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findings, are discussed in the Independent Auditors Report and in the Observations and
Recommendations portion of the report.
We request that the recommendations be implemented and we will appreciate being
informed of the action(s) taken thereon by submitting the duly accomplished Agency Action
Plan and Status of Implementation (AAPSI) Form, copy attached, within 60 days upon receipt
hereof, pursuant to Section 88 of R.A. No. 10633, otherwise known as the General
Appropriations Act for FY 2014.
We acknowledge the cooperation extended to the Audit Team by the Officials and
Staff of that Agency, thus facilitating the conduct of Audit and submission of this Report.
RODULFO J. ARIESGA
Director IV
Regional Director
CC:
President of the Republic of the Philippines
Malacanang Palace, Compound J.P. Laurel St.,
San Miguel, Manila
Vice-President
7th Floor, PNB Financial Center,
President Diosdado Macapagal Boulevard
Pasay City
President of the Senate
Rm. 606 & 22 GSIS Bldg., Financial Center,
Roxas Blvd., Pasay City
Speaker of the House of Representatives
Batasang Pambansa Complex,
Batasan Hills, Quezon City
Chairperson-Senate Finance Committee
Rm 517 5/F GSIS Bldg., Financial Center,
Roxas Blvd., Pasay City
Chairperson-Appropriation Committee
Basement, North Wing Bldg,,
House of Representatives, Quezon City
Secretary of the Department of the Budget and Management
G/F, DBM Bldg . I, General Solano St.
San Miguel, Manila
Governance Commission for Government-Owned and/or Controlled Corporations
3rd F Citibank Centre, Citibank Plaza,
Paseo de Roxas, Makati City
Presidential Management Staff, Office of the President
10/F PMS Bldg, Arlegui Street,
San Miguel, Manila 1005
The basis of the Qualified Opinion and the details of the foregoing and the other
findings, are discussed in the Independent Auditors Report and in the Observations and
Recommendations portion of the report.
In our transmittal-letter of even date, we requested the General Manager to implement
the Recommendations embodied in the report and to inform this Office of the action(s) taken
thereon by submitting the duly accomplished Agency Action Plan and Status of
Implementation (AAPSI) Form, copy attached, within 60 days upon receipt hereof, pursuant
to Section 88 of R.A. No. 10633, otherwise known as the General Appropriations Act for
FY 2014. We will appreciate any action(s) you may take towards the implementation of the
audit recommendations.
We acknowledge the cooperation extended to the Audit Team by the Officials and
Staff of that Agency, thus facilitating the conduct of Audit and submission of this Report.
RODULFO J. ARIESGA
Director IV
Regional Director
CC:
President of the Republic of the Philippines
Malacanang Palace, Compound J.P. Laurel St.,
San Miguel, Manila
Vice-President
7th Floor, PNB Financial Center,
President Diosdado Macapagal Boulevard
Pasay City
President of the Senate
Rm. 606 & 22 GSIS Bldg., Financial Center,
Roxas Blvd., Pasay City
Speaker of the House of Representatives
Batasang Pambansa Complex,
Batasan Hills, Quezon City
Chairperson-Senate Finance Committee
Rm 517 5/F GSIS Bldg., Financial Center,
Roxas Blvd., Pasay City
Chairperson-Appropriation Committee
Basement, North Wing Bldg,,
House of Representatives, Quezon City
Secretary of the Department of the Budget and Management
G/F, DBM Bldg . I, General Solano St.
San Miguel, Manila
Governance Commission for Government-Owned and/or Controlled Corporations
3rd F Citibank Centre, Citibank Plaza,
Paseo de Roxas, Makati City
Presidential Management Staff, Office of the President
10/F PMS Bldg, Arlegui Street,
San Miguel, Manila 1005
March 2, 2015
MR. RODULFO J. ARIESGA
Director IV
Commission on Audit
Regional Office No. 2
Tuguegarao City
Sir:
In compliance with Section 2, Article IX-D of the Philippine Constitution and
pertinent provisions of Presidential Decree No. 1445, we conducted a financial and
compliance audit on the accounts and operations of the Lal-lo Water District, Lal-lo, Cagayan
for the year ended December 31, 2014. We also conducted a value for money audit in selected
areas.
The audit was conducted to ascertain the propriety of financial transactions,
compliance with prescribed rules and regulations and the determination of the economical,
efficient and effective utilization of resources. It was also made to ascertain the accuracy of
financial records and reports, as well as the fairness of the presentation of the financial
statements.
