SultanKudaratProvince AAR2017

Republic of the Philippines
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
ANNUAL AUDIT REPORT
on the
PROVINCE OF SULTAN KUDARAT
For the Year Ended December 31, 2017

EXECUTIVE SUMMARY
Auditee’s Information
The Province of Sultan Kudarat along with the Provinces of North Cotabato and
Maguindanao was created on November 22, 1973 by virtue of Presidential Decree No. 341
signed by the late President Ferdinand E. Marcos. It is compose of eleven (11) municipalities
and one (1) component city, namely: Bagumbayan, Columbio, Esperanza, Isulan, Kalamansig,
Lebak, Lutayan, Lambayong, Palimbang, President Quirino, Senator Ninoy Aquino and
Tacurong City. As of 2017, the Province has a total of 255 barangays.
Pursuant to Republic Act 7160 known as Local Government Code of 1991, the Sultan
Kudarat Provincial Government (SKPG) like other Local Government Units enjoys total
independence in managing, deciding and planning its own administrative, fiscal and
development affairs in conformity with the national government’s thrusts for sustainable social
and economic growth. The Province of Sultan Kudarat is envisioned to be a model for
academic excellence, public health and safety, environmental preservation and good
governance, providing equal opportunity for all its constituents in a peaceful, friendly
atmosphere through a God-centered leadership of the incumbent elected officials. To date, the
Province boasts the potentials on agri-based development, manufacturing, infrastructure and
support facilities, eco-tourism, and mining.
Audit Scope and Methodology
Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43 of

the Government Auditing Code of the Philippines (P.D. No. 1445), we have audited the
accounts and operations of the District covering the period January 1 to December 31, 2017.
The audit was conducted in accordance with the generally accepted state auditing
standards, and accordingly included such tests of the accounting records and other related
documents and evaluation of the design and operating effectiveness of the controls and such
other procedures, as necessary, in the audit. The evaluation was performed to (a) verify the
level of assurance that may be placed on management’s assertions on the financial statements;
(b) recommend agency improvement opportunities; and (c) determine the extent of
implementation of prior years’ audit recommendations.
Deficiencies observed in the course of the audit were earlier communicated through the
issuance of the Audit Observation Memoranda (AOMs) and discussed with concerned officials
and personnel of the Province whose comments were incorporated in this report.
Financial Highlights
Figure No. 1 presents the financial position of SKPG from 2015 to 2017. Figure Nos.
2 and 3, on the other hand, project the compositions of SKPG’s assets and liabilities for 2017,
respectively. As can be gleaned, all the elements of SKPG’s financial position demonstrate an
increasing tread. As also shown, property, the plant and equipment of SKPG comprises 62%
of its assets for 2017. While the inter-agency payables account for 62% of SKPG’s liabilities
for 2017.
Figure No. 1: SKPG’s Financial Position for 2015 to 2017
Figure No. 2: Composition of SKPG’s Assets for 2017
Figure No. 3: Composition of SKPG’s Liabilities for 2017
Further, Figure No. 4 provides a graphical view of SKPG’s financial performance.

Despite a slight dip, SKPG’s financial performance is still highly favorable. Figure Nos. 5 and
6 show the compositions of SKPG’s operating revenues and expenses for 2017, respectively.
As presented, 96% of SKPG’s operating revenues for 2017 were from its share in the Internal
Revenue Collections (IRA). As to its operating expenses, maintenance and other operating
expenses accounted for the majority portion at 61%. This is followed by expenses for personnel
services at 36%.
Figure No. 4: SKPG’s Financial Performance for 2015 to 2017
Figure No. 5: Composition of SKPG’s Operating Revenues for 2017
Figure No. 6: Composition of SKPG’s Operating Expenses for 2017

Figure No. 7 below showcases the information about the cash flows of SKPG. Despite
the financing activities of SKPG, cash flows from operating activities still pose an increasing
trend resulting to favorable net cash flows.
Figure No. 7: SKPG’s Cash Flow for 2015 to 2017
Opinion of the Auditor
The Auditor rendered an unmodified opinion on the fairness of the presentation of the
financial statements.
Summary of Significant Observations and Recommendations
The significant observations and recommendations are the following:
1. SKPG needs to realign its existing articulated direction statements to conform to the
envisioned development thrusts of the national government and the result-based
management framework.
We recommended that Management, with PPDO and Office of the Administrator as leads,
ensure that its direction statements are aligned with the envisioned thrusts of the national
government and in conformance with the result-based management framework to enable a
more effective and efficient management of results through an immediate revisit of
committed personnel; and capacity building and establishment of formalized processes for
the said purpose moving forward.
2. SKPG’s current level of governance requires the improvement of its risk management
practices.
To fully achieve the benefits of risk management, we recommended that Management, with
PPDO and Office of the Administrator as leads, improve its risk management practices
through appropriate contextualization, formalized documentation, and involvement of
offices and other stakeholders.
3. SKPG needs to further enhance its current planning practices to ensure inclusive,
responsive and sustainable crafting of development initiatives.
We recommended that Management, with PPDO and Office of the Administrator as leads,
enhance its current planning practices to ensure the crafting of inclusive, responsive and
sustainable development initiatives through the establishment of mechanisms that warrants
availability of relevant and up-to-date data and information; properly functioning
structured processes; strengthened system, council or board of committed individuals; and
the integration of RBM.
4. SKPG has to institute mechanisms to reinforce delivery of responsibilities and

strengthen its monitoring over the implementation of its development initiatives.
We recommended that Management, With PPDO, PEO and Office of the Administrator as
leads, ensure, as far as practicable, an optimum level of delivery of development initiatives
through institution of mechanisms that exacts the performance of responsibilities and
enhances the periodic monitoring of implementation.
5. SKPG has to improve its current reporting practices to reinforce accountability over
representations.
We recommended that Management, with Office of the Administrator, PAO, PBO and
PTO as leads, enhance the accountability over representations by improving its current
reporting practices through adoption of mechanisms that, as far as practicable, will address
the issues on timeliness and reliability.
Status of Suspensions, Disallowances and Charges
There were P60,800.00 in Suspensions as of December 31, 2017.
Status of Implementation of Prior Years’ Audit Recommendations
The table below presents the evaluation of Management’s implementation of prior

years’ audit recommendations from CY 2007 to CY 2016.
No. of Status of Implementation as of December 31, 2017

Year Observations and Fully Partially Not
Recommendations Ongoing
Implemented Implemented Implemented
2016 9 2 7 0 0
2015 7 2 5 0 0
2014 13 5 8 0 0
2013 9 3 6 0 0
2012 6 2 4 0 0
2011 7 6 1 0 0
2010 7 6 1 0 0
2009 5 4 1 0 0
2008 5 3 2 0 0
2007 7 5 2 0 0
TABLE OF CONTENTS
Page
PART I:
AUDITED FINANCIAL STATEMENTS
Independent Auditor’s Report 1
Statement of Management’s Responsibility for the Financial Statements 3
Audited Financial Statements
Consolidated Statement of Financial Position

as of December 31, 2017 (With Comparative Figures for 2016) 4
Consolidated Statement of Financial Performance

for the period ending December 31, 2017 (With Comparative Figures for 2016) 5
Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Net Assets/Equity

Statement of Comparison of Budget and Actual Amounts

for the period ending December 31, 2017 8
Notes to Financial Statements 10
PART II:
AUDIT OBSERVATIONS AND RECOMMENDATIONS 41
PART III:
STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT
RECOMMENDATIONS 52
PART I:
AUDITED FINANCIAL STATEMENTS
COMMISSION ON AUDIT
Regional Office No. XII
LGS-B (Sultan Kudarat Province and Cotabato City)
OFFICE OF THE SUPERVISING AUDITOR
INDEPENDENT AUDITOR’S REPORT
HON. SULTAN PAX S. MANGUDADATU, AL HAJ, Ph.D.

Provincial Governor
Sultan Kudarat Provincial Government
Provincial Capitol, Isulan, Sultan Kudarat
In compliance with Section 2, Article IX-D of the Philippine Constitution and pertinent
provisions of Presidential Decree No. 1445, we have audited the accompanying financial
statements of Sultan Kudarat Provincial Government as at December 31, 2017, which comprise
the statement of financial position, statement of financial performance, statement of cash flows,
statement of changes in net assets/equity, and statement of comparison of budget and actual
amounts for the year then ended, and a summary of significant accounting policies and other
explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with Philippine Public Sector Accounting Standards (PPSAS). This
responsibility includes designing, implementing and maintaining internal controls relevant to
the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Philippine Public Sector Standards on Auditing.
Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
1
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Auditor’s Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial
position of Sultan Kudarat Provincial Government as at December 31, 2017, and its financial
performance and its cash flows for the year then ended in accordance with Philippine Public
Sector Accounting Standards.
COMMISSION ON AUDIT
By:
JOHANNA P. SAHISA
State Auditor IV
OIC - Supervising Auditor
June 29, 2018
2
3
Consolidated Statement of Financial Position
As of December 31, 2017
(With Comparative Figures for CY 2016)
Particulars Notes 2017 2016
ASSETS
Current Assets
Cash and Cash Equivalents 4 Php 1,227,420,716.44 Php 640,284,380.87
Investments 5 16,528,959.76 16,528,959.76
Receivables 6 48,239,616.68 52,503,219.89
Inventories 7 1,387,056.91 1,272,476.41
Prepayments and Deferred Charges 8 17,828,538.88 2,385,638.64
Total Current Assets Php 1,311,404,888.67 Php 712,974,675.57
Non-Current Assets
Property, Plant and Equipment, net 9 Php 2,182,522,062.15 Php 1,724,879,512.87
Biological Assets 10 18,258,000.00 18,258,000.00
Total Non-Current Assets Php 2,200,780,062.15 Php 1,743,137,512.87
TOTAL ASSETS Php 3,512,184,950.82 Php 2,456,112,188.44
LIABILITIES AND EQUITY

Liabilities
Current Liabilities
Financial Liabilities 11 Php 286,562,194.01 Php 306,044,523.18
Inter-Agency Payables 12 545,132,754.88 112,417,880.30
Intra-Agency Payables 13 12,104,215.92 11,951,687.96
Trust Liabilities 14 15,702,029.01 1,515,281.14
Deferred Credits/Unearned Income 15 1,014,722.46 921,374.80
Total Current Liabilities Php 860,515,916.28 Php 432,850,747.38
Non-Current Liabilities
Other Payables 16 Php 24,191,306.71 Php 27,078,013.81
Total Non-Current Liabilities Php 24,191,306.71 Php 27,078,013.81
Total Liabilities Php 884,707,222.99 Php 459,928,761.19
Net Assets/Equity 17 Php 2,627,477,727.83 Php 1,996,183,427.25
TOTAL LIABILITIES and NET ASSETS/EQUITY Php 3,512,184,950.82 Php 2,456,112,188.44
(See accompanying Notes to Financial Statements)
4
Consolidated Statement of Financial Performance
For the period ending December 31, 2017
REVENUE
Tax Revenue 18 Php 42,137,656.82 Php 34,914,569.82
Share from Internal Revenue Collections (IRA) 19 Php 1,375,715,601.00 Php 1,216,323,568.00
Other Share from National Taxes 20 Php 248,652.59 Php 461,687.90
Service and Business Income 21 Php 9,132,609.41 Php 9,376,272.68
Shares, Grants and Donations 22 152,032.32 188,085.45
Total Current Operating Revenue Php 1,427,386,552.14 Php 1,261,264,183.85
LESS: CURRENT OPERATING EXPENSES

Personnel Services 23 Php 421,210,992.43 Php 371,994,475.53
Maintenance and Other Operating Expenses 24 730,403,707.12 597,452,002.68
Financial Expenses 25 13,641,086.00 15,550,887.90
Non-Cash Expenses 26 24,751,331.92 23,876,241.78
Total Current Operating Expenses Php 1,190,007,117.47 Php 1,008,873,607.89
SURPLUS (DEFICIT) FROM CURRENT OPERATIONS Php 237,379,434.67 Php 252,390,575.96
Add (Deduct):
Transfers, Assistance and Subsidy
Transfers, Assistance and Subsidy to Other LGUs/Funds 27 Php (40,677,074.71) Php (48,498,218.45)
Net Financial Assistance/Subsidy Php (40,677,074.71) Php (48,498,218.45)
Other Non-Operating Income (Losses)

Miscellaneous Income 28 Php 52,000.00 Php 208,849.44
Net Other Non-Operating Income (Losses) Php 52,000.00 Php 208,849.44
SURPLUS (DEFICIT) FOR THE PERIOD Php 196,754,359.96 Php 204,101,206.95
5
Consolidated Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES

Total Cash Inflows from Operating Activities 29 Php 3,306,266,927.92 Php 2,544,460,322.90
Total Cash Outflows from Operating Activities 30 (2,664,402,304.21) (2,266,147,846.75)
Net Cash Provided (Used) in Operating Activities Php 641,864,623.71 Php 278,312,476.15
CASH FLOWS FROM INVESTING ACTIVITIES

Total Cash Inflows from Investing Activities Php - Php -
Total Cash Outflows from Investing Activities - -
Net Cash Provided (Used) in Investing Activities Php - Php -
CASH FLOWS FROM FINANCING ACTIVITIES

Total Cash Inflows from Financing Activities Php - Php -
Total Cash Outflows from Financing Activities 31 (54,728,288.14) (51,513,439.92)
Net Cash Provided (Used) in Financing Activities Php (54,728,288.14) Php (51,513,439.92)
NET CASH PROVIDED (USED) Php 587,136,335.57 Php 226,799,036.23

Add: Cash and Cash Equivalents, Beginning Balance 640,284,380.87 413,485,344.64
CASH AND CASH EQUIVALENTS, ENDING BALANCE Php 1,227,420,716.44 Php 640,284,380.87
6
Consolidated Statement of Changes in Net Assets/Equity
NET ASSETS/EQUITY, Beginning Balance, Jan. 1, 2017 Php 1,996,183,427.25 Php 1,790,905,488.56
Add (Deduct):
Change in Accounting Policy - -
Prior Period Errors 8,430,183.12 1,176,731.74
Restated Balance Php 2,004,613,610.37 Php 1,792,082,220.30
Add (Deduct): Changes in Net Assets/Equity during the Year

Adjustment recognized directly in net assets/equity 17 Php 426,109,757.50 Php -
Surpuls (Deficit) for the period 196,754,359.96 204,101,206.95
Total Changes during the Year Php 622,864,117.46 Php 204,101,206.95
Government Equity, Ending Balance Php 2,627,477,727.83 Php 1,996,183,427.25
7
Statement of Comparison of Budget and Actual Amounts
Difference of Final
Budgeted Amounts
Particulars Actual Amounts Budget and Actual
Orginal Final Amounts
Revenue and Receipts
A. Local Sources
1. Tax Revenue
a. Tax Revenue- Property Php 16,500,000.00 Php 16,500,000.00 Php 15,589,376.19 Php 910,623.81
b. Tax Revenue- Goods and Services - - - -
c. Other Local Taxes 5,245,000.00 5,245,000.00 6,173,609.94 (928,609.94)
Total Tax Revenue Php 21,745,000.00 Php 21,745,000.00 Php 21,762,986.13 Php (17,986.13)
2. Non-Tax Revenue
a. Service Income Php - Php - Php - Php -
b. Business Income - - - -
c. Other Income Receipts 7,755,000.00 17,612,600.00 9,163,980.47 8,448,619.53
Total Non-Tax Revenue Php 7,755,000.00 Php 17,612,600.00 Php 9,163,980.47 Php 8,448,619.53
Total Local Sources Php 29,500,000.00 Php 39,357,600.00 Php 30,926,966.60 Php 8,430,633.40
B. External Sources
1. Share from the National Internal revenue (IRA) Php 1,375,715,601.00 Php 1,375,715,601.00 Php 1,375,715,601.00 Php -
2. Share from GOCCs Php - Php - Php 152,032.32 Php (152,032.32)
3. Other Shares from National Tax Collections
a. Share from Ecozone Php - Php - Php - Php -
b. Share from EVAT - - - -
c. Share from National Wealth 500,000.00 500,000.00 248,652.59 251,347.41
d. Share from Tobacco Excise Tax - - - -
Total Other Shares from National Tax Collections Php 500,000.00 Php 500,000.00 Php 248,652.59 Php 251,347.41
4. Other Receipts
a. Grants and Donations Php - Php - Php - Php -
b. Other Subsidy Income - - - -
Total Other Receipts Php - Php - Php - Php -
5. Inter-Local Transfer Php - Php - Php - Php -
6. Capital/Investment Receipts Php - Php - Php - Php -
a. Sale of Capital Assets Php - Php - Php - Php -
b. Sale of Investments - - - -
c. Proceeds from Collections of Loans Receivable - - - -
Total Capital/Investment Receipts Php - Php - Php - Php -
Total External Sources Php 1,376,215,601.00 Php 1,376,215,601.00 Php 1,376,116,285.91 Php 99,315.09
C. Receipts from Borrowings Php - Php - Php - Php -

Total Receipts from Borrowings Php - Php - Php - Php -
Total Revenue and Receipts Php 1,405,715,601.00 Php 1,415,573,201.00 Php 1,407,043,252.51 Php 8,529,948.49
Expenditures
Current Appropriations
General Public Services
Personal Services Php 174,258,941.00 Php 157,141,689.00 Php 147,707,023.22 Php 9,434,665.78
Maintenance and Other Operating Expenses 141,082,637.00 143,133,836.00 125,958,164.72 17,175,671.28
Capital Outlay 24,562,500.00 27,562,500.00 21,280,067.60 6,282,432.40
Total General Public Services Php 339,904,078.00 Php 327,838,025.00 Php 294,945,255.54 Php 32,892,769.46
Education
Personal Services Php - Php - Php - Php -
Maintenance and Other Operating Expenses - - - -
Capital Outlay - - - -
Total Education Php - Php - Php - Php -
Health,Nutrition and Population Control
Capital Outlay 10,235,800.00 10,235,800.00 4,185,800.00 6,050,000.00
Total Health,Nutrition and Population Control Php 219,624,657.00 Php 212,731,866.60 Php 185,818,600.72 Php 26,913,265.88
Labor and Employment
Total Labor and Employment Php - Php - Php - Php -
Housing and Community Development
8
Total Housing and Community Development Php - Php - Php - Php -
Social Services and Social Welfare
Personal Services Php 13,232,237.00 Php 12,366,215.00 Php 11,703,528.63 Php 662,686.37
Maintenance and Other Operating Expenses 16,357,350.00 16,357,350.00 16,224,993.64 132,356.36
Capital Outlay 130,000.00 130,000.00 130,000.00 -
Total Social Services and Social Welfare Php 29,719,587.00 Php 28,853,565.00 Php 28,058,522.27 Php 795,042.73
Economic Services
Capital Outlay 4,915,000.00 5,515,000.00 5,470,000.00 45,000.00
Total Economic Services Php 191,714,344.00 Php 182,908,034.00 Php 177,111,896.93 Php 5,796,137.07
Other Purposes:
Debt Service
Financial Expense Php - Php - Php - Php -
Amortization 120,000,000.00 120,000,000.00 119,994,914.73 5,085.27
Total Debt Service Php 120,000,000.00 Php 120,000,000.00 Php 119,994,914.73 Php 5,085.27
LDRRMF
Maintenance and Other Operating Expenses Php 70,207,531.00 Php 70,180,031.00 Php 63,693,842.27 Php 6,486,188.73
Capital Outlay - 27,500.00 27,500.00 -
Total LDRRMF Php 70,207,531.00 Php 70,207,531.00 Php 63,721,342.27 Php 6,486,188.73
20% Development Fund
Maintenance and Other Operating Expenses Php 152,543,132.90 Php 152,543,132.90 Php 79,609,326.89 Php 72,933,806.01
Capital Outlay 3,300,490.10 3,300,490.10 3,300,490.10 -
Total 20% Development Fund Php 155,843,623.00 Php 155,843,623.00 Php 82,909,816.99 Php 72,933,806.01
Share from National Wealth
Maintenance and Other Operating Expenses Php - Php - Php - Php -
Capital Outlay -
Total Share from National Wealth Php - Php - Php - Php -
Allocation for Senior Citizens and PWD
Maintenance and Other Operating Expenses Php - Php - Php - Php -
Capital Outlay -
Total Allocation for Senior Citizens and PWD Php - Php - Php - Php -
Others
Capital Outlay 565,675.00 565,675.00 565,675.00 -
Total Others Php 278,701,781.00 Php 317,190,556.40 Php 271,329,252.81 Php 45,861,303.59
Total Other Purposes Php 624,752,935.00 Php 663,241,710.40 Php 537,955,326.80 Php 125,286,383.60
Total Current Apropriations Php 1,405,715,601.00 Php 1,415,573,201.00 Php 1,223,889,602.26 Php 191,683,598.74
Continuing Appropriations
General Public Services
Capital Outlay Php 39,747,659.30 Php 39,747,659.30 Php 16,656,409.88 Php 23,091,249.42
Education
Health, Nutrition and Population Control
Labor and Employment
Capital Outlay
Housing and Community Development
Capital Outlay
Social Services and Social Welfare
Economic Services
Other Purposes
Total Continuing Appropriations Php 218,848,025.86 Php 218,848,025.86 Php 122,710,569.67 Php 96,137,456.19
Total Appropriations Php 1,624,563,626.86 Php 1,634,421,226.86 Php 1,346,600,171.93 Php 287,821,054.93
Surplus (Deficit) for the period Php (218,848,025.86) Php (218,848,025.86) Php 60,443,080.58 Php (279,291,106.44)
9
Notes to Condensed Financial Statements
(All amounts in Philippine Peso unless otherwise stated)
Note 1: Profile
The Province of Sultan Kudarat along with the Provinces of North Cotabato and Maguindanao
was created on November 22, 1973 by virtue of Presidential Decree No. 341 signed by the late
President Ferdinand E. Marcos. It is compose of eleven (11) municipalities and one (1)
component city.
Pursuant to Republic Act 7160 known as Local Government Code of 1991, the Provincial
Government of Sultan Kudarat like other Local Government Units enjoys total independence
in managing, deciding and planning its own administrative, fiscal and development affairs in
conformity with the national government’s thrusts for sustainable social and economic growth.
The Province of Sultan Kudarat is envisioned to be a model for academic excellence, public
health and safety, environmental preservation and good governance, providing equal
opportunity for all its constituents in a peaceful, friendly atmosphere through a God-centered
leadership of the incumbent elected officials.
Note 2: Statement of Compliance and Basis of Preparation of Financial Statements
The consolidated financial statements have been prepared in accordance with and comply with
the Philippine Public Sector Accounting Standards (PPSAS) issued by the Commission on
Audit per COA Resolution No. 2014-003 dated January 24, 2014.
The consolidated financial statements have been prepared on the basis of historical cost, unless
stated otherwise. The Statement of Cash Flows is prepared using the direct method.
Note 3: Summary of significant accounting policies
3.1 Basis of accounting
The consolidated financial statements are prepared on an accrual basis in accordance

