimmy            Brgy Namnama         Tuba-Tuba              500
- do -                  460

3. The following seedlings which were obligated earlier but still remain unpaid as of December 31, 2008 and were not included in the Agricultural Supplies Inventories submitted to us by the City Agriculturist:
Date Booked Up
Seedlings                    Date Obligated                 Payable              Amount
a. Assorted Fruit Seeds            4/21/08                       12/31/08       P   36,181.65
b. Coffee                                  7/29/08                       12/31/08             48,000.00
c. Cacao                                   7/29/08                       12/31/08           150,000.00
d. Coconut                               8/05/08                        12/31/08          270,000.00
Total                                                       P 504,181.65

4. Status Report of Implementation of the above programs/projects.       Non-submission of the Accomplishment and

An AOM No. 2009-016  was issued to concerned city officials on February 9, 2009 for their comments and justification but no reply was received as of this date.

Recommendation for Koronadal City Government:
1. Require the City Agriculturist to prepare an annual project design for every program to be implemented by their office subject for approval by the City mayor. This will be part of the City’s Annual Investment Plan to ensure further the validity of its transaction and distribution of agricultural supplies which were made only to qualified beneficiaries.

2. Submission of Accomplishment and Status Report of Implementation of all the programs/projects of the City Agricultural Office should be made regularly for an effective monitoring and proper evaluation.
23. Released of educational assistance by Koronadal City to PTCA and various Public/Private Schools for payment of miscellaneous fees of the pupils/students beneficiaries amounting to P9,188,817.00 was  contrary to the implementation of No  Collection Policy in all Public Elementary and Secondary Schools in violation of DepEd Order No. 19 series of 2008.
The Department of Education Order No. 19 series of 2008 dated March 19, 2008 (Annex R) requires the implementation of No Collection Policy in all Public Elementary and Secondary Schools.  It was stated therein that the following policies shall be strictly observed:

1. No fees shall be collected from schoolchildren enrolling in pre-school up to Grade IV, during the enrolment period and at any time during the schoolyear.  This prohibition shall cover, among others, the authorized but voluntary contributions such as BSP, GSP, Red Cross, Anti TB Fund and PTCA.
2. For grade and year levels beyond Grade 4, no collection of any type should be undertaken during the enrolment period and the first month of classes.  Starting on the second month, contributions of the following may be collected, but only a voluntary basis:
1. Boy/Girl Scouts membership
2. Red Cross Membership
3. Anti-TB Fund Drive
4.  PTCA
5. School Publication
6. Membership in student organizations
3. PTCAs may start their collection only after presenting to their members and to the school administration a report on the utilization of the previous shoolyear’s collections.  The amount of contributions to the PTCA shall be agreed upon in a general assembly of the PTCA.
4. The school publication fee shall be set all the school level but shall not be more than P60.00 per elementary school pupil and P90.00 per secondary school student.  The publication of a school newspaper, while not mandatory, is strongly encouraged, particularly at the secondary level in line with the campus journalism program.
5. The membership fees for student organizations shall be set by the organization subject to existing school policies on student organizations.

Pupils/students who are promoted to the next grade or year level are considered automatically enrolled for the coming schoolyear in the same school.  Only pupils entering first grade, students entering first year high school, and transferees from another public school or a private school need to enroll during the enrolment period.  Returning pupils/students shall report to school only for sectioning purposes or any other pre-opening preparations as determined by the school administrators.

Based on the above Order, the Regional Director of DepEd, Region XII issued a Memorandum to all Schools Division Superintendents on May 23, 2008 directing them to inform all concerned for their strict implementation. (Annex S)

Verification  of year end trial balance revealed that the city government of Koronadal released an educational assistance to various Parents, Teachers and Community Association (PTCA) and Public/Private Schools for payment of Miscellaneous fees of the pupils/student beneficiaries amounting to P9,188,817.00 which was contrary to above DepEd Order.

