EXECUTIVE SUMMARY

INTRODUCTION

The City of Antipolo was converted into a component City of the Province of Rizal, pursuant
to Republic Act (RA) No. 8508 on April 4, 1998, as amended by RA No. 9232. The City of
Antipolo is divided into two districts, and under its territorial jurisdiction are 16 barangays.

The organizational structure of the City Government of Antipolo is as follows:

a. Key Officials

City Mayor - Hon. Andrea B. Ynares

Vice-Mayor - Hon. Josefina G. Gatlabayan

Members of the Sanggunian:

1st District Councilors 2nd District Councilors

Hon. Enrico C. De Guzman
Hon. Susana G. Say
Hon. Arnel M. Camacho
Hon. Christian Jay C. Tapales
Hon. Lemuel Marlowe G. Zapanta
Hon. Agnes G. Oldan-Gratil
Hon. Robert A. Altamirano, Jr
Hon. Filipe C. Pimentel
Hon. Philip Conrad M. Acop
Hon. Catalino M. Leyva
Hon. Irvin Paulo C. Tapales
Hon. Jesus Angelito Y. Huertas, Jr.
Hon. Edward R. O’Hara
Hon. Antonio O. Masangkay
Hon. Nixon R. Aranas
Hon. Alfred J. Zapanta

Sangguniang Kabataan (SK)

Federation President - Hon. Peter Arnold S. Papel, Jr.

President, Liga ng mga Barangay - Hon. Jonathan C. Salen

Officer-in-Charge, City Accountant - Mr. Dan Carlo M. San Gabriel

Officer-in-Charge, City Treasurer - Ms. Emilia M. Abella

b. No. of Personnel Complement

Elected 20
Permanent 832
Co-Terminous 61
Temporary 2
Contractual 314
Casual 610
Job Orders 1,902
Contract of Service 119
Total 3,860

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FINANCIAL HIGHLIGHTS

a. Comparative Financial Position:

b. Comparative Financial Position:

SCOPE OF AUDIT

Financial and compliance audits were conducted on the accounts and operations of the City
Government of Antipolo, Rizal for CY 2020. The audits were conducted to ascertain the
fairness of the presentation of the financial statements, determine compliance of the City
with laws, rules and regulations.

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AUDIT OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the fairness of the presentation of the financial
statements of the City of Antipolo, Rizal due to the following:

1. The accuracy of the balances of Property, Plant, and Equipment (PPE) accounts with
carrying amount of P5,509,618,679.14 is doubtful due to: (a) non-derecognition of the
cost of materials replaced on several properties, contrary to IPSAS 17; (b) unreconciled
Schedule of PPE and Report on the Physical Count of PPE (RPCPPE); (c) inaccurate
computation of depreciation; (d) non-provision of Residual Value of some PPEs; and (e)
abnormal/negative carrying amounts in the Schedule of PPE;

2. The Cash in Bank balances as of year-end are unreliable due to the error in recording
unearned interest income totaling P791,401.45 and the non recording of credit memo
amounting P3,976,366.00, contrary to Sections 74 and 111 of Presidential Decree (PD)
No. 1445 and Commission on Audit (COA) Circular No. 96-011 dated October 2, 1996,
resulting in a net understatement of P3,184,964.55;

3. The Construction in Progress amounting to P69,795,464.47 were not recorded in the

books of accounts, contrary to the accrual basis principle of International Public Sector
Accounting Standards (IPSAS) 1 and Section 111(2) of Presidential Decree (PD) No.
1445, thus resulted in the understatement of the Construction in Progress (CIP) and
Accounts Payable by the same amount. Moreover, the CIP account was not included in
the Report on the Physical Count of Property, Plant and Equipment (RPCPPE), contrary
to Section 57 of the Manual on the New Government Accounting System (MNGAS) for
Local Government Units (LGUs), Volume II, thus making the existence of the CIP
account recorded in the books doubtful;

