EXECUTIVE SUMMARY

Auditee’s Information

With Presidential Decree No. 198 as the enabling law, the Koronadal Water District (KWD) was
created through the Municipality of Koronadal Sangguniang Bayan Resolution No. 92, Series of
1980 and was issued the Conditional Certificate of Conformance (CCC No. 156) by the Local
Water Utilities Administration (LWUA) on July 17, 1981. The mandates of the District are:

• To acquire, install, improve, maintain and operate water supply system for municipal uses
for domestic and industrial within the boundaries of the District;

• To consider the sanitation of water for a sufficient, safe and potable water source by
providing, maintaining and operating waste water collection treatment and disposal
facilities; and

• To conduct such other functions and operations incidental to water resource development,
utilization and disposal within the District, as are necessary or incidental to said purpose.

Koronadal Water District (KWD) was changed into the City of Koronadal Water District
(CKWD), by virtue of the Interim Board of Directors Resolution No. 26, series of 2008 in
consonance with the change in the “Municipality of Koronadal” to “City of Koronadal”.

CKWD is classified as “Category C” but is re-categorized as “B” effective July 2015. The
District is headed by General Manager Rey J. Vargas with the same set of Board of Directors as
follows:

Chairperson - Engr. Danilo B. Araquil

Education Sector (until December, 2022)
Vice-chairperson - Atty. Benjie G. Espinosa
Professional Sector (until April, 2024)
Secretary - Rosario E. Ruiz
Women Sector (until December 2022)
Members - Arch. Hermogenes M. Simbulan, Jr.
Civic Sector (until December 31, 2024)
- Engr. Jessie P. Cruz
Business Sector (December 2026)

Starting off with 135 employees in January, the District has 54 regular and 89 job orders
or a total of 139 workforces by the end of the year 2021 excluding those who were hired for specific
projects like the laborers for the expansion projects.

In the quest of further improvements in terms of customer service, and for the compliance
with MC 2016-1 issued by the Department of Budget and Management, City of Koronadal Water
District implemented its Quality Management System for ISO 9001:2015 and was duly certified
in November 2018. This accreditation will provide guidance and tools to the district to ensure that
services will consistently meet the customers’ requirements, and quality is consistently improved.

Audit Scope and Methodology

Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43 of the
Government Auditing Code of the Philippines (P.D. No. 1445), we have audited the accounts and
operations of the District covering the period January 1 to December 31, 2021.

The audit was conducted in accordance with the generally accepted state auditing standards,
and accordingly included such tests of the accounting records and other related documents and
evaluation of the design and operating effectiveness of the controls and such other procedures, as
necessary, in the audit.

The audit was conducted to (a) verify the level of assurance that may be placed on
management’s assertions on the financial statements; (b) recommend agency improvement
opportunities; and (c) determine the extent of implementation of prior years’ audit
recommendations.

Deficiencies observed in the course of the audit were earlier communicated through the
issuance of the Audit Observation Memoranda (AOMs) and discussed in the exit conference
conducted with concerned officials and personnel of the District whose comments are incorporated
in this report.

Financial Highlights

Comparative Financial Position

Particulars 2021 2020 Increase (Decrease) Percentage
Total Assets 432,666,383.85 380,514,575.60 52,151,807.75 13.71
Total Liabilities 89,821,089.22 75,263,850.51 14,557,238.71 19.34
Total Equity 342,845,294.63 305,250,725.09 37,594,569.54 12.32

Results of Operations
Particulars 2021 2020 Increase (Decrease) Percentage
Income 179,125,707.25 166,431,785.79 12,693,921.46 7.63
Expenses 142,351,772.05 125,244,256.08 17,107,515.97 13.66
Net Income (Loss) 36,773,935.20 41,187,529.71 (4,413,594.512) (10.72)

Opinion of the Auditor

The Auditor rendered a qualified opinion on the fairness of the presentation of the financial
statements.
Summary of Significant Observations and Recommendations

1. Cash advances amounting to ₱1.138 million were granted to officials other than the
Disbursing Officer.

We recommended that Management:

a. refrain from granting cash advances for the procurement of goods, services, salaries,
wages, honoraria and other similar payments, to personnel other than the designated
Disbursing Officer;

b. formally designate a Disbursing Officer/Special Disbursing Officer personnel before the

granting of cash advance other than for travel; and

c. strictly comply with the rules and regulations on the grant, utilization and liquidation of
cash advances to avoid the incurrence of similar irregular transactions in the future
which may result in disallowance.

2. Prepayments for insurance amounting to ₱0.564 million were not recognized at year-end.
In addition, registration for the motor vehicle was erroneously recorded as Insurance
Expenses instead of Taxes, Duties, and Licenses account.

We recommended that Management instruct the Accounting Unit to record expenses

relating to the year incurred using the proper account and set up the pertinent Prepaid
Insurance account to achieve fair presentation of the Financial Statements.

3. The recorded Accounts Payable amounting to ₱28.893 million is not supported with
delivery receipts or invoice/billing from the suppliers/contractors.

We recommended that Management require the submission of receipts/billings to support

the obligation of expenditures and ensure that all recorded payables are adequately
supported with these documents.

4. Due to Management's lack of action in settling disallowances, Receivables-

Disallowances/Charges totaling ₱172,592.75 remain unresolved beyond the prescribed
period.

