Lapu Lapu City Executive Summary 2018

Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. VII
Cebu City
June 25, 2019
HONORABLE PAZ C. RADAZA

City Mayor
Lapulapu City
Dear Mayor Radaza,
We are pleased to transmit the report on the results of the audit of the accounts and
operations of the City of Lapulapu for the year ended December 31, 2018 prepared by our
Audit Team headed by Ms. Maria Daisy O. Bercede as Supervising Auditor and Ms. Ma.
Teresa M. Magdadaro as Audit Team Leader, in compliance with Section 2, Article IX-D
of the Philippine Constitution and Section 43 of Presidential Decree No. 1445, otherwise
known as the Government Auditing Code of the Philippines.
Our audit was made to (a) ascertain the level of assurance that may be placed on
management assertions on the financial statements; (b) determine compliance of
management with laws, rules and regulations on the pre-identified audit thrusts/areas and
recommend agency improvement opportunities thereon; and (c) determine the extent of
implementation of prior years’ audit recommendations.
The audit was conducted in accordance with International Standards of Supreme Audit
Institutions (ISSAIs) and we believe that it provided a reasonable basis for the audit
results.
We expressed a qualified opinion on the fairness of the presentation of the financial

statements of the City for Calendar Year (CY) 2018 because of the following noted
deficiencies as discussed in this report:
1. The validity, accuracy and reliability of the Property, Plant and Equipment (PPE)
account balance as of December 31, 2018 totaling to ₱3,112,606,075.29 and
₱499,623,196.29 under the General Fund (GF) and Special Education Fund (SEF),
respectively, were not established due to the discrepancy noted totaling
₱391,824,315.87 between the inventory list of the General Services Office (GSO) and
the General Ledger (GL) balance. Likewise, unserviceable properties amounting to
₱29,195,141.65 were still recorded as PPE.
2. The balances of the account Due From Other Funds in the General Fund (GF) totaling
₱17,566,119.77, Special Education Fund (SEF) amounting to ₱16,666.66 and in the
Trust Fund (TF) amounting to ₱34,106,601.66 did not reconcile with its respective
reciprocal accounts Due To Other Funds in the GF totaling ₱88,782,486.70, in the
SEF amounting to ₱92,591.29 and in the TF amounting to ₱32,282,540.54 with a
difference of ₱69,484,897.10 thus casting doubt on the accuracy of the amounts
presented in the financial statements.
The above and other audit observations, together with the recommended courses of action
which were discussed by the Audit Team with the concerned Department Heads in an
exit conference on February 26, 2019 are discussed in detail in Part II of the report.
We request that the recommended remedial measures be immediately implemented and

we will appreciate being informed of the action(s) taken thereon by submitting the duly
accomplished Agency Action Plan and Status of Implementation (form attached) within
60 days from receipt hereof.
We acknowledge the support and cooperation that you and your staff extended to the
Audit Team which facilitated the completion of this Report.
Very truly yours,
MARILOU M. RIZARRI
Director III
Officer-In-Charge
Copy Furnished:
1. Sangguniang Panlungsod
2. Bureau of Local Government Finance
3. The Secretary, Department of Interior and Local Government
4. Commission Proper, COA Central Office, Quezon City
5. National Library (soft copy)
6. University of the Philippines, Law Center (soft copy)
7. COA, Commission Central Library (soft copy)
Annex A
(Name of the Agency and Address)

AGENCY ACTION PLAN and
STATUS OF IMPLEMENTATION
Audit Observations and Recommendations
For the Calendar Year 20XX
As of _____________
Ref Audit Audit Agency Action Plan Reason for Action

Observation Recommendation Action Person/Dept. Target Status of Partial/Delay/Non- Taken/Action
Plan Responsible Implementation Implementation Implementation, if to be taken
Date applicable
From To
Agency sign-off:
___________________________________ __________
Name and Position of Agency Officer Date
Note: Status of Implementation may either be (a) Fully Implemented, (b) On-going, (c) Not Implemented, (d) Partially Implemented,
or (e) delayed
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
ANNUAL AUDIT REPORT
on the
CITY OF LAPU-LAPU
PROVINCE OF CEBU
For the Year Ended December 31, 2018

EXECUTIVE SUMMARY
INTRODUCTION
The island of Mactan where the City of Lapu-Lapu is situated was colonized by Spain in
the 16th century. The town formerly known as “Opon” was founded by the Augustinians
friars in 1730 and became a city on June 17, 1961 under Republic Act No. 3134, it was
later renamed after Datu Lapu-Lapu, a Muslim king who defeated Portuguese explorer
Ferdinand Magellan in 1521.
On May 12, 2007 the City of Lapu-Lapu was declared a Highly Urbanized City, ratified
in a plebiscite conducted on the same date. On CY 2009, a law was passed by Congress
and approved on the same year making Lapu-Lapu City a lone district separate from the
Province of Cebu, as the 7th district.
The City of Lapu-Lapu has been the frequent destination of local and foreign tourists due
to its vast corals and abundant sea life. Also an added attraction is the Kadaugan Festival
celebrated every April of the year.
As of 31 December 2018, the City Government of Lapu-Lapu had a personnel

complement of:
Nature of Appointment to Office Number

Elective Officials 15
Permanent Positions 630
Temporary 2
Co-Terminous 87
Casuals/Contractuals 704
FINANCIAL HIGHLIGHTS
Comparative analysis of the Statement of Financial Position, as graphically illustrated,

showed an increase in Assets, Liabilities and Equity. The Statement of Financial
Performance also exhibited an increase in both income and expenses.
i
Statement of Financial Position
10,000,000,000.00
8,000,000,000.00
In Pesos 6,000,000,000.00
4,000,000,000.00
2,000,000,000.00
0.00
Assets Liabilities Equity
2018 8,157,102,067.42 3,061,844,256.40 5,095,257,811.02
2017 7,193,199,133.58 2,736,809,829.66 4,456,389,303.92
Statement of Financial Performance

2,500,000,000.00
2,000,000,000.00
In Pesos
1,500,000,000.00
1,000,000,000.00
500,000,000.00
-
Total Revenue Total Expenses Surplus (Deficit)
2018 2,430,641,628.93 1,755,816,025.04 674,825,603.89
2017 2,155,086,731.57 1,509,585,038.68 645,501,692.89
The following graph illustrates the increase of Allotments, Appropriations and

Obligations during the year:
Allotments, Appropriations, and Obligations

4,000,000,000.00
3,000,000,000.00
In Pesos
2,000,000,000.00
1,000,000,000.00
0.00
Appropriations / Obligations Balance
Allotments
2018 3,823,742,774.65 1,890,196,278.84 1,933,546,495.81
2017 3,153,998,030.99 1,611,814,966.70 1,542,183,064.29
ii
SCOPE OF AUDIT
An audit was conducted on the accounts and operations of the City of Lapu-Lapu for the
calendar year ended December 31, 2018. The audit was made to obtain reasonable
assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. We also conducted compliance audit to check the validity and propriety of
the transactions and adherence to pertinent laws, rules and regulations.
AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS
We rendered a qualified opinion on the fairness of the presentation of the financial

statements of the City of Lapu-Lapu for the year 2018 due to the deficiencies enumerated
below:
₱499,623,196.29 under the General Fund (GF) and Special Education Fund (SEF),
respectively, were not established due to the discrepancy noted totaling
₱391,824,315.87 between the inventory list of the General Services Office (GSO) and
the General Ledger (GL) balance. Likewise, unserviceable properties amounting to
₱29,195,141.65 were still recorded as PPE.
4. The balances of the account Due From Other Funds in the General Fund (GF)totaling
reciprocal accounts Due To Other Funds in the GF totaling ₱88,782,486.70, in the
SEF amounting to ₱92,591.29 and in the TF amounting to ₱32,282,540.54 with a
difference of ₱69,484,897.10 thus casting doubt on the accuracy of the amounts
presented in the financial statements.
SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS
The following are the summary of significant observations and recommendations in the
audit and/or evaluation of the operations of the City for the year 2018. These and other
audit observations are fully discussed in Part II of this report.
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1. Collections by the collecting officer of the City for the issuance of a copy of the
Certificate of Birth, Marriage, Death and CENOMAR were not properly
acknowledged by an Official Receipt but instead issued with a temporary receipt
(BREQS Acknowledgment Slip) contrary to Section 68 of P.D. 1445 and Sections 72
and 73 of the Government Accounting and Auditing Manual (GAAM).
We recommended that Management require the issuance of pre-numbered Official

Receipts to acknowledge receipt of the National Statistics Office (NSO) transactions.
2. The City Treasurer’s Office could have earned an additional income of ₱227,050.00
for the two month period (January 2018 to February 2018) had the daily cash
collections of processing fee for Birth, Marriage and Death Certificate and
CENOMAR been properly monitored and reconciled against the actual number of
transmitted requests of civil documents from the City Civil Registrar to Philippine
Statistics Authority (PSA), contrary to the City’s enacted Ordinance No. 070-2007,
known as The Revised Lapu-Lapu City Revenue Code dated December 26, 2007.
We recommended that Management:
a. Require the City Civil Registrar to furnish the CTO of the summary of documents
processed in order to facilitate the reconciliation of collected processing fees;
b. Request the CTO personnel assigned at the City Civil Registrar to explain on the
deficiencies noted, otherwise request for his/her transfer;
c. Conduct further investigation to determine all persons responsible and to get the
total amount of deficiencies for the whole year since the amount of ₱227,050.00
is only for the two month period (January, 2018 and February, 2018); and
d. Require all persons found responsible to refund the total amount of deficiencies.
3. Hospital Fee collections were recorded in the General Fund-Proper amounting to

₱26,848,147.46 and PhilHealth Share for Hospitals in the Trust Fund totaling
₱14,514,027.50 instead of recording in the local economic enterprise-hospital fund
thus preventing the actual and correct presentation of the financial performance of the
fund and continuously providing for its yearly subsidy wherein the amount of
₱55,289,840.25 was actually transferred in CY 2018.
a. Require the City Accountant to transfer all collections pertaining to the Local
Economic Enterprise – Hospital to present an accurate financial performance.
b. Study on the necessity of a yearly Subsidy from the General Fund to the Local
Economic Enterprise – Hospital.
c. Require the City Accountant to record the balance of the PhilHealth Share that is
recorded in the Trust Fund under the account Due to Other Funds to the Local
Economic Enterprise – Hospital and should note that disbursements out of these
funds shall be governed by PhilHealth issuances.
iv
4. Expenses totaling ₱164,245,739.94 comprising of payroll for honoraria of residents
in the different barangays of the city as Certified by the Barangay Captains were
charged to expense items in the CY 2018 Budget of the City which is not specific as
to the amount set aside for each barangay but lumped in a single expense item,
without the necessary authority from the Sangguniang Bayan for the specific
programs/projects entered. This is contrary to the Supreme Court decision in the case
of Hon. Gabriel Luis Quisumbing et al. vs. Hon. Gwendolyn F. Garcia.
We recommended that management submit an approved SP Resolution authorizing

the City Mayor to enter into contract for projects/programs to be implemented under
the lump sum appropriation as mandated in the Supreme Court decision in the case of
Hon. Gabriel Luis Quisumbing et al. vs. Hon. Gwendolyn F. Garcia.
We also recommended that expenses conform with the object of expenditures and its
purpose as presented in the budget.
UNSETTLED SUSPENSIONS, DISALLOWANCES AND CHARGES
Balance Issuance Settlement Balance

Notice of
1/1/2018 Jan.-Dec., 2018 Jan.-Dec., 2018 12/31/2018
Suspension ₱ 63,648,395.90 -0- ₱5,454,339.91 ₱48,194,0455.99
Disallowance ₱ 39,614,604.02 -0- -0- ₱ 39,614,604.02
Charge ₱ 686,670.82 -0- -0- ₱ 686,670.82
STATUS OF IMPLEMENTATION OF PRIOR YEAR’S RECOMMENDATIONS
Of the 55audit recommendations embodied in the 2017 Annual Audit Report; 45 were
fully implemented; five were partially implemented; and five were not implemented.
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TABLE OF CONTENTS
Part Subject Page No.