Detailed audit of Disbursement Voucher No. 100-08-12-12210 (Annex T) disclosed that the City granted an educational assistance on December 23, 2008 to PTCA of Chua Elementary School for calendar year 2008-2009 intended for 47 pupils for payment of Miscellaneous fees of P 350.00 per students or a total amount of P16,450.00.  The itemized collections was enumerated hereunder:

1.   Testing                                                 P     35.00
2.   Science Fair and Quiz                                 30.00
3.   Super Quiz Bee                                           20.00
4.   Math Olympics                                           30.00
5.   Metro Bank Math Challenge                      10.00
6.   S.T.E.P./F.H.P.                                           25.00
7.   Athletic Meets                                            30.00
8.   Filipino/Buwan ng Wika                            30.00
9.   English                                                       30.00
10. Nutrition Quiz Bowl                                  10.00
11. Red CROSS                                                 5.00
12. Instructional Materials                               50.00
13. Anti TB                                                        5.00
14. Miscellaneous/Contingency             ____ 25.00
TOTAL                                           P     350.00
========

The supporting documents for the claims were as follows:

1. Letter Request of the School Principal dated December 10, 2008
2. Certification of the School Principal that listed pupils were belong to low income family
3. Certification of the Barangay Chairman that the pupils were residents of their barangay and certified voters of the City
4. Certification of Education Supervisor of OIC-ASDS that the PTCA of Chua Elementary School was in the process of finalizing its accreditation as an Organization with the SEC.
Further review of the disbursement disclosed the following deficiencies:

1. The payment is not acknowledge by an Official Receipt.
2. The amount of PTCA contribution of P350.00 was agreed by the Board Members and its officials per Board Resolution No. 2 and it was not agreed upon during general assembly of the PTCA, in violation of DepEd Order No. 19 series of 2008.
3. The itemized collections of P350.00 prepared by PTCA is not mandatory.  It is a voluntary contribution of the Parents to the school hence payment should not be shouldered by the City Government.  Those parents with low income are exempt from payment of the contribution.
4. Only Red Cross of P5.00 and Anti TB of P5.00 were allowed by DepEd to be collected on voluntary basis while other items collected amounting to P340.00 were not among contributions stated in the Order.
5. The letter request and certification that the pupils are belong to the low income family were signed by the Principal.  The Barangay Chairman only certified that the parents of the pupils are certified voters of the City.
6. The letter request was dated December 10, 2008 and the check issued to PTCA was dated December 23, 2008 when the school year was about to end.
7. The check was deposited to the account of PTCA at Koronadal Rural Bank and no proof that it was paid to the school, since the financial assistance was not subject to liquidation by the beneficiary.
8. The Educational assistance of P 9,188,817.00 was recorded under Other Maintenance and Operating Expenses (969) instead of Subsidy to NGAS (831). (Annex U)

The above audit observation was brought to the attention of concerned officials thru an Audit Observation Memorandum No. 09-20 and their reply was not yet received as of to date.

Recommendation for Koronadal City Government:
1. Require all concerned officials to strictly adhere to the implementing guidelines for No Collection Policy on all Public Elementary and Secondary Schools as embodied in DepEd Order No. 19 series of 2008 dated March 19, 2008.

2. Release of educational assistance to any school should be covered by a project design and Memorandum of Agreement.  It should be released direct to DepEd to be recorded under their Trust Fund for the implementation of the intended public school beneficiary.  The project should be based on the actual need of the school beneficiary and it should be recorded under Subsidy to National Government Agency and not to Other Maintenance and Operating Expenses.  It should be subject for liquidation by the beneficiaries to ensure the completion and proper accounting of the projects.

24. Reforestation Program amounting to P380,000.00 manifest non-prioritization by the City Government on Environmental Management prescribed in Joint Memorandum Circular No. 1 Series of 2005 dated September 21, 2005 which was aggravated by non recording of expenditures thereof into Registry of Reforestation Projects contrary to the NGAS Manual.

The latest issuance on the guidelines for allocation and utilization of 20% Development Fund was issued thru a DILG-DBM Joint Memorandum Circular No. 1 series of 2005 dated September 5, 2005. The same was reiterated by Memorandum Circular No. 2007-5 dated January 16, 2007 issued by the Department of Interior and Local Government.

The Joint Circular focuses on Social, Economic and Environmental Management with emphasis on Infrastructure Project or Capital Outlays. The Environmental aspect on the following project to be funded by 20% are as follows:

“3.0 PROJECTS COVERED

The 20% of the IRA intended for development projects shall be utilized for the following:

3.1    Social Development (Under Scoring Supplied)
3.2 Economic Development (Under Scoring Supplied)
3.3   Environmental Management
3.3.1 Construction/rehabilitation of sanitary landfill or controlled dumpsite and purchase of a garbage or related equipment.
3.3.2 Community reforestation or urban greening projects.
3.3.3 Flood control programs or projects such as de-clogging of canals or de-setting of rivers.
3.3.4 Other environmental management programs or projects that promote land and water quality as well as productivity of coastal or freshwater habitat agricultural land and forest land.

