EXECUTIVE SUMMARY

INTRODUCTION

The City of Sta. Rosa attained cityhood by virtue of Republic Act No. 9264 that

was ratified through a plebiscite on July 10, 2004.

The City was recognized as a fast rising investment capital of south Luzon next to

Metro Manila and the Information Communication Technology (ICT) Hub of Southern

Luzon. The City was an awardee of the Seal of Good Housekeeping given by the

Department of Interior and Local Government (DILG) in recognition of the City’s efforts

in advancing the principles of accountability and transparency in local governance.

The City Government is managed by Mayor Arlene B. Arcillas, assisted by Vice-

Mayor Arnel DC Gomez and the Members of the Sangguniang Panlungsod.

The Organizational Structure of the City is as follows:

a. Key Officials

City Mayor Hon. Arlene B. Arcillas

Vice Mayor Hon Arnel DC Gomez

Members of the Sanggunian:

1. Hon. Theresa C. Aala

2. Hon. Luisito B. Algabre

3. Hon. Mythor C. Cendaña

4. Hon. Eric T. Puzon

5. Hon. Antonia T. Laserna

6. Hon. Paulino Y. Camaclang Jr

7. Hon. Petronio C. Factoriza

8. Hon. Raymond Ryan F. Carvajal

9. Hon. Laudemer A. Carta

10. Hon. Edward Fernandito S. Tiongco

b. No. of Personnel

Complement

Permanent 995

Temporary 0

Casual 1,150

Contractual 19

Job Order 383

Elective Officials 13

Coterminous 53

Total 2,613

The City maintains three funds, namely: General Fund (GF), Special Education

Fund (SEF) and Trust Fund (TF). It also maintains special account in the General Fund

for 20% Development Fund, Calamity Fund, Hospital, Cemetery, Market and

Slaughterhouse.

FINANCIAL HIGHLIGHTS

For Calendar Year (CY) 2015, the City Government has a total appropriation of

₱2,650,863,522 from its General Fund (GF) and Special Education Fund (SEF)

amounting to ₱2,219,908,722 and ₱430,954,800, respectively. The City also has

Continuing Appropriation of ₱97,470,414. This budget was resolved and approved in the

City’s Annual Budget and Supplemental Budgets.

Out of the City’s appropriations, the amount of ₱2,441,650,348 was allotted.

Obligations incurred for the GF and SEF amounted to ₱1,960,069,397 and ₱349,398,295,

respectively, or a total of ₱2,309,467,692, while only ₱5,708,000 was obligated for the

Continuing Appropriation. The realized net income of the City Government for all funds

amounted to ₱ 472,354,438.

The total assets, liabilities, government equity, income and expenses for CY 2015

of the City Government are as follows:

Assets ₱ 6,125,757,345

Liabilities 1,527,250,603

Equity 4,598,506,742

Income 2,701,246,308

Expenses 2,062,696,285

SCOPE OF AUDIT

Financial and compliance audit, as well as value for money audit were conducted

on the accounts and operations of the City Government of Sta. Rosa for CY 2015. The

audit consisted of the inspection of programs and projects, interview of concerned

local officials and employees, verification, analysis and reconciliation of accounts, and

such other procedures considered necessary.

The audit was conducted to ascertain the propriety of financial transactions,

compliance with prescribed rules and regulations and the economical, efficient and

effective utilization of resources. It was also made to ascertain the accuracy of financial

records and reports, as well as the fairness of the presentation of financial transactions.

AUDIT OPINION ON THE FINANCIAL STATEMENTS

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

financial statements because the validity, accuracy and existence of Property, Plant and

Equipment accounts recorded in the books with net book value of ₱4,566,054,241.21

remained doubtful due to: (a) variance of ₱2,968,828,166.51 between the records of the

Office of City Accountant (OCA) and the Report on the Physical Count of Property,

Plant and Equipment (RPCPPE) submitted by the City General Services Office (CGSO);

(b) Inclusion of unserviceable properties totaling ₱7,657,211.74 in the books; (c)

unaccounted properties totaling ₱2,227,978.40 at the time of physical inventory; and (d)

inclusion of disposed scrap/unserviceable items and unserviceable motor vehicles with a

total value of ₱23,310,049.59 and ₱11,076,365.92, respectively. Further, the ownership,

propriety and validity of land recorded in the books amounting to ₱66,175,285.00 are

doubtful due to the lack of Torrens Title conveying ownership of the land to the City

Government.

SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

For the exceptions cited above, we reiterated our previous recommendations that

the City Mayor; (a) direct the OCA and CGSO to fast track the reconciliation of the PPE

accounts’ balance per books and RPCPPE, and to make the necessary

corrections/adjustments in the records and books of accounts, respectively; and instruct

the Office of the City Accountant and the City General Services Officer to observe proper

maintenance and updating of the PPELCs and PCs, provide the complete and necessary

information in both records to facilitate verification and reconciliation, and to effect the

necessary adjustments of their records, if warranted; (b) avoid the further deterioration of

the unserviceable properties by requiring the CGSO to prepare the necessary documents

for the disposal of the unserviceable properties; request the disposal of the unserviceable

properties; and dispose the unserviceable properties upon approval of the request, and

after the disposal, require the City Accountant to drop the disposed properties from the

City’s book of accounts; (c) instruct the CGSO to prepare a report on the

missing/unaccounted equipment, and require the persons concerned to produce the same,

otherwise, require them to pay the equivalent money of lost/unaccounted equipment, in

compliance with Section 105 of PD No. 1445; and (d) instruct the City Accountant to

request the return of the documents from the COA – Regional Office No. IV-A, and drop

the disposed properties in the book of accounts.

