EXECUTIVE SUMMARY

A. Introduction

Pursuant to Republic Act No. 7160, otherwise known as the Local Government Code of
1991, the City of Roxas was provided more powers, authorities, responsibilities and
resources to a local government unit. The system of decentralization and autonomy
enables the unit to intensify its tax collection and implement programs, projects and
activities for a more responsive and self-reliant governance.

A financial and compliance audit was conducted on the accounts and operations of the
City of Roxas for Calendar Year 2019. The audit was conducted to ascertain the
propriety of financial transactions and compliance of the agency to prescribed laws, rules
and regulations. Furthermore, it was also conducted in accordance with International
Standards of Supreme Audit Institutions (ISSAIs). The Audit Team made use of audit
techniques which included vouching, reconciliation, inspection, inquiry and financial
analysis to check on the validity of the agency’s reported accomplishments and to
ascertain the accuracy of financial records and reports, as well as the fairness of the
presentation of the financial position and results of operation. Likewise, audit was
conducted on the following areas identified as audit thrusts in the Local Government
Sector (LGS) for Calendar Year 2019: Fund Transfers, 20% Development Fund, Local
Disaster Risk Reduction and Management Fund (LDRRMF), Solid Waste Management/
Environmental Compliance, Special Education Fund (SEF) and Gender and
Development Fund.

B. Financial Highlights

Assets
Increase
2019 2018 (Decrease) %
General Fund 1,794,116,864.02 1,556,440,691.97 237,676,172.05 15.27
SEF 220,658,823.30 197,189,412.87 23,469,410.43 11.90
Trust Fund 94,265,725.04 82,977,958.30 11,287,766.74 13.60
Total 0 0 0 14.83

Liabilities
Increase
2019 2018 (Decrease) %
General Fund 200,611,352.40 205,236,644.58 (4,625,292.18) (2.25)
SEF 30,250,275.83 26,474,576.06 3,775,699.77 14.26
Trust Fund 94,265,725.04 82,977,958.30 11,287,766.74 13.60
Total 0 0 0 3.32

Equity
Increase
2019 2018 (Decrease) %
General Fund 1,593,505,511.62 1,351,204,047.39 242,301,464.23 17.93
SEF 190,408,547.47 170,714,836.81 19,693,710.66 11.54
Total 0 00 0 17.21

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Revenue
Increase
2019 2018 (Decrease) %
General Fund 856,537,583.84 771,015,871.63 85,521,712.21 11.09
SEF 37,562,203.26 34,006,563.86 3,555,639.40 10.46
Total 00 0 0 11.07

Personnel Services
Increase
2019 2018 (Decrease) %
General Fund 305,686,079.04 249,073,726.30 56,612,352.74 22.73
SEF 3,424,498.39 2,381,024.52 1,043,473.87 43.82
Trust Fund 0.00 32,000.00 (32,000.00) (100.00)
Total 0 0 0 22.91

Maintenance and Other Operating Expenses

Increase
2019 2018 (Decrease) %
General Fund 233,028,608.60 278,264,467.23 (45,235,858.63) (16.26)
SEF 208,520.04 351,759.88 (143,239.84) (40.72)
Trust Fund 619,096.00 267,780.00 351,316.00 131.20
Total 0 0 (45,027,782.47) (16.15)

Financial Expenses
Increase
2019 2018 (Decrease) %
General Fund 5,492,768.91 5,319,017.64 173,751.27 3.27
Total 5,492,768.91 5,319,017.64 173,751.27 3.27

Surplus (Deficit) from Current Operation

Increase
2019 2018 (Decrease) %
General Fund 248,906,652.42 188,008,137.21 60,898,515.21 32.39
SEF 30,420,473.62 27,861,000.87 2,559,472.75 9.19
Trust Fund (619,096.00) (299,780.00) (319,316.00) 106.52
Total 0 0 0 29.29

Net Profit / Surplus(Deficit) for the Period

Increase
2019 2018 (Decrease) %
General Fund 233,391,148.84 170,917,630.54 62,473,518.30 36.55
SEF 26,420,473.62 18,761,200.87 7,659,272.75 40.83
Trust Fund 0.00 0.00 0.00 0.00
Total 0 0 0 36.97

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C. Auditor’s Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of presentation of the

consolidated financial statements of Roxas City, Capiz as of December 31, 2019 due to
the following: (a) non-liquidation of cash advances totaling ₱10.798 million as of
December 31, 2019; and (b) the Report on the Physical Count of Property, Plant and
Equipment (RPCPPE) duly reconciled with the accounting records was not submitted to
the Audit Team, thus, resulted in difficulty in ascertaining the completeness and
correctness of the PPE account balance (net of depreciation) amounting to
₱1.369 billion as of December 31, 2019.