4. The year-end balance of the Land account amounting to P685,777,799.99 is unreliable

due to: a) unreconciled amount of P21,466,558.66 between reported balance in the
Report on the Physical Count of Property, Plant and Equipment (RPCPPE) and
accounting records; and b) lack of Transfer Certificate of Title and/or other supporting
documents to prove ownership of the land, contrary to Section 57 of the Manual on the
New Government Accounting System (MNGAS) for Local Government Units (LGUs),
Volume II and Items 1 and 2, Section 111 of Presidential Decree (PD) No. 1445;

5. The Unserviceable properties accumulated from calendar years (CYs) 2016 to 2020 with
total carrying value of P45,428,743.74 were not yet disposed of, contrary to Section 79,
Presidential Decree (PD) No. 1445, thus resulted in the non-recognition of impairment
loss, further decrease salvage value and occupancy of the much-needed storage; and

6. The balances of Due to Officers and Employees and Accounts Payable of

P16,514,275.65 and P982,242,815.88, respectively, are doubtful because of (a)
dormant and long outstanding accounts payable, aged more than two years totaling
P15,785,981.66; (b) misclassification of accounts in the total amount of P77,920,464.35;
(c) negative/abnormal balances amounting to P213,793.64, contrary to the provisions of
Sections 98 and 111 of Presidential Decree (PD) No. 1445 and COA Circular No. 2015-
009 dated December 1, 2015.

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SIGNIFICANT AUDIT OBSERVATIONS AND RECOMMENDATIONS

For the exceptions cited above, we recommended that the City Mayor/Local Chief
Executive:

1. Direct the (a) OIC-City Accountant to coordinate with the City Engineer to identify and
reconcile the property, plant and equipment that have been improved, rehabilitated, and
repaired, then derecognized the amounts of asset equivalent to the replaced parts or
any other necessary adjustments, to comply with the Paragraph 85 of IPSAS 17; seek
the assistance of the City Engineering Office to identify the improved/replaced portion of
the City Hall Building and derecognize the cost of the improved/replaced parts.
Likewise, continue to reconcile, analyze and investigate, together with the General
Services Office, the other cause/s of discrepancies between the book balance and the
RPCPPE and make necessary adjustments, if warranted; review the Schedule of PPE
and draw a Journal Entry Voucher (JEV) to take up the adjustments in the Depreciation
Expense and Accumulated Depreciation accounts in the amount of P919,360.78 for the
PPE accounts affected as presented in Annex I, to fairly present the financial statements
in accordance with PAG 3 of IPSAS 17; provide residual value estimates to at least five
percent (5%) on the identified PPEs with no residual value provision in accordance with
PAG 6 of IPSAS 17 and exert efforts to locate documents and if turned futile, request for
authority to write-off the unreconciled/undocumented accounts without details by
following COA Circular 2020-006 on the “Guidelines and Procedures in the Conduct of
Physical Count of Property, Plant and Equipment (PPE), Recognition of PPE Items
Found at Station, and Disposition for Non-existing/Missing PPE Items, for the One-Time
Cleansing of PPE Account Balances of Government Agencies” to remove negative
balances that understates the gross amount of PPE; and (b) City General Services
Officer to coordinate with the Audit Team on the submission of documents necessary for
the Relief of Accountability applied for the burned City Library Building; and coordinate
with City Accounting Office (CAO) for the details of the unreconciled accounts and
subsequently, analyze and determine the other causes of difference between the books
and RPCPPE to ensure reconciliation of both accounting and property records.

2. Direct the OIC-City Accountant to base the computation of interest on the maturity dates
indicated in the Certificate of Time Deposits and record the earned interest only, instead
of the interest for the whole duration of the time deposit to ensure correct computation;
and to draw Journal Entry Voucher/s (JEVs) to adjust the recorded unearned interest in
the amount of P791,401.45 and the unrecorded credit memo amounting P3,976,366.00
for the collection from PhilHealth to fairly present the financial statements.