I. Audited Financial Statements 1
II. Detailed Observations and Recommendations 30
III. Status of Implementation of Prior Years’ Audit 64
Recommendations
IV. Annexes 102
PART I
AUDITED FINANCIAL STATEMENTS
A. Independent Auditor’s Report

B. Statement of Management Responsibility for Financial Statements
C. Audited Financial Statements
a. Statement of Financial Position
b. Statement of Financial Performance
c. Statement of Changes in Net Assets/Equity
d. Statement of Cash Flows
e. Statement of Comparison of Budget and Actual Amounts
f. Notes to Financial Statements
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
INDEPENDENT AUDITOR’S REPORT
Honorable PAZ C. RADAZA

City Mayor
City of Lapu-Lapu
Province of Cebu
Qualified Opinion
We have audited the financial statements of the City of Lapu-Lapu, which comprise the
statement of financial position as at December 31, 2018, and the statement of financial
performance, statement of changes in net assets/equity, statement of cash flows and statement
of comparison of budget and actual amounts for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies.
In our opinion, except for the effects of the matter described in the Basis of Qualified Opinion
section of our report, the accompanying financial statements present fairly, in all material
respects, the financial position of the City of Lapu-Lapu as at December 31, 2018, and its
financial performance, its cash flows and its comparison of budget and actual amounts for the
year then ended in accordance with Philippine Public Sector Accounting Standards (PPSAS).
Basis for Qualified Opinion
As discussed in Audit Observations and Recommendations under Part II and Status of Prior
Year’s Unimplemented Audit Recommendations under Part III, the following are the bases
for the opinion:
1. The validity, accuracy and reliability of the Property, Plant and Equipment (PPE) account
balance as of December 31, 2018 totaling to ₱3,112,606,075.29 and ₱499,623,196.29
under the General Fund (GF) and Special Education Fund (SEF), respectively, were not
established due to the discrepancy noted totaling ₱391,824,315.87 between the inventory
list of the General Services Office (GSO) and the General Ledger (GL) balance.
Likewise, unserviceable properties amounting to ₱29,195,141.65 were still recorded as
PPE.
1
2. The balances of the account Due From Other Funds in the General Fund (GF)totaling
reciprocal accounts Due To Other Funds in the GF totaling ₱88,782,486.70, in the SEF
amounting to ₱92,591.29 and in the TF amounting to ₱32,282,540.54 with a difference of
₱69,484,897.10 thus casting doubt on the accuracy of the amounts presented in the
financial statements.
We conducted our audit in accordance with International Standards of Supreme Audit

Institutions (ISSAIs). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We
are independent of the agency in accordance with the ethical requirements that are relevant to
our audit of the financial statements, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Except for the matter described in the Basis for Qualified Opinion section, we have
determined that there are no other key audit matters to communicate in our report.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with PPSAS, 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.
Those charged with governance are responsible for overseeing the LGU’s financial reporting
process.
2
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not guarantee that an audit conducted in accordance with ISSAIs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
COMMISSION ON AUDIT
By:
MARIA DAISY O. BERCEDE

Supervising Auditor
February 28, 2019
3
4
City of Lapu-Lapu
Province of Cebu
NOTES TO FINANCIAL STATEMENTS
For the Calendar Year 2018
Notes to Condensed Financial Statements

(All amounts in Philippine Peso unless otherwise stated)
Note 1 - Profile
The LGU was created by virtue of Republic Act No. 3134 on June 17, 1961
otherwise known as the Charter of Lapu-Lapu City. Pursuant to RA 7160,
known as the Local Government Code of 1991, the City, like the other
government units, enjoys total independence in managing, deciding and
planning its own administrative, fiscal and development affairs in conformity
with the national government’s thrust for sustainable social economic growth.
It is a body politic and corporate endowed with powers as a political sub-
division of the national government and as a corporate entity representing the
inhabitants of the territory. It is responsible for the delivery of basic services
and facilities and promotes the general welfare of its inhabitants.
On May 12, 2007, a plebiscite was being conducted in all the 30 barangays in
Lapu-Lapu City to make the city a highly urbanized unit. It was a successful
event with the “Yes” votes winning thus the City of Lapu-Lapu was
accordingly declared as a Highly Urbanized City. Consequently, a law was
passed by Congress in CY 2009 making the City of Lapu-Lapu, a lone district
separate and distinct from the Province of Cebu and accordingly been approved
on that same year, thus making Lapu-Lapu City as the 7th District.
Note 2- The consolidated financial statements of the LGU 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 LGU. The
accounting policies have been applied starting the year 2015.
11
Note 3 - Summary of significant accounting policies
3.1 Basis of accounting
The consolidated Financial Statements are prepared on an accrual basis in

accordance with the Philippine Public Sector Accounting Standards
(PPSAS).
3.2 Consolidation
The Consolidated Financial Statements include the Consolidated General

Fund, Trust Fund and Special Education Fund. Projects funded through
loans are also part of the General Fund. The LGU maintains special
accounts under the General Fund for the following economic enterprises it
operates:
 Development Fund
 Market and Slaughterhouse
 Hospital
3.3 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees and fines
The LGU recognizes revenues from taxes and fines when the event occurs
and the asset recognition criteria are met. To the extent that there is a
related condition attached that would give rise to a liability to repay the
amount, liability is recognized instead of revenue. Other non-exchange
revenues are recognized when it is probable that the future economic
benefit or service potential associated with the asset will flow to the entity
and the fair value of the asset can be measured reliably.
Transfers from other government entities
Revenues from non-exchange transactions with other government entities

are measured at fair value and recognized on obtaining control of the asset
(cash, goods, services and property) if the transfer is free from conditions
and it is probable that the economic benefits or service potential related to
the asset will flow to the LGU and can be measured reliably.
The LGU availed of the 5 – year transitional provision for the recognition
of Tax Revenue-Real Property and Special Education Tax. For the first
year, there will be no change in policy for the recognition of the
aforementioned tax revenue.
12
Revenue from exchange transactions
Rendering of services
The LGU recognizes revenue from rendering of services by reference to

the stage of completion when the outcome of the transaction can be
estimated reliably. The stage of completion is measured by reference to
labor hours incurred to date as a percentage of total estimated labor hours.
Where the contract outcome cannot be measured reliably, revenue is

recognized only to the extent that expenses are incurred.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks
and rewards of ownership have been transferred to the buyer, usually on
delivery of the goods and when the amount of revenue can be measured
reliably and it is probable that the economic benefits or service potential
associated with the transaction will flow to the LGU.
Rental income
Rental income arising from operating leases on investment properties is

accounted for on a straight-line basis over the lease terms and included in
revenue.
3.4 Property, plant and equipment
All property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items. When significant parts
of property, plant and equipment are required to be replaced at intervals,
the LGU recognizes such parts as individual assets with specific useful
lives and depreciates them accordingly. Likewise, when a major
inspection is performed, its cost is recognized in the carrying amount of
the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognized in surplus
or deficit as incurred. Where an asset is acquired in a non-exchange
transaction for nil or nominal consideration the asset is initially measured
at its fair value.
Depreciation on assets is charged on a straight-line basis over the useful

life of the asset.
Depreciation is charged at rates calculated to allocate cost or valuation of

the asset less any estimated residual value over its remaining useful life:
13
(refer to COA issuances on the prescribed useful life of assets)
Leased assets may consist of vehicles and machinery. The assets’ residual
values and useful lives are reviewed, and adjusted prospectively, if
appropriate, at the end of each reporting period. An asset’s carrying
amount is written down immediately to its recoverable amount, or
recoverable service amount, if the asset’s carrying amount is greater than
its estimated recoverable amount or recoverable service amount. The LGU
derecognizes items of property, plant and equipment and/or any significant
part of an asset upon disposal or when no future economic benefits or
service potential is expected from its continuing use. Any gain or loss
arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included
in the surplus or deficit when the asset is derecognized.
Public Infrastructures were not previously recognized in the books. The

LGU availed of the 5-year transitional provision for the recognition of the
Public Infrastructure. For the first year of implementation of the PPSAS,
the LGU will not recognize the Public Infrastructure in the books of
accounts.
3.6 Leases
LGU as a lessor
Leases in which the LGU does not transfer substantially all the risks and
benefits of ownership of an asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease are added to the
carrying amount of the leased asset and recognized over the lease term.
Rent received from an operating lease is recognized as income on a

straight-line basis over the lease term. Contingent rents are recognized as
revenue in the period in which they are earned.
3.5 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank,
deposits on call and highly liquid investments with an original maturity of
three months or less, which are readily convertible to known amounts of
cash and are subject to insignificant risk of changes in value. For the
purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits as defined above, net
of outstanding bank overdrafts.
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3.6 Inventories
Inventory is measured at cost upon initial recognition. To the extent that

inventory was received through non-exchange transactions (for no cost or
for a nominal cost), the cost of the inventory is its fair value at the date of
acquisition.
After initial recognition, inventory is measured at the lower of cost and net
realizable value. However, to the extent that a class of inventory is
distributed or deployed at no charge or for a nominal charge, that class of
inventory is measured at the lower of cost and current replacement cost.
Net realizable value is the estimated selling price in the ordinary course of
operations, less the estimated costs of completion and the estimated costs
necessary to make the sale, exchange, or distribution. Inventories are
recognized as an expense when deployed for utilization or consumption in
the ordinary course of operations of the LGU.
3.7 Provisions
Provisions are recognized when the LGU has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits or service potential will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Where the LGU expects some or all of a provision to be reimbursed, for

example, under an insurance contract, the reimbursement is recognized as
a separate asset only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the statement of

financial performance net of any reimbursement.
Rehabilitation liability
Rehabilitation costs are provided at the present value of expected costs to

settle the obligation using estimated cash flows and are recognized as part
of the cost of that particular asset. The cash flows are discounted at a
current rate that reflects the risks specific to the rehabilitation liability. The
unwinding of the discount is expensed as incurred and recognized in the
statement of financial performance as a finance cost. The estimated future
costs of decommissioning are reviewed annually and adjusted as
appropriate. Changes in the estimated future costs or in the discount rate
applied are added to or deducted from the cost of the asset.
15
Contingent liabilities
The LGU does not recognize a contingent liability, but discloses details of
any contingencies in the notes to the financial statements, unless the
possibility of an outflow of resources embodying economic benefits or
service potential is remote.
Contingent assets
The Group does not recognize a contingent asset, but discloses details of a
possible asset whose existence is contingent on the occurrence or non-
occurrence of one or more uncertain future events not wholly within the
control of the LGU in the notes to the financial statements. Contingent
assets are assessed continually to ensure that developments are
appropriately reflected in the financial statements. If it has become
virtually certain that an inflow of economic benefits or service potential
will arise and the asset’s value can be measured reliably, the asset and the
related revenue are recognized in the financial statements of the period in
which the change occurs.
3.8 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy

retrospectively. The effects of changes in accounting policy are applied
prospectively if retrospective application is impractical.
The LGU recognizes the effects of changes in accounting estimates

prospectively by including in surplus or deficit.
3.8 Borrowing costs
Borrowing costs are capitalized against qualifying assets as part of

property, plant and equipment. Such borrowing costs are capitalized over
the period during which the asset is being acquired or constructed and
borrowings have been incurred. Capitalization ceases when construction
of the asset is complete. Further, borrowing costs are charged to the
statement of financial performance.
3.9 Related parties
The LGU regards a related party as a person or an entity with the ability to
exert control individually or jointly, or to exercise significant influence
over the LGU, or vice versa. Members of key management are regarded as
related parties and comprise the Governor, Mayors, Vice-Governors and
Vice-Mayors, Sanggunian Members, Committee Officials and Members,
16
Accountants, Treasurers, Budget Officers, General Services and all Chiefs
of Departments/Divisions.
3.10 Budget information
The annual budget is prepared on the modified cash basis, that is, all
planned costs and income are presented in a single statement to determine
the needs of the LGU. As a result of the adoption of the Modified cash
basis for budgeting purposes, there are basis, timing or entity differences
that would require reconciliation between the actual comparable amounts
and the amounts presented as a separate additional financial statement in
the statement of comparison of budget and actual amounts. Explanatory
comments are provided in the notes to the annual financial statements;
first, the reasons for overall growth or decline in the budget are stated,
followed by details of overspending or under-spending on line items.
3.11 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, management

has made judgments, which have the most significant effect on the
amounts recognized in the consolidated financial statements.
Operating lease commitments – LGU as lessor
The LGU has entered into property leases of certain of its properties. The
LGU has determined, based on an evaluation of the terms and conditions
of the arrangements, (such as the lease term not constituting a substantial
portion of the economic life of the commercial property) that it retains all
the significant risks and rewards of ownership of the properties and
accounts for the contracts as operating leases.
Estimates and assumptions
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The LGU
based its assumptions and estimates on parameters available when the
consolidated financial statements were prepared. However, existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control of the
LGU. Such changes are reflected in the assumptions when they occur.
17
Useful lives and residual values
The useful lives and residual values of assets are assessed using the
following indicators to inform potential future use and value from
disposal:
a) The condition of the asset based on the assessment of experts

employed by the LGU;
b) The nature of the asset, its susceptibility and adaptability to

changes in technology and processes;
c) The nature of the processes in which the asset is deployed; and
d) Changes in the market in relation to the asset
Impairment of non-financial assets – cash-generating assets
The recoverable amounts of cash-generating units and individual assets

have been determined based on the higher of value-in-use calculations and
fair values less costs to sell. These calculations require the use of estimates
and assumptions. It is reasonably possible that the assumptions may
change, which may then impact management’s estimations and require a
material adjustment to the carrying value of tangible assets.
The LGU reviews and tests the carrying value of assets when events or
changes in circumstances suggest that the carrying amount may not be
recoverable. Cash-generating assets are grouped at the lowest level for
which identifiable cash flows are largely independent of cash flows of
other assets and liabilities. If there are indications that impairment may
have occurred, estimates of expected future cash flows are prepared for
each group of assets. Expected future cash flows used to determine the
value in use of tangible assets are inherently uncertain and could
materially change over time.
Impairment of non-financial assets – non-cash generating assets
The LGU reviews and tests the carrying value of non-cash-generating

assets when events or changes in circumstances suggest that there may be
a reduction in the future service potential that can reasonably be expected
to be derived from the asset. Where indicators of possible impairment are
present, the LGU undertakes impairment tests, which require the
determination of the fair value of the asset and its recoverable service
amount. The estimation of these inputs into the calculation relies on the
use of estimates and assumptions.
18
Any subsequent changes to the factors supporting these estimates and
assumptions may have an impact on the reported carrying amount of the
related asset.
Fair value estimation – financial instruments
Where the fair value of financial assets and financial liabilities recorded in
the statement of financial position cannot be derived from active markets,
their fair value is determined using valuation techniques including the
discounted cash flow model. The inputs to these models are taken from
observable markets where possible, but where this is not feasible,
judgment is required in establishing fair values. Judgment includes the
consideration of inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions about these factors could affect the reported fair
value of financial instruments.
Held-to-maturity investments and loans and receivables
The LGU assesses its loans and receivables (including trade receivables)
and its held-to-maturity investments at the end of each reporting period. In
determining whether an impairment loss should be recorded in surplus or
deficit, the LGU evaluates the indicators present in the market to
determine if those indicators are indicative of impairment in its loans and
receivables or held-to-maturity investments.
Where specific impairments have not been identified the impairment for
trade receivables, held-to-maturity investments and loans and receivables
is calculated on a portfolio basis, based on historical loss ratios, adjusted
for national and industry-specific economic conditions and other
indicators present at the reporting date that correlate with defaults on the
portfolio. These annual loss ratios are applied to loan balances in the
portfolio and scaled to the estimated loss emergence period.
Note 4. Cash and Cash Equivalents