D. Summary of Significant Observations and Recommendations

1. Appropriation for Calendar Year (CY) 2019 on 70% LDRRMF was not fully utilized,
hence, weakened the attainment of objectives to reduce disaster risks and enhance
disaster preparedness and response capabilities.

We reiterated our recommendation that Management:

a. Require the LDRRMC to study and evaluate its LDRRMFIP, if needed, revise
and update it, and determine or address the constraints/reasons for failure to fully
utilize the 70% LDRRMF; and

b. Effectively, efficiently and economically implement the priority PPAs contained in

the approved LDRRMFIP and Annual Investment Plan (AIP) during the current
year to attain the objectives pursuant to DILG Memorandum Circular
No. 2012-73 dated April 17, 2012.

2. Lack of budgetary allocation to support established measures and guidelines in the

implementation of Solid Waste Management (SWM) PPAs in accordance with SWM
Plan may hamper the attainment of significant PPAs in solid waste reduction and
collection, hence, targets for solid waste volume reduction and effective SWM
program might not materialize.

We recommended that Management require the SWM Board to:

a. Come up with a comprehensive proposed budget for the SWM Program

integrating the Personal Services, MOOE and Capital Outlay and Financial
Expenses requirements in implementing the SWM Program of the City in
accordance with the approved SWM Plan;

b. Intensify SWM collection activities to assess compliance on solid waste collection

routes with schedules and targeted areas. Maximize available old garbage trucks
to serve the target clientele;

c. Direct the Solid Waste Management Board to formulate concrete measures and
guidelines as basis for the implementation of PPAs in all components of SWM
particularly in solid waste reduction, collection, monitoring and evaluation like
strict implementation of segregation of solid waste at the barangay level;

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 d. Direct the City Environmental Office to properly assess the capacity of nine
garbage trucks if it can effectively carry out the 18 routes, if not, design and come
up with thorough collection measures of waste based on realistic schedules to
improve delivery of basic service to its clientele; and

e. Direct the CENRO and Budget Officer to propose budgetary allocations for all
PPAs identified in the SWM Plan for an effective program implementation, such
as, solid waste collection, specifically for the following:

 Lack of Garbage Truck

 Fuel, Gasoline and Oil
 Repairs and Maintenance
 Other General Services

3. The lack of monitoring in project implementation on fund transfers resulted in

accumulation of Due to National Government Agencies account amounting to
₱28.737 million, deprived the intended recipients of the benefits that could be
derived therefrom; and the non-reversion of unexpended balances to the
Unappropriated Surplus of the General Fund or its return to source agency deprived
the latter of funds that could be used for other priority projects.

We recommended that Management:

a. Enhance closer monitoring activities on fund transfer and direct the Focal Person
and Project Proponent Department Head to implement immediately without delay
funded programs of all on-going/not started projects to attain the program’s
objectives;

b. Direct the City Accountant to conduct regular periodic verification and

reconciliation of the unexpended balance of fund transfers Due to NGAs account,
determine if there are concerned creditors with valid claims, and cause the
immediate return/remittance of any unexpended amount of fund transfer after
project completion pursuant to COA Circular 94-013; and

c. Direct the City Accountant to book-up completed projects in the General Fund at
acquisition cost.

4. Delay in the submission of financial reports and records by the City Accountant
hindered the timely auditorial examination of accounts, hence, errors and
misstatements in the financial reports might not be immediately detected and
corrected.

We recommended that the City Accountant:

a. Submit immediately the financial reports and accounts which are already
overdue; and

b. Henceforth, strictly comply with the aforementioned laws, rules and regulations
on the timely submission of financial reports and records of receipts and
disbursements to facilitate auditorial review.

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 The above and other audit observations together with recommended courses of action
are discussed in detail in Part II of the report.

E. Summary of Total Suspensions, Disallowances and Charges as of Year-End

The total suspensions, disallowances and charges found in the audit of various
transactions of the City of Roxas as of December 31, 2019 is ₱25.753 million, based on
the Notice of Suspension (NS)/Notice of Disallowance (ND)/Notice of Charge (NC)
issued by this Commission.

F. Status of Implementation of Prior Years’ Audit Recommendations

Of the 55 audit recommendations embodied in the CY 2018 Annual Audit Report, 29

were fully implemented, 17 were partially implemented while nine were not implemented.