EXECUTIVE SUMMARY

Introduction

Republic Act (RA) No. 5412 created General Santos City in July 8, 1968.It is
composed of twenty six (26) barangays and includes the operation of the City Hospital of
General Santos.

General Santos City dubbed as the Home of Champions, envisions that by 2030, it
shall become a truly globally competitive, livable city with prosperous, healthy, friendly,
well-educated and responsible citizenry actively participating in effective governance for
a sustainable future. This is aligned with the City’s mission to provide opportunities to
all sectors of society to be productive and responsive stakeholders, through execution of
sound and beneficial programs, projects and initiatives anchored on the principles of
justice and equality.

As of this report, the Local Government is headed by the Honorable City Mayor
Ronnel C. Rivera. The Agency has 23 departments and total personnel complement of
1,412 of which 1,299 are permanent employees, 15 elected officials, 72 co-terminus
employees, 26 casuals and 1,791 were hired on a job-order basis.

Operational Highlights
During the current year, the agency has implemented the following infrastructure
projects that impact the operation of the agency, viz:

Completed Projects On-Going Projects

No Description
Qty. Project Cost (PhP) Qty Project Cost
1 Roads & Bridges 11 89,374,512.24 11 27,805,391.99
2 Building & Other Structures 19 40,986,883.21 8 29,941,719.71
3 Drainage System/Box Culvert/ Flood Control 10 62,646,262.19 6 6,701,402.08
4 Water System 7 6,317,292.96 9 4,009,766.30
5 Electrical System 8 30,907,673.68 1 3,956,821.36
Total 55 230,232,624.28 35 72,415,101.44

Audit Methodology and Scope of Audit

A financial and compliance audit was conducted on a risk-based audit approach

on the accounts and operations of the City of General Santos for the period January 1 to
December 31, 2015. Value for Money Audit was also conducted to ascertain whether
desired results were achieved in an efficient, economical and effective manner.

The audit was focused on the different audit thrusts issued by the Local
Government Sector of the Commission on Audit.

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Financial Highlights

a) Financial Condition

Amount
Total Assets 4,899,227,770.14
Total Liabilities 1,471,524,414.08
Government Equity 3,427,703,356.06

Operating Income 1,713,172,615.89

Operating Expenses 1,215,872,499.61
Net Income 471,621,405.95

b. Financial Ratios

Description
Current Ratio 2.33:1
(Current Assets/Current Liabilities)

Quick Assets Ratio 2.26:1

(Current Assets - Inventories/Current Liabilities)

Net Working Capital 1,851,628,808.06

(Current Assets - Current Liabilities)

Debt Ratio 0.30:1

(Total Liabilities/Total Assets)

Debt to Equity 0.02:1

(Long Term Debt/Govt. Equity)

c. Appropriation, Allotment and Obligation

Appropriations Allotment Obligation

General Fund 2,369,397,295.25 2,369,397,295.25 1,578,068,526.67
Special Education Fund 103,886,414.99 103,886,414.99 51,675,118.95
Total 2,473,283,710.24 2,473,283,710.24 1,629,743,645.62

Opinion of the Auditor on the Financial Statements

We rendered a qualified opinion on the fairness of the presentation of the

financial statements of the City of General Santos as of December 31, 2015 in view of the
unreliability of the Property, Plant and Equipment amounting to ₱2,035.8M due to the
incomplete reconciliation of accounts of the inventory report with the books of accounts,
the inexistence and incompleteness of the inventory accounts totaling ₱100.9M due to
their unsubstantiated balances, and the inaccuracy of receivables and expenses amounting
to ₱16.8M due to the entity's non-settlement of cash advances to officers and employees.

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Summary of Significant Findings and Observations

1. Existence of RPT and SET Receivables based on estimates, difference between

the FS balance and the certified list and RPT Receivable balance greater than
SET Receivable cast doubt on the reported RPT and SET Receivables
amounting to ₱136,381,382.77 and ₱96,442,180.26 respectively in the financial
statement.

We recommended that the management provide the accurate amount of receivables

based on the Certified List of Taxpayers; reconcile the ending balances to come up
with reliable records; ensure among others that the RPTAS will properly allocate
partial payments to both taxes; and to exert more efforts on collections to maximize
revenue potentials and decrease IRA dependency.

2. Fund Transfers from various National Government Agencies credited to account

“Due to Other NGAs” in the Trust Fund amounting to ₱64,575,409.84 or
52.64% remained idle and/or not fully utilized for more than two (2) years not
only defeating the purpose for which the fund had been intended but also
depriving the constituents of the benefits that could have been derived had the
intended programs/projects been faithfully implemented.