The report consists of four parts: Part I- Financial Statements, Part II- Observations
and Recommendations, Part III- Status of Implementation of Prior Years Recommendations
and Part IV- Annexes. The observations and recommendations were discussed with
management officials in an exit conference held on February 26, 2015. Management
comments were included in the report, where appropriate.
We rendered a qualified opinion on the fairness of presentation of the financial
statements of the Agency because the accuracy of the Loans Payable, Current Portion of
Long-Term Debt, Interest Payable and Penalty Payable accounts cannot be ascertained due to
the non reconciliation of the balance in the general ledger against the LWUA records,
showing a discrepancy of P
=5,476,837.68, P
=817,459.87, P
=965,969.99 and P
=1,047,486.19,
respectively. Also, the correctness and accuracy of the Accounts Receivable account with a
balance of P
=716,179.47 is unreliable due to the variance between the balances per general
ledger and per customer ledger cards in the amount of P
=13,312.44.
Our audit was conducted in accordance with generally accepted auditing standards and
we believe that it provides reasonable bases for the results of audit.
KATHLEEN C. BAUTISTA-MABAZZA
OIC Supervising Auditor
on the
EXECUTIVE SUMMARY
A. Introduction
The Lal-lo Water District (LWD) was created in early 1990s. However, it did not
attain its normal business operations and was abandoned due to unknown reasons. Later,
in April 2003, thru the initiative of Mayor Florante C. Pascual, together with the Municipal
Council, Lal-lo Water District was formed pursuant to Presidential Decree No. 198, as
amended. The Agencys Mission is to make quality water accessible to every Lalloqueno and its Vision is to promote good health and sanitation through potable water
service. The Agency is categorized as a small water district (Category D) with eight (8)
permanent employees.
A financial and compliance audit was conducted on the accounts and operations of
the Lal-lo Water District for the year ended December 31, 2014. We also conducted a
value for money audit in selected audit areas. The audit consisted of review of operating
procedures, interview of concerned government officials and employees, verification,
reconciliation and analysis of accounts, and such other procedures considered necessary to
ascertain the fairness of presentation of the financial statements and compliance by the
agency to laws, rules and regulations, as well as the determination of the economical,
efficient and effective utilization of agency resources.
B. Financial Highlights
Presented below is the comparative information of the financial condition and
operation of the Lal-lo Water District for CYs 2014 and 2013:
Accounts
Assets
Liabilities
Equity
Income
Expense
Net Loss
2014
= 49,187,068.71
P
74,813,931.40
(25,626,862.69)
7,722,094.52
15,063,168.29
7,341,073.77
2013
= 49,327,917.43
P
66,710,257.34
(17,382,339.91)
7,343,673.42
13,442,637.20
6,098,963.78
Increase/
(Decrease)
= (140,848.72)
P
8,103,674.06
8,244,522.78
378,421.10
1,620,531.09
1,242,109.99
Also presented below is the comparative information of the budget and actual
expenditure of Lal-lo Water District for CYs 2014 and 2013:
2014
Corporate Operating Budget
Actual Expenditure
= 8,617,300.29
P
15,063,168.29
2013
= 6,926,793.86
P
13,442,637.20
Increase/
(Decrease)
1,690,506.43
1,620,531.09
Suspensions
Disallowances
Charges
Total
Current year
Beginning
Balance
NS/ND/NC
NSSDC
=0.00
P
=0.00
P
=0.00
P
0.00
0.00
0.00
0.00
0.00
0.00
=0.00
P
=0.00
P
=0.00
P
Ending
Balance
= 0.00
P
0.00
0.00
= 0.00
P
TABLE OF CONTENTS
1
3
4
6
8
9
10
16
26
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
As discussed in Part II-Observations and Recommendations portion of this report, the
accuracy of the Loans Payable, Current Portion of Long-Term Debt, Interest Payable and
Penalty Payable accounts cannot be ascertained due to the non reconciliation of the balance in
the general ledger with the LWUA records, showing a discrepancy of P
=5,476,837.68,
=817,459.87, P
P
=965,969.99 and P
=1,047,486.19, respectively. Also, the correctness and
accuracy of the Accounts Receivable account amounting to P
=716,179.47 is unreliable due to
the variance between the balances per general ledger and per customer ledger cards in the
amount of P
=13,312.44.
