Annual Audit Report 2012

Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. 02
Tuguegarao City
ANNUAL AUDIT REPORT

on the
LAL-LO WATER DISTRICT
Lal-lo, Cagayan
For the Year Ended December 31, 2012

COMMISSION ON AUDIT
Regional Office No. II
Tuguegarao City, Cagayan
June 28, 2013

ENGR. JOSE JACOB S. MEDINACELLI
General Manager
Lal-lo Water District
Lal-lo, Cagayan
Dear Manager Medinacelli:
We are pleased to transmit our Annual Audit Report on the audit of Lal-lo Water
District for the calendar year 2012, in compliance with Section 43 of the Government
Auditing Code of the Philippines (PD 1445). The report was prepared by Atty. Kathleen C.
Bautista, Audit Team Leader and her team members under the supervision of Mr. Floricen T.
Unida, Supervising Auditor.
The attached report consists of the Independent Auditors Report, Financial
Statements, the Observations and Recommendations which were discussed with concerned
Management officials, the Status of Implementation of Prior Years Audit Recommendations
and Annexes. Attached to this letter is the Executive Summary which summarizes the entire
contents of this report for easy reference.
Among the significant observations discussed are as follows:
1. The validity of the Loans Payable account amounting to P41,582,639.43 as of
December 31, 2012 in the books of accounts cannot be ascertained due to the non
reconciliation of the balance in the general ledger with the balance per records of
the Local Water Utilities Administration (LWUA) having a discrepancy of
P11,303,922.09.
2. The District failed to compute depreciation on its depreciable assets amounting to
P14,307,417.04 in violation of Secs. 67 and 68 of the NGAS Manual and COA
Circular No. 2004-003, thus overstating asset accounts and understating expense
accounts presented in the financial statements.
3. The land donated by the LGU of Lal-lo where the plant and building and other
structures of the District are erected amounting to P5,524,649.99 and P504,838.08,
respectively, are not owned absolutely by the District due to the absence of
Transfer Certificate of Titles (TCTs), thus exposing the risk of divestment on the
possession of land.
4. The balance of Other Assets account of P966,842.01 was understated due to
failure of management to record unserviceable property in the amount of
P2,925,481.46 that is still recorded under the PPE account, contrary to Sec. 143 of
the National Government Accounting System (NGAS) Manual.
5. The validity of ownership of three (3) parcels of land purchased from 2004 to 2012
and recorded in the books of accounts amounting to P456,00.00 could not be
ascertained due to the absence of Transfer Certificate of Titles (TCTs) which is
contrary to Sec. 39 of Presidential Decree (PD) No. 1445.
We request a status report on the actions taken on the audit recommendations within
sixty (60) days from receipt of this report, pursuant to Section 91 of the General Provisions of
Republic Act 10155, otherwise known as the General Appropriations Act of 2012.
We express our appreciation for the valuable support and cooperation extended by the
officials and employees of that District to the Audit Team.
Very truly yours,
CC:
The Board of Directors

Lal-lo,Cagayan

COMMISSION ON AUDIT
April 30, 2013
Ms. EVELYN C. ABAD

Director IV
Commission on Audit
Regional Office No. 2
Tuguegarao City
Madam:
In compliance with Section 2, Article IX-D of the Philippine Constitution and
pertinent provisions of Presidential Decree No. 1445, we conducted an audit on the accounts
and operations of the Lal-lo Water District, Lal-lo, Cagayan for the year ended December 31,
2012.
The audit was conducted to ascertain the propriety of financial transactions and
compliance with prescribed rules and regulations. It was also made to ascertain the accuracy
of financial records and reports, as well as the fairness of the presentation of the financial
statements.
The attached report consists of four (4) parts: Part I- Financial Statements,
Part IIObservations and Recommendations, Part III-Status of Prior Years Audit
Recommendations and Part IV-Annexes. The observations and recommendations were
discussed with concerned management officials and employees in an exit conference held on
April 10, 2013. The management comments are included in the report, where appropriate.
We rendered a qualified opinion on the financial statements because these are not free
of material misstatements. The validity of the Loans Payable account amounting to
P41,582,639.43 as of December 31, 2012 in the books of accounts cannot be ascertained due
to the non reconciliation of the balance in the general ledger with the balance per records of
the Local Water Utilities Administration (LWUA) having a discrepancy of P11,303,922.09;
Likewise, the Districts assertion of validity, existence and correctness of its Property, Plant
and Equipment with a net book value of P40,739,873.95 could not be relied upon due to the
following reasons: 1. Failure to compute depreciation on its depreciable assets totaling to
P14,307,417.04, thus overstating asset accounts and understating expense accounts presented
in the financial statements; 2. The validity of ownership of the land where the plant and
building and other structures of the District are erected amounting to P5,524,649.99 and
P504,838.08, respectively, are not owned by the District due to absence of Transfer
Certificate of Titles (TCTs), thus exposing the risk of divestment on the possession of land; 3.
Other Assets account amounting to P966,842.01 was understated due to the failure of
management to record the amount of P2,925,481.46 worth of properties already unserviceable

but still recorded under the PPE account; 4. The land recorded in the books of the District
amounting to P456,000.00 could not be ascertained due to the absence of Transfer Certificate
of Titles (TCTs) in the name of the District.
Our audit was conducted in accordance with generally accepted auditing standards and
we believe that it provides reasonable bases for the results of audit.
Very truly yours,

