EXECUTIVE SUMMARY

Introduction

The City of Dasmariñas, Cavite was created by virtue of Republic Act (RA) No.
9723 dated October 15, 2009 and was ratified and approved on November 26, 2009 in a
plebiscite held on November 25, 2009. The City is composed of 75 barangays. It is a
lone congressional district of the Province of Cavite.

The consolidated financial statements of the City for the Fiscal Year 2016 have
been prepared in accordance with and comply with the Philippine Public Sector
Accounting Standards (PPSAS). The consolidated financial statements are presented in
pesos, which is the functional and reporting currency of the City. The Accounting
policies have been applied starting the Calendar Year (CY) 2015.

The Organizational Structure of the City is as follows:

a. Key Officials

City Mayor : Hon. Elpidio F. Barzaga, Jr.

City Vice-Mayor : Hon. Raul Rex D. Mangubat
Members of the Sanggunian:
1. Hon. Reynaldo C. Canaynay
2. Hon. Resty M. Encabo
3. Hon. Roderick M. Atienza
4. Hon. Martin John T. Reyes
5. Hon. Nickanor N. Austria, Jr.
6. Hon. Fulgencio C. Dela Cuesta, Jr.
7. Hon. Teofilo F. Campano
8. Hon. Tagumpay P. Tapawan
9. Hon. Angelo C. Hugo
10. Hon. Aquino I. Garcia
11. Hon. Ertic S. Aledia
12. Hon. Mamerto B. Noora, Jr.
13. Hon. Ramiro Mabini L. Podaca
City Accountant : Ma. Teresa L. Mendoza
City Treasurer : Ramon G. Llacer

b. No. of Personnel Complement

Permanent : 555
Temporary : 5
Contractual : 1,123
Elective Officials : 15
Coterminous : 35
Total 1,733

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Financial Highlights

For CY 2016, the City generated a total income of P2,115,411,143.79, from local
taxes, permits and licenses, service and business income, internal revenue allotment and
other receipts which is higher by P273,157,243.75 from last year’s income of
P1,842,253,900.04 The total funds utilized for the year amounted to P1,668,535,110.27
out of the current and continuing appropriations of P2,907,829,581.52.

The Total Assets, Liabilities, Equity, Income and Expenses for CY 2016 are as
follows:

2016 2015 Increase/Decrease

Assets P 5,285,914,951 P 4,333,312,411 P 952,602,540

Liabilities 797,546,291 678,219,284 119,270,007
Equity 4,488,368,660 3,655,093,127 833,275,533
Income 2,115,411,144 1,842,253,900 273,157,244
Expenses 1,330,084,870 1,157,149,429 172,935,441

Scope of Audit

Financial, compliance and value for money audits were conducted on the accounts
and operations of the City for CY 2016. The audit was conducted to ascertain the
fairness of the presentation of the financial statements and compliance of the City with
laws, rules and regulations, as well as the economical, efficient and effective utilization
of resources.

Audit Opinion on the Financial Statements

We rendered a qualified opinion on the fairness of the presentation of the finan-

cial statements based on the following:

1. The reported balances of Property, Plant and Equipment (PPE) accounts with
net amount of P2,912,046,849.30, representing 55.09% of the total assets of
P5,285,914,951.15 as of year-end, were unreliable due to a discrepancy of
P143,656,603.86 between the Accounting records and the Report on the Phys-
ical Count of Property, Plant, and Equipment (RPCPPE), contrary to Section
114 of the Manual on the New Government Accounting System (MNGAS),
Volume I.

2. The Real Property Tax (RPT) and Special Education Tax (SET) Receivables
of P232,271,615.00 each or a total of P464,543,230.00 set at the beginning of
the year were still based on estimates due to inaccurate information generated
by the Real Property Tax Administration System (RPTAS), contrary to Sec-
tion 20 of the Manual on the New Government Accounting System

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 (MNGAS), Volume I, thus affecting the reliability of the year-end balances of
the RPT and SET Receivables and Deferred Real Property Tax and Special
Education Tax Income (now Deferred Real Property Tax and Special Educa-
tion Tax per PPSAS).