Qualified Opinion
In our opinion, except for the effects on the financial statements of the matters referred to in
the preceding paragraph, the financial statements presents fairly, in all material respects, the
financial position of the Lal-lo Water District as of December 31, 2014 and of its financial
performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards.
COMMISSION ON AUDIT
By:
KATHLEEN C. BAUTISTA-MABAZZA
OIC Supervising Auditor
2013
15,449.12 P
10,000.00
4,124,778.89
13,821.81
10,000.00
4,732,157.88
4,755,979.69
ASSETS
CURRENT ASSETS
Cash (Note 5)
Cash- Collecting Officer
Working Fund
Cash in Bank- Local Currency
Cash in Bank- Foreign Currency
Total
Receivables (Note 6)
Accounts Receivable
Allowance for Doubtful Accounts
Accounts Receivable- Net
Other Receivable
Total
Inventories (Note 7)
Office Supplies Inventory
Chemicals and Filtering Supplies Inventory
Other Inventories
Total
Prepayments, Deposits and Deferred Charges (Note 8)
Guaranty Deposits
Other Prepayments and Deposits
Other Deferred Charges
Total
TOTAL CURRENT ASSETS
4,150,228.01
716,179.47
(45,354.86)
670,824.61
54,511.51
725,336.12
650,804.19
(32,112.60)
618,691.59
34,490.75
653,182.34
685.00
10,891.95
629,717.50
641,294.45
10,045.00
16,500.90
560,872.08
587,417.98
(3,000.00)
27,600.00
24,600.00
5,541,458.58
(3,000.00)
27,600.00
24,600.00
6,021,180.01
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT (Note 9)
Land and Other Improvements
Land
Land Improvements
Accumulated Depreciation- Land Improvements
Total
Plant, Buildings and Structures
Plant (UPIS)
Accumulated Depreciation- Plant
Buildings and Other Structures
Accumulated Depreciation- Buildings and Other Structures
Total
Equipment and Machinery
Office Equipment
Accumulated Depreciation- Office Equipment
Land Transport Equipment
Accumulated Depreciation Land Transport Equipment
Other Machinery and Equipment
Accumulated Depreciaton- Other Machinery and Equipment
Total
456,000.00
126,890.00
582,890.00
456,000.00
456,000.00
37,274,057.50
(6,685,132.10)
4,435,075.83
(463,194.63)
34,560,806.60
35,641,486.74
(5,698,931.72)
1,949,493.11
(363,725.04)
31,528,323.09
225,576.35
(184,473.23)
114,550.00
(41,416.81)
6,379,432.93
(3,138,788.28)
3,354,880.96
208,976.35
(158,356.16)
114,550.00
(28,337.88)
6,643,806.82
(2,659,165.58)
4,121,473.55
89,933.20
89,933.20
38,608,578.52
1,115,285.77
2,167,520.72
3,282,806.49
39,414,413.95
38,000.00
4,999,031.61
5,037,031.61
49,187,068.71 P
3,892,323.47
3,892,323.47
49,327,917.43
63,983.50
(43,915.74)
20,067.76
63,983.50
(38,172.68)
25,810.82
29,750.00 P
29,750.00
29,605.25 P
46,460.91
76,066.16
26,609.99
41,592.66
68,202.65
521.06
472,098.00
472,619.06
Other Payables
Due to Officers and Employees
Other Payables
Total
Loans/ Lease Payable
Current Portion of Long-term Debt
Interest Payable
Loan Penalty Payable
Lease Payable
Total
5,426,943.14
18,374,765.49
12,739,278.68
36,540,987.31
4,017,065.14
15,189,789.49
7,384,076.12
26,590,930.75
11,572.91
11,572.91
13,071.86
13,071.86
36,658,376.38
27,144,824.32
38,155,555.02
38,155,555.02
74,813,931.40
39,565,433.02
39,565,433.02
66,710,257.34
DEFERRED CREDITS
Deferred Tax Liability (Franchise Tax)
TOTAL DEFERRED CREDITS
EQUITY
Donated Capital (OPIC)
Retained Earnings
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
17,367,227.70
(42,994,090.39)
(25,626,862.69)
49,187,068.71 P
16,698,942.70
(34,081,282.61)
(17,382,339.91)
49,327,917.43
2013
7,465,496.62
1,028,145.79
13,303.68
8,506,946.09
(2,219,350.45)
(1,477,573.31)