3. Direct the OIC-City Accountant to draw a JEV to record the unrecorded CIP with a debit
to CIP-Infrastructure Assets P31,431,464.47 and CIP-Buildings and Other Structures
P38,364,000.00 and credit Accounts Payable by P69,795,4646.47. Likewise, adjust the
erroneous entry in the CIP by debiting Repairs and Maintenance - Infrastructure Assets
and crediting CIP by the same amount of P10,738,612.76; henceforth, the Office of the
OIC-City Accountant and Office of the City Engineer to coordinate with each other to
compile the records/documents of all ongoing projects to facilitate recording of additions
and adjustments, under the appropriate asset accounts for fair presentation of financial
statement; and the General Services Office to henceforth, include Construction in
Progress account in the conduct of physical count of PPE and preparation of RPCPPE.
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4. Direct the (a) City General Services Officer to transfer the amount of P2,189,269.46 from
the land account to Road Network account; include the amount of P7,849,471.50
representing 15% expropriation deposit to the cost of the land; reconciliation of the
RPCPPE with Accounting records to ensure correct balances; exert effort to locate the
missing TCTs for verification/validation and submit to the Audit Team certified copies of
the same; and henceforth, ensure that the RPCPPE contains all the details of the
property specifically TCT Numbers for easy reference. And (b) OIC-City Accountant to:
assign personnel to gather documents and records relative to the P15,806,356.62
difference between the Schedule and GL balances. If exerting best efforts to locate the
documents and records prove futile, consider the write-off of accounts as prescribed
under COA Circular 2020-006 on the “Guidelines and Procedures in the Conduct of
Physical Count of Property, Plant and Equipment (PPE), Recognition of PPE Items
Found at Station, and Disposition for Non-existing/Missing PPE Items, for the One-Time
Cleansing of PPE Account Balances of Government Agencies.”

5. Direct the (a) City Accounting Office to exert more efforts in gathering documents and
records to expedite the verification activity to mobilize the disposal of unserviceable
properties and recognize the related impairment loss; and (b) City General Services
Office to coordinate with the Accounting Office to provide the needed
details/specifications in the IIRUP; and while waiting disposal, ensure that properties for
disposal are protected against the elements of nature to prevent further deterioration.

6. Instruct the OIC-City Accountant to conduct a thorough review and analysis of all
outstanding Accounts Payable and Due to Officers and Employees accounts and if
warranted, revert to the General Fund all dormant and long outstanding payables aged
two years and above pursuant to Section 98 of PD No. 1445; record the adjusting entries
by drawing a JEV to properly reclassify the accounts by Debiting Accounts Payable and
Due to Officers and Employees accounts by P75,187,673.37 and P2,732,790.98,
respectively and crediting the following accounts:

Other Payables P53,452,523.05

Leave Benefits Payable 13,115,158.06
Due to Officers and Employees 2,192,089.75
Accounts Payable 20,450.95
Due to NGAs 2,525,861.41
Due to NGOs/Pos 3,721,930.87
Due to GOCCs 920,639.75
Due to PhilHealth 5,000.00
Due to PagIbig 159,450.00
Due to GSIS 194,630.79
Due to LGUs 1,612,729.72
Total P77,920,464.35

and exert efforts to locate documents and records relative to the negative/abnormal
balance in order to determine the cause of the negative balances and initiate
corrections/adjustments to fairly present the financial statements.

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The following are the other significant observations and recommendations:

1. The validity and propriety of disbursements of fund transfers from the Office of the
President (OP) and Department of Social and Welfare and Development (DSWD) to the
City for the implementation of COVID-19 projects with a total amount of
P604,754,500.00, could not be readily ascertained due to lack or non-submission of
pertinent documents as required under Section 4(6) of Presidential Decree (PD) No.
1445.

We recommended that the City Mayor instruct the:

a. City Social Welfare and Development (CSWD) Office as well as the Procurement
Office to immediately prepare and submit to the Audit Team all the required
documents specifically the distribution list for the food items and the Barangay
Certification of beneficiaries’ residency and valid Identification card with signature
(Annex V) for the SAP distribution as required under Section 4(6) of PD No. 1445, to
readily ascertain the propriety of the distribution of the SAP.

b. CSWD Office together with other concerned offices to formulate clear guidelines in
the determination of the amount of financial assistance, specifically for burial to come
out with a uniform rate to avoid subjective evaluation in the determination of the
amount of financial assistance.

2. The City failed to submit the Summary/List of Donations Received, Distributed and
Balances of COVID-19 related donations received to the National Disaster Risk
Reduction and Management (NDRRM) Council, through the Office of the Civil Defense
(OCD), as required under COA Circular No. 2014-002 dated April 15, 2014 and COA
Circular No. 2020-009 dated April 21, 2020.