with the Philippine Public Sector Accounting Standards (PPSAS).
3.2 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees and fines
10
The Province of Sultan Kudarat recognizes revenues from taxes and fines when the
event occurs and the asset recognition criteria are met. To the extent that there is a
related condition attached that would give rise to a liability to repay the amount,
liability is recognized instead of revenue. Other non-exchange revenues are recognized
when it is improbable that the future economic benefit or service potential associated
with the asset will flow to the entity and the fair value of the asset can be measured
reliably.
The LGU availed of the 5-year transitional provision for the recognition of Tax
Revenue- Real Property and Special Education Tax. For the first year, there will be no
change in policy for the recognition of the aforementioned tax revenue.
Transfers from other government entities
Revenues from non-exchange transactions with other government entities are measured
at fair value and recognized on obtaining control of the asset (cash, goods, services and
property) if the transfer is free from conditions and it is probable that the economic
benefits or service potential related to the asset will flow to the LGU and can be
measured reliably.
Revenue from exchange transactions
Rendering of services
The LGU recognizes revenue from rendering of services by reference to the stage of
completion when the outcome of the transaction can be estimated reliably. The stage
of completion is measured by reference to labor hours incurred to date as a percentage
of total estimated labor hours.
Where the contract outcome cannot be measured reliably, revenue is recognized only
to the extent that the expenses incurred.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards
of ownership have been transferred to the buyer, usually on delivery of the goods and
when the amount of revenue can be measured reliably and it is probable that the
economic benefits or service potential associated with the transaction will flow to the
LGU.
Interest income
Interest income is accrued using the effective yield method. The effective yield
discounts estimated future cash receipts through the expected life of the financial asset
11
to that asset’s net carrying amount. The method applies this yield to the principal
outstanding to determine interest income each period.
Dividends
Dividends or similar distributions must be recognized when the shareholder’s or the

LGU’s right to receive payments is established.
Rental income
Rental income arising from operating leases on investment properties is accounted for
on a straight-line basis over the lease terms and included in revenue.
3.3 Investment Property
Investment properties are measured initially at cost, including transaction costs. The
carrying amount includes the replacement cost of components of an existing investment
property at the time that cost is incurred if the recognition criteria are met and excludes
the costs of day-to-day maintenance of an investment property.
Investment property acquired through a non-exchange transaction is measured at its

fair value at the date of acquisition. Subsequent to initial recognition, investment
properties are measured using the cost model and are depreciated over a 30-year period.
Investment properties are derecognized either when they have been disposed of or
when the investment property is permanently withdrawn from use and no future
economic benefit or service potential is expected from its disposal. The difference
between the net disposal proceeds and the carrying amount of the asset is recognized
in the surplus or deficit in the period of derecognition. Transfers are made to or from
investment property only when there is a change in use.
3.4 Property, plant and equipment
Recognition
An item is recognized as property, plant, and equipment (PPE) if it meets the

characteristics and recognition criteria as a PPE.
The characteristics of PPE are as follows:

 tangible items;
 are held for use in the production or supply of goods or services, for rental to
others, or for administrative purposes; and
 are expected to be used during more than one reporting period.
An item of PPE is recognized as an asset if:
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 It is probable that future economic benefits or service potential associated with
the item will flow to the entity; and
 The cost or fair value of the item can be measured reliably.
Measurement at Recognition
An item recognized as PPE is measured at cost.
A PPE acquired through non-exchange transaction is measured at its fair value as at the
date of acquisition.
The cost of the PPE is the cash price equivalent or, for PPE acquired through non-
exchange transaction its cost is its fair value as at recognition date.
Cost includes the following:

 its purchase price, including import duties and non-refundable purchase taxes,
after deducting trade discounts and rebates;
 expenditure that is directly attributable to the acquisition of the items; and
 initial estimate of the costs of dismantling and removing the item and restoring
the site on which it is located, the obligation for which an entity incurs either
when the item is acquired, or as a consequence of having used the item during
a particular period for purposes other than to produce inventories during that
period.
Measurement after Recognition
After recognition, all PPE are stated at cost less accumulated depreciation and
impairment losses.
When significant parts of PPE are required to be replaced at intervals, the province
recognizes such parts as individual assets with specific useful lives and depreciates
them accordingly. Likewise, when a major repair/replacement is done, its cost is
recognized in the carrying amount of the plant and equipment as a replacement if the
recognition criteria are satisfied. All other repair and maintenance costs are recognized
as expense in surplus or deficit as incurred.
Depreciation
Each part of an item of PPE with a cost that is significant in relation to the total cost of
the item is depreciated separately.
The depreciation charge for each period is recognized as expense unless it is included
in the cost of another asset.
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Initial Recognition of Depreciation
Depreciation of an asset begins when it is available for use such as when it is in the
location and condition necessary for it to be capable of operating in the manner
intended by management.
For simplicity and to avoid proportionate computation, the depreciation is for one
month if the PPE is available for use on or before the 15th of the month. However, if
the PPE is available for use after the 15th of the month, depreciation is for the
succeeding month.
Depreciation Method
The straight line method of depreciation shall be adopted unless another method is more
appropriate for agency operation.
Estimated Useful Life
The province uses the Schedule on the Estimated Useful Life of PPE by classification
prepared by COA.
It uses a residual value equivalent to at least five percent (5%) of the cost of the PPE.
Impairment
An asset’s carrying amount is written down to its recoverable amount, or recoverable

service amount, if the asset’s carrying amount is greater than its estimated recoverable
service amount.
Derecognition
The province derecognizes items of property, plant and equipment and/or any
significant part of an asset upon disposal or when no future economic benefits or
service potential is expected from its continuing use. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the surplus or deficit when
the asset is derecognized.
3.5 Leases
LGU as a lessee
Finance leases are leases that transfer substantially all of the risks and benefits
incidental to ownership of the leased item to the LGU. Assets held under a finance lease
are capitalized at the commencement of the lease at the fair value of the leased property
or, if lower, at the present value of the future minimum lease payments. The LGU also
14
recognizes the associated lease liability at the inception of the lease. The liability
recognized is measured as the present value of the future minimum lease payments at
initial recognition. Subsequent to initial recognition, lease payments are apportioned
between finance charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are recognized
as finance costs in surplus or deficit.
An asset held under a finance lease is depreciated over the useful life of the asset.
However, if there is no reasonable certainty that the LGU will obtain ownership of the
asset by the end of the lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
Operating leases are leases that do not transfer substantially all the risks and benefits
incidental to ownership of the leased item to the LGU. Operating lease payments are
recognized as an operating expense in surplus or deficit on a straight-line basis over the
lease term.
LGU as a lessor
Leases in which the LGU does not transfer substantially all the risks and benefits of
ownership of an asset are classified as operating leases. Initial direct costs incurred in
negotiating an operating lease are added to the carrying amount of the leased asset and
recognized over the lease term.
Rent received from an operating lease is recognized as income on a straight-line basis

over the lease term. Contingent rents are recognized as revenue in the period in which
they are earned.
3.6 Intangible assets
Intangible assets acquired separately are initially recognized at cost. The cost of
intangible assets acquired in a non-exchange transaction is their fair value at the date
of the exchange. Following initial recognition, intangible assets are carried at cost less
any accumulated amortization and accumulated impairment losses. Internally
generated intangible assets, excluding capitalized development costs, are not
capitalized and expenditure is reflected in surplus or deficit in the period in which the
expenditure is incurred.
The useful life of the intangible assets is assessed as either finite or indefinite.
Intangible assets with a finite life is amortized over its useful life. Software is amortized
for 10-20 years.
Intangible assets with a finite useful life are assessed for impairment whenever there is
an indication that the asset may be impaired. The amortization period and the
amortization method, for an intangible asset with a finite useful life, are reviewed at
the end of each reporting period. Changes in the expected useful life or the expected
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pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortization period or method, as appropriate, and are treated
as changes in accounting estimates. The amortization expense on an intangible asset
with a finite life is recognized in surplus or deficit as the expense category that is
consistent with the nature of the intangible asset.
Gains or losses arising from derecognition of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and
are recognized in the surplus or deficit when the asset is derecognized.
Research and Development Cost
Research costs when incurred are treated as expenses by the LGU. Development costs
on an individual project are recognized as intangible assets when the LGU can
demonstrate:
a) The technical feasibility of completing the asset so that the asset will be
available for use or sale;
b) Its intention to complete and its ability to use or sell the asset;
c) How the asset will generate future economic benefits or service potential;
d) The availability of resources to complete the asset; and
e) The ability to measure reliably the expenditure during development.
Following initial recognition of an asset, the asset is carried at cost less any
accumulated amortization and accumulated impairment losses. Amortization of the
asset begins when development is complete and the asset is available for use. It is
amortized over the period of expected future benefit. During the period of development,
the asset is tested for impairment annually with any impairment losses recognized
immediately in surplus or deficit.
3.7 Impairment of non-financial assets
Impairment of cash-generating assets
At each reporting date, the LGU assesses whether there is an indication that an asset
may be impaired. If any indication exists, or when annual impairment testing for an
asset is required, the LGU estimates the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash-generating unit’s fair valueless
costs to sell and its value in use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent of those from other
assets or groups of assets.
Where the carrying amount of an asset or the cash-generating unit (CGU) exceeds its
recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In
16
determining fair value less costs to sell, recent market transactions are taken into
account, if available. If no such transactions can be identified, an appropriate valuation
model is used.
Impairment losses of continuing operations, including impairment on inventories, are

recognized in the statement of financial performance in those expense categories
consistent with the nature of the impaired asset.
For assets, an assessment is made at each reporting date as to whether there is any
indication that previously recognized impairment losses may no longer exist or may
have decreased. If such indication exists, the LGU estimates the asset’s or cash-
generating unit’s recoverable amount. A previously recognized impairment loss is
reversed only if there has been a change in the assumptions used to determine the
asset’s recoverable amount since the last impairment loss was recognized. The reversal
is limited so that the carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognized for the asset in prior years. Such
reversal is recognized in surplus or deficit.
Impairment of non-cash-generating assets
The LGU assesses at each reporting date whether there is an indication that a non-cash-
generating asset may be impaired. If any indication exists, or when annual impairment
testing for an asset is required, the LGU estimates the asset’s recoverable service
amount. An asset’s recoverable service amount is the higher of the non-cash generating
asset’s fair value less costs to sell and its value in use.
Where the carrying amount of an asset exceeds its recoverable service amount, the asset
is considered impaired and is written down to its recoverable service amount.
In assessing value in use, the LGU has adopted the depreciation replacement cost
approach. Under this approach, the present value of the remaining service potential of
an asset is determined as the depreciated replacement cost of the asset. The depreciated
replacement cost is measured as the reproduction or replacement cost of the asset,
whichever is lower, less accumulated depreciation calculated on the basis of such cost,
to reflect the already consumed or expired service potential of the asset. In determining
fair value less costs to sell, the price of the assets in a binding agreement in an arm's
length transaction, adjusted for incremental costs that would be directly attributed to
the disposal of the asset is used. If there is no binding agreement, but the asset is traded
on an active market, fair value less cost to sell is the asset's market price less cost of
disposal. If there is no binding sale agreement or active market for an asset, the LGU
determines fair value less cost to sell based on the best available information.
For each asset, an assessment is made at each reporting date as to whether there is any
indication that previously recognized impairment losses may no longer exist or may
have decreased. If such indication exists, the Group estimates the asset's recoverable
17
service amount. A previously recognized impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset’s recoverable service
amount since the last impairment loss was recognized. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable service amount, nor
exceed the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognized for the asset in prior years. Such reversal is
recognized in surplus or deficit.
3.8 Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are classified as financial assets at fair value through surplus or deficit,
loans and receivables, held-to-maturity investments or available-for-sale financial
assets, as appropriate. The LGU determines the classification of its financial assets at
initial recognition.
Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the marketplace (regular way trades) are
recognized on the trade date, i.e., the date that the LGU commits to purchase or sell the
asset.
The LGU’s financial assets include: cash and short-term deposits; trade and other
receivables; loans and other receivables and quoted and unquoted financial
instruments.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification.
Financial assets at fair value through surplus or deficit
Financial assets at fair value through surplus or deficit include financial assets held for
trading and financial assets designated upon initial recognition at fair value through
surplus and deficit. Financial assets are classified as held for trading if they are acquired
for the purpose of selling or repurchasing in the near term. Financial assets at fair value
through surplus or deficit are carried in the statement of financial position at fair value
with changes in fair value recognized in surplus or deficit.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. After initial measurement, such
financial assets are subsequently measured at amortized cost using the effective interest
18
method, less impairment. Amortized cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part of the
effective interest rate. Losses arising from impairment are recognized in the surplus or
deficit.
Held-to-maturity
Non-derivative financial assets with fixed or determinable payments and fixed

maturities are classified as held to maturity when the LGU has the positive intention
and ability to hold it to maturity. After initial measurement, held-to-maturity
investments are measured at amortized cost using the effective interest method, less
impairment. Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the effective interest
rate. The losses arising from impairment are recognized in surplus or deficit.
Derecognition
The LGU derecognizes a financial asset or, where applicable, a part of a financial asset
or part of a group of similar financial assets when:
a) The rights to receive cash flows from the asset have expired or is waived;
b) The LGU has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full without material
delay to a third party; and either: (a) the LGU has transferred substantially all
the risks and rewards of the asset; or (b) the LGU has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
Impairment of financial assets
The LGU assesses at each reporting date whether there is objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of
financial assets is deemed to be impaired if, there is objective evidence of impairment
as a result of one or more events that has occurred after the initial recognition of the
asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future
cash flows of the financial asset or the group of financial assets that can be reliably
estimated. Evidence of impairment may include the following indicators:
a) The debtors or a group of debtors are experiencing significant financial
difficulty;
b) Default or delinquency in interest or principal payments;
c) The probability that debtors will enter bankruptcy or other financial
reorganization; and
d) Observable data indicates a measurable decrease in estimated future cash flows
(e.g. changes in arrears or economic conditions that correlate with defaults)
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Financial assets carried at amortized cost
For financial assets carried at amortized cost, the LGU first assesses whether objective
evidence of impairment exists individually for financial assets that are individually
significant, or collectively for financial assets that are not individually significant. If
the LGU determines that no objective evidence of impairment exists for an individually
assessed financial asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively assesses them
for impairment. Assets that are individually assessed for impairment and for which an
impairment loss is, or continues to be, recognized are not included in a collective
assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of
the loss is measured as the difference between the assets carrying amount and the
present value of estimated future cash flows (excluding future expected credit losses
that have not yet been incurred). The present value of the estimated future cash flows
is discounted at the financial asset’s original effective interest rate. If a loan has a
variable interest rate, the discount rate for measuring any impairment loss is the current
effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account
and the amount of the loss is recognized in surplus or deficit. If, in a subsequent year,
the amount of the estimated impairment loss increases or decreases because of an event
occurring after the impairment was recognized, the previously recognized impairment
loss is increased or reduced by adjusting the allowance account. If a future write-off is
later recovered, the recovery is credited to finance costs in surplus or deficit.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 are classified as financial liabilities
at fair value through surplus or deficit or loans and borrowings, as appropriate. The
LGU determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case of loans and
borrowings.
The LGU Group’s financial liabilities include trade and other payables, bank
overdrafts, loans and borrowings.
Subsequent measurement
The measurement of financial liabilities depends on their classification.
Financial liabilities at fair value through surplus or deficit
20
Financial liabilities at fair value through surplus or deficit include financial liabilities
held for trading and financial liabilities designated upon initial recognition as at fair
value through surplus or deficit.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently
measured at amortized cost using the effective interest method. Gains and losses are
recognized in surplus or deficit when the liabilities are derecognized as well as through
the effective interest method amortization process.
Amortized cost is calculated by taking into account any discount or premium on

acquisition and fees or costs that are an integral part of the effective interest rate.
Derecognition
A financial liability is derecognized when the obligation under the liability is

discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the
consolidated statement of financial position if, there is a currently enforceable legal
right to offset the recognized amounts and there is an intention to settle on a net basis,
or to realize the assets and settle the liabilities simultaneously.
Fair value of financial instruments
The fair value of financial instruments that are traded in active markets at each reporting
date is determined by reference to quoted market prices or dealer price quotations (bid
price for long positions and ask price for short positions), without any deduction for
transaction costs.
3.9 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank, deposits on call
and highly liquid investments with an original maturity of three months or less, which
are readily convertible to known amounts of cash and are subject to insignificant risk
of changes in value. For the purpose of the consolidated statement of cash flows, cash
and cash equivalents consist of cash and short-term deposits as defined above, net of
outstanding bank overdrafts.
21
3.10 Inventories
Inventory is measured at cost upon initial recognition. To the extent that inventory was
received through non-exchange transactions (for no cost or for a nominal cost), the cost
of the inventory is its fair value at the date of acquisition.
Costs incurred in bringing each product to its present location and condition are
accounted for, as follows:
a) Raw materials: purchase cost using the weighted average cost method;
b) Finished goods and work in progress: cost of direct materials and labor and a
proportion of manufacturing overheads based on the normal operating capacity,
but excluding borrowing costs.
After initial recognition, inventory is measured at the lower of cost and net realizable
value. However, to the extent that a class of inventory is distributed or deployed at no
charge or for a nominal charge, that class of inventory is measured at the lower of cost
and current replacement cost.
Net realizable value is the estimated selling price in the ordinary course of operations,
less the estimated costs of completion and the estimated costs necessary to make the
sale, exchange, or distribution. Inventories are recognized as an expense when
deployed for utilization or consumption in the ordinary course of operations of the
LGU.
3.11 Provisions
Provisions are recognized when the LGU has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits or service potential will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
Where the LGU expects some or all of a provision to be reimbursed, for example, under
an insurance contract, the reimbursement is recognized as a separate asset only when
the reimbursement is virtually certain.
The expense relating to any provision is presented in the statement of financial

performance net of any reimbursement.
Rehabilitation liability
Rehabilitation costs are provided at the present value of expected costs to settle the
obligation using estimated cash flows and are recognized as part of the cost of that
particular asset. The cash flows are discounted at a current rate that reflects the risks
specific to the rehabilitation liability. The unwinding of the discount is expensed as
incurred and recognized in the statement of financial performance as a finance cost.
22
The estimated future costs of decommissioning are reviewed annually and adjusted as
appropriate. Changes in the estimated future costs or in the discount rate applied are
added to or deducted from the cost of the asset.
Contingent liabilities
The LGU does not recognize a contingent liability, but discloses details of any
contingencies in the notes to the financial statements, unless the possibility of an
outflow of resources embodying economic benefits or service potential is remote.
Contingent assets
The Group does not recognize a contingent asset, but discloses details of a possible
asset whose existence is contingent on the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the LGU in the notes to the
financial statements. Contingent assets are assessed continually to ensure that
developments are appropriately reflected in the financial statements. If it has become
virtually certain that an inflow of economic benefits or service potential will arise and
the asset’s value can be measured reliably, the asset and the related revenue are
recognized in the financial statements of the period in which the change occurs.
3.12 Nature and purpose of reserves
The LGU creates and maintains reserves in terms of specific requirements.
3.13 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy retrospectively. The
effects of changes in accounting policy are applied prospectively if retrospective
application is impractical.
The LGU recognizes the effects of changes in accounting estimates prospectively by