3. The City failed to transfer to Trust Liability-DRRMF-MOOE in the Trust

Fund books and to fully disclose in the Notes to Financial Statements the un-
expended/unobligated balance of DRRMF-MOOE for CYs 2016 and 2015 to-
taling P20,199,774.64, resulting in understatement of the DRRMF-MOOE in
the Trust Fund books and overstatement of Due to Other Funds in the General
Fund books. Moreover, the accounting and reporting of the Local Disaster
Risk Reduction and Management Fund (LDRRMF) by the City did not con-
form to the guidelines prescribed under COA Circular Nos. 2012-002 and
2014-002, thus affecting the proper evaluation and monitoring of its programs,
projects and activities and the adequacy of information on the unexpended
balances of the fund in the financial statements.

4. Accumulated rental and other market fees totaling P22,292,917.32 remained

uncollected and unrecorded as of December 31, 2016, thus depriving the City
of additional funds that can be used in its operations and understatement of re-
ceivables.

Significant Observations and Recommendations

For the exceptions cited above:

1. We recommended that the City Mayor direct the:

a. City Accountant and the General Services Officer to analyze and reconcile
the discrepancy of P143,656,603.86 between the Accounting records and
the RPCPPE and make the necessary adjustments;

b. City Accountant to maintain Property, Plant and Equipment Ledger Cards

(PPELC) and Real Property Ledger Cards (RPLC) for individual property
item owned by the City for reconciliation with the General Ledger and
property records;

c. City Accountant and the General Services Officer to review the

composition of the PPE account and group them accordingly by type or
category of assets to expedite reconciliation between their records;

d. City General Services Officer to submit copy of the RPCPPE to the Audi-
tor in the prescribed format not later than January 31 of each year; and

e. City General Services Officer to prepare the Inventory and Inspection Re-
port of Unserviceable Property and the Waste Material Report for

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 unserviceable properties worth P2,946,823.60, and coordinate with the
City Accountant for dropping in the books of accounts after compliance of
requirements for disposal.

2. We reiterated our previous recommendation that the:

a. City Mayor direct the City Assessor to address the issue on the inaccurate
information generated by the system such as double declaration of as-
sessed value of properties, non-cancellation of the original tax declaration,
revisions thereof and transfer of ownership in order for the City Treasurer
to come up with an accurate certified list of taxpayers and tax due and col-
lectible every beginning of each year; and

b. concerned officials evaluate the integrity of information generated by

the RPTAS to ensure fair presentation of the RPT and SET Receiva-
bles and Deferred Real Property Tax and Special Education Tax at the end
of the year.

3. We recommended that the City Mayor direct the:

a. City Accountant to transfer in the Trust Liability – DRRMF the total

amount of P20,199,774.64 representing the 2016 and 2015 unexpend-
ed/unobligated DRRMF-MOOE. Prepare the necessary adjusting journal
entries to correct the affected accounts both in the General and Trust
Funds books;

b. City Accountant to fully disclose in the Notes to Financial Statements the

details of the unexpended/unobligated balance of the QRF and DRRMF-
MOOE. The unutilized balance should be determined and used in the dis-
aster risk reduction and management project and activities as provided in
the Local Disaster Risk Reduction Management Fund Investment Plan
(LDRRMFIP) to be spent in the succeeding five years; and

c. City Accountant to prepare and submit the Report on Sources and Utiliza-
tion of Disaster Risk Reduction Management Fund (DRRMF) on a month-
ly basis so that prompt and proper evaluation and monitoring of projects
and activities charged to the LDRRMF could be undertaken.

4. We reiterated our previous recommendations that the:

a. City Mayor instruct the Market Administrators to exert efforts in the col-
lection of rental and other market fees totaling P22, 292,917.32;

b. City Accountant take up in the books of accounts the uncollected rental

and other market fees that are deemed realizable;

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 c. City Mayor, thru the Sangguniang Panlungsod, review and evaluate mar-
ket operations, specifically the collection of market fees, and strictly im-
plement the policy on the cancellation of lease right and/or eviction of de-
linquent stallholders; and

d. Market Administrators maintain market records for individual stallholders

which will provide correct data on the amount billed and outstanding bal-
ances, necessary for monitoring and collection purposes.