We recommended and management agreed to review and analyze the account and
initiate documented representations for reconciliation with source agencies. The
concerned officials are also enjoined to be vigilant in the implementation of the
projects/programs/activities so that constituents can enjoy the benefits due therefrom.
Finally, funds that qualify for reversion should be returned to the source agencies
concerned.

3. Various projects funded from the 20% Local Development Fund were not timely
implemented as planned, thus resulting to delays in the delivery of services,
denied intended benefits to the constituents therefrom, and incurred losses in
terms of cost of money due to increase in prices over the years.

We recommended and management agreed to enhance the rate of implementation of

projects.

4. Existence of unreconciled balances between the cashbook and subsidiary ledgers

amounting to ₱125million, dormant bank accounts and obsolete checks affect
the reliability of Cash accounts in the financial statements.

We recommended and management agreed to require periodic reconciliation of

records between the Cashbook and the Subsidiary Ledger to ensure correct and
accurate reporting; to close the bank accounts with dormant deposits amounting to
₱3,119,408.65 and revert the same to the general fund or refund to the source agency,
if necessary, and to perform the required procedures in the immediate destruction of

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 obsolete checks in order to eliminate accountability of the accountable officer over
the checks no longer needed in the operations of the city government.

5. Of the total ₱2,035,801,645.94 Property, Plant and Equipment (gross of

accumulated depreciation), only ₱574,122,056.36 or 28.20% was reconciled
between the Inventory Reports of the City Accounting Office and the CGSO,
and the City was still not able to complete its annual physical count for CY 2015
contrary to Sec. 124 of the NGAS Manual Vol. 1 for LGUs.

We reiterated that the management thru the Inventory Committee to conduct a

physical count of all Property, Plant and Equipment and submit a copy of the report to
the Auditor and to continue the reconciliation of the records of the City Accounting
and City General Services Office for a reliable record of the PPE account.

6. Unsubstantiated balances of Inventory accounts totaling ₱100,957,523.80,

existence of non-moving accounts and inappropriate basis of recording of
issuances on Drugs & Medicines and Medical, Dental and Laboratory Supplies
tend to affect the existence, completeness and reliability of the account contrary
to the provisions of existing rules, laws and regulations.

We recommendedand management agreed that the CGSO should prepare complete

and comprehensive Report on the Physical Count of Inventories (RPCI) and
conductanalysis of the non-moving inventory accounts and coordinate with the
concerned departments for the compliance of documentary requirements. We also
recommended that the CGSO, CAO and City Hospital Supply Office should
undertake proper coordination for the complete and accurate recording of issuances
and ending inventory of drugs and medicines and medical, dental and laboratory
supplies.

7. Office administrative expenses totaling ₱8,912,119.05 were inappropriately

charged against the Special Education Fund (SEF) in violation of the provisions
of the Local Government Code, while programs and projects and activities
identified under Sections 100 (c) and 272 of RA 7160 were not prioritized and
implemented.

We recommended that the LCE be enjoined to advise Local School Board to

prioritize programs, projects and activities that are included in Sections 100 (c) and
272 of RA 7160 to address the needs of the students and teachers and for the
operation and maintenance of public schools. Consider the existing school
improvement plans in the budget planning in order to create linkage in budget from
the school level going to the division level. Accordingly, inappropriate charges
against the fund, to include operating expenses which are generally administrative in
nature and have neither direct nor indirect effect in the improvement of public schools
should be stopped.

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Summary of total suspensions, disallowances and charges

Out of the audit suspensions as of December 31, 2015 totaling ₱27,629,769.78,

only ₱8,679,555.85 were settled, leaving an unsettled balance of ₱18,950,213.93, while
out of the total disallowances of ₱78,729,741.32, none was settled. Details are shown
below:
a. Suspensions
Suspensions Settlement Balance
Prior Years 27,527,149.48 8,601,585.55 18,925,563.93
Current Year 102,620.30 77,970.30 24,650.00
Total 27,629,769.78 8,679,555.85 18,950,213.93

b. Disallowances
Disallowances Settlement Balance
Prior Years 78,729,741.32 - 78,729,741.32
Current Year - - -
Total 78,729,741.32 - 78,729,741.32

Status of Implementation of Prior Year’s Audit Recommendations

Status of Implementation
No. of No. of Audit Partially
Year Fully Not
AOMs Recommendations Implemented
Implemented Implemented
(Ongoing)
AAR 2014 16 37 8 26 3
AAR 2013 13 30 10 16 4
AAR 2012 & below 12 15 3 9 3
TOTAL 41 82 21 51 10
Details are shown in Part III of the Annual Audit Report.