EXECUTIVE SUMMARY

Introduction

The City of Bacoor was converted into a City by virtue of Republic Act (RA) No.
10160 which was ratified through a plebiscite on June 23, 2012. The City is divided into
two legislative districts, Bacoor West and Bacoor East, comprising 73 barangays. It is
also a lone congressional district of the Province of Cavite. Before attaining the
Cityhood, Bacoor is a first class municipality pursuant to Department Order No. 41-94
dated May 25, 1994.

The City has a total population of 513,518 and a land area at 4,617.10 hectares.
The gross population density in Bacoor in 2010 is 68 persons per hectare. The City has
118,050 total households and an average household size of 4.35.

The City of Bacoor, being the primary gateway of the Province of Cavite to Metro
Manila is full of potential in attracting visitors from the country’s capital region. With
urban conglomeration continuously moving southward of Metro Manila, the City is fast
becoming a residential/commercial urban center as more and more people get to discover
the City of Bacoor.

The City is a consistent awardee of Seal of Good Local Governance (SGLG)

given by the Department of the Interior and Local Government (DILG) for the years 2014
to 2015 and has received Gold Award for being an outstanding LGU in compliance with
the provisions of RA No. 2003, the Ecological Solid Waste Management Act of 2000.

The Organizational Structure of the City is as follows:

a. Key Officials

Municipal Mayor Hon. Lani Mercado-Revilla

Vice Mayor Hon. Catherine Sarino-Evaristo

Members of the Sanggunian:

District I District II
Hon. Rowena Bautista-Mendiola Hon. Apolonio I. Advincula, Jr.
Hon. Miguel N. Bautista Hon. Reynaldo D. Palabrica
Hon. Edwin G. Gawaran Hon. Hernando C. Gutierrez
Hon. Michael E. Solis Hon. Gaudencio P. Nolasco
Hon. Venus D. De Castro Hon. Leandro A. De Leon
Hon. Alejandro F. Gutierrez Hon. Roberto R. Javier
Hon. Victorio L. Guerrero, Jr.
ABC President

OIC - City Accountant Mr. Jerry C. Macalatan

City Treasurer Atty. Edith C. Napalan
 b. Number of Personnel Complement
Permanent - 468
Elective Officials - 15
Coterminous - 37
Temporary - 2
Casual - 392
Total 914

Financial Highlights

For Calendar Year (CY) 2016, the City of Bacoor generated a total revenue of
P1,620,300,230, which is 12.56% higher than last year’s total income of P1,439,463,059.
Out of its current year’s total appropriation of P2,128,417,851, the amount of
P1,527,847,740 was expended, leaving a balance of P600,570,111.

The total assets, liabilities, equity, income and expenses for CY 2016 are as
follows:

2016 2015 Increase

(Decrease)
Total Assets P 3,556,545,836 3,820,987,522 (264,441,686)
Total Liabilities 895,029,825 1,339,629,084 (444,599,259)
Total Equity 2,661,516,011 2,481,358,438 180,157,573
Total Income 1,670,607,911 1,468,100,378 202,507,533
Total Expenses 1,499,160,261 1,120,287,116 378,873,145

Scope of Audit

Financial, compliance and value for money audits were conducted on the accounts
and operations of the City Government of Bacoor 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

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the City Government of Bacoor due to the following:

Basis for Qualified Opinion

1. The reliability and accuracy of the balances of Property, Plant and Equipment
(PPE) of the City of Bacoor with a total gross book value of P2,961,033,155.27
(Construction in Progress excluded) as of December 31, 2016 could not be
 ascertained due to inability of the Inventory Committee to reconcile the
discrepancy of P553,259,394.07 between the report on the physical count and the
accounting records, contrary to Section C.3, Chapter 5 of the Manual on Property
Custodianship.

2. A 20,000 square meters land donated to the City Government, where the Bacoor
Government Center is situated, involving a total value of P24,399,100.00 was not
recognized in the books of the City. Likewise, Transfer Certificates of Title of
nine lots totaling P41,128,700.00 were not yet transferred in the name of the City,
thus poses the risk of third party claim.

3. Cash advances totaling P26,533,430.64 remained unliquidated at year end,

contrary to COA Circular Nos. 97-002 and 2012-004, thus overstating the account
Advances to Special Disbursing Officers and understating the total expenses by
an amount equivalent to the actual disbursements.

4. At least five contractors/suppliers with business address within the City and with
significant transactions with the City Government alone, underdeclared their gross
sales/receipts for CY 2015 by as much as P74,353,099.12, resulting in under
collection of Business Taxes totaling P402,307.09 in 2016.

5. Accounts Payable totaling P2,719,941.65 have no valid claimants nor pertain to

consummated transactions, contrary to Section 46 of PD No. 1177 and the
Updated Budget Operations Manual for Local Government Units, resulting in the
overstatement of the Accounts Payable by P2,719,941.65 and the related expenses
and PPE accounts.

