EXECUTIVE SUMMARY

A. Introduction

Tagum City, the capital of the Province of Davao del Norte was officially created into
a component city by virtue of Republic Act No. 8472 entitled “An Act converting the
then Municipality of Tagum into a City, to be known as the City of Tagum”, signed
on January 30, 1998 by the then President, His Excellency Fidel V. Ramos. It was
ratified through a plebiscite in Tagum on March 7, 1998.

Situated 55 kilometers north of Davao City, it is one of the fastest growing cities in
Region XI. It has 23 barangays covering a total land area of 19,580 hectares.

In a study conducted by the Asian Institute of Management in 2005 up to 2007,

Tagum City was ranked among the 20 most viable component cities to do business in
the country. The City, with its steady supply of raw materials, competitive human
resources, continuing infrastructure development and efficient local governance
offers vast investment opportunities. Being identified as the sub-regional center of the
Davao Integrated Development Program (DIDP) Master Plan, it welcomes domestic
and export trading and manufacturing activities outlined in its priority areas of
investment.

The City is spearheaded by the newly elected Mayor Allan L. Rellon, DPA who
assumed office on July 1, 2013 together with the following elected city officials:

Elective Officials:
Vice-Mayor : Geterito T. Gementiza, MDMG
Councilors : Tristan Royce R. Aala, MDMG
Macario A. Bermudez, II
Oscar M. Bermudez, MD, MDMG
Fernand S. Bordios, MSSW
Agripino G. Coquilla, Jr., CE
Eva Lorraine E. Estabillo
Prospero E. Estabillo, Jr.
Rudy T. Onlos
Francisco C. Remitar, MDMG
Nicandro T. Suaybaguio, Jr.
Alan D. Zulueta, MDMG

B. Financial Highlights

For calendar year 2013, the financial condition of the City of Tagum registered an
increase in its total assets, liabilities and government equity by 7.24%, 5.35% and
8.10%, respectively, compared to last year’s as shown hereunder:
 Account 2013 2012 Increase Percentage
Assets P2,251,480,590.59 P2,099,471,153.63 152,009,436.96 7.24
Liabilities 693,852,874.65 658,602,847.58 35,250,027.07 5.35
Government
Equity 1,557,627,715.94 1,440,868,306.05 116,759,409.89 8.10

Total revenues and receipts realized during the year totaled P978.4M, of which
P508.9M or 52.02% thereof was generated from local sources. There was also an
increase in the Internal Revenue Allotment (IRA) for the year amounting to P42.4M.
Breakdown of income sources is shown in the tabular presentation below:

2013 2012
Nature Amount Percentage Amount Percentage

Local Income P508,943,927.86 52.02 P496,482,681.46 55.72

IRA 434,017,503.00 44.36 391,633,797.00 43.95

Income from Grants &
Donations 35,153,946.01 3.59 2,170,500.00 0.24
Share from
PAGCOR/PCSO 272,676.12 0.03 517,527.97 0.06
Share from National
Wealth 0.00 0.00 296,664.00 0.03
Total P978,388,052.99 100.00 P891,101,170.43 100.00

The foregoing revenues were used to fund the following expenditures appropriated
for the City’s operation and the various programs and projects aligned for the year,
such as:

Expenditure Appropriation Percentage Obligation Percentage

Personal
Services P270,094,689.67 26.53 P257,451,775.73 28.75
MOOE 451,530,593.20 44.36 389,235,970.29 43.47
Capital Outlay 144,431,202.61 14.19 104,092,543.30 11.63
Financial
Expenses 151,877,016.63 14.92 144,562,291.06 16.15
Total P1,017,933,502.11 100.00 P895,342,580.38 100.00

C. Operational Highlights

For the year, the plans and targets of the City of Tagum deals with the development
thrust under the EAGLE WINGS, a ten-point agenda of the city which acronym
stands for the following programs:
 Specific Programs/Projects and Accomplishments
1. Education, Employment and - Intensified City Educational Scholarship
Culture Program, City Vocational Technical Scholarship
Program (CIVOTESPRO), Alternative Learning
System, Special Program for Employment of
Student and Madrasah. The Sulong Dunong
Educational Assistance Program catered 891
High School students. The CIVOTESPRO has
already 97 scholars and has endorsed 12 scholars
to CHED. The PESO has assisted a total of 1,894
recommendations of which 1,479 were catered.
5,587 students and parents in mostly high school
institutions and colleges in the city were given
career and employment coaching while 857
clients have undergone the Pre-Employment
Seminar for Local Applicants and since July, 737
residents of Tagum were registered in the Online
Skills Registry System. As for culture, the City
have established the Tagum City Cultural and
Historical Commission and IPs are now well
represented in the 6th Council and in the
Barangay Sanggunian.
2. Agriculture, Fisheries, and - Special projects on rubber production and
Environmental Development organic farming served in 210 hectares with 335
farmers as beneficiaries. Fabricated 230 artificial
coral reef with registered 350 folks in coastal
areas. Regular monitoring and inspection of more
than 60 Material Recovery Facilities from
various puroks and barangays. Installed signages
and distributed primer on Solid Waste
Management. A total of 37,620 hills of different
forest trees from Australia and India were planted
at San Agustin Botanical Park.
3. Genuine Peace, Safety and - The city has organized the Force Multipliers
Security volunteers to help watch the city. Motorcycle
cops are now visible who directly manage Traffic
Management Officers (TMO) as well as in
coordination with Security Management Officers
(SMO). Turned-over to PNP 24 suspects from the
13 crimes committed against property, prohibited
drugs and violation on environmental law.
Continuous upgrade of the CDRRMC of its
system, purchased of hand-held radios for easy
info-blasting during emergencies and personnel
are equipped with rigid trainings from the Office
of Civil Defense and NDRRMC.
4. Livelihood and Tourism - Provided Capability Building Services for
Development Livelihood in Grow Micro Biz program for
entrepreneurs. Catered 30 small entrepreneurs
given additional capitalization through soft loan
program of the DOLE and the City. Established