(29,270.00)
(3,509,106.68)
(951,664.88)
(8,186,965.32)
319,980.77
(925,732.45)
(925,732.45)
(925,732.45)
(605,751.68)
4,755,979.69
4,150,228.01 P
7,071,186.57
695,389.09
14,727.76
837,256.18
5,000.00
3,000.00
8,626,559.60
(1,664,101.22)
(1,179,561.11)
(32,359.72)
(3,299,769.11)
(566,549.74)
(6,742,340.90)
1,884,218.70
(1,822,196.93)
(1,822,196.93)
(1,822,196.93)
62,021.77
4,693,957.92
4,755,979.69
2014
2013
16,698,942.70
668,285.00
17,367,227.70
15,873,897.61
825,045.09
16,698,942.70
(34,081,282.61)
(1,571,734.01)
(7,341,073.77)
(42,994,090.39)
(26,639,647.98)
(1,342,670.85)
(6,098,963.78)
(34,081,282.61)
(25,626,862.69) P
(17,382,339.91)
7,294,805.06 P
69,080.44
285,258.43
(15,109.01)
2013
7,634,034.92
6,872,953.73
52,973.00
275,607.98
(5,831.62)
(7,701.83)
7,188,001.26
2,308,442.45
95,681.90
94,136.34
60,000.00
60,000.00
40,000.00
185,472.00
148,330.00
40,248.08
90,000.00
181,408.32
9,600.00
19,500.00
7,200.00
43,970.28
3,383,989.37
1,867,477.82
74,499.98
74,499.93
58,000.00
58,000.00
25,000.00
176,256.00
113,649.00
30,628.13
61,000.00
139,712.16
7,500.00
14,812.50
6,000.00
65,784.29
2,772,819.81
41,524.25
43,873.65
102,680.07
59,280.46
42,699.31
2,802.00
17,988.00
3,471.00
80,599.00
23,196.00
176,375.03
53,368.00
43,494.20
40,568.76
125,924.00
96,510.00
40,688.71
2,139.60
11,062.61
16,200.00
2,988.00
61,972.00
12,095.00
172,167.78
59,974.00
22,706.20
1,658,657.04
10,200.00
48,997.00
6,700.00
400.00
1,540.00
13,242.26
986,200.38
99,469.59
26,117.07
13,078.93
479,622.70
5,743.06
4,020,531.00
7,404,520.37
1,451,113.54
900.00
360.00
10,300.00
100.00
36,205.63
1,500.00
13,616.61
945,218.03
58,484.87
24,165.57
13,079.11
513,531.30
7,549.95
2,005.00
3,763,914.27
6,536,734.08
231,373.83
54,573.90
5,000.00
9,573.00
54,831.50
216,455.44
5,200.00
13,232.00
24,750.00
295.00
259,932.44
6,796,666.52
391,334.74
155,672.16
547,006.90
355,352.23
7,759,872.60
(125,837.68)
88,059.60
(37,778.08)
(37,778.08)
(3,184,976.00)
(4,118,319.69)
(7,341,073.77) P
547,006.90
(4,270.00)
(3,337,213.00)
(3,304,487.68)
(6,098,963.78)
The Lal-lo Water District (LWD) was created in early 1990s. However, it did not
attain its normal business operations and was abandoned due to unknown reasons.
Later, in April 2003, thru the initiative of Mayor Florante C. Pascual, together with
the Municipal Council, Lal-lo Water District was formed pursuant to Presidential
Decree No. 198, as amended.
1.2
1.3
The programs and expansion were made and carried out by the Lal-lo Water District
Board of Directors and management, in partnership with LWUA, so that water,
which is an essential part of life, reaches the taps of all if not majority of the people
in the service area of the municipality.
1.4 The Agency is categorized as a small water district (Category D). The Lal-lo Water
District is managed through policies formulated by its Board of Directors, in
accordance with the regulation imposed by the Local Water Utilities Administration,
National Government Agencies and other regulatory and oversight bodies.
2. Basis of Financial Statements
2.1
3.2
3.3
3.4
Property, Plant and Equipment (PPE) Property, Plant and Equipment are
recorded at historical cost including installation, survey services, freight and other
incidental expenses incurred in the acquisition less accumulated depreciation.
Construction in progress account is used for all capital expenditures relating to the
implementation of a project and shall be closed to the proper account upon project
completion.