In addition thereof, the cost or expenditure of reforestation projects shall be recorded in the Registry of Reforestation Projects by the accounting office as prescribed in the New Government Accounting System Manual for LGU’s.
Verification on the records of the City Government of Koronadal particularly on the Annual Investment Plan (AIP) disclosed that for the year 2008, the amount ofP380,000.00 was allocated for purely reforestation projects. It was found that the program holder of the project was under the City Environment and Natural Resources Office (CENRO). The program entitled Ecological-based Upland Agri- Business Program was composed of different project as follows:

Survey of 13 Upland Barangays               P100,000.00
Contour Farming                                         100,000.00
Agro Forestry Project                                  100,000.00
Rubber/Abacus/Palm Oil/Jathropa/
Neem Tree Production                                  50,000.00
Adopt a Mountain for Reforestation
Project                                                           30,000.00
P380,000.00

Verification on the implementation of the foregoing program disclosed several deficiencies as follow:
1. Reforestation Project with allocation of P380,000.00 is equivalent to .49% of total appropriation of P77,525,565.00 from 20% Development Fund showing less preference to Environmental Management as prescribed in the aforecited Joint Circular.
2. Allocation of P30,000.00 for Adopt a Mountain Reforestation Project was considered a good project but it was not given proper attention. No amount of obligation was incurred thereof.
3. Similar program was undertaken particularly by City Agriculture Office which tends to duplicate or overlapped the same work.
4. Other expenditure incurred which is not under the reforestation programs were charged therein which overstated the cost of the program while understating the other program implemented with in the City Environment and Natural Resources Office.

The foregoing deficiencies was aggravated by not recording into the Registry of Reforestation Project all cost or expenditure in the total amount of P301,183.00 incurred in the prosecution of the reforestation program in the year 2008. The same should be booked-up just like in the category of Public Infrastructure because the program is intended for public purpose.
Interview with the CENRO Officer revealed that their Office was newly separated from the Office of the City Mayor and he informed us that there were various reforestation programs and projects  which were implemented before but he was not aware that the approved appropriation and disbursement was not recorded under the Reforestation Projects of the City.

The Assistant Accountant however justified that their recording was based on the accounts appearing in the approved Obligation Request approved by the Budget Officer.

We therefore advise the CENRO being the program holder of the project to use the correct account for their succeeding budget preparation.

Recommendation for Koronadal City Government:
1. Advice the Local Chief Executive with the assistance of City Environment and Natural Resources Officer to give preference on environmental management. Bigger allocation for reforestation programs funded from 20% Development Fund is necessary as a token contribution for minimizing or control of Global Warming. Enforcement or implementation of the same shall be done accordingly with prudence by concerned officials and employees particularly the appropriate use of proper accounts.
2. Accounting Office is advice to record into Registry of Reforestation Project cost incurred thereof. Such will enhance easy monitoring and evaluation of the program.

III. Value for Money Audit

1. The  Market  Transport  Terminal  Building  constructed  at a  total  cost of P 2,178,597.00 was not utilized and remained idle for three (3) years, thus its objective for the development of the city’s land and people was not fully obtained.
The utilization of government fund and resources by a responsible government officials is clearly emphasize in Section 2 of PD 1445, otherwise known as Government Auditing Code of the Philippines, cited herein as follows:
“Sec. 2. Declaration of Policy. It is the declared policy of the State that all resources of the government shall managed, expended or utilized in accordance with law and regulation, and safeguarded against loss or wastage through illegal or improper disposition, with a view of ensuring efficiency, economy and effectiveness in the operations of government. The responsibility to take care that such policy faithfully attended to rests directly with the chief or head of the government agency concerned.”

The city government of Koronadal had appropriated the amount of P1,997,000.00 for the construction of market terminal building to be funded from 20% Development Fund based on the Annual Investment Plan (AIP) of year 2005. The building were completed at the same year at the total cost of P2,178,597.00 based on the accounting record.

The market transport terminal building was planned and constructed along with other economic project of the city government with emphasis of the development of land and its people as envisioned by the local chief executive per his budget message attached as Annex V hereof.

To enhance understanding of the program and objective on the construction of the Market Terminal Building, shown below is Program Accountability Model, to wit:

PROGRAM ACCOUNTABILITY MODEL

GOAL: To spur economic activities through the construction of Market Terminal Building.
OBJECTIVE: To ensure efficiency in the implementation of the project and sustain viability of economic enterprise.
PROGRAM: Project: Construction of Market Terminal Building with total cost of P2,178,597.00.
OUTPUT: Development of Market Terminal Building at China Town Public Market.
IMMEDIATE  Provide  adequate  and comfortable space for EFFECT:          Market Vendors  and Buyers  for  buy and sale                                                                                                                                                                &n bsp;
of various merchandise and agricultural                                products.