The other deficiencies noted in the audit of the accounts and transactions of the
City are as follows:

1. Development projects totaling P197,132,075.20 under the 20% Development

Fund were not specifically indicated in the Annual Investment Plan (AIP) for CY
2016, contrary to Section 2.1 of Local Budget Circular (LBC) No. 70 and Item 2
of the Department of the Interior and Local Government (DILG) Memorandum
Circular (MC) No. 96-263, thus evaluation/assessment of effectiveness of their
implementation could not be undertaken.

We reiterated our previous recommendation that the City Planning and

Development Coordinator (CPDC) see to it that the Annual Investment Program
(AIP) of the City contains information as to the specific programs, projects and
activities, as well as the time frame for their completion, as required under
Section 2.1 of the LBC No. 70 dated March 14, 2000 and Item 2 of the
DILG MC No. 96-263 dated December 9, 1996, to facilitate proper evaluation
and assessment of their implementation.

2. At least 23 establishments with significant transactions with the City alone under
declared their gross sales/receipts by as much as P260,561,192.98, thus business
taxes of P2,011,316.77 were not collected.

We recommended that the City Mayor direct the:

a. Officer - in - Charge, Business Permit and Licensing Unit to require business

taxpayers to submit Sworn Statement of all their gross sales/receipts (not only
from the City Government) for the preceding calendar year and other pertinent
records/information for the determination of gross receipts;

b. City Accountant to submit to the Business Permit and Licensing Office a List
of Payment made to Contractors/Suppliers who transacted with the City Gov-
ernment in the preceding calendar year to serve as one of the bases in the as-
sessment of business taxes in the current year; and

c. OIC, Business Permit and Licensing Unit to verify/assess the gross receipts of
the 23 establishments and validate the reported under collection totaling
P2,011,316.77 and enforce the collection of underpayment, including penal-

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 ties and surcharges, if applicable, pursuant to the rates provided in the City’s
Revenue Code. Absence of documented action or information to counter the
under collection shall result in the issuance of the corresponding Notice of
Charge (NC).

3. Two hundred-ninety two (292) items listed as issued by the Division Office to
various public schools totaling P8,720,189.42 were unaccounted during the ocular
inspection conducted by the Audit Team, hence, may result in possible loss of
government funds if could not be found and presented for validation.

We recommended that the OIC, Schools Division Superintendent and the

concerned Principals of recipient schools present to the Audit Team the tools and
equipment worth P8,720,189.42 not seen and accounted during the ocular
inspections, for validation. Otherwise, Notice of Disallowance (ND) shall be
issued for items that could not be presented.

4. One hundred twenty-five (125) sets of robotic equipment worth P4,570,000.00 for
science class purposes for school curriculum 2016-2017 and P605,612.00 worth
of tools for K to 12 program were not put into use due to non-inclusion of robotic
course in science classes and inappropriate tools for use by K-11 students, respec-
tively, thus defeating the purpose for which the items were procured.

We recommended that the OIC, Schools Division Superintendent ensure that the
tools and equipment worth P4,570,000.00 and P605,612.00, respectively, are
utilized by the respective schools in the following school year, and that tools and
equipment to be procured in the future are the actual needs of the schools and
students.

5. The Invitation to Apply for Eligibility and to Bid (IAEB) for the procurement of
goods and services and infrastructures with an Approved Budget for the Contract
of more than P2,000,000.00 and more than P5,000,000.00, respectively, were ad-
vertised in a newspaper which is not among those of general nationwide circula-
tion, contrary to Section 21.2.1, Rule VII of RA No. 9184, thus the widest possi-
ble dissemination of the procurement opportunity was not ensured. Moreover, the
City could have saved P1,100,450.00 had IAEBs below thresholds were not pub-
lished in a newspaper.