3.5
5. Cash
5.1 This account is composed of the following:
Accounts
Cash on Hand
Working Fund- District
Working Fund- Project
Cash in Bank (LBP-LWUA)
Cash in Bank (PNB, Bank Reserve)
Cash in Bank (Coop. Bank of Cagayan)
Cash in Bank (LBP-District)
Cash in Bank (PNB, Terminal Pay)
Cash in Bank (PNB, Loan Amortization)
Total
2014
P 15,449.12
5,000.00
5,000.00
29,469.53
503,368.86
76,465.73
320,099.02
540,878.14
2,654,497.61
P 4,150,228.01
2013
P
13,821.81
5,000.00
5,000.00
955,201.98
770,841.45
120,818.61
273,057.44
360,430.13
2,251,808.27
P 4,755,979.69
11
5.4. Cash in Bank (LBP-LWUA) represents proceeds of loans from Local Water Utilities
Administration.
5.5. Cash in Bank (PNB-Bank Reserve) represents the 3% bank reserve of the District for
future projects.
5.6. Cash in Bank (Cooperative Bank of Cagayan) represents daily collection depository
account of the District.
5.7. Cash in Bank (LBP District) represents funds for the normal operations of the
District.
5.8. Cash in Bank (PNB Terminal Pay) represents amount set aside for payment of
terminal leave benefits of the employees of the District.
5.9. Cash in Bank (PNB-Loan Amortization) represents amount set aside for payment of
loan to LWUA.
6. Receivables, net
6.1. This account consists of the following:
Accounts
Accounts Receivable
Other Receivables
Total
Allowance for Doubtful Accounts
Receivables, net
2014
P 716,179.47
54,511.51
770,690.98
(45,354.86)
P 725,336.12
2013
P 650,804.19
34,490.75
685,294.94
(32,112.60)
P 653,182.34
6.2 Accounts Receivable represents amount due from customers for water sales.
6.3 Other Receivables represents material service connection fees due from customers.
7. Inventories
7.1
Accounts
Office Supplies Inventory
Chemicals and Filtering Supplies Inventory
Other Inventories
Total
7.2
2014
685.00
10,891.95
629,717.50
P 641,294.45
P
2013
P 10,045.00
16,500.90
560,872.08
P 587,417.98
Other Inventories account consists of pipes, water meters and other materials used
for service connections.
12
Land
Land Improvements
Plant
Building and Other Structures
Office Equipment
Land Transport Equipment
Other Machinery and Equipment
Furniture and Fixture
Sub-total
Less: Accumulated Depreciation
Property, Plant & Equipment, Net
Add: Construction Work in Progress-Plant
Construction Work in Progress-Buildings
and Other Structures
Total Property, Plant & Equipment, Net
9.2
2014
P 456,000.00
126,890.00
37,274,057.50
4,435,075.83
225,576.35
114,550.00
6,379,432.93
63,983.50
49,075,566.11
10,556,920.79
38,518,645.32
0.00
89,933.20
2013
P 456,000.00
0.00
35,641,486.74
1,949,493.11
208,976.35
114,550.00
6,643,806.82
63,983.50
45,078,296.52
8,946,689.06
36,131,607.46
1,115,285.77
2,167,520.72
P38,608,578.52
P39,414,413.95
2014
P 6,685,132.10
463,194.63
184,473.23
41,416.81
3,138,788.28
43,915.74
P10,556,920.79
Plant
Building and Other Structures
Office Equipment
Land Transport Equipment
Other Machinery and Equipment
Furniture and Fixture
Total
13
2013
P 5,698,931.72
363,725.04
158,356.16
28,337.88
2,659,165.58
38,172.68
P 8,946,689.06
2014
38,000.00
4,999,031.61
P 5,037,031.61
Intangible Assets
Other Assets
Total
2013
P
0.00
3,892,323.47
P 3,892,323.47
Accounts Payable
Interest Payable
Due to National Government Agencies
Due to GOCC (GSIS Payable)
Due to GOCC (GSIS Loans Payable)
Due to GOCC (HDMF Payable)
Due to GOCC (HDMF Loans Payable)
Due to GOCC (Philhealth Payable)
Current Portion on Long Term Debt-2014
Current Portion on Long Term Debt-prior years
Loan Penalty Payable
Deferred Tax Liability (Franchise Tax)
Other Payables
Total
11.2
2014
P
29,750.00
18,374,765.49
29,605.25
29,503.39
7,852.78
3,200.00
2,654.76
3,249.98
1,409,878.00
4,017,065.14
12,739,278.68
11,572.91
0.00
P36,658,376.38
2013
P
0.00
15,189,789.49
26,609.99
21,741.29
10,256.45
2,700.00
3,819.94
3,074.98
1,173,947.00
2,843,118.14
7,384,076.12
13,071.86
472,619.06
P27,144,824.32
Other Payables account was reclassified to Accounts Payable which consists of the
following:
Particulars
Materials received on account
Due to officers and employees (refunds BIR)
Total
2014
P 29,750.00
0.00
P 29,750.00
2013
P 472,098.00
521.06
P472,619.06
11.3 Due to National Government Agencies represents taxes withheld from payroll and
from purchases of goods and services.