2018 2017
Cash on Hand
Cash-Local Treasury 48,746,566.71 34,256,972.50
Petty Cash 942,461.34 944,224.02
Cash in Bank – Local Currency
Cash in Bank-Local Currency-Current
Account 263,947,381.51 122,522,915.37
Cash Equivalents
Cash in Bank-Local Currency-Time
Deposits 2,898,000,000 2,338,000,0000
Total 3,211,636,409.56 2,495,724,111.89
19
Cash in banks earn interest based on the prevailing bank deposit rates. Short-term
deposits are made for varying periods, depending on the immediate cash
requirements of the LGU and earn interest at the respective short-term deposit
rate.
Note 5 – Investments
2018 2017
Financial Assets-Others
Guaranty Deposits 25,286,266.97 12,270,386.97
Other Investments 1,663,646.00 1,663,646.00
Total 26,949,912.97 13,934,032.97
The above accounts are non-moving for so many years now and evidence
that such investment can be accounted and verified is remote since the
people who may have knowledge of such are no longer connected with the
government.
Note 6 - Receivables
2018 2017
Loans and Receivable Accounts
Accounts Receivable 18,250.00 18,250.00
Real Property Tax Receivable 1,432,685,887.65 1,433,991,745.27
Special Education Tax Receivable 413,852,754.01 367,208.281.07
Inter-Agency Receivables
Due from National Government Agencies 3,009,940.97 3,009,940.97
Due from Local Government Units 16,493,457.58 13,983,557.78
Intra-Agency Receivables
Due from Other Funds 51,669,385.82 40,936,104.63
Advances
Advances for Payroll 869,750.00 (10,000.00)
Advances to Special Disbursing Officer 6,287,174.96 6,215,907.73
Advances to officers and Employees 1,397,525.05 88,751.17
Other Receivables
Receivables-Disallowances/Charges 2,510,904.98 2,853,265.54
Due from Officers and Employees 5,618.62 5,618.62
Due from Non-Government
Organizations/POs 3,431,092.16 4,909,782.26
Other Receivables 1,801,703.49 1,801,703.49
Total 1,934,033,445.29 1,875,012,909.33
20
Note 7 – Inventories
2018 2017
Inventory Held for Consumption
Office Supplies Inventory 3,044,638.24 3,462,125.25
Accountable Forms, Plates and Stickers 11,218,171.24 6,834,410.35
Animal/Zoological Supplies Inventory 207,354.03 13,104.03
Food Supplies Inventory 3,205,397.98 3,524,796.99
Drugs and Medicines Inventory 9,340,865.74 12,212,767.62
Medical, Dental and Laboratory Supplies
Inventory 15,547,880.16 17,843,804.84
Fuel, Oil and Lubricants Inventory 635,971.73 579,912.59
Textbooks and Instructional Materials
Inventory 00 2,257,042.78
Construction Materials Inventory 428,099.73 428,099.73
Other Supplies and Materials Inventory 1,620,289.51 899,722.12
Total 45,248,668.36 48,055,786.30
Note 8 – Prepayments and Deferred Charges

2018 2017
Prepayments
Advances to Contractors 33,660,823.62 22,850,938.25
Other Prepayments 6,205,440.12 6,205,440.12
Total 39,866,263.74 29,056,378.37
Note 9 - Property, Plant and Equipment
Depreciation was implemented starting CY 2003 on current purchases only.

Property, Plant and Equipment beginning balances are not included yet in the
computation of depreciation and reconciliation with General Service Office is still
on-going. The allocation of salvage value was implemented on January 2004
pursuant to COA rules and regulations.
The transfer and adjustment column relates to reclassifications between the

different classes of assets and also to other categories of assets including
inventory and intangible assets.
The LGU measured the residual value of all items of property, plant and
equipment, but does not expect a residual value of these assets, because these will
be utilized for their entire economic lives and do not have a significant scrap
value. During the current financial year, the LGU reviewed the estimated useful
lives and residual values of property, plant and equipment, where appropriate.
21
Note 10 – Intangible Assets
2018 2017
Computer Software 5,199,475.00 4,750.000.00
Note 11 – Liabilities
11-1 2018 2017
Financial Liabilities
Accounts Payable 248,833,226.09 180,285,158.98
Due to Officers and Employees 19,801,783.12 12,718,933.11
Loans Payable-Domestic 35,745,956.18 59,074,766.61
Total 304,380,965.39 252,078,858.70
11-2 2018 2017

Inter-Agency Payables
Due to BIR 20,666,047.49 19,571,410.52
Due to GSIS 10,491,460.93 10,806,239.69
Due to Pag-ibig 1,486,754.92 863,556.06
Due to PhilHealth 3,025,437.38 3,148,224.46
Due to NGAs 75,877,712.99 87,518,691.97
Due to GOCCs 47,424,710.87 65,522,210.87
Due to LGUs 19,129,424.24 16,498,437.31
Total 178,101,548,82 203,928,770.88
The first four accounts represent the amounts deducted from the salaries of
officials and employees and were remitted to the respective government
agencies immediately on the month following the month on which these were
deducted.
The remaining accounts represent balances of funds received by the LGU for
specific purposes. Transfers from other government agencies represent those
funds received for specific projects undertaken by the LGUs for specific
purpose. These funds were received on the basis of the project budgets
submitted. Accordingly, the LGUs are contractually bound to spend these
funds only in connection with the projects. Furthermore, the contracts
stipulate that the funds received for the project may only be applied to the
costs incurred for the project, as and when the phases of the projects are
certified as complete. The conditions remaining therefore represent phases of
the projects that are yet to be certified as complete. Return of the unspent
portion of the fund is subject to the conditions stated in the respective
Memorandum of Agreements executed between the LGU and the proponent
government agencies
22
11-3 2018 2017
Intra-Agency Payables
Due to Other Funds 121,157,618.53 63,827,811.14
11-4 2018 2017

Trust Liabilities
Trust Liabilities – DRMM Fund 127,709,408.56 104,903,587.58
Bail Bonds Payable 66,477.52 66,477,52
Guaranty/Security Deposits Payable 3,298,099.41 5,202,680.00
Total 131,073,985.49 110,172,745.10
11-5 2018 2017

Deferred Credits/Unearned Income
Deferred Real Property Tax 1,432,685,616.73 1,433,991,474.35
Deferred Special Education Tax 413,852,753.51 367,208,281.07
Other Deferred Credits 273,811,706.54 135,774,650.01
Total 2,120,350,076.78 1,936,974,405.43
2018 2017
11-6
Other Payables
Other Payables 206,800,061.39 169,827,238.41
Note 12 – Tax Revenue

12-1 2018 2017
Tax Revenue - Individual and Corporation
Community Tax 15,680,495.34 13,706,822.91
Professional Tax (300.00)
Tax Revenue - Property
Real property Tax - Basic 179,248,381.63 160,739,125.24
Discount on Real Property Tax - Basic (17,827,382.24) (12,912,791.05)
Special Education Tax 123,796,505.61 112,281,566.26
Discount on Special Education Tax (9,048,809.59) (7,400,234.70)
Real Property Transfer Tax 85,729,104.25 68,070,585.85
Tax Revenue – Goods and Services
Business Tax 522,397,416.74 421,262,885.34
Tax on Delivery Trucks and Vans 5,679,660.00 5,271,385.00
Amusement Tax 482,057.14 657,970.25
Franchise Tax 7,860,766.80 7,983,098.64
Printing and Publication Tax 1,525.00 20,175.00
Other Taxes 316,667,495.84 293,754,959.25
Tax Revenue – Fines and Penalties
Tax Revenue – Fines and Penalties –
Property Taxes 38,670,501.65 36,858,761.83
Tax Revenue – Fines and Penalties –
Other Taxes 6,877,249.41 448,556.11
Total 1,276,214,667.58 1,100,742,865.93
23
12-2 2018 2017
Share from National Taxes
Share from Internal Revenue Collection 843,169,841.00 784,758,506.00
Share from National Wealth 215,442.91 170,715.62

Share from Tobacco Excise Tax
Share from Economic Zone ____________ ___________
Subtotal 215,442.91 170,715.62
Total 843,385,283.91 784,929,221.62
Note 12– Service and Business Income

2018 2017
Service Income
Permit Fees 60,854,628.40 36,787,539.17
Registration Fees 4,956,570.57 3,815,622.42
Clearance and Certification Fees 3,659,085.83 3,392,648.00
Inspection Fees 27,516,264.41 15,378,866.77
Processing Fees 360.00 360.00
Occupation Fees 13,985,040.00 12,939,530.00
Fishery Rentals, Fees and Charges 0.00 0.00
Fines and Penalties – Service Income 8,725.00 8,550.00
Other Service Income 0.00 0.00
Business Income
School Fees 4,178,110.00 5,297,542.50
Rent Income 3,426,499.60 3,206,546.00
Road Network Fees 407,885.00
Parking Fees 4,828,195.00 5,528,220.00
Power Supply System Fees 00 00
Receipts from Market Operations 10,848,045.47 11,189,059.36
Receipts from Slaughterhouse Operations 1,142,776.50 1,172,846.55
Sales Revenue 2,226,475.51 2,145,350.36
Garbage Fees 14,048,711.08 12,666,042.94
Hospital Fees 44,361,872.26 36,309,897.85
Dividend Income 0.00 0.00
Interest Income 25,351,549.85 18,862,635.30
Other Business Income 1,513,875.00 1,221,750.00
Total 223,314,669.48 169,923,007.22
24
Note 13- Transfers, Assistance and Subsidy
2018 2017
Assistance and Subsidy
Subsidy from National Government 18,926,102.99 60,770,600.77
Subsidy from GOCC 486,496.00 10,919,062.85
Subsidy from General Fund
Proper/Other Special Accounts 55,289,840.25 18,826,498.00
Transfers
Transfers from Unspent DRRMF ___________ 1,415,034.56
Total 74,702,439.24 91,931,196.18
Note 14– Share, Grants and Donations

2018 2017
Share
Share from PAGCOR 00
Share from PCSO 8,860,346.85 6,904,104.13
Grants and Donations
Grants and Donations in Cash 3,950,000.00 534,869.45
Total 12,810,346.85 7,438,973.58
Note 14-1 Gain on Sale of Property, Plant & Equipment 98,886.00
Note 14-2MiscellaneousIncome 115,335.87
Note 15 - Employee Costs 2018 2017

Salaries and Wages
Salaries and Wages-Regular 214,194,310.69 184,744,013.35
Salaries and Wages-Casual/Contractual 72,666,268.73 40,592,845.41
Other Compensation
Personal Economic Relief Allowance
(PERA) 31,326,322.56 24,563,851.69
Representation Allowance (RA) 4,566,500.00 4,343,625.00
Transportation Allowance (TA) 4,566,500.00 4,343,625.00
Clothing/Uniform Allowance 7,837,000.00 4,660,000.00
Subsistence Allowance 3,141,968.06 2,729,358.06
Laundry Allowance 333,088.30 285,305.80
Productivity Incentive Allowance 00 1,542,000.00
Honoraria 13,495,559.92 14,012,183.03
Hazard Pay 10,389,482.57 8,471,448.67
Overtime and Night Pay 25,081,275.32 15,880,195.25
Year-end Bonus 23,798,651.55 18,881,423.03
Cash Gift 6,395,500.00 5,104,556.12
Other Bonuses and Allowances 29,432,402.27 22,847,246.00
Personnel Benefit Contributions
Retirement and Life Insurance Premiums 33,981,166.57 26,927,923.95
25
Pag-ibig Contributions 1,504,801.44 1,192,162.50
PhilHealth Contributions 3,467,037.85 2,644,747.74
Employees Compensation Insurance
Premiums 1,559,187.05 1,293,359.15
Other Personnel Benefits
Terminal Leave Benefits 4,369,533.98 4,840,451.83
Other Personnel Benefits 15,646,281.03 12,960,349.27
Total 507,752,837.89 402,860,670.85
Note 16 – Maintenance and Other Operating Expenses
2018 2017
Travelling Expenses
Travelling Expenses-Local 3,602,411.71 4,659,360.95
Travelling Expenses- Foreign 1,842,665.24 150,000.00
Scholarship and Training Expenses
Training Expenses 21,351,388.98 18,087,772.82
Scholarship Expenses 1,947,412.38 3,037,274.25
Supplies and Materials Expenses
Office Supplies Expenses 12,593,288.95 10,998,792.48
Accountable Forms Expenses 2,579,596.81 3,177,697.70
Animal/Zoological Supplies Expenses 720,520.00 663,454.25
Food Supplies Expenses 29,121,624.14 21,415,373.51
Drugs and Medicines Expenses 9,505,845.05 13,1771,888.92
Medical, Dental and Laboratory Supplies 10,081,983.30 7,341,136.66
Expenses
Fuel, Oil and Lubricants Expenses 20,871,927.88 15,663,240.17
Agricultural and Marine Supplies Expenses 144,650.00 141,735.00
Textbooks and Instructional Materials 1,368,600.00 7,466,371.21
Expenses
Military, Police and Traffic Supplies Expenses 431,264.00 600,571.99
Other Supplies and Materials Expenses 56,343,875.18 54,151,529.75
Utility Expenses
Water Expenses 476,753.56 392,694.33
Electricity Expenses 174,637,844.94 147,214,497.95
Communication Expenses
Postage and Courier Services 296,663.15 414,745.00
Telephone Expenses 4,984,338.54 4,278,502.25
Internet Subscription Expenses 1,443,953.87 1,591,953.59
Cable, Satellite, Telegraph and Radio Expenses 18,780.00 18,780.00
Awards, Rewards & Prizes
Awards and Rewards Expenses 3,435,000.00 1,187,330.00
Survey, Research, Exploration and Dev’t.
Expenses
Survey Expenses 2,053,600.00 0.00
Demolition/Relocation&Desilting/Dredging
Expenses
26
Demolition and Relocation Expenses 5,150,989.03 773,134.47
Confidential, Intelligence& Extraordinary

Expenses
Confidential Expenses 6,000,000.00 4,000,000.00
Extraordinary and Miscellaneous Expenses 1,511,345.39 2,319,841.71
Total 372,516,322.10 323,517,678.96
Note 17 – Contracted Services

2018 2017
Professional Services
Consultancy Services 5,812,500.00 6,317,000.00
Other Professional Services 28,804,300.00 28,031,355.20
General Services
Environment/Sanitary Services 104,966,752.74 98,212,742.39
Security Services 15,235,509.90 13,148,873.64
Other General Services 36,797,441.21 31,284,508.40
Total 191,616,503.85 176,994,479.63
Note 18 – Repairs and Maintenance