We also reiterated our previous recommendation that the City Mayor direct the

City Assessor, the City Treasurer and the City General Services Officer to continue the

facilitation of the transfer of titles of lots in the name of City Government of Santa Rosa

to protect the interest of the government, continue the completion and submission of the

documentary requirements for the newly purchased lots, and the City Accountant make

the necessary adjustments for the cancelled transaction for the fair presentation of the

Land account balance in the financial statement.

Other significant observations and recommendations are the following:

1. Audit of cash advances granted by the City Government with a year-end balance of

₱8,581,381.41 showed deficiencies, which resulted in the overstatement of assets

and understatement of affected expense accounts in the financial statements and

exposes government fund to risk of loss and/or misappropriation, to wit:

a. Cash advances amounting to ₱8,581,381.41 remained unliquidated at year-end,

contrary to the provision of Item 4.1.3 and 5.8 of COA Circular No. 97-002 dated

February 10, 1997 and COA Circular No. 2012-004 dated November 28, 2012

We reiterated our recommendation that the City Mayor instruct the City

Accountant to require the concerned officers/employees to immediately liquidate

their outstanding cash advances. In addition, institute the necessary administrative

and legal actions against the accountable officers who failed to liquidate their cash

advances on time.

b. Cash advances totaling ₱2,766,791.93 were granted to officers/employees with

unsettled cash advances, contrary to Item 4.1.2 of COA Circular No. 97-002 dated

February 10, 1997.

We recommended that the City Mayor reprimand the City Accountant to stop

granting cash advances to officers and employees with outstanding cash advances,

and to strictly monitor the granting and utilization of cash advances.

We also recommended that the City Accountant immediately issue demand letters

to the concerned accountable officers to liquidate their long outstanding cash

advances, or withhold the salaries of those defaulting accountable officers.

c. Post-audit of liquidation reports showed the following deficiencies which cast

doubt to their validity, propriety and legality:

Liquidation Reports totaling ₱2,594,787.50 were not supported with complete

documentation;

Excess claim of travelling and training expenses of ₱202,055.88; and

Non-essential and/or unnecessary items totaling ₱9,907.76 were charged to

cash advances.

We recommended that the City Mayor:

require the concerned accountable officers to complete the documentation of

the submitted Liquidation Reports, otherwise, the transactions will not be

allowed in audit, and

require the immediate refund of the excess claim of traveling and training

expenses and unnecessary expenses, and strictly comply with the provisions

of EO 298 and NBC No. 486.

d. Cash advances amounting to ₱2,586,996.93 were granted to 47 officials and

employees of the City Government without the necessary bond, in violation of

Item 4.2 of Treasury Circular No. 02-2009 and Item 7.1 of COA Circular No. 97-

002 dated February 10, 1997.

We reiterated of previous recommendation that the City Mayor make the

necessary actions to ensure that only duly bonded and authorized

official/employees are granted cash advances to avoid exposure of government

funds to high risk of loss and non-recovery in case of embezzlement and misuse.

e. Cash advances totaling ₱1,145,696.00 were liquidated beyond the prescribed

period, contrary to Items 4.1.3 and 5.1.3 of COA Circular No. 97-002 dated

February 10, 1997.

We recommended that the City Mayor direct the concerned City officials and

employees to ensure that all cash advances are liquidated within the prescribed

period, and require the concerned accountable officers the immediate and timely

liquidation of their cash advances.

We further recommended that all the City officers and employees with

outstanding cash advances be reminded of the sanctions provided under Section 8,

Rule V of CSC Resolution No. 04-0676 dated June 17, 2004 as amended by CSC

Resolution No. 12-00103 dated January 12, 2012.

f. Cash advances in the amount of ₱118,500.00 were granted to two City

Government employees in excess of their maximum bond cash accountabilities,

defeating the purpose of Treasury Circular No. 02-2009 dated August 6, 2009.

We recommended that the City Mayor oblige the City Accountant to ensure that

the cash advances granted to an employee and/or officer does not exceed his/her

maximum cash accountability.

2. Review of the implementation of the “Construction of Sports Complex at Barangay

Tagapo, City of Santa Rosa, Laguna” project amounting to ₱589,900,000.00 showed

the delayed completion of the project which deprived the City Government as well as

its constituents of the benefits and immediate use of the facilities, defeating the

purpose to which the loan was acquired.

We recommended that the City Mayor direct the City Engineering Office to provide

the Audit Team of the requested information/explanation for the causes of the long

delays in the project implementation, duly supported with documents to support the

information/explanation to be given, and immediately submit the following requested

documents to enable the Audit Team to evaluate and determine the actual status of the

work accomplished for the project, to wit:

a. Clear copy of the Programme Evaluation Review Technique/Critical Path Method

(PERT/CPM) of the project

b. Latest Status of Work Accomplished (SWA)

c. Variations Order, if approved

d. Time Extensions, if there is any

e. Other documents relative to the time suspension and extension of the contract, if

there is any

3. Audit of the payments made for the “Construction of City Hall Extension at City of

Santa Rosa, Laguna” totaling ₱337,831,922.43 showed deficiencies and not

supported with proper and complete documentation, contrary to Paragraph 6, Section

4 of PD No. 1445 and Paragraph d, Section 168 of the GAAM, Volume I, casting

doubt on the legality and regularity of the disbursements.

We recommended that the City Mayor direct the City Accountant and the City

Engineer to immediately submit the documents needed to support the progress

payments to avoid the issuance of Notice of Suspension.

4. Audit of the payments made for the “Construction of Sports Complex at Barangay

Tagapo, City of Santa Rosa, Laguna” for CY 2015 totaling ₱177,552,127.03 showed

deficiencies and not supported with proper and complete documentation, contrary to

Paragraph 6, Section 4 of PD No. 1445 and Paragraph d, Section 168 of the GAAM,

Volume I, casting doubt on the legality and regularity of the disbursements.