COMMISSION ON AUDIT
April 11, 2013

Mr. FLORICEN T. UNIDA
Supervising Auditor
Audit Group H
Carig, Tuguegarao City, Cagayan
Sir:
In compliance with Section 2, Article IX-D of the Philippine Constitution and
pertinent sections of Presidential Decree No. 1445, we conducted a Financial and Compliance
Audit on the accounts and operations of the Lal-lo Water District for the year ended
December 31, 2012.
The audit was conducted to ascertain the propriety of financial transactions and
compliance of the agency to prescribed rules and regulations. It was also made to ascertain
the accuracy of financial records and reports, as well as the fairness of the presentation of the
financial statements.
The attached report consists of four (4) parts: Part I- Financial Statements,
Part II-Observations and Recommendations, Part III-Status of Prior Years Audit
Recommendations and Part IV- Annexes. The observations and recommendations were
discussed with concerned management officials and employees in an exit conference held on
April 8, 2013. The management comments are included in the report, where appropriate.
We rendered a qualified opinion on the financial statements because these are not free
of material misstatements. The validity of the Loans Payable account amounting to
P41,582,639.43 as of December 31, 2012 in the books of accounts cannot be ascertained due
to the non reconciliation of the balance in the general ledger with the balance per records of
the Local Water Utilities Administration (LWUA) having a discrepancy of P11,303,922.09;
Likewise, the Districts assertion of validity, existence and correctness of its Property, Plant
and Equipment with a net book value of P40,739,873.95 could not be relied upon due to the
following reasons: 1. Failure to compute depreciation on its depreciable assets totaling to
P14,307,417.04, thus overstating asset accounts and understating expense accounts presented
in the financial statements; 2. The validity of ownership of the land where the plant and
building and other structures of the District are erected amounting to P5,524,649.99 and
P504,838.08, respectively, are not owned by the District due to absence of Transfer
Certificate of Titles (TCTs), thus exposing the risk of divestment on the possession of land; 3.
Other Assets account amounting to P966,842.01 was understated due to the failure of
management to record the amount of P2,925,481.46 worth of properties already unserviceable
but still recorded under the PPE account; 4. The land recorded in the books of the District
amounting to P456,000.00 could not be ascertained due to the absence of Transfer Certificate
of Titles (TCTs) in the name of the District.
Our audit was conducted in accordance with generally accepted auditing standards and
we believe that it provides reasonable bases for the results of audit.
We acknowledge the cooperation extended to us by the Districts personnel, which
facilitated our audit.
Very truly yours,
EXECUTIVE SUMMARY
A. Highlights of Financial Information
The Water District of Lal-lo primarily derived its P6,643,078.20 operating revenues
for CY 2012 from services rendered to its concessionaires for water metered sales and other
service income. The agencys assets, liabilities and capital deficiency for the year were
P47.58million, P58.35 million, and (P10.77 million), respectively.
B. Operational Highlights
During the year, the district operating revenues increased by P925,936.94 due to the
increase number of concessionaires availing their services. The District is continuously
implementing the construction and expansion of its water system in order to extend and
improve their services in distant barangays of Lal-lo.
C. Scope of Audit
Financial and compliance audit were conducted on the accounts and operations of the
Lal-lo Water District for the year ended December 31, 2012. The audit consisted of review of
operating procedures, inspection of the principal programs and projects, interview of
concerned government officials and employees, verification, reconciliation and analysis of
accounts, and such other procedures considered necessary to ascertain the fairness of
presentation of the financial statements and compliance by the agency to laws, rules and
regulations.
D. Auditors Opinion on the Financial Statements
The auditor rendered a qualified opinion on the fairness of presentation of the financial
statements because these are not free of material misstatements. The validity of the Loans
Payable account amounting to P41,582,639.43 as of December 31, 2012 in the books of
accounts cannot be ascertained due to the non reconciliation of the balance in the general
ledger with the balance per records of the Local Water Utilities Administration (LWUA)
having a discrepancy of P11,303,922.09; Likewise, the Districts assertion of validity,
existence and correctness of its Property, Plant and Equipment with a net book value of
P40,739,873.95 could not be relied upon due to the following reasons: 1. Failure to compute
depreciation on its depreciable assets totaling to P14,307,417.04, thus overstating asset
accounts and understating expense accounts presented in the financial statements; 2. The
validity of ownership of the land where the plant and building and other structures of the
District are erected amounting to P5,524,649.99 and P504,838.08, respectively, are not
owned by the District due to absence of Transfer Certificate of Titles (TCTs), thus exposing
the risk of divestment on the possession of land; 3. Other Assets account amounting to
P966,842.01 was understated due to the failure of management to record the amount of
P2,925,481.46 worth of properties already unserviceable but still recorded under the PPE
account; 4. The land recorded in the books of the District amounting to P456,000.00 could
not be ascertained due to the absence of Transfer Certificate of Titles (TCTs) in the name of
the District.
E. Significant Observations and Recommendations

There are eight (8) audit observations and recommendations which were discussed
with management officials in an exit conference and their comments were incorporated in this
report where appropriate. The significant observations and recommendations are as follows:
1. The validity of the Loans Payable account amounting to P41,582,639.43 as of
December 31, 2012 in the books of accounts cannot be ascertained due to the non
reconciliation of the balance in the general ledger with the balance per records of
the Local Water Utilities Administration (LWUA) having a discrepancy of
P11,303,922.09.
We recommended that the Accounting Processor reconcile the difference between the
balance of the Loans Payable per book of the District and per LWUA record in order
to ascertain the correct amount of Long Term Loans and to reflect the appropriate
adjustments.
2. The District failed to compute depreciation on its depreciable assets amounting to
P14,307,417.04 in violation of Secs. 67 and 68 of the NGAS Manual and COA
Circular No. 2004-003, thus overstating asset accounts and understating expense
accounts presented in the financial statements.
We recommended that management comply strictly with the provisions prescribed in
the above cited guidelines on the computation of the depreciation of the depreciable
assets.
3. The land donated by the LGU of Lal-lo where the plant and building and other
structures of the District are erected amounting to P5,524,649.99 and
P504,838.08, respectively, are not owned absolutely by the District due to the
absence of Transfer Certificate of Titles (TCTs), thus exposing the risk of
divestment on the possession of land.
We recommended that management facilitate the titling of the two lots by assessing
the adequacy of documents that will support the data for titling. Prepare plans to
initiate activities on how to pursue complete titling process of the two (2) lots
promptly in order to have an absolute ownership of the land where the Districts plant
and building and other structures are constructed.
4. The balance of Other Assets account of P966,842.01 was understated due to
failure of management to record unserviceable property in the amount of
P2,925,481.46 that is still recorded under the PPE account, contrary to Sec. 143
of the National Government Accounting System (NGAS) Manual.
We recommended that management require the Senior Accounting Processor A to
immediately draw a Journal Entry Voucher to reclassify the unserviceable properties
from the PPE to Other Assets account.
5. The validity of ownership of three (3) parcels of land purchased from 2004 to
2012 and recorded in the books of accounts amounting to P456,00.00 could not be
ascertained due to the absence of Transfer Certificate of Titles (TCTs) which is
contrary to Sec. 39 of Presidential Decree (PD) No. 1445.
We recommended that management facilitate the titling of the three lots by assessing
the adequacy of documents that will support the data for titling. Prepare plans to
initiate activities on how to pursue complete titling process of the three lots promptly
in order to present the correct amount of its Land account recorded in the books of
accounts.
F. Status of Implementation of Prior Years Audit Recommendations
Monitoring and evaluation of the management action on the three (3) audit
recommendations contained in the CY 2011 Annual Audit Report disclosed that these
recommendations have been fully implemented.
G. Compliance with Tax Laws
Generally, the district complied with tax laws for calendar year 2012.
H. Compliance with Gender and Development
The agency did not appropriate five (5%) percent of its annual budget for 2012 for
GAD purposes which is not in compliance with the General Provisions of the General
Appropriations Act (GAA) for CY 2012, particularly Section 28 thereof, thereby
compromising the agencys mandate and capability to effectively address issues and promote
womens empowerment.
TABLE OF CONTENTS
Page
PART I- Financial Statements
Independent Auditors Report
Statement of Management Responsibility for the
Financial Statements
Condensed Balance Sheet
Condensed Statement of Income and Expenses
Condensed Statement of Cash Flows
Condensed Statement of Changes in Equity
Notes to Financial Statements
1
3
4
5
6
7
8
PART II - Observations and Recommendations

Financial and Compliance Audit
PART III- Status of Implementation of Prior Years Audit
Recommendations
PART IV- Annexes
Annex A - Detailed Balance Sheet
Annex B - Detailed Statement of Income and Expenses
Annex C Detailed Statement of Cash Flows
Annex D Detailed Statement of Changes in Equity
Annex E Schedule of Disbursements without
complete documentation
13
22
PART I - FINANCIAL STATEMENTS

