EXECUTIVE SUMMARY

Introduction:

Commonwealth Act No. 51, otherwise known as the Charter of the City of Davao
was issued on October 16, 1936. On June 19, 1965, Republic Act No. 4354 was enacted
providing for the revised Charter of Davao City.

As a political subdivision of the national government and a corporate entity

representing the inhabitants of its territory, the City Government of Davao is responsible
for the general welfare of its inhabitants, ensure and support among others, the following:
a. preservation and enrichment of culture;
b. promote health and safety;
c. enhance the right of the people to a balanced ecology;
d. encourage and support the development of appropriate and self-reliant scientific
and technological capabilities;
e. improve public morals;
f. enhance economic prosperity and social justice;
g. promote full employment among its residents;
h. maintain peace and order; and
i. preserve the comfort and convenience of the inhabitants.

Davao City is said to be the largest city in the world in terms of land area
consisting of approximately 244,000 hectares. It is composed of three (3) congressional
districts, represented by twenty-four (24) councilors, and subdivided into eleven (11)
political districts, with one hundred eighty-two (182) barangays. For its elective officials,
the first six months of the year, had Atty. Sara Z. Duterte as City Mayor and Atty.
Rodrigo R. Duterte as City Vice Mayor. For the rest of the year, Atty. Rodrigo R.
Duterte sat as City Mayor with Mr. Paulo Z. Duterte as City Vice Mayor. For its
appointed officials and personnel, the City of Davao has 1,182 male and 1,701 female
employees, augmented by 8,785 job orders/contract of services and 86 consultants for the
first semester and 8,383 job orders/contract for services and 20 consultants for the second
semester of the year.

For calendar year 2013, the City Government continued to pursue its thrust
“BAROG” (acronym for Barangay Empowerment, Academe, Resource Generation,
Peace and Order and Good Governance), thru the following programs: (1) developing
the local capabilities of the barangays to provide for the basic goods and services of its
communities; (2) advancing the developmental potentials of its citizens through
continuous upgrading of skills and knowledge; (3) maximizing the growth of key sectors
of the local economy especially tourism, agribusiness, and ICT; (4) enhancing proactive
approaches in stabilizing the peace and order situation of its local communities and
citizens; and (5) adopting more transparent, efficient and effective delivery of public
services. For its objectives and strategies, see the Program Accountability Model of the
City of Davao is attached as Annex 1.
FINANCIAL HIGHLIGHTS

Appropriation

5,000.00
4,000.00
3,000.00 CY 2013
2,000.00 CY 2012

1,000.00
CY 2012
0.00
General Fund Special Education CY 2013

(In Billions)
Expenditure

5,000.00
4,000.00
3,000.00 CY 2013
2,000.00 CY 2012
1,000.00
0.00 CY 2012
General Fund Special Education CY 2013

(In Billions)

Income

5,000.00
4,000.00
3,000.00 CY 2013
2,000.00 CY 2012
1,000.00
0.00 CY 2012
General Fund Special Education CY 2013

(In Billions)
Operational Highlights

Among the major accomplishments of the City Government of Davao for CY

2013, in three Major Final Outputs (MFOs), are as follows:

MFO No. 1 - Social, Economic and Environmental Development - Provision of

Comprehensive health and medical, sports, educational and social
alleviation interventions

 Prevented and controlled spread of rabies disease thru vaccination, impounding

and conduct of IEC; maintain K-9 unit for emergency response for public safety;
 Provided capacity building, health, nutrition, early education and socio-cultural
and recreational activities to children, parents, elder persons, persons with
disability, women and educational assistance to children of bomb victims;
 Provided extension services to 337 coops and 76 pre-coop groups;
 Served 4,018 clienteles in 106 barangays through mobile registration program;
 Registered 632 births under the program sa paaralan ko puede ng magparehistro
 Processed 18 subdivision applications, 112 agreements/titles, 85 deeds of sale,
settled 9 awardee disputes, tagged and mapped 1,361 informal settlers,
 Conducted coastal and riverbanks clean up in 14 barangays and planted 420 hills
of mangrove
 Distributed 5,012 notices for emission test, planted 12,674 assorted grafted
seedlings, established mangrove nurseries, propagated/planted 22,500 assorted
plant seedlings
 Constructed 3 storey, 12 CR at SPED Bangkal

MFO No. 2 – Development Administration - Enhanced operation systems in all

departments leading to improved delivery of services and increased revenue collections

a. Digitized 33 barangay maps, 340 section maps, 22,493 parcel maps

b. Launched web-based information system with document tracking feature
c. Produced 8,747 maps, templates, prepared 2,806 maps/documents
geographically referenced and conducted 2 technical training
d. Institutionalized the DRRM Data Management & installed 1 unit Automated
Weather System; developed the data base of all disaster volunteer
respondents; established emergency alerting/communication system and
monitoring posts to monitor water/flooding of rivers

MFO No. 3 – Infrastructure- Increased influx of tourism related economic events and
improved accessibility of barangays and markets for local produce

 Completed 14 projects under road construction; 7 projects under Buildings and

other structure; one project under Other public structures; one Electrification
project and four drainage projects.
Scope of Audit

Financial and compliance audit was conducted on the accounts and operations of
the City Government of Davao for Calendar Year ended December 31, 2013, to ascertain
the propriety of the financial transactions and compliance of the agency to prescribed
laws, rules and regulations. It was also made to ascertain the accuracy of the financial
records and reports as well as fairness of the presentation of the financial statements.
Performance audit was likewise conducted with the objective of informing management
where improvement can be instituted in the field of revenues, expenditures and
management of resources.