We recommended that the City Mayor direct the City Accountant and the City

Engineer to submit the documents needed to support the progress payment to avoid

the issuance of Notice of Suspension.

In addition, submit proof that the project implementation is on schedule and is

satisfactorily undertaken to support the payments for the substitution of the retention

money.

5. Liabilities amounting to ₱73,492,727.28 were recorded without complete

documentation, contrary to Section 4 (6) of PD No. 1445 and COA Circular No. 97-

004 dated July 1, 1997, hence, casting doubt on the legality, correctness and

reasonableness of expenditure.

We recommended that the City Mayor instruct the Chief Accountant to retrieve and

evaluate all the documents pertaining to the unpaid payables, and submit the related

disbursement vouchers, in compliance with the guidelines of Section 4 (6) of PD No.

1445 and COA Circular No. 97-004 dated July 1, 1997 on recording of liabilities.

6. The actual rate of collection of Real Property Tax (RPT) and Special Education Tax

(SET) of the City increased by 5.53% due to massive tax campaign and effective

collection procedures, thus giving additional funds to finance various projects of the

City. However, the City could have benefited more if it had availed the remedies

provided under 256 of RA No. 7160 to enforce collection of accumulated delinquent

taxes for the years 2013 to 2015 totaling ₱54,817,923.95.

We recommended that Management continue maintaining its collection efficiency

and further enhance its performance thru the conduct of massive information and tax

campaign among its constituents. We also recommended that Management avail the

remedies provided under Section 260 of RA No. 7160 to enforce collection of

delinquent Real Property Tax.

7. The reliability and existence of the recorded inventories totaling ₱45,528,787.42 as of

the end of the year could not be ascertained due to:

a. non-implementation of the perpetual inventory method by the City Government of

Santa Rosa;

b. failure to prepare and maintain the Supplies Ledger Cards (SLCs) by the Office of

the City Accountant (OCA); and

c. failure to prepare and submit the Report on the Physical Count of Inventories

(RPCI) as required under Section 114 of the MNGAS for LGUs, Volume I and

Section 56, Volume II of the same Manual.

We reiterated our prior year’s audit recommendation that the City Mayor direct the

CGSO and OCA to strictly comply with the provisions of the aforementioned

regulations of the MNGAS and require:

a. the Accountant to:

record the purchase of supplies and materials for stock as inventory following

the perpetual inventory method; and

maintain SLC for each commodity/stock for reconciliation with the GL

controlling accounts;

b. the CGSO to:

properly maintain and observe correct recording in the SC for each type of

inventory;

record all receipts and issuances of supplies;

reconcile periodically with the ledger cards of OCA;

prepare and submit regularly the RSMI to the Accounting Unit;

conduct physical count of inventories; and

prepare and submit the RPCPI to the Auditor not later than January 31 of each

year; and

c. the Accountant and the Supply Officer to:

reconcile the RPCI with the GL controlling accounts; and

verify and adjust any discrepancies.

8. Excess of expenses over income in the amount of ₱33,944,484.54 was incurred by the

Santa Rosa Community Hospital (SRCH) in CY 2015 due to the non-realization of its

estimated budget/income and substantial increase of expenditures, particularly on

drug and medicines, and medical, dental and laboratory supplies expenses, giving

negative impression on the effective management of the SRCH operation.

We recommended that the City Mayor require the City Accountant, City Treasurer

and Director of Santa Rosa Community Hospital to coordinate closely in monitoring

the utilization of funds of SRCH, and make sure that all the expenditures are within

the budgeted amount.

We also recommended that the City Mayor, with the assistance of City Accountant,

City Treasurer and Head of SRCH, handle the operations of SRCH with the diligence

of a good father of a family to prevent incurrence of net loss in its financial operation.

Lastly, since the hospital renders the very important health services to its constituents,

consider its actual needs in the budget preparation to determine the subsidy to be

given to SRCH so that it will not incur deficit in its financial statements.

9. Receivables totaling ₱31,809,126.95 from various debtors remained outstanding for

several years due to failure of the City to adopt efficient and aggressive collection

strategies, contrary to Sections 35 and 37 of PD No. 1445, thus casting doubt on the

collectability of the accounts and may further result in the loss of government funds.

We recommended that the City Mayor instruct the City Accountant and the City

Treasurer to institute all possible legal remedies against the concerned accountable

persons. We also recommended that the City Accountant:

issue demand letters and cause the withholding of salary for those defaulting

officers and employees;

determine the breakdown of Self-Employment Assistance Loan Program and

provide and maintain Subsidiary Ledgers of each debtor with outstanding balance

from the said program; and

request the write-off of receivables with no certainty of collection or follow-up

the request if there is a pending request for its writing-off from the Commission

on Audit, with the reminder that all proofs that efforts have been initiated to

collect the same be submitted to the said agency.

Moreover, compel the members of Bagong Pag-asa Neighborhood Association to pay

their outstanding balance, or else foreclose the property pertaining to the defaulting

debtor.

In addition, require the City Cooperative Officer to provide all possible records

relative to the defaulting multi-purpose cooperatives and coordinate with the City

Accountant and the City Treasurer for possible settlement of the long outstanding

receivables.

Lastly, we recommended that the City Government formulate and adopt an effective

policy for its granting and collection of loans and financial assistance to various

individuals or groups.

10. Priority Development Assistance Fund (PDAF) and other funds received from

legislators and other National Government Agencies with an unexpended balances

totaling ₱19,694,914.13 remained in the General Fund books under the Due to Other

NGAs (416) account since CY 2011, in violation of NBC No. 476 dated September

20, 2001 and Section 3 of PD No. 1445, resulting in the overstatement and

understatement of the Due to Other NGAs account in the General Fund and Trust

Fund, respectively, and deprives the national government of the opportunity for the

immediate use of funds for other priority programs had it been returned by the City to

the National Treasury or source agencies.

