PART II – AUDIT OBSERVATIONS AND RECOMMENDATIONS

Utilization of Local Disaster Risk Reduction and Management Fund (LDRRMF) for
COVID-19 related Programs, Projects and Activities (PPAs) - ₱83.036 million

1. The City earmarked the amount of ₱149,429,417.00, or 16.59% of the estimated

revenue for Local Disaster Risk Reduction and Management Fund (LDRRMF) in CY
2021 and utilized the amount of ₱83,036,438.50 for COVID-19 pandemic responses
and ₱24,843,588.35 for other disaster related programs; however, improprieties and
deficiencies were noted in the planning, procurement, and reporting of activities which
are inconsistent with Section 12 of Republic Act (R.A.) No. 10121, pertinent provisions
of Government Procurement Policy Board (GPPB) Circular No. 01-2020 dated April 6,
2020 and Revised Implementing Rules and Regulations (RIRR) of R.A. No. 9184.

1.1 During CY 2021, the City allocated more than 5% of the estimated revenue from
regular sources to support disaster risk reduction management activities, in compliance
with the National Disaster Risk Reduction and Management Council (NDRRMC),
Department of Budget Management (DBM) and Department of Interior and Local
Government (DILG) Joint Memorandum Circular (JMC) No. 2013-1 dated March 25,
2013.

1.2 For CY 2021, the City’s appropriation ordinance included the budget for
LDRRMF PPAs totaling ₱45,049,188.45. Of this amount, ₱31,534,431.92 or 70% was
allocated for Disaster Preparedness and Management Program while ₱13,514,756.53 or
30% was set aside for Quick Response Fund (QRF).

  Activities Budget Amount

Disaster Preparedness and Management Program (70%)  
  Thematic Area 1: Disaster Prevention and Mitigation ₱28,630,000.00
  Thematic Area 2: Disaster Preparedness 1,194,431.92
  Thematic Area 3: Rehabilitation and Recovery 1,700,000.00
Total – Disaster preparedness and management program
  31,534,431.92
(70%)
Quick response fund (30%) 13,514,756.53
  Total – LDRRMF ₱ 45,049,188.45

1.3 The inclusive PPAs were contained in the City Disaster Risk Reduction and
Management Fund Investment Plan (CDRRMFIP) for CY 2021 enacted by the CDRRM
Council (CDRRMC) through Kapasyahan Blg. 02, year 2020 dated September 24, 2020.

1.4 On July 13, 2021, the City enacted Appropriation Ordinance No. 2, series of 2021
approving Supplemental Budget No. 2 series of 2021 in the amount of ₱102,883,485.29
to finance essential expenditures of the City Government. The sources of fund came
from the savings from the General Fund of CY 2020 and unfilled positions from January
to June 2021. Of the ₱102,883,485.29, ₱57,800,000.00 was appropriated to finance
COVID-19 related PPAs and expenses.

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1.5 Meanwhile, the LDRRMF Utilization Report prepared by the Office of the City
Accountant as of December 31, 2021 revealed that the amount of ₱149,429,417.00 was
made available for spending, a total of ₱107,880,026.85 was utilized thus, leaving a
balance of ₱41,549,390.15, as shown below.

LDRRMF
Quick Response Mitigation Fund
Total
Fund (30%) (70%)
A. Sources of Funds
Current appropriations – CY 2021 ₱11,252,945.58 ₱26,256,873.02 ₱37,509,818.60
(based on actual revenue from regular
sources)
Continuing appropriations 0.00 24,843,588.35 24,843,588.35
Previous Years’ Unexpended
Balances transferred to Special Trust 29,276,010.05 0.00 29,276,010.05
Fund
Supplemental appropriation 57,800,000.00 0.00 57,800,000.00
Total Funds Available 57800000 0 82643588.35.00
B. Utilization
Food Supplies Expenses 0.00 366,600.00 366,600.00
Welfare Goods Expenses 76,711,556.00 284,800.00 76,996,356.00
Medical, Dental and Laboratory
Supplies Expenses 2,995,850.00 2,285,232.50 5,281,082.50
Other Property, Plant and Equipment 0.00 25,235,988.35 25,235,988.35
Total Utilization 0.00 25887388.35 267886121.05
Unutilized Balance ₱18,621,549.63 ₱22,927,840.52 ₱41,549,390.15
Utilization Rate 72.19%

1.6 Analysis of the utilization of LDRRMF of the City for CY 2021 disclosed that of
the total utilization of ₱107,880,026.85, 76.97% or ₱83,036,438.50 was expended for
COVID-19 related PPAs, and the remaining for the disaster related programs. Further
analysis showed that the activities under COVID-19 responses pertained to the following:

PPAs Utilization
Meals of patients with COVID-19 at quarantine facilities ₱1,909,680.00
Meals for the medical staff conducting COVID-19
vaccination 366,600.00
Goods given to COVID-19 positive patients 10,286,676.00
Welfare goods (36,000 sacks of rice) 64,800,000.00
Medical, dental and laboratory supplies 5,281,082.50
Mist cannon 392,400.00
Total ₱80760158.50

1.7 The non-COVID related PPAs covered the 40% final payment of installation of
fiber optic, CCTV, early warning system and other paraphernalia for command center
amounting to ₱24,843,588.35, which was categorized as a continuing appropriation of the
prior year.

1.8 Our review disclosed that 25 activities costing ₱2,640,000.00 were not
implemented during the year, while the activity with a budgeted cost of ₱28,000,000.00
intended for the procurement of vaccines for COVID-19, disinfectants, sprayers,
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disinfection tents and other disinfecting supplies and misting equipment was depleted
only by a minimal amount of ₱392,400.00.

1.9 The City Planning and Development Officer (CPDO) commented that the said
PPAs were not pushed through due to health risks to and limited mobility of City
personnel brought by the COVID-19 pandemic. The City also shifted more of its efforts
on the distribution of welfare goods to COVID-19 patients, conduct of antigen testing and
administration of vaccines. As to acquisition of COVID-19 vaccines, the same was not
executed because of the stiff requirements of the National Government in the direct
procurement of vaccines by Local Government Units (LGUs).

1.10 Nonetheless, we conducted an audit on compliance of the City with pertinent

rules and regulations affecting LDRRMF and we observed the following improprieties
and deficiencies:

 Non-preparation of Local Disaster Risk Reduction and Management Plan

(LDRRMP)

1.11 The CDRRMC did not prepare the LDRRMP which could be the City’s basis on
the implementation of DRRM PPAs at the local level. Its formulation is required by R.A.
No. 10121 or an Act Strengthening the Philippine Disaster Risk Reduction and
Management System. Its Section 12(c)(6) states that:

(c) The provincial, city and municipal DRRMOs or BDRRMCs shall

perform the following functions with impartiality given the emerging
challenges brought by disasters of our times:
xxx
(6) Formulate and implement a comprehensive and - integrated LDRRMP
in accordance with the national, regional and provincial framework, and
policies on disaster risk reduction in close coordination with the local
development councils (LDCs); xxx

1.12 The LDRRMP is the strategic road map to attain resilience against disasters. It
should be attuned with the national, regional and provincial framework and aligned with
the priorities of the national disaster plan. It provides LGU’s assessment of hazards,
exposure, vulnerabilities, capacities, and the goals, objectives, outcomes, action plans,
and mechanisms for monitoring and evaluation for the four thematic DRRM thematic
areas: disaster prevention and mitigation, disaster preparedness, disaster response, and
disaster rehabilitation and recovery.

1.13 The lack of the required LDRRMP impressed that the PPAs implemented have
not gone through the LDC’s deliberation as provided in the above-cited provision. This
situation may suggest the ineffective planning by the City since the annual CDRRMFIP
enacted by the CDRRMC was formulated even without the required LDRRMP. As this
exercise should be done annually, the PPAs to be implemented by the City must be
supportive to and aligned with the short-term goals and the vision of the national

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government in the long run. The basic principle is that the formulation of the LDRRMP is
a response to the national government’s call for efforts to make communities more
disaster-resilient.

1.14 Furthermore, the non-implementation of the planned activities as discussed above

signifies the poor planning on the part of the City in the formulation of their CDRRMFIP.
The CDRRMC could have realigned or reprogrammed these unimplemented PPAs to
other PPAs that will strengthen more the disaster resiliency of the City in the time of
pandemic.

1.15 According to the CPDO, the LDRRMP was not prepared by the former CDRRM
Officer who took a leave of absence starting September 2021 until her resignation on
January 8, 2022. The PPAs listed in the CDRRMFIP are those that need to be
implemented as identified and assessed by the CDRRMC.

 Deficiencies in the procurement activities

1.16 Post audit of 21 disbursement vouchers (DVs) for the utilization of the LDRRMF
disclosed the following:

Particular Laws, Rules and

Deficiencies Noted
Regulations not Adhered to
Approved Project Procurement Management Plans (PPMP) Section 9.1 of Commission on Audit
and Annual Procurement Plan (APP) were not submitted (COA) Circular No. 2012-001
nor attached in the Disbursement Vouchers;
The Purchase Orders (POs) executed and conformed by two Section 3.5 of Government Procurement
suppliers for the purchase of goods through Emergency Policy Board (GPPB) Circular No. 01-
Procurement for the period January 1 to June 30, 2021 did 2020 dated April 6, 2020 or the
not include a warranty clause where the supplier, Guidelines for Emergency Procurement
distributor, manufacturer, or contractor warrants that, for under Republic Act No. 11469
the period stipulated covering the procurement at hand, the
Goods or Infrastructure Projects to be delivered or
implemented shall be free from defects and conform to
quality standards and technical specifications of the said
contract.
The Omnibus Sworn Statement (OSS) submitted by two Appendix 1 Section 3.4(a) of GPPB
suppliers for the purchase of goods through Emergency Circular No. 01-2020
Procurement for the period January 1 to June 30, 2021 was
incompliant with the OSS for Emergency Procurement
under the Bayanihan Act. Specifically, the OSSs submitted
did not declare that the posting of a performance security
has been dispensed with due to the urgent need for the
procurement and that the suppliers warrant that the projects
to be delivered shall be free from defects and conform with
quality standards and technical specifications of the
contract.
There was no proof of posting of the updated Annual Section 9 of GPPB Circular No. 01-2020
Procurement Plan (APP) and Notice of Award (NOA) in the
GPPB online portal for Emergency Procurement under the
Bayanihan Act
Certification from BAC Secretariat of the posting of NOA Section 37.1.6 of the 2016 RIRR of R.A.
in conspicuous places and print-out of NOA posting in No. 9184

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 Particular Laws, Rules and
Deficiencies Noted
Regulations not Adhered to
PhilGEPS website was not presented

1.17 The necessary and timely postings of the procurement information in the GPPB
portal, PhilGEPS and conspicuous places could have enhanced the accountability and
transparency of the procurements conducted by the City while the lack of necessary
information in the OSS, POs and other procurement documents raised doubts on the
regularity of the transactions.

1.18 As explained by the concerned officials, they overlooked the regulations

concerning the noted deficiencies.

 Deficient procurement documents

1.19 The Purchase Request (PR), Requisition and Issue Slip (RIS), PO and Inspection
and Acceptance Report (IAR) attached to the DVs did not contain complete details such
as the date of the document, document number and the date and place of delivery for the
PO. Moreover, one member of the Technical Working Group (TWG) did not sign in
almost all of their resolutions.

1.20 Responsible official explained that the necessary information in the

aforementioned documents was not properly filled out due to voluminous transactions.
On the other hand, the TWG member reasoned out that he has not been properly
informed of the documents to be signed and most of the time, he was doing field works
and accompanying the LCE in his activities.

1.21 The absence of basic details on procurement documents including the terms in the
PO is an indication of poor internal control, which could pose unfavorable risks to the
City in case of disputes that may surface from the absence of clear contract terms and
provisions.

1.22 Overall, the City has substantially utilized the LDRRMF for COVID-19 related
PPAs which greatly helped its constituents in coping and battling the health and
economic challenges brought about by the transmission of COVID-19 infection and in
supporting the national government curtail the harm and bad impact the pandemic brings
by.

1.23 We recommended that the Local Chief Executive (LCE) direct the (a) OIC-
CDRRMO, in collaboration with the CDRRMC, to: (i) prepare the LDRRMP as
required by R.A. No. 10121; (ii) properly and effectively identify LDRRMF related
PPAs to be undertaken in order to ensure their full implementation and attainment
of the expected outcomes; and (iii) consider the immediate reprogramming of
budget for unimplemented PPAs to other feasible undertakings to further
strengthen the disaster preparedness and mitigation program of the City; (b)
Chairman, Bids and Awards Committee (BAC) and Head, BAC Secretariat to: (i)
ensure that the necessary procurement information or disclosures are timely posted

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in the PhilGEPS and conspicuous places; (ii) submit justification on the noted
deficiencies in the procurement process and/or transmit the absent or lacking
documents as discussed above; (c) City General Services (CGS) Officer to improve
his review function and ensure that the PR, PO, RIS and IAR contain all the
required and relevant information; and (d) Acting City Accountant to ensure that
all procurement documents including supporting resolutions are duly certified and
signed by the proper officials.

Management’s Comment:

1.24 In an exit conference conducted on March 17, 2022, the newly designated OIC-
CDRRMO committed to prepare the LDRRMP with the four thematic areas integrated in
the Plan. Also, the BAC Chairman and Head of BAC Secretariat reassures that the
necessary procurement information will be timely posted in conspicuous places and that
they will submit the requisite lacking documents as discussed above. Moreover, the CGS
Officer and the Acting City Accountant/TWG Head agreed with the Audit Team’s
recommendation and will ensure that the procurement documents contain the required
and relevant information and duly certified and signed by proper officials, respectively.

COVID-19 vaccination program

2. The City has substantially complied with the guidelines of the Philippine
National Deployment and Vaccination Plan for COVID-19 Vaccines and pertinent
issuances of the Department of Health (DOH) in the conduct of vaccination program
resulting in 51,587 fully vaccinated individuals or 59.91% of the target level for herd
immunity as of December 28, 2021; thus, providing protection to the community by
lowering the likelihood of severe cases and deaths. However, the procurement of
vaccination ancillary supplies amounting to ₱437,625.00 was not properly documented
contrary to GPPB Circular No. 02-2021 dated March 25, 2021; thus, affecting the
regularity and transparency of the noted transactions.

2.1 According to the World Health Organization (WHO), the COVID-19 pandemic
has led to dramatic loss of human life worldwide and presents an unprecedented
challenge to public health, food systems and work sphere. One of the most important
developments in the fight for against pandemic is the discovery and production of
COVID-19 vaccines.

2.2 The COVID-19 vaccines are widely credited for their role in reducing the severity
and death caused by COVID-19. However, due to very limited global supply of
vaccines, many countries have implemented phased distribution plans that prioritize those
at highest risk of complications, such as the elderly, and those at high risk of exposure
and transmission, such as healthcare workers. (https://en.wikipedia.org/wiki/COVID-19)

2.3 To effectively carry out the nationwide vaccination program, the DOH, in
collaboration with other national agencies develop a comprehensive plan for vaccine
deployment and vaccination entitled “The Philippine National Deployment and
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Vaccination Plan for COVID-19 Vaccines”, referred to hereinafter as “Vaccination Plan”.
According to the Vaccination Plan, the implementation of a nationwide COVID-19
vaccination program shall be in a phased approach taking into consideration the quantity
of vaccines delivered to the country, the cold chain requirements, and burden of COVID-
19 cases in geographical areas.
2.4 As also stated in the Vaccination Plan, the LGUs shall take the lead in the
implementation of the COVID-19 vaccination program in accordance with the policies
and guidelines set by the COVID-19 Vaccine Cluster and DOH. On the other hand, the
National Government and its regional counterparts, shall provide strategic direction, and
technical logistical assistance, cascade policies and guidelines, and capacitate
implementers, among others.

2.5 The City Government of Gapan took its steps to adopt the Vaccination Plan and
observed the numerous guidelines issued by DOH in the vaccination of its eligible
constituents which started on March 17, 2021.