including in surplus or deficit.
3.14 Foreign currency transactions
Transactions in foreign currencies are initially accounted for at the ruling rate of
exchange on the date of the transaction. Trade creditors or debtors denominated in
foreign currency are reported at the statement of financial position reporting date by
applying the exchange rate on that date. Exchange differences arising from the
settlement of creditors, or from the reporting of creditors at rates different from those
at which they were initially recorded during the period, are recognized as income or
expenses in the period in which they arise.
23
3.15 Borrowing costs
Borrowing costs are capitalized against qualifying assets as part of property, plant and
equipment. Such borrowing costs are capitalized over the period during which the asset
is being acquired or constructed and borrowings have been incurred. Capitalization
ceases when construction of the asset is complete. Further, borrowing costs are charged
to the statement of financial performance.
3.16 Related parties
The LGU regards a related party as a person or an entity with the ability to exert control
individually or jointly, or to exercise significant influence over the LGU, or vice versa.
Members of key management are regarded as related parties and comprise the
Governor, Vice-Governors, Sanggunian Members, Committee Officials and Members,
Accountants, Treasurers, Budget Officers, General Services and all Chiefs of
Departments/Divisions.
3.17 Service concession arrangements
The LGU analyses all aspects of service concession arrangements that it enters into in
determining the appropriate accounting treatment and disclosure requirements. In
particular, where a private party contributes an asset to the arrangement, the LGU
recognizes that asset when, and only when, it controls or regulates the services the
operator must provide together with the asset, to whom it must provide them, and at
what price. In the case of assets other than ’whole-of-life’ assets, it controls, through
ownership, beneficial entitlement or otherwise – any significant residual interest in the
asset at the end of the arrangement. Any assets so recognized are measured at their fair
value. To the extent that an asset has been recognized, the LGU also recognizes a
corresponding liability, adjusted by a cash consideration paid or received.
3.18 Budget information
The annual budget is prepared on the modified cash basis, that is, all planned costs and
income are presented in a single statement to determine the needs of the LGU. As a
result of the adoption of the Modified cash basis for budgeting purposes, a separate
Statement of Comparison of Budget and Actual Amounts is presented showing the
basis, timing or entity differences Explanatory comments are provided in the notes to
the annual financial statements; first, the reasons for overall growth or decline in the
budget are stated, followed by details of overspending or underspending on line items.
3.19 Significant judgments and sources of estimation uncertainty
Judgments
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In the process of applying the LGU’s accounting policies, management has made
judgments, which have the most significant effect on the amounts recognized in the
consolidated financial statements.
Operating lease commitments – LGU as lessor
The LGU has entered into property leases of certain of its properties. The LGU has
determined, based on an evaluation of the terms and conditions of the arrangements,
(such as the lease term not constituting a substantial portion of the economic life of the
commercial property) that it retains all the significant risks and rewards of ownership
of the properties and accounts for the contracts as operating leases.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial
year, are described below. The LGU based its assumptions and estimates on parameters
available when the consolidated financial statements were prepared. However, existing
circumstances and assumptions about future developments may change due to market
changes or circumstances arising beyond the control of the LGU. Such changes are
reflected in the assumptions when they occur.
Useful lives and residual values
The useful lives and residual values of assets are assessed using the following indicators
to inform potential future use and value from disposal:
a) The condition of the asset based on the assessment of experts employed by the
LGU;
b) The nature of the asset, its susceptibility and adaptability to changes in
technology and processes;
c) The nature of the processes in which the asset is deployed; and
d) Changes in the market in relation to the asset
Impairment of non-financial assets – cash-generating assets
The recoverable amounts of cash-generating units and individual assets have been
determined based on the higher of value-in-use calculations and fair values less costs
to sell. These calculations require the use of estimates and assumptions. It is reasonably
possible that the assumptions may change, which may then impact management’s
estimations and require a material adjustment to the carrying value of tangible assets.
The LGU reviews and tests the carrying value of assets when events or changes in
circumstances suggest that the carrying amount may not be recoverable. Cash-
generating assets are grouped at the lowest level for which identifiable cash flows are
largely independent of cash flows of other assets and liabilities. If there are indications
25
that impairment may have occurred, estimates of expected future cash flows are
prepared for each group of assets. Expected future cash flows used to determine the
value in use of tangible assets are inherently uncertain and could materially change
over time.
Impairment of non-financial assets – non- cash generating assets
The LGU reviews and tests the carrying value of non-cash-generating assets when
events or changes in circumstances suggest that there may be a reduction in the future
service potential that can reasonably be expected to be derived from the asset. Where
indicators of possible impairment are present, the LGU undertakes impairment tests,
which require the determination of the fair value of the asset and its recoverable service
amount. The estimation of these inputs into the calculation relies on the use estimates
and assumptions.
Any subsequent changes to the factors supporting these estimates and assumptions may
have an impact on the reported carrying amount of the related asset.
Fair value estimation – financial instruments
Where the fair value of financial assets and financial liabilities recorded in the
statement of financial position cannot be derived from active markets, their fair value
is determined using valuation techniques including the discounted cash flow model.
The inputs to these models are taken from observable markets where possible, but
where this is not feasible, judgment is required in establishing fair values. Judgment
includes the consideration of inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions about these factors could affect the reported fair value of
financial instruments.
Provisions
Provisions were raised and management determined an estimate based on the

information available. Provisions are measured at the management's best estimate of
the expenditure required to settle the obligation at the reporting date, and are discounted
to present value where the effect is material.
Held-to-maturity investments and loans and receivables
The LGU assesses its loans and receivables (including trade receivables) and its held-
to-maturity investments at the end of each reporting period. In determining whether an
impairment loss should be recorded in surplus or deficit, the LGU evaluates the
indicators present in the market to determine if those indicators are indicative of
impairment in its loans and receivables or held-to-maturity investments.
Where specific impairments have not been identified the impairment for trade
receivables, held-to-maturity investments and loans and receivables is calculated on a
26
portfolio basis, based on historical loss ratios, adjusted for national and industry-
specific economic conditions and other indicators present at the reporting date that
correlate with defaults on the portfolio. These annual loss ratios are applied to loan
balances in the portfolio and scaled to the estimated loss emergence period.
3.20 Financial instruments - financial risk management
Exposure to currency, commodity, interest rate, liquidity and credit risks arises in the
normal course of the LGU’s operations. This note presents information about the
LGU’s exposure to each of the mentioned risks, policies and processes for measuring
and managing risk, and the LGU’s management of capital. Further quantitative
disclosures are included throughout these financial statements. Fair values set out
below, is a comparison by class of the carrying amounts and fair value of the LGU’s
financial instruments.
The fair value of the financial assets and liabilities are included at the amount at which
the instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation.
The following methods and assumptions were used to estimate the fair values:
a) Cash and short-term deposits, trade receivables, trade payables and other
current liabilities approximate their carrying amounts largely due to the short-
term maturities of these instruments;
b) Long-term fixed-rate and variable-rate receivables / borrowings are evaluated
by the LGU based on parameters such as interest rates, individual
creditworthiness of the customer and the risk characteristics of the financed
project. Based on this evaluation, allowances are taken to account for the
incurred losses of these receivables and market related interest rates. The
carrying amounts of such receivables, net of allowances, are not materially
different from their calculated fair values;
c) Fair value of quoted notes and bonds is based on price quotations at the
reporting date. The fair value of unquoted instruments, loans from banks and
other financial liabilities, obligations under finance leases, as well as other non-
current financial liabilities is estimated by discounting future cash flows using
rates currently available for debt on similar terms, credit risk and remaining
maturities;
d) Fair value of financial assets is derived from quoted market prices in active
markets, if available; and
e) Fair value of unquoted available-for-sale financial assets is estimated using
appropriate valuation techniques
Fair value hierarchy
The LGU uses the following hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
27
 Level 1: Quoted (unadjusted) prices in active markets for identical assets or
liabilities;
 Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e., as price) or indirectly
(i.e., derived from prices);
 Level 3: Techniques which use inputs that have a significant effect on the
recorded fair value that are not based on observable market data
Investments
The LGU limits its exposure to credit risk by investing with only reputable financial
institutions that have a sound credit rating (rated BB and above), which are within the
specific guidelines set in accordance with the LGU Finance Committee and the
Sanggunian approved investment policy. Consequently, the LGU does not consider
there to be any significant exposure to credit risk.
Receivables
Receivables are amounts owed by consumers, and are presented net of impairment
losses. The LGU has a credit risk policy in place, and the exposure to credit risk is
monitored on an ongoing basis. The LGU is compelled, by its constitutional mandate,
to provide all of its residents with basic minimum services, without recourse to an
assessment of creditworthiness. There were no material changes in the exposure to
credit risk and its objectives, policies and processes for managing and measuring the
risk during the year under review.
The LGU’s maximum exposure to credit risk is represented by the carrying value of
each financial asset in the statement of financial performance. The Group has no
significant concentration of credit risk, with exposure spread over a large number of
consumers, and is not concentrated in any particular sector or geographic area.
The LGU establishes an allowance for impairment that represents its estimate of
anticipated losses in respect of receivables.
The average credit period on services rendered is 30 days from date of invoice. Interest
is raised at the three-month government bond rate plus 1% on any unpaid accounts after
the due date. The LGU provided fully for all receivables outstanding over 365 days
where there was no evidence of expected recovery. Receivables up to 365 days are
provided for based on estimated irrecoverable amounts, determined by reference to past
default experience.
Cash and cash equivalents
The LGU limits its exposure to credit risk by investing cash and cash equivalents with
only reputable financial institutions that have a sound credit rating, and within specific
guidelines set in accordance with the Sanggunian’s approved investment policy.
28
Consequently, the LGU does not consider there to be any significant exposure to credit
risk.
Liquidity risk
Liquidity risk is the risk of the LGU not being able to meet its obligations as they fall
due. The LGU’s approach to managing liquidity risk is to ensure that sufficient liquidity
is available to meet its liabilities when due, without incurring unacceptable losses or
risking damage to the LGU’s reputation.
The LGU ensures that it has sufficient cash on demand to meet expected operating
expenses through the use of cash flow forecasts. On average, 94.93%of receivables are
settled within 30 days after the due date, and payables are settled within 30 days of
invoice date.
Capital management
The primary objective of managing the LGU’s capital is to ensure that there is sufficient
cash available to support the LGU’s funding requirements, including capital
expenditure, to ensure that the LGU remains financially sound. The LGU monitors
capital using a gearing ratio, which is net debt, divided by total capital, plus net debt.
In a capital intensive industry, a gearing ratio of 54.5% or less can be considered
reasonable. Included in net debt are interest bearing loans and borrowings, payables,
less investments.
Currency risk
The LGU is exposed to foreign-currency risk through the importation of goods and
services, either directly or indirectly, through the award of contracts to local importers.
The LGU manages any material direct exposure to foreign-currency risk by entering
into forward exchange contracts. The LGU manages its indirect exposure by requiring
the local importer to take out a forward exchange contract at the time of procurement,
in order to predetermine the peso value of the contracted goods or services. The LGU
was not a direct party to any outstanding forward exchange contracts at the reporting
date. The movement in the currency was not material to the Group’s procurement.
Market risk
Market risk is the risk of changes in market prices, such as foreign-exchange rates and
interest rates, affecting the LGU’s income or the value of its financial instrument
holdings. The objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimizing the return on the risk.
29
Note 4: Cash and Cash Equivalents
Cash and cash equivalents totalling P1.227 billion comprise 93.59% of the total current assets
of P1.311 billion and 34.94% of the combined total assets of P3.512 billion. The breakdown
of cash and cash equivalents is as follows:
Particulars 2017 2016

Cash Local Treasury Php 10,110,825.18 Php 4,851,170.60
Petty Cash 707,784.00 692,784.00
Cash on Hand Php 10,818,609.18 Php 5,543,954.60
Cash in Bank - Local Currency, Current Account Php 1,216,602,107.26 Php 634,740,426.27
Cash in Bank - Local Currency Php 1,216,602,107.26 Php 634,740,426.27
Total Php 1,227,420,716.44 Php 640,284,380.87
Cash Local Treasury represents undeposited collections, majority of which pertains to

collections during the last working days of the year.
Cash in banks earns interest based on the prevailing bank deposit rates. Short-term deposits
are made for varying periods, depending on the immediate cash requirements of the LGU and
earn interest at the respective short-term deposit rate.
Note 5: Investments
Current portion of investments totalling P16.528 million comprises 1.26% of the total current
assets of P1.311 billion. Breakdown is as follows:

Cash in Bank - Local Currency, Time Deposits Php 16,278,959.76 Php 16,278,959.76
Investments in Time Deposits Php 16,278,959.76 Php 16,278,959.76
Guarantee Deposits Php 250,000.00 Php 250,000.00
Allowance for Impairment - -
Financial Assets-Others Php 250,000.00 Php 250,000.00
Total Php 16,528,959.76 Php 16,528,959.76
Note 6: Receivables
The current portion of receivables amounting to P48.239 million makes up 3.68% of the total
current assets of P1.311 billion. The breakdown of receivables is shown below.

Accounts Receivable Php 184,372.32 Php 183,372.32
Real Property Tax Receivable 3,081,429.46 3,081,429.46
Special Education Tax Receivable 868,812.50 868,812.50
Loans Receivable-Others 300,000.00 300,000.00
Loans and Receivables Php 4,434,614.28 Php 4,433,614.28
30
Due from National Government Agencies Php 610,719.89 Php 610,719.89
Due from Government Owned and Controlled Corporation 873,657.98 873,657.98
Due from Local Government Units 22,421,902.30 22,421,902.30
Inter-Agency Receivables Php 23,906,280.17 Php 23,906,280.17
Due from Other Funds Php 11,373,149.99 Php 11,349,354.04
Intra-Agency Receivables Php 11,373,149.99 Php 11,349,354.04
Advances for Payroll Php 20,754.40 Php 21,354.40
Advances for Officers and Employees 8,308,139.09 12,594,007.05
Advances Php 8,328,893.49 Php 12,615,361.45
Other Receivables Php 196,678.75 Php 198,609.95
Other Receivables Php 196,678.75 Php 198,609.95
Total Php 48,239,616.68 Php 52,503,219.89
Transfers from other government agencies represent those funds received for specific projects
undertaken by the LGU for specific purpose. These funds were received on the basis of the
project budgets submitted. Accordingly, the LGU is contractually bound to spend these funds
only in connection with the projects.
Furthermore, the contracts stipulate that the funds received for the project may only be applied
to the costs incurred for the project, as and when the phases of the project are certified as
complete. The conditions remaining therefore represent phases of the projects that are yet to
be certified as complete. Returned of the unspent portion of the fund is subject to the conditions
stated in the respective Memorandum of Agreements executed between the LGU and the
proponent government agencies.
Note 7: Inventories
Inventory held for consumption aggregating P1.307 million and inventory held for distribution
totalling P80,000.00 account for 94.23% and 5.77%, respectively, of the total inventories of
P1.387 million. This group of accounts consists of the following:

Other Supplies and Materials for Distribution Php 80,000.00 Php -
Inventory Held for Distribution Php 80,000.00 Php -
Accountable Forms, Plates and Stickers Inventory Php 852,783.21 Php 818,202.71
Drugs and Medicines Inventory 310,523.70 310,523.70
Medical, Dental and Laboratory Supplies Inventory 143,750.00 143,750.00
Inventory Held for Consumption Php 1,307,056.91 Php 1,272,476.41
Total Php 1,387,056.91 Php 1,272,476.41
Note 8: Prepayments and Deferred Charges
This group of accounts is broken down as follows:
31
Advances to Contractors Php 17,134,688.88 Php 1,691,788.64
Other Prepayments 693,850.00 693,850.00
Total Php 17,828,538.88 Php 2,385,638.64
Note 9 - Property, Plant and Equipment
Property, plant and equipment (PPE) consist of the following major account groups:

Land Php 41,203,069.30 Php 21,203,453.30
Other Land Improvements 112,891,949.20 112,891,949.20
Road Networks 542,613,701.62 116,503,944.12
Power Supply Systems 692,500.00 782,500.00
Buildings 184,492,766.75 183,852,347.75
School Buildings 7,162,699.58 7,162,699.58
Hospitals and Health Centers 20,761,933.57 20,761,933.57
Markets 475,728.05 475,728.05
Other Structures 17,522,178.21 17,522,178.21
Machinery 4,675,627.23 2,986,877.23
Office Equipment 28,898,773.85 24,707,033.69
Information and Communication Technology Equipment 23,860,124.61 21,775,963.90
Agricultural and Forestry Equipment 985,645.00 661,474.00
Communication Equipment 1,792,415.56 1,816,935.00
Construction and Heavy Equipment 324,041,495.62 340,378,881.33
Disaster Response and Rescue Equipment 182,963.85 193,288.14
Military, Police and Security Equipment 593,368.97 575,218.97
Medical Equipment 59,576,880.72 59,425,030.72
Sports Equipment 60,420.00 60,420.00
Technical and Scientific Equipment 14,829,887.25 13,029,887.25
Other Machinery and Equipment 2,982,160.93 2,882,160.93
Motor Vehicles 147,161,710.75 130,274,827.26
Watercrafts 72,753.33 72,753.33
Other Transportation Equipment 1,341,000.00 1,503,000.00
Furniture and Fixtures 44,895,440.50 44,715,188.26
Books 540,383.93 449,355.31
Leased Assets Improvements, Land 567,202.65 567,202.65
Construction in Progress - Buildings and Other Structures 592,386,282.68 592,386,282.68
Other Property, Plant and Equipment 5,260,998.44 5,260,998.44
Total Php 2,182,522,062.15 Php 1,724,879,512.87
The total PPE for CY 2017 reached P2.182 billion, net of accumulated depreciation amounting
to P75.364 million. Construction in Progress-Buildings and other Structures got the biggest
share of P592.386 million or 27.15% of the total net PPE, followed by Road Networks
amounting to P542.613 million or 24.87%.
Accumulated
Particulars Gross Amount Depreciation Net Value
Land Php 41,203,069.30 - Php 41,203,069.30
Other Land Improvements 112,891,949.20 - 112,891,949.20
Road Networks 542,613,701.62 - 542,613,701.62
Power Supply Systems 1,150,000.00 (457,500.00) 692,500.00
Buildings 184,492,766.75 - 184,492,766.75
School Buildings 7,162,699.58 - 7,162,699.58
Hospitals and Health Centers 20,761,933.57 - 20,761,933.57
32
Markets 475,728.05 - 475,728.05
Other Structures 17,522,178.21 - 17,522,178.21
Machinery 4,687,814.73 (12,187.50) 4,675,627.23
Office Equipment 34,113,340.89 (5,214,567.04) 28,898,773.85
Information and Communication Technology Equipment 27,532,482.56 (3,672,357.95) 23,860,124.61
Agricultural and Forestry Equipment 991,495.00 (5,850.00) 985,645.00
Communication Equipment 1,840,759.30 (48,343.74) 1,792,415.56
Construction and Heavy Equipment 373,002,931.34 (48,961,435.72) 324,041,495.62
Disaster Response and Rescue Equipment 200,171.00 (17,207.15) 182,963.85
Military, Police and Security Equipment 602,143.97 (8,775.00) 593,368.97
Medical Equipment 59,594,655.72 (17,775.00) 59,576,880.72
Sports Equipment 60,420.00 - 60,420.00
Technical and Scientific Equipment 14,829,887.25 - 14,829,887.25
Other Machinery and Equipment 2,982,160.93 - 2,982,160.93
Motor Vehicles 163,170,709.73 (16,008,998.98) 147,161,710.75
Watercrafts 353,920.00 (281,166.67) 72,753.33
Other Transportation Equipment 1,800,000.00 (459,000.00) 1,341,000.00
Furniture and Fixtures 45,071,939.23 (176,498.73) 44,895,440.50
Books 563,560.00 (23,176.07) 540,383.93
Leased Assets Improvements, Land 567,202.65 - 567,202.65
Construction in Progress - Buildings and Other Structures 592,386,282.68 - 592,386,282.68
Other Property, Plant and Equipment 5,260,998.44 - 5,260,998.44
Total Php 2,257,886,901.70 Php (75,364,839.55) Php 2,182,522,062.15
Note 10: Biological Assets
Biological assets are composed of the following:

Breeding Stocks Php 18,258,000.00 Php 18,258,000.00
Bearer Biological Assets Php 18,258,000.00 Php 18,258,000.00
Total Php 18,258,000.00 Php 18,258,000.00
Note 11: Financial Liabilities

Accounts Payable Php 88,334,285.62 Php 54,189,910.88
Due to Officers and Employees 46,613,590.44 45,512,006.21
Loans Payable-Domestic 151,614,317.95 206,342,606.09
Total Php 286,562,194.01 Php 306,044,523.18
Accounts payable includes the previous years’ account balances and of the recognized
payables at the end of December 31, 2017 in compliance of the New Government Accounting
System.
Due to officers and employees represent the accumulated vacation and sick leave of provincial
officials and employees taken up in the payrolls and provided for the previous years’
accumulated vacation and sick leave.
The loans payable account consists of loans acquired for heavy equipment, new capitol
building and sports complex through Land Bank of the Philippines (LBP) and Development
Bank of the Philippines (DBP). An account with LBP and DBP is maintained to ensure
payment of the said loans.
33
Note 12: Inter-Agency Payables

Due to BIR Php 8,514,414.69 Php 7,906,165.89
Due to GSIS 1,119,663.76 3,582,285.46
Due to Pag-ibig 946,527.69 803,153.82
Due to Philhealth 3,045,716.57 2,124,365.92
Due to NGAs 524,041,482.18 92,180,811.52
Due to GOCCs 299,489.01 292,698.21
Due to LGUs 7,165,460.98 5,528,399.48
Total Php 545,132,754.88 Php 112,417,880.30
The accounts represents the amount deducted from the salaries of officials and employees and
is remitted to the respective government agencies immediately on the month following the
month for which these were deducted. While the due to NGAS and LGUs accounts represent
balances of fund received by the LGU for specific purposes and share of various municipalities
and barangay in the RPT, and sand and gravel collection, respectively.
Note 13: Intra-Agency Payables
Intra-Agency Payables are reciprocal accounts that subsists within the LGU.