We reiterated our recommendation that the City Mayor direct the Chief Accountant

to:

effect the necessary adjustments/journal entries in the books of account to present

the correct balance of the Due to Other NGAs account in the General and Trust

Funds financial statements;

review, analyze, and/or reconcile Due to Other NGAs account, together with the

other related accounts in the trial balance, and determine the proper disposition of

the dormant trust funds; and

remit/revert all unexpended/dormant balances to the source agency/National

Treasury so that these can help augment the finances for other priority

projects/programs of the national government or other agencies.

11. Inspection and technical evaluation of the Proposed Construction of Bone and Coffin

Crypt Building (Phase II) and Proposed Construction of City Hall Extension projects

of the City Government showed that the projects were completed beyond the contract

time, thus incurred Liquidated Damages (LD) in the amount of ₱459,742.35 and

₱15,639,362.06, respectively.

We recommended that the City Mayor, thru the City Engineer, inform the contractor

about the incurrence of liquidated damages relative to the projects they had

undertaken with the City Government, and request the payment totaling

₱16,099,104.41.

12. The Annual Investment Plan (AIP) contained programs appropriated in lump-sum

amounts, hindering the proper evaluation of the Fund utilization.

We recommended that the City Mayor instruct the City Planning Development

Coordinator to identify the specific programs and projects relative to the 20%

Development Fund totaling ₱11,945,157.00 in order to validate and evaluate the

utilization of the funds according to existing regulations.

13. Propriety of payments for consultancy services totaling ₱9.24 million could not be

ascertained due to the absence of reports/outputs where the accomplishments of the

consultants could be validated, contrary to Section 4 (6) of PD No. 1445 and COA

Circular No. 2012-001 dated June 14, 2012, Terms of Reference and Contracts of the

Consultant.

We recommended that the City Mayor instruct the Acting OIC of the Human

Resources Management Office (HRMO) and the City Accountant to require the

prompt submission of the consultants’ Accomplishment Reports and see to it that

copies of which are attached to the payroll to support the claims of the consultants.

14. The City appropriated funds from the 20% Development Fund for four

programs/projects totaling ₱7,500,000.00 that did not partake the nature of

investment or capital expenditures, contrary to Item 2.3 of Joint Memorandum

Circular No. 2011-1 dated April 13, 2011, defeating the purpose of the Fund.

We reiterated our recommendation that the City Mayor instruct the City Accountant,

City Budget Officer and the City Planning Development Coordinator to appropriate

and fully utilize the 20% Development Fund exclusively for socio-economic

programs and projects, which are in the nature of investment or capital expenditures

in accordance with the DILG Joint Memorandum Circular No. 2011-1 dated April 13,

2011, for the benefit of the constituents, and to ensure the proper use thereof to

enhance the general welfare of the people.

15. The reliability and existence of the recorded inventories of the Santa Rosa

Community Hospital (SRCH) totaling ₱7,325,267.05 as of year-end could not be

ascertained due to non-implementation of the perpetual inventory method, failure to

prepare and maintain the Supplies Ledger Cards (SLCs) by the Office of the City

Accountant (OCA), while the Stock Card and the Report on the Physical Count of

Inventories (RPCI) prepared and maintained by the SRCH were not in the prescribed

format as required under Section 114 of the MNGAS for LGUs, Volume I and

Section 56, Volume II of the same Manual.

We recommended that the City Mayor direct the Medical Director, SRCH, CGSO and

OCA to strictly comply with the abovementioned provisions of the MNGAS and

require:

the Accountant to record the purchase of supplies and materials for stock as

inventory following the perpetual inventory method, and maintain SLC for each

commodity/stock for reconciliation with the GL controlling accounts;

the SRCH to maintain SC in the required format for each type of inventory and to

record all receipts and issuances of supplies, reconcile periodically with the stock

cards of CGSO and ledger cards of OCA, and prepare and submit regularly the

RSMI to the Accounting Unit;

the Accountant and the Supply Officer to prepare and submit RPCI in the

prescribed format, and reconcile the RPCI with the GL controlling accounts,

verify and adjust any discrepancies; and

the Director of SRCH, CGSO and OCA to coordinate closely in the monitoring of

medical, drugs and dental supplies, materials and all assets of SRCH to have an

accurate and reliable financial statement.

16. Audit of the amount transferred by the Department of Social Welfare and

Development (DWSD) for its Supplemental Feeding Program implemented by the

City showed the following deficiencies:

a. Disbursement for the Supplemental Feeding Program (SFP) implemented by the

City Social Welfare and Development Office (CSWDO) totaling ₱5,424,000.00

was made thru cash advance in the name of the City Treasurer, instead of the

creditors/payees, in violation of Section 93 of PD No. 1445, COA Circular No.

97-002 dated February 10, 1997 and the Implementing Rules and Regulations of

RA No. 9184, thus exposing government funds to risks of loss and/or

misappropriation.

b. Non-withholding of government tax of at least ₱244,285.87 for the purchases of

foodstuff intended for SFP totaling ₱5,424,000.00, contrary to the Bureau of

Internal Revenue (BIR) Regulations No. 2-98 issued on May 17, 1998 and

depriving the government of the much needed funds.

c. Payments were made/processed even without complete documentary

requirements, in violation of Section 4 (6 and 7) of PD No. 1445 and COA

Circular No. 97-004 dated July 1, 1997, thus casting doubt on the correctness and

reasonableness of expenditures.

