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Findings No.1 COA Annual Audit Report 2004

July 25, 2008

A financial and compliance audit was conducted on the accounts and operations of the provincial government of Bukidnon for year ended December 31, 2004.

The audit necessitated the study and test of the financial transactions and operations of the province, to determine whether these were properly conducted and that the provincial government was complying with applicable laws and regulations including the budgetary requirements.

As to our favorable observation, we noted that,

Total number of livelihood loan beneficiaries is 31,976 in the total amount of P145,848,614.93, showing that management is concerned with the poor constituents.

However, the following deficiencies were noted

The report of inventories was not submitted pursuant to Section 375 of the Local Government Code, thus fixed assets in the total amount of P1,328,055,434.71

an not be ascertained.

Section 375 of the Local Government Code of 1991 provides the following provisions:

“xxx Primary and secondary accountability for government property.

(a) Each head of department or office of a province… shall be primarily accountable for all government property assigned or issued to his department or office. The person or persons entrusted with the possession or custody of government property under the accountability of any head of department or office shall be immediately accountable to such officer.

The head of a department or office primarily accountable for government property may require any person in possession of the property or having custody and control thereof under him to keep such records and make reports as may be necessary for his own information and protection.

(c) Buildings and other physical structures shall be under the accountability and responsibility of the provincial or city general services officer or the municipal mayor or punong barangay, as the case may be.

(d) Every officer primarily accountable for government property shall keep a complete record of all properties under his charge and render his accounts therefore semiannually to the provincial or city general services officer or the municipal mayor or punong barangay, as the case may be.”

The financial statements of the Province of Bukidnon showed a total fixed assets of P1,328,055,434.71 as of December 31, 2004. (Annex A)

Management created a committee to conduct inventory of fixed assets of the Province of Bukidnon, but the corresponding inventory report was not submitted as of date of report, in violation of the foregoing regulations.

In view of the absence of the report, an audit of fixed assets could not be made. Alternative audit procedures can not be made because the General Services Officer failed to show the ledger cards of fixed asset acquired during the previous years. This condition had been existing since many years had passed.

Management Comment:

Management failed to reply the Audit Observation Memorandum which they promised during the exit conference on February 8, 2005.

Recommendations:

Require the Chairman of the Inventory Committee to submit the inventory report to the Provincial General Services Officer (PGSO) copy furnished the Commission on Audit.

Require the general services officer to list down all the titles of lands owned by the province, indicating thereon the Title number, area, assessed value and location.


The General Journal for CY 2004 together with the supporting documents were not submitted because the same were not yet completed, in violation of COA Circular No. 95-006, thereby the post audit of journal vouchers could not be made pursuant to COA Circular Nos. 86-253 and 90-343.

Section 6.05 of COA Circular 95-006 dated May 18, 1995 as amended, states among others the following:

“xxx The officials involved in the daily recording of transactions in the books of accounts shall turn over the receipts and the disbursement records with all paid vouchers and documents evidencing the transaction to the Auditor within ten (10) days from date of receipt of said documents.”

COA Circular No. 90-343 provides that the head of the agency shall approved all Journal Vouchers (JV) affecting cash transactions. COA Circular No. 86-253 also provides that the concerned auditors should post audit all JVs affecting cash transactions.

All financial transactions of the government should be covered by disbursement vouchers for disbursements and by official receipts for collections and these transactions are recorded in the Journal of Disbursements and Journal of Collections, respectively. All other financial transactions that are not covered by disbursement vouchers and official receipts are recorded in the General Journal (GJ) by means of the accounting entries in the Special Journal Vouched (SJV) which is the Journal Entry Voucher (JEV) in the New Government Accounting System.

Transactions recorded in the GJ included proceeds and payment of loans, liquidation of cash advances, adjustment of supplies and many others, which involved big amounts affecting cash accounts and for these reasons, COA Circular Nos. 90-343 and 86-253 were issued in order to determine regularity.

The agency failed to submit the required GJ with the supporting documents because the same were not yet arranged and they were still in the process of completing the documents. Due to this deficiency the audit of the vital financial transactions of the agency were not completed.

Management Comment:

Management failed to give written comment on the Audit Observation Memorandum which they promised during the exit conference last February 8, 2005.

Recommendation:

Require the accounting unit to facilitate completion of General Journals and Journal Entry Vouchers and submit to COA the General Journals together with the corresponding JEVs and supporting documents.

Written by admin · Filed Under Bukidnon, Commission on Audit 

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