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City, Philippines
INDEPENDENT AUDITORS REPORT
The Board of Directors
Lal-lo, Cagayan
We have audited the accompanying financial statements of Lal-lo Water District, Lal-lo,
Cagayan, which comprise the statement of financial position as of December 31, 2012 and
the statement of comprehensive income, statement of changes in equity and statement of cash
flows for the year then ended, and a summary of significant accounting policies and other
explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with State accounting principles, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Philippine Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the financial statements are free from material
misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessment, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Basis for Qualified Opinion
As discussed in our Observations and Recommendations, the validity of the Loans Payable
account amounting to P41,582,639.43 as of December 31, 2012 in the books of accounts
cannot be ascertained due to the non reconciliation of the balance in the general ledger with
the balance per records of the Local Water Utilities Administration (LWUA) having a
discrepancy of P11,303,922.09; Likewise, the Districts assertion of validity, existence and
correctness of its Property, Plant and Equipment with a net book value of P40,739,873.95
could not be relied upon due to the following reasons: 1. Failure to compute depreciation on
its depreciable assets totaling to P14,307,417.04, thus overstating asset accounts and
understating expense accounts presented in the financial statements; 2. The validity of
ownership of the land where the plant and building and other structures of the District are
erected amounting to P5,524,649.99 and P504,838.08, respectively, are not owned by the
District due to absence of Transfer Certificate of Titles (TCTs), thus exposing the risk of
divestment on the possession of land; 3. Other Assets account amounting to P966,842.01 was
understated due to the failure of management to record the amount of P2,925,481.46 worth of
properties already unserviceable but still recorded under the PPE account; 4. The land
recorded in the books of the District amounting to P456,000.00 could not be ascertained due
to the absence of Transfer Certificate of Titles (TCTs) in the name of the District.
Qualified Opinion
In our opinion, except for the effects on the financial statements on the matter referred to in
the preceding paragraph, the financial statements presents fairly, in all material respects, the
financial position of the Lal-lo Water District as at December 31, 2012 and of its financial
performance and its cash flows for the year then ended in accordance with State accounting
principles.
COMMISSION ON AUDIT
By:
April 22, 2013

2

Lal-lo, Cagayan
STATEMENT OF MANAGEMENTS RESPONSIBILITY

FOR THE FINANCIAL STATEMENTS
The management of Lal-lo Water District, Lal-lo, Cagayan is responsible for all
information and representations contained in the accompanying Balance Sheet as of
December 31, 2012 and the related statements of Income and Expenses and Cash Flow for
the year then ended. The financial statements have been prepared in conformity with rules and
regulations and generally accepted state accounting principles and reflect amounts that are
based on the best estimates and informed judgment of management with appropriate
consideration to materiality.
In this regard, management maintains a system of accounting and reporting which
provides the necessary internal controls to ensure that transactions are properly authorized and
recorded, assets are safeguard against unauthorized use or disposition and liabilities are
recognized.

Condensed Balance Sheet
As of December 31, 2012
(With corresponding figures for 2011)
2012
2011
Assets
Current assets
Cash (Note 5)
Receivables, net (Note 6)
Inventories (Note 7)
Prepayment and deferred charges
5,873,171.68
4,693,957.92
607,510.03
571,703.73
-
9,638,525.00
8,745,792.22
406,492.60
336,240.18
150,000.00
Non-current assets
Property, plant and equipment, net (Note 8)
Other asset
41,706,715.96
40,739,873.95
966,842.01
37,403,804.53
37,403,804.53
-
Total assets
47,579,887.64
47,042,329.53
58,345,638.01
18,024,716.08
40,320,921.93
52,960,248.72
11,377,609.29
41,582,639.43
(10,765,750.37)
(5,917,919.19)
Liabilities and equity

Liabilities
Current liabilities (Note 9)
Non-current liability (Note 10)
Equity
Total liabilities and equity
47,579,887.64
See Accompanying Notes to Financial Statements
47,042,329.53

Condensed Statement of Cash Flows
Year ended December 31, 2012
2012
2011
Cash flows from operating activities

Cash inflows
Cash outflows
Net cash provided by operating activities
6,985,701.76
(4,879,493.75)
2,106,208.01
6,225,143.74
(4,366,257.77)
1,858,885.97
Cash flows from investing activities

Cash inflows
Cash outflows
Net cash provided by investing activities
(5,108,042.31)
(5,108,042.31)
6,290.47
(5,505,055.71)
(5,498,765.24)
Cash inflows
Cash outflows
Net cash provided by financing activities
(1,050,000.00)
(1,050,000.00)
13,401,529.00
(2,400,000.00)
11,001,529.00
Net increase in cash and cash equivalent
(4,051,834.30)
7,361,649.73
8,745,792.22
1,384,142.49
Cash flows from financing activities
Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period
4,693,957.92
8,745,792.22

Condensed Statement of Changes in Equity
For the Year ended December 31, 2012
2012
Government equity, beginning of period

Additions (deductions)
Government equity, end of period
Donated capital, beginning of period

Donated capital, end of period
Retained earnings (deficit), beginning of period
Retained earnings (deficit), end of period
Total Equity
2011
15,468,397.61
405,500.00
15,873,897.61
8,345,834.11
7,122,563.50
15,468,397.61
(21,386,316.80)
(5,253,331.18)
(26,639,647.98)
(16,314,234.50)
(5,072,082.30)
(21,386,316.80)
(10,765,750.37) P
(5,917,919.19)

Condensed Statement of Income and Expenses
2012
Income
Business and service income (Note 11)

Other Income (Note 12)
Rebates
6,674,271.39
2011
P
6,643,078.20
40,728.03
(9,534.84)
Expenses
Personal services
Maintenance and other operating expenses
Financial expenses (Note 13)
Net Income (Loss)
5,701,287.65
55,790.93
(8,744.13)
11,212,859.25
10,285,033.30
2,333,603.83
2,981,777.81
5,897,477.61
2,280,685.53
2,672,956.83
5,331,390.94
(4,538,587.86)
See Accompanying Notes to Financial Statements
5,748,334.45
(4,536,698.85)
NOTES TO FINANCIAL STATEMENTS

CY 2012
1. Agency Background
1.1
The Lal-lo Water District (LWD) was created in early 1990s. However, it did not
attain its normal business operations and was abandoned due to unknown reasons.
Later, in April 2003, thru the initiative of Mayor Florante C. Pascual, together with
the Municipal Council, Lal-lo Water District was formed pursuant to Presidential
Decree No. 198 as amended.
1.2
The Districts Mission is TO MAKE QUALITY WATER ACCESSIBLE TO

EVERY LAL-LOQUENO and its Vision is TO PROMOTE GOOD HEALTH
AND SANITATION THROUGH POTABLE WATER SERVICE.
1.3
The programs and expansion were made and being taken by Lal-lo Water District
Board of Directors and management in partnership with LWUA so that water, which
is an essential part of life reach the taps of all if not majority of the people in the
service area of the municipality.
1.4 The district is categorized as a small water district. The Lal-lo Water District is
managed through policies formulated by its Board of Directors, in accordance with
the regulation imposed by the Local Water Utilities Administration, National
Government Agencies and other regulatory and oversight bodies.
2. Basis of Financial Statements
2.1
The water district adopts the Commercial Practices System- New Government
Accounting System (CPS-NGAS) Manual for Local Water District prescribed by the
Local Water Utilities Administration (LWUA). The Financial Statements were
presented using the chart of accounts in the CPS-NGAS.
3. Significant Accounting Policies