We recommended that the:

a. Chairman, Bids and Awards Committee advertise the Invitation to Apply for
Eligibility and to Bid (IAEB) for the procurement of goods and services and
infrastructure projects, respectively, in a newspaper of general nationwide cir-
culation to comply with Section 21.2.1 of the 2016 Revised IRR of RA No.
9184, to ensure the widest possible dissemination of the procurement oppor-
tunity, and

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 b. Bids and Awards Committee limit the advertisement of IAEB in a newspaper
where the ABCs are more than the thresholds provided in RA No. 9184 to
save on advertising cost.

6. The amount of P1,311,193.18 Bottom-Up Budgeting (BuB) funds was used for
other purposes not in conformity with the Memorandum of Agreement/Project
Profile. Likewise, the amount of P200,000.00 for the ripprapping embankment
remained unutilized as of December 31, 2016, resulting in delays in the attain-
ment of the project’s objective. Also, lack of basic information on the implemen-
tation of one project as against the Memorandum of Agreement (MOA) was not-
ed. Furthermore, the unexpended balances of BuB projects totaling P655,009.64
were not returned to source agencies after completion of the projects as required
in Commission on Audit Circular (COA) No. 94-013.

We recommended that the City Mayor require the:

a. City Social Welfare and Development Officer and OIC, CDRRMO to submit
valid justification/explanation on the use of P1,311,193.18 for purposes not in
conformity with the Memorandum of Agreement/Project Profile and City
General Services Officer on and OIC, CDRRMO to demand the delivery of
the two sets SRR uniform or recommend the refund of P10,800.00 from the
Supplier and impose liquidated damages for failure to deliver on time;

b. City Engineer to expedite the use of the P200,000.00 for the implementation
of the Riprapping of Embankment;

c. City Agriculturist to submit the time frame for the implementation of the pro-
ject and monitoring scheme to be able to assess if the project objectives of the
Organic Vegetables Production Demo Farms Project were met; and

d. City Accountant and City Treasurer to refund/return the unexpended balances

of the completed BuB projects to source agencies totaling P655,009.64 to
comply with COA Circular No. 94-013 dated December 13, 1994.

7. Allocation of 1% Internal Revenue Allotment (IRA) for the strengthening and

implementation of the Programs, Projects and Activities (PPAs) of the Local
Council for the Protection of Children (LCPC) was not aligned to Section 15 of
RA No. 9344 and DILG Memorandum Circular No. 2012-120.

We recommended that the City Mayor implement the allocation of 1% IRA for
the strengthening and implementation of programs, projects and activities of the
Local Councils for the Protection of Children (LCPC) in accordance with Section
15 of RA No. 9344 and DILG Memorandum Circular No. 2012-120.

8. Submission of disbursement and collection reports to the Auditor’s Office was de-
layed, ranging from 10 to 140 days, contrary to Section 7.2.1(a) of COA Circular

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 No. 2009-006 dated September 15, 2009. Moreover, there were delays of 36 to
53 days in the submission of the year-end financial statements and schedules by
the City Accountant, contrary to Section 41 of PD No. 1445 and COA Circular
No. 2010-01.

We reiterated our previous recommendation that the:

a. City Mayor require the City Accountant to strictly observe the time frame
provided under Section 7.2.1(a) of COA Circular No. 2009-006 and Section
41 of PD No. 1445 on the submission of the year-end financial reports, to-
gether with the supporting schedules for a timely examination and review of
the financial transactions of the City. The provisions of Section 122 of PD
No. 1445 should likewise be enforced for non-compliance thereof; and

b. City Accountant address the causes of the delayed submission of accounts.

Devise a work plan to hasten the preparation and submission of the financial
statements and their schedules.

The above observations and recommendations were discussed with the

concerned City officials and staff in an exit conference held on April 28, 2017.
Management’s views and comments were incorporated in the report, where
appropriate.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 24 prior year’s audit recommendations embodied in the 2015 Annual Audit
Report, 11 were fully implemented, 10 were partially implemented and 3 remained not
implemented by the City Government.

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