5. Economy and Affordability of
Taxes
6. Wellness, Sports and Health
7. Infrastructure, Transportation
and Communication
Development
8. NGOs, GOs and Cooperatives
Convergence & Recognition
the Skills Training Cum Production Program in
Slaughtering Operation for 100 trainees by which
66 passers are now hired and are ready to fly for
Australia. 451 trainers, since July, attended the
Masonry, Civil Technology
Butchering/Slaughtering Operation, Carpentry,
Cosmetology/ Beauty Care, Motorcycle,
Automotive, Food and Beverages Services and
Massage Therapy. Launched/ established the
Kantahan sa Tagum, UGMAD Festival, Tagum
City Music Management Program, Gay Summit,
Kaimunan Festival for IPs, Pakaradjan Festival
for Muslims, Tagumeño Bisag Asa: A
Balikbayan Summit, as well as the 1st Mutya ng
Tagum.
- The drafting of the City Investment Code,
Revised Economic Enterprise Code and Revised
Taxcode are on its final stage and ready for
submission to the 6th Council for legislation.
- Provision of health services such as: Aid to
Indigent Patients, Blood Program, School Dental
Program, and Balik-Sigla Program. Provided
tetanus toxoid and other vaccinations to
employees including sports and zumba fitness.
Sent 236 athletes for Batang Pnoy Mindanao
Qualifying Leg, 213 athletes were sent to
Cagayan de Oro for Milo Little Olympics and
organized fun run events and all other ball games
for camaderie.
- Implemented the Purok Road Improvement and
Maintenance Task Force to oversee, expedite and
cause immediate response for repair,
rehabilitation, improvement and maintenance of
roads wherein 400 puroks and barangay roads
were immediately served. Accomplished 24
repairs and cleaning of drainage, 30 desilting of
closed box culvert, pipes and creeks. Cleared an
area of 46,600 square meters, excavated 14,800
meters and graveled an area of 22,400 for road
right of way. Repaired 13 government school
buildings as integrated in Schools Infrastructure
and Maintenance Program. Total project
accomplishment for CY 2013 amounted to
P81,413,543.88, 84.51% of the total project cost
P96,330,544.40. Van operations were allowed in
the city so to allow its constituents more choices
of public transportation and at the same time
additional income to the City Economic
Enterprise.
- Initiated and reorganized the City Cooperative
Development Council and drafted strategic plans,
 Development and inventory of registered cooperatives in the
city. Coordinated with the different NGOs and
Cooperatives by establishing a real coordinator
through a Project Development Officer.
9. God-Centered and Good - Monthly mass and ecumenical prayers for
Governance employees and public market have been held and
distributed hundreds of Holy Bibles. Provided
prayer room at the public market for the Muslim
community. Conducted seminar on values
enhancement on moral recovery and conflict
management to different barangays and schools.
And regular meetings of the LCE with all
Department Heads for proper coordination and
meets that common vision for the constituents.
10. Social Services - Implemented the Kaagapay Pang Medikal
Program which catered 767 patients in Davao
Regional Hospital and other government
medical agencies. Provided gift certificates to
334 elementary pupils from far-flung barangays
in partnership with Gaisano Mall of Tagum.
Subsidies given to Luntiang Paraiso, Home for
the Aged and Gloria Christy Regis Center and
Sagop-Palad Foundation. In partnership with
DSWD, assisted in the Pantawid Pamilya
Pilipino Program, Social Pension,
Supplementary Feeding Program and
Sustainable Livelihood Program. Conducted
skills training under the Women and Children
Welfare Program and provided school bags and
supplies for pupils/students.

D. Scope of Audit

A financial and compliance audit was conducted, on a test basis, on the accounts and
transactions of the City of Tagum for the year ended December 31, 2013, to ascertain
the propriety of financial transactions, operations, and compliance of the agency with
prescribed rules and regulations. It was also made to ascertain the accuracy of
financial records and reports as well as fairness of the presentation of the financial
statements.

