B.

Value For Money Audit

12. Trust funds amounting to P90,022,212.10 had remained relatively idle for the
past five years without proper liquidation of the amount of grant and
disposition of excess funds, if any, thus depriving the Province of the benefits
of completed projects to which these funds had been originally intended and
likewise depriving the donor-agencies of resources that could be put to
better use in other activities or in other agencies needing assistance.

Section 94 of the Manual on the New Government Accounting System (NGAS)

for LGUs, Volume I, provides that Trust Fund shall consist of private and public
monies which have officially come into the possession of the local government or of a
local government official as trustee, agent or administrator, or which have been received
as a guaranty for the fulfillment of some obligation. A trust fund shall only be used for
the specific purpose for which it came into the possession of the local government unit.

An aging schedule of trust funds in the possession of the Province, excluding trust
receipts consisting of retention fees, guaranty deposits and the like, shows that more than
53% of the balances as at year-end, totaling P302,813,014.23, pertain to funds received in
the previous years. Around 30% or P90,022,212.10, had been carried in the books more
than 5 years ago, and had remained unutilized since 2006. (Refer to Annexes M-1 to M-
10)

Trust funds recorded in the Due to Other GOCCs and Due to LGUs accounts were
the least utilized and comprise the bulk of the long dormant accounts. On the other hand,
we noted that funds coming from the PDAF of congressmen and senators appear to be the
most utilized, with some virtually spent as soon as received. We did observe though that
funds from the PDAF of certain former congressmen and senators appear also to have
remained idle for some time.

The non-utilization of these funds may not only be contrary to the purpose for
which these funds had been set up, but likewise deprives the Province of the benefits of
completed projects to which these funds had been originally intended. The relatively
small balances of several accounts also indicate improper liquidation of project funds as
well as disposition of the excess. Moreover, unwarranted retention of these funds when
no longer needed deprives donor-agencies of resources that could be put to better use in
other activities or in other agencies needing assistance.

In the case of grants from national agencies, COA Circular No. 94-013 dated |
December 13, 1994 specifically provides in Sec. 4.9 thereof that the IA (implementing
agency) shall return to the SA (source agency) any unused balance upon completion of
the project.

41
 Furthermore, we noted several accounts with debit balances amounting to
P1,428,077.10, which is an indicator either of bookkeeping errors, or improper utilization
and unauthorized charges to these accounts.

An AOM was issued covering the herein finding. In response, the Provincial
Accountant committed that a memorandum addressing issues raised herein will be issued
by management to all offices concerned.

We recommend that the Province, thru its implementing offices or departments,

should draw up the appropriate project proposals to utilize fully idle or dormant trust
funds pursuant to the law governing said grant and/or the Memorandum
Agreement/contract with the respective donors.

The Province should likewise implement proper liquidation of the amount granted
as well as the refund of excess project funds to the donor, if so provided in the terms of
the grant.

13. Policies, procedures and practices implemented by the Province had failed to
generate proper competition and ensure efficiency in its procurement,
casting serious doubts on whether the Government is able to obtain the best
possible quality and cost for the goods and services it had procured as well as
meet the requirements of the end-user/requisitioner when needed to
implement programs, projects and activities of the Province.

Procurement is the effective acquisition of goods or services that are appropriate

and are purchased at the lowest possible price to meet the needs of the purchaser in terms
of quality and quantity, time, and location.

GOVERNING PRINCIPLES

The procurement functions of the local government are regulated under R.A.
9184, the law enacted to modernize, standardize, and regulate the procurement activities
of the government, along with applicable provisions of COA Circular 92-386 dated
October 20, 1992 setting forth the rules and regulations on supply and property
management in local governments pursuant to Section 83, Title VI, Book II of RA 7160
(Local Government Code of 1991).

Sec. 3 of R.A. 9184 set forth the following governing principles on government
procurement, among others, (as adequately explained in the Generic Procurement Manual
issued by the GPPB):

42
 a) Transparency in the procurement process and in the implementation of
procurement contracts through wide dissemination of bid opportunities and
participation of pertinent non-government organizations.

The procurement process and the implementation of procurement contracts must be

transparent. Procuring entities must ensure the widest dissemination of bid opportunities
and the participation of pertinent non-government organizations. Towards this end,
posting in the Procuring Entitys website, in the PhilGEPS website, and in a conspicuous
place within the premises of the Procuring Entity is required for all procurements.
Moreover, in addition to the COA representative, the BAC of the Procuring Entity is
required to invite observers coming from eligible and qualified PAs and NGOs to
observe any or all stages of the procurement process. Finally, each procurement
transaction must be properly documented and such records must be maintained and
made available to proper parties.

b) Competitiveness by extending equal opportunity to enable private contracting

parties who are eligible and qualified to participate in public bidding.

Public procurement must be competitive and, as a rule, be conducted through public

bidding, except as otherwise provided for .

c) Streamlined procurement process that will uniformly apply to all government

procurement.

The procurement process shall be simple and made adaptable to advances in modern
technology in order to ensure an effective and efficient method. A streamlined
procurement process that will uniformly apply to all government procurement must be
adopted.

LIMITATIONS ON SCOPE

As noted in our AOM No. 12-009, submissions by management of purchase

orders and contracts for review along with related documents are partial and incomplete,
which in effect precludes proper review of procurement transactions. The Purchase
Orders (POs) submitted are not supported by required documents pertaining to the
conduct of the public bidding or any alternative forms of procurement as conducted by
the Bids and Awards Committee (BAC). Hence our review of the conduct of procurement
was undertaken through the examination of vouchers as submitted for post-audit by the
Accounting Office, after selecting at random samples of transactions involving
procurement.

PROCUREMENT PROFILE

Section 10 of R.A. 9184 provides that All Procurement shall be done through
Competitive Bidding, except as provided for in Article XVI of this Act.

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 We examined the Deliveries Monitoring Reports provided by the General
Services Office (GSO) for the period July 2011 to December 31, 2011, out of which we
drew a profile of procurement as reflected in the purchase orders submitted as
attachments to said reports. (Refer to Annex N-1). We noted that 63.18% of the
transactions reflected in said reports refer to procurements through public bidding, with
36.82% representing procurement through alternative methods. Direct contracting
represents 12.35% of the total, while procurement through government agencies (NFA,
DBM, etc.) account for 2.53% while the remaining 21.93% of the transactions constitute
negotiated procurement (shopping, small-value procurement and emergency purchase).

A breakdown of the value of items procured, however, reveals that 64.25% of the
total value of the goods procured for the period was thru alternative methods, while only
35.75% was acquired thru the prescribed mode of public bidding.

