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Findings No.3 COA Annual Audit Report 2006

July 26, 2008

Due and demandable receivable accounts of the City Government amounting to P 7,882,507.35, has remained uncollected for two (2) years or more, thus depriving the Agency and its constituents of the beneficial use of its funds. Read more

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Findings No.2 COA Annual Audit Report 2006

July 26, 2008

The City’s Accountable Officers were either insufficiently bonded in violation of Sec. 101 (2) of the Government Auditing Code of the Philippines (P.D. 1445) and Art. 405 (m) of the Local Government Code of 1991 (R.A. 7160), thereby exposing government funds and properties to undue risk.

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Findings No.1 COPA Annual Audit Report 2006

July 26, 2008

The Audit Team had conducted a financial, compliance and performance audit on the operations and fiscal transactions of the City Government of Malaybalay for the Calendar Year 2007. We had performed our examination in accordance with the prescribed government auditing standards and other applicable laws, rules and regulations which we deemed appropriate for the existing conditions. Read more

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Findings No.1 COA Annual Audit Report 2005

July 26, 2008

The City Accountant recorded the Real Property Tax and Special Education Tax Receivables based on the estimates provided by the City Treasurer’s Office in violation of Section 20, Volume I of the Manual for the New Government Accounting System, hence the validity of the accounts becomes doubtful. Read more

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Findings No.4 COA Annual Audit Report 2004

July 26, 2008

Retention of prior years’ Accounts Payable under the General Fund P6,922,258.43, which no actual claim, administrative or judicial, has been filed and which has been outstanding for two (2) years or more has resulted in the immobilization of funds.

Section 98 of the Government Auditing Code of the Philippines (P.D. 1445) provides that unliquidated balance of accounts payable which has been outstanding for two (2) years or more and against which no actual claim, administrative or judicial, has been filed or which are not covered by perfected contracts on record may be reverted to the unappropriated surplus of the agency.

Verification of Accounts Payable disclosed that an unliquidated balance of P6,922,258.43, which has been obligated in prior years, has remained outstanding as claims against the Agency despite the doubtful validity and actual existence of these claims.

The failure of the Agency to ascertain the validity of such claims and consequently effect the proper adjustment resulted in the unnecessary retention of funds which could have been reverted to the unappropriated surplus of the Agency.

The Management has commented that the failure to revert the unliquidated balances of the prior years’ accounts payable was overlooked due to the volume of work of the Accounting Department.

We had advised the concerned agency employees to review and validate te legality and propriety of the amounts of claim against the Agency and to effect the necessary adjustment if the same are found to be without valid claimants or undocumented claims.

RECOMMENDATION:

Verify and validate the legality, existence and validity of the prior years’ outstatnding accounts payable and revert the same to the unappropriated surplus of the General Fund of the Agency if it is established that such claims are found to be undocumented and without valid claimants, pursuant to Sec. 98 of the Government Auditing Code of the Philippines (P.D. 1445).

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Findings No.3 COA Annual Audit Report 2004

July 26, 2008

The Inventory Committee failed to conduct physical count of the Property, Plant and Equipment valued at P 690,603,763.18 in violation of the provisions of Section 124 of the New Government Accounting System Manual, thus rendered the accuracy of the account balance doubtful. Further, no reconciliation was made of the property ledger cards of the GSO with the ledger cards of the Accounting Department, as mandated of Section 114 of the NGAS.

Section 124 of the NGAS Manual states that “The Local Chief Executive shall require periodic physical inventory of supplies or property . . . Physical count of property, plant and equipment shall be made annually and reported on the Report of 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 114 of the same manual provides that “The Chief Accountant shall maintain the perpetual inventory records comprising of Property, Plant and Equipment Ledger Card (PPELC) for each type of livestock. Such ledger cards shall contain the details of the property, plant and equipment and livestock account in the inventory control account in the general ledger.

“The General Services Officer or the Municipal Treasurer, as the case may be, shall likewise maintain property cards for property, plant and equipment and work animals in their custody to account for the receipt and disposition of the same. The balance per property cards should always reconcile with the ledger of the accounting unit. They should also reconcile with other property records like Acknowledgement Receipt for Equipment (ARE).”

Verification revealed that due to the non-prioritization of the financial control on the safeguarding of assets, the Inventory Committee failed to conduct the inventory-taking of their property, plant and equipment costing P 690,603,763.18 as of December 31,2004. Below is the breakdown of the Property, Plant and Equipment:

Land and Land Improvements P 119,258,653.01

Buildings 128,127,694.99

Office Equipment, Furniture and Fixtures 38,716,236.93

Machineries and Equipment 117,491,380.46

Transportation Equipment 17,114,135.72

Other Property, Plant and Equipment 67,971,138.86

Reforestation Projects 29,490.50

Construction-in-Progress 201,895,032.71

P 690,603,763.18

In addition, it was further disclosed that the Accounting Division and General Services Office did not maintain appropriate ledger cards and property cards, respectively. Further, the recorded accountability for assets cannot be compared with the existing assets and any difference could not be acted upon/rectified.

The inadequacy of the accounting records did not permit the Auditor to apply alternative audit procedures.

Such conditions were not in conformity with the provisions of Section 124 and 114 of the NGAS Manual.

In effect, the accuracy and the correctness of the account balance of P690,603,763.18 is rendered doubtful.

The Management commented that the Accounting division are in the process of updating of the ledger cards for reconciliation of the differences, if any. Further, the recommendation will soon be acted upon considering that it will be the first time for the city government to conduct the physical count.

RECOMMENDATION:

Comply with and implement the provisions of Section 114 and 124 of NGAS Manual to establish the accuracy and correctness of the Property, Plant and Equipment account.

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Findings No.2 COA Annual Audit Report 2004

July 26, 2008

2. The LGU failed to furnish copies of all contracts entered into by the City Government with several contractors to the Office of the Auditor for financial, legal and technical review, within five (5) days from the date of execution of the contracts, in violation of the provisions of COA Circular Nos 76-34; 82-195 and 96-010, thus, preventing the immediate rectification of the deficiencies that may be uncovered in the course of the review. Read more

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Findings No.1 COA Annual Audit Report 2004

July 26, 2008

Deposit on Letters of Credit account of P 14,304,449.87 had remained outstanding despite its application/ utilization for the acquisition of the two (2) units of Garbage Compactors and one (1) unit of Backhoe. Read more

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