We recommended that Management:

a. strictly monitor and enforce settlement of the disallowances in accordance with the
procedure outlined in COA Circular No. 2009-006's Rules and Regulations on
Settlement of Accounts (RRSA);

b. send demand letters to all the persons liable; and

 c. pursue all available collection methods from persons liable who are no longer associated
with the District

5. The District paid various monetary awards/incentives under its Program and Awards and
Incentives for Service Excellence (PRAISE) to its officials and employees totaling ₱8.81
million for CY 2021.

We recommended that Management:

a. Refrain from granting monetary PRAISE incentives without sufficient legal basis and
ensure that subsequent monetary cash incentives from PRAISE have supported the
computation of monetary savings generated out of suggestions, inventions, superior
accomplishments and other personal efforts by the individuals or groups and that
PRAISE incentives did not exceed 20 percent of the savings generated; and

b. Strengthen its on-the-spot awards which require minimal monetary incentives, practice
the grant of non-monetary awards, and institutionalize non-monetary rewards and
recognition programs.

6. The District did not conduct a periodic performance audit of water meters used by its
concessionaires.

We recommended that Management:

a. Develop written policies and procedures on Water Meter Calibration, Repair, and
Replacement Program and ensure that these are effectively and efficiently implemented;

b. Periodically conduct a performance audit of water meters used by concessionaires after

five years of utilization to ensure accuracy and performance efficiency following
LWUA MC No. 014-10; and

c. Request for accreditation of their Testing and Calibration Laboratory from PAB.

7. Usage and access of water from fire hydrants of the Bureau of Fire Protection (BFP) were
not adequately monitored and accounted for by the District. In addition, the District failed
to maintain Hydrant Record Cards under LWUA Operations and Maintenance Manual Item
7.5.3.4.f..

We recommended that Management:

a. Prepare Fire Hydrant Maintenance Program;

b. Update the Memorandum of Agreement (MOA) with the BFP indicating the possible
reimbursement on the cost of installation and operation of such fire protection facilities
as prescribed in Section 32 of PD 198;
 c. Conduct a regular meeting or discussion with the BFP about the Standard Operating
Procedures (SOP) in the usage of fire hydrants during fire incidents and also on the
irregular use and access of water from the fire hydrants; and

d. Establish regular monitoring of fire hydrants by requiring the concerned personnel to

maintain Hydrant Record Cards to record inspections, actual condition, and
maintenance needs.

8. The District has neither prepared nor implemented a Septage Management Plan.

We recommended that Management continuously coordinate with the Local Government

Unit of Koronadal and other stakeholders in the locality to expedite the formulation of a
sound and effective Septage Management Plan in its area of jurisdiction and for the
possible generation of additional fund sources for its proper implementation.

9. Insurable properties totaling ₱154.540 million were not insured with the General Insurance
Fund of the Government Service Insurance System (GSIS.

We recommended that Management:

a. Immediately insure its properties with the General Insurance Fund of GSIS; and

b. Submit the District’s duly accomplished Property Inventory Form (PIF) of all insurable
properties showing their latest appraised values/valuation to the Office of the
Supervising Auditor or the Audit Team Leader and the GIF of GSIS on or before April
30 of each year to be used as the basis for the assessment of the general insurance
coverage under COA Circular 2018-002.

10. Gender issues identified by the District were not adequately supported by proper analysis
of sex-disaggregated data (SDD) and other gender-related information.

We recommended that Management:

a. Improve the collection of sex data from its clients, as prescribed under PCW
Memorandum Circular No. 2014-05 and Part I, Third Edition of the Harmonized Gender
and Development Guidelines for Project Development, Implementation, Monitoring,
and Evaluation; and

b. Undertake personnel capacity development and backstopping, mechanisms that assure

the availability of relevant GAD data, and courses of actions that facilitate and exact
responsibilities for inclusive GAD planning, implementation and monitoring to
effectively and efficiently deliver the purpose of gender and development; and

c. Incorporate a GAD corner in the District’s official website, which shall disclose the City
of Koronadal Water District’s GAD Plans and Budgets, Accomplishment Reports, the
composition of its GAD Focal Point System (GFPS), other gender mainstreaming
 efforts, as well as the GAD Database, which will show the results of analysis of sex-
disaggregated data collected by the District from its employees and clients.

Status of Suspensions, Disallowances and Charges (in Philippine Peso)

The total audit suspension, disallowances and charges found in the audit of various
transactions of the agency, as of December 31, 2021 is ₱172,592.75, based on the Notice of
Suspension (NS)/Notice of Disallowance (ND)/Notice of Charge (NC) issued by this Commission,
as summarized hereunder:

Beginning This period January 1 to December Ending Balance

Balance as of 31, 2021 as of December
January 1, 2021 NS/ND/NC NSSDC 31, 2021
Notice of Suspension (NS) 0.00 0.00 0.00 0.00
Notice of Disallowance (ND) 172,592.75 0.00 0.00 172,592.75
Notice of Charge (NC) 0.00 0.00 0.00 0.00
Total 172,592.75 0.00 0.00 172,592.75

Status of Implementation of Prior Years’ Audit Recommendations

Of the twenty-one (21) prior years’ audit recommendations embodied in the 2020 Annual
Audit Report, six (6) have been fully implemented, twelve (12) have been partially implemented,
and three (3) were not yet implemented.