14
2014
2013
P 39,565,433.02 P 40,320,921.93
(1,409,878.00) ( 1,173,947.00)
418,458.09
P38,155,555.02 P39,565,433.02
15
The Loans Payable, Current Portion of Long-Term Debt, Interest Payable and
Penalty Payable accounts cannot be ascertained due to the non reconciliation of
the balance in the general ledger against LWUA records, showing a
discrepancy of P
=5,476,837.68, P
=817,459.87, P
= 965,969.99 and P
= 1,047,486.19,
respectively.
1.1
1.2.
1.3.
Analysis of the Loans Payable account showed that the balance in the general
ledger of the Agency did not tally with the balance as recorded in the LWUA
books of accounts. The balance of the said account in the books of the
Agency totaled to P
=38,155,555.02, while Local Water Utilities
Administration (LWUA) records totaled to P
=32,678,717.34, hence showing
a discrepancy of P
=5,476,837.68.
1.4.
16
Difference
= 5,426,943.13
P
= 6,244,403.00
P
= (817,459.87)
P
Interest Payable
18,374,765.49
19,340,735.48
(965,969.99)
12,739,278.68
13,786,764.87
(1,047,486.19)
Total
=36,540,987.3
P
=39,371,903.35
P
=(2,830,916.05)
P
Account
Current Portion of
LongTerm Debt
Balance per
General Ledger
1.5.
Hence, the validity of the Loans Payable, Current Portion of Long Term
Debt, Interest Payable and Loan Penalty Payable recorded in the books of
accounts cannot be ascertained, thereby affecting the fair presentation in the
financial statements.
1.6.
1.7.
The land donated by the LGU of Lal-lo, where the plant and building and other
structures of the Agency are erected amounting to P5,524,649.99 and
P504,838.08, respectively, are not yet registered in the name of the Agency.
2.1.
2.2.
Item V.4 of COA Circular 89-296 dated January 27, 1989 states that:
Where the property or assets involved are no longer serviceable
or needed by the department, agency, corporation or local
government unit concerned, they may be transferred to other
government entities/agencies without cost or at an appraised value
upon authority of the head or governing body of the said agency or
17
Verification of records disclosed that the land where the Agencys plant and
building and other structures are erected amounting to P5,524,649.99 and
P504,838.08, respectively, were not yet titled in the name of the Agency. No
Transfer Certificates Title (TCTs) or any other documents showing proof of
ownership were presented during the audit.
2.4.
Management alleged that there are Deeds of Donation of the land where the
office building and other structures are located. However, management failed
to produce these Deeds, thereby belying their existence.
2.5.
2.6.
2.7.
Unreconciled balances between the General Ledger and Customer Ledger Cards
3.
3.2. Subsidiary ledgers show in detail the same information in summary by the
controlling account hence, the balance of the controlling account at the end of
the posting period should be equal to the total of the balances of the accounts
in the subsidiary ledger.
18
3.3.
P716,179.47
=
729,491.91
= 13,312.44
P
3.4.
3.5.
3.6.
19
b.
c.
4.3.
4.4.
Moreover, said Circular requires that the good governance conditions set by
the IATF for FY 2013 be satisfied 100%. However, inquiry with the
management revealed that the Agency does not have the Agency
Transparency Seal and failed to post all invitations to bid and awarded
contracts in the Philippine Government Electronic Procurement System for
CY 2013.
4.5.
Further, the payment of PBB was supported with Board of Resolution No.