PROFILE OF COMPETITIVE BIDDING AS CONDUCTED BY THE PROVINCE

Sec. 5 (e) provides the following definition of Competitive Bidding: refers to

a method of procurement which is open to participation by any interested party and
which consists of the following processes: advertisement, pre-bid conference, eligibility
screening of prospective bidders, receipt and opening of bids, evaluation of bids, post-
qualification, and award of contract

The Procurement Manual for Local Government Units (under Section Three, Part
I thereof) provides the following explanation on what Competitive Bidding is:

Competitive Bidding or Public Bidding as a method of procurement that is open

to any interested and qualified party. This process treats bidders equitably and provides
fair grounds for competition among themselves, thereby ensuring that no single bidder
significantly influences the outcome of the bidding. Competition among proponents will
urge them to offer more beneficial terms to the government. Hence, the alternative
methods of procurement must only be resorted to when competitive bidding is not a
feasible option, in accordance with the conditions laid down in R.A. 9184 and its IRR-A.

LGUs should have a well-planned procurement program so that it will have

sufficient time to conduct such Public Bidding and procure the required goods for its
operations promptly within a reasonable time.

We extracted from the files as samples some of the vouchers we used as

references in determining the amount of undisclosed purchase orders already issued in
2010 but paid only in 2011 (as noted in our AOM No.12-004) and added the vouchers on
procurement transactions for the period October 1-20, 2011, to develop a profile of
biddings conducted by the Province over the past two years. We observed that 80.70% of
transactions, which comprise 90.76% of the amount of procurement as per sample,
consist of public biddings involving only a single bidder. Moreover, in cases where there
are competing bids, 12.28% of these transactions (6.96% of the total value) involve cases
when the contract as awarded is split between two or more bidders who submitted the

44
lowest bid for certain items (partial bids), instead of awarding one contract to the lowest
calculated responsive bid based on the total calculated prices of the bids as evaluated.
Hence, only 7.02% of the transactions (2.28% of the total value) represent biddings with
competing bids and a single winner awarded the contract. (Refer to Annex N-2)

VIRTUAL ABSENCE OF COMPETITION

While Sec. 36 was intended for a bidding to proceed under three supposedly
exceptional scenarios or circumstances when the bid is unable to draw competitive offers
or bids, the foregoing figures clearly show that the objectives of R.A. 9184 in prescribing
competitive or public bidding for all procurement in the government had not been
achieved at all in the Province due to the absence of competition in 80% to 90% of all
procurements done thru supposedly public or competitive bidding. In turn, the lack of
competition creates serious doubts on whether the Province is really getting the best
goods or services for the best value and at the most advantageous terms. Annex N-3
shows a list of suppliers with 5 or more POs awarded to them, most of which involve
biddings with virtually no competition.

PROCUREMENT TIMELINES

Our analysis of data provided by the Delivery Monitoring Reports show an

average procurement time of 134 days, from the time the Purchase Requisition (PR) is
received by the BAC up to the time the deliveries are accepted from the
supplier/contractor. The timeline is slightly longer in public biddings, extending up to
140 days, while those under alternative procurement do not fare much better at 123 days.
Direct contracting appear to be the most timely mode of procurement at an average on
only 94 days, while procurement thru government agencies appear to be least efficient
at 158 days. Negotiated procurement, carried out after a canvass of prices, matched the
overall average at 134 days.

Further analysis show that under public bidding, 86% of the procurement
transactions take more than 90 days, with more than 56% in fact taking longer than 120
days. For alternative procurement, around 68% take more than 90 days, with 36% taking
more than 120 days. (Refer to Annex N-4)

PROCESSING OF PURCHASE ORDERS

Processing time from the date the PR is received by the BAC up to the release of
PO is 125 days on the average, with 134 days needed to process procurement thru public
bidding and 110 days for alternative procurement. Direct contracting takes 92 days while
procurement thru government agencies take only 73 days. Once more, negotiated
procurement (thru canvass) matched the overall average of 125 days.

Further analysis show that 85% of the purchase orders are released after more
than 90 days, with 54% taking longer than 120 days. For alternative procurement, around
64% take more than 90 days, with 30% taking more than 120 days. (Refer to Annex N-5)

45
 In contrast, the Revised IRR of RA 9184 provides for a maximum procurement
period for public bidding of goods of only 124 calendar days (which already include a
relatively long post-qualification period of 30 days and approval period of 15 days) while
setting the minimum at 28 calendar days. While no official timeline is provided for
alternative procurement, the same should logically be considerably lower than that for
public bidding in view of relatively fewer procedures undertaken for alternative forms of
procurement. (Refer to Annex N-8)

BIDDING, CANVASS AND PAYMENTS

To provide details of the actual processing timelines, we likewise determined the

processing time for bidding related processes, for that in the conduct of canvass in case of
negotiated procurement, as well as that for payments to suppliers and contractors, using
the samples we earlier used to build a profile of biddings.

We computed an average procurement time for bidding at 137 days from the date
the PR is received by BAC to the time the PO is released (which reasonably compares
with the procurement time average of 134 we earlier extracted using POs covering
deliveries over a six-month period ending December 31, 2011). For canvass, we obtained
an average of 117 days. (Refer to Annex N-6)

The new timeline provides the following interesting facts:

1. Successful biddings are conducted on the average 36 days after the PR had been
received by the BAC, while the canvass is undertaken after 29 days.

2. The processing time consisting of evaluation of bids and consequent award

through the issuance of PO takes about 42 days for biddings. Strangely, the
evaluation of canvass takes longer, averaging 52 days.

3. Once the PO had been drawn up, it still takes around 59 days for it to be released
for biddings, while it takes another 36 days for it to be released for negotiated
procurement.

4. Payments on claims are settled on the average 62 days after release of the PO.
Reckoned from date of delivery, payments are made 53 days after for biddings
while it takes only 45 days for payments on negotiated procurement.

The timeline likewise establishes a procurement and payment cycle in the

Province spanning 199 days for biddings and 179 days for canvass. It also indicates that a
winning bidder should expect to be paid only after 163 days after the biddings, while
other suppliers who submitted the lowest quotations for a canvass are paid 150 days after.

46
IMPLICATIONS

A procurement cycle of 134 days for a local government unit (LGU) would mean
that government projects can proceed only after a waiting time of almost 4.5 months.
Even assuming that all requisitions are made at the beginning of the year, this leaves the
agencies only 7.5 months to implement programs, projects and activities budgeted for the
calendar year. This casts serious doubts on whether implementation timelines were being
met, particularly since our review of implementation of trust funds likewise indicated
delays.