2018 2017
Repairs & Maintenance-Investment Property 00 20,502.72

Repair & Maintenance-Infrastructure Assets 9,603,101.78 18,608,484.25
Repairs & Maintenance-Buildings and Structures 32,763,998.09 3,791,455.06
Repairs & Maintenance-Machinery and 3,247,290.34 1,944,893.84
Equipment
Repairs & Maintenance-Transportation 3,886,043.26 7,010,220.30
Equipment
Repairs & Maintenance-Furniture, Fixtures and 207,865.50 215,284.00
Books
Repairs & Maintenance-Other Property, Plant & 27,871.25 17,287,977.42
Equipment
Total 49,736,170.22 78,878,820.59
Note 19 - Taxes, Insurance Premiums and Other Fees

2018 2017
Taxes, Duties and Licenses 149,911.88 140,910.82

Fidelity Bond Premiums 513,530.75 501,792.00
Insurance Expenses 2,773,537.13 3,367,052.13
Total 3,436,979.76 4,009,754.95
27
Note 20 – Other Maintenance and Operating Expenses
2018 2017
Advertising Expenses 1,699,300.10 1,101,915.22

Printing and Publication Expenses 00 18,108.00
Representation Expenses 6,124,661.99 3,519,430.96
Rent Expenses 3,552,600.00 5,508,173.60
Membership Dues and Contributions to 301,270.00 1,133,314.00
Organizations
Subscription Expenses 488,956.04 426,97.00
Donations 30,898,749.54 29,545,424.40
Other Maintenance and Operating Expenses 361,271,432.89 323,399,359.60
Total 404,336,970.56 364,652,700.78
Note 21 – Non-Cash Expenses
2018 2017
Depreciation-Land Improvements 1,614,263.39 2,139,535.41

Depreciation-Infrastructure Assets 48,803,177,81 35,323,699.10
Depreciation-Buildings and Structures 30,837,731.85 25,249,409.47
Depreciation-Machinery and Equipment 38,959,162.08 27,992,725.12
Depreciation-Transportation Equipment 10,299,895.83 7,172,774.73
Depreciation-Furniture, Fixtures and Books 2,457,401.29 1,5915,263.51
Depreciation-Other Property, Plant &
Equipment 98,074.80 82,352.13
Total 133,069,707.05 99,875,729.47
Note 22 - Financial Expenses
2018 2017
Interest Expenses 3,963,770.70 6,002,422.95
Bank Charges _____6,987.66 _____00
Total 3,970,758.36 6,002,422.95
Note 23 – Transfers, Assistance and Subsidy
2018 2017
Financial Assistance/ Subsidy
Subsidy to GF Proper/Special Accounts 55,289,840.25 18,826,498.00
Subsidies - Others 00
Transfers
Transfers of Current Year DRRMF to 34,089,935.00 33,966,282.50
Trust Fund
Total 89,379,775.25 52,792,780.50
28
Note 24 - Reconciliation of Net Cash Flows from Operating Activities to Surplus/
(Deficit)
Surplus/(Deficit) 674,825,603.89 645,501,692.89

Add (Deduct)Non-Cash Transactions
Depreciation 133,069,707.05 99,875,729.47
Increase in Payables 348,375,643.58 104,5553,144.21
Increase in Other Current Assets (21,117,533.43) 2,171,319.34
Increase in Receivables (59,020,535.96) (20,221,155.61)
Prior Years’ Adjustments (5,688,064.00) 11,698,022.71
Net Cash from Operating Activities 1,070,444,821.13 843,578,753.01
Other Matters: Subsequent Events
1. Confidential Expenses for the fourth quarter amounting to ₱2,000,000.00

were accordingly liquidated on January 2019 as per JEV NO. 2019-01-
1000001
2. Cash advance for foreign travel of National Employees to wit:

Ferdinand Collantes 250,550.93
Ruelo Saladaga 250,550.93
Joseph Stephen Ygnacio 250,550.93
Ending balance as December 31, 2018 of Due from Officers and
Employees amounting to ₱1,344,685.05 will be reduced by ₱751,652.79
and will leave a balance of ₱593,032.26. The above persons liquidated
their advances in February 2019.
3. A national employee also named Clifford Avila from Bureau of Firehose

liquidation dated January 2009, just submitted his liquidation this February
2019.
4. JEV No. 101-12-1000817 dated December 2018, entry to Accounts

Payable for Special Account-Hospital was erroneously closed to Special
Account-Market. Adjusting Entry was done on January 29, 2019 per JEV
No, 101-19-01-1000006 amounting to ₱368,846.79.
29
PART II
DETAILED OBSERVATIONS AND
RECOMMENDATIONS
PART II – AUDIT OBSERVATIONS AND RECOMMENDATIONS
1. Cash advances of 49 personnel totaling ₱677,633.28 granted from CY 1997 to CY

2017 remained unliquidated as of December 31, 2018 contrary to the provisions of
COA Circular 2012-001, Section 89 of PD 1445 and the guidelines set in COA
Circular 97-002 governing the grant, utilization, and liquidation of cash advances.
COA Circular 2012-001 provides that accountable officers shall liquidate cash advances
within the following period:
a. Salaries, wages, allowances, honoraria and other similar payments – within five
calendar days after the end of the pay period
b. Traveling expenses – within 30 days after the return of the official/employee
concerned to his official station for local travel and within 60 days after the return of
the official/employee concerned to the Philippines in the case of foreign travel
c. Special purpose – as soon as the purpose of the cash advance has been served
Section 89 of PD 1445 also states that no cash advance shall be given unless for a legally
authorized specific purpose. A cash advance shall be reported on and liquidated as soon
as the purpose for which it was given has been served. No additional cash advance shall
be allowed to any official or employee unless the previous cash advance given to him is
first settled or a proper accounting thereof is made.
The schedule below shows the unliquidated cash advances of the 49 personnel totaling
₱677,633.28 as of December 31, 2018:
ACCOUNTABLE OFFICERS DATE GRANTED AMOUNT

1 ABUGAN , CLETO - LTO Officer in charge Jun-97 3,410.00
2 ABUGAN , CLETO - LTO Officer in charge Jan-99 4,966.00
3 AVILA, CLIFFORD Jan-09 50,000.00
4 BAGANO, MERLO - City Attorney's Office Mar-04 3,650.00
5 BENTULAN, ROXAN Feb-07 15,549.60
6 BERAME, ABEGAIL D. May-15 17,500.00
7 BERIDO, PEPE Jun-08 9,611.00
8 DAYAG, EMERSON Apr-07 16,642.01
9 DEGOLLACION, NIXON May-12 11,300.00
10 DEL FIERRO, ANTONIO -Adm. Officer , PNP Oct-98 1,177.00
11 DOMINGO, ANDREW JOHN Mar-16 21,700.00
12 ESPALLAGAR, ANTONIETTA Oct-18 25,400.00
13 ESPEDIDO, MARIO May-11 2,715.09
14 GACRAMA, MARLON - RTC 53 Process Server Mar-98 3,470.00
15 GAKO, IRENEO JR.- City Fiscal- 1997 Jun-97 3,996.00
16 GATO, JUAN - RTC 53 Sherif IV Mar-97 1,900.00
17 IBAG, LOURDES B. Mar-11 23,429.00
18 JAVIER, ROMEL - RTC 53-Stenographer III May-97 1,950.00
19 LAGRIMAS, DOLORES Mar-12 11,200.00
20 LAURON, JOVENCIO (Agus, Brgy. Capt.) Feb-15 10,430.00
30
ACCOUNTABLE OFFICERS DATE GRANTED AMOUNT
21 LLENES, RONNIE Jun-07 9,952.00
22 LLOVERAS, AGUSTIN- PNP(Intelligence Fund) 1997 Jan-97 21,450.00
23 MAGNO, NESTOR- Police Inspector-PNP-2003 Oct-03 571.76
24 MARABABOL, HARLENE Mar-12 10,559.84
25 MATBAGON, JACKSON (Caubian Brgy. Capt.) Feb-15 8,035.00
26 MELANCOLICO, NELSON (Sabang, Brgy. Capt.) Feb-15 12,000.00
27 MONZON, LETECIA Apr-08 13,687.00
28 PACALDO, ANTHONY Mar-10 9,620.00
29 PIMENTEL BASILISO- RTC-54 Oct-05 7,500.00
30 POLISTON, CHARLESTON Aug-08 17,956.34
31 ROBLE, PAZ - DILG-1997 Jul-97 1,730.00
32 ROBLE, RENIA Oct-06 11,000.00
33 ROSTATA, DOMINGO Mar-10 9,500.00
34 SABADUQUIA ,LISA Nov-08 15,550.40
35 SABILLO, MANUEL T. Mar-11 6,835.00
36 SAYSON, LORGENA P. May-12 10,404.00
38 TAMPUS, CAROLNY NICOLLETE May-09 20,400.00
39 TAMPUS, MANUEL C. Nov-17 14,019.64
40 VALENCIA, TITO Mar-10 9,500.00
41 VIBARES, VICTOR Mar-12 9,600.00
42 VIDAL, WILLAND-Youth Dev’t Commission-1998 Jun-98 5,050.00
43 VILLANOBOS, ROGELIO May-08 9,540.00
44 YMBONG RODULFO- SP SECRETARY Jun-05 10,550.00
45 YRASTORZA, RAPHAEL SR. Jun-11 10,880.00
46 ALEGRE, SUNSHINE V. Dec-17 8,395.25
47 TARONA, ARNOLD Sep-96 20,000.00
48 WEIGEL, ERNEST LUKE Mar-00 96,207.68
49 RIVERA, MARY AGNES – NAT’L. SCHOOLS PRESS CON - SEF Jan-09 52,840.00
TOTAL 677,634.28
Sanctions should be imposed such as the provision of Section 5.1.3 of COA Circular No.
97-002 which states that the failure of the accountable officer to liquidate his cash
advance within the prescribed period shall constitute a valid cause for the withholding of
his salary. Hence, the Accountant can cause or order the withholding of the payment of
the employee for the failure to liquidate his/her cash advance.
Management’s Comment:
The City Accountant commented that most of the persons included in the list come from
the National Government Agencies. The local government unit used to grant cash
advances to these employees but their attention was called by the COA thus at present
these had already been stopped. Also, five of these personnel were already dead but the
accounting personnel still had to apply for the writing off of their accounts. They further
stated that they had already issued and sent demand letters to those assigned in the
National Agencies. Also included in the list are persons who had retired.
31
Auditor’s Rejoinder:
The audit team made it clear that for those persons who have retired and were cleared
from all accountabilities even if they still have unliquidated cash advance, then those
persons who gave them clearance or have caused their retirement without paying their
obligations to the government shall be responsible for the payment thereof.
a. Require the City Accountant to direct the employees who are still in service and
connected with the agency to settle and liquidate all their outstanding cash
advances by sending notification or demand letters;
b. Require the City Accountant to request for the write-off of cash advances for
those that are applicable in accordance with COA Circular 2016-005 dated
December 19, 2016;
c. Require the imposition of sanctions in cases of failure to settle/liquidate the cash
advances, cause or order the withholding of the payment of the employee as
provided for under Section 122 of PD 1445 and Section 9.3.2 of COA Circular
No. 97-002 and in addition impose the sanctions provided under the penal
provisions of Section 128 of PD 1445 and/or study the possibility of filing the
appropriate charges to enforce settlement thereof in accordance with Article 217
of the Revised Penal Code.
2. The Account Due From Other Funds in the General Fund (GF)totaling
₱17,566,119.77, Special Education Fund (SEF) amounting to ₱16,666.66 and in
the Trust Fund (TF) amounting to ₱34,106,601.66 did not reconcile with its
respective reciprocal accounts Due To Other Funds in the GF totaling
₱88,782,486.70, in the SEF amounting to ₱92,591.29 and in the TF amounting to
₱32,282,540.54 with a difference of ₱69,484,897.10 thus casting doubt on the
accuracy of the amounts presented in the financial statements.
The Due From Other Funds Account is an Intra-Agency Receivables which is used to
record in the agency books the amount of advances to other funds and this will be
credited upon liquidation. While the Due to Other Funds Account is an Intra-Agency
Payables, used to record the authorized receipt of funds from one fund to another fund
maintained by the same agency and this will be debited for the transfer of the funds to
another fund. These two accounts are reciprocal accounts that should reconcile with each
other.
In the verification of the two accounts, a difference of ₱69,484,897.10 was noted and is
presented in the next page:
32
Special
General Fund Trust Fund
Education TOTAL
(GF) (TF)
Fund (SEF)
Due From Other Funds 17,566,119.77 16,666.66 34,089,935.00 51,672,721.43
Due To Other Funds 88,782,486.70 92,591.29 32,282,540.54 121,157,618.53
DIFFERENCE 69,484,897.10
Analysis and adjustments to the accounts should be made if necessary, to reflect an

accurate report. They should take note that an entry using a reciprocal account in one
fund would also mean another entry using the corresponding reciprocal account in
another fund.
Upon consolidation of all the funds, the reciprocal accounts should be eliminated and no
balance must be shown in the year end consolidated financial statements.
Adjustments to the accounts were already effected in January, 2019 and the other
adjustments will follow, to be transferred to the correct account.
a. Require the City Accountant to trace the inclusions in the reciprocal accounts
and to examine if it is necessary to remain as an Intra-Agency Receivable or as
an Intra-Agency Payable.
b. Require the City Accountant to make the necessary adjustments if needed to be
able to reflect a correct and accurate report and that all reciprocal accounts
should reflect zero balances.
₱499,623,196.29 under the General Fund (GF) and Special Education Fund
(SEF), respectively, were not established due to the discrepancy noted totaling
₱391,824,315.87 between the inventory list of the General Services Office (GSO)
and the General Ledger (GL) balance. Likewise, unserviceable properties
amounting to ₱29,195,141.65 were still recorded as PPE.
Qualitative characteristics of financial reporting under the Philippine Public Sector