Significant Audit Observations and Recommendations

For the deficiencies cited above, the Audit Team recommended that the City
Mayor direct:

a. the Inventory Committee to conduct a comprehensive physical inventory of all

assets of the City of Bacoor to determine their actual existence and condition
and prepare the RPCPPE, which should incorporate the results of the physical
count and not the data copied from the accounting records;

b. the City Accountant to provide details in the PPE Ledger Cards being
maintained by his Office to provide adequate information of the PPE;

c. the General Services Officer to maintain PCs for individual property item
owned by the City for reconciliation with accounting records and control
purposes;
d. the Municipal Accountant to coordinate with the City Assessor, General
Services Officer and City Treasurer for the property records and related
reports to ensure the correct recording of the donated property in the City’s
books of accounts;

e. the Head – Land Titling and Zoning Department to ensure that the titles of the
purchased and donated parcels of land are transferred in the name of the City
Government of Bacoor to establish its absolute ownership thereof;

f. the City officials and employees concerned to liquidate their outstanding cash
advances of P26,533,430.64, in compliance with COA Circular Nos. 97-002
and 2012-004;

g. the Accounting officials concerned to work out for the determination of

persons liable for unliquidated cash advances totaling P68,057.52, which
remained long outstanding to facilitate their immediate liquidation;

h. that drawing cash advances towards the end of the year be avoided to prevent
long exposure of the funds to possible loss or misuse and remain outstanding
as at year-end;

i. the City Treasurer to require the business taxpayers to submit Sworn

Statement of all their gross receipts/sales (not only from the City Government
of Bacoor) for the preceding calendar year and other pertinent
records/information for the determination of reliable/accurate gross receipts;

j. the City Accountant and the City Treasurer to prepare an updated List of
Payments made to contractors/suppliers who transacted with the City
Government in the preceding calendar year to serve as one of the bases in the
assessment of Business Taxes due;

k. the City Treasurer to verify/assess the gross receipts of the five sampled
contractors/suppliers and validate the reported under collection totaling
P402,307.09, and enforce the collection of underpayment including penalties
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 mean issuance of the corresponding Notice of Charge;

l. the Requisitioning Department of the City prepare Obligation Requests

(ObRs) based on commitments arising from contracts entered into by the City
Government. They should ensure that supporting documents attached therein
are valid, proper and legal;

m. the City Budget Officer check the completeness of the data in the ObRs and
record the obligations in the Registries as they are incurred; and
 n. the City Accountant to always see to it that no obligation shall be certified to
Accounts Payable unless these are founded on a valid claim and properly
supported by sufficient evidence in compliance with Section 46 of PD No.
1177.

Other significant audit observations and recommendations are the following:

1. The presence of duplication on the assessment of several real property units in the
City of Bacoor affects the reliability of the reported tax delinquencies amounting to
P330,277,678.14 as of December 31, 2016 and the implementation of remedial
actions to collect them.

We recommended that the City Mayor facilitate the cleansing of the Real Property
Tax system in coordination with the Offices of the Assessor and Treasurer to get rid
of the duplication in assessment of real property units and to adjust accordingly the
reported tax delinquencies. Moreover, direct the City Assessor to specify the specific
address/location of the properties to effect remedial measures to collect tax
delinquencies.

2. The non-billing and non-collection of rental fees from five lessees occupying the
lower ground floor level of the City Hall building deprived the City Government of at
least P1,414,165.85 income which could have been programmed for infrastructure or
other priority projects which would benefit the City’s constituents.

We recommended that the City Mayor direct the:

a. City Treasurer to prepare the individual Statement of Accounts/bill and

demand payment of rental fees including deposits and penalties, as well as
utilities incurred, from each lessee in accordance with the contract of
agreement for leased spaces;

b. City Engineer to compute the required utilities consumption of each lessee to

serve as the basis for billing the corresponding expenses incurred by them in
business operation; and

c. General Services Officer and the City Administrator to closely monitor all
occupants/users of vacant spaces and other structures owned by the City
Government to see to it that corresponding rental fees are charged and
collected.