We recommended and Management agreed that the Local Chief Executive direct the
OIC-City Social Welfare and Development Office to:

a) prepare the Summary/List of Donations Received, Distributed and Balances as well

as the required one-time report for in-kind donations and submit to the NDRRM
Council, through the OCD, copy furnished the audit team; and

b) ensure proper monitoring of all donations in-kind received from all sources by
maintaining separate records of receipts and issuance/distribution thereof.

3. The City Government realigned the amount of P25,515,631.03 from the 20%
Development Fund (DF) intended for the purchase of medical equipment which could
have boosted the City’s capacity to address the COVID-19 pandemic, thus defeating the
purpose of Republic Act (RA) No. 11494 and Department of Budget and Management/
Department of Finance/Department of Interior and Local Government (DBM/DOF/DILG)
Joint Memorandum Circular (JMC) No. 2 to the detriment of the intended beneficiaries.

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 We recommended that the Local Chief Executive direct the City Planning and
Development Officer to henceforth:

a. properly plan the projects to be executed that are responsive to the needs of time
especially during pandemic; and

b. observe proper timing and planning in the realignment of infrastructure projects to

ensure timely implementation of projects. Timelines in the application of the
necessary permits should be considered in project planning.

4. The mandatory bonding requirement of every accountable officer of the City was not
strictly adhered to, contrary to Section 4.2 of Treasury Circular No. 02-009 dated August
6, 2009, thus government funds and properties were not adequately protected against
possible loss or pilferage.

We recommended that the City Mayor instruct the OIC-City Treasurer to ensure that all
accountable officers of the City be properly bonded pursuant to the provisions of
Treasury Circular No. 02-2009.

5. The City’s Procurement Monitoring Report (PMR) was not prepared and submitted to the
Government Procurement Policy Board (GPPB), as required under Section 12.2 of the
Revised Implementing Rules and Regulations (RIRR) of Republic Act (RA) No. 9184 and
GPPB Resolution No. 11-2020, thus deprived the Head of the Procuring Entity (HoPE)
and other stakeholders of relevant data to foster transparency and further improve the
procurement process of the City. Moreover, the PMR was not posted in the City’s
website contrary to Section 1 of Executive Order (EO) No. 662, s. 2007, as amended.

We recommended that the City Mayor direct the BAC to prepare and submit the required
PMR pursuant to Section 12.2 of the RIRR of RA No. 9184 and GPPB Resolution No.
11-2020 and post in the website of the City as prescribed under Section 1 of EO No.
662, s. 2007, as amended.

6. Observers were not notified by the Bids and Award Committee (BAC) on the bid
evaluation and post-qualification procurement activities, contrary to Section 13.1 of the
Revised Implementing Rules and Regulations (RIRR) of Republic Act (RA) No. 9184,
thus, the objective of the law to foster transparency in the procurement process was not
achieved.

We recommended that the BAC strictly comply with the requirement of invitation in all
stages of procurement to enhance transparency in the procurement process of the City
as intended by law.

7. The amount of P20,393,090.99 was allocated from the Special Education Fund (SEF)
budget for utilities of public schools despite the availability of counterpart fund from the
Department of Education (DepEd), in violation of Section 4.1 of Department of
Education/Department of Budget and Management/Department of Interior and Local
Government (DECS/DBM/DILG) Joint Circular No. 1, s. 2017 dated January 19, 2017 to
the detriment of the intended students beneficiaries.

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 We recommended that the Local School Board consider the budget of the City Division
Office, DepEd in the preparation of the SEF budget to ensure that the SEF budget
during the year should be net of CDO budget pursuant to Section 4.1 of the
DECS/DBM/DILG Joint Circular No. 1, s. 2017.

8. Laxity in the collection of rentals and enforcement of penalties and sanctions against
defaulting stallholders as provided in the Contract of Lease to the disadvantage of the
City Government. Moreover, the payment of power and water bills were likewise not
imposed and monitored while the unpaid bills were not taken up in the books as
receivables.