The long procurement cycle could likewise explain in part the grossly material
and significant number and value of approved contracts/purchase orders as well as
purchase requisitions already charged against previous years appropriations covering
projects that are not yet implemented and/or goods that are not yet delivered as at year-
end (which were subsequently recorded as payables and/or paid only in the succeeding
year). These creates distortions in the financial reports, considering that charges to
appropriations no longer correspond to charges to expenses for any particular year, thus
affecting proper evaluation of accomplishments and project implementation vis--vis
financial performance.

SOURCES OF RISKS AND DELAYS

We reviewed the various elements and processes involved in the conduct of

procurement, particularly those pertaining to public bidding, to assess adequacy of
policies and procedures implemented to encourage competition as well as to identify
possible causes of delay as indicated by the timelines:

LACK OF CONSOLIDATION OF SIMILAR PROCUREMENT REQUIREMENTS AS

PROCUREMENT STRATEGY

The Procurement Manual for Local Government Units contains the following
provisions on procurement planning:

The APP is the document that consolidates the various PPMPs submitted by the
various end-user units or the PMO within the LGU. It reflects the entirety of the
procurement activities that will be undertaken by the LGU within the calendar year. In
the consolidation of PPMPs, the BAC may adopt a strategy through which similar items
of procurement are packaged into one procurement undertaking and under a single
PPMP, in which the original PPMPs shall be consolidated and revised. Also, during the
review of the PPMPs, the BAC shall determine the nature of the procurement, whether
they be procurement of goods, infrastructure or consulting services.

The APP is prepared by the BAC through the BAC Secretariat upon submission
by the end-user units of their respective PPMPs. In preparing the APP, the BAC shall
take into consideration the following factors:

47
 a. The APP should include all procurement activities planned for the year. The
approved APP shall be the basis for the LGUs procurement, and only those projects
/procurement included therein shall be undertaken.

b. The APP shall include provisions for a lump sum to cover foreseeable
emergencies or contingencies usually indicated by historical records.

c. Scheduling of procurement activities in the APP should be done in such a

manner that the BAC and the other offices/units in the LGU that are involved in the
procurement process are able to efficiently manage the conduct of procurement
transactions. Moreover, it is paramount that project implementation timelines are met.

The Generic Procurement Manual likewise contains the following explanation on

procurement strategy:

The procurement strategy refers to the approach that will be adopted by the
BAC in the procurement of the goods, infrastructure projects and consulting services
included in the APP.

In the review and consolidation of the PPMPs, the BAC will be able to determine
the extent of diversity, quantities, quality, cost, the supply market, and other
characteristics of the Procuring Entitys requirements for the year. The profile of the
procurement is a major determinant in the choice of procurement strategy to be
employed, as well as in the scheduling of procurement activities.

There may be common requirements for the various PPMPs. For example, three
projects require the purchase of five (5) units of laptop computers for each project office,
or a total of fifteen (15) laptop computers. Obviously, it will be more cost effective and
efficient if the BAC will procure the 15 laptop computers in one bidding exercise and as
one bid lot.

We cannot glean any such signs of proper consolidation of similar requirements

of various operating units under one Office even just at the level of the PMPP, much less
in the APP of the Province. In contrast, we noted several instances of purchase
requisitions and purchase orders of tires and spare parts awarded to the same supplier all
coming from one office, like in the case of the Provincial Engineers Office.

The lack of consolidation accounts for the numerous purchase orders and
instances of public biddings conducted by the BAC, and this eventually translates into
larger volumes of transactions as well as documentations; hence, the consequent delay in
procurement. The Delivery Monitoring Reports lists 1,263 POs over a six-month period,
indicating an annual volume of 2,500 to 3,000 purchase orders issued by the Province.

48
INADEQUATE SPECIFICATIONS OF REQUISITIONED ITEMS AND PROPOSED
TERMS FOR THE PROCUREMENT

Sec. 17.2 of the Revised IRR of RA 9184 provides that The specifications and
other terms in the Bidding Documents shall reflect minimum requirements or
specifications required to meet the needs of the procuring entity in clear and
unambiguous terms.

The Procurement Manual thus further explains:

The term technical specifications refers to the physical description of the goods or
services, as well as the requirements of the end user of LGUs in terms of the functional,
performance, environmental interface and design standard requirements to be met by the
goods to be manufactured or supplied, or the services to be rendered. The technical
specifications must include the testing parameters for goods, when such testing is
required in the contract.

Functional description is the description of the functions for which the Goods are to
be utilized. Performance description refers to the manner that the Goods are required
to perform the functions expected of them. Environmental interface refers to the
environment in which the required functions are performed at the desired level.
Design refers to the technical design or drawing of the goods being procured. A
design standard is particularly useful in cases where the goods procured are specially
manufactured for the LGU.

Precise and accurate specifications are necessary not only to give suppliers the
required information to make an informed bid, but also for oversight, review and
monitoring units of the Province to properly assess compliance with the terms and
conditions of the contract.

For example, in the case of catering contracts, we noted that the contracts do not
even contain proposed menu or fare, schedule, venue and number of participants, which
is a crucial factor not only in the determination of the ABC but also in assessing
compliance with terms of the contracts.

In the case of procurement of printed materials and supplies, we noted several

overly delayed transactions involving Ala Balay Imprinta, wherein the implementation of
the contract was suspended with the concurrence of the BAC.
The reason cited is that allegedly the design of the forms or materials to be printed have
not been completed or finalized.

The said justification for effectively extending the terms of the contract is a
clear illustration of inadequate specifications, which has serious ramifications and renders
questionable the way public biddings are being conducted (considering further that the
same involves not just one but several purchase orders). For one, how can the ABC be
reasonably set when the design of the product intended to be procured is still unclear?

49
Can a supplier make an informed bid if he is not even made aware of how the design of
the printed product will turn out to be? How can an award and proper evaluation be made
of the bids if the ultimate product is yet unclear, considering that there is the so-called
no contact rule? How can the inspection unit conduct inspection of the deliveries if the
specifications were not so specified in the contract? Are pre-procurement conferences
ever held, or even just a review of invitations to bid in order to verify the adequacy of the
specifications, which, based on the aforementioned definition, necessarily include
designs?

Vagueness of specifications and terms in turn is conducive to collusive

transactions and discourages open participation and competition, since only those
actually privy to eventual needs of requisitioners are likely to participate in the
procurement transaction.