02, Series of 2014, Approving the Adoption of the Local Water Utilities
Administration (LWUA) Established Guidelines in the Implementation and
Granting of PBB for Local Water Districts Directors and Officers and
Employees Circulated in Year 2012 and for the Purpose of Releasing the Lallo Water Districts 2013 PBB, which is contrary to COA Circular 2012-003
dated October 29, 2012.
4.6.
In view of the noted deficiencies, the Agency failed to meet all the
requirements stated under the IATF Memorandum Circular No 2013-01
dated August 2, 2013, thus rendering the Agency ineligible for the PBB.
20
4.7.
4.8.
4.9.
Purchases of common-use supplies and supplies and materials were not made
through the Procurement Service (PS) and the Philippine Government
Electronic Procurement System (PhilGEPS), as required under Republic Act
(RA) No. 9184 and Administrative Order (AO) No. 17 of the President.
5.1.
The Procurement Service (PS) by virtue of Letter of Instruction No. 755 and
Executive Order No. 359, is tasked with the implementation of a
government-wide procurement system for common-use office supplies,
materials, and equipment for all government agencies.
Mandatory
compliance by all government agencies was also required in RA 9184 which
set forth the state policy of the government that the procurement process of
government supplies, materials and equipment shall be done in the most
transparent and competitive manner.
5.2.
5.3.
DBM Circular Letter No. 2013-14 dated November 29, 2013 was issued
reiterating the Submission of Annual Procurement Plan for Common-Use
Supplies and Equipment (APP-CSE). The Circular Letter, in support of the
governments policy for transparency in government transactions and
efficiency in procurement processes, directs all government agencies to:
21
Review of the Agencys procurement process disclosed that the Agency did
not procure common use supplies and materials from the Procurement
Service of the Department of Budget and Management.
5.5.
5.6.
5.7.
The Agency failed to withhold and remit the tax on the Board of Directors
honorarium amounting to P
=18,547.20, which is contrary to Revenue
Memorandum Circular No. 34-2008 dated April 15, 2008, thus depriving the
national government of tax collection.
6.1.
Revenue Memorandum Circular No. 34-2008 dated April 15, 2008 which
provides tax treatment of directors fees for income tax and business tax
purposes ,states among others that:
The fees received by the director who is not an employee of the
payor corporation are subject to ten (10%) creditable withholding
tax if his gross income for the current year does not exceed
=720,000.00 or fifiteen percent (15%) if his gross income exceeds
P
=720,000.00pursuant to Revenue Regulations No. 30-2003.
P
6.2.
22
6.3.
6.4.
6.5.
The Agency failed to appropriate five percent (5%) of its corporate operating
budget for GAD purposes, which is not in compliance with Section 33 of the
General Provisions of the General Appropriations Act (GAA).
8.1.
8.2.
Verification disclosed that the Agency failed to prepare GAD Plan and
appropriate five percent (5%) of its annual budget for CY 2014 for GAD
purposes, which is not in compliance with the GAA Provisions stated above,
thereby compromising their capability to effectively address gender issues
and promote womens empowerment.
23
8.3.
8.4.
Insurable properties of the Agency were not covered with appropriate property
insurance with the Government Service Insurance System (GSIS) as required in
COA Circular No. 92-390 dated November 17, 1992.
9.1.
Item 1.1.2 of COA Circular No. 92-390 dated November 17, 1992 provides
that:
xxx All insurable assets and properties of the government should be
adequately covered/insured with the General Insurance Fund of the
GSIS xxx.
9.2.
9.3.
All insurable properties of the Agency must be covered with the appropriate
property insurance with the Government Service Insurance System (GSIS) in
order to indemnify or compensate the Agency for any damage to, or loss of,
its properties due to fire, earthquake, storm, or other casualty.
9.4.
9.5.
9.6.
24
10.2.
Inquiry with Management disclosed that no plans and projects were designed
to address disaster risk reduction, as well as the mitigation of the adverse
effect of climate change in the environment for CY 2014, contrary to the
provisions of Sections 38 and 39 of the GAA.
10.3.
During the exit conference, Management did not comment on the audit
observation, however they agreed to comply with the recommendation.
10.4.
25
The Agency availed loan from the Local Water Utilities Administration
(LWUA) from its Non LWUA Initiated Funds amounting to P
=25M on a 50%
loan and 50% grant basis on December 2009 for the improvement of its
water supply system.
13.2.