3.1
Accrual Basis of Accounting Expenses/Income are recognized when

incurred/realized and reported in the financial statements in the period to which they
relate. Payable accounts are likewise recognized and recorded in the books of
accounts only upon acceptance of the goods/inventory/other assets and rendition of
services to the agency.
3.2
Disbursement Procedure In recording expenditures, the Voucher System is

followed in which vouchers payable is credited prior to payment and debited when
paid.
8
3.3
First- In, First-Out Costing Method - Supplies and materials purchased for
inventory purposes are recorded at cost using the First-In, First-Out (FIFO) method.
3.4
Property, Plant and Equipment (PPE) Property, Plant and Equipment are
recorded at historical cost including installation, survey services, freight and other
incidental expenses incurred in the acquisition less accumulated depreciation.
Construction in progress account is used for all capital expenditures relating to the
implementation of project and shall be closed to proper account upon project
completion.
3.5
Method of Depreciation - the straight line method is used in the computation of

depreciation. A residual value equivalent to 10% is maintained before dividing the
cost by the estimated useful life.
4. Correction of Fundamental Errors

Errors of prior years are corrected by using the Prior Period Adjustment account and
eventually closed to Retained Earnings at year end. Errors affecting current year
operations are charged to the current years accounts.
5. Cash
5.1
This account is composed of the following:

Accounts
Cash on Hand
Working Fund
Cash in Bank (LBP-LWUA)
Cash in Bank (PNB, Bank Reserve)
Cash in Bank (Coop. Bank of Cagayan)
Cash in Bank (LBP-District)
Cash in Bank (PNB, Terminal Pay)
Cash in Bank (PNB, Loan Amortization)
Total
2012
P 16,065.93
5,000.00
2,916,447.57
544,584.35
70,973.98
360,635.98
180,106.77
600,143.34
P 4,693,957.92
2011
P
12,576.19
5,000.00
8,027,364.88
334,912.13
36720.07
329,218.95
0.00
0.00
P 8,745,792.22
5.2
Cash on Hand includes undeposited collections from water sales.
5.3
Working Fund represents amount set aside which is used for small expenditures.
Accounts Receivable
6.1
This account consist the following:
Accounts
Accounts Receivable Customers
Accounts Receivable Others
Total
Allowance for Doubtful Accounts
Receivables, net
6.2
6.3
2012
P 606,489.51
19,516.51
626,006.02
(18,495.99)
P 607,510.03
Accounts Receivable Customers account represents amount due from customers

for water sales.
Accounts Receivable - Others represents material service connection fees due from
customers.
Inventories
7.1
Accounts
Chemicals and Filtering Supplies Inventory
Other Inventories
Total
7.2
2011
P 390,979.32
22,585.51
413,564.83
(7,072.23)
P 406,492.60
2012
P 28,645.15
543,058.58
P 571,703.73
2011
P 5,973.45
330,266.73
P336,240.18
Other Inventories account consists of pipes, water meters and other materials used
for service connections.
Property, Plant and Equipment

8.1
This account is composed of the following:
Accounts
Land
Plant
Building and Other Structures
Office Equipment
Land Transport Equipment
Other Machinery and Equipment
Furniture and Fixture
Sub-total
Add: Construction Work in Progress
Less: Accumulated Depreciation
2012
P 456,000.00
38,285,440.38
1,949,493.11
201,676.35
114,550.00
6,536,661.82
63,983.50
47,607,805.16
145,355.00
7,013,286.21
P40,739,873.95
Property, Plant & Equipment, Net
10
2011
P
36,000.00
22,086,526.17
1,463,139.76
167,151.91
114,550.00
5,394,046.12
64,512.96
29,325,926.92
14,027,700.49
5,949,822.88
P37,403,804.53
8.2
The composition of Accumulated Depreciation is the following:

Accumulated Depreciation
Plant
Building and Other Structures
Office Equipment
Furniture and Fixture
Total
9
2012
P 4,503,030.30
297,021.55
133,205.09
15,258.77
2,034,147.77
30,622.73
P 7,013,286.21
2011
P3,877,934.83
253,127.36
112,743.74
2,179.84
1,677,007.25
26,829.86
P5,949,822.88
2012
P11,852,576.49
20,611.93
18,887.18
8,406.42
2,000.00
5,160.61
1,900.00
1,261,717.50
2011
P 8,535,012.00
19,947.82
27,016.04
1,995,827.00
1,581,400.64
3,113,375.17
9,825.14
148,855.00
752,675.70
10,257.41
36,873.32
P18,024,716.08
P11,377,609.29
Current Liabilities
9.1

Accounts
Interest Payable
Due to National Government Agencies
Due to GOCC (GSIS Payable)
Due to GOCC (GSIS Loans Payable)
Due to GOCC (HDMF Payable)
Due to GOCC (HDMF Loans Payable)
Due to GOCC (Philhealth Payable)
Current Portion on Long Term Debt-2012
Current Portion on Long Term Debt-balance of
Prior Years
Loan Penalty Payable
Deferred Tax Liability (Franchise Tax)
Other Payables
Total
9.2
Due to National Government Agencies represents taxes withheld from payroll and
from purchases of goods and services.
9.3
Other Payables consist the following:
Particulars
Materials received on account
Unpaid materials from supplier
Unpaid Officers & Employees benefits
Overpayment from customers
Total
2012
P
3,500.00
145,355.00
0.00
0.00
P 148,855.00
11
2011
P 19,310.00
0.00
17,530.00
33.32
P 36,873.32
10 Non Current Liabilities

This pertains to Loans Payable account which represents various loans received from
LWUA on various dates, with different terms and interest rates.
Particulars
2012
P41,582,639.43
(1,261,717.50)
0.00
P40,320,921.93
Long term debt

Current portion of long term debt -2012
Additional loan releases
Total
2011
P35,655,761.43
(920,269.00)
6,847,147.00
P41,582,639.43
11 Business and Service Income

This pertains to Generation, Transmission & Distribution Income which consist the
following:
Accounts
Metered Sales
Unmetered Sales
Miscellaneous Service Income
Penalty Charges
Total
2012
P 6,349,931.55
8,298.00
35,866.00
248,982.65
P 6,643,078.20
2011
P 5,434,455.87
6,125.00
40,544.00
220,162.78
P5,701,287.65
12 Other Income
Accounts
Interest Income
Others
Total
P
P
2012
6,844.83
33,883.20
40,728.03
2011
55,790.93
55,790.93
13 Financial Expenses
Accounts
2012
P3,395,825.00
2,500,962.61
690.00
P5,897,477.61
Interest expense
Loan Penalty Expenses
Bank Charges
Total
12
2011
P3,591,441.00
1,739,949.94
P5,331,390.94
PART II - OBSERVATIONS AND RECOMMENDATIONS
PART II - OBSERVATIONS AND RECOMMENDATIONS

Financial and Compliance Audit
Unreconciled balances of Loans Payable account between the books of accounts of
the District and LWUA records
1.
The validity of the Loans Payable account amounting to P41,582,639.43 as of