Accounting Standard (PPSAS) 1 provides that “Reliable information is free from material
error and bias, and can be depended on by users to represent faithfully that which it
purports to represent or could reasonably be expected to represent.”.
33
Pursuant to Executive Order (EO) No. 2018-24B, dated July 2, 2018 the City created the
Inventory Team to conduct actual inventory and physical count of all properties of the
City, reconcile GSO records with Accounting Records, and identify all unserviceable
properties for proper disposition.
PPE Account GF SEF

Land 157,298,766.88 16,126,717.78
Other Land Improvements 197,965,392.57 250,047.65
Road Networks 531,748,438.53
Flood Control Systems 38,285,582.37
Water Supply Systems 129,008,262.32
Power Supply Systems 3,526,256.50
Seaport Systems 3,102,632.87
Other Infrastructure Assets 130,309.43
Buildings 482,474,473.62
School Buildings 43,380,754.38 325,934,070.32
Hospitals and Health Centers 23,261,322.32
Markets 82,760,519.66
Slaughterhouse 8,575,342.72
Other Structures 449,296,079.01 2,023,027.69
Machinery 26,677,383.00
Office Equipment 92,571,131.53 16,318,717.55
Information and Communication Technology 43,405,987.92
97,040,171.97
Equipment
Agricultural and Forestry Equipment 1,046,141.70
Communication Equipment 24,390,775.25 982,088.99
Construction and Heavy Equipment 42,668,031.74
Disaster Response and Rescue Equipment 131,331,057.28 7,095.00
Military, Police and Security Equipment 10,613,723.55 17,834.85
Medical Equipment 54,494,069.02 2,145,847.00
Sports Equipment 658,950.00
Technical and Scientific Equipment 874,911.52 23,662,107.60
Other Machinery and Equipment 92,036,987.21 22,823,282.54
Motor Vehicles 200,621,222.28 29,000.00
Watercrafts 1,422,994.20
Other Transportation Equipment 15,225,463.80
Furniture and Fixtures 25,019,329.94 20,836,914.08
Books 3,784,959.50
Parks, Plazas & Monuments 5,008,889.86
Construction in Progress - Infrastructure Assets 52,508,546.57 92,764.00
Construction in Progress - Buildings and Other 24,140,633.32
39,610,388.82
Structures
Other Property, Plant and Equipment 44,186,813.37 827,060.00
Total ₱3,112,606,075.29 ₱499,623,196.29
34
Review of the consolidated PPE accounts disclosed that the GL balance in the amount of
₱3,612,229,271.58 does not reconcile with the GSO balance of ₱3,220,404,955.71,
showing a difference of ₱391,824,315.87 as of December 31, 2018, details as follow:
Fund GSO Asset List GL Variance

GF 2,723,265,679.14 3,112,606,075.29 (389,340,396.15)
SEF 497,139,276.57 499,623,196.29 (2,483,919.72)
Total ₱3,220,404,955.71 ₱3,612,229,271.58 ₱(391,824,315.87)
Review of the submitted report on PPE revealed that the GSO did not use the NGAS
prescribed format for RPCPPE to report on the physical count of property, plant and
equipment by type. Instead, the GSO has submitted a PPE list which contains the
acquisition date, payee, property description and asset amount.
According to the Accounting Office, the reconstruction of the details of the PPE accounts
and reconciliation thereof with the general ledger balance is currently on-going. Further,
they have mentioned that they have already made several adjustments and one of which is
the Book account in the amount of ₱117,286,670.91which were non-existent due to fire
and damaged by water. Review of the supporting documents for the adjustment revealed
that an Inventory, Inspection, and Appraisal of Unserviceable Property Report was
attached and signed by the Incumbent City Mayor then. This report was submitted by
Department of Education enumerating the properties that were part of the fire and
damaged by water that were issued to the different schools.
It is worthy to mention, the decrease of the variance between the GSO records and the
Accounting records from ₱808,626,393.30 in CY 2017 to ₱391,824,315.87 in CY 2018.P
An aggregate amount of ₱29,195,141.65 of unserviceable properties were not disposed as

at December 31, 2018, resulting in further deterioration of PPE, congestion of storage
space, and loss of opportunity to earn additional income from sale. Details are as follow:
PPE Account Amount

Motor Vehicles 9,827,427.27
Office Equipment 6,840,753.35
Furniture and Fixtures 1,449,489.20
Information and Technology Equipment 11,077,471.83
Total ₱29,195,141.65
The Accountant commented that they have already created the Inventory Team this year
unlike the other years to be able to concentrate on the physical count of the City’s
properties. They have conducted several meetings discussing on the updates of the
inventory. They promised to finish the physical inventory and reconcile the records this
year.
35
a. Instruct the City Accountant and GSO to continuously reconcile the balances of
the PPE accounts and to identify the details of the unreconciled difference of
₱391,824,315.87 between the accounting and GSO records;
b. Prepare the RPCPPE by PPE account and by department/office with the
corresponding total amount to facilitate reconciliation of PPE account balances
with accounting records, and submit a copy of the RPCPPE to the Audit Team
for audit purposes;
c. Submit additional supporting documents such as but not limited to
acknowledgment from the recipient DepEd officials to prove that books were
non-existent due to fire and damaged by water before adjusting the account,
otherwise reverse the adjustments made.; and
d. Expedite the disposal of unserviceable properties to generate additional funds
and to prevent further deterioration.
4. The City Government owned insurable properties valued at ₱1,380,616,461.22

million were not fully insured with the Government Service Insurance System
(GSIS) as required under Section 5 of the Property Insurance Law (RA 656), as
amended by Presidential Decree No. 245, which exposes the City to non-
indemnification in the event of loss of property due to fire, earthquake, storm or
other casualty.
Section 5 of RA 656, otherwise known as the Property Insurance Law provides that:
“Every government, except a municipal government below first class, is hereby required
to insure its properties, with the Fund against any insurable risk herein provided and pay
the premiums thereon, which, however, shall not exceed the premiums charged by private
insurance companies: Provided, however, That the System reserves the right to
disapprove the whole or a portion of the amount of insurance applied for: Provided,
further, That such property or part thereof as may not be insurable of acceptable for
insurance may be insured with any private insurance company. A municipal government
below first class may upon application insure its properties in the Fund under such rules
and regulations as the System may prescribe.”
Section 4.1.2 of DepEd, DBM and DILG Joint Circular No. 1 s.2017 enumerates the
allowable expenses chargeable against the Special Education Fund and one of which
states that:
“Construction, repair, and maintenance of school buildings and other facilities for public
elementary and secondary schools, xxx….”
36
Our audit of Property, Plant and Equipment (PPE) account disclosed that based on the list
of properties for calendar year (CY) 2018 submitted by the General Services Office
(GSO), the City has insurable properties with a total value of ₱1,380,616,461.22
consisting of office buildings, school buildings, watercraft, hospital and health centers,
market, slaughterhouse, motor vehicles and other structures acquired as of December 31,
2018, details follow:
PPE Particular Account Code Amount

Office Building 1-07-04-010 ₱ 439,822,821.68
School Building 1-07-04-020 370,957,772.13
Watercraft 1-07-05-040 1,153,900.00
Hospital and Health Centers 1-07-04-030 22,686,963.52
Market 1-07-04-040 47,487,005.64
Slaughterhouse 1-07-04-050 8,575,342.72
Motor Vehicles 1-07-06-010 142,250,894.55
Other Structures 1-07-04-990 347,681,760.98
TOTAL ₱ 1,380,616,461.22
Analysis of the Local School Board approved annual budget for CY 2018 revealed that
there was no budget allocation for insurance expense, thus they are not providing their
insurable properties such as school buildings in the amount of ₱326,767,154.76 with
adequate insurance protection.
The non-compliance with the requirement denies the government adequate and reliable
protection against any damage to or loss of its properties or assets and interests due to
fire, earthquake, storm, or other fortuitous events/casualty.
The persons concerned in the different departments involved in the acceptance of the city
property agreed among themselves that they will provide a system that will capture all the
properties that are insurable from the time of acceptance.
a) Ensure that all insurable properties of the City are fully and adequately covered
by property insurance pursuant to Section 5 of RA 656;
b) Instruct the City Engineering Office and City Assessor’s Office to assist GSO in
providing the location plan/sketch, TCT and tax declarations of the insurable
assets for submission to GSIS; and
c) Require the Local School Board to allot budget for the payment of insurance
expenses of insurable school buildings.
37
5. Collections by the collecting officer of the City for the issuance of a copy of the
Certificate of Birth, Marriage, Death and CENOMAR were not properly
acknowledged by an Official Receipt but instead issued with a temporary receipt
(BREQS Acknowledgment Slip) contrary to Section 68 of P.D. 1445 and Sections
72 and 73 of the Government Accounting and Auditing Manual (GAAM).
Section 68 (1) of Presidential Decree No. 1445 provides that: there shall be no payment
of any nature that shall be received by a Collecting Officer without immediately issuing
an official receipt (OR) in acknowledgement thereof.
Also, Sections 72 and 73 of the GAAM provides that: “At no instance shall temporary
receipts be issued to acknowledge the receipts of public funds.” and “Pre-numbered ORs
shall be issued in strict numerical sequence. All copies of each receipt shall be exact
copies or carbon reproduction in all respects of the original.’’, respectively.
The City of Lapu-Lapu through the Office of the Local Civil Registrar executed a
Memorandum of Agreement with the Philippine Statistics Authority (PSA) to receive and
provide services for civil registry documents not only requests for civil registry
documents for constituents registered in the locality but also those that may have been
registered in other localities.
It was observed that unnumbered BREQS Acknowledgement Slips were issued for the
issuance of certificates of birth, marriage, death and CENOMAR and noted that these
were not the kind of official receipts that the government are issuing. This transaction
does not ensure the validity of the payment made and contrary to the regulation of issuing
pre numbered official receipts.
The Local Civil Registrar stated that in order to prevent, or at least minimize, any
variance, their office together with the Lapu-Lapu City Treasurer’s Office and other
concerned offices will formulate a system/policy that would promote transparency and
accountability of funds received as processing fees.
We recommended that Management require the issuance of pre-numbered Official

Receipts to acknowledge receipt of the National Statistics Office (NSO) transactions.
6. The City Treasurer’s Office could have earned an additional income of

₱227,050.00 for the two month period (January 2018 to February 2018) had the
daily cash collections of processing fee for Birth, Marriage and Death Certificate
and CENOMAR been properly monitored and reconciled against the actual
number of transmitted requests of civil documents from the City Civil Registrar to
Philippine Statistics Authority (PSA), contrary to the City’s enacted Ordinance No.
070-2007, known as The Revised Lapu-Lapu City Revenue Code dated December
26, 2007.
38
Item (a), Section 5B-01-Imposition of Fees, Article B, Chapter 5 of the Revised Lapu-
Lapu City Revenue Code enumerates the services rendered by the City Civil Registrar
and their corresponding fees, among others, the processing of Birth, Marriage and Death
Certificates with ₱50.00 processing fee.
Further, Section 5B-03-Time of Payment, of the same article and section above, provides
that:
“The fees shall be paid to the City Treasurer before registration or issuance of the
permit, license or certified copy of local registry records or documents.”
The number of transmitted requests of civil documents from the City Civil Registrar to
Philippine Statistics Authority (PSA) does not tally with the collection report of
processing fees charged by the City Treasurer’s Office (CTO).
The CTO assigned one employee to collect fees for the services rendered by the City
Civil Registrar. Every day, the employee remits and reports its collections together with
the abstract of collections, report of collections and deposits and logbook. However, there
is no report from the City Civil Registrar’s Office itself to validate the reports made by
such employee.
The laxity and lack of internal control were further manifested on the results of the
examination of the sampled transmittal forms to PSA and the abstract of collections from
the CTO for the months of January and February 2018. It was revealed that the number of
transmitted/processed civil documents to PSA was not tallied with the total collected fees
of the CTO as follows:
No. of
Processin Per Audit Per CTO
Particulars BREQS* Difference
g Fee (B) (A x B) Collections
(A)
JANUARY
Certificate of No 529 ₱50.00 ₱ 26,450.00 ₱ 10,750.00 ₱ (15,700.00)
Marriage
(CENOMAR)
Birth Certificate 3,108 50.00 155,400.00 111,300.00 (68,150.00)
Death Certificate 42 50.00 2,100.00
Marriage 439 50.00 21,950.00
Certificate
FEBRUARY
Certificate of No 574 50.00 28,700.00 7,100.00 (21,600.00)
Marriage
(CENOMAR)
Birth Certificate 3,406 50.00 170,300.00 70,750.00 (121,600.00)
Death Certificate 36 50.00 1,800.00
Marriage 405 50.00 20,250.00
Certificate
TOTAL 8,539 ₱ 426,950.00 ₱ 199,900.00 ₱ (227,050.00)
*per Transmittal Forms submitted to PSA
39
In a schedule prepared for a two month period, it was noted that a total of ₱227,050.00 of
additional collections from processing fees for Birth, Marriage and Death Certificate and
CENOMAR could have been earned had the completeness of the processed documents
and the accuracy of processing fees collected been properly monitored and reconciled.
Sound internal control and effective administrative policies require safeguarding of

assets, checking the accuracy and reliability of submitted reports, adherence to the
Revenue Code, compliance with laws, rules and regulations to prevent wastage of
government resources and to maximize the benefit due to it.
One of the proposals made was to set up a cash advance for NSO transactions to facilitate
the processing of the documents and to use the Official Receipts of the City under the
Trust Fund.
a) Require the City Civil Registrar to furnish the CTO of the summary of
documents processed in order to facilitate the reconciliation of collected
processing fees;
b) Request the CTO personnel assigned at the City Civil Registrar to explain on the
deficiencies noted, otherwise request for his/her transfer;
c) Conduct further investigation to determine all persons responsible and to get the
total amount of deficiencies for the whole year since the amount of ₱227,050.00
is only for the two month period (January 2018 and February 2018); and
d) Require all persons found responsible to refund the total amount of deficiencies.
7. Hospital Fee collections were recorded in the General Fund-Proper amounting to