ULTIMATE Promote general  welfare  for  development of
GOAL:  land and people.

Our ocular inspection showed that the market terminal building was not utilized. The building was not attended and not cleaned or maintained. The building was not utilized for the past three years, In spite that it is adjacent to the China Town Public Market, the same was not used for any economic activities.  See pictures attached as Annex “W”.

In view of the forgoing premises and compared viz a viz with Project Accountability Model (PAM), it is believed that the objective of the city for the construction of said building was not really realized. The value of the money being spent in the construction of the project was considered unworthy, thus its ultimate goal was not attained.

The City Planning and Development Officer had duly noted our recommendation.  She justified that the City government has been in the process of formulating the Transport and Traffic Management Plan that was started in the last quarter of 2008 with the City Engineer as the Chairman and the City Planning and Development Officer as the Vice Chairman.  Among the expected output of the place is to appropriately define the use of the Market Transport Terminal Building.

Recommendation for Koronadal City Government:
1. The chief executive along with the program holder particularly the city Development Planning Officer is advice to take into consideration in the plotting and prioritization of program and project of the city with the attainment of its ultimate goal for the good of its land and people at a minimum cost due to limited financial resources of the city.

2. Failure of the City to formulate specific guidelines in their Rice Production Program for calendar year 2008 resulted to various deficiencies which were disadvantageous to the government thus expected output of the project was not attained.

The City purchased on May 8, 2008 certified & registered seeds for their Rice Production Program to be distributed by the City Agriculture Office to various farmer beneficiaries. The agricultural products purchased from SOCOCEPCO were as follows:

367   bags of certified Palay Seeds    @  1,200.00   P  440,400.00
11   bags of Registered Palay Seeds @ 1,800.00         17,600.00
Total                                                  P  418,000.00

When we asked the concerned City Officials about the guidelines on the implementation of the program and a copy of its approved project design, they informed us that implementation of the project was based on last year’s project profile (AIP 2007) with the following Activity Description:

“Procure & distribute certified inbred/hybrid rice seeds and other agri inputs to farmers and seed production cooperators:
a. Conduct of technology training to rice farmers
b. Purchase certified rice seeds and other inputs on seed production for farmer – cooperators.
c. Attendance to Annual forum on rice.”
Expected output of the projects were as follows:

1. Technology transfer to 500 rice farmers for maximum production.
2. Purchased rice seeds and distributed to 150 farmers on a 50:50 scheme.
3. Assisted 5 farmer cooperators on seed production.
According to the City Agriculturist the implementation of the program was based on the project profile for calendar year 2007 so, we prepared Project Accountability Model for the said project to enable us to determine whether their main objective was fully attained to wit:

PROGRAM ACCOUNTABILITY MODEL

GOAL: Promote Livelihood Development in the community.
OBJECTIVE: To assist farmer cooperators on seed production of certified inbred/hybrid rice seeds.
PROGRAM: Rice Production Program.
OUTPUT: Certified inbred/hybrid rice seed for seed production.
IMMEDIATE  Provide     technology     assistance   to
EFFECT: farmers cooperators   for   maximum  seed production.

ULTIMATE    Promote uplift the standard of living of
GOAL:                    the farmers.

Verification of rice distribution and inspection of the project made by the audit team revealed that the 367 bags of certified palay seeds were distributed to individual farmers instead of giving priority to farmers and seed production cooperators as stated in the project profile.
It was also observed that the City procured the needed certified rice seeds to SOCOSEPCO at high prices instead of procuring it from their farmers and seed production cooperators beneficiaries that availed their rice production program.