ADVERTISEMENT/POSTING OF INVITATION TO BID

The Procurement Manual provides the following rationale behind the

advertisement of invitations to bid:

1.2. Advertisement and Posting of IAEB as a Legal Requirement

The posting and/or advertisement of the IAEB ensures transparency of the procurement
process, widest possible dissemination to increase the number of prospective bidders,
and intensify competition for the procurement activity or project.

Intensified competition, in turn, will ensure that LGU will get the best possible quality
and cost for the goods and services sought to be procured.

Inasmuch as, historically, biddings had not been able to generate competition as
intended under the present rules and regulations, the LGU should have considered
supplementing advertisement efforts to make the public bidding conducted by the
Province truly competitive through the following suggested measures also contained in
said Procurement Manual:

1.5. Posting in Conspicuous Place

The LGU should have a specific prominent and public place reserved for posting of IAEB
(e.g. bulletin board in the provincial capitol or city, or municipal hall). Though no longer
required, the LGU may continue its old practice under the Local Government Code
(Section 363) of posting the call for bids (now the IAEB) in at least three (3) publicly
accessible and conspicuous places and sending by mail or otherwise to prospective
bidders in the locality and nearby areas. This will ensure the widest publicity of the
procurement activity and encourage more participants in the bidding process.

50
BAC COMPOSITION AND QUORUM

The Revised IRR contains the following provisions on the composition, quorum
and conduct of business by the BAC:

11.2.4. The Head of the Procuring Entity may designate alternate members to the BAC,
who shall have the same qualifications as their principals as set in the Act and this IRR.
The alternate members shall attend meetings of the BAC and receive the corresponding
honoraria, whenever their principals are absent. The alternate members shall have the
same term as their principals. The accountability of the principal and the alternate
member shall be limited to their respective acts and decisions.

12.3. Quorum
A majority of the total BAC composition as designated by the Head of the Procuring
Entity shall constitute a quorum for the transaction of business, provided that the
presence of the Chairman or Vice-Chairman shall be required.

12.4. Meetings
The Chairman or, in his absence, the Vice-Chairman, shall preside at all meetings of the
BAC. The decision of at least a majority of those present at a meeting at which there is
quorum shall be valid and binding as an act of the BAC: Provided, however, That the
Chairman or, in his absence, the Vice-Chairman, shall vote only in case of a tie.

Our examination of bidding documents attached to vouchers submitted for post-

audit, particularly the abstract of bids, show clear indicators that the primary source of
delay is the routing of the abstract for signature of the members of the BAC, and not
additional post-qualification procedures that may be deemed necessary in highly
technical or complex procurement. We likewise noted that no alternates have been
designated despite the issuance of the Revised IRR prescribing the same, and that the
BAC still conducts business through the use of representatives, particularly in the crucial
opening of the bids which likewise necessarily includes the determination of eligibility of
the bidders.

The use of representatives renders the process subject to challenges of legitimacy,

as well as contributes considerably to delays in the processing of related documents,
which average around 42 days.

ISSUANCE OF PO/CONTRACT AND IMPLEMENTATION OF SECURITIES

REQUIREMENTS

Once the PO is issued pursuant to a notice of award, we noted a gap averaging 39

days between the date of the PO and the date the same is released by the BAC. Our
examination of the dates the securities or performance bond were posted by the
respective suppliers indicates that the delayed posting of performance bonds primarily

51
accounts for the delay in the release of the PO. It likewise appears that the following
provisions of the Revised IRR are not strictly implemented:

37.2.1. The winning bidder shall post the required Performance Security and
enter into contract with the procuring entity within ten (10) calendar days from receipt
by the winning bidder of the Notice of Award.

40.1. If the bidder with the Lowest Calculated Responsive Bid/Highest Rated
Responsive Bid or the bidder with the Single Calculated/Rated Responsive Bid, fails,
refuses or is unable to submit the documents required under Section 37.1 of this IRR or
to make good its bid by entering into a contract with the procuring entity or post the
required Performance Security within the period stipulated in this IRR or in the Bidding
Documents, the bid security shall be forfeited and the appropriate sanctions provided in
this IRR and existing laws shall be imposed, except where such failure, refusal or
inability is through no fault of the said bidder.

ADVANCE DELIVERY/INSPECTION/ACCEPTANCE

The following explanation on the importance of planning to eliminate practices

contrary to the rules and regulations are noted in the Procurement Manual:

Procurement Planning and Budget Linkage

Procurement planning ensures that the overall goal of the particular project will be
achieved effectively and efficiently. Through plans, an LGU is able to effectively manage
and track procurement all the way to contract performance. As such, it allows managers
to determine how to allocate limited cash and other appropriate resources under a given
time line and identify choke-points, weaknesses, and delays in the entire activity that can
be addressed or eliminated. Also, a sound procurement planning enables the LGU to be
cost efficient in its procurement, as it ensures a strong link between procurement needs
and goals.

Proper planning ensures that only goods, infrastructure projects, and consulting services
which have been included in the approved APP shall be procured thereby precluding
occasions for unnecessary government purchases and circumventions of the prescribed
procurement procedures such as advance deliveries, suki system, or unwarranted
resort to alternative methods of procurement, among others.

Aside from the instances of delayed deliveries which were justified by the
vague specifications and terms, we likewise noted several instances of advance
deliveries, which renders doubtful the verification and inspection done considering that
these were received and accepted prior to the issuance of the final contract or purchase
order.

ALTERNATIVE PROCUREMENT AND OTHER DISCREPANCIES

Referring back to the timelines under the Annexes, we noted that direct
contracting accounted for 60.64% of the total value of goods procured, while only 1.77%

52
was acquired from government agencies and 1.83% thru negotiated procurement. This
indicates that direct contracting was resorted to in high-value procurement (usually
involving technical equipment and medical and hospital supplies) while the negotiated
procurement was resorted to in small-value items.

DIRECT CONTRACTING

The following explanatory notes found in the Procurement Manual for LGUs
sums up the basic requirements and features of procurement thru direct contracting:

Exclusivity of the source and necessity of the goods to be procured are required under
this condition before a LGU may resort to Direct Contracting

To justify the need to procure through the Direct Contracting method, the BAC should
conduct a survey of the industry and determine the supply source. This survey should
confirm the exclusivity of the source of goods or services to be procured. In all cases
where Direct Contracting is contemplated, the survey must be conducted prior to the
commencement of the procurement process. Moreover, the LGU must justify the necessity
for an item that may only be procured through Direct Contracting, and it must be able to
prove that there is no suitable substitute in the market that can be obtained at more
advantageous terms.