Pre-Implementation Phase

2.6 According to the officials of the City Health Office (CHO), the City was able to
undertake the following activities prior to actual vaccine administration, which are in
accordance with the Vaccination Plan:

 Establishment of a Vaccination Operation Center (VOC)

 The City’s VOC was created with the LCE as Overall Chairman and City
Health Officer II as Overall Co-Chairman. The City’s VOC is primarily
in charge of the COVID-19 vaccination program which is divided into the
following teams composed of Rural Health Physicians, Nurses, Midwifes,
Medical Technologists, other medical and non-medical employees, and
DILG, Philippine National Police (PNP) and Bureau of Fire Protection
(BFP) personnel:
a. planning, campaign, management and technical support team;
b. finance, cold chain, and logistic management team;
c. coordination team;
d. vaccination safety surveillance and response team; and
e. communication advocacy and partnership team.
 Masterlisting of Eligible Populations, Vaccination Workforce, Implementing
Units and Vaccination Sites/Posts
 The registration of the eligible population prior to vaccination was made
available to the public through the City’s online portal
vaccineregistration.cityofgapan.com. Offline registration was also
provided for subsequent encoding to the online platform by the
Information Technology Unit.
 According to the City Health Officer, the vaccination workforce composed
of vaccination team, Adverse Effect Following Immunization (AEFI)
team, Supervisors/Monitors and other personnel. During National

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 COVID-19 Vaccination Days, personnel from BFP, PNP, Barangay
Health Workers (BHW) and volunteers are included in the workforce.
 In the early stage of the program, the VCO selected the Gapan City gym
as its site/place of vaccination. Several sites/places were added during the
year which include the Gapan City College, Waltermart Gapan, Gapan,
City Plaza and mobile clinics/hospitals.
 Microplanning
 Microplanning is a bottom-up planning process carried out to determine
local needs and gaps and to ensure smooth and satisfactory vaccine
implementation. The Gapan City Microplan for COVID-19 Vaccine
Immunization program was prepared and submitted online to the
Provincial Health Office (PHO) and Provincial DOH Office (PDOHO).
 Vaccines, Logistics and Cold Chain Management
 The following medical equipment were used by the City for the storage
and transport of vaccines received from DOH:
a) Dometic fridge
b) Bio-thermal vaccine carrier
c) Ordinary vaccine carrier
 The dometic fridges are kept in different Rural Health Units and
Command Center.
 Capacity Building and Training
 Various trainings were attended by the personnel of CHO pertaining to
the implementation of vaccination program and in the handling and
administration of a specific vaccine brand.
 Advocacy, Community Engagement and Social Preparation
 Social media platforms were primarily used in the information
dissemination and education campaign regarding the vaccines.
 Preparation of Vaccination Sites/Posts
 The vaccination posts/sites of the City are prepared and fully equipped
prior to the conduct of vaccination activity and have the following areas:
(a) waiting area where vaccinees wait for their vaccination turn; (b)
vaccination area composed of registration area, health education area,
screening area and vaccination area; and (c) post-vaccination monitoring
area.
 The City selected large vaccination sites such as gym, mall and plaza in
order to avoid possible crowding and to comply with the minimum health
standards.
 The utilization of the vaccination sites was also in accordance with the
guidelines issued by DOH through Department Order No. 2021-0116
dated February 26, 2021.

Procurement of Vaccines and Ancillary Supplies

2.7 The City appropriated the amount of ₱28,000,000.00 during CY 2021 for the
procurement of vaccines for COVID-19, disinfectant, sprayers, disinfections tents and
other supplies. However, the City was not able to utilize the budget allotted for the

31
purchase of COVID-19 vaccines due to non-preparation of the requirements for the
multiparty agreement with the DOH and the National Task Force against COVID-19
(NTF). All the vaccines received by the City during CY 2021 came from the vaccines
procured by the National Government.

2.8 On March 2021, the City received its first batch of COVID-19 vaccines. The
quantity of vaccines received by the City during CY 2021 and the remaining inventory as
of December 31, 2021 as provided by the CHO are as follows:

Quantity/Inventory
Brand Dose Unit Received during Remained as of
CY 2021 12/31/2021
1st 18,040 0
Sinovac Vial
2nd 18,040 310
1st 937 42
AstraZeneca Vial
2nd 87 78
1st 2,903 384
Pfizer Vial
2nd 2,689 346
Janssen Full Vial 3,930 2,944
1st 1,073 8
Moderna Vial
2nd 1,023 397
1st 650 0
Sinopharm Vial
2nd 650 0

2.9 For the ancillary supplies necessary for the administration of COVID-19 vaccines,
the City procured the following:

Delivery
Description Amount
Date
9/15/2021 Purchase of medical supplies to be used for COVID-19 ₱120,275.00
vaccination such as alcohol, gloves, band aid, micropore,
syringes, zip lock and sterile needles
12/1/2021 Purchase of medical supplies to be used for COVID-19 317,350.00
vaccination such as syringes, cotton balls, band aids,
isolation gown, masks, alcohol, gloves, thermal scanner
with alcohol dispenser, micropore, and sterile needles
Total ₱317350.00

2.10 Our post audit revealed that the City was not compliant with GPPB Circular No.
02-2021 or Guidelines for the Procurement of COVID-19 Vaccines and its Ancillary
Supplies and Services or Other Goods and Services Authorized under Republic Act No.
11525 or the COVID-19 Vaccination Program Act of 2021 dated March 25, 2021,
particularly on the procurement COVID19 ancillary supplies. The following requirements
were lacking:

Deficiencies Noted Requirement of GPPB Circular No. 02-2021

Non-preparation of project Section 5.3.1 – The end-user or implementing unit of the PE
requirements shall prepare the project requirements with the following
details: a) Approved Budget for the Contract; b) Name and
Details of Ancillary Supplies and Services; c) Name of the

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 Deficiencies Noted
Non-submission of updated APP
Non-submission of posting
requirements
Requirement of GPPB Circular No. 02-2021
supplier, manufacturer, distributor or service provider; and d)
other relevant information
Section 5.4 – The BAC or end-user unit shall recommend for
approval of the HoPE any updating of the APP to cover the
procurement of Ancillary Supplies and Services
Section 7.3 – PEs shall post the information in Item 7.1 at any
conspicuous place in their premises and on the GPPB Online
Portal, within thirty (30) days after award or execution of a
contract or similar agreement.

2.11 As explained by the BAC and the CHO as end-user, they overlooked the
regulations concerning the noted deficiencies. Compliance with the said rules could have
enhanced the accountability and transparency of the subject transactions.

Vaccine Administration

2.12 Following the DOH Department Memorandum No. 2021-0099 dated February 23,
2021, the City vaccinated, in order of priority, the below enumerated population groups
during CY 2021.

Phase 1 – Priority Eligible A

A1 Frontline workers in health facilities
A2 Senior citizens
A3 Adults with comorbidities not otherwise included in the preceding
categories
A4 Frontline personnel in essential sectors
A5 Poor population
Phase 2 – Priority Eligible B
B1 Teachers, Social Workers
B2 Other Government Workers
B3 Other Essential Workers
B4 Socio-demographic groups at significantly higher risk other than
senior citizen and poor population
B5 Overseas Filipino Workers
B6 Other Remaining Workforce
Phase 3 – Priority Eligible C: Rest of the Filipino population not otherwise
included in the above groups

2.13 The CHO submitted to the Audit Team database/list of vaccine-recipients who
were vaccinated as of December 31, 2021. The list included information such as the
name and category of the recipient, address, date vaccinated (1st and 2nd dose), name of
vaccine, among others. The Audit Team conducted confirmation to 30 randomly selected
vaccine-recipients. The objectives of the confirmation are: a) to verify their existence;
and b) to validate their eligibility to the priority group they belong to in the database.
Results of confirmation disclosed that 100% of the respondents confirmed that they were
vaccinated by the City and that they belonged to the indicated priority group in the
database submitted to the Audit Team.

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2.14 Meanwhile, the CHO advanced the following problems encountered by the LGU
in the implementation of vaccination program:

 Misbeliefs of vaccine recipients regarding COVID-19 vaccines despite extensive

health education;
 Increase of COVID-19 cases; and
 Limited health care workers due to COVID-19 infection.

2.15 According to them, the number of vaccinated individuals could have been higher
if not for those hesitant potential vaccinees. In order to address the problem, extensive
information and education dissemination was conducted at the Barangay level by the
CHO. Businesses, such as malls, that demand only fully vaccinated persons to enter their
premises also pushed them to be immunized. However, despite these strategies, some
people continue to resist the vaccination.

2.16 Below are some of the pictures taken during the vaccination conducted at the
Gapan City gym.

Vaccination status

2.17 As shown in the Report of Daily Monitoring of Vaccination as of December 28,

2021 by the PDOHO of Nueva Ecija, the cumulative 2 nd doses administered (fully
vaccinated) by City of Gapan was 51,587 individuals or 59.91% of the targeted 86,106

34
individuals or 70% of population. The percentage of fully vaccinated was higher than the
average rate of the whole province which is 55.95%.

2.18 Verification of the database submitted by the CHO disclosed that the number of
vaccine-recipients who were administered with 2nd dose vaccines (including one full dose
Janssen brand) totaled 56,826 as of December 31, 2021 or 5,239 more than the report of
PDOHO as of December 28, 2021. Portion of the difference could be attributed to the
number of 2nd dose administered from December 28-31, 2021. Moreover, according to
the encoder of the database of the City contracted by the DOH, there were backlogs in the
encoding of vaccinees during year-end which resulted in understated figure in the report
of PDOHO.

2.19 As further mentioned by the City Health Officer, the target population of the City
has increased after year-end since children ages 5-11 years old were added in the eligible
recipients of vaccines. As of March 3, 2022, based on the report submitted by the CHO,
the City had already fully vaccinated 82,808 individuals or 73.90% of the targeted
112,055 individuals while a total of 84,913 individuals were vaccinated at least by one
dose.

2.20 According to the World Health Organization (WHO), COVID-19 vaccines

continue to provide strong protection against severe disease and death. Many studies
suggest that a vaccine could have a substantial impact on reducing incidence,
hospitalizations, and deaths, especially among vulnerable individuals with comorbidities
and risk factors associated with severe COVID-19.

2.21 As of December 31, 2021, the City’s confirmed, recovered, death and active cases
due to COVID-19 virus as provided by the CHO are as follows:

No. of confirmed COVID-19 positive 2,381

No. of recovered 2,230
No. of deaths 150
No. of active case 1

2.22 According to CHO, the death toll could have risen higher if the immunizations
were not administered.

2.23 In summary, the City has substantially implemented its vaccination program in
accordance with the guidelines of the DOH. As a result, the City had a greater
percentage of completely vaccinated people than the province-wide average.

2.24 We commended Management for its continuous efforts to comply with the
COVID-19 vaccination program guidelines, a way of providing protection to their
constituents from adverse effects of the virus. We recommended that the (a)
management continue to administer vaccines efficiently so that local herd immunity
can be attained in the soonest time possible; and (b) Chairman, BAC and City

35
Health Officer submit the lacking requirements in the procurement of ancillary
supplies as discussed above.

Management’s Comment:

2.25 In compliance with our issued Audit Observation Memorandum (AOM), the City
Health Officer submitted the project requirements for the procured ancillary supplies
which was approved by the LCE. Also, the management committed to continue to
administer vaccines efficiently in order to attain local herd immunity.

Understated Property, Plant and Equipment (PPE) and Government Equity accounts –
₱108.069 million

3. The reported balances of PPE accounts of the City as of December 31, 2021
amounting to ₱1,447,709,997.06 could not be relied upon due to (a) inability of the
Inventory Committee to complete physical inventory count and to render complete
report thereon; (b) non-maintenance of complete property records by the City
Accounting Office (CAO) and the CGSO which were inconsistent with the pertinent
provisions of Presidential Decree (PD) No. 1445 and the New Government Accounting
System (NGAS) Manual for LGUs; and (c) failure to leverage on the one-time
cleansing of PPE information as provided under COA Circular No. 2020-006 dated
January 31, 2020. Moreover, Infrastructure Assets amounting to ₱108,069,940.35
previously transferred to the Registry of Public Infrastructure were not yet recorded
back to appropriate assets account contrary to COA Circular No. 2016-004 dated
September 30, 2016, hence, resulting in understatement of PPE and Government
Equity accounts both by the same amount as of December 31, 2021.

3.1 The fairness of presentation of the City’s financial statement has been in question
in the previous audit reports and became a recurrent issue which was primarily attributed
to the unreliability of the balance of its PPE at the end of each reporting period. As at
December 31, 2021, the LGU’s PPE of ₱1,447,709,997.06 represented 82.39% of its total
assets amounting to ₱1,757,138,615.41. The breakdown of the said account as per
accounting records follows:

PPE Account Net Book Value

Land ₱71,562,773.77
Road Networks 383,287,844.43
Flood Control Systems 10,185,335.17
Power Supply Systems 6,559,762.69
Buildings and Other Structures 619,012,967.37
Machinery and Equipment 182,366,466.98
Transportation Equipment 46,487,899.90
Furniture and Fixtures 3,962,424.14
Other Property, Plant and Equipment 101,190,621.47

36
 CIP - Buildings and Other Structures 23,093,901.14
Total ₱1,447,709,997.06

3.2 In the Annual Audit Report (AAR) for CY 2020, it was reported that the
existence, completeness and accuracy of the PPE could not be ascertained due to the (a)
discrepancy between physical count report and the accounting records; (b) non-
reconciliation of balances between the CAO and CGSO; and (c) weaknesses in records
maintenance.
3.3 For the above infractions, the then auditors recommended that the management:
(a) set timelines for the reconciliation of the CAO and CGSO records; (b) strictly comply
with the maintenance and submission of complete and proper reports; and (c) reconcile
the records of the CAO and CGSO.

3.4 To test compliance with the audit recommendations, we conducted verification of

records and inquiry which disclosed the following:

 Incomplete Conduct of Physical Count and Partial Submission of the Report on

Physical Count of PPE (RPCPPE)

3.5 For CY 2021, the LCE created an Inventory Committee under Executive No. 22 s.
2021 which is composed of the LCE as chairperson; City Administrator as vice-
chairperson; while the members are composed of the CGS Officer, Acting City
Accountant, Secretary of the City Council, Barangay Cultural Communities and Affairs
Division and President of the Liga ng mga Barangay.

3.6 Meanwhile, the CGSO reported that physical count of PPE was conducted on the
last quarter of the year however, it was only partially undertaken because of a series of
office lockdown due to COVID-19 pandemic. Nevertheless, the CGSO furnished the
Audit Team a copy of the RPCPPE on February 23, 2021. Validation of the submitted
RPCPPE revealed that it was prepared only by the CGSO and not by the Inventory
Committee and sorted “by office” rather than by “PPE type”. Further, it included items of
PPE which are mostly office equipment, furniture and fixtures and information and
communication technology equipment only which hindered the Audit Team to compare
and validate the information with the PPE records of the Accounting Unit. Thus, the
requirement of Section 124, NGAS Manual for LGUs, Volume I which states that
“Physical count of property, plant and equipment by type shall be made annually and
reported on the RPCPPE. This shall be submitted to the Auditor concerned not later than
January 31 of each year.” was only partially complied with.

 Incomplete property records

3.7 Verification and inquiry in CY 2021 disclosed that the required records for PPE
were not yet maintained by the CAO and CGSO. Also, the Acting City Accountant has
not yet kept the inventory records comprising the PPE Ledger Cards (PPELCs) for each
category of PPE as provided under Section 114, NGAS Manual for LGUs, Volume I.
Likewise, the CGSO has not maintained property cards (PCs) for PPE in their custody to

37
account for the receipt and disposition of the same as prescribed by the aforementioned
section. Both officers neglected the reconciliation exercise for property records.

3.8 As it was, validation of the completeness of these assets as reported in the

financial statements could not be facilitated in the absence of parallel and complementary
records to benchmark with.

 Failure to leverage on the one-time cleansing of PPE accounts

3.9 The issues mentioned above had long been accounting shortcomings and
recurrently caused the unreliability of the financial statements as the PPE accounts
comprise the material portion of the City’s total assets.

3.10 Recognizing the same status for most of government agencies, the Commission
issued COA Circular No. 2020-006 dated January 31, 2020 which provides for the
general and specific guidelines for one-time cleansing of PPE accounts, which includes
the preliminary activities, inventory taking and reconciliation of the result thereof with
accounting records. This issuance would assist the government agencies to come up with
reliable PPE balances that are verifiable as to existence, condition and accountability.
Specifically, the Circular standardizes the procedures in the derecognition of non-
existing/missing PPEs without available record of accountability.

3.11 Taking the above option could have improved the reliability of the PPE accounts
and of the financial statements, as a whole, of the City as at December 31, 2021.

3.12 The Acting City Accountant and the CGS Officer acknowledged the lapses and
admitted that they are not aware of the COA Circular on PPE accounts cleansing. They
assured the audit team that such will be taken into consideration.