Further review of the implementation and distribution of certified seed disclosed other deficiencies as follows:

1. List Distribution for 11 bags of registered Palay Seeds was not submitted for audit.
2. The 50:50 scheme was not fully implemented because the farmer beneficiaries refunded only P440 per bag instead of P600 per bag hence there was undercollection of P160 per bag or a total deficit of P58,720.00.
3. Only 71 farmer beneficiaries refunded an amount of P440 per bag for 344 bags of certified seeds (See Annex X).
4. There were 120 farmer beneficiaries who received certified rice but not refunded its 50 % cost since there were 191 total beneficiaries who availed the program. (See Annex  Y).
5. There were 55 bags of certified rice that were distributed to the employees and officials of the City or their relatives, viz;
Refunded
Name of Beneficiaries   Designation/Related to  Qty            Amt.            Remarks
(employees with same family name)
1. Verna Tulimao                                    Fiscal Examiner II                             9            P    3,960               Per OR# 0279565
Fernando Tulimao
Ramonito Tulimao
Harold Tulimao
Rosalia Tulimao
2. Julieta Gastala                                     Budget Officer                                  2                                     No refund
Roderick Gastala                                                                                           2                                      No acknowledgement
&nbsp ;     Refund
3. Jaime Cordero                 Gerardo Cordero/Agriculturist, Technologist     20                 8,800            Pd. per OR# 0279589
Jessel Cordero/Admin.Officer V
4. Edgar Miguel                   Ma. Emelita Miguel/City Agriculturist &            2                             Refunded per OR 0279578
Mary Ann Miguel            Eric Miguel/Agricultural Technologist                2                                                    OR 0279583
Isidro Miguel                                             -  do -                                          2                                      No refund
Vicente Miguel                                                                                               4                1,760            OR# 0279610
5. Eduardo Silvederio        Minda May A. Silvederio/Sup.Adm. Officer         8                3,520            Per OR# 0279570
6. Rogelio Barluado          Herman Barluado/Adm.Officer                              2                   880            Per OR# 0279613
7. Jun Pagunsan                Oscar Pagunsan/SP Member                                   2                                     No Refund
Emilio Pagunsan/Admin.Officer                      ______
Total                                                            55

Due to absence of specific guidelines how to disburse the refund of farmers beneficiaries the total collected refund of P159,280 was recorded in the book of Trust Fund as Other Payables under Rice Production Program instead of recording it as Miscellaneous Income or reduction to its expense account in the book of General Fund.  The said other payables account were not supported with individual listing hence this account can not be settled in the future thus the total accumulated amount under PALAY SEED reached P281,755.00  as of December 31, 2008.
Due to various deficiencies noted above we can conclude that the objective of providing technology assistance to farmer cooperators for maximum seed production was not attained.

An Audit Observation Memorandum No.09-09 dated January 20, 2009 was issued to the City Mayor for their comment and justification but their reply was not yet received as to date.  The City Agriculturist however informed us during exit conference her planned to conduct seminar in her office and requested the Audit Team to be the lecturer.

Recommendation for Koronadal City Government:
1. Require Sanggunian Panglungsod to formulate specific guidelines in their Rice Production Program for appropriate implementation of the City.  Proper monitoring must be done for strict compliance of the guidelines and in order to attain fully the main objective of the program.
2. Rectify the erroneous charging of the refund to Other Payables under PALAY SEED.

3. Failure of the City Government of Koronadal to give priority to the employment of ISKO grantees in the City under its Scholarship Program resulted to non-attainment of its objective of job opportunity to graduates contrary to Section XIII-c of City Ordinance No. 3 series of 2002.
City Ordinance No. 3 series of 2002 established and ISKO City Scholarship Program and provides funds for the tuition fees of the 50 grantees and operational expenses of the ISKO Program of P900,000.00 yearly.  The amount was increased to P7.2M in 2007 per approved Ordinance No. 13 series of 2006 thus total budget requirements up to School Year (SY) 2008-2009 are shown below:

SY 2003-04 for   50 grantees                       P      900,000.00
2004-05 for 100 grantees                            1,800,000.00
2005-06 for 150 grantees                            2,700,000.00
2006-07 for 200 grantees                            3,600,000.00
2007-08 for 200 grantees                            7,200,000.00
2008-09 for 200 grantees (AIP)                  6,400,000.00
200 grantees (SIP)                   3,239,645.00
——————–
TOTAL                                                  P 25,839,645.00
============

Section XIII of the City Ordinance No. 3 series of 2002 provides the privileges and Incentives of ISKO Grantees as follows:

a) A tuition privilege of P7,000.00 per semester to a maximum of 8 consecutive semesters or upon finishing a four year course following a four (4) year curriculum.
b) Academic Incentive – An ISKO grantee who shall graduate with honor will be given the following graduation incentives:
1. Summa Cum Laude                       -      P   20,000.00
2. Magna Cum Laude                        -           15,000.00
3. Cum Laude                                    -           10,000.00
4. Topnotcher of Board
Examination (Top ten)             -           20,000.00
c) Job Opportunity:  The City Government of Koronadal shall give priority to the employment of ISKO grantees in the city government.