Due to Other Funds Php 12,104,215.92 Php 11,951,687.96
Total Php 12,104,215.92 Php 11,951,687.96
Note 14: Trust Liabilities
This major group of accounts consists of amounts held in trust for specific purposes, such as
Disaster Risk Reduction and Management Fund, and guaranty/security deposits. Details are as
follows:

Trust Liabilities-Disaster Risk Reduction and Management Php 8,743,890.27 Php -
Bail Bonds Payable 4,431.85 4,431.85
Guarantee/Security/Deposit Payable 6,953,706.89 1,510,849.29
Total Php 15,702,029.01 Php 1,515,281.14
Note 15: Deferred Credits/Unearned Income
This group of accounts is composed of the following:

Deferred Real Property Tax Php 145,872.59 Php 52,524.93
Deferred Special Education Tax 868,849.87 868,849.87
Total Php 1,014,722.46 Php 921,374.80
34
Note 16: Other Payables
This group of accounts is composed of the following:

Other Payables Php 24,191,306.71 Php 27,078,013.81
Total Php 24,191,306.71 Php 27,078,013.81
Note 17: Net Assets/Equity
Comparative details of net assets/equity are as follows:

Net Assets/Equity Php 2,627,477,727.83 Php 1,996,183,427.25
Total Php 2,627,477,727.83 Php 1,996,183,427.25
A P426,109,757.50 adjustment recognized directly in net assets/equity was made during the
year per JEV No. 101-2017-06-01 to recognize various road networks.
Note 18: Tax Revenue
Tax revenue amounting to P42.137 million represents 2.95% of the total revenue of P1.427
billion. Presented below are details of the tax revenue.

Professional Tax Php 149,692.50 Php 129,112.50
Tax Revenue-Individual and Corporation Php 149,692.50 Php 129,112.50
Real Property Tax- Basic Php 15,364,446.79 Php 12,032,934.78
Less: Discount on Real Property Tax-Basic 788,946.96 699,153.63
Special Education Tax 20,374,670.69 17,301,473.06
Less: Discount on Special Education Tax - -
Real Property Transfer Tax 1,786,598.00 1,288,944.39
Tax Revenue-Property Php 36,736,768.52 Php 29,924,198.60
Tax on Sand, Gravel and Other Quarry Php 1,708,884.36 Php 1,848,998.66
Tax on Delivery trucks and Vans 1,252,200.00 1,095,100.00
Amusement Tax 17,750.00 19,050.00
Franchise Tax 674,197.88 628,876.73
Printing and Publication Tax 3,400.00 2,000.00
Tax Revenue-Goods and Services Php 3,656,432.24 Php 3,594,025.39
Tax Revenue-Fines and Penalties-Property Tax Php 1,013,876.36 Php 1,060,301.66
Tax Revenue-Fines and Penalties-Other Taxes 580,887.20 206,931.67
Tax Revenue-Goods and Services Php 1,594,763.56 Php 1,267,233.33
Total Php 42,137,656.82 Php 34,914,569.82
35
Note 19: Share from Internal Revenue Collections
The share from internal revenue collections amounting to P1.375 billion represents 96.36% of
the total revenue of P1.427 billion. Comparative details are presented below.

Share from Internal Revenue Collections Php 1,375,715,601.00 Php 1,216,323,568.00
Total Php 1,375,715,601.00 Php 1,216,323,568.00
Note 20: Other Share from National Taxes
Details are presented below.

Share from National Wealth Php 248,652.59 Php 437,766.90
Share from Tobacco Excise Tax - 23,921.00
Total Php 248,652.59 Php 461,687.90
Note 21: Service and Business Income
The total Service and Business Income of P9.132 million represents 0.64% of the total revenue
of P1.427 billion. Comparative details of service and business income are as follows:

Permit Fees Php 976,000.00 Php 871,300.00
Registration Fees 132,400.00 50,000.00
Clearance and Certificate Fees 386,099.15 288,088.00
Inspection Fees 151,800.00 57,900.00
Processing Fees 107,400.00 30,300.00
Service Income Php 1,753,699.15 Php 1,297,588.00
Rent/Lease Income Php 75,409.00 Php 49,908.00
Receipts from Printing and Publication 350.00 -
Sales Revenue 637,084.00 585,993.50
Hospital Fees 5,582,016.50 5,517,388.14
Interest Income 1,084,050.76 838,478.04
Other Business Income - 1,086,917.00
Business Income Php 7,378,910.26 Php 8,078,684.68
Total Php 9,132,609.41 Php 9,376,272.68
Note 22: Share, Grants and Donation

Share from PAGCOR Php 152,032.32 Php 188,085.45
Total Php 152,032.32 Php 188,085.45
36
Note 23: Personnel Services
Personnel services totaling P421.21 million represents 35.40% of the total current operating
expenses of P1.19 billion. Below are the comparative details of personnel services.

Salaries and Wages - Regular Php 227,987,798.17 Php 208,531,859.85
Salaries and Wages - Casual/Contractual 29,354,061.99 28,006,244.23
Personal Economic Relief allowance 21,275,105.75 21,792,984.60
Representation Allowance 3,069,875.00 3,279,637.50
Transportation Allowance 250,125.00 212,000.00
Clothing/Uniform Allowance 3,480,000.00 3,310,000.00
Subsistence Allowance 4,996,805.83 4,546,081.11
Productivity Incentive Allowance 6,011,000.00 1,060,000.00
Honoraria 157,500.00 50,000.00
Hazard Pay 8,402,790.96 7,472,786.39
Longevity Pay 825,000.00 -
Year-End Bonus 36,919,665.02 34,643,821.24
Cash Gift 4,472,000.00 4,512,000.00
Other Bonuses and Allowances 35,668,463.22 455,000.00
Personnel Services Php 382,870,190.94 Php 317,872,414.92
Retirement and Life Insurance Premiums Php 26,574,548.18 Php 23,767,382.75
Pag-IBIG Contribution 4,217,098.20 3,760,933.43
PhilHealth Contribution 2,401,863.57 2,174,303.80
Employees Compensation Insurance Premiums 1,007,238.46 1,025,821.50
Personnel Benefit Contribution Php 34,200,748.41 Php 30,728,441.48
Retirement Gratuity Php 801,658.00 Php 154,638.25
Terminal Leave Benefits 3,338,395.08 2,404,494.86
Other Personnel Benefits - 20,834,486.02
Other Personnel Benefit Php 4,140,053.08 Php 23,393,619.13
Total Php 421,210,992.43 Php 371,994,475.53
Note 24: Maintenance and Other Operating Expenses
The maintenance and other operating expenses (MOOE) of P730.403 million represents
59.11% of the total current operating expenses of P1.19 billion. The top four components of
MOOE are: supplies and materials expenses (P336.332 million or 46.05%); other maintenance
and operating expenses (P140.951 million or 19.30%); general services (P99.239 million or
13.59%); and repairs and maintenance (P64.757 million or 8.87%). Comparative details of
MOOE are as follows:

Traveling Expenses - Local Php 13,660,241.78 Php 10,901,799.60
Traveling Expenses Php 13,660,241.78 Php 10,901,799.60
Training Expenses Php 2,348,970.85 Php 2,337,656.68
Scholarship/Grants/Expenses 9,637,400.00 2,880,223.50
Training and Scholarship Expenses Php 11,986,370.85 Php 5,217,880.18
Office Supplies Expense Php 32,910,504.73 Php 29,809,634.66
Accountable Forms Expense 1,705,654.26 505,115.20
Animal/Zoological Expenses 24,523,908.78 13,891,139.30
37
Food Supplies Expense 44,763,313.25 25,787,151.10
Drugs and Medicines Expenses 42,213,534.68 25,371,598.84
Medical, Dental and Laboratory Supplies Expenses 9,054,606.21 3,442,486.50
Fuel, Oil and Lubricant Expenses 129,057,522.88 115,105,276.07
Agriculture and Marine Supplies Expenses 6,365,532.50 1,915,158.62
Other Supplies and Material Expenses 45,738,408.60 16,213,883.18
Supplies and Material Expenses Php 336,332,985.89 Php 232,041,443.47
Water Expenses Php 3,311,152.27 Php 905,239.68
Electricity Expenses 24,819,386.26 19,584,375.66
Supplies and Material Expenses Php 28,130,538.53 Php 20,489,615.34
Postage and Courier Services Php 1,976,255.34 Php 47,106.00
Telephone Expenses 4,569,437.95 3,229,538.52
Internet Subscription Expenses 2,462,876.62 718,108.07
Cable, Satellite, Telegraph and Radio Expenses 125,479.20 -
Communication Expenses Php 9,134,049.11 Php 3,994,752.59
Confidential Expenses Php - Php 323,353.00
Intelligence Expenses - 3,789,000.00
Extraordinary and Miscellaneous Expenses - 1,348,742.36
Confidential, Intelligence and Extraordinary Expenses Php - Php 5,461,095.36
Other Professional Services Php 18,394,869.75 Php 5,383,659.00
Professional Services Php 18,394,869.75 Php 5,383,659.00
Other General Services Php 99,239,022.45 Php 45,538,924.65
General Services Php 99,239,022.45 Php 45,538,924.65
Repairs and Maintenance - Buildings and Other Structure Php 18,166,903.85 Php 20,873,314.12
Repairs and Maintenance - Machinery and Equipment 6,059,286.60 15,467,867.72
Repairs and Maintenance -Transportation Equipment 40,463,965.75 35,718,848.22
Repairs and Maintenance - Furniture and Fixturere 67,400.00 -
Repairs and Maintenance Php 64,757,556.20 Php 72,060,030.06
Taxes, Duties and Licenses Php 227,251.24 Php 41,256.50
Fidelity Bond Premiums 274,452.50 178,120.00
Insurance Expenses 7,314,816.86 7,022,357.05
Taxes, Insurance Premiums and Other Fees Php 7,816,520.60 Php 7,241,733.55
Advertising Expenses Php 616,000.00 Php 568,000.00
Printing and Publication Expenses 110,845.00 20,775.00
Representation Expenses 24,686,230.00 7,027,527.44
Transportation and Delivery Expenses - 208,357.28
Rent/Lease Expenses 2,632,850.00 1,134,000.00
Membership Dues and Contributions to Organizations 300,000.00 748,400.00
Subscription Expenses 93,617.40 101,317.00
Donations 29,981,277.96 35,038,124.80
Other Maintenance and Operating Expenses 82,530,731.60 144,274,567.36
Other Maintenance and Operating Expenses Php 140,951,551.96 Php 189,121,068.88
Total Php 730,403,707.12 Php 597,452,002.68
Note 25: Financial Expenses
Comparative details are as follows:

Interest Expenses Php 13,641,086.00 Php 15,550,887.90
Total Php 13,641,086.00 Php 15,550,887.90
38
Note 26: Non-Cash Expenses

Depreciation - Infrastructure Assets Php 90,000.00 Php 90,000.00
Depreciation - Machinery and Equipment 19,419,496.27 19,300,305.16
Depreciation - Transportation Equipment 5,107,116.51 4,431,094.75
Depreciation - Furniture, Fixtures and Book 134,719.14 54,841.87
Depreciation and Amortization Php 24,751,331.92 Php 23,876,241.78
Total Php 24,751,331.92 Php 23,876,241.78
Note 27: Transfers, Assistance and Subsidy

Subsidy to NGAs Php 1,339,200.00 Php -
Subsidy to Local Government Units 31,411,909.71 34,044,728.18
Subsidy to Other Funds 7,925,965.00 8,743,890.27
Subsidies - Others - 5,709,600.00
Total Php 40,677,074.71 Php 48,498,218.45
Note 28: Miscellaneous Income

Miscellaneous Income Php 52,000.00 Php 208,849.44
Total Php 52,000.00 Php 208,849.44
Note 29: Cash Inflows from Operating Activities

Collection from taxpayers Php 42,926,603.78 Php 35,613,723.45
Share from Internal Revenue Allotment 1,375,715,601.00 1,216,323,568.00
Receipts from business/service income 8,048,558.65 8,537,794.64
Interest Income 1,063,421.82 783,326.30
Other Receipts 1,878,512,742.67 1,283,201,910.51
Total Php 3,306,266,927.92 Php 2,544,460,322.90
39
Note 30: Cash Outflows from Operating Activities

Payment to suppliers and creditors Php 1,324,926,291.51 Php 1,093,416,627.20
Payment to employees 421,210,992.43 371,994,475.53
Interest Expenses 13,641,086.00 15,550,887.90
Other Expenses 904,623,934.27 785,185,856.12
Total Php 2,664,402,304.21 Php 2,266,147,846.75
Note 31: Cash Outflows from Financing Activities

Payment of loan amortization Php 54,728,288.14 Php 51,513,439.92
Total Php 54,728,288.14 Php 51,513,439.92
Note 32: Local Disaster Risk Reduction and Management Fund
The Local Disaster Risk Reduction and Management Fund (LDRRMF) represents the amount
set aside by the LGU to support its disaster risk management activities pursuant to RA No.
10121 otherwise known as the “Philippine Disaster Risk Reduction and Management Act of
2010”. The amount available and utilized during the year totaled P70,910,069.27 and
P61,025,580.79, respectively. The unutilized balance of LDRRMF from current year
appropriation is transferred to Account 8-90-9008, Continuing Appropriation.
40
Part II:
AUDIT OBSERVATIONS AND RECOMMENDATIONS
The legitimacy and legacy of leadership are not the resounding and eloquent speeches
but the level of governance that touches the very lives of the people even after the leader steps
down from power. This metaphysical political yardstick simply demands that those who lead
are duty bound to put in the forefront the welfare and development of the people. This
responsibility is not detached from reality for the current governmental structure has afforded
multitude of mechanisms and avenues to ensure that public services are delivered and public
welfare is advanced. For this purpose, Republic Act No. 7160 has espoused a more responsive
and accountable local government structure instituted through a system of decentralization
whereby local government units shall be given more powers, authority, responsibilities, and
resources1. By this, political subdivisions across the archipelago, like the Sultan Kudarat
Provincial Government (SKPG), are bound and measured by the delivery of short-term and
long-term development actions that are inclusive, responsive, and sustainable amidst the
demands of the present and uncertainties of the future. With this, the delivery of development
initiatives becomes an accountability of those elected and charged with local governance. It is
an accountability that demands not an ordinary level of governance but a governance that
touches the very lives of people.
The concept of governance is not new for it has been around in political and academic
conversations for a long time. Governance, as a task of running an entity, is a necessary
condition for an enabling environment in the delivery of development. It pertains to the
structures and processes through which affairs are managed in a manner that is transparent,
inclusive and responsive. Governance is vital to the management processes of planning,
implementing, monitoring and reporting. It calls for the establishment of an appropriate
direction for the organization; the proper management of risks; the institutionalization of
controls and mechanisms that promote enabling values system, facilitate informed and
transparent decision-making, capacitate everyone in the organization, enable effective
performance of clear and defined functions and responsibilities, and involve all stakeholders;
and the exaction of accountability to ensure organizational effectiveness and efficiency.
Simply put, the cornerstones of governance are risk management, control and
accountability. Risk management involves the identification and evaluation of the effect of
uncertainty on objectives, while control seeks to ensure conformity of actual performance with
the planned standards to facilitate the most effective and efficient attainment of the objectives.
Accountability, on the other hand, is the obligation to account for activities, accept
responsibilities for them including disclosure of the results in a transparent manner. These
governance components are interrelated as they influence one another. This intricately woven
fabric of risk management, controls and accountability enables the attainment of appropriately
set direction and objectives of the organization. Thus, the maturity and dynamics of these
mutually supportive systems within SKPG are essential, if not crucial, in the efficient and
effective execution of management processes upon which delivery of results relies. Gaps or
areas of improvement on these interrelated systems have considerable repercussions not only
1
Section 2(a) of RA 7160.
41
in the utilization of resources but also to the overall delivery of development where reputation,
legitimacy and legacy of leadership depend.
The value of governance is more pronounced for a government unit like SKPG as it
manages the delivery of development especially now that the outlook of the national
government, as contained in Executive Order No. 65 (EO 65)2, and the advances in the field
of management demand no less than an enabling level of governance. By this backdrop, we
have assessed SKPG’s delivery of development initiatives by looking into the inclusivity and
synergy of its direction setting and planning; the maturity of risk management practices; and
the adequacy of control mechanisms vital to the execution, monitoring and reporting of
development initiatives involving the 20% Development Fund (20% DF), Special Education
Fund (SEF), Local Disaster Risk Reduction Management Fund (LDRRMF), Gender and
Development Fund, Solid Waste Management, and Protection of Children among others. Our
observations and recommendations are discussed below.
1. SKPG needs to realign its existing articulated direction statements to conform to the
envisioned development thrusts of the national government and the result-based
management framework.
Fundamental to organizational success is its foresight and articulation of a desired

future state. Hence, the governance processes start and are affected with the appropriate
articulation of direction statements. An entity’s direction statements are its articulated vision,
mission and strategic objectives. Vision is a statement of a desired future state that an entity
wants to attain which may be larger than and beyond its full control. Mission is a statement
containing very purpose of an organization. Organizational objectives, on the other hand, are
specific, measurable, attainable, realistic and time-bounded statements of goals in varying
levels. The articulation of these direction statements have profound importance. First, these
statements contain the organization’s awareness of its purpose and its current realities. Second,
these articulations capsulize what it intends to do and how it will do it. Third, these will provide
measures to which performance can be assessed. Lastly, these statements will serve as guide
posts useful to management decision-making.
With its primordial purpose to advance development by providing public goods and
services, it is only imperative for SKPG to appropriately articulate its direction statements
along this noble purpose. However, there should be synergy and alignment between SKPG’s
direction statements and that of the national government since the former is a microcosm of
the latter; being the latter’s extension and agent. Although accorded with autonomy in the
conduct of its affairs, SKPG is still duty bound to adhere to the mandate of the national
government. This principal-delegate relationship is once again at work in EO 65. The said EO
has required that all plans of government departments, offices and instrumentalities, including
government-owned or –controlled corporations and local government units, shall be
consistent with Ambisyon Natin 20403. The Ambisyon Natin 2040 envisions the Philippines,
by 2040, to be a prosperous, predominantly middle-class society where no one is poor; the
2
Approving and Adopting the Twenty-Five-Year Long Term Vision Entitled Ambisyon Natin 2040 as Guide for
Development Planning; October 11, 2016
3
Section 4 of EO 65
42
peoples live long and healthy lives, smart and innovative, and live in a high-trust society4. It
puts forward that, by 2040, impacts of government actions are evident by having Filipinos
enjoy strongly rooted, comfortable, and secure lives. These impacts will be brought by the
outcomes of initiatives for housing and urban development, manufacturing, connectivity,
educational services, tourism and allied services, agriculture, health and wellness services, and
financial services among others. This enunciated Ambisyon Natin 2040 is the articulated vision
of the Government of the Philippines to which SKPG’s articulated direction statements must
conform or be aligned.
Upon inquiry on whether the current articulated direction statements of SKPG are
aligned with Ambisyon Natin 2040, Management readily submitted documents, primarily the
Provincial Disaster Risk Reduction Management-Climate Change Adaptation (PDRRM-CAA)
Program, claiming that it contained articulated and aligned direction statements of SKPG.
While we appreciate the efforts of Management, a circumspect of the submitted documents,
however, points to needed improvements with regard to the alignment of the current direction
statements of SKPG with Ambisyon Natin 2040 following the result-based management
(RBM) framework. As exposition, we sampled and examined the purported direction
statements in the submitted PDRRM-CAA Program coined as maintenance of peace and order
and public safety implying improved protective services with its implementation strategies of
hiring of additional peace and public safety personnel, provide equipment and facilities, and
conduct of massive advocacy and public awareness campaigns; and its corresponding projects
of hiring of additional policemen and firemen, training of volunteer fire brigade, capability
building for police and fire personnel, and fire station and fire-fighting equipment in every
municipality. From these statements, it can be observed that: first, the goal coined as
maintenance of peace and order and public safety was not even an impact statement under
RBM. What is more in tune with the change language requirement of RBM is the implied
improved protective services; second, outcome statements were not articulated; third, strategy
statements referred to projects or actions to be taken while the project statements pointed to
outputs; fourth, output indicators as measures of delivery and accountability were not
established; and lastly, the necessary inputs were not provided.
To explain, the above analysis for direction statement articulation and alignment uses
the internal logic espoused by RBM. The objective of RBM is to provide a coherent framework
for strategic planning and management based on learning and accountability in a decentralized
environment. The results-based approach aims to improve management effectiveness and
accountability by defining realistic expected results, monitoring progress toward the
achievement of expected results, integrating lessons learned into management decisions and
reporting on performance.5 The RBM framework is followed for the delivery of development
across the world. It accentuates the importance and relationship of inputs, outputs, outcomes
and impacts when managing results. The framework emphasizes the delivery of change from
the current state of things to the desired state with measures of performance and accountability.
It highlights the progression and control over the delivery of results. It underscores the idea
4
Section 1 of EO 65
5
Results Based Management Concepts and Methodology; UNDP Results Framework Technical Note: 2000, July
2002 citing Note on RBM, Operations Evaluation Department, World Bank, 1997 and “Results-based
Management in Canadian International Development Agency”, CIDA, January 1999.
43
that full control lies upon the inputs and outputs of the results chain, and the accountability
over the actualization of the set outcomes and impacts that should necessarily be aligned with
that of the higher body, in this case the national government. Squarely put, direction statements
of SKPG should not only be aligned with the current thrusts of the national government but
must also conform with and capture the essence of RBM. Correlating this observation to the
various responses of Management, an inference can be made that the needs to improve the
capacity of personnel to undertake the exercise formally and to establish structured processes
that would enable the same were the likely reasons why this challenge on alignment exists.
Also, these Management submissions advanced that the nature of SKPG, being a political unit,
puts tension upon the leadership to make good of its political commitments and to promptly
act on matters of preferential concern. This reality translates to courses of actions being
undertaken that were not previously planned, much less in conformance with the above
discussed idea of alignment.
We deeply recognize the unique nature of SKPG and its efforts towards delivery of
development that sometimes create juxtaposition between the demands of compliance and
actual operations. Furthermore, we accord due respect to the discretion of the leadership on
how it manages the affairs of SKPG, being a political unit; but, this work would like to press
that reasonable proficiency in the application of the above discussed principles of alignment
and conformance with RBM will not only ensure congruency of efforts both within and without
the organization but will also enable SKPG to operate in a more effective and efficient manner.
Contrariwise, articulating organizational-wide direction statements, goals and objectives that
are not aligned with the national government thrusts and not in conformance with the RBM
framework runs the risks relating to incongruence of actions that may eventually translate to
operational ineffectiveness and inefficiencies that impact leadership reputation. By this token,
we posit the following recommendation.
We recommended and Management, with PPDO6 and Office of the Administrator7