December 31, 2012 in the books of accounts cannot be ascertained due to the
non reconciliation of the balance in the general ledger with the balance per
records of the Local Water Utilities Administration (LWUA) having a
discrepancy of P11,303,922.09.
1.1
Section 111 (1) Presidential Decree (PD) No. 1445, otherwise known as the
Government Auditing Code of the Philippines provides:
Keeping of accounts. The accounts of the agency shall be kept in
such detail as is necessary to meet the needs of the agency and at the
same time be adequate to furnish the information needed by fiscal or
control agencies of the government.
1.2
Audit of Loans Payable Account showed that the balance as of

December 31, 2012 reflected in the general ledger of the District did not tally
with the balance as recorded in the LWUA books of accounts. The balance of
the said account in the books of the District totaled to P41,582,639.43 while,
the LWUA record totaled to P30,278,717.34, having a discrepancy of
P11,303,922.09. Hence, the accuracy of the Loans Payable account as of
December 31, 2012 cannot be ascertained, thereby affecting its fair
presentation in the financial statements.
1.3
The details of LWUA records are presented below:

Loan Account No.
4-2104
4 -2238
4-2445
Total
Loan Outstanding
P16,246,050.63
3,660,289.00
10,372,377.71
P 30,278,717.34
1.4
We recommended that the Accounting Processor reconcile the difference

between the balance of the Loans Payable per book of the District and per
LWUA record in order to ascertain the correct amount of Long Term
Loans and to reflect the appropriate adjustments.
1.5
Management agreed with the recommendation.

13
Failure to provide depreciation on its depreciable assets

2.
The District failed to compute depreciation on its depreciable assets in violation

of Secs. 67 and 68 of the NGAS Manual and COA Circular No. 2004-003,
thereby overstating the asset accounts and understating the expense accounts
presented in the financial statements.
2.1
Manual on National Government Accounting System, states that:

Sec. 67. Depreciation for Property, Plant and Equipment. The costs
of property, plant and equipment are allocated to the periods
benefited through the provision of accumulated depreciation.
Depreciation is the systematic and gradual allocation of the
depreciable amount of asset over its useful life.
Sec. 68. Method of Depreciation. Depreciation shall be computed
using the Straight Line Method. Depreciation shall start on the
second month of the purchase. A residual value equivalent to ten
percent of the cost shall be set.
2.2
COA Circular Letter No. 2004-003 dated October 4, 2004 provides:

2.0 Guidelines
2.1 For uniformity, government agencies shall be guided by the
revised estimated useful life of the PPE prescribed under Annex A of
COA Circular No. 2003-007 dated December 11, 2003. The
computation of the depreciation expense shall start on the following
month after the purchase/completion of the PPE, irrespective of the
date within the month.
2.2 The current and subsequent monthly depreciation expense shall
be computed as follows:
Monthly Depreciation
Expense
=
2.3
Carrying Amount-Residual Value

Remaining Useful Life
Carrying Amount shall be the cost minus the accumulated

depreciation
Residual Value shall be ten per cent (10%) of the cost
Remaining Useful Life shall be the revised useful life less the age
of the asset expressed in months
Review of the documents revealed that no depreciation was provided for its
depreciable assets listed on the next page that were completed on March 20,
14
2012, which is contrary to Secs. 67 and 68 of the NGAS Manual and COA
Circular No. 2004-003.
Description
Transmission and Distribution Mains
Well # 4 (Lower Magapit South)
Structure and Improvement(Lower
Magapit South)
Pumping Equipment-Generator Set
Lower Magapit
Pumping Equipment 3
Water
Treatment
Equipment
Chlorinator(Lower
Magapit
South)
Total
Cost
P
9,988,756.04
2,173,759.65
365,270.75
774,480.00
927,498.60
77,652.00
P14,307,417.04
2.4
The failure of management to provide depreciation expenses on depreciable

assets amounting to P14,307,417.04 resulted to overstatement of asset accounts
and understatement of expense accounts presented in the financial statements.
2.5
We recommended that management comply strictly with the provisions

prescribed in the above cited guidelines on the computation of the
depreciation of the depreciable assets in order to present fairly the
valuation and presentation of the affected PPE accounts on the financial
statements and the results of its operations.
.
2.6
Management committed to provide the corresponding depreciation of said

properties.
Donated land without Transfer Certificate of Titles

3.
The land donated by the LGU of Lal-lo where the plant and building and other
structures of the District are erected amounting to P5,524,649.99 and
absence of Transfer Certificate of Titles (TCTs), thus exposing the risk of
divestment on the possession of land.
3.1
Article 708 of the New Civil Code states that:

The Registry of Property has for its object the inscription or
annotation of acts and contracts relating to the ownership and other
rights over immovable property. Thus, ownership of real properties
like land shall be covered by a certificate of title as proof of
ownership. This legal requirement is to be observed in order to
15
ascertain that the land wherein the office building and other
structures are erected are legally owned by the District.
3.2
Sec. 76 of Presidential Decree 1445

Transfer of property between government agencies. Any
government property that is no longer serviceable or needed by the
agency to which it belongs may be transferred without cost or at an
appraised value, to other agencies of the government upon authority
of the respective heads of agencies in the national government, or
the governing bodies of Government Owned or Controlled
Corporations (GOCCs), other self governing boards or commission
or the government, or of the local legislative bodies for Local
Government Units (LGUs) concerned.
3.3
Verification of records disclosed that the land in which the Districts plant and
building and other structures are erected amounting to P5,524,649.99 and
absence of TCT. There is a risk that the costs of these structures will be put to
waste if the District will be divested of ownership rights to the land.
3.4
Management alleged that there are Deeds of Donation of the land where the
office building and other structures are located. However, management failed
to produce these Deeds, thereby belying their existence.
3.5
We recommended that management facilitate the titling of the two lots by

assessing the adequacy of documents that will support the data for titling.
Prepare plans to initiate activities on how to pursue complete titling
process of the two (2) lots promptly in order to have an absolute
ownership of the land where the Districts plant and building and other
structures are constructed.
3.6
Management agreed with the recommendation and they will coordinate

with the Local Government Unit of Lal-lo to facilitate the titling of land.
16
Unserviceable properties still recorded under PPE account instead of Other Assets
account
4.
The balance of Other Assets account of P966,842.01 in the Balance Sheet is

understated due to failure of management to record unserviceable properties in
the amount of P2,925,481.46 that are still recorded under the PPE account,
contrary to Sec. 143, Volume III of the National Government Accounting
System (NGAS) Manual.
4.1
Sec. 143, Volume III of the NGAS Manual provides:

Other Asset Account shall be used to record the value of obsolete
and unserviceable assets awaiting final disposition as well as those
assets still serviceable but are no longer being used.
4.2
Wells located inside and outside Cagayan State University amounting to

P2, 925,481.46, which have been proven unproductive in 2012, were still
recorded under the PPE account instead of the Other Assets account in
violation of the above mentioned provision.
4.3
As a result, the PPE account with a net book value of P40,739,873.95 as of

December 31, 2012 was overstated while the Other Assets account was
understated in the same amount of P2,925,481.46 due to the failure of the
management to reclassify it to the proper account.
4.4
We recommended that management require the Senior Accounting

Processor A to immediately draw a Journal Entry Voucher to reclassify
the unserviceable properties from the PPE to Other Assets account in
order to present fairly the affected accounts in the financial statements.
4.5
Management agreed to reclassify the unserviceable properties to Other