The Program Accountability Model for Iskolarship Program is shown below:

PROGRAM ACCOUNTABILITYMODEL

Goal              -  To establish a scholarship fund for poor but deserving students residing in the City of Koronadal
Objective         -   Encourage     educational    upliftment,     support    the
Development of appropriate and self-reliant Scientific and Technical Capabilities and to embrace economic prosperity and social justice.
Program          -   ISKO City Scholarship Program

Output             -   100% of scholars finished the courses
They enrolled starting school year
2006-2007   -   50    (1st batch)
2007-2008   -   50    (2nd batch)
Immediate
Effect               -   Provide employment to ISKO graduates
Ultimate
Goal                 -   Uplift the standard of living of the graduates

Verification made on the status of implementation of the Scholarship Program of the City disclosed that there were already two (2) batches consisting of 100 ISKO grantees who were supposedly finished the courses they enrolled.  The listing of the 1st Batch and 2nd Batch scholars were shown in Annex Z1 & Z2 respectively.  List of the graduates for the first two batches were not available during the audit thus the rate of the graduated scholars to total ISKO grantees could not be computed.  Information and other data as to their present employment were not also available thus we tried to interview one of the grantees who was the only one presently employed in the City of Koronadal as casual.  She informed us that not all of them graduated because of the following reason:

1. Some failed to maintain the 85% rating
2. Some get married
3. One was already deceased
4. Some transferred
5. Some enrolled to two (2) years  course only

As to the ISKO graduates most of them were teachers who were employed in the Private School and only few were hired by Local School Board.  Two of them were hired by the City as casual in Accounting Office but they were laid off as of December 31, 2008 because their job contract expired already.  Many of them have no work while others have no information where they are now.

Because of the City’s non-prioritization to the employment of ISKO graduates the ultimate objective of the Scholarship Program to Uplift the standard of living was not fully attained of the ISKO graduates.

Recommendation for Koronadal City Government:
1. Require the ISKO Program Scholarship Board to strictly adhere to the guidelines formulated in the City Ordinances for ISKO program and give priority to the employment of ISKO grantees in the City government in order to successfully attain its objectives.  A contract should be executed with a condition that ISKO Scholars should be obliged to finish the courses they enrolled.  Encourage also the grantees to enroll in a course muchly needed by the City Government and advise them to get Civil Service Eligible Examination while they were still in college for their possible employment with the government.

21. Non-implementation of the required organizational structure and staffing pattern of the city contrary to Section 76 of the Local Government Code resulting to deviation from the policy guidelines for contract services and the lodging of expenses totaling _P 54.6 Million to General Services Account (795) in violation to CSC Resolution No. 02-0790.
The organizational structure of the city government is not yet patterned to the Plantilla of Personnel for City but still that of a municipality more than eight (8) years after becoming a component city of the Province of South Cotabato. This was contrary to Section 76 of the Local Government Code (RA 7160) which states –
“Every local government unit shall design and implement its own organizational structure and staffing pattern taking into consideration its service requirements and financial capability subject to the minimum standard and guidelines prescribed by the Civil Service Commission.”
“Section 1.1 of CSC Resolution No. 020790

a. Individual Contract of Services/Job Order – refers to employment described as follows:

1. The contract covers lump sum work or services such as janitorial, security or consultancy where no employer-employee relationship exists between the individual and the government;
2. The job order covers piece work or intermittent job of short duration not exceeding six months and pay is on a daily basis;
3. The contract of services and job order  were not covered by Civil Service law, rules and regulations, but covered by Commission on Audit (COA) rules;
4. The employees involved in the contract or job order do not enjoy the benefits enjoyed by government employees, such as PERA, ACA and RATA.
5. Services rendered thereunder are not considered as government service.”

“Section 4. Prohibitions – The following are prohibited from being hired under a contract of services and job order.
a. Those who have been previously dismissed from the service due to commission of an administrative offense;
b. Those who are covered under the rules on nepotism;
c. Those who are being hired to perform functions pertaining to vacant regular plantilla positions.
d. Those who have reached the compulsory retirement age except as to consultancy services.”