 Non-recording of Infrastructure Assets transferred to the Registry of Public

Infrastructure - ₱108.069 million

3.13 Data gathered from the financial reports of the City from CYs 2010 to 2014
disclosed that Infrastructure Assets totaling ₱108,069,940.35 were transferred from
Government Equity account to the Registry of Public Infrastructure, as follows:

Year Infrastructure Assets Amount

Farm to Market Road - Various Brgys, Gapan City (Mabuga,
Macabaklay, Mahipon, Bungo, Malimba, bayanihan, San Nicolas,
2010 ₱26,404,108.61
Bulak, Sta. Cruz, Marelo, pambuan, Punot, San Roque, Putting Tubig,
Sto. Crsito Sur, Kapalangan and Mangino)
Farm to Market Road - Various Brgys, Gapan City (Mangino,
Mahipon, San Nicolas, Bayanihan Phase I, Sitio Cardenas Kapalangan,
2011 34,791,391.12
Maburak, San Vicente, Sto. Cristo Norte, San Roque, Balante & San
Lorenzo)

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 Year Infrastructure Assets Amount
Concreting of Various Roads -Various Brgys, Gapan City
2012 (Macabaklay, Puting Tubig, Bulak, Mahipon, Marelo, San Nicolas, San 14,975,275.45
Roque, Mabuga)
Farm to Market Road - Various Brgys, Gapan City (Mangino,
Mahipon, San Nicolas, Bayanihan Phase I, Sitio Cardenas Kapalangan,
12,205,683.15
2013 Maburak, San Vicente, Sto. Cristo Norte, San Roque, Balante & San
Lorenzo)
Concreting of Roads - Brgy. Bungo 76,128.00
Farm to Market Road - Various Brgys, Gapan City (Bungo, Bayanihan,
2014 Kapalangan, Mabuga, Mangino, Parcutela, Puting Tubig, San Roque, 19,617,354.02
San Vicente, Sta. Cruz & Sto. Cristo)
Total ₱108,069,940.35

3.14 It was noted that none of the above infrastructure assets was recorded back in the
books using the appropriate asset accounts contrary to Section 3.7 of COA Circular No.
2016-004 dated September 30, 2016, which states that:

The transitional provision provided under Paragraph 95 of International

Public Sector Accounting Standards (IPSAS) 17, which provides that
“entities are not required to recognize property, plant and equipment for
reporting periods beginning on a date within five years following the date
of first adoption of accrual accounting in accordance with IPSAS,” shall
be observed. This shall apply to the Public Infrastructure accounts
transferred to the registries under the NGAS and which shall be recorded
back to the books of accounts using the appropriate account prescribed in
the chart. The target of implementation for the recognition of the Public
Infrastructures shall be as follows:

End of 2016 – 25%

End of 2017 – 50%
End of 2018 – 75%
End of 2019 – 100%”

3.15 The reason cited by the Acting City Accountant was the unavailability of records
such as ledgers and photocopy of DVs to support the transfer.

3.16 The CAO’s failure to record in the books the Infrastructure Assets amounting to
₱108,069,940.35 resulted in understatement of PPE and Government Equity accounts
both by the same amount as of December 31, 2021. In addition, the non-recognition of
the said depreciable assets had parallel adverse effect on depreciation accounting. Such
condition resulted in the understatement of depreciation expense accounts and
overstatement of Government Equity accounts of undetermined amount as of year-end.

39
3.17 Overall, the above lapses and deficiencies negate continuously the reliability of
the accounts, thus, affecting the fair presentation of the City’s PPEs as at end of any
reporting period.

3.18 For the deficiencies discussed above, we reiterated our prior year’s
recommendation that the LCE require the (a) Inventory Committee and CGS
Officer to (i) conduct physical inventory of all PPE of the City on or before January
31 of each year, conclude said inventory count for CY 2021 and immediately submit
the related reports to the Audit Team; and (ii) reconcile the resultant inventory
reports with the accounting records; and (b) Acting City Accountant and CGS
Officer to maintain complete PPE records such as PPELCs and PCs for the proper
control and monitoring of the agency property and equipment.

3.19 We further recommended that the LCE direct the (a) Acting City
Accountant and CGS Officer to consider the guidelines on one-time cleansing of
PPE accounts to render a reliable PPE information; and (b) Acting City Accountant
to record the Infrastructure assets that were previously transferred to the Registry
of Public Infrastructure to their appropriate PPE accounts and the corresponding
depreciation thereon.

Management’s Comment:

3.20 The CGS Officer and Acting City Accountant expressed their commitment to
comply with the aforementioned recommendations of the Audit Team. The Acting City
Accountant further mentioned that the necessary journal entries will be taken up for the
unrecognized Infrastructure assets and corresponding depreciation expense.

3.21 Likewise, the CGS Officer and the Acting City Accountant stated that they will
give time to review the guidelines and procedures regarding the one-time cleansing of
PPE accounts.

Understated Inventory and Government Equity accounts – ₱11.529 million

4. The City failed to recognize the undistributed welfare goods in the amount of
₱11,529,000.00 as part of its Inventory account at December 31, 2021 resulting in the
understatement of inventory and government equity accounts by the same amount as
of the same period. Moreover, several deficiencies were noted in the recording and
management of inventories which are inconsistent with Sections 112, 114, 119, 121
and 124 of NGAS for LGUs Manual, Volume I thus, the existence and completeness of
the booked inventory accounts as of year-end could not be ascertained.

4.1 As of December 31, 2021, the balance of inventory accounts of the City amounted
to ₱2,356,521.35, detailed in the below table.

Particulars Amount
Office Supplies Inventory ₱476,810.10

40
 Particulars Amount
Accountable Forms, Plates and Stickers 109,579.56
Drugs and Medicines Inventory 1,073,277.10
Medical, Dental and Laboratory Supplies Inventory 574,605.59
Other Supplies and Materials Inventory 122,249.00
Total ₱1879711.25

4.2 Review of schedule of inventories submitted and prepared by the CAO as of year-
end disclosed that the above inventories were duly supported with sufficient information
such as item description, quantity on hand, unit cost and amount as provided by the City
Treasurer Office (CTO) and CHO.
4.3 Audit of other inventory accounts disclosed that on August 3, 2021, the City
purchased 36,000 sacks of rice for distribution to indigent families. This activity was a
demonstration of the City as response to COVID-19 pandemic. Inquiry with the City
Budget Officer and CPDO disclosed that the procured sacks of rice were not fully
distributed to recipients as of December 31, 2021. Furthermore, ocular inspection by the
Audit Team on January 28, 2022 validated the physical existence of the remaining
inventory of rice at the designated warehouses. Relative thereto, the CGSO submitted to
the Audit Team an Inventory Report showing a total of 6,405 sacks of rice that remained
undistributed as of December 31, 2021.

4.4 Interview with the Acting City Accountant and review of the procedures and
documents pertaining to the procurement of rice showed that at the time of delivery, the
goods were inspected by the authorized property personnel and accepted by the Property
Officer as indicated in the IAR. The Property Officer then issued the accepted goods to
the Implementing Office, which is the CDRRMO, as indicated in RIS. In the records of
the CAO, based on IAR and RIS, the number of goods procured were all accepted and
distributed thus no inventory remained as of December 31, 2021. Further, according to
the CGSO, no Stock Card (SC) and Summary of Supplies and Materials Issued (SSMI)
were maintained for the rice procured. The CAO also recorded the procurement as
outright expense account rather than inventory account thus, no supplies ledger card
(SLC) was maintained.

4.5 The foregoing procedures of the City evidently showed lack of control in the
handling and monitoring of the procured rice for distribution. Chapter 7, NGAS for
LGUs Manual, Volume I provides the following policies and procedures for Inventory:

 Sec. 112. Definition of Supplies or Property. – Supplies or property include

everything, except real property, which may be needed in the transaction of
public business or in the pursuit of any undertaking, project or activity, xxx

 Section 114. Perpetual Inventory Method. – Purchase of supplies and materials

for stock, regardless of whether or not they are consumed within the accounting
period, shall be recorded as inventory following the perpetual inventory method.
Under the perpetual inventory method, an inventory control account is
maintained in the General Ledger on a current basis. In addition, detailed
inventory records are maintained for each inventory item.

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 xxx
The Chief Accountant shall maintain the perpetual inventory records comprising
of Supplies Ledger Cards (SLC) for each commodity/stock xxx

The General Services Officer or the Municipal Treasurer, as the case maybe shall
likewise maintain stock cards and property cards for supplies; xxx The balance
per stock card/property cards should always reconcile with the ledger cards of
the accounting unit.

 Sec. 119. Property Records to be Maintained. – The General Services Officer or

the Local Treasurer, as the case maybe, shall number each type of supplies and
maintain Stock Cards per stock number. xxx

Deliveries of supplies or property shall be immediately recorded in the property

records on the basis of the AIR and other supporting documents. The AIR and
other supporting documents shall be forwarded to the Chief Accountant for the
preparation of the DV and recording of deliveries in the appropriate ledger
cards.

 Sec. 121. Reporting on Issuance of Supplies/materials. – The General Services

Officer or the Local Treasurer, as the case maybe, shall consolidate weekly the
RIS for which supplies and materials were issued using the Summary of Supplies
and Materials Issued (SSMI). The SSMI together with the original copy of the
RIS shall be submitted to the Chief Accountant, who shall compute cost of
supplies issued and ending inventory using the moving average method. Based on
the SSMI, a JEV shall be prepared to record the expenditures using appropriate
expenditure accounts.

4.6 The practice of the City vis-a-vis the policies for inventory set forth in NGAS
Manual for LGUs, Volume I revealed the following lapses:

a. Non-recognition of the procured rice as Inventory (Section 112);

b. Failure to observe the Perpetual Inventory Method (Section 114);
c. Non-maintenance of SC by the Procuring/Supply officer (Sections 114 and
119);
d. Non-maintenance of inventory/SLC by the CAO (Section 114); and
e. Non-preparation of SSMI by the CGSO (Section 121).

4.7 With the submission of the CGSO of reports for undistributed rice valuing
₱11,529,000.00, we validated the information in the financial statements of the City as of
year-end and we established that the same was not reported as inventory as of even date.
Details are shown below:

Receipts Issuance Balance

Dates Qty Unit Cost Total Cost Qty Qty Unit Cost Total Cost
8/3/2021 36,000 ₱1,800.00 ₱64,800,000.00 36,000 ₱1,800.00 ₱64,800,000.00

42
 Receipts Issuance Balance
Dates Qty Unit Cost Total Cost Qty Qty Unit Cost Total Cost
Aug. 3 to 29,595 6,405 1,800.00 11,529,000.00
Dec. 31,
2021

4.8 Meanwhile, the Inventory Committee did not conduct physical count of the
booked inventory and undistributed rice and prepare Report of the Physical Count of
Inventories (RPCI) thereon in violation of Section 124 of the aforementioned NGAS
Manual for LGUs, which states that The local chief executive shall require periodic
physical inventory of supplies or property. Physical count of inventory items by type
shall be conducted semestrally and reported in the Report of the Physical Count of
Inventories (RPCI). This shall be submitted to the Auditor concerned not later than July
31 and January 31 of each year for the first and second semesters, respectively.

4.9 The non-adherence of the City with the pertinent provisions of NGAS Manual for
LGUs, Volume I pertaining to the policies and procedures in the recognition and
management of inventories has created doubt on the existence and completeness of the
booked inventory accounts as of December 31, 2021. Moreover, the non-recording of
remaining undistributed rice amounting to ₱11,529,000.00 resulted in the understatement
of inventory and government equity accounts by the same amount as of year-end.

4.10 We recommended and the LCE agreed to require the (a) Acting City
Accountant, CGS Officer and Supply Officer to maintain their respective inventory
records and reports such as SLCs, SCs and SSMI; (b) Acting City Accountant to (i)
maintain inventory records using the Perpetual Inventory Method for procured
supplies and materials; and (ii) record the undistributed welfare goods as inventory
in the books; and (c) Inventory Committee to conduct physical count of supplies and
materials semestrally and to report the same in the RPCI for submission to the
Audit Team not later than July 31 and January 31 of each year.

Understated Trust Liability – DRRMF and Overstated Government Equity accounts -

₱23.065 million

5. The City did not transfer to a special trust fund at year-end the unexpended
Quick Response and Mitigation Funds – MOOE balances of LDRRMF amounting to
₱23,065,226.10 contrary to Section 6.4 of NDRRMC, DBM and DILG JMC No. 2013-
1, dated March 25, 2013 and Section 5.1.10 of COA Circular No. 2012-002, dated
September 12, 2012 thus, resulting in the understatement of Trust Liabilities - DRRMF
and overstatement of government equity accounts both by the same amount as of
December 31, 2021.

5.1 Section 6.4 of NDRRMC, DBM and DILG JMC No. 2013-1, dated March 25,
2013 states that The unexpended LDRRMF shall accrue to a special trust fund solely for
the purpose of supporting disaster risk reduction and management activities of the Local

43
Disaster Risk Reduction and Management Council (LDRRMC) within the next five (5)
years.

5.2 Moreover, Section 5.1.10 of COA Circular No. 2012-002 dated September 12,
2012 states that All unexpended/unobligated balance of the QRF and the DRRMF-
MOOE shall be transferred to the Special Trust Fund under the account “Trust Liability
– DRRM” (Code 438) in the Trust Fund books.

5.3 Review and analysis of the report of available and unutilized LDRRMF as of
December 31, 2021 prepared by the CAO disclosed an unutilized balance of
₱41,549,390.15, computed as follows:

Amount
Particulars Balance
Available Utilized
Current Year Appropriation (CY 2021)
Quick Response Fund (QRF) ₱11,252,945.58 ₱ 11,115,560.00 ₱137,385.58

Mitigation Fund (MF) 26,256,873.02 3,329,032.50 22,927,840.52

Subtotal 26256873.020 3329032.50 22927840.520

Continuing Appropriation 24,843,588.35 24,843,588.35 0.00
Special Trust Fund – CY 2020 QRF 29,276,010.05 10,791,846.00 18,484,164.05
Supplemental Budget No. 2 series 57,800,000.00 57,800,000.00 0.00
of 2021
Total Unexpended LDRRMF as ₱149,429,417.00 ₱107,880,026.85 ₱41,549,390.15
of December 31, 2021

5.4 As shown in the above table, the City appropriated the total amount of
₱37,509,818.60 for LDRRMF for CY 2021 and utilized the amount of ₱14,444,592.50
thus leaving an unexpended balance of ₱23,065,226.10; in addition, there is an
unexpended balance of prior years amounting to ₱18,484,164.05 which pertained to the
QRF balance of CY 2020, bringing the total unexpended balance of LDRRMF to
₱41,549,390.15 as of year-end.

5.5 However, examination of the financial statements of the City as of December 31,
2021 disclosed that only ₱18,484,164.05 was the balance of the account Trust Liability –
DRRMF. The City did not transfer to a special trust fund the unexpended balance of
QRF and MF – MOOE of the current year amounting to ₱23,065,226.10 at year-end
thereby understating the trust liability account and overstating the government equity
both by the same amount as of the same period.

5.6 The total unexpended LDRRMF of ₱41,549,390.15 should have accrued to a

special trust fund as prescribed under the aforementioned JMC and COA Circular.
Below is the illustrative accounting entry in the transfer of unexpended balance as shown
in Annex C of aforementioned COA Circular:

LGU Books
Particulars
General Fund Trust Fund
2. Transfer of unexpended Quick Dr. Subsidy to other Funds Dr. Cash

44
 Response and Mitigation Funds – Cr. Cash Cr. Trust Liability – DRRMF
MOOE at the end of the year (with subsidiary for the source
and year)

5.7 According to the Acting City Accountant, it has been the practice of the City that
the unexpended balances at the end of the year are being transferred to a trust fund in
January to February of succeeding year because the amount has yet to be fixed until the
complete reporting of DRRM disbursement vouchers. Said exercise is inconsistent with
the above regulation which requires the fund transfers to be done and reported at the end
of the year.

5.8 We recommended that the LCE direct the (a) Acting City Treasurer and
Acting City Accountant to establish effective measures to expedite the process of
DRRM disbursements in order (i) to fix the unexpended QRF and MF – MOOE
balances of the current year and (ii) to transfer them to a special trust fund at the
end of the year; and (b) Acting City Accountant to draw journal entry at year-end
to recognize the unexpended balance as Trust Liability – DRRMF in the financial
statements as illustrated in COA Circular No. 2012-002.

Management’s Comment:

5.9 The Acting City Accountant gave the assurance to monitor the utilization of
LDRRMF to be able to record the transfer of unexpended balance/s to trust fund at year-
end.

Cash advances

6. The City has instituted effective measures of reducing its reported cash
advances, thus, the outstanding balance of ₱61,257,604.06 on December 31, 2020
declined to ₱486,102.12 at year-end. Although liquidations are being made on or
before the end of the year, the reporting was delayed which is inconsistent with the
provisions of COA Circular Nos. 97-002 and 2012-004 dated February 10, 1997 and
November 28, 2012, respectively. Moreover, the transactions in the amount of
₱10,042,226.58, which the liquidation reports aimed to substantiate were not yet
submitted for audit, thus, their regularity and validity could not be ascertained.

6.1 Records showed that as of December 31, 2020, the City had unliquidated cash
advances amounting to ₱61,257,604.06. Validation disclosed that the City complied with
the prior year’s recommendation, that is, to immediately settle/recover the unliquidated
cash advances which brought down the balance amounting to only ₱486,102.12 as of
December 31, 2021.