We recommended that the City Mayor require the CSWD Officer, City Accountant

and City Treasurer to:

refrain from paying the procurement of the program thru cash advance, instead

issue check directly payable in the name of the creditor/payee to whom payment

is due;

strictly comply with the revenue regulation on withholding of taxes for the

procurement of goods and services;

submit liquidation report/disbursement voucher to the Auditor with complete

documentary requirements to prevent the issuance of Notice of Suspension/

Disallowance in audit; and

follow the procurement laws in the purchases of goods and services for the

program.

17. Expenditures totaling ₱4,168,052.17 charged against the Special Education Fund do

not fall within the primary purpose of the Fund, contrary to Section 272 of RA No.

7160 as implemented by DECS, DBM and DILG Joint Circular Nos. 01-B, 01-A and

01 dated June 25, 2001, March 14, 2000 and April 14, 1998, respectively, thus

defeating the purpose for which the Fund was established.

We recommended that the Local School Board officials strictly observe the

provisions of Section 272 of RA No. 7160, DBM Local Budget Circular No. 62 and

DBM Compensation Policy Guidelines No. 98-1 relating to the defined usage or

utilization of the SEF in order to consider the said expenditures allowable in audit.

Likewise, comply with the provisions of DECS-DBM-DILG Joint Circular No. 01, s.

of 1998 in identifying projects/programs and activities chargeable against SEF, where

the budget should reflect an equitable distribution of SEF mandated priority projects.

18. The balance of Accounts Payable as of December 31, 2015 totaling ₱378,688,750.48

included claims amounting to ₱3,946,708.17 which have been outstanding in the

books for two years or more, but were not reverted to the Unappropriated Surplus of

the General Fund, contrary to Section 98 of PD No. 1445, thus these may no longer

represent valid claims, and the validity, existence and correctness of the balance

cannot be relied upon.

We reiterated our previous recommendation that the City Mayor direct the Chief

Accountant to:

determine the legitimacy of the transactions, and if found to be valid claims,

communicate with the concerned payees for the payment/settlement of the

accounts;

revert to the Unappropriated Surplus of the General Fund those that proved to be

with no legal claims; and

conduct periodic review and monitoring of the Accounts Payable account so that

this account will consist only of valid claims against the City Government.

19. Cash balance at year-end of ₱3,624,991.91 of Santa Rosa Community Hospital

(SRCH) was insufficient to cover its current liabilities totaling ₱16,039,309.38, thus

incurring cash deficit of ₱12,414,317.47, contrary to Section 308 of RA No. 7160.

We recommended that the City Mayor require the City Accountant, City Treasurer

and Director of Santa Rosa Community Hospital to coordinate closely in monitoring

the cash balance of SRCH to ensure that enough fund is available to pay its

obligations, and consider different strategies to increase the City’s income, and

intensify collection to cover such deficit.

20. Fund transfers to Non-Governmental Organizations/People’s Organizations

(NGOs/POs) amounting to ₱3,553,120.00 were not supported with complete

documentation, in violation of Sections 4.4 and 4.5 of COA Circular No. 2007-001

dated October 25, 2007, Section 4(6) of PD No. 1445 and COA Circular No. 2012-

001 dated June 14, 2012, casting doubt on the legality and regularity of the grants.

We reiterated our recommendation that the City Accountant strictly adhere to the

provisions of COA Circular No. 2007-001 dated October 25, 2007 on the granting,

utilization and accounting of funds released to NGO/PO, by complying with the

documentary requirements, to ensure their physical and legal existence and financial

condition, otherwise, the said disbursements will be suspended or disallowed in audit.

21. The accuracy of Cash in Bank-Local Currency, Current Account balance shown in

the financial statements at ₱823,316,192.94 could not be determined due to a net

difference of ₱3,115,750.52 noted between the General Ledger and the cashbook,

contrary to pertinent provisions of the GAAM and the MNGAS for LGUs, affecting

the fair presentation of the financial statements.

We reiterated our previous recommendation that the City Accountant and the City

Treasurer regularly reconcile the Cash-in-Bank account balances per ledger and per

cashbooks, and to immediately effect the adjustments/corrections noted therein.

We also recommended that the City Accountant conduct regular verification of the

credit and debit memos issued by the bank, and immediately effect the necessary

adjustments/corrections in the books, otherwise, the said reconciling items will be

considered shortage/overage of the City Treasury. On the other hand, the City

Treasurer immediately inform the City Accountant of the credit and debit memos

issued by the bank to enable the latter to effect the necessary adjustments in the

books.

22. Audit of Job Order (JO)/Casual/Contractual Services disclosed several deficiencies

summarized as follows:

a. The City does not have written policies and guidelines on the procurement of Job

Order services, thus rights and obligations of the City and the JO personnel were

not clearly established, and the risk that different rules and procedures might be

applied to different JO personnel, contrary to a sound system of internal control.

We reiterated our previous recommendation that the City Mayor:

issue and institute standard written policies and guidelines on the hiring of JO

services to categorically establish rights and obligations of the City and JO

personnel and minimize the risk of applying various policies and guidelines in

the hiring of JOs;

observe strictly the implementation of the hiring process for JO personnel,

ensuring that all JO personnel go through the said process and meet the

qualifications required for each position;

consider to integrate in the JO files other documents consisting of other

personal, school or employment records, but not limited to the following: (a)

Birth and Marriage Certificates; (b) Evidence of educational attainment such

as elementary or high school records, diploma and/or transcript of records or

training certificates; (c) NBI Clearance (especially from those who render

security and janitorial services) and; (d) Medical clearance for JOs working in

hospitals, clinics or other related fields to ensure that the right people are hired

for the implementation of the programs of the City;

require JO applicants to undergo reasonable screening process to ascertain

their identity and qualifications, and to make sure that they are not employed

in other local government unit; and

ensure that the hiring of JO personnel is adequately planned, taking into

consideration the need of each Department/Office, the estimated number of

JOs to be hired, their wages and qualifications.

b. Liquidation of cash advances for payments of wages of JO personnel were

processed and disbursed without the required supporting documents, contrary to

Section 4 (6) of PD No. 1445 and COA Circular No. 2012-001 dated June 14,

2012, hence, validity, propriety and legality of the claims could not be

determined.