as leads, agreed to ensure that its direction statements are aligned with the envisioned thrusts
of the national government and in conformance with the result-based management
framework to enable a more effective and efficient management of results through an
immediate revisit of committed personnel; and capacity building and establishment of
formalized processes for the said purpose moving forward.
2. SKPG’s current level of governance requires the improvement of its risk management
practices.
An entity’s articulated direction statements serve as guiding beacons for the

organization and as measures in assessing its performance. All things ideal, what has been set
should fully materialize. In reality, however, the organization should account for and manage
risks. Risks are uncertainties that have favorable and unfavorable effects. These uncertainties
should be managed properly in order to ensure the effective and efficient delivery of what is
planned and, consequently, the attainment of the organization’s objectives, mission and vision.
Handling risks should be present in planning, implementation, monitoring and evaluation, and
6
See Section 476(b)(1 to 5) of RA 7160.
7
See Section 480(b)(1) of RA 7160.
44
reporting phases of programs, projects and activities. Risk management is an indispensable
component of effective and efficient delivery of outputs, outcomes and impact under the RBM
framework. It enables more robust planning and informed decision-making; enhances ability
of personnel to remedy serious gaps; and facilitates provisions of timely information on these
gaps. Because of this, it is incumbent upon those charged with management to implement risk
management replete with processes that: ensure proper identification of risks through
appropriate contextualization; adequately assess the identified risks; formulate mitigating
actions for identified and assessed residual risks; implement these mitigating actions; properly
monitor, evaluate and report its implementation; and provide risk data and information through
formalized documentation. Risk management should be observed by everyone and be integral
to the business processes of the organization. Otherwise, unmanaged and, eventually,
materialized risks will have detrimental effects ranging from operational inefficiencies and
ineffectiveness to reputational damage. Risk management is therefore crucial.
In as much as risk management capacitates an organization to get to where it wants to

go while averting drawbacks and surprises along the way, much of it depends on how it is
contextualized with the defined vision, mission and objectives as the foundation. Generic
activities involving the contextualization of risk management within any organization involve
the setting of criteria against which risks will be assessed. On the other hand, the context scope
is determined within the boundaries of the organization objectives. The selection of key
objectives has to be driven by an evaluation of external and internal factors that may currently
impact the organization. Afterwards, a thorough review of these factors at the commencement
of risk assessment activities enables the identification of processes that have more vulnerability
and that would derive the greatest value for risk assessment. In essence, these contextualization
requirements have to enable people in the organization to identify the critical factors that can
give rise to risks. The behavior of internal processes is expected to react to external
disturbances giving rise to the identification of risks by the organization. However, it should
not be inferred that risk contextualization is only done at the top level. More often,
organization-wide risks are results of smaller and peculiar risks that reside on smaller processes
across the organizational hierarchy. This means, therefore, that risk contextualization has to be
viewed from all levels of the organization. Given the wide latitude and complexities of a local
government unit’s operations, this activity must not be overlooked. It is therefore critical that
risk contextualization is performed incisively because it sets the foundation for risk
identification and therefore influences succeeding risk management actions. A risk that is not
identified is a risk that is not managed at all.
Thus, the importance of having articulated direction statements that are aligned to the
achievement of the national government’s objectives cannot be over-emphasized. This
becomes more pronounced when the internal and external context of risk assessment are
defined because SKPG revolves around an environment that is distinct from other government
agencies. Because of this, we inquired on how SKPG contextualizes its risks. Based on the
submissions of Management, and in relation to the preceding observation, the presented risk
management is anchored on SKPG’s disaster risk reduction and climate change priorities and
commitments. It must be underlined that this is only managing risks of a composite part of
SKPG’s sphere of control and accountability, a portion of its whole operation. Risk
management should be inclusive. This necessitates correlation of SKPG’s risks to well-defined
45
objectives that is both paramount and crucial to the entire risk management exercise. As such,
to properly establish the context of its risk management, SKPG needs to articulate first its very
own well-defined objectives that capsulize all its internal and external deliverables and
operating realities. Otherwise, the related processes of the risk management exercise will be
misplaced and SKPG’s risks will be unmanaged. It will just trigger the fashioning and
implementation of controlling processes and procedures which operationalize the set strategies
that do not effectively deliver the desired responses to risks and risk indicators. It also affects
the crafting of risk monitoring procedures that are necessary in the iterative risk management
process. Hence, it must be emphasized that unmanaged risks translate to unnecessary costs and
exposes SKPG to the daunting possibility of never fully realizing its purpose. By this, the
recommendation below is advanced.
To fully achieve the benefits of risk management, we recommended and

Management, with PPDO and Office of the Administrator as leads, agreed to improve its
risk management practices through appropriate contextualization, formalized
documentation, and involvement of offices and other stakeholders.
3. SKPG needs to further enhance its current planning practices to ensure inclusive,
responsive and sustainable crafting of development initiatives.
Good intentions expressed in various programs, projects and activities as well as

availability of financial resources are not enough to ensure that development results will be
achieved. Clear and quality plans for development initiatives play a critical factor for it
improves focus on priorities and efficiency in the use of time, money and other resources to
bring about the desired change. In this regard, planning is imperative. Planning is viewed as a
decision-making process that will guide decisions concerning future actions. The planning
process also provides a systematic way of managing susceptibilities and laying down the
control measures to ensure implementation of development initiatives. It is in this stage that
synergy between the articulated direction statements of the organization and the operational
objectives is forged into courses and measures of action. This now, as already pointed above,
highlights value of setting clearly defined goals and embedding the logic of RBM. As a result,
development initiatives are deemed to have greater chance of success when the objectives and
scope of programs, projects and activities are properly defined and clarified during the
planning stage. Thus, to improve chances of success, attention needs to be placed in proper
planning. Without proper planning, projects may be implemented at the wrong time or in the
wrong manner and would result to poor outcomes.
For a local government unit, transforming goals to courses of actions is capsulized on

the regularly prepared short-term and long-term plans including the Provincial Development
and Physical Framework Plan (PDPFP), Annual Investment Plan, and plans for local disaster
risk reduction, gender and development, and solid waste among others. The formulation of
these plans is an extremely important responsibility for any governing body because this is
where the priorities are set and decisions are made as to what is to be accomplished. The
identification and formulation of programs, projects and activities (PPAs) is not only a matter
of compliance for the approval of budget but also plays an important role towards carrying out
the mandates and the eventual realization of the organization’s purpose. Therefore, it is
46
expected that these plans are focused on achieving clear results for citizens and service users
that are inclusive, responsive and sustainable through implementation of the long-term and
short-term PPAs. In this regard, formulated plans of SKPG should nevertheless follow the
RBM framework, champion the theory of change and outline the logical relationship of inputs,
outputs, outcomes and impacts.
When queried about this, Management offered that during the planning stage,
development initiatives were formulated based on the reports by participating organizations
and consultations with Municipal Planning and Development Coordinators (MPDCs). These
consultations were made for the appropriate and adequate needs identification. Workshops
and meetings were then conducted to ensure that there were no duplication of PPAs and that
there is alignment with the national goals. The crafted development initiatives were generally
supplemental courses of actions by the SKPG to address gaps in areas where existing
capacities of the concerned or recipient municipalities are challenged. Management explained
that this approach was espoused in the view that it is more cost efficient. Management,
however, expressed that the planning exercise is not formally documented. Leadership
preferential commitments were usually generic and the specifics were identified in-flight.
These leadership direction and preferential commitments also drive the specification of PPAs.
Hence, abrupt or unexpected changes on PPAs from what was originally planned are not
uncommon during implementation. Management further provided that in planning for disaster,
risks, and gender and development PPAs, the challenge of non-availability of relevant and up-
to-date data exists. This affects the identification and formulation of the PPAs. Due to the
absence of these data that serve as basis for a more inclusive and synergistic planning, PPAs
were generically crafted and were only specified in-flight based on the requests or needs of
the recipients (e.g. of municipalities).
Based on the above submissions and after evaluation of the documents made available
to the team, we have noted some points for improvements on SKPG planning practices. First,
up-to-date and relevant data should be maintained. Data and information should be captured,
retained and kept updated for it is indispensable to a well-informed planning exercise and the
building of institutional knowledge through learned experiences. Its availability and
maintenance is not only of value to the planning phase but to the entire results delivery chain.
As what is apparent, SKPG should have formalized the documentation of its management
exercises. Elsewise, SKPG runs the risks associated with misinformed or baseless planning
decisions such as non-responsiveness of courses of actions and the consequential operational
inefficiencies thereof. Second, enabling mechanisms like the committed system, council or
board and the necessary processes should be observed, institutionalized and strengthened 8.
8
For development planning in general, see Sections 106, 107(c), and 109(a) of RA 7160.
For planning related to 20% Development Fund, see Section 287 of RA 7160 and DILG-DBM JMC No. 2017-
01.
For planning related to the Special Education Fund (SEF), see Sections 98(a)(b1), 99 and 100(c) of RA 7160
and Section 7(b) of RA 10410.
For planning related to Gender and Development (GAD), see PCW Memorandum Circular No. 2011-01 and
PCW-DBM-DILG-NEDA JMC No. 2013-01 as amended by PCW-DBM-DILG-NEDA JMC No. 2016-01.
For planning related to Local Disaster Risk Reduction Management Fund (LDRRMF), see Section 12 of RA
10121, DILG Memorandum Circular 2012-73, and NDRRMC-DBM-DILG Joint Memorandum Circular No.
2013-01.
47
Planning as process depends on how it is structured and who are its leads. Structured processes
and strengthened system, council or board of committed individuals are imperatives for
planning. Well-thought-out planning procedures performed by dedicated system, council or
board will ensure not only the production of inclusive, responsive and sustainable plans but
will also reinforce the fabrics of controls and accountability. Lastly, there should be integration
of RBM on the development plans. Current development plans of SKPG did not espouse the
theory of change. These plans did not clearly provide the outline on how PPA’s will deliver
results in the logical relationship of inputs, outputs, outcomes and impacts. The absence of this
logical relationship within SKPG’s results chain runs counter to the very of essence of the
planning exercise. Simply put, without the integration of RBM efforts will be less effective
and efficient in delivering inclusive, responsive and sustainable development.
As result of these, PPAs of SKPG were oftentimes couched in general terms where the
specifics are detailed in-flight. Point be stressed, though, that nowhere in this observation
discounts the efforts of SKPG on how it plans the delivery of its mandate. In fact, we recognize
the efforts of Management that resulted to the availability of workable plans that SKPG is now
using to actualize its mandate. We also recognize the context of SKPG’s work where political
commitments and preferences often drive the direction of the organization. These matters,
however, should not deter SKPG from pursuing the optimal fusion between the delivery of
results and leadership’s political commitments and preferences. The best avenue to make this
happen is through a robust planning process. Simply said and as discussed above, robust
planning depends on availability of relevant and up-to-date data and information, properly
functioning structured processes, strengthened system, council or board of committed
individuals, and the integration of RBM. Contrariwise, efforts to objectify both the mandate
for development of SKPG, as a political unit, and the political commitments and preferences
of leadership would only be riddled with disconnects that exponentially increase the challenges
and exposures of SKPG to operational ineffectiveness and inefficiencies and may even affect
the reputation of leadership. With this overwhelming importance of planning to the overall
management and delivery of results, we put forward this recommendation.
We recommended and Management, with PPDO and Office of the Administrator as

leads, agreed to enhance its current planning practices to ensure the crafting of inclusive,
responsive and sustainable development initiatives through the establishment of
mechanisms that warrants availability of relevant and up-to-date data and information;
properly functioning structured processes; strengthened system, council or board of
committed individuals; and the integration of RBM.
4. SKPG has to institute mechanisms to reinforce delivery of responsibilities and strengthen

its monitoring over the implementation of its development initiatives.
Governance is not only about decision-making and planning. Decision without

implementation is self- defeating. Along the management processes, implementation follows
the decision and entails the materialization of what has been planned or decided.
Implementation of development initiatives consists of carrying out planned courses of actions
or PPAs with the end view of delivering positive change. Parallel to the implementation
process is the monitoring process that keeps tab of the progresses of what has been planned
48
and infuse controls to ensure that PPAs are on track in achieving its desired end results.
Monitoring is an on-going process that provides feedback information necessary in assessing
whether progress is being made and making needed in-flight adjustments. Moreover,
monitoring also provides feed forward information that bridges the repetitive management
process of planning, implementation, reporting and evaluation. In a nutshell, implementation
relates to doing what has been planned while monitoring sees to it that implementation is
carried out correctly and within the bounds of what was planned. Noting this and
notwithstanding the effects of the observation presented above, we endeavor to look into the
implementation of development initiatives of SKPG and its corresponding monitoring
mechanisms to ensure successful delivery. The level of delivery of development initiatives of
SKPG as of December 31, 2017 is presented in the table below.
Table 1: Delivery of Development Initiatives of SKPG as of December 31, 2017
Delivery No. of Total Budget Total Costs % of Delivery

Frontier PPAs for PPAs Incurred based on Costs
2017 20% DF 64 P275,843,623.00 P202,904,731.72 73.56%
SEF 9 10,000,000.00 0.00 -
GAD 34 70,285,781.00 60,684,688.00 86.34%
LDRRMF - 70,207,531.00 63,153,195.96 89.85%
As can be gleaned from the table above, the levels of delivery of SKPG is
commendable. When asked on what were the possible factors that attributed to the less than
optimum delivery of expected results, the Management offered that the implementation of
PPAs were faced primarily by issues on work synergy, work behavior, logistics and adequacy
of monitoring mechanisms. The Management further explained that, for the infrastructure
projects, the major challenge lies in the non-identification of specific programs, projects and
activities (PPAs) in the early stages of planning. PPAs were only identified later based on
preferential commitments. Consequentially, these PPAs will have to be carried out in a race
with time where delays are highly probable. It was also pointed out that the inaccessibility of
areas due to poor road conditions especially during rainy seasons, lack/absence of legal
title/deed of donation, and peace and order situation contribute to the delays in
implementation. As to other development initiatives, the Management advanced that the lack
of adequately trained personnel on matter deters the effective delivery of planned PPAs. It was
also pointed out that, despite the considerable number, contractual personnel (job orders)
cannot undertake the responsibilities related to the implementation of these PPAs because of
reduced accountability due to the nature of their employment with the Provincial Government.
On the adequacy of monitoring mechanisms, it was further discussed with and amenable to
Management that the creation of a committed body of personnel to conduct periodic
monitoring of the implementation of projects and the institutionalization of other mechanisms
like the requirement on fund transferees to submit fund utilization reports may prove beneficial
to elevate the concern. Hence, this recommendation.
We recommended and Management, with PPDO, PEO9 and Office of the

Administrator as leads, agreed to ensure, as far as practicable, an optimum level of delivery
9
See Section 477(b) of RA 7160.
49
of development initiatives through institution of mechanisms that exacts the performance of
responsibilities and enhances the periodic monitoring of implementation.
5. SKPG has to improve its current reporting practices to reinforce accountability over
representations.
Accountability is a relationship based on obligations to demonstrate, review, and take

responsibility for performance, both for the results achieved in the light of agreed expectations
and the means used. It is supported by clear roles and responsibilities, clear performance
expectations that are balanced with the capacity to deliver development actions, defined
monitoring and evaluation mechanisms, and credible and timely reporting. Applying the
concept makes it profound that an organization is accountable to those who will be affected by
its decisions or actions. Part of the accountability continuum for those charged with
Management in SKPG is to ensure that information on development PPAs and resources are
reported with reasonable degree of reliability and timeliness. Timely and reliable information,
both financial and non-financial, are essential in ensuring effective governance and
accountability of public entities. Without this information, the decision making of the
government bodies will be compromised as legislators cannot make effective and robust
decisions regarding the allocation of resources, and officials cannot effectively manage the
resources at their disposal. Furthermore, it deters the holding of a government unit accountable
for how it used public money.
Along this line of accountability, evaluation of the accounting system of SKPG

revealed that information in the Consolidated Financial Statements cannot be delineated into
data for 20% Development Fund (DF) and 80% General Fund. It was also observed based on
the submitted reports that a considerable lag exists in the reporting process of SKPG. And, in
some instances, required reports are not available such as the monthly report on the sources
and utilization of Disaster Risk Reduction and Management Fund (DRRMF). When asked
about these matters, Management explained that the lack of competent personnel with
accounting degree/knowledge compounded by the voluminous reportorial requirements are
causes of these challenges. Management further pointed out that the lag on reporting is a
recognized area of improvement and is brought about by the need to fully verify
representations through reconciliations and series of checks and balances amongst and
between the concerned offices in SKPG. Management proffered that it is the basic trade-off of
timeliness and reliability.
We recognize the current realities and efforts of the Management to, as far as possible,
make SKPG’s representations timely and reliable. We also recognize that trade-off exists
within this sphere of management accountability. But, this observation presses forward the
idea and the need for SKPG to look into its current reporting practices with the end view of
improving the same. It must be stressed that these pointed challenges affect the accuracy and
reliability of SKPG’s representations. These challenges exponentially increase the
susceptibility of misleading decision makers and, of course, other concerned stakeholders like
the public. Internally, these areas of improvement create operational vulnerabilities that may
lead to manipulation of data such as joggling of disbursements or even double charging of
expenses without any traces to account the same. In all, these matters present not only
50
information risks but the possibilities of other operational conundrums that may deter delivery
of developments with efficiency, effectiveness and accountability. This being the situation, this
recommendation is advanced.
We recommended and Management, with Office of the Administrator, PAO, PBO

and PTO as leads, agreed to enhance the accountability over representations by improving
its current reporting practices through adoption of mechanisms that, as far as practicable,
will address the issues on timeliness and reliability.
51
PART III:
STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS
The table below presents the results of the evaluation of Management’s implementation of prior years’ audit recommendations
from CY 2007 to CY 2016.
STATUS OF
REASON FOR
MANAGEMENT IMPLEMENTATION
OBSERVATIONS AND RECOMMENDATIONS REF PARTIAL/NON-
ACTION (Full, Partial, On-going
IMPLEMENTATION
or Not Implemented)
No. 1: The utilization of the Local Disaster Risk AAR The 2018 LDRRM Action On-going
Management Fund could not be verified and determined 2016 Plan was prepared as the
the validity and correctness of its charges contrary to the basis in the implementation
relevant provisions of Republic Act (RA) 10121 and its of LDRRM Programs and
Implementing Rules and Regulations (IRR), thus setting Projects. Efforts were also
limits in the full attainment of the objectives of the fund. carried out to comply with
the monthly reportorial
We recommended that Management require the requirement (submission of
LDRRMO to submit the Annual LDRRMFIP and the reports on the 15th day of
monthly Report of Sources and Utilization of DRRMF every ensuing month).
duly certified correct by the Provincial Accountant on or
before the 15th day after the end of each month.
No. 2: The collections by some Collecting Officers were AAR Fully Implemented
not turned over/ deposited to the treasurer/authorized 2016
depository bank within the period stated on the provisions
of Manual on New Government Accounting System
(NGAS) and COA Revised Cash Examination Manual
thereby exposing government funds to risk of loss or
misappropriation.
We recommended that Management:
a. instruct all Collecting Officers to deposit intact all their

collections daily or not later than the next banking day with
the AGDBs. In cases where collections are minimal and
daily deposit thereof becomes costly and impractical,
52
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
deposit can be made at least once a week, or as soon as
their collections reach P10,000; and
b. establish a reasonable amount of Petty Cash Fund for

petty operational expenses.
No. 3: The year-end balances of Real Property Tax (RPT) AAR The first two On-going
Receivable and Special Education Tax (SET) Receivable 2016 recommendations were
of P3,081,429.46 and P868,812.50 respectively do not implemented by
tally with their corresponding reciprocal accounts Management. However,
Deferred RPT Income and Deferred SET Income with a variance remains between
balances of P52,524.93 and P868,849.87 respectively, as the receivable and the
required under the Manual on NGAs thus causing doubt reciprocal account. As of
on the correctness of these balances in the financial December 31, 2017, the of
statements. RPT Receivable was
P3,081,429.46 while the
We recommended that Management: Deferred RPT was
P145,872.59. There is on-
a. direct the Provincial Assessor’s Office to prepare and going reconciliation.
submit to the Provincial Treasurer’s Office, on or before
the thirty-first (31st) day of December each year, an
assessment roll containing a list of all real properties have
been newly assessed or reassessed and the values of such
properties;
b. require the Provincial Treasurer’s Office to furnish the