6.2 The action of the City in enforcing the liquidation of outstanding cash advances
was commendable, however, the same has been found wanting as the following
deficiencies remained existing:

45
  Non-liquidation of cash advances within the prescribed period

6.3 COA Circular No. 97-002 dated February 10, 1997 provides the rules and
procedures governing the grant, utilization and liquidation of cash advance. Pertinent
provisions relevant to City’s operations follow:

i. All cash advances shall be fully liquidated at the end of each year;
ii. When a cash advance is no longer needed or has not been used for a
period of two (2) months, it must be returned to or refunded
immediately to the collecting officer;
iii. Section 5.1 sets the time within which to liquidate cash advances, as
follows:
a) Salaries, Wages, etc. – within five (5) days after each fifteen (15)
day/end of the month pay period;
b) Petty Operating Expenses and Field Operating Expenses – within
twenty (20) days after the end of the year, subject to replenishment
as frequently as necessary during the year;
c) Official Travel – within sixty (60) days after return to the
Philippines, in the case of foreign travel or within thirty (30) days
after return to permanent official station in the case of local travel,
as provided for in E.O. 248 and COA Circular No. 96-004.
iv. Finally, Section 8 states the responsibility of the Agency Head, thus:
“It shall be the responsibility of the Head of the Agency to ensure the
proper granting, utilization and liquidation of all cash advances in
accordance with these rules and regulations.”

6.4 As mentioned above, there was a remarkable decrease in unliquidated cash

advances of the City, however, analysis of the cash advances granted and liquidated
during the year, including those granted in the previous years, disclosed that the accounts
amounting to ₱11,660,926.00 (Appendix A) were not liquidated within the prescribed
period contrary to pertinent provisions of the foregoing COA Circular.

6.5 During the year, cash advances were granted for the payment of Representation
Allowance and Transportation Allowance (RATA); honoraria of day care workers, senior
citizens, PNP, fire, health workers, People’s Law Enforcement Board (PLEB) and
Regional Trial Court (RTC); salaries of job order personnel of Division Office of Gapan
City; and wages of Nueva Ecija University of Science and Technology (NEUST)
Instructors, Gapan City College Instructors and City Local School Board (CLSB)
Teachers of DepEd Division of Gapan City but their liquidations were reported on
beyond the prescribed period which is within five (5) days after each fifteen (15) day/end
of the month pay period. Delays ranging from 30 to 214 days were noted.

46
6.6 Moreover, a number of cash advances granted in the previous years for local
travel (training) were belatedly liquidated by the accountable officers with delays ranging
502 to 1369 days. The rule is to settle them within thirty (30) days after return to
permanent official station.

6.7 Furthermore, some cash advances granted in the previous years for special
purpose and time-bound activities such as Cultural Presentation, Lantern
Parade/Competition and Blood Letting Activity were liquidated by the accountable
officers 47 to 883 days after the receipt of the funds, inconsistent with regulation
requiring the liquidation thereof within twenty (20) days from accomplishment of the
purpose.
6.8 According to the Acting City Treasurer, the delays in the liquidation of the cash
advances granted for trainings, special purpose and time-bound activities was due to the
inattentiveness of the accountable officers to submit the related supporting documents
within the specified timelines. With regard to the cash advances granted for the payment
of honoraria, the deferral of reporting could be attributed to the omission of RTC’s
officials to return their individual DVs/payroll to the CTO on time.

6.9 The omission to liquidate the cash advances entails unwarranted benefits to the
accountable officers who still keep the money, if there is remaining. The connotation is
that the money was not used up for the activities unless the appropriate documents
evidencing the expenses are submitted for liquidation purposes. For as long as the
liquidation is not reported on, the affected accounts in the books of the City, as a
consequence, remain misstated.

 Unsubmitted Liquidation Reports – ₱10.042 million

6.10 Review of the submission of accounts of the City disclosed that the liquidation
reports (LRs) for the months of November and December 2021, when the bulk of
liquidations during the year was noted, were still not submitted by the Acting City
Accountant to the Audit Team as of February 28, 2022. Details of which are shown
below.

Unsubmitted LRs as of February 28, 2022

Month Current Year Qty Prior Years Qty Totals Qty
November 2021 ₱40,341,654.28 44 ₱3,192,540.00 5 ₱43,534,194.28 49
December 2021 44,289,529.42 69 608,590.00 2 44,898,119.42 71
Total ₱84,631,183.70 113 ₱3,801,130.00 7 ₱44898119.420 120

6.11 According to the Acting City Accountant, huge volume of the LRs of the
Accountable Officials was only submitted to their Office during 4 th quarter of CY 2021.
Her Office is still in the process of examining all the attached documentary requirements
and will be submitted to the Audit Team once completed.

47
6.12 In compliance with our issued AOM, the Acting City Accountant submitted LRs
amounting to ₱78,390,087.12 on March 3 and 15, 2022 as shown in details in the below
table.

Submitted LRs on March 3 and 15, 2022

Month Current Year Qty Prior Years Qty Totals Qty
November 2021 ₱40,341,654.28 44 ₱3,098,940.00 4 43,440,594.28 48
December 2021 34,929,492.84 65 20,000.00 1 34,949,492.84 66
Total ₱34929492.84 109 ₱20000.00 5 ₱78390087.12 114

6.13 The total LRs still unsubmitted by the City as of March 15, 2022 amounted to
₱10,042,226.58, detailed as follows:

Unsubmitted LRs as of March 15, 2022

Month Current Year Qty Prior Years Qty Totals Qty
November 2021 ₱0.00 0 ₱93,600.00 1 ₱93,600.00 1
December 2021 9,360,036.58 4 588,590.00 1 9,948,626.58 5
Total ₱9,360,036.58 4 ₱682,190.00 2 ₱9948626.58 6

6.14 Due to the delay in the submission of reports, the validity and regularity of the
recorded liquidations could not be immediately ascertained.

6.15 We recommended and the LCE agreed to direct (a) all accountable officers
and employees to ensure liquidation of cash advances within the prescribed period
as required by COA Circulars Nos. 97-002 and 2012-004; and (b) the Acting City
Accountant expedite the submission of unsubmitted liquidation reports for audit
and verification.

Non-recognition of Allowance for Impairment on dormant receivables

7. The City neither recognized the impairment losses as prescribed under IPSAS
29 paragraph 67 nor initiated the procedures for write-off as required under COA
Circular No. 2016-005 dated December 19, 2016 for its dormant receivables
amounting to ₱669,242.64, thus, the Due from LGUs and other receivable accounts
were not fairly presented in the financial statements for CY 2021.

7.1 COA Circular No. 2016-005 dated December 19, 2016 was issued to prescribe the
Guidelines and Procedures on the Write-off of Dormant Receivable Accounts,
Unliquidated Cash Advances and Fund Transfers. The purpose of the Circular is to
enable the fair presentation of those accounts in the financial statements. Section 5
thereof contains the following definitions:

48
 a. Dormant Receivable Accounts – accounts which remained inactive or
non-moving in the books of accounts for ten (10) years or more and
where settlement/collectability could no longer be ascertained.
b. Impairment - a loss in the future economic benefits due to uncertainty
of collectability of the receivables or the amount in respect of which
recovery has ceased to be probable.
c. Write–Off of Dormant Accounts - The process of derecognizing the
asset account and the corresponding allowance for impairment from
the books of accounts and transferring the same to the Registry of
Accounts Written off (RAWO). This does not mean
condoning/extinguishing the obligation of the accountable
officer/debtor.

7.2 On impairment of receivables, paragraph 67 of IPSAS 29 provides:

An entity shall assess at the end of each reporting period whether there is
any objective evidence that a financial asset or group of financial assets is
impaired. If any such evidence exists, the entity shall apply xxx, paragraph
75 (for financial assets carried at cost), xxx to determine the amount of any
impairment loss.

7.3 Review and verification of the schedules of receivable accounts of the City
disclosed the existence of dormant Other Receivables and Due from LGUs accounts as of
December 31, 2021 as follows:

Account Amount Age

Other Receivables
Receivables from GOCC – GF ₱68,716.62 >13 years
Miscellaneous Receivables – GF 62,780.58 >13 years
Other Receivables Unaccounted - SEF 181,082.26 >11 years
Unaccounted (past year accounts) - TF 104,133.00 >11 years
Sub-total 416,712.46
Due from LGUs – SEF 252,530.18 >11 years
Total ₱669,242.64

7.4 According to the Acting City Accountant, the Other Receivables and Due from
LGUs balances amounting to ₱416,712.46 and ₱252,530.18, respectively, refer to the
previous years’ transactions in which there were no available subsidiary ledgers and
related documents or records to support the said accounts. She further mentioned that
these accounts have been long outstanding even before she was appointed as Acting City
Accountant thus, she does not keep any information for the particulars of these
transactions.

49
7.5 Despite the existence of dormant and unsubstantiated receivables which were
non-moving for more than 10 years, the City did not recognize the allowance for
impairment as evidenced by the uncertainty of their collectibility pursuant to IPSAS 29
paragraph 67. Neither the responsible officials initiated the procedures on the write-off
of dormant receivable accounts as required in COA Circular 2016-005, thus, the fair
value of the Other Receivable and Due from LGUs accounts was not presented in the
financial statements for CY 2021.

7.6 We recommended that the LCE direct the Acting City Accountant to:

a) compute/determine the amount of impairment and provide for

allowance for impairment for dormant Other Receivables and Due from
LGUs accounts to render a more reliable presentation of the accounts in
the financial statements using the below proposed adjusting entries; and

Account Title Debit Credit

Impairment Loss – Other Receivables xxx
Allowance for Impairment – Other Receivables xxx

Impairment Loss xxx

Allowance for Impairment – Due from LGUs xxx

b) if conditions and requirements of COA Circular No. 2016-005 could be

met and satisfied, request for the write off of the established dormant
Other Receivables and Due from LGUs accounts.

Management’s Comment:

7.7 The Acting City Accountant commented that they will determine the valuation of
allowance for impairment for recognition in the books. They will study the conditions
and requirements of the COA Circular to facilitate the request for write-off of noted
dormant receivables.

Lapses in the utilization and liquidation of funds transferred by NGAs

8. The City did not fully observe the guidelines in the utilization and liquidation of
funds transferred by the National Government Agencies (NGAs) which resulted in (a)
non-remittance to the sponsoring agencies of unexpended balances for one completed
and one unimplemented project in the amount of ₱2,712,280.84; (b) delays in the
implementation of PPAs costing ₱17,895,359.69; and (c) idleness of funds aging 9 to
13 years in the amount of ₱549,213.06 in violation of Section 6.7 of COA Circular No.
94-013 dated December 13, 1994 and Item 3.7 of Local Budget Circular (LBC) No. 130
dated November 19, 2020, hence depriving the constituents of the timely delivery of
services/benefits that may be derived from the timely utilization of the aforesaid funds.

50
8.1 In prior years and for CY 2021, the City had been a recipient of funds transferred
from various NGAs for the implementation of various PPAs. As of December 31, 2021,
the balance of the Due to NGAs account amounted to ₱43,924,325.28. Aging the details
thereof would yield the following:

Age
Particulars Less than 1 year More than 1 to 5 More than 5 to Beyond 10 years
years 10 years
Due to NGAs 14,705,436.84 10,207,384.04 14,779,445.99 4,231,758.41

8.2 Review of documents and information pertaining to the transferred funds and Due
to NGAs account disclosed the following deficiencies:

 Unwarranted retention of unexpended balances of one completed and one

unutilized project - ₱2.712 million

8.3 Based on the schedule submitted by the Acting City Accountant, the DBM
transferred to the City the amount of ₱99,900,000.00 under Local Government Support
Fund (LGSF) - Other Financial Assistance intended to finance the construction of farm-
to-market roads at Barangays Bulak, Maburak, Macabaklay Mahipon, Marelo, Pambuan,
Parcutela, Sto. Cristo Sur, San Nicolas and San Roque. The implementation of the
projects was consistent with the provision of LBC No. 131 dated January 8, 2021. All
projects have been reported completed during the year. In their implementation, the City
had saved the amount of ₱24,547.84 that remained reflected under the Due to NGAs
account as of December 31, 2021.

8.4 The unutilized amount should have been refunded to the source agency as the
purpose for which the fund was created has already been served. Therefore, the continued
keeping of excess funds is inconsistent with provisions of Section 6.7 of COA Circular
No. 94-013 dated December 13, 1994 that requires the Implementing Agency to return to
the Source Agency any unused balance of funds transferred.

8.5 According to the Acting City Accountant, the amount of ₱24,547.84 was still
unremitted because she is still in the process of completing the needed documents for the
preparation of Report of Disbursements including those that will be provided by the City
Engineering Office (CEO).

8.6 Moreover, the DBM transferred funds to the City on December 11, 2020, charged
against the FY 2020 NDRRMF, in the amount of ₱2,687,733.00. Verification of records
showed that the City has not yet utilized the full amount as of December 31, 2021 thus, it
should be returned to the Bureau of Treasury (BTr) as provided in Item 3.7 of LBC No.
130 dated November 19, 2020 which states that The financial assistance to LGUs,
charged against the NDRRM Fund, may be utilized by the beneficiary LGUs until
December 31, 2021. Funds which remain unutilized after December 31, 2021 shall be
reverted to the National Treasury by the recipient LGUs. For this purpose, unutilized
funds refer to the balances of the amount received by the LGU, which were not disbursed
by the recipient LGU.

51
 8.7 According to the CPDO, the identification of the project was delayed by the
pandemic and it did not take place as of December 31, 2021. He added that the
unutilized amount will be refunded to the BTr.

 Delayed/non-implementation of four PPAs and partial implementation of one

PPA - ₱17.895 million

8.8 The City has also been a recipient of government funds or fund transfers
aggregating ₱17,895,359.69 covering the period CYs 2018 – 2021. Our review disclosed
that substantial balances were still unexpended as of year-end. The details, degree of
accomplishment or status, and reasons provided by the management are presented in the
table below.

Designated
Source Date Balance as of Status as of Reason/
PPAs period of
Agency Received 12/31/2021 12/31/2021 Remarks
Implementation
To be returned
Closure and
Unutilized and to the Source
Rehabilitation of Not listed in
DENR June 18, unimplemented Agency
Open and ₱476,437.69 APP for CY
RO III 2018 for more than 3 according to the
Controlled 2021
years Acting City
Dumpsite
Accountant
Seal of Child-
Friendly Local Unutilized and No face-to-face
Not listed in
Governance January unimplemented classes yet due
DSWD 50,000.00 APP for CY
(Feeding Program 20, 2021 for less than 1 to the current
2021
for 1,400 day care year pandemic
children)
Financial Assistance
to LGUs - Typhoon Unutilized and To be returned
Up to December
Ulysses Decembe delayed to the Bureau of
31, 2021 per
DBM (Construction of r 11, 2,687,733.00 implementation Treasury due to
DBM LBC No.
Drainage Canal for 2020 for more than 1 lapsed period of
130
Flood Control, year implementation
Brgy. Mangino)
LGSF - Disaster
Reduction &
Unutilized and
Rehabilitation Up to December Identification of
delayed
Assistance Program February 31, 2022 per the project was
DBM 2,001,139.00 implementation
(Construction of 24, 2021 DBM LBC No. delayed by the
for less than 1
Drainage Canal for 134 pandemic.
year
Flood Control,
Brgy. Mangino)
DBM LGSF - Assistance June 18, 12,680,050.00 4th quarter CY With partial Finalization of
to Cities - Green 2021 2021 per utilization of the project
Green Program Supplemental ₱6,494,641.52 design/plan was
(Construction of APP leaving an delayed by the
Pambuan Plaza at unutilized pandemic thus,
Brgy. Pambuan) amount of was bidded only
₱6,185,408.48. on Nov. 16,
2021 and

52
 Designated
Source Date Balance as of Status as of Reason/
PPAs period of
Agency Received 12/31/2021 12/31/2021 Remarks
Implementation
started on Nov.
29, 2021.
Nonetheless,
the project was
51% completed
as of year-end.
Total ₱17,895,359.69

8.9 As can be gleaned from the foregoing information, the City was in delay in the
implementation of the projects. Because of the City’s inaction to prudently manage and
monitor the fund, the Department of Environment and Natural Resources (DENR)
imposed its right to recover the trusted fund even without the delivery of any output, a
miscarriage of project’s objectives.

8.10 The timelines of projects implementation are fixed in the agreement/covenant

which the City has to honor. Working behind the targets is an indication of inefficiency.

8.11 In case of fund transfers, donors and sponsoring agencies are also expectant users
of the project implementation reports. The timely completion of the project which the
City would report adds up to the accomplishment of the donor as well.

8.12 Moreover, every prioritized project represents a government intervention to

resolve a gap or a problem. To delay its completion would mean a delay in the delivery of
public service at the disadvantage of expectant beneficiaries, in particular.