We examined on a test basis certain transactions involving direct contracting,

notably medical and hospital supplies. We then compared prices per PO under direct
contracting with that of prices per purchase orders covering items acquired to
consignment as well as with purchase orders issued for similar items but requisitioned by
different Offices under the Province. We noted discrepancies as shown in Annex N-7,
which strongly indicate that the requisite survey had not been properly undertaken before
resorting to alternative procurement thru direct contracting.

PROCUREMENT THRU OTHER GOVERNMENT AGENCIES

The foregoing timelines likewise indicates that for procurement thru government
agencies, the problem lies primarily in effecting delivery, particularly with regard to
purchase thru the DBM. Thus, while the PO to other government agencies can be
prepared after only 19 days on the average, actual procurement stretched up to 158 days
due to delayed deliveries, much later than the average for procurement thru public
bidding.

NEGOTIATED PROCUREMENT

One would reasonably expect that procurement under negotiated procurement

would be much faster considering that the regulations had relatively shortened the
mandatory processes. But further analysis of transactions shows that 87% of these
transactions take more than 90 days, with 43% taking more than 120 days. 85% of the
POs are released only after more than 90 days, with 40% released after 120 days.

53
 An examination of the Abstract of Bids/Quotations for these transactions in the
sample reveals that the Abstract also undergoes routing for signature of BAC members,
thus prolonging the process.

SCHEDULING OF PROCUREMENT ACTIVITIES

We noted an unusually huge volume of year-end procurement; that is, at a time

when implementation of the project is supposedly winding down, paving the way for
reporting and evaluation functions. These are likewise indicators of the lack of adequate
planning and failure to properly align procurement activities and timelines with the
operational requirements and schedules of the agency. The inappropriate timing also cast
doubts on the necessity of such procurement, if not the validity of the transactions.

VICIOUS CYCLE

The long procurement and payment cycle discourages otherwise legitimate

suppliers from participating in the public bidding and other forms of procurement of the
Province. In turn, the absence or lack of competition prevents the LGU from reaping the
rewards of competition as intended by R.A. 9184: lower prices and better terms, thus
optimizing the use of scarce resources of the government.

The delays likewise give rise to questionable practices, such as requisitioning by

end-user Offices for next years requirements at year-end using current year
appropriations, in clear anticipation of delays under the prevailing procurement and
payment cycle of the Province. This further leads to distortions in financial reports and in
monitoring and evaluation of project accomplishments, thus ultimately weakening
internal control.

An AOM was issued covering the herein finding. In response, the General
Services Officer and current BAC Chairperson agreed that some of the existing
procedures shall be modified in order to fast track the procurement activities of the
Province. The Governor indicated that he is considering the creation of another BAC to
address specific procurement needs of certain offices with huge volume of transactions,
as well as the appointment of alternates as allowed under the Revised IRR of R.A. 9184.
End-user units will be required to undertake proper planning and consolidation of their
procurement requirements.

We recommend that the Province undertake measures to address risks and delays
in procurement, and:

a. Designate alternate BAC members to assure continuity of procurement processes;

b. Ensure prompt preparation of abstract of bids as read and as evaluated, unless

referred to Technical Working Group for further evaluation;

54
c. Consolidate, at least at the level of end-user Offices, the requirements of all
units/divisions under them in their PMPP.

d. Supplement advertisement of invitation of bids by adopting the policy under Sec.

363 of R.A. 7160 prescribing sending invitations by mail or otherwise to
prospective bidders in the locality or nearby areas in case of high-value
procurement;

e. Consider the creation of several BAC for cluster of Offices, if the limited
consolidation will not result in lower volume of transactions and faster
processing;

f. Require the BAC to review adequacy of specifications and terms and conditions,
prior to issuance of invitations to bid to ensure fair competition and proper
monitoring of procurement, as well as conduct pre-procurement conferences for
the purpose, whenever necessary;

g. Implement strictly timelines on the posting of performance bonds as well as

sanctions for failure of suppliers to comply;

h. Conduct proper survey to verify exclusivity of supply source for goods to be

procured as well as prove that no suitable substitute is available at more
advantageous terms, in case of procurement thru direct contracting;

i. Establish procurement timelines in consonance with project schedules, including a

cut-off date for processing requisitions and issuance of purchase orders to ensure
receipt of most of the procured items in time for the project implementation, with
provisions for exceptions only in case of emergencies;

j. Discontinue the practice of accepting advance deliveries.

55
PART III - STATUS OF IMPLEMENTATION OF PRIOR YEARS AUDIT
RECOMMENDATIONS

Audit Ref. Management Status of Reason for

Observation Recommendations Action Implementation Partial/ Non-
Implementation
1. The Province of We recommend that AAR Partially Reiterated in
Negros Occidental the Provincial CY implemented. herein report.
failed to reconcile, Accountant effect 2010
identify, and properly reconciliation of the
classify balances of balances of the asset
asset accounts accounts against
totalling relevant records and
P1,748,822,120.09, record the appropriate
which renders adjustments to reflect
doubtful the validity the correct balances.
of 38% of the total
assets recorded in the
books of accounts of
the LGU as at year-
end.
The Province failed We recommend that Partially Reiterated in
to implement existing the Province should implemented. herein report.
rules and regulations comply with the
pertaining to the provisions of COA
granting, utilization Circular 97-002 and
and liquidation of ensure proper
cash advances of granting, utilization
officials and and liquidation of cash
employees of the advances.
LGU, resulting in the
unliquidated cash The Provincial
advances amounting Accountant should
to P43,235,285.20 as rectify errors in the
at year-end. recording of accounts
to ensure proper
monitoring of
liquidation of cash
advances and
implementation of
existing rules and
regulations on cash
advances, including
the withholding of
salaries of accountable
officers who fail to
effect prompt
liquidation in
accordance with
existing rules and
regulations.
3. Extant We recommend that Not Reiterated in
practices and management should implemented. herein report.