“Sec. 2 of CSC Resolution 021480 with subject of clarifications on Policy guidelines for Contract of Services also states that:
Sec. 2. Application to Local Government Units (LGUs). Under Section 77 of the Local Government Code of 1991, the local chief executive may employ emergency or casual employees or laborers paid on a daily wage or piecework basis and hired through job orders for local projects authorized by the sanggunian concerned, without need of approval or attestation by the Civil Service Commission.”
The city government of Koronadal had only 211 regular personnel with permanent position per Personnel Schedule for Budget Year 2008. To supplement its manpower requirements, the LGU hired casual employees and Job Orders personnel consisting of 846 workers as of CY 2008 per list of Job Orders furnished by the HRMO to our office as summarized below as follows:
List of Job Orders
City of Koronadal
OFFICE ASSIGNED                                                              No. of JOs

Accounting Office                                                                                     6
Agriculture                                                                                               20
Architect                                                                                                   3
Assessor’s Office                                                                                       8
Bureau of Fire Protection                                                                           2
Commission on Elections                                                                           5
Cooperative’s Office                                                                                  9
Data Encoder                                                                                            13
Engineer’s Office                                                                                    202
Environment and Natural Resources Office (CENRO)                          138
General Services Office                                                                            12
Health Office                                                                                            34
Information Office                                                                                     2
Kor. Investment Center                                                                             8
Legal Office                                                                                               3
Mayor’s Office – Franchising                                                                    1
- Nutrition Program                                                         2
- CSU                                                                            172
Market                                                                                                       7
Municipal Trial Court                                                                               4
Nutrition Office                                                                                         2
PIMEO                                                                                                      7
Planning and Dev’t. Office                                                                        3
Sanguniang Panlungsod                                                                           36
Social Welfare and Dev’t.                                                                         7
Slaughterhouse                                                                                         37
Traffic Section                                                                                         40
Treasurer’s Office                                                                                     3
Veterinarian                                                                                              21
Vice Mayor’s Office                                                                                39
Total                                                                                            846

Review of the submitted List of Job Order personnel and its corresponding payroll for the month of September 2008, we have observed various deficiencies which were disadvantageous to the government viz;

1. There were deviations from the policy guidelines for contract services in violation to CSC Resolution No. 02-0790 such as:
a.    Some job order personnel were covered under the rules on nepotism.
b. Various job order personnel were hired to perform function pertaining to vacant regular plantilla position (Annex “O”).

c.    Various job order personnel were paid on a monthly basis (Annex “P”).
2. The total Job Order contracts of the City represent 80% of its total manpower complement thus only 211 or 20% belong to the regular personnel with permanent position hence accuracy of total Expenditures charge to Personal Services was doubtful.
3. Records of Services of these Job Order personnel were not under the control and supervision of the Human Resource Management but instead they were controlled by each Department Heads.
4. Lack of Proper Training of Personnel and their frequent movement due to short duration of their contracts resulted to non-attainment of quality service of manpower.

Total Compensation paid to Job Order personnel were charged to MOOE under the account of General Services with a total amount of P54,593,230.60 including those paid to Job Order personnel performing special or technical skills or professional.

This audit observation was reported in AOM No. 09-013 dated January 29, 2009 and comments of management was not yet received as of this date.  However, they informed us during the exit conference that they will start implementing the required staffing pattern and organizational structure of the City.

Recommendation for Koronadal City Government:
1. Require the full implementation of the required Organizational Structure and Staffing pattern of the City as mandated in Sec. 76 of the Local Government Code to avoid various deviations from the policy guidelines for contract services embodied in the CSC Resolution No. 02-0790.

20. Standard procedures embodied in the Government Procurement Act (RA 9184) were not fully adopted by the BAC resulting to various deficiencies in the Bidding Process of the City’s Procurement System.
Section 12 & 13 of the Implementing Rules and Regulations (IRR) of RA 9184 amended provides the functions of the BAC:

“12.1 The BAC shall have the following functions: advertise and/or post the invitation to bid, conduct pre-procurement and pre-bid conferences, determine the eligibility or prospective bidders, receive bids, conduct the evaluation of bids, undertake post-qualification proceedings, resolve motions for reconsideration, recommend award of contracts to the head of the procuring entity or his duly authorized representative.
12.2 The BAC shall be responsible for ensuring that the procuring entity abides by the standards set forth by the Act and this IRR-A and it shall prepare a procurement monitoring report that shall be approved and submitted by the head of the procuring entity to the GPPB on a semestral basis.
12.3  Quorum – A majority of the total BAC composition as designed by the head of the procuring entity shall constitute a quorum for the transaction of business, provided that the presence of the Chairman or Vice-Chairman shall be required.
12.4  Meetings – The Chairman or, in his absence, the Vice-Chairman, shall preside at all meetings of the BAC. The decision of at least a majority of those present at a meeting at which there is quorum shall be valid and binding as an act of the BAC: Provided, however, that the Chairman or, in his absence, the Vice-Chairman, shall vote only in case of a tie.