The project includes construction of new wells as water sources for Lal-lo
Water District with the assistance of LWUA.
13.3.
13.4.
During the exit conference, the Management commented that they relied the
study and test conducted by LWUA on the possible sources of water, hence
they constructed the two wells believing that they could come up with
productive wells as sources of water. Nevertheless, they committed to be
more prudent on the implementation of their future projects.
13.5.
26
2%
14.2.
The revenue of the Agency is mainly sourced from water sales from its water
connections from residential/domestic, governments, commercial and
industrial concessionaires in the locality.
14.3.
Records disclosed that there was a total water production for the year of
302,359 cubic meters, of which only 262,901 cubic meters were
billed/accounted, while 39,958 cubic meters were unbilled/unaccounted.
14.4.
The 39,958 cubic meters represent the Non-Revenue Water (NRW), wherein
the Agency could have generated an estimated sales revenue of
P
=895,59.20 had the unaccounted 39,958 cubic meters been sold at
224 per 10 cu. meters, the minimum rate for residential/government
category.
14.5.
Though, the Non-Revenue Water for CY2014 is within the allowable 20%
prescribed rate by LWUA. The unaccounted water of 39,958 cubic meters or
an estimated sales revenue of P
=895,59.20, is lost revenue which affects the
financial viability and operational efficiency of the Agency.
14.6.
The lost revenue could have been used to finance more projects for the
maintenance and improvement of water system of the Agency.
14.7.
During the exit conference, Management commented that the Non Revenue
Water (NRW) of the Agency is within the allowable rate prescribed by
LWUA. However, they agreed to implement the recommendation.
14.8.
27
Suspensions
Disallowances
Charges
Total
Current year
Beginning
Balance
NS/ND/NC
NSSDC
=0.00
P
=0.00
P
=0.00
P
0.00
0.00
0.00
0.00
0.00
0.00
=0.00
P
=0.00
P
=0.00
P
28
Ending
Balance
= 0.00
P
0.00
0.00
= 0.00
P
20
Audit Observation
/Recommendation
Ref.
Management
Action
Status of
Implementation
/Reasons for
Partial/Non
Implementation
Not
Implemented
Reiterated in
Part II, Finding
No. 1 of this
report.
Management
coordinated with
the
Local
Government Unit.
However, there
are differences in
the
technical
description of the
lots
hence,
management
failed to register
the lots in the
Registry
of
Deeds.
Not
Implemented
Reiterated in
Part II, Finding
No. 2 of this
report.
Audit Observation
/Recommendation
Ref.
Management
Action
Management
requested the
Register of Deeds
to make
annotations/
encumbrances on
the mother titles
of the lots, since
these are not yet
subdivided.
Status of
Implementation
/Reasons for
Partial/Non
Implementation
Partially
Implemented
Not
Implemented
Reiterated in
Part II, Finding
No. 5 of this
report.
Management
reclassified the
Other Payables
account to
Accounts
Fully
Implemented
Audit Observation
/Recommendation
Ref.
Management
Action
Status of
Implementation
/Reasons for
Partial/Non
Implementation
Payable.
31
Not
Implemented
Reiterated in
Part II, Finding
No. 8 of this
report
Date
Check Voucher
No.
Board of Directors
2014-03-03
2014-03-03
2014-03-03
2014-03-03
2014-03-03
2014-03-03
Permanent Employees
2014-03-03
2014-03-03
2014-03-03
2014-03-03
2014-03-03
2014-03-03
2014-03-03
2014-03-03
TOTAL
Payee
2014-03-01
2014-03-01
2014-03-01
2014-03-01
2014-03-01
2014-03-01
Teodoro R. Collera
Reynol P. Balatico
Eduardito C. Israel
Angeles Siriban
Ritalinda Q. Manuel
Romeo Diaz
2014-03-02
2014-03-02
2014-03-02
2014-03-02
2014-03-02
2014-03-02
2014-03-02
2014-03-02
Prepared by:
Reviewed by:
ELFINA M. CAMARAO
State Auditor II
Audit Team Member
GERALDIN B. ANIAG
State Auditor III
OIC-Audit Team Leader
Annex A
Page 1 of 1
Amount
19,008.00
15,840.00
14,400.00
15,840.00
15,840.00
7,200.00
25,000.00
13,500.00
13,500.00
13,500.00
13,500.00
13,500.00
13,500.00
13,500.00
207,628.00