Asset account.
Purchased lots without Transfer Certificate of Titles totaling to P456,000.00

5.
The validity of ownership of three (3) parcels of land purchased from 2004 to
2012 and recorded in the books of accounts amounting to P456,00.00 could not
be ascertained due to the absence of Transfer Certificate of Titles (TCTs) which
is contrary to Sec. 39 of Presidential Decree (PD) No. 1445.
5.1 Sec. 39 of P.D. 1445 provides that:
(1) xxx
17
(2) In case of deeds to property purchased by any government

agency, the Commission shall require a certificate of title entered
in favor of the government or other evidence satisfactory to it that
the title is in the government
(3) It shall be the duty of the officials or employees concerned
including those in non-government entities under audit, or
affected in the audit of government and non-government entities,
to comply promptly with these requirements. Failure or refusal to
do so without justifiable cause shall constitute a ground for
administrative disciplinary action as well as for disallowing
permanently a claim under examination, assessing additional levy
or government share, or withholding or withdrawing government
funding or donations through the government.
5.2
Review of the documents showing ownership of the lands purchased by the

District disclosed that the following three (3) lots were not in the name of the
District, to wit:
Year
Location
Area
Acquisition Cost
Acquired
2004
Sta. Maria, Lal-o
240 sq.m.
2012
Magapit, Lal-lo
70sq.m.
140,000.00
2012
Catayauan, Lal-lo
400sq.m
280,000.00
Total
36,000.00
P 456,000.00
5.3
The Deeds of Sale were the only proof of ownership and basis in recording the
Land account in its books of accounts, which were presented by the District.
Management failed to transfer the purchased lots in the name of the District
because they believed that the Deeds of Sale were sufficient proofs of
ownership of the lots.
5.4
Moreover, the District has not paid the Tax Declarations of Real Property for
the two (2) parcels of land purchased in 2004 and 2012. Land conveyance is
effected through registration in the Registry of Land Titles and Deeds, which
has an office in every city and municipality.
5.5
Thus, ownership of the District over the three (3) parcels of land could not be
ascertained and ultimately renders the balance of the Land account presented in
the financial statements amounting to P456,000.00 as of December 31, 2012
unreliable.
18
5.6 We recommended that management facilitate the titling of the three lots
by assessing the adequacy of documents that will support the data for
titling. Prepare plans to initiate activities on how to pursue complete
titling process of the three lots promptly in order to present the correct
amount of its Land account recorded in the books of accounts.
5.7 Management agreed with the recommendation and they assured that they
will start to process the transfer of Titles this 2013.
Disbursements without complete documentation totaling to P69,223.63

6.
Payments of gasoline totaling to P69,223.63 were made without complete

documentation in violation of Section 4(6) of Presidential Decree No. 1445, thus
casting doubts as to the propriety of these disbursements.
6.1
Section 4(6) of the Presidential Decree No. 1445 states:

Claims against government funds shall be supported with complete
documentations.
6.2
In our audit of the disbursements of the District, we noted that payments to

ROC Shell Service Station for gasoline were not supported with complete
documentation such as Purchase Request and Purchase Order, thus, it cast
doubts as to the propriety of these disbursements. ( Annex E)
6.3
In our interview with the Accounting Processor, she explained that the District
is constantly procuring their gasoline at ROC Shell Service Station, hence, they
are no longer preparing Purchase Requests/ Orders and that only the official
receipts served as their supporting document for those payments.
6.4
We recommended that the District ensure that all disbursements be

supported with complete documentation pursuant to Section 4(6) of PD
1445.
6.5
Management agreed to implement the recommendation this 2013.
19
Procured IT Equipment erroneously recorded as Office Supplies

7.
Procurement of one (1) unit printer, surge protector and uninterrupted power
supply amounting to P 7,300.00 was erroneously recorded as Office Supplies
Expenses instead of IT Equipment, thus overstating the expenses and
understating the assets of the District of same amount in the Financial
Statements.
7.1
COA Circular No. 2004-02 dated April 29, 2004 prescribed the Chart
of Accounts under the New Government Accounting System (NGAS)
for use of Government-Owned and Controlled Corporation (GOCCs)
except government banks.
The account IT Equipment (207-01) under NGAS Chart of Accounts
provides the following description:
IT Equipment- is used to record the cost or appraised value of IT
equipment acquired purchased or developed. It also includes PCs to
more complex mainframes, IT peripheral equipment such as printers,
external devices for back up storage and similar items.
7.2
In our audit of the disbursements, we noted that the District procured one (1)
unit printer, surge protector and uninterrupted power supply amounting to P
7,300.00 which was erroneously recorded as Office Supplies Expenses instead
of IT Equipment, thus overstating the balances of said account and
understating the account IT-Equipment of the District presented in the
Financial Statements
7.3
We recommended that the Accounting Processor make an adjusting entry

to reclassify the affected accounts for fair presentation in the Financial
Statements.
7.4
Management agreed to prepare an adjusting entry to reclassify the

equipment to the proper account.
No appropriation for GAD purposes on the annual budget for 2012

8.
The agency did not appropriate five (5%) percent of its annual budget for 2012
for GAD purposes which is not in compliance with the General Provisions of
the General Appropriations Act (GAA) for CY 2012, particularly Section 28
thereof, thereby compromising the agencys mandate and capability to
effectively address issues and promote womens empowerment.
20
8.1
Sec. 28 of 2012 GAA. Programs/Projects Related to Gender and

Development.
All departments, bureaus, officers, agencies, SUCs, GOCCs, and
LGUs shall formulate a Gender and Development (GAD) Plan
design to address gender issues within the concerned sectors or
mandate and implement applicable provisions in the Convention on
the Elimination of All Forms of Discrimination Against Women, the
Beijing Platform for Action, the Millennium development Goals
(2000-2025), the Philippine Plan for Gender-Responsive
Development, (1195-2025), and the Framework Plan for Women.
The GADF Plan shall be integrated in the regular activities of the
agencies, which shall be at least five percent (5%) of their respective
budgets.
The development of GAD Plan shall proceed from the conduct
gender analysis, the generation and review of sex-disaggregated
data, and consultations with gender advocates and women clientele.
Its implementation shall contribute to poverty alleviation, the
economic empowerment especially of marginalized women, the
protection, promotion and fulfillment of womens human rights, and
the practice of gender-responsive governance. Utilization of the
GAD budget shall be evaluated based on the Gad performance
indicators indentified by said agencies. The preparation and
submission of annual GAD plans and annual GAD Accomplishment
Reports shall be guided by Joint Circular No. 2001-01 dated April 5,
2001 issued by the DBM, NEDA and Philippine Commission on
Women (formerly the National Commission on the Role of Filipino
Women), as well as other guidelines n GAD Planning and Budgeting
that may be issued by the appropriate agencies.
8.2
Verification disclosed that the District failed to appropriate five (5%) percent
of its annual budget for CY 2012 which is not in compliance with the General
Provisions of the General Appropriations Act (GAA) for CY 2012, particularly
Section 28 thereof, thereby compromising the capability to effectively address
gender issues and promote womens empowerment.
8.3
We recommended that the District prepare GAD Plan and allocate 5% of

its total budget for implementation.
8.4
Management agreed with the recommendation.
21
PART III - STATUS OF IMPLEMENTATION