₱26,848,147.46 and PhilHealth Share for Hospitals in the Trust Fund totaling
₱14,514,027.50 instead of recording in the local economic enterprise-hospital fund
thus preventing the actual and correct presentation of the financial performance of
the fund and continuously providing for its yearly subsidy wherein the amount of
₱55,289,840.25 was actually transferred in CY 2018.
The Hospital Fees Account is used to record the fees/charges for hospital services
rendered including medical, dental and laboratory services.
The financial accounts including the income from the hospitals (Lapu-Lapu District
Hospital and Sta. Rosa Hospital) maintained by the City of Lapu-Lapu were recorded
under the local economic enterprise fund.
40
The financial performance of the 2 hospitals as of December 31, 2018 reported a deficit
from operation of ₱37,074,389.75 but after the subsidy from General Fund (GF) was
added it presented a surplus for the period of ₱18,215,450.50.
In the verification of the Annual Budget, the hospitals had continuously been receiving
subsidy from the GF. Below is a schedule showing the Budgeted and Actual Amounts
transferred to the Hospital Fund for the three year period.
AMOUNTS
YEAR Budget (GF) Subsidy from GF - Hospital
2016 ₱ 26,871,516.00 ₱ 26,871,516.00
2017 ₱ 37,652,996.00 ₱ 18,826,498.00
2018 ₱ 73,719,787.00 ₱ 55,289,840.25
In the review of the financial accounts in the General Fund, the balance of the hospital
fee collections amounting to ₱26,848,147.46 as of December 31, 2018 from the City
Health collections comprises the following:
1. Medical, Dental & Laboratory Fees

2. City Health New Born Screening
Also, the PhilHealth Share for Hospitals totaling ₱21,687,156.70 recorded in the Trust
Fund under the account Due to Other Funds is distributed as follows:
AMOUNT
Lapu-Lapu City Hospital ₱ 20,483,749.70
Sta. Rosa Hospital 1,203,407.00
Adjustments made for the transfer to the General Fund as a Receivable (7,173,129.20)
TOTAL ₱ 14,514,027.50
All hospital fees should be recorded in the local economic enterprise–hospital fund to be
able to present the actual financial performance of the fund and to determine whether a
subsidy from the general fund is still needed. It should be noted that disbursements out of
the PhilHealth Share for Hospitals should be governed by the issuances of PhilHealth.
The Accountant commented that the account Hospital Fees under the General Fund is
City Health collections and they are going to transfer this as Miscellaneous Income. Also,
breakdown for PhilHealth Share for Hospitals in the Trust Fund will also be transferred to
the General Fund-Hospital.
41
We recommend that Management:
a. Require the City Accountant to transfer all collections pertaining to the Local
Economic Enterprise – Hospital to present an accurate financial performance.
b. Study on the necessity of a yearly Subsidy from the General Fund to the Local
Economic Enterprise – Hospital.
c. Require the City Accountant to record the balance of the PhilHealth Share that
is recorded in the Trust Fund under the account Due to Other Funds to the
Local Economic Enterprise – Hospital and should note that disbursements out of
these funds shall be governed by PhilHealth issuances.
8. Expenses totaling ₱164,245,739.94 comprising of payroll for honoraria of

residents in the different barangays of the city as Certified by the Barangay
Captains were charged to expense items in the CY 2018 Budget of the City which is
not specific as to the amount set aside for each barangay but lumped in a single
expense item, without the necessary authority from the Sangguniang Bayan for the
specific programs/projects entered. This is contrary to the Supreme Court decision
in the case of Hon. Gabriel Luis Quisumbing et al. vs. Hon. Gwendolyn F. Garcia.
Section 22 (C) of Republic Act 7160 otherwise known as the Local Government Code of
1991 provides that:
‘‘Unless provided in this Code, no contract may be entered into by the Local Chief
Executive in behalf of the local government unit without prior authorization by the
Sanggunian concerned. A legible copy of such contract shall be posted at a conspicuous
place in the provincial capitol or the city, municipality or barangay hall.’’
The appropriation ordinance describes the projects/programs in generic terms. Excerpts

from the ruling of the Supreme Court in the case of Hon. Gabriel Luis Quisumbing et. al.
vs. Hon. Gwendolyn F. Garcia, et. al. GR No. 175527 promulgated on 08 December 2008
states that:
‘‘The question of whether a sanggunian authorization separate from the appropriation

ordinance is required should be resolved depending in the particular circumstances of the
case. Resort to the appropriation ordinance is necessary in order to determine if there is a
provision therein which specifically covers the expenses to be incurred or the contract to
be entered into. Should be appropriation, ordinance, for instance, already contain in such
that all the local chief executive needs to do is to execute the contract, no further
authorization is required, the appropriation ordinance already being sufficient.’’
On the other hand, should the appropriation ordinance describe the project in generic
terms such as ‘‘infrastructure project, inter-municipal waterworks’’, drainage and
sewerage ‘‘flood control’’, the irrigation system project, reclamation project or roads and
bridges there is obvious need for a covering contract for every specific project that in turn
requires approval by the sanggunian. Specific sanggunian approval may also be required
42
for the purchase of goods and services which are neither specified in the appropriation
ordinance nor encompassed within the regular personal services and maintenance
operating expenses.’’
The CY 2018 Budget of the City of Lapu-Lapu includes the following line items of
expense under the Office of the Mayor:
Fund Account Name Account Code 2016 2017 2018

MOOE Other General 5-02-12-990 21,760,768.43 27,000,000.00 16,700,000.00
Services
Other MOE Community Affairs 5-02-99-990-1 48,732,003.44 58,886,943.81 60,000,000.00
and Development
Program
Other MOE Research and 5-02-99-990-4 21,138.109.52 31,000,000.00 34,000,000.00
Project Monitoring
Program
Special Misc. Health 5-02-12-010 29,717,670.16 33,500,000.00 24,000,000.00
Purpose Services-Other,
Appropriation- Social Services
MOOE Sector
Environment/Sani
tary Services
Special Peace and Order 5-02-99-990-2 15,000,000.00 22,400,000.00
Purpose Program, MOOE,
Appropriation- Other MOE
MOOE Barangay
Monitoring and
Evaluation
Special Sanitary Services- 5-02-12-010 13,001,640.69 14,900,000.00 25,000,000.00
Purpose Street Cleaning-
Appropriation- Social Services
MOOE Sector
Special Community 5-02-12-010 21,742,432.00 25,034,000.00 22,500,000.00
Purpose Development-
Appropriation- Beautification-
MOOE Social Services
Sector
Special Community 5-02-12-990 15,500,000.00
Appropriation- Maintenance of
MOOE Plazas, Parks and
Monuments-Other
General Services
Special Repair and 5-02-13-030 27,170.020.37 19,600,000.00 11,500,000.00

Purpose Maintenance of
Appropriation- Government
MOOE Facilities-MOOE,
Repair and
Maintenanc3e-
Infrastructure
Assets
43
In the review of the Registry of Appropriation, Allotment and Obligation and the
pertinent vouchers, the expenses comprise of payrolls for the honorarium of persons in
the different barangays of the city. Attached to the payrolls are the certifications from the
Barangay Captains that the persons noted in the payroll had satisfactorily completed their
task or duties.
The expense items in the budget are stated in lump sum or generic terms and did not state
that the appropriation is to be distributed to the different barangays with their
corresponding amount.
The table below shows the expenses credited to the generics or lumped appropriation.
Fund Account Name Account Code Appropriation Obligations Balance

MOOE Other General 5-02-12-990 16,700,000.00 13,885,766.00 2,814,234.00
Services
Other MOE Community Affairs 5-02-99-990-1 60,000,000.00 54,487,868.29 5,512,131.71
and Development
Program
Special Peace and Order 5-02-99-990-2 22,400,000.00 14,037,341.79 8,362,658.21
Purpose Program, MOOE,
Appropriatio Other MOE Barangay
n-MOOE Monitoring and
Evaluation
Special Misc. Health 5-02-12-010 24,000,000.00 20,901,079.54 3,098,920.46
Purpose Services-Other,
Appropriatio Social Services Sector
n-MOOE Environment/Sanitar
y Services
Special Sanitary Services- 5-02-12-010 25,000,000.00 19,299,836.93 5,700,163.07
Purpose Street Cleaning-
Appropriatio Social Services Sector
n-MOOE Environment/Sanitar
y Services
Appropriatio Beautification-Social
n-MOOE Services Sector
Environment/Sanitar
y Services
Appropriatio Maintenance of
n-MOOE Plazas, Parks and
Monuments-Other
General Services
Special Repair and 5-02-13-030 11,500,000.00 9,510,153.65 1,989,846.35
Purpose Maintenance of
Appropriatio Government
n-MOOE Facilities-MOOE,
Repair and
Maintenance-
Infrastructure Assets
44
The lump sum appropriation in the Budget would require specific Sanggunian approval
and may also be required for the payment of services which are neither specified in the
appropriation ordinance nor encompassed within the regular personal services and
maintenance operating expenses. This is contrary to the Supreme Court decision in the
case of Hon. Gabriel Luis Quisumbing et al. vs. Hon. Gwendolyn F. Garcia.
The Budget Officer stated that the Quisumbing case refers to Infrastructure projects
lumped into one.
In the promulgation of the Quisumbing case it was stated that should the appropriation
ordinance describe the project in generic terms there is the obvious need for a covering
contract for every specific project that in turn requires approval by the Sanggunian.
We recommended that Management submit an approved SB Resolution authorizing

the City Mayor to enter into contract for projects/programs to be implemented
under the lump sum appropriation as mandated in the Supreme Court decision in
the case of Hon. Gabriel Luis Quisumbing et al. vs. Hon. Gwendolyn F. Garcia.
We also recommended that expenses conform with the object of expenditures and its
purpose as presented in the budget.
9. Reappointed and renewed casual personnel were deprived of the benefits enjoyed
by the regular personnel in regard to additional compensation paid to employees
for holidays or non-working days.
Item G, Section 9, Rule IV of the CSC Resolution No. 1800692 explains the nature of
appointment of casual employees as:
“An appointment issued only for essential and necessary services where there are not
enough regular staff to meet the demands of the service and for emergency cases and
intermittent period not to exceed one year.
Reappointment (renewal) of casual appointments to the same position shall be submitted

to the CSC for notation only, without the need for approval/validation. Xxx
Personnel under contractual or casual appointment are entitled to the same benefits
enjoyed by regular employees.”
45
As of September 30, 2018, the City Government of Lapu-Lapu had a personnel
complement of:
Nature of Appointment to Office Number

Elective Officials 15
Permanent Positions 589
Temporary 2
Contractual: Casual 626
Confidential/Co-Terminus 87
Job Order/Contract of Service 1,594
In the audit team’s verification of the supporting documents on the appointment of casual
personnel, the Human Resource Management Office provided a sample copy of the CS
Form No. 34-F s. 2018 or the Plantilla of Casual Appointment duly received by the Civil
Service Commission (CSC).
On the examination of the sampled payment of salary for casual personnel, it was
revealed that holidays were deducted from the number days worked as follows:
No. of
Paid
Journal Entry Nature of Working
Holidays Working
Voucher No. Appointment Days (Inc. of
Days
Holidays)
January 1, 2018, Monday
JEV No. 101-18-01- (New Year’s Day)
Casual 23 21
0538 January 2, 2018, Tuesday
(New Year Holiday)
JEV No. 101-18-02- February 16, 2018, Friday
Casual 20 19
1159 (Chinese New year)
March 28, 2018,
Wednesday, (Declared
Halfday)*
JEV No. 101-18-03-
Casual 22 March 29, 2018, Thursday 20
4212
(Maundy Thursday)
March 30, 2018, Friday
(Good Friday)
April 9, 2018, Monday
JEV No. 101-18-04- (Act of Valor)
Casual 21 18.5
6707 April 27, 2018, Friday
(Lapu-Lapu Day)
May 1, 2018, Tuesday
JEV No. 101-18-06- (Labor Day)
Casual 23 21
11697 May 14, 2018, Monday
(Brgy. Election)
June 12, 2018 Tuesday,
JEV No. 101-18-06- (Independence day)
Casual 21 19
11369 June 15, 2018 Friday,
(Eid’l Fitr)
JEV No. 101-18-07- July 2018, No Holiday
Casual 22 22
14376
46
No. of
Paid
Journal Entry Nature of Working
Holidays Working
Voucher No. Appointment Days (Inc. of
Days
Holidays)
August 6, 2018, Monday,
(Cebu Province Day)
August 21, 2018, Tuesday,
(Ninoy Aquino Day-not
JEV No. 101-18-08-
Casual 23 declared as holiday)** 19
16005
August 22, 2018,Tuesday
(Eid’l Adha)
August 27, 2018, Monday
(National Heroes Day)
* Deducted in April 2018 Payroll
** Added in September 2018 Payroll.
It can be gleaned from the above table that casual employees were not paid for not
working on holidays unlike regular employees who received their salary in full and
without deduction in their working days.
As casual personnel, they should enjoy the benefits given to the regular employees
including Personnel Economic Relief Allowance (PERA), Uniform/Clothing Allowance,
Year-End Bonus, Cash Gift and Leave Credits.
Contract of services and job orders are different from plantilla appointment of casual
employees, which is required to be submitted to CSC for approval. Employment of the
former, pursuant to Section 1 of CSC Resolution No. 020790 dated June 5, 2002, among
others, has no employer-employee relationship and covers a piece of work or intermittent
job of short duration not exceeding six months on a daily basis.
On the other hand, the employment of contractual and casual employees is through an
appointment issued by the appointing authority and attested by the CSC. Such
employment is considered government service and presupposes the existence of
employer-employee relationship.
It should be stressed that since casual employee’s service rendered the existence of
employer-employee relationship, they are entitled to the same pay privileges including
compensation for holidays or non-working days accorded to regular employees.
On CY 2019, the benefits in CY 2018 of the casual employees were given to them.
We recommended that Management grant the same pay privileges enjoyed by the
regular employees to casual and contractual employees in compliance with Item G,
Section 9, Rule IV of the CSC Resolution No. 1800692.
47
10. The City did not submit the Procurement Monitoring Report (PMR) for CY 2018 to
the GPPB as required under Republic Act No. 9184 or the Government
Procurement Act, thus defeating the purpose of transparency in all procurement
activities specified in the Annual Procurement Plan.
Pursuant to Section 12.2 of the 2016 Revised Implementing Rules and Regulations (IRR)
of Republic Act (RA) No. 9184, which states that:
“The BAC shall be responsible for ensuring that the Procuring Entity abides by the
standards set forth by the Act and this IRR, and it shall prepare a Procurement
Monitoring Report (PMR) in the form prescribed by the GPPB. The PMR shall cover all
procurement activities specified in the APP, whether ongoing and completed, from the
holding of the pre-procurement conference to the issuance of notice of award and the
approval of the contract, including the standard and actual time for each major
procurement activity. The PMR shall be approved and submitted by the HoPE to the
GPPB in printed and electronic format within fourteen (14) calendar days after the end of
each semester. The PMR shall likewise be posted in accordance with E.O. 662, s. 2007,
as amended.”
GPPB has issued Circular No. 03-2015 dated March 20, 2015, to remind procuring
entities of the requirement on the submission of the PMR after every semester in
accordance with the same section of the above Republic Act No. 9184.
Further, of the same circular above has defined the PMR as “a semestral report on
procurement activities specified in the Annual Procurement Plan (APP), whether ongoing
and completed. The PMR shall cover major activities from the holding of the pre-
procurement conference to the issuance of notice of award, the approval of the contract,
delivery/completion, and acceptance/turnover, including the standard and actual time for
each major procurement activity.”
Inquiry with the city personnel disclosed that they have not submitted the prescribed
PMR to the GPPB as required under the aforesaid provisions.
A check with the GPPB and the local government unit’s websites revealed that the
monitoring report of the City Government of Lapu-Lapu for the 1st & 2nd semesters of
CY 2018, were not posted in the GPPB website
(http://www.gppb.gov.ph/monitoring/pmr.php).
Non-compliance of the city with the requirement of the Republic Act No. 9184
undermines the value of the PMR as to transparency and which is also supposed to be
useful in monitoring, and evaluating the city’s performance and serve as basis for sound
policy decisions.
48
The BAC Chairman promised to comply with the recommendation of the audit team and
they are now in the process of preparing the PMR to be submitted to the GPPB.
We recommended that Management require the Bids and Awards Committee