We recommended and Management agreed that the City Mayor require the OIC-City
Economic Enterprise Office to:

a. enforce the provision of the contract on the timely payment of rent and the imposition
of penalties and surcharges. Any moratorium/relaxation of payment should be
documented and approved by the City Mayor;

b. send demand letters to all stall owners with overdue accounts including power and
water bills, if no moratorium; and

c. maintain records for each stall/unit owners for the monitoring of payments and
submit record of monthly receivables to the Accounting Office for the recording in the
books of accounts.

9. The year-end balances of the Due to BIR, Due to GSIS, Due to Pag-IBIG and Due to
PhilHealth accounts of P18,174,152.23, P16,542,153.50, P3,199,341.23, and
P2,832,113.20, respectively, were not remitted in full within the period prescribed by
regulations, thus, may result in payment of interests, penalties and surcharges, deprived
the government of the immediate use of tax money and, non-granting of benefits to the
City’s personnel.

We reiterated our recommendation and Management agreed that the City Mayor require
the OIC-City Accountant to:

a. assign personnel to work specifically on reconciliation. Coordinate with the Human

Resource Office on the possibility of available records related to the refund of BIR
contribution. Likewise, prioritize the reconciliation of the accounts Due to BIR, GSIS,
Pag-IBIG and PhilHealth to identify the status/composition and other details of the
unremitted balance and remit immediately to the various agencies, if warranted;

b. make representations with the concerned officials of the GSIS, BIR, Pag-IBIG Fund
and PhilHealth as regards the settlement of the prior years’ unremitted withheld
taxes/contributions/payments to avoid the imposition of interests, surcharges and
penalties; and

c. henceforth, strictly adhere with the prescribed period of remittances of the withheld
taxes, contributions/loan payments to the various agencies to avoid the payment of

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 interests, surcharges and penalties and the non-granting of loans and/or benefits to
the City officials and employees.

10. The Gender and Development Plans/Programs/Activities (GAD PPAs) of the City
Government for CY 2020 with a total budget of P288,526,263.12 were either partially or
not implemented at all, contrary to Section 4.1 C.1(1) of Philippine Commission on
Women (PCW), Department of Interior and Local Government (DILG), Department of
Budget and Management (DBM) and National Economic Development Authority (NEDA)
Joint Memorandum Circular (JMC) No. 2013-01, as amended by PCW-DILG-DBM-
NEDA JMC No. 2016-01 dated January 1, 2016, thus resulting in the inability of the City
to maximize the benefits which could have been derived therefrom by the identified men
and women beneficiaries.

We recommended that Management revisit its GAD PPAs, providing more attention and
study on how to maximize the utilization of the GAD fund in order to attain the objectives
for which the funds is intended especially during pandemic.

11. The Emergency Operations Center Building II with a total project cost of
P103,270,875.00 was still not implemented despite being programmed in 2019 which if
implemented could further improve the disaster response and preparedness of the City
especially during pandemic.

We recommended that the City Mayor require the City Engineering Office and the City
Disaster and Risk Reduction Management Office (CDRRMO) to:

a. explore all avenues to relocate the illegal settlers in the proposed site; or
b. consider the possibility of other project sites to ensure project implementation sites;
and
c. henceforth conduct feasibility study first before finalizing project proposals
specifically on the proposed site to avoid delay in project implementation.

UNSETTLED SUSPENSIONS, DISALLOWANCES AND CHARGES

Audit Suspensions of P23,901,213.21 and Audit Disallowances of P27,889,696.42

remained unsettled as of year-end, with details shown below:

Balance as Balance as
December 31, December 31,
2019 Issued Settlement 2020
Notice of Suspension P23,901,213.21 P0.00 P0.00 P23,901,213.21
Notice of Disallowance 27,972,045.63 0.00 82,349.21 27,889,696.42
Total P51,873,258.84 P0.00 P82,349.21 P51,790,909.63

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STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS

Of the 44 prior years’ audit recommendations embodied in the Calendar Year (CY) 2019
and Prior Year’s Annual Audit Reports (AAR), 26 were fully implemented, 11 were partially
implemented and the remaining seven were not implemented by the City Government of
Antipolo.