We reiterated our previous recommendation that Management strictly adhere to

the provisions of Section 4 of PD No. 1445 and COA Circular No. 2012-001, and

attach the required supporting documents for the liquidation of cash

advances/payment for wages of JO personnel.

c. The City Government’s hired casual and JOs totaling 1,464 workers, 1,083 and

381 for casual and JOs, respectively, comprises 57.82% of the City’s total

workforce or 396 (37.08%) more than the City’s permanent employee of 1,068,

thus the existing organizational structure and staffing pattern of the City may not

be appropriate.

We reiterated our previous recommendation that the City Mayor undertake the

following courses of action:

Review and study the current plantilla position to come up with a more

realistic organizational structure for the City, since the existing organizational

structure seems inappropriate based on the current workforce of the City;

Limit the hiring of casuals and JOs to those that are extremely necessary

according to the immediate and actual needs of each Office, with

consideration on the financial capability of the City government; and

Fill-up the vacant plantilla position to hire qualified employees who will

provide the regular services provided by the City.

23. The unexpended Priority Development Assistance Fund (PDAF) balance of

₱329,503.68 and other payables due to National Government Agencies amounting to

₱1,747,776.82 or a total of ₱2,077,280.50 remained in the Trust Fund books since CY

2011, contrary to Executive Order No. 431 dated May 30, 2005, Paragraph 3, Section

122 of the GAAM, Volume I, and Sections 4.9 and 6.7 of COA Circular No. 94-013

dated December 13, 1994, thus depriving the national government of the opportunity

for the immediate use of funds for other priority programs.

We reiterated our previous recommendation that the City Mayor direct the Chief

Accountant to:

review, analyze, and/or reconcile the account, together with the other related

accounts in the trial balance, to determine the proper disposition of these dormant

trust funds;

remit/revert all unexpended/dormant balances to the source agency/General Fund

or Bureau of Treasury so that it can help augment the finances for other priority

projects/programs of the national government or other agencies; and

effect the necessary adjustments/journal entries in the books of account.

24. The account Due from Other Funds under the General Fund with year-end balance

amounting to ₱1,673,732.58 has no corresponding reciprocal account Due to Other

Funds under the Trust Fund, thus rendering the said account unreliable.

We recommended that the City Mayor instruct the City Accountant to prepare

adjusting entries to correct error, for proper presentation of the accounts in the

financial statements.

From now on, strictly adhere to the accounting principles as provided in the MNGAS

to ensure proper presentation of the accounts in the financial statements.

25. The balance of ₱491,624.43 allocated for medical assistance to poor/indigent patients

re: Medical Assistance Program of the Department of Health (MAP-DOH) remained

unutilized as of the end of the year, thus depriving the intended beneficiaries of the

benefits that could be derived therefrom.

We recommended that the City Mayor instruct the person-in-charge of the DOH-

MAP fund to strictly follow the provisions of the Memorandum of Agreement

(MOA) and DOH Administrative Order (AO) No. 2015-0025 dated June 16, 2015,

which does not include the necessity of requiring the patients to obtain endorsement

letters from the representatives to avail the medical assistance.

26. Accountable forms totaling ₱354,413.84 were procured by the City from a private

printer, Ready Forms Incorporated, contrary to the Department of the Interior and

Local Government (DILG) Memorandum Circular No. 2012-32, resulting in irregular

expenditures.

We recommended the refund of the cost of accountable forms totaling ₱354,413.84

purchased from RFI, or justify in writing why the amount should not be disallowed in

audit; and to stop the practice of procuring accountable forms from private printers

not recognized as government printers by the DILG and the Government Procurement

Policy Board (GPPB).

27. Audit of the Motor Vehicles account of the City of Santa Rosa revealed the following

deficiencies that affect the fair presentation of the account in the financial statements,

and casts doubt on the ownership of some motor vehicles:

a. Twenty-one (21) units of motor vehicles (MVs) are not covered with

Acknowledgement Receipts for Equipment (ARE) and one unit had lapsed ARE,

in violation of Section 42 of the MNGAS for LGUs, Volume II and Sections 492

and 493 of the GAAM, Volume I;

b. Thirteen (13) units of MVs were not registered with the Land Transportation

Office (LTO), 29 units had lapsed LTO registration and five units MVs were still

not registered in the name of the City Government of Santa Rosa, depriving the

City Government of full ownership and control over these properties; and

c. Thirteen (13) units MVs were not insured with the GSIS and three units had

lapsed insurance policy, to the disadvantage of the City Government just in case

these vehicles incurred accident.

We reiterated our prior year’s audit recommendations that the City Mayor instruct the

CGSO and the OCA to continue to:

a. issue and renew the AREs of all the motor vehicles owned by the City in

accordance with Section 492 of the GAAM;

b. monitor the registration and insurance of all the motor vehicles and see to it that

all vehicles are registered and insured within the reglamentary period; and

c. cause the transfer of registration of the vehicles not registered in the name of the

Santa Rosa City.

28. Consultancy Contracts were not submitted to the Office of the Auditor within five

working days upon approval, together with the supporting documents for review, in

violation of COA Circular No. 2009-001 dated February 12, 2009. Also, most of the

Consultants have been consecutively in service for more than five years, which

contradicts the definition of a consultant wherein services should be for a short

duration and with a definite output.