OF PRIOR YEARS RECOMMENDATIONS
PART III - STATUS OF IMPLEMENTATION OF PRIOR YEARS

RECOMMENDATIONS
Management
Action
Audit Observation
/Recommendation
Ref.
1. The existence, accuracy and AAR

reliability of the Construction Work in 2011
Progress (CWIP) account amounting to
P14,027,700.49 is doubtful due to the
failure of management to substantiate
and
submit
the
documentary
requirements for the evaluation of
technical aspect of contracts required
under COA Memorandum No. 2005027 dated February 28, 2005.
Management
complied with the
recommendation.
Documentary
requirements
required were
submitted to
COA.
Status of
Implementation/
Reasons for
Partial/Non
Implementation
Implemented
We recommended that management

should comply with the requirements of
COA Memorandum No. 2005-027 dated
February 28, 2005 regarding the technical
aspect of contracts and should substantiate
the accuracy and existence of the CWIP
account amounting to P14,027,700.49 for
fair presentation in the financial
statements.
2. Various perfected contracts for the AAR

procurement
of
goods
and 2011
infrastructure projects of the District
were not submitted to the Office of the
Auditor within five (5) working days
after perfection of the contract in
violation of COA Circular No. 2009-01
dated February 12, 2009.
should comply with the requirements of
COA Circular No. 2009-01 dated
22
Management
complied with the
recommendation.
Implemented
February 12, 2009.

The timely
submission of government contracts,
purchase orders and
its supporting
documents will facilitate systematic and
effective review process and likewise, for
timely communicating to management the
defects and/or deficiencies found, if any.
3. The account Tax Credit (Debit) AAR
amounting
to P55,541.01 was 2011
erroneously classified as Accrued
Liabilities instead of Taxes, Duties and
Licenses in violation of COA Circular
No. 2004-02 dated April 29, 2004, thus,
overstating the liability account and
understating the expense account.
should draw the necessary journal voucher
to reclassify the accounts for fair
presentation of the Financial Statements
and in conformity with NGAS Chart of
Accounts prescribed under COA Circular
No. 2004-02 dated April 29, 2004.
23
Journal Voucher
was made to
reclassify the
accounts/
Implemented
24
Annex - A
Page 1 of 2

Detailed Balance Sheet
As of 'December 31, 2012
2012
2011
ASSETS AND OTHER DEBITS

CURRENT ASSETS
Cash
Cash- Collecting Officer
Working Fund
Payroll Fund
Cash in Bank- Local Currency
Total
Receivable Accounts
Accounts Receivable
Allowance for Doubtful Accounts
Accounts Receivable- Net
Total
Inventories
Chemicals and Filtering Supplies Inventory
Other Inventories
Total
Prepayments, Deposits and Deferred Charges
Other Deferred Charges
Total
TOTAL CURRENT ASSETS
16,065.93 P
5,000.00
4,672,891.99
4,693,957.92
12,576.19
5,000.00
8,728,216.03
8,745,792.22
626,006.02
(18,495.99)
607,510.03
607,510.03
413,564.83
(7,072.23)
406,492.60
406,492.60
28,645.15
543,058.58
571,703.73
5,973.45
330,266.73
336,240.18
5,873,171.68
150,000.00
150,000.00
9,638,525.00
456,000.00
36,000.00
456,000.00
36,000.00
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT
Land and Other Improvements
Land
Land Improvements
Accumulated Depreciation- Land Improvements
Total
Plant, Buildings and Structures
Plant (UPIS)
Accumulated Depreciation- Plant
Buildings and Other Structures
Accumulated Depreciation- Buildings and Other Structures
Total
Equipment and Machinery
Office Equipment
Accumulated Depreciation- Office Equipment
Accumulated Depreciation Land Transport Equipment
Accumulated Depreciation- Other Machinery and Equipment
Total
38,285,440.38
(4,503,030.30)
1,949,493.11
(297,021.55)
35,434,881.64
22,086,526.17
(3,877,934.83)
1,463,139.76
(253,127.36)
19,418,603.74
201,676.35
(133,205.09)
114,550.00
(15,258.77)
6,536,661.82
(2,034,147.77)
4,670,276.54
167,151.91
(112,743.74)
114,550.00
(2,179.84)
5,393,946.12
(1,676,907.25)
3,883,817.20
Annex - A
Page 2 of 2
Furniture, Fixtures and Books
Furniture and Fixtures
Accumulated Depreciation- Furniture and Fixtures
Books
Total
Construction-in-Progress
Construction-in-Progress- Plant
Total
TOTAL PROPERTY, PLANT AND EQUIPMENT
OTHER ASSETS
Other Assets
TOTAL OTHER ASSETS
TOTAL ASSETS AND OTHER DEBITS
63,983.50
(30,622.73)
64,512.96
(26,829.86)
33,360.77
37,683.10
145,355.00
145,355.00
40,739,873.95
14,027,700.49
14,027,700.49
37,403,804.53
966,842.01
966,842.01
47,579,887.64 P
47,042,329.53
LIABILITIES, EQUITY AND OTHER CREDIT ACCOUNTS

CURRENT LIABILITIES
Inter-Agency Payables
Due to National Government Agencies (BIR, etc.)
Due to Government Owned and/or Controlled Corporation
Due to Local Government Units (in-Lieu Share, etc.)
Total
Other Payables
Other Payables
Total
20,611.93 P
36,354.21
56,966.14
19,947.82
27,016.04
46,963.86
148,855.00
148,855.00
36,873.32
36,873.32
2,843,118.14
11,852,576.49
3,113,375.17
17,809,069.80
1,995,827.00
8,535,012.00
752,675.70
11,283,514.70
9,825.14
9,825.14
10,257.41
10,257.41
TOTAL CURRENT LIABILITIES
18,024,716.08
11,377,609.29
NON-CURRENT LIABILITIES
Loans Payable
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
40,320,921.93
40,320,921.93
58,345,638.01
41,582,639.43
41,582,639.43
52,960,248.72
Loans/ Lease Payable

Current Portion of Long-term Debt
Interest Payable
Loan Penalty Payable
Total
DEFERRED CREDITS
Deferred Tax Liability (Franchise Tax)
TOTAL DEFERRED CREDITS
EQUITY
Government Equity
Capital/Equity Reserve
Donated Capital (OPIC)
Retained Earnings
TOTAL EQUITY
TOTAL LIABILITIES, EQUITY AND OTHER CREDIT ACCOUNTS
15,873,897.61
(26,639,647.98)
(10,765,750.37)
47,579,887.64 P
15,468,397.61
(21,386,316.80)
(5,917,919.19)
47,042,329.53
Annex B
Page 1 of 2