(BAC) to prepare and submit to the Head of the Procuring Entity (HOPE) for her
approval the Procurement Monitoring Report to GPPB (pmr@gppb.gov.ph) in
compliance with the provisions stated in Section 12.2 of the Revised Implementing
Rules and Regulations of R.A. 9184.
11. The Notices of Award and the Notices to Proceed for the procurement of
infrastructure projects, goods and services charged to Special Education Fund
(SEF) amounting to ₱12,551,413.52 were not posted in the PhilGEPS website
contrary to Section 54.2 of the 2016 Revised Implementing Rules and Regulations
(IRR) of R.A. 9184 otherwise known as “The Government Procurement Reform
Act” dated August 9, 2016.
The Revised IRR of RA 9184 provides the following:
‘‘Section 8.3.1. All Procuring Entities are mandated to fully use the PhilGEPS in
accordance with the policies, rules, regulations, and procedures adopted by the GPPB and
embodied in this IRR. In this connection, all Procuring Entities shall register with the
PhilGEPS and shall undertake measures to ensure their access to an on-line transmission,
conveyance and use of electronic data messages or electronic documents. The PS-DBM
shall assist Procuring Entities to ensure their on-line-connectivity and help in training
their personnel responsible for the operation of the PhilGEPS from their terminals.
Section 37.1.6. The BAC, through the Secretariat, shall post, within three (3) calendar
days from its issuance, the Notice of Award in the PhilGEPS, the website of the
procuring entity, if any, and any conspicuous place in the premises of the procuring
entity.
Section 37.4.2. The procuring entity, through the BAC Sectretariat, shall post a copy of
the Notice to Proceed and the approved contract in the PhilGEPs or the website of the
procuring entity, if any, within (15) calendar days from the issuance of the Notice to
Proceed.’’
Review of the disbursement vouchers of the City on the procurement of goods and
infrastructure projects through competitive bidding/Alternative mode of procurement
amounting to ₱12,551,413.52, as shown in the next page, revealed that there was no
evidence of posting the Notices of Award and the Notices to Proceed in the PhilGEPS
website:
49
Mode of
Check. No. Date Payees Amount
Proc.
575376 1.18.18 NP Fast Net Dev. Corp. 202,500.00
575379 1.29.18 NP Better Components de Cebu, Inc. 382,670.00
575387 2.9.18 CB Phil. Duplicators, Inc. 332,000.00
575390 2.12.18 CB SI Technologies, Inc. 929,373.26
575391 2.12.18 CB SI Technologies, Inc. 1,019,553.46
575406 2.20.18 SVP J:Khezznov Trading Ind. Inc. 99,201.35
575414 3.14.18 CB GELA Construction 2,004,171.80
575419 3.20.18 NP OfficeBox Enterprises 496,850.00
575420 3.20.18 NP OfficeBox Enterprises 496,850.00
575448 5.11.18 CB Officebox Enterprise 713,241.50
575450 5.16.18 Officebox Enterprise 449,400.00
575480 8.7.18 CB Philippine Duplicators, Inc. 1,655,000.00
575500 10.3.18 CB GELA Construction 1,163456.62
575502 10.8.18 SVP San Narciso Builders Corp. 193,440.00
575522 11.14.18 CB GELA Construction 1,487,907.25
TOTAL 12,551,413.52
The violation defeated the purpose to promote transparency and efficiency in the conduct
of government procurement procedures.
Management justified that they were not able to comply with the posting due to lack of
manpower.
We recommended that the Bids and Awards Committee shall post the Notices of
Award and Notices to Proceed on the procurements of goods and infrastructure
projects through competitive bidding/Alternative modes of procurement in the
PhilGEPS website in compliance with the provisions of Section 54.2 of the 2016
Revised Implementing Rules and Regulations of R.A. 9184.
12. Unexpended balances of Priority Development Assistance Fund (PDAF) totaling

₱30,158,615.01 were not returned to the National Government through the Bureau
of the Treasury contrary to COA Memorandum dated March 26, 2014 and as
provided in the Supreme Court (SC) decision, declaring the PDAF
unconstitutional.
50
COA Memorandum dated March 26, 2016 provides that ‘‘Unutilized PDAF must be
returned to the Department of Finance (DOF).’’
The petitions under GR No. 208566, GR 208493 and GR 209251 which all assails the
constitutionality of the Pork Barrel System was decided by the Supreme Court on
November 19, 2013 which rectify error which has persisted in the chronicles of our
history.
The Supreme Court decision provides as follows:
‘‘The Court finds the Pork Barrel System as unconstitutional in view of the inherent
defects in the rules within which it operates. Xxx…
Xxx.. the Court hereby declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF;
(b) all legal provisions of past and present Congressional Pork Barrel Laws such as the
previous PDAF and CDF Articles and the various Congressional Insertions, which
authorize/d legislators – whether individually or collectively organized into committees –
to intervene, assume or participate in any of the various post-enactment stages of the
budget execution, such as but not limited to the areas of project identification,
modification and revision of project identification, fund release and/or fund realignment,
unrelated to the power of congressional oversight; (c) all legal provisions of past and
present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles
and the various Congressional Insertions which confer/red personal, lump-sum
allocations to legislators from which they are able to fund specific projects which
themselves determine; (d) all informal practices of similar import and effect, which the
Court similarly deems to be acts of grave abuse of discretion amounting to lack or excess
of jurisdiction; xxxx.”
Review of the accounting records disclosed that the City had an unutilized PDAF as
summarized below:
Name of Legislator Unutilized Amount

Sen. Vicente Sotto 500,000.00
Sen. John Osmena 1,594,360.55
Cong. Emerito Calderon 100,000.00
Cong. Nerissa Ruiz 20,000.00
Vicente Sotto III 250,000.00
Cong. Emerito Calderon 150,000.00
Sen. Francis Pangilinan 60,000.00
51
Name of Legislator Unutilized Amount
Sen. Juan Miguel Zubiri 500,000.00
Cong. Arturo Radaza 33,784.00
Cong. Arturo Radaza 3,500,000.00
Sen. Manuel Villar 150,711.31
Cong. Catalina Bagasina 19,925.68
Sen. Antonio Trillanes IV 367,305.00
Sen. John Osmena 900,000.00
Sen. Antonio Trillanes IV 500,000.00
TOTAL 30,158,615.01
With the Supreme Court declaration of the unconstitutionality of the PDAF,

disbursements and utilization of the funds are now deemed irregular, improper and/or
unlawful. Hence, by virtue of this declaration, government officials and/or private
individuals who authorized the disbursements/utilization of the PDAF may be held
responsible and even liable for the violation thereof.
Review of the Trust Fund accounts showed Cash in Bank-Time Deposit of

₱320,000,000.00, the remaining and unutilized PDAF of ₱30,158,615.01 of which
utilization was declared as unlawful.
52
Management agreed to return the unexpended balance of the PDAF.
We recommended that Management terminate the time deposit in the trust fund
and direct the officials concerned to cause the return of the unexpended balance of
the Priority Development Assistance Fund (PDAF) to the National Government
through the Bureau of the Treasury.
13. The City did not establish and maintain a Gender and Development (GAD)
Database, failed to issue an Executive or Administrative Oder to create the
Monitoring and Evaluation (M & E) Team and did not submit the required
attachments to the GAD Accomplishment Report (AR) contrary to PCW-DILG-
DBM-NEDA JMC No. 2013-01 and RA 9710.
Section 36.C of RA 9170 states that “All departments, including their attached agencies,
offices, bureaus-state universities and colleges, government-owned and –controlled
corporations, local government units, and other government instrumentalities shall
develop and maintain a GAD database containing gender statistics and sex-disaggregated
date that have been systematically gathered, regularly updated, and subjected to gender
analysis for planning, programming, and policy formulation”
Section 4.1.B of PCW-DILG-DBM-NEDA JMC No. 2013-01provides that:
“LGUs, through their Local Planning and Development Offices (LPDO), shall spearhead
the setting up and maintenance of the GAD database to serve as basis for gender-
responsive planning, programming and policy formulation. The GAD database, which
can either be manually operated or developed through software, shall form part of the
overall management information system (MIS) of the LGU.
Section 4.C.8.5 of the said circular states that “The annual GAD Accomplishment Report
shall be accompanied by brief summary of the reported programs or projects, copies of
reported policy issuances, results of HGDG test and actions taken by the LGU on the
COA audit findings and recommendations.
Moreover, Section 5.1 of the same circular states that “All LGUs shall establish, enhance,
strengthen and/or maintain a gender responsive monitoring and evaluation (M & E)
system. In establishing and/or strengthening an M&E System, the LCE of provinces,
cities and municipalities shall issue an Executive Order or Administrative Order creating
the M&E Team.”
Review of the GAD Accomplishment Report disclosed that it was not accompanied by
the required attachments as mentioned above in the said circular.
53
Further, it was revealed during the interview with the City Personnel that they are not
familiar with the attachments required to the GAD Accomplishment Report and they are
still in the process of establishing and maintaining GAD database and the Monitoring and
Evaluation Team.
They are now in the process of preparing the attachments to the AR and establishing the
GAD Database and at the same time requested the Mayor to issue an order creating the M
& E Team.
We recommended that Management direct the concerned officials to establish and

maintain the Gender and Development (GAD) Database and the Monitoring and
Evaluation (M & E) Team. Also, require the GAD Focal Person to submit the
required attachments to the GAD Accomplishment Reports to the DILG and to the
Auditor’s office as mentioned in Section 4.C.8.5 of DILG-DBM-NEDA JMC No.
2013-01
14. Lack of revenue-generating plans and strategies for the saleable materials set by
the LGU in the Material Recovery Facility (MRF) deprived the City of additional
funds from the sale and utilization thereof.
Item No. (4), Section 12 of the Republic Act No. 9003 or the Ecological solid Waste
Management Act of 2000 provides the duties and responsibilities of the City Solid Waste
Board and one of which states that:
“Adopt specific revenue-generating measures to promote the viability of its Solid Waste
Management Plan”
Section 129-Power to Create Source of Revenue, Book II of the Local Government Code
provides that:
“Each local government unit shall exercise its power to create its own sources of revenue
and to levy taxes, fees, and charges subject to the provisions herein, consistent with the
basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to
the local government units.”
The City had prepared and submitted to the National Solid Waste Commission its Ten
(10) Years Solid Waste Management Plan for the period CY2012-2022 for which the
Commission commended management for its efforts and initiative in formulating the
same.
Further, the City is managing a Material Recovery Facility (MRF) located in Soong,
Mactan and in Olango Island with 394 employees and eight (8) functional dump trucks.
54
Several Activities and Programs were participated and conducted by the City
Environment and Natural Resources Office with the coordination of the other offices and
departments of the City of Lapu-Lapu. The details are as follows:
a) Limpio LapuLapu 2018, a clean-up drive of the city

b) Conducted lecture on City Ordinance 484-97 (Comprehensive Environmental and
Sanitation Code of Lapu-Lapu City) and R.A. 9003 (Ecological Solid Waste
management Act of 2000) to Saint Alphonsus Catholic School last July 2018.
c) Lapu-Lapu City joined in the International Coastal Clean–up Program conducted
last September 2018.
d) Mangrove Planting with the Philippine Air Force conducted at Barangay Sta.
Rosa last August 30, 2018
e) Conducted and participated the paralegal training on the ENR management and
law enforcement for WEO/ENRO (Wildlife Enforcement Officer/Environment
and Natural Resources Office) deputation last August 7 and 8, 2018.
f) Seminar Workshop for SSG/SPG Presidents, Vice Presidents and Junior Police
last November 15 and 16, 2028
g) Launched the City’s GO GREEN PROGRAM with the theme last December 1,
2018.
h) Conducted coastal clean-up in Olango Island last February 2, 2018
i) Conducted seminars and trainings for the People’ Organization
j) Conduct seminar on World Habitat Day last October 2, 2018
k) Conducted workshop on review of protocol on rehabilitation, restoration of
Olango Island Wildlife Sanctuary held last November 12-13, 2018.
The Office of the City Environment and Natural Resources has incurred expenses totaling
to ₱102,729,255.69 as of December 31, 2018, broken down as follows:
CY 2018
Personal Services ₱ 3,332,769.56
Maintenance and Other Operating Expenses 86,424,486.13
Capital Outlay 12,972,000.00
TOTAL ₱ 102,729,255.69
The City is collecting garbage from the main thoroughfares, and from the public market,
while barangays are collecting garbage of residents and small establishments in their
respective area. The collected garbage is then brought to the MRF in Soong, Mactan for
sorting, processing, and storage.
The MRF receives waste for final sorting, according to its type for composting and
recycling. It is also designed to receive, sort, process, and store compostable and
recyclable materials. MRFs handle recyclable materials and help reduce the trash that end
up in sanitary landfill in Consolacion, Cebu.
55
Inquiry with the City Treasurer’s Office (CTO) revealed that no remittances of proceeds
from the sale of recyclable materials and that no reported income from CENRO and
MRF. Further, in our ocular inspection and interview at the MRF, it was disclosed that
there were no revenue-generating measures in place for saleable recycled materials.
In their 10 Years Solid Waste Management Plan, CENRO has identified that 31.60% of
the garbage is recyclable. Further, CENRO has identified 25 junkshops around the city
which accepts bottles, plastic bottles, metals, newspaper, cartons and, other materials.
The significant availability of recyclable materials and strong recycling markets present
abundant opportunities to generate additional income if effective revenue-generating
measures are applied.
They appreciated the audit recommendation and agreed to come up with another strategy
in addition to the existing that is already in place for the City to earn additional revenue
out of the waste segregation.
We recommended that Management require the City Solid Waste Management