Provincial Accounting Office of a duly certified list
showing the amount due and collectible for the year at the
beginning of the year for each respective taxpayers as basis
to draw a Journal Entry Voucher (JEV) to record the debit
to Real Property Tax Receivable/Special Education Tax
Receivable and crediting to Deferred Real Property Tax
Income/Deferred Special Education Tax Income; and
53
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
c. take extra care in the recording of transactions affecting
RPT/SET Receivables and Deferred RPT/SET income.
The balances of the four (4) accounts should be reconciled
and adjustments should be made to present fairly the
No. 4: Various procurements of goods and supplies were AAR On-going efforts are On-going
not posted in the PhilGEPS website contrary to the 2016 undertaken by Management
requirement stated under RA 9184 and its IRR-A; thus, to fully implement the
resulting to non-promotion of transparency and efficiency recommendations.
in government procurements. However, some systems
challenges (lags and
We recommended that Management: timeouts) were encountered
in the course of the
a. post all procurement opportunities to the PhilGEPS implementation.
bulletin board as well as to the agency’s own website, if
any, and any conspicuous place in the premises of the
Procuring entity. This may not be complied with for the
unforeseen contingency requiring immediate purchase
within P100,000 and procurements equal to P50,000 and
below; and
b. adhere to the requirements prescribed by IRR-A of RA

9184.
No. 5: The optimum utilization of the 20% Development AAR As of December 31, 2017, On-going
Fund in C.Y. 2016 for intended development projects were 2016 23 projects under AIP 2016
not achieved, considering that the Programs / Activities / faced major delivery
Projects under this fund should have been completed challenges due to the non-
and/or nearing their expected completion contrary to Item identification of specific
No. 5 of DILG-DBM Joint Circular No. 2011-1 dated programs, projects and
April 13,2011. activities (PPAs) in the
early stages of planning. It
We recommended that Management: was also pointed out that
the inaccessibility of areas
due to poor road conditions
54
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
a. see to it that the 20% Development Fund be optimally especially during rainy
utilized to help achieve desirable socio-economic seasons, lack/absence of
development and environmental outcomes; legal title/deed of donation,
and peace and order
b. address the factors hampering the project situation contribute to the
implementation such as poor synchronization, peace & delays in implementation.
order problem, conflicts, weak coordination/timing of However, Management is
projects. With this, have a contingency plan to cope with exerting its utmost efforts
the said aggravating factors; and to redress these problems
and fully implement the
c. improve the project monitoring and evaluation system audit recommendations.
which has the potential of mitigating delays in project
implementation arising from those mentioned factors.
No. 6: Several general provisions on the implementation AAR Spearheaded series of On-going
and enforcement of Ecological Solid Waste Management 2016 coaching to walk-in clients
Program under RA No. 9003 and its implementing Rules to assist the Municipalities
and Regulations were not fully complied with in the formulation of their
respective plans. On the
As reiteration, we recommended that Management, for process of deliberation for
strict compliance: the unapproved municipal
SWM Plans for its
a. consolidate immediately all the submitted SWM Plan to consolidation and
arrive at an initial Provincial SWM Plan, in compliance subsequently approval of
with RA 9003 and its IRR; the Provincial SWM Plan.
b. coordinate with SWM Board of the municipalities with

respect to the evaluations made by the regional office of
the environment management bureau to expedite the
preparation and submission of the PSWMP; and
c. if possible, implement immediately the general program

of action to achieve the government’s policy specifically
to ensure the protection of public health and environment.
55
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 7: The true cost or booked value of Road Asset AAR Road Asset Networks were On-going
Networks in the financial statements cannot be ascertained 2016 recognized in the books of
due to the non-maintenance of subsidiary ledgers and non- accounts on June 2017
recognition of depreciation/impairments on the books of based on the Report on the
accounts. Moreover, the regular maintenance for the Physical Count of Local
upkeep of the road network system was not properly Road Network submitted
charged under COA Circular No. 2015-008 dated by the Provincial
November 23, 2015. Engineer’s Office.
Subsidiary ledger shall be
We recommended that Management: maintained to record
subsequent construction
a. address the Accounting Division/Unit to: and repairs and
i. Maintain subsidiary records for roads and road maintenance of each road
components for every road network; network and its
ii. prepare a lapsing schedule for the computation of components. Efforts are
the depreciation for each component at the end of still undertaken to fully
the year; implement the
iii. the total road network system shall be disclosed in recommendations
the Notes to the Financial Statements (Annex B);
iv. prepare the Report on the Physical Count of the
Road Network System (Annex C);
v. prepare the Local Road Network Ledger Card
(Annex D); and
vi. ensure the proper accounting of the repairs and
maintenance of the roads;
b. require the General Services Office to:

i. maintain a Local Road Inventory and Road Map;
and
ii. keep a complete Local Road Network Property Card
for all roads and its components (Annex E); and,
c. direct the Provincial Engineers Office to provide the

accounting office and the general service office with the
56
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
complete description and cost segregation of road
components.
No. 8: The amount of P12,594,007.05 representing AAR Management continues to On-going
Advances to Officers and Employees for travel and other 2016 adopt the following scheme
time-bound undertakings remained unliquidated as of for the collectability of the
December 31,2016, in violation to Section 89 of PD 1445 said advances:
and several deficiencies noted in the grant, liquidations
and monitoring of cash advances contrary to COA Circular a. stricter / full
No. 97-002 dated February 10,1997. implementation of the 2%
salaries and wages
We recommended that Management: deduction and 20% from
bonuses and other benefits;
a. require the Accounting Office to regularly perform the
following: b. establish collectability /
i. require certification on the face of the cash advance recoverability of the cash
voucher that an official/employee has no previous advances; and
unliquidated cash advance, as an added control;
ii. suspend salaries if the official/employee failed to c. complete full settlement
liquidate the cash advance within the prescribed of unliquidated cash
period; and advances to those who are
iii. prepare and submit a Monthly Status of Cash about to retire or to transfer
Advances to the Audit Team for monitoring to other offices.
purposes;
On-going efforts are made
b. on the unliquidated travel expenses, send within 10 days to further improve the level
before the expiration of the 30 days after the return from of unliquidated cash
travel & impose strictly the sanctions of withholding the advances. As of December
salary upon failure to liquidate; 31, 2017, a total amount of
P8,308,139.09 remained
c. desist from issuing clearance from money unliquidated. Of which,
accountabilities to the concerned accountable officers who 8.17% are aged over 30
were about to retire or separate from the service until they days but less than 1 year;
have fully settled their money accountabilities; and 30.69% are 1 year to 5
57
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
4. on the part of the outstanding cash advances of years; and 61.14% are over
accountable officers who were already separated from this 5 years.
office, exert extra effort to locate their whereabouts to send
demand letters and secure necessary documents needed to
support the request for write-off.
No. 9: Semi-expendable properties amounting to AAR Fully Implemented
P3,784,188.40 were still accounted as part of the Property, 2016
Plant and Equipment accounts contrary to Chapter 9 and
10, Volume I of Government Accounting Manual.
a. instruct the Accounting Office to prioritize the

reclassification of properties below the P15,000.00
threshold to Semi-expendable accounts to reflect the true
balances of accounts in the Financial Statements; and
b. instruct the Property Officer to issue ICS to all end-users

of semi-expendable items and cancel those previously
issued PAR on some items.
No. 1: Advances to Officers and Employees amounting to AAR (See management actions On-going
P11,253,629.47 had remained unliquidated beyond the 2015 on AAR 2016 Finding No.
reglementary period prescribed under existing rules and 8.)
regulations, thereby understating the expense and
overstating the receivable account.
We recommended that management send demand letters

to the officers and employees whose cash advances remain
unliquidated as of year-end for the proper recording of
expenses in the books. For those personnel who already
transferred to other agencies and/or separated but without
clearance from the Province, send demand letters to their
last known addresses and exhaust all possible actions to
demand liquidations from them. Also, the LGU may
58
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
request from the Commission on Audit for write-off of
cash advances involving deceased personnel and those
whose accounts have been dormant for years together with
appropriate supporting documents including proof that
extensive efforts have been exerted to demand liquidation
thereof.
No. 2: Program/Activities/Projects under the 20% Local AAR (See management actions On-going
Development Fund for CY 2015 and 2014 amounting to P 2015 on AAR 2016 Finding No.
10,350,000.00 were neither completed nor initiated that 5.)
could have contributed to the socio-economic
development and environmental well-being of the
constituents.
As this has been an observation for prior years, we reiterate

our recommendation for the management to closely
monitor the utilization and implementation of projects
funded out of the 20% Local Development Fund for the
attainment of desirable socio-economic development and
environmental management outcomes. Establishment of
timelines and strict compliance to such is greatly
encouraged.
No. 3: Identification of projects, programs and activities AAR Admittedly, there was On-going
related to Gender and Development is not in accordance 2015 difficulty on the GAD
with PCW-NEDA-DBM Joint Circular No. 2012-01, thus implementation due to the
effectiveness of the gender-responsive planning, adequacy of GAD sex-
budgeting and addressing GAD objective cannot be disaggregation data base.
assured which affect the principles of a gender-responsive With the GAD program and
governance. project for 2018 on CBIMS,
a GAD sex-disaggregated
We recommended that GAD Focal Point system comply database will be established
with the guidelines in the formulation of GAD Plan and and will be maintained
Budget as embodied in PCW-NEDA-DBM Joint Circular moving forward.
2012-01. Prioritize conduct of gender audit and
formulation of GAD database/sex-disaggregated data so
59
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
that projects, activities and programs to be included in the
Annual Investment Program will fully address the existing
gender issues in the Province.
No. 4: The unexpended portion of the Local Disaster Risk AAR Fully Implemented
Reduction Management Fund (LDRRMF) amounting to 2015
P8,743,890.27 as of December 31, 2015 were not
transferred to a special trust fund in violation of Section 21
of RA 10121, as reiterated in COA Circular No. 2012-002.
We recommended that the unexpended balance be

transferred to a special trust fund pursuant to Section 21 of
RA No 10121 to ensure that funds are available for disaster
and risk reduction and management activities of the
LDRRMC in times of calamities.
No. 5: The submission of monthly financial reports and AAR Albeit number of delays On-going
their supporting documents to the Office of the Auditor 2015 were reduced, these were
incurred delays ranging from 22 to more than 355 days in cannot be fully eliminated.
violation of COA Circular No. 95-006 and COA Circular The timing of report
No. 2002-03. submission is affected by:
the delay in the transfer of
We advised the management to adhere with the mandatory source documents such as
and reglementary period of submission of financial reports disbursement vouchers,
such as, but not limited to reports, journals, trial balance, liquidation reports,
statement of financial performance, statement of financial collection and deposit
position, physical inventory report, etc pursuant to COA reports and other pertinent
Circulars 95-006 and 2002-003, to ensure timely review documents from the Office
and verification of accounts on the financial transactions of the Provincial Treasurer
of the agency. to the Office of the
Provincial Accountant;
pertinent documents are
individually and thoroughly
analysed in preparation for
reporting purposes. There is
inadequate personnel in
60
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
Accounting Division to
handle the voluminous
transactions for recording,
posting and summarizing of
transactions to produce the
needed financial reports of
COA and other agencies;
and the conversion /
reclassification of the
accounts in line with the
comprehensive Chart of
Accounts. Nevertheless,
Management is tirelessly
working to improve the
timing of its reports
submission.
No. 6: Unexpended/unutilized balances of the DAP and AAR Unutilized DAP fund Fully Implemented
Congressional Funds amounting to P403,004.66 and 2015 already remitted to Bureau
P2,230,572.10 respectively were not remitted/returned to of Treasury
Bureau of the Treasury.
We hereby reiterated our recommendation that

unexpended/unutilized balances of the DAP and
Congressional Funds be remitted/returned to the Bureau of
the Treasury.
No. 7: Non-preparation of the Provincial Solid Waste AAR (See management actions On-going
Management Plan deprives the constituents of a long-term 2015 on AAR 2016 Finding No.
and concrete management action addressing solid waste 6.)
management that ensures protection of public health and
environment, in violation of Section 11 of Republic Act
9003.
We recommended that management fast-track the

formulation of Provincial Solid Waste Management Plan
61
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
that will reflect the general program of action and
initiatives of the provincial government in implementing a
solid waste management program that would support the
various initiatives of its component cities and
municipalities. Also, this PSWMP must be immediately
forwarded to the National Solid Waste Management
Commission for approval.
No. 1: The balances of Property, Plant and Equipment AAR Ledger cards are being On-going
(PPE) account with a book value of P1,612,754,197.69 2014 maintained. There are on-
remained doubtful due to the continued inability of going reconciliations of the
management to maintain and reconcile property records PPE account balances of the
with the books of accounts. Accounting and Inventory
Records as well as the
We recommend that the General Services Office maintains classification of PPE
property records and see to it that such records are
reconciled with the actual inventory count. Property and
accounting records should be reconciled in accordance
with the provisions of the Manual on Property and Supply
Management in order to reflect the correct amount of
Property, Plant and Equipment in the financial statements.
No. 2: The existence, validity and accuracy of the Cash AAR The office has prepared the On-going
In Bank account amounting to P333,590,825.36 could not 2014 bank reconciliation but has
be ascertained due to the delay in the preparation of bank failed to submit it on a
reconciliation statements (BRS). regular monthly basis due
to the following: the LGU
We recommended that Management require the Provincial depository banks issue
Accountant to: current banks statements
after 1-2 months since
i. give priority to the preparation of the bank generation and transmittal
reconciliation statement as this is a very important of the said statements is
device in ascertaining the completeness and made at the central office in
correctness of the cash account balance; Manila; bank statements
received through mail were
occasionally incomplete
62
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
ii. better yet, enroll in the “we access program” of which affects the
some banks thru their website to have an updated reconciliation process;
access (online) of the transaction summary in aid of there are inadequate
reconciliation process; and personnel in the
Accounting division to
iii. coordinate with the Provincial Treasurer in handle the specified
conducting deeper investigation/verification and account; and submission of
validation of the closed/dormant accounts which are financial source documents
still carried in the books. from the Provincial
Treasurer’s office.
Incomplete data affects the
posting of transactions to
the subsidiary ledgers (SL)
as well as the reconciliation
of SL and Bank Statement.
On some regular bank

accounts that turned
inactive, the Provincial
Accountant was not able to
make regular bank
reconciliation due to lack of
pertinent bank data because
there are banks that would
not provide statements
unless deposits are updated.
Nevertheless, Management
is exerting efforts to
improve and implement the
recommendations on
monthly bank
reconciliation.
63
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 3: Dormant accounts amounting to P7,920,304.49 AAR The said amount pertains to On-going
were not reviewed, analysed and reconciled with other 2014 the non-moving prior year
related accounts in the trial balance, thus validity and transactions.
accuracy of the accounts cannot be attested.
The Accounting Office
We recommended that the provincial accountant review, maintains subsidiary
analyse, validate and reconcile the dormant accounts with ledgers for the said
the related accounts in the financial statements. If the accumulated accounts;
analysis/review of the accounts is not possible due to the however, the office has no
absence of records and documents, the head of the agency knowledge as to the details.
should seek authority from the members of the Any documents to support
Sangguniang Panalalawigan (SP) to write off the doubtful the account were not readily
accounts. Once the legislative body approves, submit the available. At present, the
listings of the doubtful accounts together with the SP office looks forward to have
Resolution to the COA and request authority for their additional manpower to
write-off supported by a list of available records and extent work back/locate
of validation made on the accounts stating the reasons why documents and prior years’
the books of accounts/records, financial records for validation,
statements/schedules and supporting vouchers/documents review and analysis to
cannot be located. facilitate proper valuation
of accounts in the financial
reports.
No. 4: Depreciation expenses were not provided for all AAR Provision for depreciation On-going
depreciable assets amounting to P924,531,102.54 2014 expense for some PPE
resulting in the overstatement of its net income and the accounts were recognized
book value of the Property, Plant and Equipment. and booked up in the books
for CY 2015 on depreciable
We reiterate our recommendation that the Provincial assets of 2012 to present.
Accountant be required to provide depreciation expense to
the depreciable assets and effect the necessary adjustment There are on-going
and correction in their books of accounts. reconciliations of the
accounts and balances.
64
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 5: Advances to Officers and Employees amounting to AAR (See management actions On-going
P10,423,690.84 had remained unliquidated beyond the 2014 on AAR 2016 Finding No.
reglementary period prescribed under existing rules and 8.)
regulations, thereby understating the expense and
overstating the receivable account.
We recommend that Management:
a. adhere strictly with the rules and regulations in the

granting, utilization and liquidation of cash advances
under COA Circular No. 97-002 and other related
issuances. To avoid adverse decision on the matter, require
all accountable officers to immediately liquidate the cash
advances, either by submission of liquidation documents
or refund the full amount;
b. require the Accountant to send Demand Letters to the

officers & employees whose cash advances remain
unliquidated as of year-end for the proper recording of
expenses in the books; and
c. enforce Section 9 of COA Circular 2012-004 on the

suspension of salaries as well as the filing of criminal and
administrative charges against erring employees if they
fail to heed the demand for the settlement of their cash
advances.
No. 6: The unexpended portion of the Local Disaster Risk AAR Fully Implemented
Reduction Management Fund (LDRRMF) amounting to 2014
P19,829,418.28 as of December 31,2014 were not accrued
to a special trust fund, hence, funds for disaster risk
reduction and management activities in case of calamities
is not assured.
65
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
We recommend that the unexpended balance be
transferred to a special trust fund pursuant to Section 21 of
RA No. 10121 to ensure that funds are available for
disaster and risk reduction and management activities of
the LDRRMC in times of calamities.
No. 7: Discrepancies between the reciprocal accounts Due AAR The account includes prior On-going
from Other Funds and Due to Other Funds amounting to 2014 years’ accounts that were
P3,337,735.47 indicated errors in recording transactions not properly reconciled due
affecting these accounts. to lack of manpower to
handle reconciliation
We recommended that the Provincial Accountant be considering the voluminous
required to analyse/investigate the discrepancies and transactions of the
thereafter prepare the necessary adjusting journal entries. province. Currently, the
Accounting Office prepares
all the necessary data for
reconciliation of the Due to
Other fund Account.
No. 8: Non-preparation and submission of the Report of AAR Fully Implemented
Supplies and Materials Issued to the accounting office 2014
renders the existence of the accountable forms inventory
amounting to P1,466,663.21 doubtful.
a. require the Inventory Custodian of the accountable

forms in the Treasurer’s Office to regularly prepare and
submit the RSMI to the Accounting Office as basis to
record issuance; and
b. require the Accounting Office to record adjustments to

book up the unrecorded issuance.
No. 9: Unexpended/unutilized balances of the DAP Funds AAR Fully Implemented
amounting to P400,948.20 was not remitted/returned to the 2014
Department of Finance.
66
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
We recommend that the unexpended/unutilized balance of

the DAP funds be remitted/returned to the Department of
Finance.
No. 10: Accountable Forms used by the Provincial and AAR Fully Implemented
Municipal Treasurers in their various collection activities 2014
were procured from Ready Form Incorporated, a private
company.
We recommend that management conform with the

directive of DILG Memorandum Circular that the
procurement of accountable forms be strictly in
accordance with the GPPB Resolution.
No. 11: Non-submission of the Provincial Solid Waste AAR (See management actions On-going
Management Plan to the National Solid Waste 2014 on AAR 2016 Finding No.
Management Commission for approval precludes the 6.)
Commission from validating if the provincial plan is
aligned to the national framework.
We recommended that management comply with the rules

and regulations prescribed in RA 9003 with regard to the
preparation of the said plan and forwarding the same to the
National Solid Waste Commission for approval.
No. 12: Program/Activities/Projects under the 20% Local AAR (See management actions On-going
Development Fund for CY 2014 and CY 2013 were not 2014 on AAR 2016 Finding No.
substantially implemented/completed that could have 5.)
contributed to the socio, economic and environmental
well-being of the constituents.
We reiterate our recommendation that management

closely monitor the utilization and implementation of
projects funded out of the 20% Local Development Fund
for the attainment of desirable socio-economic
development and environmental management outcomes.
67
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 13: Projects, programs and activities related to Gender AAR Fully Implemented
and Development amounting to P4,700,000.00 were not 2014
implemented, depriving the intended beneficiaries of the
services that could have been derived from the programs.
a. follow the PCW-DILG-DBM-NEDA Joint