 Fund transfers for implementation of five PPAs which are dormant for nine to 13
years - ₱0.549 million

8.13 Fund transfers with outstanding balance of ₱549,213.06 remained idle as of

December 31, 2021. Records show that the funds were set aside for the implementation
of five projects. Details are as follows:

Source Balance as of
PPAs Date Received Remarks
Agency 12/31/2021
Kilos Asenso
Undetermined Undetermined ₱11,433.61 No available records
Support Fund
PDAF Gringo
Undetermined Undetermined 54,333.00 No available records
Honasan
Financial Based on available
Undetermined Assistance – Undetermined 64,646.45 records, non-moving since
Medical Mission 2012 (9 years)
Based on available
President Social
Undetermined Undetermined 416,300.00 records, non-moving since
Fund
2008 (13 years)
Undetermined CLSU-Fits Undetermined 2,500.00 Based on available
Database Content records, non-moving since
Development, 2011 (10 years)

53
 Source Balance as of
PPAs Date Received Remarks
Agency 12/31/2021
Interconnectivity
Total ₱537779.45

8.14 Analyzing the available accounting data would reveal that said funds have been in
dormant state for more than nine to 13 years. According to the Acting City Accountant,
her office could not recover anymore the documents such as memorandum of agreements
(MOA), Special Allotment Release Order (SARO), or binding instructions on the manner
of the fund disposition. These are inherited information from her predecessors which is
not supported with appropriate documentation.

8.15 The dormancy of account gives several possibilities: the trust is of no use since
the purpose has already been served; failure to implement that resulted in abandonment;
or uncontrolled shortcomings along the way of implementation that precluded the
attainment of the purpose. Nevertheless, whatever reason there maybe, the inaction of the
management to utilize the fund in a timely manner or to revert back to the sponsor/donor
within reasonable time constitutes an imprudence in managing government resources.

8.16 The aging accounts are mere embellishments in the records of the City. The act of
safekeeping alone without performance or implementation may end up in the purposes or
objectives of the trusts not being achieved.

8.17 We recommended that the LCE require the (a) Acting City Accountant, City
Legal Officer and Acting City Treasurer to review all dormant accounts under the
trust funds, retrieve their MOA/SARO and other relevant documents, and
determine whether: (i) the unutilized fund balances could be legitimately used by
the City despite the passage of unreasonable time or seek authority from the donor
or sponsor on the possibility of utilizing the same for the purpose other than those
provided in the MOA/SARO; and (ii) make proper liquidations and reporting to the
respective donors/sponsors for unexpended balance of the trusts; (b) henceforth, the
City and the Acting City Treasurer to ensure that all incoming trusts supported by
transfers and receipts are fully documented and that provisions on implementation
timeliness and effectiveness are considered with the end view of delivering the
outputs effectively within reasonable time; and (c) the Acting City Accountant and
the Acting City Treasurer to cause the immediate return of the unutilized and/or
non- moving funds to the respective source agencies and BTr in observance of COA
regulations and DBM guidelines.

Management’s Comment:

8.18 The Acting City Accountant mentioned that they are still preparing the necessary
documents that would facilitate the return of unexpended balances to source agencies and
assured that once prepared, they would immediately transfer the said balances. She also
agreed to communicate with EMB in writing to settle the issue of unutilized fund transfer
and to send confirmation letters to the NGAs for the noted dormant accounts/balances.

54
Utilization of the 20% Development Fund

9. The City utilized the amount of ₱116,498,614.17 or 69.34% of the

₱168,000,000.00 budget for 20% Development Fund (DF) as of year-end; however,
one project costing ₱12,000,000.00 was not implemented at all and two with a budget
cost of ₱77,000,000.00 were belatedly carried out thus, the goal of achieving the
desired socio-economic development and environmental outcomes as envisioned under
DBM, Department of Finance (DOF) and DILG JMC No. 1, dated November 4, 2020
was not fully realized within the target time frame.

9.1 Section 287 of R.A. 7160 provides that every LGU shall appropriate in its annual
budget no less than twenty percent (20%) of its annual IRA for development projects.

9.2 For CY 2021, the City, under Sangguniang Panlungsod (SP) Resolution No. 41 s.
2020 dated December 4, 2020, appropriated the amount of ₱156,000,000.00 for the 20%
DF to finance its priority development projects. The amount was equivalent to 23.77% of
the Internal Revenue Allotment (IRA) for the year.
9.3 The PPAs for implementation as listed in the Annual Investment Program (AIP)
for CY 2021 and Local Development Council of Gapan City Kapasyahan Blg. 03, taon
2020 dated September 24, 2020, are as follows:

Name of PPAs Amount

Social Development
1. Purchase of COVID-19 Vaccine ₱ 12,000,000.00
2. Purchase of Tablet PC for Elementary, Junior and Senior High
School and Gapan City College Students 65,000,000.00
Economic Development
1. Construction of Lumang Gapan Project Expansion Phase II 32,000,000.00
2. Construction/Rehabilitation of Damaged Paved Roads and
Drainage Canal (P. Jacinto St., Brgy. San Vicente) 8,000,000.00
3. Construction/Rehabilitation of Damaged Paved Roads and
Drainage Canal (Brgy. San Nicolas) 6,000,000.00
Environmental Management
1. Purchase of 22 Units Garbage Compactor 33,000,000.00
Total ₱156,000,000.00

9.4 The City, under SP Appropriation Ordinance No. 3 s. 2021 dated September 20,
2021, reprogrammed its priority development projects funded by 20% DF for CYs 2020
and 2021 as follows:

PPAs reprogrammed
From To
Installation of Street Lights (CY Purchase of 30 Units ₱45,000,000.00
₱10,000,000.00 Farm Tractor (CY
2020)
Purchase of Land and Site 2,000,000.00 2021)
Development for Public
Cemetery (CY 2020)

55
 Purchase of 22 Units Garbage
33,000,000.00
Compactor (CY 2021)
₱45,000,000.0 ₱45,000,000.
Total 0 Total 00

9.5 Review of pertinent records and the Report on Utilization of the 20% DF as of
December 31, 2021 prepared by the Acting City Accountant revealed that the City was
only able to utilize ₱116,498,614.17 out of the total allotted budget of ₱168,000,000.00
or 69.34% utilization rate as of year-end. Details are as follows:

Total Cost
Balance/
Approved Incurred as of % of
Name of PPAs Unutilized
Budget December 31, Completion
Amount
2021
Social Development
1. Purchase of COVID-19
Vaccine ₱12,000,000.00 0.00 ₱12,000,000.00 0%
2. Purchase of Tablet PC for
Elementary, Junior and Senior
High School and Gapan City
College Students 65,000,000.00 64,997,424.00 2,576.00 100%
Economic Development
1. Construction of Lumang Gapan
Project Expansion Phase II 32,000,000.00 16,599,259.62 15,400,740.38 51.91%
2. Construction/Rehabilitation of
Damaged Paved Roads and
Drainage Canal (P. Jacinto St.,
Brgy. San Vicente) 8,000,000.00 7,989,661.56 10,338.44 100%
3. Construction/Rehabilitation of
Damaged Paved Roads and
Drainage Canal (Brgy. San
Nicolas) 6,000,000.00 5,989,268.99 10,731.01 100%
Environmental Management
1. Purchase of 30 Units Farm
Tractor 45,000,000.00 20,923,000.00 24,077,000.00 46.66%
Total ₱168,000,000.0 ₱116,498,614.17 ₱51,501,385.83
0

9.6 Our analysis disclosed that above PPAs are valid expenditures of 20% DF as
these were not exclusions enumerated under in Section 3.2.5 of DBM-DOF-DILG JMC
No. 1 dated November 20, 2020 or the Revised Guidelines on the Appropriation and
Utilization of the 20% of the Annual Internal Revenue Allotment for Development
Projects. As also stated in Section 3.2.1 and 3.2.2 of the same JMC, the 20% DF shall be
utilized to finance the LGUs priority development projects, as embodied in their
respective duly approved local development plans and medium-term and annual
investment programs and which are essential to the promotion of the general welfare of
the people, both of which were duly accomplished by the City.

9.7 The Audit Team performed an ocular inspection of the projects on February 9,
2022 and all were found existing. These include the projects entitled
“Construction/Rehabilitation of Damaged Paved Roads and Drainage Canal in P. Jacinto
56
St., Brgy. San Vicente and Brgy. San Nicolas” and “Construction of Lumang Gapan
Expansion Phase II”.

9.8 Following are the deficiencies noted in the audit of the 20% DF of the City for
CY 2021:

 Unimplemented one project with budget amount of ₱12.000 million

9.9 The project, Purchase of COVID-19 Vaccines, budgeted at ₱12,000,000.00 was

not implemented as of year-end. According to the CPDO, the City was not able to obtain
authority from the National Government to procure COVID-19 vaccines.

9.10 The City could have reprogrammed at the most reasonable time the said project to
other priority projects for the benefit of its constituents. Furthermore, the City should
have observed prudence on the planning of vaccines acquisitions as the activities really
require the coordination of and authority from the DOH and NTF in accordance with RA
No. 11525 or the COVID-19 Vaccination Act of 2021.

 Delayed/Partial implementation of projects with budget amount of ₱77.000

million

9.11 Two projects namely: the Construction of Lumang Gapan Project Expansion
Phase II and Purchase of 30 Units Farm Tractor with budget amount of ₱32,000,000.00
and ₱45,000,000.00, respectively were only 51.91% and 46.66% completed as of year-
end, as shown in the 4th Quarter Report on PPAs submitted by the Acting City Engineer.
Said report also showed that the projects were only started on October 22, 2021 and
November 29, 2021 with target completion date of April 27, 2022 and January 4, 2022,
respectively. Details of the delayed/partial implementation are shown below.

% of
Schedule per
Completion
APP/ Date of Bid
Project Name Date Started as of
Supplemental Opening
December
APP
31, 2021
Construction of Lumang
2nd Quarter of October 12, October 22,
Gapan Project Expansion 51.91%
CY 2021 2021 2021
Phase II
Purchase of 30 Units Farm 3rd Quarter of November 16, November 29,
46.66%
Tractor (reprogrammed) CY 2021 2021 2021

9.12 According to the Acting City Engineer, the delays in the implementation of
construction of Lumang Gapan could be attributed to the series of office lockdowns
brought about by COVID-19 pandemic thus, bidding activity was belatedly conducted.
As for the purchase of 30 units farm tractors, only 14 units were delivered as of
December 31, 2021, the delivery of other 16 units transpired in January 2022.

57
9.13 Delays in the completion of PPAs connote the postponement of enjoyment for the
intended beneficiaries and attainment of outcomes that could be realized therefrom by the
City.

9.14 The City’s desired socio-economic development and environmental management

outcomes could have been fully realized had all projects been implemented as planned.

9.15 We recommended that the LCE (a) ensure the full or optimum utilization of
the 20% DF during the budget year; and (b) require the concerned officers to be
prudent in overseeing the timely implementation of PPAs under their responsibility.

Management’s Comment:

9.16 The CPDO reiterated that the planned/budgeted purchase of COVID-19 vaccines
did not materialize due to lack of authority from the national government to purchase the
same. Nevertheless, the management assured that the 20% DF will be fully or optimally
utilized by the City for the benefits of its constituents.

Special Education Fund (SEF)

10. The City spent the amount of ₱6,946,710.03 or 49.61% of the CY 2021 SEF
budget even in the absence of the required information and documents contrary to the
pertinent provisions of Department of Education (DepEd), DBM, and DILG Joint
Circular (JC) No. 1, s. 2017 and PD No. 1445, thus, affecting the regularity of the
transactions. Moreover, procured properties issued to the DepEd personnel in
previous years were not properly monitored, hence, the accountability over the assets
could not be fixed which may result in the loss or non-traceability of said government
property.

10.1 Section 4(6) of PD No. 1445 states that claims against government funds shall be
supported with complete documentation.

10.2 Moreover, Section 272 of RA No. 7160 provides that the SEF shall be allocated to
the following:

1. Operation and maintenance of public schools;

2. Construction and repair of school buildings;
3. Facilities and equipment;
4. Educational research;
5. Purchase of books and periodicals: and
6. Sports development.

10.3 Furthermore, Section 100(c) of the same law provides that the annual school
board budget shall give priority to the following:

58
 1. Construction, repair, and maintenance of school buildings and other
facilities of public elementary and secondary schools;
2. Establishment and maintenance of extension classes where necessary; and
3. Sports activities at the division, district, municipal, and barangay levels.

10.4 As stated in the Report on SEF Utilization for CY 2021 submitted by the Acting
City Accountant, the City Government appropriated the total amount of ₱14,000,000.00
for SEF PPAs while the amount of ₱6,946,710.03 was disbursed during the year, thus,
leaving an unobligated balance of ₱7,053,289.97 as of year-end as shown in the below
table.

Object of Expenditures Appropriations Disbursements Balances

Personal Services (PS) ₱ 7,751,000.00 ₱ 6,841,617.00 ₱ 909,383.00
Maintenance and Other Operating Expenses (MOOE)
Educational Research/Training and 1,000,000.00 0.00 1,000,000.00
Development
Sports Development 1,000,000.00 0.00 1,000,000.00
Learning Materials 100,000.00 0.00 100,000.00
LRMDS/ALS/Kinder
Repair and Maintenance of School 1,049,000.00 0.00 1,049,000.00
Buildings and Others
Gas and Lubricants 300,000.00 105,093.00 194,906.97
Other MOOE 700,000.00 0.00 700,000.00
Sub-total MOOE 4,149,000.00 105,093.00 4,043,906.97
Capital Outlay 2,100,000.00 0.00 2,100,000.00
TOTAL ₱ 14,000,000.00 ₱ 6,946,710.03 ₱ 7,053,289.97

10.5 The PPAs included in the above SEF budget are eligible expenditures in view of
the categories provided by the foregoing provisions of the law. Gleaning from the above
table, the City’s Local School Board (CLSB) failed to utilize the total amount of
₱5,949,000.00 appropriated for six PPAs comprising 42% of the total SEF budget.
According to the City Budget Officer (CBO), activities such as educational research and
training and sports development were intended for the benefit of the teachers and
students, however they were not implemented because of health risks and non-resumption
of face-to-face classes in CY 2021 due to the pandemic.

 Utilization of SEF

10.6 Section 4 of DepEd, DBM, and DILG JC No. 1, s. 2017, dated January 19, 2017
provides the allowable expenses chargeable against the SEF and states that:

In all instances, the allocation for the following expenditure items

chargeable against the SEF shall be net of the budgetary provision for
the same or related item(s) in the budget for the DepEd and the ECCD
Council, and that which may be funded out of the Special Purpose Funds:

o Operation and maintenance of public schools:

59
 o Construction and repair of school buildings:
o Facilities and equipment
o Educational research
o Purchase of books and periodicals
o Sports development
o Funding for the ECCD Program

10.7 According to the JC, the corollary budget allocation shall be complementary to
the budget of the national programs.

10.8 In our verification of the DVs, we noted that the transactions made in CY 2021
were not supported with any information from the DepEd City Division Province of
Nueva Ecija stating to the effect that it did not provide nor its budget is exhausted to
accommodate the above expenses proposed by the CLSB.

10.9 Likewise, information or documents supporting the expenses for salaries/wages

and gas and lubricants, were not attached to the disbursement vouchers. The following
table shows the specific deficiencies noted in the audit:

Particulars Amount Required Additional Supporting

Documents/Deficiencies
Personal Services - ₱ 6,841,617.00  Teacher deployment analysis of DepEd (Schools
Honoraria identified to have shortages of teachers);
 Determination of rates of
compensation/allowances by the CLSB based on
funds available: and
 Registry of Qualified Applicants (RQA)
 Contract
 PDS and other employment records
 Liquidation Report
 Proof/Document that the payment of the
salaries/wages of utility workers have not been
provided such position in the DepEd budget
Gas and Lubricants 105,093.00  Name and signature of the passenger in the
driver’s trip ticket
 Purpose of travel not indicated in the driver’s trip
ticket
 Requisition and Issue Voucher (RIV)
 Report of Fuel Consumption
Total ₱6,946,710.03

10.10 The City Human Resources and Management Office (CHRMO) declared that the
recruitment and selection of teachers are lodged to the CLSB. On the other hand, the
CBO disclosed that in practice, the District Supervisor identifies the schools with
shortages of teachers and the CLSB chooses from among the qualified applicants who
submitted their PDS and other credentials. The rates of the compensation/allowances of
said teachers were also determined during the CLSB meeting. However, the said
activities were not documented and so the information was not attached in the
disbursement documents.
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10.11 Furthermore, the CBO commented that they did not use RQA as reference in the
selection. For other expenditures, they relied on the suggestions of the District
Supervisor, she being the representative of the education department and her expenditure
proposals without reference to the JC were prioritized.

10.12 A transaction could be deemed an irregular if it is conducted in a manner that

deviates from the standards. Therefore, the absence of evidence that the SEF
disbursements are done in accord with the prevailing guidelines would render the
transactions irregular., which are disallowable in audit.