We reiterated our previous recommendation that the concerned officials of the City to

reassess the need of hiring consultants, and determine their capabilities based on

proven expertise, experience and capability to avoid unnecessary and excessive

expenditures.

We also recommended that the HRMO Officials continue to update the Personal Data

Sheets (PDSs) of the Consultants, and require certifications on recent seminars and

trainings attended.

Also, prepare the evaluation reports on the Consultants’ services to support the

contract renewal.

We also request the submission of the basis or guidelines being used by the City in its

determination of the rate of honorarium of the Consultants.

29. Verification of the submitted Utilization Report for Medical Assistance Program of

the Department of Health (MAP-DOH) fund prepared by the Office of the Chief of

Santa Rosa Community Hospital showed the following deficiencies, casting doubt on

the validity, propriety and legality of the disbursements made:

a) Sixty-nine (69) Charge Slips amounting to ₱72,132.00 were processed despite the

absence of signatures of the responsible officials/employees;

b) The proof of legitimacy of the claimants were not presented; and

c) The Certificates of Indigency issued by the respective Barangay of the

beneficiaries were not required as additional proof to the eligibility of the

beneficiaries to medical assistance.

We recommended that the City Mayor require the authorized official/employee in-

charge of the preparation of the Utilization Report of the MAP to submit Charge Slips

certified and signed by the proper authorities that the sixty-nine patients were actually

existing and treated. Likewise, validate the submitted documents from any

identification cards presented by the claimants in order to determine the accuracy and

legitimacy of the claims

We also recommended that the City Mayor require the officials/employees concerned

to insist from the claimants the submission of the Certificate of Indigency issued by

the barangay.

30. Out of 41 projects costing ₱125,193,219.80 appropriated for 20% Local Development

Fund, only 35 projects with a total cost of ₱77,663,611.24 or 62.30% were

implemented during the year, thus deprived the constituents of the City of the benefits

they could have enjoyed from the development projects derived from the fund. Also,

low utilization rate of the fund was noted as only ₱46,961,538.84 or 60.47% of

₱77,663,611.24 was paid as of December 31, 2015.

We recommended that the City Mayor require the Planning Development Coordinator

to ensure that prioritized projects under the 20% Development Fund are fully

implemented as planned.

We also recommended that the City Mayor instruct the concerned City officials to

improve the utilization rate of the Fund.

31. Audit of the City Government’s implementation of 2016 planned Gender and

Development (GAD) programs, projects and activities (PPAs) and its compliance

with GAD laws, rules and regulations disclosed the following deficiencies:

a. The implementation of the City’s GAD program/projects/activities during the

year were restricted due to low utilization of GAD Fund and Budget, as only 34%

or ₱35,176,252.95 of the approved budget of ₱103,649,609.00 was expended and

only 21 activities or 36% of the 58 programmed/planned activities for

implementation during the year were either implemented or partially

implemented, thus the intent of GAD on promoting gender-responsive

governance, protecting and fulfilling women’s human rights, and promoting

women’s empowerment as mandated by the policies enumerated in Joint

Memorandum Circular No. 2001-01 of DILG, DBM and NCRFW was not fully

achieved.

We recommended that the City Mayor instruct the GAD Focal Point Team to

fully implement the GAD Plan and Budget and see to it that all expenses incurred

are in accordance with the approved budget by:

strictly monitoring the implementation of the planned GAD program, projects

and activities;

indicating clearly defined target in the “Performance Target” column of the

AGPB to ensure the smooth implementation of the projects;

indicating in the “Actual Result” column of the AGAR the actual

accomplishment for a truthful evaluation and assessment of the activities

implemented; and

seeing that the amount obligated and actual amount utilized are closely

monitored and reconciled, to ensure the reliability of the GAD reports.

b. The City’s GAD Database which will serve as the source of information to serve

as basis for an evidenced-based and gender-responsive planning, programming

and policy formulation for GAD was not yet established, affecting the City

Government’s promotion of gender-responsive governance.

We recommended that the City Mayor instruct the Local GAD Focal Point Team

(LGFPT), LGFPT-TWG and the GAD Focal Point Coordinator to utilize the

existing database, planning and data-gathering tools and management information

system, to generate gender statistics and sex-disaggregated data and other GAD-

related information from primary and secondary sources such as surveys and

studies for the meantime that the GAD Database could not be immediately

established, so that the City will have a source of information for its GAD

planning, programming and policy formulation for GAD.

32. Audit of the City Government’s budget and utilization of Local Disaster Risk

Reduction Management Fund (LDRRMF) and its compliance with laws, rules and

regulations governing the fund disclosed the following deficiencies:

a. The City failed to maximize the utilization of LDRRMF, as only 73% or

₱53,336,210.27 of the approved budget of ₱76,623,813.00 for “Preparedness and

Mitigation (70%)” was utilized, defeating the aims of RA No. 10121, the

“Philippine Disaster Risk Reduction and Management Act of 2010” to strengthen

and develop processes to better prepare and lessen the impact of deadly and costly

natural and man-made hazards and disasters.

We recommended that the City Government, thru its LDRRMC, fully implement

the LDRRMF programs, and see to it that all expenses incurred are in accordance

with the approved budget. In addition, strictly monitor the implementation of the

planned GAD program, projects and activities, to ensure that the plan is fully

implemented. With these, the intent of GAD on promoting gender-responsive

governance, protecting and fulfilling women’s human rights, and promoting

women’s empowerment as mandated could be fully achieved.

b. The City failed to submit the required LDRRMF reports provided under COA

Circular No. 2012-002, giving difficulty in the evaluation of LDRRMF

accomplishment and fund utilization.