Memorandum Circular No. 2013-01 on the
implementation of programs, projects and activities related
to Gender and Development; and
b. avoid accommodations of unrelated PPAs through their

inclusion in the GAD budget; instead maximize the said
budget to those programs that promote women
empowerment, gender equality and gender development.
No. 1: Cash advances totalling P16,003,557.77 remained AAR (See management actions On-going
unliquidated contrary to the rules and regulations 2013 on AAR 2016 Finding No.
prescribed under COA Circulars 97-002 and 2012-004 8.)
dated February 10, 1997 and November 28, 2012,
respectively, thus government funds were exposed to risk
of loss or misappropriation.
a. take extra effort to demand the immediate liquidation of

all outstanding cash advances from the concerned
officials/employees pursuant to COA Circulars 97-002
and 2012-004;
b. impose sanctions prescribed in the said Circulars for

non-compliance thereof, such as withholding the salaries
and other emoluments of the officials/employees who
68
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
continuously disregard, fail or decline to comply with the
demand, including filing appropriate charges against them;
c. send demand letters to officials and employees who are

no longer employeed with the province to liquidate their
cash advances and consider taking legal actions/remedy
against them; and
d. ensure strict compliance with COA Circulars 97-002

and 2012-004 on the grant, utilization and liquidation of
cash advances, particularly the period within which to
liquidate the same to avoid accumulation of huge cash
advances.
No. 2: Public infrastructures totalling P116,503,944.12 AAR No longer applicable and
were not closed to the Government Equity account at the 2013 considered implemented
end of the year and transferred to the appropriate Registry due to adoption of PPSAS.
of Public Infrastructures as required under the new
Government Accounting System manual due to lack of
details/information of the same thereby overstating the
financial statements as of year end.
Moreover, the Registry of Public Infrastructures was also

not maintained by the accounting office and kept in a
perpetual manner as required under the same manual,
hence no summary of all Public Infrastructures were
prepared and disclose in the Notes to financial Statements.
We recommended for the Provincial Accountant to come

up with a listing of all the completed Public
Infrastructures- Roads, highways and Bridges totaling
P116,503,944.12. Coordinate closely with the Provincial
Engineer and other department heads concerned for the list
of public infrastructures of the province. After ascertaining
all public infrastructures, draw a Journal Entry Voucher
69
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
(JEV) to close the above account to government equity
account. Henceforth, maintain the required registries for
all public infrastructures classified accordingly based in
the NGAs Manual and adequate disclosures be made in the
Notes to Financial Statements.
No. 3: The Construction in Progress amounting to AAR In the old Accounting On-going
P507,554,381.93 could not be identified and accounted for 2013 System, the Construction in
due to non-maintenance of subsidiary ledgers on a per Progress is recorded in the
project basis, contrary to the provisions of paragraph 4 and books upon the approval of
5, Sections 50 and 16, Volume I and II, respectively, of the the purchased requests,
NGAs Manual for LGU thus, reliability and validity of the ROA and ALOBS and
account balances and other related accounts could not be subsequently is closed upon
determined. payment. In due time there
are various projects under
We recommended for the Provincial Accountant to take construction in progress
the following course of action: that were not close since the
introduction of NGAs.
a. validate and account for the details of the long
outstanding unidentified Construction in Progress account NGAs recognized
totalling P507,554,381.93; construction in progress
only upon payment. No
b. coordinate closely with other concerned department corollary entry is used to
heads particularly with the Provincial Engineers as to the close what has been set-up
specific details of the CIP accounts; in the Old accounting
system. In effect, the
c. maintain separate subsidiary ledgers or CIPLC Accounting Office finds it
(Construction in Progress Ledger Cards-Annex12 NGAs difficult to determine
Manual Volume II) on per project basis and; accurately the
completed/uncompleted
d. ensure that in accounting for CIP only on-going and projects. Given the new
uncompleted projects are reflected. provisions in the NGAs, the
subsidiary ledgers to be
kept for each class of PPE
that shows the details of the
70
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
transaction based on the
source documents have
been made on the current
purchases. Nevertheless
and considering the
adoption of PPSAS,
Management is exerting
efforts to fully implement
the recommendations.
No. 4: No Project Procurement Management Plan (PPMP) AAR Fully Implemented
and Annual Procurement Plan (APP) were prepared for the 2013
major programs indicated in the Annual Investment Plan
of the province in violation of Section 7 of Republic Act
9184 Revised Implementing Rules and Regulations.
We recommended that Management prepare PPMPs and

APPs as required by RA 9184. In case, those involved are
not fully acquainted in the preparation thereof, require
them to undergo training.
No. 5: The management failed to furnish the Office of the AAR Currently, only copies of On-going
Auditor copies of purchase orders and contracts and their 2013 Contracts and Inspection of
supporting documents pertaining to items bid in violation deliveries were furnished
of Section 3.2.1 COA Circular No. 2009-001 dated by Management. Efforts are
February 12, 2009. Moreover, transmittal to the Office of exerted by Management to
the Auditor of invitation to observe the opening of bids fully comply with the
was not done consistently as required by Section 6.10 of recommendation.
COA Circular No. 95-006 dated May 18, 1995.
The management should promptly furnish the Office of the

Auditor copies of purchase orders and contracts within
five (5) days before the scheduled time of opening of bids.
No. 6: The validity and accuracy of the total Property, AAR There are on-going On-going
Plant and Equipment amounting to P1,506,316,170.55 2013 reconciliations of the
accounting and PGSO
71
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
cannot be established due to non-compliance with Section records such as the
124 of NGAs for LGUs. unserviceable properties
and the PPE account
We recommended that The Provincial Accountant strictly balances.
comply with the policies and procedures provided by
Section 124 of New Government Accounting System
(NGAs) Volume I for LGU. Moreover, proper accounting
should be observed and necessary adjustments should be
made to reflect the correct amounts of the accounts
affected.
No. 7: Non-recognition of depreciation in the books was AAR Currently, there are still On-going
observed and therefore, total assets, equity and net income 2013 some PPEs without
are overstated while total expenses are understated. recognized depreciation
(e.g. Buildings, School
We recommended that The Provincial Accountant adhere Buildings, Hospitals and
to NGAs for LGU for proper valuation of PPEs and present Health Centers, Markets
fairly the agency’s financial condition and performance. and Other Structures). To
correct this and to fully
In order to address the non-recognition of depreciation of implement the
prior years, we recommend that the Provincial Accountant recommendation, there are
coordinate with the Committee on Inventory and make on-going reconciliations of
necessary adjusting entries to correct the balance of prior the accounting and PGSO
period accounts affected records necessary to
properly account for the
depreciations of these
PPEs.
No. 8: Programs/Projects under the 20% Development AAR (See management actions On-going
Fund for CY 2013 were not substantially 2013 on AAR 2016 Finding No.
implemented/completed that could have contributed to the 5.)
socio, economic and environmental well-being of the
constituents pursuant to Joint Memorandum Circular No.
2011-1 of the Department of Interior and Local
Government and Department of Budget and Management
dated April 13,2011.
72
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
a. closely monitor the utilization and implementation of

priority projects for the attainment of desirable socio-
economic development and environmental management
outcomes and to maximize the usage of the fund;
b. through the concerned implementing department, fast

track the implementation based on the scheduled time
frames indicated in the AIP to achieve the desired
management outcomes; and
c. strictly comply with the Joint Memorandum Circular

No. 2011-1 of the Department of Interior and local
government and Department of Budget and Management
dated April 13,2011 should be observed.
No. 9: Disaster Risk Reduction Management-related AAR Fully Implemented
activities with an appropriation amounting to 2013
P4,650,000.00 should have been charged to Local Disaster
Risk Reduction Management Funds and not on GAD Fund
pursuant to Column 7, Annex A of the Philippine
Commission on Women, National Economic and
Development Authority and Department of Budget and
Management Joint Circular No. 2012-01 and Section 1,
Rule 18 of RA 10121.
A number of planned programs/activities/projects (PAPs)

related to GAD were not accomplished, hence the
efficiency and effectiveness of the agency’s interventions
in addressing gender issues and concerns affecting the full
development of women is not fully achieved.
It is recommended that the Management strictly follow

Philippine Commission on Women, Department of
73
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
Interior and Local Government, Department of Budget and
Management and National Economic Development
Authority (PCW-DILG-DBM-NEDA) Joint
Memorandum Circular No. 2013-01.
The Province should avoid accommodations of unrelated

PAPs through their inclusion in the GAD Budget; instead,
maximize the GAD Budget to those programs that
promote women empowerment, gender equality and
gender and development.
The GAD Focal Point System should assume greater

responsibility in record keeping, monitoring and
evaluation of all PAPs included in the GAD Plan and
Budget to fully address the gender issues.
The GAD Focal Point is enjoined to conduct evaluation of

the PAPs indicated in the GAD Plan and Budget (GPB) to
serve as basis if GAD AR were in accordance with the
GPB.
No. 1: The validity and accuracy of Property, Plant and AAR The Inventory and Disposal On-going
Equipment (PPE), as reflected on the Financial Position, 2012 Committee were created
cannot be established due to failure of the management to per Executive Order No.
strictly comply with the prescribed policies and procedures 2017-002 & 2017-003,
in the recording, reporting and maintaining of records for respectively. There are on-
the said accounts. going reconciliations of the
accounting and PGSO
We recommended that Management: records such as the
unserviceable properties
a. create an Inventory Committee to undertake the conduct and the PPE account
of annual physical count of the property, plant and balances.
equipment of the Province and reconcile the results of the
inventory count with the property and accounting records; The reclassification of
properties below the
74
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
b. through the Provincial General Services Officer P15,000.00 threshold to
(PGSO), facilitate the preparation of the Inventory and Semi-expendable accounts
Inspection Report of Unserviceable Property for those to reflect the true balances
items identified and declared as unserviceable Property for of accounts in the Financial
those items identified and declared as unserviceable or Statements was already
obsolete and to furnish the Provincial Accountant a copy made.
thereof as his basis in the preparation of reclassifying
entries; and
c. the Provincial Accountant and PGSO to reclassify

properties below the P15,000.00 threshold to Semi-
expendable accounts to reflect the true balances of
accounts in the Financial Statements.
No. 2: Submission to the Office of the Auditor of copies AAR (See management actions On-going
of purchase orders and contracts, copies of delivery 2012 on AAR 2013 Finding No.
documents and copy of the schedule or notice of opening 5.)
of bids were not done consistently in violation of COA
Circular No. 2009-001 dated February 12, 2009 and COA
Circular No. 95-006, hence, timely review and evaluation
cannot be done and any defects/deficiencies, if any, could
not be communicated immediately to management.
The Provincial general Services Office and Provincial

Engineer should be vigilant in furnishing the Office of the
Auditor copies of purchase orders and contracts within
five (5) days from perfection/issuance pursuant to COA
Circular No. 2009-001. Likewise, submit schedule/notice
of opening of bids and notices of deliveries at least five (5)
days before the scheduled time of the opening of bids and
within twenty four (24) hours from their acceptance,
respectively, as required under COA Circular No. 95-006.
No. 3: Non-submission of Statement of duties and AAR Fully Implemented
responsibilities of individual job orders, contractual and 2012
casuals as well as the non-attachment of corresponding
75
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
Accomplishment reports to the paid payrolls prevented the
Auditor from verifying/comparing the above-mentioned
documents, thus, possible duplication or overlapping of
duties and responsibilities which may contribute to the
excessive hiring of said job orders and casuals could not
be validated.
The personnel in charge in the renewal of the contract of

services of job orders and casuals at the Office of the
Human Resource Management should facilitate the
submission of all Statement of duties and responsibilities
and corresponding accomplishment reports to the Office
of the Auditor to be used as basis in verifying/comparing
and validating the above-mentioned documents to
determine whether there are duplication or overlapping of
functions and duties which may result in the excessive
hiring of said job orders and casuals which may be
detrimental to government resources.
No. 4: The Consolidated Annual Procurement Plan for CY AAR Fully Implemented
2012 were prepared despite the absence of the Project 2012
Procurement Management Plans (PPMPs) from different
departments/end users, hence, violative of Section 7 of RA
9184 and its Implementing Rules and Regulations.
a. require orientation training of the members of Bids and

Awards Committee (BAC), BAC Secretariat and other
officials and employees involved directly or indirectly in
the procurement activities as wells as in the preparation
and consolidation of PPMPs and APPs; and
b. moreover, through BAC members and BAC Secretariat,

enforce the procurement procedures and processes as
76
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
required in the implementing rules and regulations of RA
9184, otherwise known as the Government Procurement
Reform Act.
No. 5: Failure of the General Services Officer to adopt a AAR GSO had a flowchart for On-going
centralized procurement system resulted in inaccuracies 2012 synchronized / centralized
on the acquisition, recording and accounting of supplies procurement of the
and materials, thus exposing the latter to possible loss or departments / offices.
wastage through improper disposition.
As to the second
We recommended that Management: recommendation, efforts
are undertaken to make
a. devise a workable flow chart on the acquisition, storage, certain that there is spacious
issuance, utilization of supplies, materials and equipment storage room.
as well as their disposal for guidance of the General
Services Office personnel as well as by the requisitioners,
end-users and other concerned officers and employees on
their respective responsibilities and accountabilities on the
government property; and
b. provide for a secured and more spacious place/storage

room for the unissued supplies and materials to avoid
possible loss or wastage.
No. 6: Due from Officers and Employees of AAR (See management actions On-going
P15,311,552.13 granted in CY 2012 and prior years have 2012 on AAR 2016 Finding No.
remained unliquidated as of year-end due to non- 8.)
adherence to the provisions of COA Circular No. 97-002
dated February 17, 1997 which may lead to the misuse of
government funds.
No. 1: Checks totalling to P1,087,135.51 issued under AAR Fully Implemented

Land Bank of the Philippines remained outstanding for 2011
more than six (6) months, hence considered as stale
checks, but were not cancelled contrary to Joint Circular
No. 8-85, thus understating the cash in bank and accounts
77
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
payable accounts. Moreover, the accuracy and reliability
of Cash in Bank of P193,944,825.78 could not be
ascertained due to outstanding reconciling items
amounting to P1,922,375.53 that still remained unadjusted
in the book.
a. instruct the Provincial Treasurer to send a written notice

to the payee of the existence of the check at least one
month before a check becomes stale. The Provincial
Treasurer may replace the stale checks upon presentation;
b. require the Provincial Accountat to adjust in the books

of accounts the total amount of stale checks by deviting the
Cash in Bank – Local Currency, Current Account and a
credit to Accounts Payable for P1,087,135.51 to restore the
liability to creditors; and
c. furthermore, require Provincial Accountant to effect the

adjustment on reconciling items immediately or on the
following month so as to prevent the accumulation of same
in the future.
No. 2: Procurement of various supplies and materials AAR Fully Implemented
including drugs and medicines totalling to P39,240,800.04 2011
were directly charged to expenses instead of recording in
the inventory accounts contrary to provision of Section
114 of the NGAS Manual of LGUs, Vol. I, thus misstating
inventory and expense accounts in the financial
statements.
78
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
a. direct the Provincial Accountant and Provincial General
Services Officer to adhere strictly to the provisions of
Section 114 of NGAS for LGUs, Vol. I, specifically on the
recording of regular purchases of supplies and materials as
inventories, preparing of Summary of Supplies and
Materials Issued, maintaining an updated Supplies Ledger
Card and Stock Card for each inventory item received as
well as periodically reconcile both records so as an
accurate and reliable financial statement could be
presented;
b. also, advise the General Services Officer to exercise

diligence in performing the general process to be followed
in the control of inventory so as to safeguard the inventory
supplies against loss or wastage through improper
disposition; and
c. moreover, consider the possibility of installing a

computerized inventory system to speed up the recording
of transactions and production of accurate information.
No. 3: The General Services Officer failed to procure the AAR Per PGO-Memorandum Fully Implemented
Common-Use Supplies of the province from the 2011 Order No. 20, Series of
Procurement Service – Department of Budget and 2018, all commonly-used
Management (PS-DBM) and the non-submission of the supplies will be procured
Annual Procurement Plan for Common-Use Supplies and through the DBM-PS.
Equipment (APP-CSE) to the DBM Regional Office,
violates Section 53e of the Implementing Rules and
Regulations-A, (IRR-A), Republic Act. No. 9184,
Administrative Order No. 17 and DBM Circular Letter No.
2011-6, respectively.
We recommended that Management direct the General

Services Office to facilitate the procurement of all
common-use supplies of the province with the
79
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
Procurement Service-DBM, Koronadal, South Cotabato
and also submit the Annual Procurement Plan for
Common-Use Supplies and Equipment for FY 2012 on or
before November 15, 2011 to the Department of Budget
and Management, Regional Office No. XII, Koronadal,
South Cotabato and henceforth on or before November 15
of each year for consolidation, in compliance with Section
53e of the Implementing Rules and Regulations-A, (IRR-
A). RA No. 9184, Administrative Order No. 17 and DBM
Circular Letter No. 2011-6, respectively.
No. 4: The non-submission of copy and all supporting AAR Fully Implemented
documents totalling to P14,857,153.91 for the 2011
improvement of Capitol Gym/Sports Complex to the
Auditor within the prescribed period of five (5) days from
execution of the contract violates Section 3.1 of COA
Circular No. 2009-001, thus, immediate review and
evaluation of the transactions was not conducted.
We recommended that Management direct the Provincial

Engineer and General Services Officer to submit to the
Auditor for review and evaluation copies of contracts and
all supporting documents within five (5) days from
perfection in order that management could be informed
promptly of any defects/deficiencies noted.
No. 5: Financial assistance totalling to P1,650,000.00 AAR Donation program of the SP Fully Implemented
charged against Donation account (878) were granted to 2011 was transferred to the
various individuals, barangays, other local government PSWDO as AICS where
units and organizations despite the lack of detailed clients of the SP members
guidelines governing the grant and also, not supported seeking financial and
with complete documents, hence violates Section 4 (2,6) medical assistance will be
of PD 1445, Section 36 and 447 (5) (xi) of RA 7160. provided through PSWDO
following the SOP in
We recommend that the Provincial Vice-Governor and granting AICS.
Sangguniang Panlalawigan Member shall formulate
80
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
policies on the proper disposition of funds charged against
donations for every nature of assistance to determine the
extent and limitation of the grant. Also, see to it that in the
granting of financial assistance/donation, the provision of
Section 4 (2,) of PD 1445, Section 36 and 454 (5) (xi) of
RA 7160 are adhered to.
No. 6: Cash Advances totalling to P37,956,168.75 AAR (See management actions On-going
specifically under the Due from Officers and Employees 2011 on AAR 2016 Finding No.
account remained unliquidated contrary to COA Circular 8.)
No. 97-002 dated February 10, 1997, thus, overstating the
Receivables and understating the Expenses account in the

Accountant to adhere strictly to the provisions of COA
Circular No. 97-002 dated February 10, 1997 in the
granting utilization and liquidation of cash advances to
prevent further accumulation thereof. Also, ensure that
officers and employees with outstanding cash advances are
not granted additional cash advances under the “No
liquidation, No Cash Advance” policy.
No. 7: Appropriate action were not taken by management AAR Fully Implemented
to enforce the settlement of outstanding audit suspensions 2011
and disallowances, hence, resulting in their accumulation
to P4,359,469.98 and P7,640.62, respectively, as of
December 31, 2011.
We recommended that Management direct the concerned

officials and employees to comply within 90 calendar days
with the requirements of the transactions suspended in
audit. Likewise, settlement of audit disallowances should
be enforced by withholding the salaries or other claims due
the persons liable, in satisfaction of the amounts
disallowed.
81
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 1: Fuel consumption amounting to P17,641,758.77 AAR Fully Implemented
charged to account Gasoline, Oil and Lubricants was not 2010
properly controlled, accounted for and accurately reported
to Section 361, items e.1, f. and g., of Government
Accounting and Auditing Manual (GAAM), hence, the
validity and propriety of the account cannot be ascertained.
We recommended that Management require the heads of

offices who are using government vehicles to attach a
properly accomplished, serially numbered and duly
approved driver’s trip ticket to the disbursement voucher
to ensure proper use of government vehicle and
consumption of fuel. A summary of which shall be made
at the end of the month in a Monthly Report of Official
Travels and such shall be submitted to Auditor’s Office
No. 2: The existence of the Cash in Bank – Local Currency AAR Fully Implemented
accounts booked at P162,855,584.87 cannot be ascertained 2010
due to delayed preparation of Bank Reconciliation
Statements contrary to Section 74 of PD 1445 and COA
Circular No. 96-011.
We recommended that Management require the Provincial

Accountant to give preferential attention on the
preparation and submission of the Bank Reconciliation
Statements and same time effect of the necessary
adjustments of reconciling items to ensure the correctness
of balances reported thereon in accordance with Section 74
of PD 1445 and COA Circular No. 96-011.
No. 3: Failure of the Provincial General Services Officer AAR Fully Implemented
to conduct physical inventory taking on Property, Plant 2010
and Equipment (PPE) owned by the province violates
Section 124 of New Government Accounting System
(NGAS), Volume I. Moreover, property cards were not
updated, hence, not reconciled with PPE Ledger Cards and
82
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
controlling accounts maintained by the Accounting Office
contrary to Section 10, 13, & 15 of NGAS Volume II, thus,
the validity, existence and correctness of the PPE accounts
totalling to P1,375,701,733.76 could not be ascertained.
We recommended the following:
a. create a committee to conduct a yearly physical

inventory of all property, plant and equipment of the
province by using the prescribed format in NGAS, Volume
II (see Annex C) and submit the inventory report not later
than January 31 of each year;
b. group the PPE by using the correct account code and

title to conform with the prescribed Revised Philippine
Government Chart of Accounts;
Excluded office supplies, medical, dental and laboratory
supplies in the PPE, it is classified as inventory items;
Transfer all unserviceable properties to Inventory &
Inspection Report for Unserviceable Property for disposal
or condemnation;
c. start using acknowledgement receipt for equipment

(ARE) in the issuance of property, plant and equipment
instead of the Memorandum Receipt (MR);
d. General Services Office should maintain Property Card

for each class of property, plant and equipment and
reconcile this property ledger card and controlling
accounts maintained by the Accounting Office so that any
discrepancies noted can be immediately adjusted; and
e. Inventory report should be signed by the Inventory

Committee and approved by the Provincial Governor.
83
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 4: Review/evaluation of Purchase Orders, Contracts AAR (See management actions On-going
and Inspection of Deliveries cannot be done due to non 2010 on AAR 2013 Finding No.
furnishing of copies of purchase orders, contracts and 5.)
inspection reports in violation of COA Circular No. 96-
010 and 95-006, thereby the Auditor failed to inform
management of any defect/deficiency in the
contract/purchase order.