Detailed Statement of Income and Expenses
2012
Business and Service Income:
Generation, Transmission and Distribution Income
Rent/Lease Income
Interest Income
Other Business and Service Income
Rebates
Total Business and Service Income
Less: Operating Expenses:
Operation Expenses:
Personal Services
Salaries and Wages
Personnel Economic Relief Allowance (PERA)
Representation Allowance
Transportation Allowance
Clothing and Uniform Allowance
Honoraria (Directors' Fees & Remunerations,etc)
Year-end Bonus
Overtime and Holiday Pay
Other Bonuses and Allowances
Life and Retirement Insurance Contributions
PAG-IBIG Contributions
PHILHEALTH Contributions
ECC Contributions
Other Personnel Benefit Contributions
Vacation and Sick Leave Benefits
Total Personal Services
6,643,078.20
6,844.83
33,883.20
(9,534.84)
6,674,271.39
1,501,885.00
120,000.00
48,000.00
48,000.00
25,000.00
187,156.00
84,822.50
21,735.84
60,000.00
121,789.80
6,000.00
11,150.00
6,000.00
2011
5,701,287.65
55,790.93
(8,744.13)
5,748,334.45
1,390,779.27
120,000.00
48,000.00
48,000.00
16,000.00
278,416.20
224,572.65
116,991.66
6,000.00
10,550.00
21,375.75
92,064.69
2,333,603.83
2,280,685.53
Annex B
Page 2 of 2
Other operations Expenses

Office Supplies Expense
Fuel, Oil and Lubricants Expenses
Travel Expenses
Training and Scholarship Expenses
Electricity
Postage and Deliveries
Telephone Expenses- Landline
Telephone Expenses- Mobile
Internet Expenses
Printing Expenses
Advertising, Promotional and Marketing Expenses
Taxes, Duties and Licenses
Representation Expenses
Generation, Transmission and Distribution Exp.
Extraordinary and Miscellaneous Expenses
Donations
Legal Services
General/Janitorial Services
Doubtful Accounts Expenses
Depreciation - Plant (UPIS)
Depreciation - Buildings and Other Structures
Depreciation - Office Equipment
Depreciation - Land Transport Equipment
Depreciation - Other Machinery and Equipment
Depreciation - Furniture and Fixtures
Other Maintenance and Operating Expenses
Total Other Operations Expenses
Total Operation Expenses
Maintenance Expenses:
Repairs and Maintenance - Plant (UPIS)
Repairs and Maintenance - Bldgs. & Other Struct.
Repairs and Maintenance - Office Equipment
Repairs and Maintenance - Land Transport Equip't
Repairs and Maintenance - Other Mach.and Equip't
Total Maintenance Expenses
Total Operation and Maintenance Expenses
Net Income Before Interest & Financial Charges
Bank Charges
Commitment Fees
Documentary Stamps Expenses
Interest Expenses
Loan Penalty Expenses
Net Income (Loss) for the Period
63,241.88
35,380.30
119,363.00
28,300.00
32,029.95
1,339.00
24,217.90
15,600.00
1,785.00
30,046.00
14,776.00
159,083.90
22,571.00
1,010,005.69
5,056.00
6,000.00
4,650.00
1,000.00
11,423.76
625,095.47
43,894.19
20,461.35
13,078.93
357,240.52
3,792.87
2,649,432.71
4,983,036.54
270,828.10
30,156.00
1,383.00
6,130.00
23,848.00
332,345.10
5,315,381.64
1,358,889.75
(690.00)
(3,395,825.00)
(2,500,962.61)
(4,538,587.86) P
91,175.75
91,210.30
79,514.00
16,100.00
515,670.55
32,509.96
14,400.00
11,424.00
112,843.51
24,206.00
79,985.00
11,400.00
1,500.00
7,072.23
723,484.16
139,849.54
20,479.06
2,179.84
281,804.71
3,605.54
55,541.01
2,315,955.16
4,596,640.69
270,618.83
10,318.20
39,008.40
319,945.43
4,916,586.12
794,692.09
(3,591,441.00)
(1,739,949.94)
(4,536,698.85)
Annex C
Page 1 of 1

Detailed Statement of Cash Flows
2012
Cash Flows from Operating Activities
Cash Inflows:
Collection of Water Bills
Collection of Other Revenues
Refund of overpayment of expenses and Cash Advances
Total Cash Inflows
Cash Outflows:
Payment of Operating Expenses:
Payroll
Fuel/Power for Pumping
Chemicals
Other Operation and Maintenance Expenses
Purchase of Supplies Inventory
Total Cash Outflows
Total Cash Provided (used) by Operating Activities
Cash Flows from Investing Activities:
Cash Inflows:
Proceeds from Short-Term Investments
Total Cash Inflows
Cash Outflows:
Purchase/construction of
UPIS
Total Cash Outflows
Total Cash Provided (Used) by Investing Activities
Cash Flows from Financing Activities
Cash Inflows:
Proceeds from Borrowings (Loans Payable)
Cash Outflows:
Cash Payment of interest on loans payable and other financial charges
Total Cash Provided (used) by Financing Activities
Cash Provided by Operating, Investing and Financing Activities
Add: Cash and Cash Equivalents - Beginning
Cash and Cash Equivalents, Ending
2011
6,978,539.11
7,162.65
6,985,701.76
(1,424,371.75)
(808,399.48)
(16,800.00)
(2,176,157.80)
(453,764.72)
(4,879,493.75)
2,106,208.01
(5,108,042.31)
(5,108,042.31)
(5,108,042.31)
5,593,311.73
619,575.01
12,257.00
6,225,143.74
(1,296,774.82)
(490,227.61)
(2,579,255.34)
(4,366,257.77)
1,858,885.97
6,290.47
6,290.47
(5,505,055.71)
(5,505,055.71)
(5,498,765.24)
13,401,529.00
(1,050,000.00)
(1,050,000.00)
(4,051,834.30)
8,745,792.22
4,693,957.92 P
(2,400,000.00)
11,001,529.00
7,361,649.73
1,384,142.49
8,745,792.22
Annex D
Page 1 of 1

Detailed Statement of Changes in Equity
2012
Government equity, beginning of period

Government equity, end of period
Donated capital, beginning of period

Donated capital, end of period
Retained earnings (deficit), beginning of period
Adjustments during the year
Net Income/( Loss)
Retained earnings (deficit), end of period
Total Equity
2011
15,468,397.61
405,500.00
15,873,897.61
8,345,834.11
7,122,563.50
15,468,397.61
(21,386,316.80)
(714,743.32)
(4,538,587.86)
(26,639,647.98)
(16,314,234.50)
(535,383.45)
(4,536,698.85)
(21,386,316.80)
(10,765,750.37) P
(5,917,919.19)
Annex E
Page 1 of 1
Lallo Water District
Schedule of fuel paid without complete supporting documents
January 31, 2012 to December 31, 2012
DATE
2012-01-19
2012-02-07
2012-02-21
2012-03-28
2012-03-20
2012-04-10
2012-05-25
2012-06-06
2012-06-11
2012-06-26
2012-08-22
2012-08-28
2012-09-19
2012-09-20
2012-09-28
2012-10-05
2012-10-17
2012-12-12
2012-12-28
TOTAL
PAYEE
ROC Shell Service Station
AMOUNT
4,116.56
2,271.56
5,860.59
3,346.22
4,060.26
3,814.96
4,226.53
3,359.25
3,818.62
5,400.66
3,855.33
815.62
2,674.12
3,987.37
3,639.87
1,538.87
5,241.37
3,194.43
4,001.44
69,223.63
*Payment of fuel for the generator set in Lower and Upper Magapit pumping Station.
**Payment of fuel for the generator set at pumphouse 2, 3 & 4 and gasoline for the district service.
***Payment of fuel for the service vehicle

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