56
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
procedures of the implement measures
Province pertaining to to ensure prompt
receipts and reporting, remittances
collections resulted in and deposit of
delayed remittances collections in order to
and deposits and reflect the correct cash
delayed recording of balances in the
receipts and financial statements:
collections, thereby
weakening a. Collecting
accounting controls officers should be
over the cash required to prepare
transactions and RCDs at the close of
ultimately resulting in each business day and
the understatement of effect remittance of
the balances of cash, their collections daily,
income and related particularly when
accounts in the collections exceed
periodic and year-end P5,000.00;
financial statements b. The Province
amounting to should consider the
P7,351,392.09 in designation of
2009 and additional liquidating
P9,375,194.62 in officers and merging
2010, contrary to the their functions with
accounting policies the verification unit, in
set forth in the order to facilitate the
Manual on the New verification and
Government remittance process.
Accounting System. Procedures for
verification of receipts
should be streamlined
to ensure prompt
recording and
remittance of
collections;
c. The Province
should likewise
consider the
designation of a
regular cashier and/or
collecting officers for
Mambukal resort,
considering the
substantial volume of
cash handled by said
enterprise;
d. Enterprises
with assigned cashiers
(regular or designated)
should be required to
deposit collections in

57
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
authorized depository
banks (directly or
through inter-bank
transfers) to reduce
risk of loss in transit as
well as to ensure
prompt deposit of
collections. The
verified RCDs should
be submitted to
accounting for
recording, and the
transactions of the
cashiers as
accountable officers of
said enterprises should
be recorded in their
respective cashbooks.
e. The
Provincial Accountant
and the Provincial
Treasurer should
conduct jointly a
review of the
accounting and
reporting policies of
the Province with
regard to collection,
deposit and recording
of revenues, in order
to ensure correctness
and accuracy of cash
balances in Treasury
reports and in the
financial statements
and to preclude any
duplication of
procedures and
functions.
4. A fund We recommend that Implemented.
transfer from the the appropriate
General Fund to the adjustments be
EEDD on December recorded in the books
30, 2010 was not as at year-end to
immediately correct the
acknowledged as understatement of the
collection of the Cash accounts, and
EEDD on the same that henceforth,
date, resulting in the transactions involving
understatement of fund transfers should
consolidated Cash be simultaneously
accounts of the recognized in the

58
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
Province as at year- books of accounts
end by maintained for the
P35,518,781.50 funds involved in said
transactions.
5. The lack of We recommend that Partially
proper review of the the Provincial implemented
validity of reconciling Accountant should
items in the bank implement the
reconciliation provisions of COA
statements and Circular No. 96-011
monitoring of their and record
disposition by the adjustments for valid
Accounting Office reconciling items as
despite indicators of reflected in the BRS
possible fraudulent prepared by the
transactions Accounting Office.
amounting to The Province should
P14,378,355.23 cast likewise make
doubts on the validity representations to the
of the reconciliation respective banks for
process and the correction of bank
accuracy of the errors noted in the
valuation of the cash BRS.
accounts in the
financial statements, Henceforth, the BRS
in view of unrecorded submitted to the COA
adjustments in the Auditor should be
books of accounts for supported by copies of
reconciling items the JEV recording
requiring debit to reconciling items that
cash amounting to require correction in
P52,242,205.91 and the books of accounts,
adjustments for as well as a copy of
credits to cash the letter to the
totalling respective bank
P49,463,904.33. informing them of
errors noted in the
BRS (other than those
resulting from the
timing of recording of
transactions). Upon
receipt of the bank
statements and prior to
actual reconciliation,
verification of
supporting paid
checks, debit memos
and credit memos
should be made to
ensure that debits and
credits made in the
bank statements are

59
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
properly documented
by the Bank.
The Accounting
Office should require
banks to submit
original copies of the
bank statements, aside
from the faxed
advanced copies. Cash
balances and
transactions should be
monitored regularly to
determine proper use
of the accounts and
prevent charges per
BSP regulations for
dormant accounts.
6. The We recommend that Partially
Province failed to the Province should implemented.
effect prompt implement the
liquidations of funds provisions of COA
released to non- Circular 2007-001 and
governmental ensure proper
organizations/private granting, utilization
organizations and liquidation of cash
(NGO/POs) pursuant fund transfers.
to the provisions of
COA Circular 2007- The Provincial
001 dated October 25, Accountant should
2007, resulting in the review all outstanding
accumulation of accounts and record
unliquidated releases adjustments for
amounting to transfers that actually
P180,415,866.08 as at partake of the nature
year-end along with of donations rather
the consequent than that of project
understatement of implementation as
expenses and contemplated in the
overstatement of regulations.
assets and retained
earnings. The Province should
institute action against
NGO/POs and their
officers/organizers that
failed to implement
the programs and
projects funded by the
Provincial government
pursuant to the
provisions of the
Memorandum of
Agreement covering

60
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
these transactions.
7. Lack of We recommend that Partially
monitoring and the Provincial implemented.
proper accounting for Accountant should
deliveries of rice analyze the Due from
procured through NGAs account and
negotiated reclassify charges and
procurement from the credits to the
National Food appropriate accounts.
Administration had NFA warehouse stock
resulted in the issue forms should be
misstatement of the compared against
Due from NGAs quantities procured per
account, related P.O., and if indeed
expense accounts and incomplete deliveries
retained earnings, as had been made,
well as in discrepancies should
unaccounted be reported to NFA
deliveries of rice along for the demand
mostly pertaining to to make good the
previous periods shortfall/unserved
which amounted to purchase orders, if
P35,676,443.26 as at any.
year-end.
Requisitioning Project
implementers should
in turn be made to
account for all rice
withdrawn per verified
NFA warehouse stock
issue slips by
presenting
payrolls/distribution
sheets duly
acknowledged by
recipients.
Unaccounted
deliveries should be
charged to the
accountability of
Project implementors.

Henceforth, purchase
orders should be
supported by
schedules of
deliveries, and project
proposals should
incorporate time-tables
for project
implementation and
identify beneficiaries,

61
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
to facilitate monitoring
of accountabilities as
well as
accomplishment of
project objectives.
8. The Office We recommend that Partially Reiterated in
of the Provincial the Accounting Office implemented. herein report.
Accountant failed to should submit all the
effect prompt unaccounted original
submission to the vouchers and
Office of the supporting documents
Provincial Auditor of to the Office of the
all vouchers issued by Auditor. We likewise
the Province, contrary recommend that the
to the provisions of Provincial Treasurer
Section 107 of PD release checks only to
1445 and the Rules claimants and forward
and Regulations on the vouchers and
the Settlement of supporting documents
Accounts. to the Office of the
Provincial Accountant
in accordance with
procedures laid out in
the Manual on NGAS.
9. The We recommend that Partially Reiterated in
Province of Negros management effect implemented. herein report.
Occidental had full settlement of
effected only partial suspensions by
settlement of all submitting the
disallowances and required
suspensions issued documentation and
upon the effectivity explanations/justificati
of the COA Rules and ons listed in the
Regulations on the notices of suspension,
Settlement of in order to avoid
Accounts, reducing unnecessary
unsettled balances to complications arising
P1,724.00 and from suspensions
P65,552,184.57, lapsing into
respectively, as at disallowances.
December 31, 2010.
10. A review of We recommend that Substantially
transactions the Province should complied.
pertaining to trust endeavor to complete
funds granted by the the implementation of
Bureau of Postharvest the projects and
Research and liquidate the funds due
Extension (BPRE) for BPRE.
the establishment of
agricultural tramline Program of works
in the province of prepared by the
Negros Occidental Project implementing