E. State Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the financial statements. As discussed in

Part II of this report, the inclusion of completed projects in the Construction-in-
Progress accounts, failure to transfer them to their appropriate Property, Plant and
Equipment (PPE) accounts and Government Equity, record the same to the Registry
of Public Infrastructure (RPI) resulted in the overstatement of the total assets of the
City by P49,385,153.50. Moreover, the absence of the required physical count and
 property records of inventories amounting to P47,989,194.27 casts doubt on the
existence, completeness and accuracy of the reported balances.
.
F. Summary of Significant Observations and Recommendations

The City has fulfilled its legal mandate in the year 2013 through its development
programs and projects as demonstrated by the following favorable observations.

a. The City garnered various awards in recognition of its accomplishments,

namely:

• Best PESO Office for Component City Category during the 13th National
PESO Congress;
• One of the national finalists, and the only one from Mindanao, in the 2013
Jesse Robredo Awards for Best in E-Gov Customer Empowerment (G2C);
• Finalist in the Component City Category as a “Child-Friendly City” by the
Council for the Welfare of Children;

b. Timely submission of financial reports and records by the Office of the City
Accountant.

However, there were still deficiencies noted on which remedial measures are hereby
provided to correct its effect on the operations of the City, such as:

1. The Construction-in-Progress accounts totaling P132,912,076.34 included

various projects amounting to P55,484,512.70, already reported as completed
as of year-end, but remained unadjusted to their appropriate Property, Plant
and Equipment accounts, thereby understating the Plant, Property &
Equipment, Government Equity and the Registry of Public Infrastructure
accounts inconsistent with Section 111 of P.D. No. 1445.

Require the City Engineer’s Office to fast tract the submission of the list of
completed projects and the required supporting documents to the City
Accountant’s Office for the latter to appropriately close the CIP accounts to its
proper PPE accounts.

It is also recommended that the two offices periodically reconcile their records to
reflect the actual accomplishments of the projects undertaken.

2. Incomplete property records, absence of periodic physical count and

improper recording of various inventories procured by the City amounting
to P47,989,194.27 as of the year-end cast doubt as to the existence,
completeness and accuracy of the reported balances therein in violation of
Sections 114, 119, 121 and 124 of Volume I of the NGAS Manual.
 Require the General Services Officer to maintain the mandatory property records,
conduct periodic physical count and render a report thereof adhering to the
procedures/guidelines in inventory-taking.

We also recommended that the Accounting Office record all the purchases as
inventory and report issuances based on submitted SSMI by the GSO.

3. Various disbursements funded out of the Special Education Fund amounting

to P4,736,839.14 are considered irregular, unnecessary and excessive as
defined under COA Circular No. 2012-003 and inconsistent with the purpose
for which such fund was created under R. A. No. 5447 to the disadvantage of
the public schools who could have benefitted from the projects/programs
derived therefrom.

We recommended to the Local School Board to carefully evaluate the

programs/projects to be included in the SEF Budget taking into consideration the
objectives set forth under existing laws and regulations that govern the utilization
of such fund.

Likewise, refrain from utilizing SEF funds for activities/programs/projects that

are not authorized under the laws, rules and regulations.

4. Expenditures categorized as minimum basic needs for locally-funded

projects under the Office of the City Mayor totaling P2,143,048.36 were
initiated and implemented by the Sangguniang Panlungsod contrary to its
mandates defined under Article 99 of R. A. No. 7160.

Adhere to the provisions of R. A. No. 7160 insofar as implementation of locally-

funded programs/projects and other similarly-situated undertakings of the City are
concerned.

5. Assistance funded from the 5% Calamity Fund of the City amounting to

P1,416,750.00 was not supported with documents and reports to establish
the propriety and validity of the said expenses. Moreover, transfers of funds
to other LGUs were recorded as outright expense instead of receivable
contrary to that prescribed under COA Circular No. 2012-002.

Secure from the Provincial Government of COMVAL a report on the utilization

of the P500,000 transferred as required by COA Circular No. 2012-002.
Subsequent transfers should be recorded as receivable from the grantee LGU,
subject to liquidation thereof.

On the other hand, submit the required supporting documents to establish the
propriety and validity of the other expenses charged to the Calamity Fund.
 6. Procurement of construction materials and other supplies of the City for CY
2013 amounting to P93,997,789.00, other than the common use supplies and
equipment, was undertaken in the absence of an Annual Procurement Plan
and a procurement monitoring report thus, timely evaluation on whether the
conduct of procurement undertakings were effectively managed could not be
facilitated, a condition violating Sections 7 and 12.2 of the Revised IRR of R.
A. No. 9184.

Instruct the BAC Secretariat to prepare an approved Annual Procurement Plan

(APP) that shall include information in support of each individual project,
program or activity as programmed in the City’s Annual Budget, copy of which
must be furnished this Office for reference. The same must be duly supported
with information in Project Procurement Management Plan (PPMP) as its basis
for preparation. Otherwise, members of the BAC may be charged with
appropriate charges for non-compliance with the same provision.

Also, require the BAC to prepare and submit within fourteen (14) calendar days at
the end of each semester, a procurement monitoring report.

G. Implementation of Prior Years’ Audit Recommendations

Of the nine audit recommendations of prior years, three were fully implemented, five
were partially implemented and one remained unimplemented.