3. Bottom-up Budgeting (BUB) projects with a total cost of P4,400,000.00 remained

unimplemented despite the receipt of corresponding funds from participating National
Government Agencies (NGAs) thus, attainment of the optimum goal of inclusive
growth and poverty reduction was not fully achieved. Moreover, a total amount of
P190,355.40 representing excess funds from projects completed were not yet remitted
to the source agencies, exposing the funds to possible misuse.
 We recommended that the City Mayor direct the:

a. City Engineer to fast track the implementation of the Reconstruction of the

Health Center in Molino III and the continuation of the Flood Control Project
at Molino III;

b. General Services Officer to coordinate with the City Engineer and

immediately prepare the required documents for the procurement of the
needed equipment for the immediate operation of the health center;

c. City Social Welfare and Development Officer to expedite the use of the
P500,000.00 for the Capacity Training for the Millennium Development
Goals (MDG) Faces in the Barangays;

d. City Tourism Officer to speed up the utilization of the initial release

amounting to P200,000.00 and coordinate with the Bids and Awards
Committee (BAC) Chairperson for the speedy awarding of the contract for
consultancy services of the tourism consultant re: implementation of the
Tourism Development Master Plans and Strategic Development Plans so that
the immediate goal of the project could be attained;

e. BUB Focal Person to closely monitor the implementation of all the BUB
projects so that the optimum goal of inclusive growth and poverty reduction
could be fully attained; and

f. City Accountant and City Treasurer to immediately refund/remit excess BUB

project funds to the source national government agencies to avoid possible
loss or misuse.

4. Adequate internal control over the City’s Transportation Equipment with net book
value of P74,740,316.24 were not observed, thus exposing government property to
possible losses, misuse, further deterioration, reduction of economic value and
accountability risk.

We recommended that the City Mayor direct the General Services Office (GSO) to
ensure adequate control over the motor vehicles of the City by performing the
following control measures:

a. Reconcile the Inventory Report of Transportation Equipment with Accounting

records;

b. Immediately register in the name of the City the motor vehicles still registered
in the name of the previous owner;
 c. Follow up with the LTO the plate number of motor vehicles with no plate
number;

d. Exert effort to retrieve documents for those motor vehicles with no records on
file in the GSO;

e. Observe annual registration of all vehicles; and

f. Prepare the required Inventory and Inspection of Unserviceable Property

(IIRUP) for all motor vehicles found unserviceable to facilitate the disposal of
the same.

5. Proper disposal of unserviceable property, plant and equipment including the 26 units
of motor vehicles with a total book value of P8,521,841.00 and various office
furniture and equipment totaling P4,306,230.88 was not undertaken by the City and
are left in the equipment pool and garage, contrary to Section 79 of Presidential
Decree (PD) No. 1445 and Section 125 of the Manual on the New Government
Accounting System (MNGAS), Volume I, thus exposing the same to further
deterioration due to wear and tear and loss/reduction of income from sale of scrap.

We recommended that the City Mayor direct:

a. the General Services Officer and the created Appraisal and Disposal
Committee to immediately prepare the appraisal report for the unserviceable
properties and prepare the request for inspection and affirmation of the
appraisal costs by the COA Technical Audit Specialist (TAS) so that disposal
of the same could be effected in order to avail of higher economic value when
offered at public auction; and

b. the concerned officials to strictly comply with the policies and procedures on
the disposal of property provided in COA Circular. Upon disposal, the
Accounting Office should prepare a Journal Entry Voucher (JEV) to drop
from the books the accounts for the sold/condemned properties.

6. Financial assistance to 73 barangays totaling P4,814,000.00, purposely to augment

barangay projects/programs/activities, were not properly acknowledged with Official
Receipts (OR) and not recorded in the books of the recipient barangays, thus validity
of the receipt of funds and propriety of corresponding expenditures could not be
ascertained.

We recommended that the City Mayor require issuance of ORs for every fund
transferred/granted to each barangay and record the transactions pertaining thereto in
the barangay books of accounts. Moreover, require the Liga ng mga Barangay to
issue Accountable Form No. 51 (government Official Receipt) for the receipt of all
funds for the barangay coursed thru them.
7. Acquisition of Property, Plant and Equipment items totaling P3,758,627.15 for use in
the City Division Office, as well as financial assistance and similar expenses recorded
in the books under the Maintenance and Other Operating Expenses totaling
P3,312,409.27 were charged against the Special Education Fund (SEF), contrary to
DECS-DBM-DILG Joint Circular Nos. 01,01-A and 01-B, thus defeating the purpose
for which the fund was established and affecting the objectives of the
programs/projects/activities programmed for the year.

We recommended that the City Mayor direct the Local School Board (LSB) to limit
the utilization of the SEF budget only to programs, projects and activities defines
under the DECS-DBM-DILG Joint Memorandum Circular Nos. 01, 01-A and 01-B to
ensure that the purpose for which the fund was established is met. We also
recommend to cause the restoration of the amount of P7,071,036.42 inappropriately
charged against SEF from the General Fund.

The Audit Team had discussed the above observations and recommendations with
the concerned officials of the City in an exit conference held on May 12, 2017 and that
their comments were incorporated in the report, where appropriate.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 35 audit recommendations contained in the 2015 Annual Audit Report, 19

were fully implemented, ten were partially implemented while the remaining six were not
implemented by the City.