As a result of the risk assessment conducted and in keeping with the identified
audit thrust of the Local Government Sector for CY 2013, the following areas/accounts
were looked into by the Audit Team, viz:

1. Cash and other Cash Accounts

2. Receivables
3. Inventories
4. Property, Plant and Equipment
5. Compliance with Tax Laws
6. Procurement/compliance with RA 9184
7. Specific expenditure items
a. LGU partnership with NGOs/POs
b. Drugs and Medicines
c. Aid to COMELEC
d. Honoraria of members of committees/councils/boards
e. Consultants
f. Honoraria of barangay volunteers
g. Electricity expenses
8. Gender and development
9. Special Education Fund
10. Local Disaster Risk Reduction and Management Fund (LDRRMF)
11. Priority Assistance Development Fund and other Trust Funds
12. Domestic loans and projects funded out of the 20% Development Fund

The audit team also looked into the City Government’s outstanding legal cases,
compliance with the full disclosure policy and its standing as far as the Seal of Good
Housekeeping is concerned and the status of audit suspensions, disallowances and
charges.

Auditor’s Opinion on the Financial Statements

The auditor rendered a qualified opinion on the financial statements.

Significant findings and recommendations

Among the significant findings and recommendations are as follows:

1. Weakness and/or absence of internal control in the Cash Division and the e-
Business Tax Payment System resulted in non-discovery of errors in the reports of
collecting officers and a shortage of collections amounting to P16,105,084.86.

We recommended and management agreed that an Internal Audit Services

(IAS) is installed, and both the City Treasurer’s Office and the City Information and
Technology Center institute control measures and enhancement of the features of the
computerized program on business tax payment system;

2. The recorded receivables from Real Property Tax of P295,232,199.78 is

inaccurate and unreliable due to errors in the Real Property Tax Collection
System and absence of supporting list or subsidiary ledger for taxpayers with
unpaid accounts, contrary to Section 20 of the NGAS Manual for LGUs affecting
fairness of presentation of the financial statements.

We recommended and management agreed that the City Assessor’s Office and
the City Treasurer’s Office coordinate in the cleansing of the data base of the Real
Property Tax Assessment System (RPTAS), review and update the classification of
lands, buildings and other taxable property, identify tax exempt property, after which
implement the applicable provisions of RA 7160.

3. Inventory account balances of supplies and materials as of December 31, 2013

reached an unreliable amount of P170,749,757.06 due to failure of the different
divisions/offices to conduct physical inventory and to submit utilization reports
pursuant to Sec. 121and 124 of the NGAS Manual for LGUs.

We recommended and management agreed that concerned offices conduct the

physical inventory of supplies and materials, cause the reconciliation of balances and
update and submit their SSMI to the City General Services Offices for proper
consolidation and submission to the accounting office.

4. Misclassification and erroneous valuation of the account Land at assessed value

instead of cost or fair value rendered the carrying amount of P169,706,520.00
unreliable and inaccurate, thereby affecting fairness of presentation of the account
in the financial statements.

We recommended and management agreed that the City Assessor’s Office and
the General Services Office conduct ocular inspection and appraisal of all lands
owned and/or which future economic benefits accrue to the City Government, to
determine the fair value of the property, as basis for the City Accountant in valuing
the assets in the books and in determining which assets shall be recorded in the
Registry of Public Infrastructure.
 These and the other significant audit findings and recommendations are
extensively discussed in Part II of the report and presented to management during the exit
conference conducted on February 27, 2014. Their views and comments are included in
the report where appropriate.

Outstanding legal cases and final and executory decisions on legal cases

As of December 31, 2013, the City Government of Davao has sixty-two (62) legal
cases, of which number, three (3) were dismissed/terminated, twelve (12) pending with
the Court of Appeals/Supreme Court and the rest are on-going.

Compliance with full disclosure policy and Seal of Good Housekeeping

For CY 2013, the Department of Interior and Local Government (DILG) has not
yet released the result of its evaluation for the 2013 Seal of Good Housekeeping (SGH)
as there are documents yet to be posted in the first quarter of 2014.

Compliance with full disclosure policy

For CY 2013, Davao City has complied with the posting of all the required
documents according to the period of posting, per certification issued by the OIC,
Regional Director, Department of Interior and Local Government, Regional Office No.
XI, Davao City.

Status of Audit Suspensions, Disallowances and Charges

As of December 31, 2013, the status of suspensions, disallowances and charges

issued as a result of post audit of accounts covering the period January to September
2013, is stated as follows:

Description Suspensions Disallowances Charges Total

Balance, Jan. 1, 2013 8,322,855.79 - - 8,322,855.79
Issued, Jan-Dec,. 2013 201,203,288.88 25,097,543.76 - 226,300,832.64
Total 209,526,144.67 25,097,543.76 - 234,623,688.43
Settled, Jan-Dec. 2013 27,052,011.81 18,600.00 - 27,070,611.81
Balance, Dec. 31, 2013 182,474,132.86 25,078,943.76 - 207,553,076.62

Status of Implementation of Prior Year's Audit Recommendations

Of the seventy-two (72) audit recommendations embodied in the Annual Audit

Report of as of December 31, 2012 and the Interim Audit Report as of June 30, 2013,
twenty-six (26) or 36% were fully implemented; thirty-nine (39), or 54% were partially
implemented; and seven (7), or 10% were not yet implemented. Also, all the sixteen
(16) remaining audit recommendations from the Annual Audit Reports covering
Calendar Years 2006-2011, were fully implemented.