 Non-monitoring of SEF PPEs

10.13 The basic rule is that each government agency shall conduct physical count of all
its PPE annually and the Inventory Committee shall be responsible for the actual count to
ascertain the existence, completeness and condition of all PPEs owned by
the government agency. Furthermore, we emphasize that the accountability over the
entrusted government property is shifted to the receiving officer as Section 101 of P.D.
No. 1445 states Every officer of any government agency whose duties permit or require
the possession or custody of government funds or property shall be accountable therefore
and for the safekeeping thereof in conformity with law.

10.14 As of December 31, 2021, the PPE accounts of the SEF are composed of the
following:

PPE Accounts (SEF) Amount

Land ₱ 7,804,728.00
School Buildings 13,291,618.56
Furniture and Fixtures 201,835.21
Office Equipment 9,053.05
Information and Communication Technology 19,876,625.90
Equipment
Motor Vehicle 1,215,266.49
Other PPE 2,324.68
Total ₱42,401,451.89
10.15 In our verification, we determined that for a long time, the Inventory Committee
has not conducted annual physical inventory of SEF property and the CGS Officer has
not monitored the transfers of accountability after initial recording thereof particularly,
the equipment and furniture and fixtures.

10.16 Likewise, verification of documents disclosed that the Property

Acknowledgement Receipt (PAR) for properties assigned to DepEd officials/personnel
was maintained only for new property acquisitions during CY 2021. According to the
CGS Officer, the prior years’ acquisitions would be reviewed and revisited for the
issuance of PAR. He explained that he is still in the process of conducting the physical
count and updating the list of PPEs.

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10.17 The auditing rules require that all equipment/items issued for official use of
officers and employees should covered by PAR to establish accountability over them.

10.18 The lack of proper monitoring and safeguard controls for SEF property ran
contrary to pertinent provisions of P.D. No. 1445 and the existing regulations.

10.19 We recommended that the City Local School Board (a) ensure that (i) SEF
expenditures are supported with information that they are net of the DepEd’s
budgetary provision for the same or related item(s) in its budget; and (ii) the
guidelines on SEF operations, budgeting, and utilization are being adhered to; (b)
submit the requisite documents noted in audit; and (c) monitor the SEF properties
by requesting the Inventory Committee to complete the validation exercise and fix
the accountability of the property end-users by requiring them to acknowledge the
PAR.

Management’s Comment:

11.12 The management agreed with the audit recommendations of the Audit Team and
committed to comply thereto. The Acting City Accountant added that the management
will study the possibility of transferring the booking of properties assigned with Deped
employees from LGU to Deped books in accordance and as warranted by the existing
rules and regulations.

Ecological Solid Waste Management Act of 2000

11. The City has substantially complied with the provisions of R.A. No. 9003 or the
Ecological Solid Waste Management Act of 2000. However, the tipping fee amounting
to ₱2,544,000.00 for transporting residual wastes in CY 2021 could have been
minimized had the City improved its source reduction and waste minimization
measures and prioritized the establishment and operation of its waste disposal facility
as included in the City’s Ten-Year Solid Waste Management Plan.

11.1 R.A. No. 9003 or the Ecological Solid Waste Management Act of 2000 provides
that It is the declared policy of the State to adopt a systematic, comprehensive and
ecological solid waste management program which shall ensure the proper segregation,
collection, transport, storage, treatment and disposal of solid waste through the
formulation and adoption of the best environment practice on ecological waste
management.

11.2 Also, the IRR of the said Act were promulgated which prescribe that all LGUs
shall coordinate efforts and implement at their level the following regulations:

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 a) Mandatory segregation of wastes at source;
b) No segregation/No collection rule;
c) Establishment of a functional Materials Recovery Facility or MRF;
d) Operation of a disposal facility; and
e) No littering mandate of law.

11.3 Furthermore, Section 16 of the said Act prescribes that the province, city or
municipality, through its Local Solid Waste Management Boards (LSWMB), shall
prepare its respective Ten-Year Solid Waste Management Plans (SWMP) consistent with
the National Solid Waste Management Framework.

11.4 Validation of records and interview conducted disclosed that the City
substantially complied with the provisions of R.A. No. 9003 as shown by the following
accomplishments:

 The City reorganized the composition of LSWMB and defining its functions
through Executive Order No. 9 series of 2018. Validation disclosed that the
composition of the Board complied with Section 5 of IRR of R.A. No. 9003.
 The Ten-Year SWMP (2017-2026) was formulated and approved by the
National Solid Waste Management Board in June 2018;
 No segregation / no collection rule was followed. For CY 2021, the Quarterly
Report on Manila Bay Clean Up, Rehabilitation and Preservation Project
(MBCURPP) Form 2.1 for 4th Quarter submitted by City Environment and
Natural Resources Office (CENRO) showed that 23 out of 23 or 100% of the
barangays in the City are compliant with segregation at source pursuant to
Section 10 Role of LGUs in Solid Waste Management of R.A. No. 9003.
 Materials Recovery Facility (MRF) was established. Ocular inspection was
done by the Audit Team on the Central MRF maintained by the City located
in Barangay Pambuan and found that the said MRF was being used for sorting
and segregation as shown in the picture below.

Central MRF, Barangay Pambuan

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  No littering mandate law was implemented. The City enacted Ordinance No.
20 series of 2017 or an Ordinance prohibiting littering and similar acts within
the territorial jurisdiction of the City and prescribing penalties for its violation.
According to the CENRO, several penalties were imposed by the City due to
the violation of the said ordinance. Notice of Violation was issued which
indicates the name and address of the offender, nature of violation and the
corresponding penalties thereof such as reprimand, payment and community
service.

11.5 Despite the above accomplishments, the Audit Team noted that the City has yet to
implement the following strategies mentioned in its Ten-Year SWMP to improve further
its waste reduction, segregation, diversion and proper disposal of residual wastes:

a. Location of properly labeled waste receptacles at strategic places;

b. Establishment of the integrated waste management facility;
i. Sanitary Landfill
ii. Composting Facility
iii. Materials Recovery Facility
c. Fabrication of concrete hollow blocks made of crushed bottles, tiles and
others; and
d. Livelihood project, production of items made of recyclable materials.

11.6 According to the CENRO, the final disposal facility of the City was not yet
established since they are still in the process of securing Environmental Compliance
Certificate (ECC) for the establishment of its own sanitary landfill. He further mentioned
that the City is currently under negotiation to conduct initial study regarding the technical
and financial proposal for the construction of the said disposal facility.

11.7 Moreover, inspection of the Central MRF disclosed that the City has only the
following equipment to help in the solid waste reduction and diversion:

Shredder (shredding of food and biodegradable Composting Machine (shredded food and
wastes) biodegradable wastes were placed for composing

64
 and drying)

11.8 As further explained by the CENRO and concerned employees in the MRF, the
composting facility is currently being used to produce fertilizer-like products which are
then distributed and picked-up by the vegetable growers. However, as it is, the current
composting facility alone is not sufficient to address the issues in the solid waste
reduction and diversion. The City needs to further adopt the specific strategies mentioned
in the Ten-Year SWMP which include, but are not limited to, the fabrication of concrete
hollow blocks made of crushed bottles, tiles, etc. and livelihood project; and production
of items made of recyclable materials.

11.9 Due to the inability to establish its own sanitary landfill, the City has acquired the
services of Metro Clark Waste Management Corporation (MCWMC) to haul the residual
garbage from the transfer station facility to the MCWMC Sanitary Landfill in Capas,
Tarlac and incurred a total amount of ₱2,544,000.00 as payment for the tipping fees
during CY 2021.

11.10 Such tipping fees could have been minimized had the City prioritized the
establishment and operation of its final disposal facility and adopted the strategies
provided in its Ten-Year SWMP.

11.11 We commended the management for its unceasing efforts to comply with
R.A. No. 9003 or the Ecological Solid Waste Management Act of 2000. We further
recommended that the LCE direct the CENRO to prioritize and pursue the
establishment and operation of the City’s final disposal facility and to implement
strategies mentioned in the Ten-Year SWMP in order to minimize the payment of
tipping fees.

Management’s Comment:

11.12 During the exit conference, the CENRO narrated that there is a continuous
negotiation for the establishment of the final disposal facility of the City in Brgy.
Makabaclay. He also agreed with the Audit Team’s recommendation to implement
additional strategies in order to minimize solid wastes.

Non-compliance with some provisions of R.A. No. 9184 and its IRR

12. The City did not strictly adhere to the pertinent provisions of R.A. No. 9184 or
the Government Procurement Reform Act, its IRR and COA Circular No. 2012-001
dated June 14, 2012 respecting the procurement of infrastructure projects and goods
during CY 2021 thus, the principle of transparency was not satisfactorily promoted.
Furthermore, inconsistencies of information in the bidding documents cast doubt on
the regularity of the transactions.

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12.1 R.A. No. 9184 or The Government Procurement Reform Act was enacted on July
22, 2002 in order to provide for the modernization, standardization and regulation of the
procurement activities of the government and other purposes. Relative thereto, the 2016
RIRR was promulgated for the purpose of prescribing the necessary rules and regulations
of the R.A. 9184. The provisions of the IRR are in line with the commitment of the
Government of the Philippines to promote good governance and its effort to adhere to the
principles of transparency, accountability, equity, efficiency, and economy in its
procurement process.

12.2 Also, COA Circular No. 2012-001 dated June 14, 2012 was issued in order to
prescribe the revised guidelines and documentary requirements for common government
transactions including the procurement of infrastructure projects and goods.

12.3 Post-audit of the following projects which City Government procured through
public bidding during CY 2021 disclosed deficiencies in the documentation and lapses in
observing the prescribed procedures:

Name of Project Project Cost

Installation of fiber optic, CCTV, Early Warning ₱87,951,000.00
System and Other Paraphernalia for Central
Command Center
Supply and delivery of 13,214 pcs. Tablet PC for 92,499,982.00
Junior and Senior High School Students
Upgrade and Rehabilitation of Damaged Paved 7,989,661.56
Roads and Drainage Canal

12.4 Below are the common deficiencies noted and the pertinent rules and regulations
not adhered to by the City Government pertaining to the above procurements:

Applicable Rules and Requirements of the Rules and

Deficiencies Noted
a. Approved PPMP and APP were
not submitted nor attached in
the DVs;
b. No discussion was mentioned
in the Minutes of the Pre-
Procurement Conference that
the procurement was in
accordance with the project and
annual procurement plans
c. No invitation of representative
of COA and at least two (2)
observers during the conduct of
Pre-Bid Conference
d. No Notification Letter by the
BAC Secretariat to all bidders
who submitted their bid
proposal
Regulations Regulations
Section 9.1 of COA Attachment/submission of
Circular No. 2012-001 authenticated photocopy of the
approved APP and any amendment
thereto.
Section 20.1 (b) of RIRR One of the objectives of the Pre-
of R.A. 9184 Procurement Conference is to ensure
that the procurement is in accordance
with the PPMP and APP
Section 13.1 of RIRR of To enhance the transparency of the
R.A. 9184 process, the BAC shall, during xxx
pre-bid conference, xxx invite, in
addition to the representative of the
COA, at least two (2) observers xxx
Section 25.7 of RIRR of To ensure transparency and accurate
R.A. 9184 representation of the bid submission,
the BAC Secretariat shall notify in
writing all bidders whose bids it has
received through its PHILGEPS-

66

Deficiencies Noted
e. No Notification of Bidding
Results of the losing bidders
f. Non-utilization of City website
in the posting of Procurement
activities and documents such
as Invitation to Bid, NOA,
Contract and NTP
g. No certification from the Head
of BAC Secretariat of posting
of NOA in conspicuous places
Applicable Rules and
Regulations
Section 37.1.1 of RIRR of
R.A. 9184
Section 21.2.1 (b), 37.1.6;
and 37.4.2 of RIRR of R.A.
9184
Section 37.1.6 of RIRR of
R.A. 9184
Requirements of the Rules and
Regulations
registered physical address or official
e-mail address. The notice shall be
issued within seven (7) calendar days
from the date of bid opening.
Within three (3) calendar days from
the issuance of the resolution
recommending award of the contract,
the BAC shall notify all other
bidders, in writing, of its
recommendation.
The BAC, through the Secretariat,
shall post, the Invitation to Bid,
NOA, Contract and NTP in the
website of Procuring Entity
The BAC, through the Secretariat,
shall post, xxx the NOA in any
conspicuous place in the premises of
the Procuring Entity

12.5 In effect, the above-cited lapses and deficiencies were not in accordance with
pertinent provisions of the procurement law and its implementing rules.

12.6 Furthermore, in our review and verification, we also noted the inconsistencies of
information in the bidding documents for the procurement of:

 Installation of fiber optic, CCTV, Early Warning System and Other Paraphernalia
for Central Command Center, such that:

o The Bid Evaluation Report stated that there was no Pre-Procurement

Conference conducted when in fact the Pre-Procurement Conference was
conducted on July 27, 2020 as shown in the Minutes of Pre-Procurement
Conference;
o The Bid Evaluation Report stated that there is only one bidder for the
project while in the Abstracts of Bids as Read and Calculated there were
two bidders who submitted their bids, both of which were sufficient and
compliant with the bid requirements;
o Notice of Bid Evaluation to the winning bidder stated that the bid has been
determined to be Lowest Calculated Responsive Bid (LCRB) while the
Notice of Post-Qualification revealed that the bid was the Single
Calculated Responsive Bid (SCRB); and
o The BAC Resolution declaring SCRB and Recommending Approval has
no Resolution Number and was inconsistent with its content/discussion
that there are two (2) bidders who found to be substantially complying
thus it should be declared LCRB and not SCRB.

 Procurement of 13,214 tablet PCs and Upgrade and Rehabilitation of Damaged

Paved Roads and Drainage Canal
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 o Minutes of Pre-Procurement Conference and performance bond of the
winning bidders were not submitted nor attached in the Disbursement
Voucher.

12.7 The above lapses and inconsistencies in the documentation of bidding

requirements as provided by the R.A. No. 9184 and its IRR shaded doubts on the
accuracy of the information, much more on the regularity of the transactions. Moreover,
inconsistencies may suggest that the responsible officials were lax in discharging their
duties on the preparation and review of procurement records and reports.

12.8 According to the concerned officials, they overlooked the rules and regulations
pertaining to the noted deficiencies. For the posting of procurement activities in the
City’s website, they reasoned out that because of the planned updating of website which
was not yet implemented up to this time, they stopped the posting of procurement notices.
Audit validation of the City’s website showed that the last invitations to bid posted
pertained to CYs 2016-2017 while the links are no longer working.

12.9 The necessary and timely posting of procurement information in the City’s
website and conspicuous places, the delivery of invitations to designated observers, and
the notification of results of bids are activities that could enhance the accountability and
transparency of the procurements. Furthermore, to claim that the transactions are regular
in full aspect, the responsible officers should fulfill the prescribed documentation of the
procurement activities including the submission of PPMP and APP and exercise prudence
in accomplishing properly the bidding documents to avoid the incurrence of inconsistent
or conflicting information therein.

12.10 We recommended that the LCE require the (a) BAC; BAC Secretariat, and
TWG to (i) submit the copies of lacking documentary requirements for the above
procurements, (ii) provide satisfactory explanation on the noted inconsistencies in
the bidding documents; and (iii) henceforth, ensure compliance with the pertinent
provisions of R.A. No. 9184 and its IRR and COA Circular No. 2012-001 in all
procurements through public bidding; and (b) Acting City Accountant to ensure
requisite documentation of procurements.

Management’s comment:

12.11 The BAC Chairman gave the assurance that the APP and PPMP will be attached
in the DVs and posting requirements for procurement activities will be observed. He also
stated that those noted lacking documentary requirements will be submitted to COA and
will be added in their checklist of documents for infrastructure projects.

Delayed submission of accounts

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13. The City has yet to improve further in terms of financial accounts submission
as the audit still noted delays ranging from 18 to 155 days on the transmittal thereof
contrary to Sections 347 of R.A. No. 7160 and 7.2.1 of COA Circular No. 2009-006,
thus, the audit team was precluded from the timely verification of account balances
and rendition of appropriate audit actions on the recorded transactions within
reasonable time.

13.1 Our constant reminders reached the responsible officers so that they would be
apprised on the timelines of the reports submission to COA, aside from the fact that this
observation was an item of the previous audit reports. Our records would show that the
City has not yet taken appropriate measure to avoid the incurrence of delays in submitting
the financial information, hence, this reiteration.

13.2 Section 347 of R.A. No. 7160 or the Local Government Code of 1991 states the
following provisions pertaining to rendition of accounts:

Local treasurers, accountants and other local accountable officers shall

render their accounts within such time, in such form, style, and content
and under such regulations as the Commission on Audit may prescribe.