We recommended that the LDRRMO comply with the provision and guidelines

set forth in COA Circular No. 2012-002, and prepare and submit all required

reports/documents in the prescribed format within the time frame provided.

c. The City failed to transfer the unexpended balance of the LDRRMF QRF and

DRRMF MOOE to the Special Trust Fund under the account “Trust Liability –

DRRM” (Code 438), contrary to Section 5.1.10 of COA Circular No. 2012-002

dated September 12, 2012, defeating the purposes and objectives of the fund as

stated under RA No. 10121, otherwise known as the Philippine Disaster Risk

Reduction and Management Act of 2010.

We reiterated our recommendations that:

the City Accountant and the Budget Officer determine the actual unexpended

balance of the LDRRMF QRF and DRRMF MOOE for CY 2015;

the City Treasurer transfer the determined amount of unexpended balance of

LDRRMF to the Trust Fund; and

the City Accountant to:

- record the amount transferred to “Trust Liability-DRRM” (Code 438);

- continuously maintain its Subsidiary Ledgers; and

- discuss in detail in the Notes to the Financial Statements the amount and

details of the unexpended balance of LDRRMF.

33. The City Government did not fully comply with the prescribed guidelines for the

implementation of Republic Act No. 9003 dated January 26, 2001, otherwise known

as Ecological Solid Waste Management Act of 2000, resulting in the following

deficiencies, which compromise the efficient and effective discharge by the City

Government of Santa Rosa of its Solid Waste Management functions as provided by

Section 17 of Republic Act No. 7160, thus resulting in negative impact on the

preservation of the environment and health of its citizen:

a. The composition of the City Solid Waste Management Board was not in

accordance with Section 12 of RA No. 9003, thus may affect the formulation of

the Solid Waste Management Plan, and the implementation of the same.

We recommended that the City Mayor form or establish a complete set of Solid

Waste Management Board, pursuant to Section 12 of Republic Act No. 9003 or

the “Ecological Solid Management Act of 2000 for effective formulation and

implementation of the City's Solid Waste Management Plan.

b. Meetings of the City Solid Waste Management Board were not done regularly,

contrary to Item 4, Section 12 of RA No. 9003, thus the implementation of the

Solid Waste Management Plans by the Component Barangays of the City were

not strictly monitored.

We recommended that the City Mayor require the City Solid Waste Management

Board to conduct regular meetings, to ensure that the Component Barangays

support the City in the implementation of the Solid Waste Management Plans, and

to immediately act in case of problems encountered in its implementation.

c. Absence of Multi-Purpose Environment Cooperatives or Association, contrary to,

and defeating the purpose of Section 13 of RA No. 9003.

We recommended that the City Mayor encourage and support the establishment

of Multi-Purpose Environment Cooperatives or Association that will help

promote the implementation of RA No. 9003.

d. The Notice of award, Invitation to Bid or Request of Submission of Price

Quotations for the “Collecting, Hauling and Disposal of Solid Waste of the City”

contract of the City were not posted in PhilGEPS, contrary to the Revised

Implementing Rules and Regulation of Section 54 of Republic Act No. 9184.

We recommended that the City Mayor require the Bids and Awards Committee

(BAC) to strictly comply with the provisions of RA No. 9184 to ensure healthy

competition in the bidding of procurement projects of the City Government.

e. The documentation of the qualification of the contractor awarded the “Collecting,

Hauling and Disposal of Solid Waste of the City” was inadequate, casting doubt

to the ability of the Contractor to efficiently and effectively undertake the

collection, hauling and disposal of wastes generated by the City.

We recommended that the City Mayor require the BAC to strictly require the

submission of the complete Contractor's eligibility documents, evaluate the ability

of the Contractor, and ensure that the bidder's equipment, manpower and other

resources are actually free and not committed to other business interest of the

bidders, to ensure that the awarded Contractor can efficiently and effectively

undertake the collection, hauling and disposal of waste generated by the City.

f. The required volume of garbage collection of 21,569 cubic meters per month was

not met by the Contractor, contrary to Article 3.3 of the contract it entered with

the City Government. Further, the correctness of the volume of garbage collected

cannot be validated due to inadequacy of the documents and information

supporting the claims.

We recommended that the City Mayor direct the CENRO Head to:

establish systematic measures that will assess and measure the performance of

the contractor in the collection, hauling and disposal of solid wastes of the

City Government;

assign personnel that will witness the actual weighing of the waste collected to

ensure that the volume reported were correct;

ensure that the required volume stated in the contract are met and strictly

adhered by the Contractor, and only the exact amount of waste collected are

billed by the Contractor; and

require the Contractor to refund the amount paid equivalent to the

variance/difference of the required volume in the contract against the actual

waste collected for the period July to December, 2015.

g. Six (6) out of the seven Materials Recovery Facility (MRF) located in different

Barangays of the City were non-operational, thus the implementation of waste

segregation at source were not fully implemented.

We recommended that the City Mayor require the coordination of City Solid

Waste Management Board (CSWMB), Barangay Solid Waste Management Board

(BSWMB) and CENRO to:

determine the problems of the non-operational MRF, and require its

repair/rehabilitation to make it operational; and

ensure that all barangays are provided with MRFs that are properly

maintained and operated.

h. The City failed to strictly implement the provisions of the City of Santa Rosa

Environment Code which resulted in improper transfer, processing and disposal

of solid waste, thereby risking the health of its constituents and environment to

the negative effects of pollution.

We recommended that the City Government strictly implement the provisions of

the Environment Code, and impose penalties to those who will be caught

violating the same.

Our observations and recommendations were discussed with the City officials

and employees concerned in an exit conference held on April 29, 2016, and we are

pleased to note their favorable reactions thereon.

Status of Implementation of Prior Year’s Audit Recommendations

Out of the 94 audit recommendations embodied in the 2014 Annual Audit Report,

30 were fully implemented, 42 were partially implemented and 22 were not implemented

by the City Government.