In our attendance to a Pre-Bid Conference as an observer and in our review of the bidding documents for the eleven (11) Infrastructure Projects with a total Approved Budget for the Contract (ABC) of P39,288,830.70 disclosed several deficiencies contrary to the Standard Procedures embodied in the IRR of RA 9184 as follows:

1. The time schedule for the Pre-Bid Conference was not stated in the GEPS website and Invitation of Application for Eligibility and to Bid (IAEB). Only the date was mentioned, thus there were interested bidders who came late.
2. Copy of the IAEB for the said bidding was not posted in the BAC Bulletin during the inspection conducted.
3. Letter of invitation to COA observer was received by the COA Office at 3:45PM for pre-bid conference schedule on the following day without a copy of the IAEB or other bidding documents.
Other deficiencies noted in the review of the bidding process of the City revealed the following:

1. The important and necessary bidding documents for Procurements were not properly posted in the BAC Bulletin of the City and instead the Bulletin was used to post other documents which do not belong to the City such as:

a. Regional Trial Court – Office of the Sheriff
Sps. Elizardo Legohon & Vilma R. Legohon
b. Condensed Statement of Condition of One Network Rural Banl, Inc. – as of 9/30/08
c. Invitation to Bid of NFA Reg. XII, Kor. Of Nissan Patrol
d. Notice of Loss – Office of Brgy Treasurer – 10/14/08, Barangay Lamlacaff, Municipality of Polomolok.
2. Various IAEB for Procurement of Goods with minimal amount were posted in the BAC Bulletin. Date of bidding was not provided but instead a word “For Information Only” was stated therein.

When we informed the BAC Secretariat of the deficiencies cited above, she justified that most of the personnel assigned to her office were under job order contract with only a short term of duration thus she keeps on training them and deficiencies could not be avoided.  Reply to our AOM No. 2009-014 dated February 2, 2009 was received on February 9, 2009.

It was suggested during the exit conference that the management should assign a support personnel to the BAC Secretariat who are permanent and qualified.

Recommendation for Koronadal City Government:
1.  Assign trained personnel with regular appointment to support the BAC Secretariat and require the BAC Members & Secretariat to strictly adhere to the guidelines on Procurement of Goods, Services & Infrastructure Projects to avoid the occurrence of deficiencies in the Bidding Process of the City.

19. Inaccurate classification & recording of livestock procured under the Rice Production Program of the City Agriculture Office to Agricultural Supplies Inventory account instead of  Work/Other Animals (281) Stocks resulted to erroneous presentation of government assets amounting to P60,000.00 as of December 31, 2008 in violation of Sec. 112 of PD 1445.

Section 112 of PD 1445 provides that:

“Recording of financial transactions. – Each government agency shall record its financial transactions and operations conformably with generally accepted accounting principles and in accordance with pertinent laws and regulations.”

The Chart of Accounts in the NGAS states that Other Assets includes:

Work/Other Animals (281) – Cost/Appraisal value of work/Other animals acquired.

Review and analysis of the general ledger for Agricultural Supplies Inventory Account disclosed that procurement of the 2 heads of buck and 4 heads doe and 2 heads of gilt to be used as working animals for rice production program under Palayamanan Demo Project – Rice based with Live Stock Component of the City Agricultural Office were recorded under the Agricultural Supplies Inventory (162) instead of recording it under Work/Other Animals (281) in compliance to the Chart of Accounts in the New Government Accounting System.

Verification of the Disbursement Voucher and its supporting documents disclosed that the Purchase Order requires delivery of 4 heads Doe at P5,000.00 each same with the Inspection & Acceptance Report but the Reimbursement Expense Receipt (RER) revealed that only 2 heads of Doe was indicated therein hence a difference of 2 heads amounting to P10,000.00 was noted.

Recommendation for Koronadal City Government:

1.  Require the City Accountant to make the necessary adjusting entry to correct the inaccurate classification and recording of livestock used for rice production from Agricultural Supplies Inventory to Work/Other Animals account for a fair presentation of the government assets in the Financial Statements of the City. Require also the delivery of additional 2 heads of Doe and require the concerned employees to explain the occurrence of discrepancy in the Reimbursement Expense Receipt (RER) compared to its supporting documents.