Provincial, city, and municipal auditors shall certify the balances arising
in the accounts settled by them to the Chairman of the Commission on
Audit and to the local treasurer, accountant, and other accountable
officers. Copies of the certification shall be prepared and furnished other
local officers who may be held jointly and severally liable for any loss or
illegal, improper or unauthorized use or misappropriation of local funds
or property.

13.3 Moreover, COA Circular No. 2009-006 dated September 15, 2009 was issued to
prescribe the use of the Rules and Regulations on Settlement of Accounts. Section 7.2.1
Item (a) of the said Circular states that:

The Chief Accountant, Bookkeeper or other authorized official performing

accounting and/or bookkeeping functions shall ensure that the reports and
supporting documents submitted by the accountable officers are
immediately recorded in the books of accounts and submitted to the
Auditor within the first ten (10) days of the ensuing month. (Emphasis
ours)

13.4 For CY 2020, the City was in delay on the submission of Official Receipts (ORs)
for the period January to September 2020 while ORs for the months of October to
December 2020 remained unsubmitted as of prior year’s audit report date. The measured
delays range from 97 to 158 days. The same conditions were also noted in case of DVs,
both for Cash and Checks, where DVs for the months of January to June 2020 were not
submitted within the prescribed period registering delays of 171 to 246 days while DVs

69
 for the months of July 2020 to December 2020 also remained unsubmitted as of report
date.

13.5 Validation of the subsequent submission of the above CY 2020 accounts

disclosed that the City was able to submit them in CY 2021 as shown in the below table.

Month Unsubmitted as of
Accounts Date Submitted
CY 2020 Report Date
October 2020 May 10, 2021
ORs November 2020 June 25, 2021
December 2020 July 9, 2021
July 2020 March 2, 2021
August 2020 April 23, 2021
September 2020 April 26, 2021
DVs (Checks and Cash)
October 2020 May 10, 2021
November 2020 June 25, 2021
December 2020 July 9, 2021

13.6 For CY 2021, analysis showed that the City was constantly delayed in the
submission of aforementioned accounts ranging from 18 to 155 days as shown in the
below table.

Receipts,
Disbursement Required Due Date Submitted No. of Days Delayed
s and Other Date of
Reports for Submission
CY 2021 ORs DVs ORs DVs
January February 10, 2021 May 21, 2021 July 15, 2021 100 days 155 days
February March 10, 2021 May 21, 2021 July 16, 2021 72 days 128 days
March April 10, 2021 June 28, 2021 September 7, 2021 79 days 150 days
April May 10, 2021 July 2, 2021 October 11, 2021 53 days 154 days
May June 10, 2021 July 2, 2021 October 21, 2021 22 days 133 days
June July 10, 2021 July 28, 2021 November 11, 2021 18 days 124 days
July August 10, 2021 November 11, 2021 November 18, 2021 93 days 100 days
August September 10, 2021 December 10, 2021 December 14, 2021 91 days 95 days
September October 10, 2021 December 21, 2021 January 27, 2022 72 days 109 days
October November 10, 2021 January 24, 2022 January 27, 2022 75 days 78 days
November December 10, 2021 February 2, 2022 March 3, 2022 54 days 83 days
December January 10, 2022 March 11, 2022 March 15, 2022 60 days 64 days

13.7 The financial reports including the ORs and DVs serve as vital tools for
Management arriving at relevant decisions and the auditor in rendering appropriate audit
actions. In order for the users to utilize the reports and supporting documents effectively,
these must be submitted on time. This is the main reason why existing laws, rules and
regulations prescribe the time and mode of rendering accounts as basis for decision-
making.

13.8 While delays in submission of accounts had been a recurring observation of the
auditors in prior years, it is noteworthy that as compared with the statistics in prior years,
there was effort in compliance leading to reduction in the period of delay in CY 2021.

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13.9 According to the Acting City Accountant, the delays in the submission of
accounts to the Audit Team were attributed to the deferral of the CTO in the processing
of paid vouchers and their subsequent submission to the CAO.

13.10 Due to the delays and non-submission of some accounts as of date, the validity
and regularity of the recorded disbursements and receipts could not be immediately
ascertained. Moreover, the correctness of the affected revenue, expense, cash advance
and other related accounts could not be immediately determined. The above practice also
precluded the auditors in the timely post audit of transactions and rendition of audit
actions thereon.

13.11 We recommended and the LCE agreed to direct the Acting City Treasurer
and Acting City Accountant to continuously exert efforts and strategize effective
measures on how to minimize, if not eliminate the incurrence of delays in the
submission of accounts.

Non-submission of Contracts and Purchase Orders (POs) within five (5) days from its
execution and/or issuance

14. The omission of the City to submit copies of POs, Contracts for Infrastructure
Projects and Contracts of Consultants, Contractuals and Job Order personnel together
with their related documents within five days from execution and/or issuance thereof
was a complete defiance of COA Circular No. 2009-001 dated February 12, 2009, thus,
the appropriate audit actions thereto could not be rendered at the most reasonable
time.

14.1 COA Circular No. 2009-001 dated February 12, 2009 contains the following
provisions which cover all contracts, purchase orders and the like, entered into by any
government agency irrespective of the amount involved.

a. Section 3.1 - Contracts

 Section 3.1.1 - Within five (5) working days from the execution of a
contract by the government or any of its subdivisions, agencies or
instrumentalities, including government-owned and controlled
corporations and their subsidiaries, a copy of said contract and each
of all the documents forming part thereof by reference or
incorporation shall be furnished to the Auditor of the agency
concerned.

 Section 3.1.2 - Copies of documents required to be submitted shall

include but not limited to eligibility and bidding documents, contract

71
 agreement, performance security, notice of award, notice to proceed,
program of work and detailed estimates, obligation request, BAC
resolution and minutes of proceedings, among others as well as “such
other documents peculiar to the contract and/or to the mode of
procurement and considered necessary in the auditorial review and in
the technical evaluation thereof.”

b. Section 3.2 - Purchase Orders (POs)

 Section 3.2.1 - A copy of any purchase order irrespective of amount

and each and every supporting documents, shall, within five (5)
working days from issuance thereof, be submitted to the Auditor
concerned.

14.2 For CY 2021, the CGSO did not submit to the Audit Team the duly approved POs
within five working days from the date of their issuance. Meanwhile, the Contracts of
Consultants, Contractuals and Job Order personnel for CY 2021 were not also submitted
by the CHRMO within five days from the date of their execution and/or issuance.
Moreover, it was also observed that the CEO did not submit copies of Contracts for
infrastructure projects including the documents that form part thereof within the
aforementioned period. The said documents were only attached in the disbursement
vouchers submitted to the Audit Team several months later. These omissions ran counter
with the above audit regulations.

14.3 Interview with the concerned officials revealed their unfamiliarity to the rules and
regulations in the advance submission of POs and contracts to the Audit Team. Advance
submission has never been put into practice in the previous years.

14.4 The non-adherence of the CGSO, CHRMO and CEO with the regulations on the
submission of copies of perfected contracts and POs precluded the Audit Team from
conducting an immediate review and verification of the transactions at the most
appropriate time during the year. It also hampered the timely conduct of ocular inspection
of the projects including the monitoring and validation of the reported accomplishment.

14.5 We recommended and the CGS Officer, CHRM Officer and Acting City
Engineer agreed to submit regularly the copies of Contracts and POs together with
its supporting documents within the prescribe period.

Gender and Development (GAD)

15. The City has substantially complied with GAD local planning and budgeting as
prescribed under Philippine Commission on Women (PCW)-DILG-DBM-National
Economic Development Authority (NEDA) JMC Nos. 2013-01 and 2016-01, however,
the appropriate cost attribution for related PPAs remained disregarded, thus, the
gender-responsiveness of identified major programs and projects was not properly

72
assessed. Moreover, The City realigned or took changes of its GAD Plan and Budget
(GPB) in the absence of proper endorsement by the DILG which was inconsistent with
Section 6 of PCW-DILG-NEDA-DBM JC No. 2016-01.

15.1 Pursuant to PCW-DILG-DBM-NEDA JMC No. 2013-01 or Guidelines on the

Localization of the Magna Carta of Women, the City Mayor issued executive order to
institutionalize the establishment, reconstitution and/or strengthening of the GAD Focal
Point System (GFPS) in their respective LGUs. In 2019, Executive Order No. 13 s. 2019
was issued to reconstitute and strengthen the composition of the GFPS. The System’s
Executive Committee is composed of the City Mayor as chairperson; City Vice-Mayor as
vice-chairperson; and different department heads including representatives from the
private sector, academe, civil society organization and persons with disabilities as
members. It was also reinforced through the creation of a GFPS TWG and Secretariat.

15.2 Meanwhile, the Annual GPB prepared by the City for CY 2021 was
reviewed and endorsed by DILG Nueva Ecija Provincial Office. The GPB showed
an estimated budget of ₱108,140,000.00 or 11.95% of total agency’s
appropriation of ₱905,278,190.56. On the other hand, the GAD Accomplishment
Report (AR) for CY 2021 submitted by the City showed a total GAD budget of
₱198,050,000.00 thus, a variance of ₱89,910,000.00 was computed as compared
to the originally approved GPB. The GAD AR also reported a total expenditure
amounting to ₱128,541,072.00 or 14.20% of the total agency’s appropriation.
Details of the GAD budget and actual expenditures for CY 2021 are shown in the
table below.
Actual Cost or
Approved GAD
PPAs GAD Variance
Budget
Expenditure
1. Provision of Special Gift to Senior
Citizens during Birthdays. Free cinema ₱15,000,000.00 ₱9,964,500.00 ₱5,035,500.00
viewing at WalterMart Gapan City
2. Provision of Tablet PC 92,500,000.00 92,471,572.00 28,428.00
3. Provision and Installation of Street
20,000,000.00 0.00 20,000,000.00
Lights
4. Purchase of COVID-19 Vaccines 40,000,000.00 0.00 40,000,000.00
5. Rabies Prevention and Eradication
300,000.00 0.00 300,000.00
Program
6. Training and Seminar for COVID-19
100,000.00 0.00 100,000.00
vaccination and related topics
7.Increase coverage of Fully Immunized
50,000.00 50,000.00 0.00
Children (FIC)
8. Assistance to individuals in crisis
3,500,000.00 1,055,000.00 2,445,000.00
situation (AICS)
9. Aid to indigent families 5,000,000.00 5,000,000.00 0.00
10.Medical Mission (Medical Outreach
Program) and Operation Tuli; Provision of 1,600,000.00 0.00 1,600,000.00
Medical and Dental Laboratory supplies
11. Installation of CCTV as part of
establishment of Gapan City Central 20,000,000.00 20,000,000.00 0.00
Command Center

73
 Actual Cost or
Approved GAD
PPAs GAD Variance
Budget
Expenditure
Total ₱198,050,000.00 ₱128,541,072.00 ₱69,508,928.00

15.3 The table above shows that five activities with budget cost of ₱62,000,000.00
were not implemented during the year thus, depriving the intended beneficiaries of the
intervention or resolution of gender-issues which were aimed to be addressed. According
to the GAD Focal Person, the medical mission did not materialize due to health risks to
personnel while the purchase of COVID-19 vaccines did not push through due to the
National Government’s effort to integrate and consolidate all resources and initiatives.

15.4 Moreover, the program AICS with budget allocation of ₱3,500,000.00 was
partially implemented with unutilized amount of ₱2,445,000.00 at year-end. As also
stated by the GAD Focal Person, the partial implementation was due to a lower number
of beneficiaries that availed the AICS as compared to the previous years’ figures. Further
inquiry revealed that the GAD budget for the provision of special gift to senior citizens
during birthdays was erroneously budgeted for ₱15,000,000.00; the amount should have
been ₱10,000,000.00 only.

15.5 Review and evaluation of the GPB and the GAD AR for CY 2021 disclosed the
following deficiencies, to wit:

 Non-conduct of gender analysis of their programs and projects through the

administration of the Harmonized Gender and Development Guidelines (HGDG)
tool

15.6 PCW-DILG-DBM-NEDA JMC 2016-01 or the amendments to JMC No. 2013-01

provides that:

To gradually increase the gender-responsiveness of LGU programs and

projects, the LGU may attribute a portion or the whole of the program’s
budgets to the GAD budget supporting gender-responsive PPAs. To
facilitate this, the LGU shall conduct a gender analysis of their programs
and projects through the administration of the Harmonized Gender and
Development Guidelines (HGDG) tool using the appropriate design
checklist (HGDG Boxes 9-15, 18-23), the funding facilities checklist
(HGDG Box F1) or the generic checklist (HGDG Box 7a). The results of
the HGDG assessment together with the supporting documents (e.g.,
project proposal/brief) shall be attached to the GPB for submission.

15.7 It can be gleaned from the above table that almost all of the activities were
included in the regular programs to be implemented by and under the responsibilities of
the City’s offices such as Office of the Senior Citizen Affairs (OSCA), City Veterinary
Office (CVO), CHO, City Social Welfare Development Office (CSWDO) and Mayor’s
Office. Such PPAs are more likely to address the educational and social needs of the

74
City’s constituents but gender issues on these activities have not been clearly identified to
considerably qualify as charges against the GAD budget.

15.8 In determining what can be or cannot be charged to GAD budget, the primary
consideration is the gender issue being addressed by the expense or activity. If the gender
issue is clear, then the expense may be charged to the GAD budget.

15.9 As there was no assessment, the GPB was not accompanied by required
supporting documents on cost attribution. The Focal Person explained that the attribution
of GAD major PPAs was not subjected to the gender analysis using the HGDG tool
because of their unfamiliarity with the entire process, specifically on the accomplishment
of the HGDG checklists. They were not yet trained on the application of such gender
analysis tool.

15.10 Gender analysis is a process of gathering information on or investigating key

questions at the beginning of a planning process. It is a tool to (a) understand social
processes and respond with informed and equitable options; and (b) identify gender
issue/s and design strategies to address gender issues relevant to proposed/existing PPAs.

15.11 The omission of the GFPS to administer gender analysis using the HGDG tool
and to perform HGDG test during preparation of GPB has created doubt on whether the
amounts spent by the City for the projects amounting to ₱128,541,072.00 during CY
2021 are all gender-responsive and attributable to GAD.

 Unreported Realignment/Changes in the GPB to DILG

15.12 Section 6 of PCW-DILG-NEDA-DBM JC No. 2016-01 states that the LGUs

through their LCE shall inform the concerned DILG Office in writing if there are
changes in the DILG endorsed GPB and/or if there is a need to implement additional
PPAs relevant to current gender issues or GAD related undertakings. The concerned
DILG Office, in turn, shall acknowledge receipt of the adjusted GPB and shall inform the
LGU if the GAD PPAs or activities in the adjusted GPB are in accordance with the JMC,
as amended.

15.13 As mentioned above, there is a variance amounting to ₱89,910,000.00 between

the total budget per DILG endorsed GBP as compared to the information in the GAD AR,
details of which are shown in the succeeding table.

Reviewed GAD
PPAs GAD AR Variance
Budget
1. Provision of School Bags, Supplies
and Uniforms to public elementary ₱9,000,000.00 ₱0.00 ₱9,000,000.00
pupils
2. Provision of Tablet PC 0.00 92,500,000.00 (92,500,000.00)
3. Provision and Installation of Street
0.00 20,000,000.00 (20,000,000.00)
Lights
4. Purchase of COVID-19 Vaccines 0.00 40,000,000.00 (40,000,000.00)

75
 Reviewed GAD
PPAs GAD AR Variance
Budget
5.Construction of Multi-Purpose
6,000,000.00 0.00 6,000,000.00
Gymnasium Hall
6. Provision of Vegetable Seeds to farm
800,000.00 0.00 800,000.00
families
7. Purchase of necessary equipment and
500,000.00 0.00 500,000.00
supplies for birthing facilities
8. Health Promotion through Mother's
Class and advocacy to school authorities
450,000.00 0.00 450,000.00
to have more active physical activities in
school
9. Construction of Gapan City Hospital 50,000,000.00 0.00 50,000,000.00
10. Provision of Rice Allowance and
Groceries to all 4Ps families in the 15,840,000.00 0.00 15,840,000.00
locality
11. Installation of CCTV as part of
establishment of Gapan City Central 0.00 20,000,000.00 (20,000,000.00)
Command Center
Total ₱82,590,000.00 ₱172,500,000.00 ₱(89,910,000.00)

15.14 These noted discrepancies/changes in the DILG endorsed GPB were not relayed
to the concerned DILG Office in writing. The GAD Focal Person averred that they
verbally communicated the same to the said office, contrary to the regulation which
requires that the manner of transmitting information should be in writing.

15.15 As the City’s information was not acknowledged by the DILG, then the
prescribed review did not take place, therefore, there was no assurance that the changes
made in the GPB were in accord with the JC.