General Services Officer to furnish copies of
letter/purchase orders and notify the Provincial Auditor of
the time and date of scheduled deliveries within five (5)
f=days pursuant to COA circular Nos. 96-010 and 95-006
to give the latter sufficient time to conduct a selective
inspection of deliveries.
No. 5: Guidelines on proper accounting of the agricultural AAR Fully Implemented
products were not applied, recording for the deaths and 2010
offspring of livestock was not undertaken, thus, reliability
of the recorded balances of P10,038,074.00 could not be
ascertained.
a. implement the provisions of COA Circular No. 84-239

relative to the accounting of livestocks, breeding stocks
and work/other animals as well as the preparation of the
Monthly Report of Inventory and other reports as required
by the circular; and
b. direct the Provincial Veterinarian to conduct inventory

of the livestocks and work/other animals, to maintain
records of offspring and disposal and submit to the Offices
of the General Services and Accounting for recording and
reconciliation.
84
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 6: Management’s failure to enforce accounting and AAR Fully Implemented
auditing rules and regulations and its inaction regarding 2010
settlement of outstanding audit suspension and
disallowances caused their accumulation to P116,761.00
and P6,240.00, respectively as of December 31, 2010.
We recommended that Management enforce immediate

settlement of all suspended and disallowed claims
pursuant to Section 7.1.1 of COA Circular No. 2009-006.
Ensure that government auditing rules and regulations are
strictly complied with before processing claims/effecting
payments to minimize if not totally eliminate suspensions
or disallowances.
No. 7: Lack of proper coordination, supervision and AAR Fully Implemented
monitoring among offices concerned in the 2010
implementation of the programs/projects funded out of the
20% Development Fund, caused the delay and non-
implementation of six (6) projects costing P3,900,000.00,
thus depriving the intended beneficiaries of the immediate
economic and social benefits that can be derived from its
completion.
a. direct the Provincial Planning and Development Officer

and the Provincial Engineer to coordinate, supervise and
monitor all unimplemented projects to ensure prompt and
efficient implementation of the program/projects funded
under the 20% Development Fund; and
b. also, direct the Provincial Engineer to send tracers to the

recipient barangays who failed to comply with the
requirements of the provincial government as embodied in
85
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
the Memorandum of Agreement (MOA) so as immediate
action could be taken to implement to project as scheduled.
No. 1: Cashbook for cash advances of two Accountable AAR Fully Implemented
Officers were not maintained in violation of Section 25 2009
and 28, Volume II on the Manual on the New Government
Accounting System, hence cash balances could not be
determined/or established.
We recommended that Management require all

accountable officers to have cash records (Cashbooks) to
account their cash advances, withdrawals and
disbursements of cash.
No. 2: The periodic financial reports and accounts of the AAR Fully Implemented
LGU were not submitted to the Office of the Audit Team 2009
Leader within the prescribed period contrary to COA
Circular No. 95-006 and Section 490 of the GAAM,
Volume II, hence, timely verification thereof of the
accounts could not be conducted.

Accountant to submit promptly the monthly reports
collections, disbursements and monthly trial balances to
the Provincial Auditor so that timely post-audit of
transactions could be made and verification of trial
balances could be facilitated. In so doing, management
could be informed immediately of any deficiencies/errors
detected and corrections/adjustments thereof effected.
No. 3: The special account for the Sultan Kudarat AAR Efforts are undertaken to On-going
Provincial Hospital was not maintained and the year-end 2009 fully implement the
trial balances and financial statements for the existing recommendation. This is
special accounts were not prepared and submitted by the due to the inadequate
Provincial Accountant contrary to Section 105, Volume I personnel in the
of the New Government Accounting System Manual. As a Accounting Division which
result, important information on the results of their supposed to handle the
86
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
operation needed by management for monitoring and specified and voluminous
decision-making could not be provided. SKPH transactions for
recording, posting and
We recommended that the Provincial Accountant should summarizing of
set up special account so that management may be transactions to produce the
adequately informed as to result of their operations. required financial reports
such as Post-Closing Trial
Balance, Balance Sheet,
Statement of Income and
Expenses and Statement of
Cash Flows.
No. 4: Donations were given to private persons and as AAR (See management actions Fully Implemented
“financial assistance” for hospitalization, medical and 2009 on AAR 2011 Finding No.
burial expenses, fare and other expenses contrary to 5.)
section 4(2) of Presidential Decree No. 1445 (State Audit
Code of the Philippines) which provides that government
funds shall be spent or used solely for public purposes,
thus resulting in the improper use of government funds
amounting to P1,650,000.00.
We recommended that Management discontinue the

payment of donations or financial assistance to private
person for hospitalization, medical burial and
transportation expenses except those allowed under
DSWD Administrative Order No. 75 and henceforth,
utilize government funds for public purposes only. If ever
donations be granted from the SP funding, SP Resolution
is required and payments should be solely for the public
purpose and directly to the recipient not reimbursement as
required under Section 4(2) of the State Audit Code of the
Philippines
No. 5: The amount of P1,000,000.00 appropriated by the AAR Fully Implemented
Provincial Government under Gender and Development 2009
(GAD) was less than the required 5% pursuant to Republic
87
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
Act 7192 and the General Appropriation Act (GAA) and
was not fully utilized / used and expenses were not related
to GAD PPAs thus the objectives were not fully attained.
We recommended that Management require the

Sangguniang Panlalawigan to impose the provisions of
Republic Act 7192, as follows:
 set aside a minimum amount of five percent (5%) of
their appropriation tom implement Gender and
Development (GAD) and utilize it fully for the
attainment of the agency objectives;
 intensify awareness campaigns on gender issues and
concerns especially among policy-makers and
extension workers;
 support and expand the participation of grass roots
women in planning, implementation, monitoring
and evaluation of development programs and
projects;
 provide gender-responsive relief and rehabilitation
programs with special focus on women’s needs; and
 secure specific guidelines from Department of
Budget and Management as to the allocation of
Gender and Development as required under RA
7192.
No. 1: Cash advance granted to officers, employees and AAR (See management actions On-going
other government agencies in the amount of 2008 on AAR 2016 Finding No.
P39,720,376.07 remained unliquidated although the 8.)
purpose for the grant of the said cash advances had long
been achieved in violation of Section 89 of PD 1445 and
Section 179 of the GAAM.
We recommended that Management should comply

strictly with the laws, rules and regulations pertaining to
cash advances in order to lessen the accumulation of the
88
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
same. In case of refusal to settle said outstanding cash
advances, institute administrative/criminal action against
those concerned.
No. 2: Failure of the Accounting Department to generate AAR Fully Implemented
on time the financial reports resulted to delayed 2008
submission of reports to end-users for their reference in
decision-making, in contrary to Section 122 of PD 1445.

Accountant to comply the prescribed regulation of
submitting required reports to the Commission and to the
end-users, the Local Government Executive for guidance
and decision-making.
No. 3: Failure of the Auditee to enforce the repayment AAR Fully Implemented
scheme of loans receivable of P15,888,577.31 resulted to 2008
non-recovery of government funds which could have been
used for various programs and projects.
We recommended that Management formulate strategies

in collecting repayment of loan so that other constituents
could enjoy the benefit derived from the loan.
No. 4: The objectives for the creation of the Special AAR Fully Implemented
Education Fund (SEF) were not fully attained because the 2008
programs, projects and activities funded through SEF by
the Local School Board were not defined, prioritized and
implemented in accordance with the provisions of DECS,
DBM and DILG Joint Circular Nos. 01 s 1998, 01-A s.
2000, RA No. 5447, otherwise known as the Special
Education Fund Act dated April 14, 1998, March 14, 2000
and September 25, 1968, Section 99(a) and 10(c) of RA
7160 which prescribed the rules and regulations to be
observed in the utilization of the SEF by the Local School
Board for the operation and maintenance of the elementary
and secondary public schools.
89
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
a. strictly prioritize the programs, projects and activities of

the DEPED as stipulated in DECS-DBM-DILG Joint
Circular Nos. 01 s. 1998, 01-A s. 2000, 100 © of RA 7160
and RA 5447 to address the problems of the students and
teachers and for the operation and maintenance of public
schools; and
b. use the Special Education Fund – Budget Preparation

No. 1 form provided in Section 99 (a) of Local
Government Code in the preparation of SEF budget and
prepare Budget Authorization No. 1 form and SEF Budget
Utilization provided in DECS-DBM-DILG Joint Circular
No. 01-A s. 2000 in authorization and accountability of
SEF budget.
No. 5: The economic and social viability of the Sultan AAR This was proposed in the On-going
Kudarat Provincial Hospital as economic enterprise could 2008 Local Resource
have been realized economically, efficiently and Mobilization Plan for 2017,
effectively had it been readily established by the auditee for approval by the Local
which may have resulted to the attainment of the agency Chief Executive. Efforts are
in generating additional resources/revenue. undertaken to ensure the
full implementation of the
We recommended that Management follow strictly the recommendation.
guidelines set forth in Section 313 and 325 of RA 7160
otherwise known as the Local Government Code of 1991
in the establishment of economic enterprise as mentioned
in the report.
No. 1: Evidence of ownership of Land in the total amount AAR Fully Implemented
of P19,003,453.80 acquired by the provincial government 2007
were not transferred in its favor depriving it of ownership
and indemnities, thereby exposing government properties
90
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
from improper disposition and possible loss contrary to
Section 2 of PD 1445.
We recommended that Management require:
a. the Provincial Treasurer to exhaust all means to retrieve

the documents pertaining to the Land or follow-up
documentation of ownership title of the land amounting to
P19,003,453.80;
b. the Provincial Accountant after the retrieval of

documents should include in the subsidiary ledgers on
Property Plan and Equipment-(Land Account) to obtain
description and all necessary information in this Account;
and
c. the Inventory reports in the physical count in Property,

Plant and Equipment – Land submitted by the Provincial
Treasurer be reconciled with the records of the Provincial
Accountant.
No. 2: Failure of the Provincial Accountant to prepare and AAR Fully Implemented
submit bank reconciliation statements resulted to non- 2007
verification by the auditor of the veracity of the bank
balances amounting to P72,630,710.12 in violation to
Section 74 of P.D. 1445 and COA Circular No. 96-011
dated October 2, 1996.
We recommended that Management require the Provincial

Accountant to prepare and submit the monthly Bank
Reconciliation Statements to the Auditor pursuant to
Section 74 of PD 1445 and COA Circular No. 96-011 to
ensure the accuracy and validity of the cash in the bank
accounts. He should assign personnel to prepare the
reconciliation statements.
91
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 3: Absence of insurance coverage over insurable AAR Fully Implemented
properties of the Provincial Government such as buildings 2007
amounting to P139,810,446.06 is in violation of
Presidential Administrative Order No. 33, thereby
exposing the agency to the risk that losses may not be
indemnified in the event of unforeseen occurrences.
We recommended that Management appropriate funds for

the insurance coverage of insurable properties of the
Provincial Government in accordance with the provision
of Administrative Order No. 33 in order to attain speedy
recovery of indemnities of losses arising from unforeseen
events.
No. 4: Failure of management to adhere strictly to the AAR (See management actions On-going
provisions of Section 89 of PD 1445 and COA Circular 2007 on AAR 2016 Finding No.
No. 97-002 resulted to the accumulation of unliquidated 8.)
cash advances amounting to P37,046,444.57 depriving the
agency additional cash to finance other needs in the
operation.
We recommended that Management require the immediate

liquidation of outstanding cash advances. Observe existing
rules and regulations on the grant, utilization and
liquidation of cash advances. No cash advance should be
granted for personal use. The Provincial Accountant
should see to it that cash advance granted has the
corresponding appropriation so as not to delay the
liquidation thereof. He should follow-up the demand
letters already issued by the Auditor. Likewise, the
Provincial Treasurer should withhold/deduct bigger
amounts from the salaries for payments of any money due
such officials and employees with outstanding cash
advances.
92
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
No. 5: Failure of the Auditee to allocate the 5% of their AAR Fully Implemented
total annual budget for the Gender and Development 2007
(GAD) resulted to the non-achievement of its programs,
project and activities and thus further defeating the
purpose of a gender-responsive governance.
We recommended that the budget officer should provide

in the General Fund of the LGU, 5% of the total annual
appropriation for GAD program, project and activities
(PPAs). This 5% allocated in the local budget
influences/rules the other 95% to become gender
responsive.
No. 6: Delayed preparation of program of work for AAR Fully Implemented
Infrastructure Projects funded out of 20% Economic 2007
Development Fund amounting to P1.8 million resulted to
its non-implementation at year-end thereby depriving its
beneficiaries.
a. require the complete documentation and programming

of infrastructure projects funded out of the 20% Economic
Fund before these will be incorporated in the Annual
Investment Plan. Strict monitoring is also recommended
for funds transferred to other recipient LGUs to ensure that
the projects as planned are actually implemented; and
b. implement the projects funded out of the 20% Economic

Development Fund so that the intended beneficiaries could
be attained.
No. 7: The Province of Sultan Kudarat failed to establish AAR Efforts are undertaken by On-going
controls over the information technology designed for 2007 Management to fully
Real Property Tax Administration System (RPTAS) and comply with the
Business Permits and Licenses System (BPLS), resulting
93
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
to inefficient, ineffective and uneconomical operation of requirements of the
the system in conformity with the Information Systems recommendations.
Auditing Standards.
We recommended that Management should
a. prepare an IT Strategic Plan to ensure that the use of IT

throughout the province and its municipalities is geared to
the attainment of agency’s goals and objectives in terms of
the degree of LGU automation, functionality, stability,
costs strength and weaknesses;
b. ensure that the provision of all IT hardware, software,

methods and resources remains in step with the strategic
direction of the LGU;
c. improve physical security and access controls to include

the following:
i. rogram and system documentation should be kept in
secured shelves accessible only to authorized
personnel;
ii. IT equipment must be covered with insurance
especially the new acquisitions;
iii. the data center should be equipped with a manual
fire alarm;
iv. record of information regarding the contents,
versions and location of data files maintained;
v. hand-held fire extinguishers (inspected annually)
are to be in place;
vi. install and emergency power-off switch; and
vii. document and test emergency evaluation plan;
d. allocate funds for the improvement/renovation of the

Provincial/Municipal Information Technology Center
94
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
where a safe, protected and secured EDP room be
provided;
e. create the position title of Systems Administrator

pursuant to the provision of RA 6758 in line with the
qualification standards and Index of Occupational
Services (IOS) set by the Civil Service Commission. The
creation and approval of IT positions will enlighten IT
functions of the Province and its Municipalities;
f. create an IT Steering Committee to provide the

following:
i. transactions should be properly authorized and
recorded to ensure that the provincial/municipal
assets are safeguarded;
ii. access to the computer, the production date library,
the production programs, the programming,
documentation and the operating system and
associated utilities should be limited with the
security policy;
iii. transaction authorization should be properly
exercised and should be delegated to the degree that
it relates to the particular level of responsibility of
the authorized individual; and
iv. limited reconciliation on the results of application
processing should be performed by the data control
group with the use of totals and balancing sheets to
provide independent verification to ensure that the
application is running successfully and that data are
in proper balance; and
g. prepare a Disaster Recovery/Contingency Plan in order

to minimize, if not eliminate the effect of disruption in the
event of a major failure not only in the existing operational
computer systems but also for the other systems that later
95
STATUS OF
REASON FOR
IMPLEMENTATION
or Not Implemented)
the province and its municipalities may develop in-house
or from an outside sources.
96

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Republic of the Philippines

ANNUAL AUDIT REPORT

PROVINCE OF SULTAN KUDARAT

For the Year Ended December 31, 2017

Audit Scope and Methodology

Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43 of

Figure No. 1: SKPG’s Financial Position for 2015 to 2017

Figure No. 2: Composition of SKPG’s Assets for 2017

Figure No. 3: Composition of SKPG’s Liabilities for 2017

Further, Figure No. 4 provides a graphical view of SKPG’s financial performance.

Figure No. 4: SKPG’s Financial Performance for 2015 to 2017

Figure No. 5: Composition of SKPG’s Operating Revenues for 2017

Figure No. 6: Composition of SKPG’s Operating Expenses for 2017

Figure No. 7: SKPG’s Cash Flow for 2015 to 2017

Opinion of the Auditor

Summary of Significant Observations and Recommendations

The significant observations and recommendations are the following:

4. SKPG has to institute mechanisms to reinforce delivery of responsibilities and

Status of Suspensions, Disallowances and Charges

There were P60,800.00 in Suspensions as of December 31, 2017.

Status of Implementation of Prior Years’ Audit Recommendations

The table below presents the evaluation of Management’s implementation of prior

No. of Status of Implementation as of December 31, 2017

Independent Auditor’s Report 1

Statement of Management’s Responsibility for the Financial Statements 3

Audited Financial Statements

Consolidated Statement of Financial Position

Consolidated Statement of Financial Performance

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Net Assets/Equity

Statement of Comparison of Budget and Actual Amounts

Notes to Financial Statements 10

INDEPENDENT AUDITOR’S REPORT

HON. SULTAN PAX S. MANGUDADATU, AL HAJ, Ph.D.

Management’s Responsibility for the Financial Statements

June 29, 2018

Particulars Notes 2017 2016

LIABILITIES AND EQUITY

Net Assets/Equity 17 Php 2,627,477,727.83 Php 1,996,183,427.25

TOTAL LIABILITIES and NET ASSETS/EQUITY Php 3,512,184,950.82 Php 2,456,112,188.44

(See accompanying Notes to Financial Statements)

Particulars Notes 2017 2016

LESS: CURRENT OPERATING EXPENSES

SURPLUS (DEFICIT) FROM CURRENT OPERATIONS Php 237,379,434.67 Php 252,390,575.96

Other Non-Operating Income (Losses)

SURPLUS (DEFICIT) FOR THE PERIOD Php 196,754,359.96 Php 204,101,206.95

(See accompanying Notes to Financial Statements)

Particulars Notes 2017 2016

CASH FLOWS FROM OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

NET CASH PROVIDED (USED) Php 587,136,335.57 Php 226,799,036.23

(See accompanying Notes to Financial Statements)

Particulars Notes 2017 2016

Add (Deduct): Changes in Net Assets/Equity during the Year

Government Equity, Ending Balance Php 2,627,477,727.83 Php 1,996,183,427.25

(See accompanying Notes to Financial Statements)

Revenue and Receipts

C. Receipts from Borrowings Php - Php - Php - Php -

Note 2: Statement of Compliance and Basis of Preparation of Financial Statements

Note 3: Summary of significant accounting policies

3.1 Basis of accounting

The consolidated financial statements are prepared on an accrual basis in accordance