62
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
reveals deficiencies in office should indicate
the implementation of specific time-table for
the project as well as the projects;
in the handling, amendments,
accounting and deviations and
utilization of funds, extensions should bear
resulting in the concurrence of the
overcharging of funding agency and/or
administrative costs the project
amounting to management
P1,004,480.50 and committee, particular
the failure to fully when these extend
implement the project beyond the effectivity
within the period of of the MOA/trust
effectivity of the agreement.
covering
Memorandum of The Provincial
Agreement (MOA) as Accountant should
well as to liquidate ensure that the
the funds received for program of works
the purpose to date: prepared for Projects,
particularly its
10.1 The financial component,
Province through the are in conformity with
Office of the provisions of the
Provincial budget/trust agreement
Agriculturist (OPA) (a file of which should
had charged project be maintained in the
funds with excessive Accounting Office for
administrative costs guidance and
totalling reference).
P1,140,740.76, most
of which are not The Offices of the
relevant to the Provincial
Project, although the Agriculturist and the
MOA provided for Provincial Accountant
administrative and should properly
non-direct cost of review charges and
only 1% of total ensure that only costs
project cost and expenses relevant
amounting to to the specific purpose
P136,260.26; of the Project are
charged against trust
10.2 Only one funds, while relevant
project thus far had administrative
been completed and expenses should never
accepted as at year- exceed limits set under
end, well beyond the the MOA. Other
one-year period of unnecessary and
effectivity of the irrelevant costs and
MOA; Four projects charges which cannot
were all awarded to be funded under the

63
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
only one contractor, regular budget of the
while three projects, OPA should be
including two charged to the account
projects supposed to of persons responsible
have been therefor.
implemented under
Phase I, have not
been awarded to any
contractor as of date
of expiry of the
MOA;

10.3 The amounts

released by BPRE as
trust fund were not
deposited in a
separate trust liability
account in an
authorized
government
depository bank,
contrary to the
provisions of the
MOA;

10.4 The
Accounting Office
failed to properly
monitor utilization of
funds to ensure that
disbursements are
made only for the
specific purpose
provided in the MOA.

1. The Province of The Provincial AAR Reconciliation Partially

Negros Occidental Accountant should CY ongoing. implemented.
failed to establish the endeavor to clean up 2009
correctness of Other the unreconciled 197
Investment and account to ensure that
Marketable Securities the investment account
(Account 197), Loans is fairly presented in
Receivable LGUs the Balance Sheet and
(Account 125) and to make certain that
Loans Receivable subsidiary ledgers are
Others (Account 126) correctly provided
with an aggregate under the specific
amount account tagging
P100,121,389.64. created for the
purpose.

The Provincial

64
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
Accountant should
conduct thorough
identification of loan
grantees and ensure
that uncollectible
accounts are
recommended for
write off, after
submission of proof
that these accounts are
indeed uncollectible
and needed to be
written off.

4. Public biddings The Province should Wide Partially Some suppliers

held by the Province ensure transparency dissemination implemented. are reluctant to
in 127 instances for and competitiveness in of bids is join biddings due
the procurement of all its procurement practiced. to delays in
goods, services and processes by widely processing of
infrastructure projects disseminating claims/
in the aggregate of information about
P77,896,572.90 procurement contracts
involve the so that qualified and
participation of a lone eligible bidders may
bidder, contrary to the participate, in
general principles on accordance with the
government above-cited provisions
procurement set forth of Revised
under Section 3(a) Implementing Rules
and (b) of the Revised and Regulations (IRR)
Implementing Rules of Republic Act (R.A.)
and Regulations No. 9184.
(IRR) of Republic
Act (R.A.) No. 9184
regarding
transparency and
competitiveness.

5. A review of Bank The Provincial No Not Difficulty in

Reconciliation Accountant and the adjustments implemented, documenting
Statements on various Provincial Treasurer had been reiterated. reconciling
accounts and funds should reconcile their made. items.
maintained by the records, locate and
Province disclosed identify documents
the following pertaining to
deficiencies: discrepancies between
book and bank
a. Deposits in Transit balances, and record
amounting to appropriate adjusting
P1,851,363.94 in the entries in the books of
General Fund accounts the province
remained unadjusted and thus ensure the

65
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
in the books of the accuracy and
Province for more reliability of cash
than ten (10) years in account as presented
violation of Section in the Balance Sheet.
3.3 of COA Circular
No. 96-011.
b. Unaccounted
difference between
Book and Bank
balances of
P3,000,000.00 for
LBP and P398,095.30
for PNB in the total
amount of
P3,398,095.30.
c. Items requiring
adjustments in the
Books in the amount
of P4,089,626.74 are
significant amounts
described as
unaccounted
adjustments in the
BRS.

6. Instructional The Provincial Not No IMCS

Materials Government thru the implemented. approval had
/Workbooks printed Department of been obtained to
and paid by the Education (DepEd) date.
Province in the total should submit to the
amount of Instructional Materials
P2,499,550.00 were Council Secretariat
not properly (IMCS) the said
evaluated and duly Instructional Materials
approved by the for review/evaluation
Department of and approval before it
Education (DepEd) will be reproduced for
Instructional distribution and use.
Materials Council A list of recipient-
Secretariat (IMCS) in schools duly certified
violation of Chapter 4 by Principal or
- Section 2.2 and 4 of authorized
the DECS Service representative should
Manual. likewise be submitted
by the project
proponents
/implementors to
account for the
distribution of the
books to intended
beneficiaries.
8. The Province of The Provincial No collection. Not

66
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
Negros Occidental Treasurer shall install implemented.
failed to collect the effective and efficient
amount of control procedures in
P89,239,154.55 in the identification of
loans granted to the active borrowers of
LGUs, NGOs/POs these loans granted to
and Private Entities MPCs and LGUs.
that could have been Likewise, ensure that
used for other priority past-due loans are
development projects collected immediately
and programs so that they will revert
beneficial to its back to the coffers of
constituents. the Province to be re-
applied to priority
projects and programs
for the benefit of its
constituents.