15.16 We recommended that the GFPS through the GAD Focal Person (a) continue
its efforts to improve gender mainstreaming to achieve full compliance with the
provisions of relevant laws and regulations; (b) employ the HGDG in the attribution
of costs of regular program/project to GAD; (c) inform the concerned DILG Office,
in writing, of changes introduced in the DILG-endorsed GPB; (d) ensure the
complete implementation of activities indicated in the GPB to maximize the
intervention in addressing gender-issues in the City; and (e) nominate the GFPS
members for seminars/trainings on gender analysis to familiarize themselves with
the process and employment of HGDG in the attribution of costs of regular
program/project to GAD.

Management’s comment:

15.17 The GAD Focal Person stated that the CY 2021 GPB passed the review and was
approved by the DILG. Nevertheless, he agreed that they will implement the audit
recommendation for CY 2023 GPB as the CY 2022 GPB was already prepared and
submitted. He further agreed that any revisions in their GPB will be reflected in the DILG
GAD portal and that the revisions made will be communicated, in writing. He also added
that they will inquire with DILG the availability of seminar/training on gender analysis.
76
Compliance with tax laws, rules and regulations

16. The City was able to comply with Bureau of Internal Revenue (BIR) Revenue
Regulation (RR) No. 02-1998 dated April 17, 1998 in the withholding of taxes
amounting to ₱34,786,699.47 during CY 2021 and was able to remit the amount of
₱32,426,675.55 for the same period in accordance with RR Nos. 1-2013 and 11-2018
dated January 23, 2013 and January 31, 2018, respectively; leaving an unremitted
balance of ₱2,360,023.92 as of year-end which pertains to the taxes withheld for the
month of December 2021.

16.1 BIR RR No. 02-1998 dated April 17, 1998, as amended, which prescribes the
rules and regulations to implement R.A. No. 8424 relative to the withholding on income
subject to the expanded withholding tax and final withholding tax, withholding of income
tax on compensation, withholding of creditable value-added tax and other percentage
taxes. It also provides that all government offices are constituted as withholding agents
for purposes of the creditable tax required to be withheld on income payments from
compensation, contractors, suppliers of goods and services. As withholding agents, they
are primarily liable for the remittance of taxes to the National Treasury through the BIR.

16.2 Also, Section 7 of RR No. 1-2013 provides the timing of filing of return and
payment of tax due on withholding taxes for compensation and withholding of creditable
value-added tax and other percentage taxes which is on or before the 10 th day following
the month in which withholding was made. Further, for taxes withheld at source, Section
5 of RR No. 11-2018 prescribes that the monthly and quarterly filing and payments shall
be made not later than every tenth (10 th) day of the following month and last day of the
month following the close of quarter during which the withholding was made,
respectively.

16.3 Our review of the subsidiary ledger of the Due to BIR account showed that the
City was able to withheld the amount of ₱34,786,699.47 in CY 2021 in compliance with
BIR RR No. 02-1998. The total amount remitted during the year amounted to
₱32,426,675.55 leaving an unremitted balance of ₱2,360,023.92 as of December 31, 2021
which pertains to taxes withheld for the month of December 2021, as shown in the below
table.

Amount
Due to BIR Total Due to Amount Due to BIR
CY 2021 withheld for
(beginning) BIR Remitted (ending)
the month

January ₱0.00 ₱880,236.83 ₱880,236.83 ₱0.00 ₱880,236.83

February 880,236.83 854,345.66 1,734,582.49 880,236.83 854,345.66
March 854,345.66 5,826,010.87 6,680,356.53 854,321.78 5,826,034.75
April 5,826,034.7 4,461,287.80 10,287,322.5 5,826,034.75 4,461,287.80
May 4,461,287.85 1,668,485.45 6,129,773.255 4,461,095.80 1,668,677.45
June 1,668,677.40 3,100,919.94 4,769,597.39 1,668,473.87 3,101,123.52
5
77
 Due to BIR Amount Total Due to Amount Due to BIR
CY 2021 withheld for
(beginning) BIR Remitted (ending)
the month
July 3,101,123.5 975,762.15 4,076,885.67 3,100,931.52 975,954.15
August 975,954.152 1,824,888.13 2,800,842.28 971,468.00 1,829,374.28
September 1,829,374.2 4,765,158.81 6,594,533.09 1,823,461.55 4,771,071.54
October 4,771,071.58 5,755,137.02 10,526,208.5 4,762,758.67 5,763,449.89
November 5,763,449.84 1,118,594.19 6,882,044.086 5,775,656.17 1,106,387.91
December 1,106,387.99 3,555,872.62 4,662,260.53 2,302,236.61 2,360,023.92
Total 1 ₱34,786,699.4 ₱32,426,675.5
7 5
16.4 We recommended that the LCE direct the Acting City Accountant and
Acting City Treasurer to continue complying with the BIR rules and regulations on
the withholding and remittance of taxes on compensation, value added taxes,
percentage taxes and expanded taxes from government money payments.

Compliance with R.A. No. 8291 or the GSIS Act of 1997

17. The City was able to comply with Section 6(b) of R.A. No. 8291, otherwise
known as the Government Service Insurance System (GSIS) Act of 1997 by
withholding trust liabilities of ₱46,974,144.41 and remitting the amount of
₱47,005,334.25 to the GSIS during the year; however, unreconciled balance of
₱1,071,011.15 was still noted which the Accounting Office has yet to settle as of
December 31, 2021.

17.1 Section 6(b) of R.A. No. 8291 otherwise known as the GSIS Act of 1997 requires
each employer to remit directly to the GSIS, the employees’ and employers’
contributions within the first ten (10) days of the calendar month following the month to
which the contributions apply.

17.2 Our review of the subsidiary ledger of the Due to GSIS account showed a balance
of ₱1,071,011.15 as of December 31, 2021. The total GSIS premiums and loan
amortizations withheld and the remitted amount to the System from January to December
2021 are itemized in the following table:

Amount
Due to GSIS Total Due to Due to GSIS
CY 2021 withheld for Remittances
(Beginning) GSIS (Ending)
the month

January ₱1,102,200.99 ₱3,800,009.72 ₱4,902,210.71 ₱3,681,423.56 ₱1,220,787.15

February 1,220,787.15 3,716,196.90 4,936,984.05 3,644,967.76 1,292,016.29
March 1,292,016.29 3,710,634.09 5,002,650.38 3,633,426.95 1,369,223.43
April 1,369,223.43 3,838,754.68 5,207,978.11 3,593,234.38 1,614,743.73
May 1,614,743.73 3,753,240.36 5,367,984.09 3,667,651.27 1,700,332.82
June 1,700,332.82 3,721,478.34 5,421,811.16 4,024,944.85 1,396,866.31

78
 Amount
Due to GSIS Total Due to Due to GSIS
CY 2021 withheld for Remittances
(Beginning) GSIS (Ending)
the month

July 1,396,866.31 4,105,471.38 5,502,337.69 4,022,889.85 1,479,447.84

August 1,479,447.84 4,025,811.06 5,505,258.90 4,055,370.16 1,449,888.74
September 1,449,888.74 4,058,378.06 5,508,266.80 4,330,033.38 1,178,233.42
October 1,178,233.42 4,072,759.95 5,250,993.37 3,800,973.19 1,450,020.18
November 1,450,020.18 4,076,734.84 5,526,755.02 4,061,069.67 1,465,685.35
December 1,465,685.35 4,094,675.03 5,560,360.38 4,489,349.23 1,071,011.15
Totals ₱43174134.69 ₱43323910.69

17.3 The foregoing information would show that remittances of the employer’s and
employees’ GSIS contributions and loan amortization were done on a monthly basis,
however, we noted that the such remittances did not tally with the withheld amounts.
Further verification disclosed that the balance as of year-end was not yet remitted as of
February 21, 2022.

17.4 According to the Acting City Accountant, the unremitted balances indeed
pertained to transactions of prior years and were carried over in the recent records. The
established discrepancies in the amount of monthly dues between the records of the City
and billing statement of the GSIS were caused by the introduction of accounts of newly
hired City employees in the system. Her office continuously conducts the reconciliation
of the accounts which decreased minimally the variance noted in the beginning of the
year. She further mentioned that the GSIS has already provided schedule of the
arrearages as of February 2022 which tallied with the records of her Office.

17.5 The same observation was also noted in prior year’s audit report. Despite its
previous commitment, the City has been short of attention to settle the variance
completely during CY 2021, thus this reiteration.

17.6 We recommended that the LCE direct the (a) Acting City Accountant to
reconcile the records affecting the Due to GSIS accounts and settle immediately the
established variance/difference which appears to be as City’s unremitted trust
liabilities; and (b) Acting City Accountant and Acting City Treasurer to further
improve their compliance on GSIS rules and regulations by having close supervision
for the immediate disposition of variance/difference between the monthly withheld
GSIS contributions and the corresponding remittances.

Compliance with R.A. No. 9679 or HDMF law of 2009

18. The City was compliant with R.A. No. 9679 or the Home Development Mutual
Fund (HDMF) Law of 2009, otherwise known as Pag-IBIG Fund in the withholding
and remittances of contributions and loan amortizations from compensation of

79
personnel together with the City’s share in the amount of ₱2,850,790.28; thus,
resulting in zero balance of Due to Pag-IBIG Fund as of December 31, 2021.

18.1 Section 3 of the IRR of R.A. No. 9679 or the HDMF Law of 2009 otherwise
known as Pag-IBIG Fund requires that:

All employers shall remit to the Fund their contributions and the
contributions of their covered employees as well as the latter’s loan
amortizations or payments to the Fund, as provided for under Section 2 of
this Rule, when applicable, within fifteen (15) days from the date the same
were collected unless another period is previously agreed upon between
the employer and the Fund, or within such periods as the Fund may
prescribe otherwise.

18.2 During CY 2021, the City withheld ₱2,850,790.28 from compensation of

personnel for Pag-IBIG contributions and loan amortizations together with the
City’s share and remitted the same amount leaving a zero unremitted balance as of
year-end. Summarized in the table below are the monthly transaction totals for the
Due to Pag-IBIG account.

Withheld
Due to Pag- Due to Pag-
including Total Due to
CY 2021 IBIG Remittances IBIG
government’s Pag-IBIG
(Beginning) (Ending)
share
January ₱0.00 ₱216,877.28 ₱216,877.28 ₱216,877.28 ₱0.00
February 0.00 219,495.23 219,495.23 219,165.60 329.63
March 329.63 219,964.34 220,293.97 225,156.35 (4,862.38)
April (4,862.38) 233,087.68 228,225.30 228,287.68 (62.38)
May (62.38) 227,109.20 227,046.82 226,709.20 337.62
June 337.62 279,169.33 279,506.95 281,569.33 (2,062.38)
July (2,062.38) 236,241.46 234,179.08 233,441.46 737.62
August 737.62 236,777.47 237,515.09 236,777.47 737.62
September 737.62 245,436.61 246,174.23 245,836.61 337.62
October 337.62 249,563.79 249,901.41 248,876.81 1,024.60
November 1,024.60 255,950.56 256,975.16 251,961.03 5,014.13
December 5,014.13 231,117.33 236,131.46 236,131.46 0.00
Totals ₱2633913 ₱2633913

18.3 We recommended that the LCE direct the Acting City Accountant and
Acting City Treasurer to continue complying with the R.A. No. 9679 or HDMF law
of 2009 on the withholding of contributions and loan amortizations from employees’
compensation together with the government’s share and its timely remittances to
HDMF.

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Compliance with R.A. No. 7875 as amended by R.A. Nos. 9241 and 10606 or the
National Health Insurance Act of 2013

19. The City was compliant with R.A. No. 7875 as amended by R.A. Nos. 9241 and
10606 or the National Health Insurance Act of 2013 in the withholding and
remittances of PhilHealth contributions from compensation of personnel together with
the City’s counterpart in the amount of ₱3,663,097.50; thus, resulting in zero balance
of Due to PhilHealth as of December 31, 2021.

19.1 R.A. No. 7875 as amended by R.A. Nos. 9241 and 10606 or the National Health
Insurance Act of 2013, prescribes that the member’s monthly contribution shall be
deducted and withheld automatically by the employer from the former’s salary, wage or
earnings. The employer’s counterpart in the payment of contribution shall not in any
manner be charged to the employee. The monthly premium contribution of employed
members shall be remitted by the employer on or before the date prescribed by the
Philippine Health Insurance Corporation (PHIC).

81
 19.2 During CY 2021, the City withheld ₱3,663,097.50 from compensation of
personnel for PhilHealth contributions together with the City’s counterpart and
remitted the same amount leaving a zero unremitted balance as of year-end.
Summarized in the table below are the monthly transaction totals for the Due to
PhilHealth account.

Withheld
Due to Due to
including Total Due to
CY 2021 PhilHealth Remittances PhilHealth
government’s PhilHealth
(Beginning) (Ending)
share
January ₱0.00 ₱290,689.83 ₱290,689.83 ₱0.00 ₱290,689.83
February 290,689.83 288,889.83 579579.66 290,689.83 288,889.83
March 288,889.83 288,342.24 577232.07 288,889.83 288,342.24
April 288,342.24 296,860.29 585202.53 288,651.66 296,550.87
May 296,550.87 304,268.85 600819.72 298,690.71 302,129.01
June 302,129.01 304,273.07 606402.08 303,395.70 303,006.38
July 303,006.38 322,846.71 625853.09 312,617.88 313,235.21
August 313,235.21 313,770.67 627005.88 313,235.22 313,770.66
September 313,770.66 313,770.66 627541.32 313,770.66 313,770.66
October 313,770.66 312,478.20 626248.86 314,933.70 311,315.16
November 311,315.16 315,842.55 627157.71 312,478.20 314,679.51
December 314,679.51 311,064.60 625744.11 625,744.11 0.00
Totals ₱3372407.670 ₱3663097.50

19.3 We recommended that the LCE direct the Acting City Accountant and
Acting City Treasurer to continue complying with the R.A. No. 7875 as amended by
R.A. Nos. 9241 and 10606 or the National Health Insurance Act of 2013 on the
withholding of contributions from employees’ compensation together with the
government’s share and its timely remittances to PHIC.

Unsettled Notice of Suspensions (NS)/Disallowances (NDs)

20. As of December 31, 2021, the total balance of unsettled audit disallowances and
suspensions of the City amounted to ₱49,477,891.67 and ₱229,960,236.80,
respectively.

20.1 COA Circular No. 2009-006 dated September 15, 2009 prescribes the use of the
Rules and Regulations on Settlement of Accounts (RRSA). Pursuant thereto, the Auditor
issues a Notice of Disallowance/Notice of Charge for differences resulting from the audit
of accounts, while a Notice of Suspension is issued pending compliance with various
requirements for transactions which may result to pecuniary loss to the government.

20.2 Presented as follows is the amount of suspensions, disallowances, charges as of

December 31, 2021:

82
 Beginning This Period
(January 1 to December 31, Ending Balance
Balance
Notice (As of December
(As of December 2021)
31, 2021)
31, 2020)
NS/ND/NC NSSDC

Notice of Suspension
₱229,960,236.80 ₱0.00 ₱0.00 ₱229,960,236.80

Notice of Disallowance 49,477,891.67 0.00 0.00 49,477,891.67

Notice of Charge 0.00 0.00 0.00 0.00

Total ₱0 ₱0.00 ₱0.00 ₱0

20.3 Of the total balance of disallowance of ₱49,477,891.67, the amount of

₱49,295,049.48 represents the Notice of Disallowances issued in CY 2015, as detailed in
the below table, pertaining to the cost deficiency, liquidated damages and unnecessary
item/cost for the Project: Design and Build Services of the Gapan City Town Center as
reported in the Technical Evaluation Report of Regional Technical Service, COA Region
III. The NDs were covered by a Petition for Review filed before the Commission Proper
after the appeal to COA Region III was denied.

ND No. ND Date Amount of ND Remarks

2015-001 February 24, 2015 ₱28,013,291.29 Cost deficiency in the project: Design and
Build Services for the Gapan City Town
Center
2015-002 February 24, 2015 11,701,634.68 Liquidated damages in the project: Design
and Build Services for the Gapan City
Town Center
2015-003 June 10, 2015 9,580,123.51 Unnecessary item/cost in the project:
Design and Build Services for the Gapan
City Town Center
Total ₱126283

20.4 During CY 2021, no settlements were reported by the accountable officials,

employees and private individuals and/or entities on the outstanding audit suspensions
and disallowances issued during CY 2020 and of prior years.

20.5 We recommended that the LCE direct the (a) accountable officials and
employees of the City to exercise due prudence in the disbursement of government
funds to avoid audit suspensions/disallowances; and (b) Acting City Accountant, in
coordination with City Legal Office, to (i) exhaust all possible means for the
collections/recovery of the disallowed transactions except the one on appeal from the
persons liable therefrom; and (ii) require the persons responsible for the immediate
settlement of the balances of audit suspensions through cash payments or
submission of lacking documents within the prescribed period before they mature
into audit disallowances.

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84