The Province shall

cease to make
additional investments
or grant additional
loans to MPCs, Private
Entities and LGUs in
order to preclude
possible misuse of
government funds and
utilize it instead for
more viable programs
and projects beneficial
to the greater majority
of its constituents.

9. The May 19, 2009 The Provincial Amount of Partially

inspection and Agriculturist and other loss for failure implemented.
evaluation by the concerned officials to apply
Technical Audit involved in the warranty is
Specialist (TAS) of selection and appraisal being made.
the Commission on of the vehicle should
Audit on the be held accountable
procurement of one for failure to
(1) unit 2nd hand implement standard
Isuzu Pickup 4x4 by requirements in the
the Office of the acquisition of second-
Provincial hand motor vehicles,
Agriculturist (OPA) which omissions
revealed the rendered
following disadvantageous to the
deficiencies: Province the
uneconomical
a. Non- purchase of fully-
operational/defective depreciated Isuzu

67
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
air conditioning Pickup, and to effect
system and engine oil the refund of
leakage P550,000.00 if the said
amount cannot be
b. The 6-months recovered from the
warranty given to the supplier of the
Province was in defective vehicle.
violation to Section
62.1 of Republic Act
(R.A.) 9184.

c. Actual mileage or
distance travelled had
exceeded the
allowable mileage
which proved the
procurement is
uneconomical in
violation of Section
4.1 of National
Budget Circular
(NBC) No. 446A
dated January 30,
1998.

d. The price amount

of P550,000.00 had
exceeded the
Appraised Useful
Values(AUV) or the
Remaining Useful
Value (RUV) based
on National Budget
Circular (NBC)
Department of
Budget and
Management (DBM)
and the Commission
on Audit (COA) 98-
569A.

2. Sixty (60) units of The OPA and PEMO AAR Distribution of Partially Some recipients
mechanical shredder should submit the CY shredders was implemented. are still not
acquired from RU Deeds of Donation 2008 already located
Foundry and Machine together with other covered with
Shop in the aggregate supporting documents Deeds of
amount of to the Office of the Donation
P11,150,000.00 Accountant for proper (DODs)
remained in the books treatment of donations
after they were and dropping of assets
distributed to various in the books, and to

68
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
recipients; thus, the GSO for dropping
overstating the asset in the property cards.
and understating the The Accounting
expenses. Office and GSO
should reconcile their
records to account for
the four (4) units that
were not recorded.

2. Failure of the We recommend that AAR Reconciliation Partially Cleaning up of

Provincial the Provincial CY and cleaning implemented. accounts is still
Accountant and Accountant and the 2007 up of accounts on-going..
Provincial Cashier reconcile the is still on-
Treasurer/Cashier to cash accounts to going..
reconcile the cash reflect the correct
accounts regularly, figure in the financial
resulted in the statements in order to
overstatement of provide management
Cash in Bank-Local with accurate
Currency, Current information needed for
Account (LCCA) of sound decision
P6,254,265.60, making.
thereby misstating the
Financial Statement
contrary to Sections
74 and 111 of
Presidential Decree
No. 1445.

1. The non- Instruct the Inventory AAR Clean-up of Partially Clean-up of

completion of Committee to conduct CY accounts still implemented. accounts still
physical count of periodic physical 2006 ongoing ongoing
inventories and count of all inventories
depreciable assets and PPE as well as to
under Property, Plant ensure timely
and Equipment (PPE) submission of the
and inadequacy of required Report of
related supplies and Physical Count of
property ledger cards Inventories (RPCI)
resulted to the and Report of Physical
difficulty in Count of Properties,
establishing the Plant, and Equipment
fairness of (RPCPPE) as
presentation of scheduled.
affected accounts
totaling Require the Provincial
P25,563,731.09 and Accountant and the
P599,710,497.70, GSO to reconcile their
respectively. records and properly

69
 Audit Ref. Management Status of Reason for
Observation Recommendations Action Implementation Partial/ Non-
Implementation
identify the
inventories and
depreciable assets
under PPE in order to
establish the fairness
to presentation of the
affected accounts in
the Balance Sheet.

3. Non-remittance of Direct the Provincial AAR The Provincial Not Still un-
various LGUs share Treasurer to comply CY Accountant is implemented. implemented due
aggregating with the provision of 2006 hesitant to to lack of
P15,714,292.00 as Section 286 (a) of the remit the share supporting
required under 1991 Local to LGUs due documents.
Section 286(a) of the Government Code in to lack of
1991 Local order for the other supporting
Government Code LGUs to maximize the documents.
deprived the use of their funds in She promised
concerned the implementation of to implement
beneficiaries of the various programs and the
use of said funds for projects. recommendati
their projects. on as soon as
possible by
offsetting the
Due from and
Due to
Accounts.

3. Inadequate We recommend that AAR Booking up of Partially Cleaning up of

controls over the the General Services CY accounts is implemented accounts is still
grant of donations to and the Accounting 2005 still on process on-going.
other Local Officers should
Government Units periodically reconcile
(LGUs) and Non- the donated assets
Government accounts to ensure its
Organizations correctness based on
(NGOs) were the ARE, Deed of
observed, thereby, Donation, or MOA. It
overstating the is also suggested that
Property, Plant, and physical inventory
Equipment account shall be regularly done
by P4,873,853.00. for all donated assets.

70
 PART IV - ANNEXES

Balance Sheet
General Fund Annex A.1
Special Education Fund Annex A.1.1
Trust Fund Annex A.1.2

Statement of Income and Expenses

General Fund Annex A.2
Special Education Fund Annex A.2.1

Statement of Cash Flows

General Fund Annex A.3
Special Education Fund Annex A.3.1
Trust Fund Annex A.3.2

Statement of Government Equity

General Fund Annex A.4
Special Education Fund Annex A.4.1
Trust Fund Annex A.4.2

SAAOB
GF Annex B.1
EEDD Annex B.2
SEF Annex B.3

Other Annexes:

Special Accounts in the General Fund Annex C

(C - 1)

Performance Bonds/Bidders Bonds/Bail Bonds

Payable Account Annex D
(D - 1)

Trust Receipts Annex E

(E1 - 3)

71
Disclosures in Notes to Financial Statements Annex F
(F1 - 3)

Travelling Expenses Annex G

(G1)

Receipts, Collections and Deposits Annex H

(H1 4)

Unreconciled Balances in eNGAS Annex I

(I1 5)

Unliquidated Cash Advances Annex J

(J1 5)

Submission of Vouchers Annex K

(K1 3)

Settlement of Accounts Annex L

(L1)

Trust Funds Annex M

(M1 10)

Procurement Annex N
(N1 10)

72