Board to prepare a proper revenue plan for the MRF indicating the strategies to
improve the revenue generation from recyclable materials.
15. The City’s projects programmed for Local Disaster Risk Reduction Management
Fund (LDRRMF) amounting to ₱214,810,035.34 were not fully implemented in
accordance with the Approved LDRRMF Plan with a fund utilization of only
₱8,660,118.00 or 5.3% for the current projects and ₱11,249,458.95 or 21.76% for
the continuing projects.
Review of the Status of Appropriation, Allotments and Obligations for the Current
Appropriations and Continuing Appropriation-Local Disaster Risk Reduction
Management Fund disclosed the following:
Local Disaster Risk Reduction Appropriation /

Obligation Difference
Management Fund Allotments
Current Appropriations 163,123,330.46 8,660,118.00 154,463,212.46
Continuing Appropriations 51,686,704.88 11,249,458.95 40,437,245.93
TOTAL 214,810,035.34 19,909,576.95 194,900,458.39
Based on the above schedule, it can be observed that the city had obligated only 5.3% for
the current appropriations and 21.76% for the continuing appropriations. The under-
utilization of the said Fund resulted in the non-achievement of the purpose for which the
Fund was established to the disadvantage of the intended beneficiaries and its
constituents who were deprived of the vital services and benefits due them had the
projects listed in the LDRRMFIP been fully and properly implemented.
56
The Management promised to maximize the utilization of the fund.
We recommend that Management maximize the utilization of the Local Disaster

Risk Reduction Management Fund (LDRRMF) allocated for the implementation of
various projects, programs and activities that are envisioned to help in the
attainment of social, economic and environmental development and optimally utilize
the Fund to efficiently manage and address eventualities for risk or emergencies due
to occurrence of man-made or natural calamities.
16. The Monthly Reports on the Sources and Utilization of Local Disaster Reduction
and Management Fund were not submitted to the Auditor by the Local Disaster
Risk Reduction and Management Council (LDRRMC) contrary to Section 5.1.5 of
COA Circular No. 2012-002 dated September 12, 2012, thereby precluding the
auditor from verifying the propriety of charges against the funds.
Section 5.15 of COA Circular No. 2012-002 dated September 12, 2012 states that: ‘‘A
Report on Sources and Utilization of DRRMF shall be prepared and certified correct by
the Local Accountant. The Local Disaster Risk Reduction and Management Officer
(LDRRMO) shall submit the report on or before the 15th day after the end of each month
through the LDRRMC and Local Development Council to the COA auditor of the
LGU.’’
Interview with the City DRRM Officer revealed that they had been preparing the said
reports in the previous years but the City Accountant had just stopped submitting the
same to the LDRRMO.
The Accountant claimed that they were submitting it timely to the auditor’s office.
They were made to resubmit the reports for verification and found out that the report
refers to CY 2016 and they stopped submitting for CYs 2017 and 2018.
We recommended that Management direct the concerned official to submit to the

Audit Team the Reports on Sources and Utilization of DRRMF certified correct by
the City Accountant in prescribed form on or before the 15th day after the end of
each month.
57
17. The functionality of the Local Council for the Protection of Children could not be
determined due to the absence of the indicators such as the conduct of regular and
special meetings at least once in every two (2) months and an Approved Action Plan
with corresponding budget proposal that should be based on activities that the
Council is going to undertake as provided in DILG Memorandum No. 2005-07
dated February 1, 2017.
Lapu-Lapu City Executive Order No. 2017-18 dated July 11, 2017 was issued creating
the Local Council for the Protection of Children (LCPC) pursuant to DILG
Memorandum Circular No. 2002-121.
The guidelines in monitoring the functionality of the LCPC was contained in DILG
Memorandum Circular 2005-07 dated February 1, 2017 which states that the presence
of the following indicates that the LCPC is operational or functional:
A. Records or Minutes of Meetings. To be active and dynamic, the LCPC

must conduct regular and special meetings at least once in every two (2)
months. Such meetings shall discuss or tackle program implementation
strategies, issued and problems on children that should be given utmost
attention or solution and monitoring of children’s P/P/As that are being
implemented in the locality.
B. Approved Action Plan of the LCPC with corresponding budget proposal.
The plan should be based on activities the LCPC is going to undertake as a
Council which include, but not limited to the following:
1. Preparation and updating of situationer or current database on children

in their areas of jurisdiction as basis for the local planning for children;
2. Preparation of the Work and Financial Plan (WFP) of the LCPC and its
approval by the Sanggunian concerned;
3. Monitoring of the four (4) gifts for children namely: a) Local
Development Plan for Children (LDPC); b) Local Investment Plan for
Children (LIPC); c) Local Code for Children; and d) Local State of
Children Report (LSCR);
4. Referral to agencies/NGO of children in need of assistance/protection
and follow-up on action taken;
5. Ensuring and monitoring of the enforcement of laws/policies for the
survival, development, protection and participation of children; and
6. Monitoring and assessment of the programs, projects and activities
(PPAs) on children being undertaken by the LGUs which include, but
not limited to the following:
a. Early childhood education, i.e. establishment or improvement of the
standard daycare centers, recruitment or trained/capacitated daycare
workers, etc.;
b. Elimination of all forms of child abuse/worst forms of child
labor;…….
c. Xxxxxx d. xxxxx e.xxxxxx f.xxxxxx
58
g. Strengthening the family, such as parental care and guidance, family
week celebration, parent education;
h. Legal Protection Program; and
i. HIV/AIDS Prevention Program.
C. Approved budget for LCPC Integrated into the City Budget. The LCPCs,
through their Secretariat as provided for in MC 2002-121, should be
provided with funds from the LGUs Maintenance and Other Operating
Expenses (MOOE), i.e., meeting, travelling expenses, supplies, materials &
equipment through an ordinance.
D. Accomplishment report of the LCPC which include:

1. Activities undertaken showing the implementation of the LCPC Action
Plan;
2. State of the Children Report which the local chief executive (LCE) shall
deliver every month of October of every year in celebration of the
Children’s Month.
3. Other activities undertaken not reflected in the LCPC’s Action Plan.
The reports submitted to the office are the List of PPAs for the budget year 2018 and
the accomplishment report of the City Social Welfare and Development Office
(CSWDO). These PPAs should have been included in the Approved Action Plan of
the LCPC in their monitoring and assessment of the existing PPAs on children being
undertaken by the LGU (Indicator B.6).
Verification of the existing reports reveals the absence of the indicators enumerated
and discussed in Memorandum Circular No. 2005-07. The functionality of the LCPC
will depend on the efforts of the Council based on the released guidelines of the DILG
with the indicators enumerated therein.
They stated that the LCPC meetings were combined with the other different committees.
They could consider it that they have already complied with these indicators and they
also refer the budget as already submitted to the COA Office.
During the exit conference, the audit team pointed out that the functionality of the LCPC
could be determined if there were really meetings conducted by the LCPC with the
Council discussing in their Minutes the activities undertaken by the different offices of
which LCPC programs, projects and activities are in place. The Action Plan should
include the monitoring and evaluation of these offices. The LCPC budget would refer to
the budget of the Council such as supplies, travel and etc.
59
a. Make the LCPC operational and functional by following the indicators set forth
in the DILG Memorandum Circular 2005-07.
b. Require the LCPC to be active and dynamic by conducting regular and special
meetings at least once in every two months.
18. The City did not submit on time the receipts and disbursements records with all
paid vouchers and documents evidencing the transactions to the Audit Team as
required under Item 6.05 of COA Circular No. 95-006, which prevented the timely
review of accounts.
Item 6.05 of COA Circular No. 95-006 provides that “The official involved in the daily
recording of transactions in the books of accounts shall turn over the receipts and the
disbursement records with all paid vouchers and documents evidencing the transaction to
the Auditor within ten (10) days from date of receipt of said documents.”
Inventory of the submitted Disbursement Vouchers and Official Receipts revealed the
following status of submission:
DATE SUBMITTED
MONTH FUND Disbursement Vouchers Official Receipts
GF April 20, 2018 April 20, 2018
January TF March 8, 2018 March 8, 2018
SEF April 2, 2018 April 2, 2018
GF May 9, 2018 May 9, 2018
February TF March 27, 2018 March 27, 2018
SEF April 2, 2018 April 2, 2018
GF June 13, 2018 June 13, 2018
March TF April 26, 2018 April 26, 2018
SEF May 6, 2018 May 6, 2018
GF July 20, 2018 July 20, 2018
April TF May 23, 2018 May 23, 2018
SEF May 31, 2018 May 31, 2018
GF August 13, 2018 August 13, 2018
May TF June 29, 2018 June 29, 2018
SEF July 5, 2018 July 5, 2018
GF October 1, 2018 September 14, 2018
June TF August 2, 2018 August 2, 2018
SEF July 31, 2018 July 31, 2018
GF September 14, 2018 October 8, 2018
July TF August 23, 2018 August 23, 2018
SEF September 3, 2018 September 3, 2018
60
DATE SUBMITTED
MONTH FUND Disbursement Vouchers Official Receipts
GF December 10, 2018 November 5, 2018
August TF September 25, 2018 September 25, 2018
SEF September 26, 2018 September 26, 2018
GF January 23, 2019 December 7, 2018
September TF October 29, 2018 October 29, 2018
SEF October 25, 2018 October 25, 2018
GF January 14, 2019 January 25, 2019
October TF December 18, 2018 December 18, 2018
SEF January 14, 2019 January 14, 2019
GF not submitted February 4, 2019
November TF January 7, 2019 January 7, 2019
SEF January 11, 2019 January 11, 2019
GF not submitted not submitted
December TF February 14, 2018 February 14, 2018
SEF February 18, 2019 February 18, 2019
Based on the above schedule, it can be observed that the city is always delayed in the
submission of the above-mentioned documents, thus, preventing the auditorial review of
agency reports and transactions on time. Consequently, any error noted and adjustment
thereon could not be immediately relayed to Management.
They stated that they will have a meeting on whose department really caused the delay
of the submission of the vouchers and they even asked for a longer period to submit the
vouchers and other reports.
The deadline for the submission is being set by regulation and should be followed in
order for the audit team to have time to review, verify and evaluate the accounts and
financial reports of the city.
We recommended that concerned official or employee submit on time the

disbursement vouchers and collection reports and the supporting documents
pertaining thereto to the Auditor within ten (10) days from receipt of said
documents or reports in compliance with Item 6.05 of COA Circular No. 95-006.
61
19. The City’s programmed projects for development amounting to ₱546,229,386.48
were not fully implemented in accordance with the Annual Investment Plan with a
fund utilization of only ₱78,996,979.68 or 23.56% for the current projects and
₱90,711,687.86 or 42.98% for the continuing projects.
Review of the Status of Appropriation, Allotments and Obligations for the Current
Appropriations and Continuing Appropriation-20% Development Fund disclosed the
following:
Appropriation /
Local Development Project Allotments Obligation Difference
Current Appropriations 335,201,926.62 78,996,979.68 256,204,946.94
Continuing Appropriations 211,027,459.86 90,711,687.86 120,315,772.00
TOTAL 546,229,386.48 169,708,667.54 376,520,718.94
Based on the above schedule, it can be observed that the city had obligated only 23.56%
for the current appropriations and 42.98% for the continuing appropriations. The
minimal utilization of the said 20% Development Fund resulted in the non-achievement
of the purpose for which the Fund was established to the disadvantage of the intended
beneficiaries who constituents were deprived of the vital services and benefits due them
had the same been fully and properly implemented.
The Management explained that some projects were not implemented due to the
problem of lot acquisition. They stated that they have reprogrammed some of the
unimplemented projects to maximize the utilization of the fund.
Problems on lot acquisition should have been dealt with in the planning stage of the
project to avoid these problems to crop up during the implementation stage which would
already involve loss of time and cost to the agency.
We recommended that Management maximize the utilization of the 20%

Development Fund allocated for the implementation of various projects, programs
and activities that are envisioned to help in the attainment of social, economic and
environmental development and optimally utilize the Fund to help achieve
desirable socio-economic development and environmental outcomes.
Compliance with Tax Laws
Evaluation of the agency’s operations during the year showed compliance with the
requirements of tax laws and regulations. Taxes were withheld from compensation and
payments to contractors/suppliers and remitted to the Bureau of Internal Revenue.
62
STATUS OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES
Notice of Balance 1/1/2018 Issuance Settlement Balance

Jan.-Dec., 2018 Jan.-Dec., 2018 12/31/2018
Suspension ₱ 63,648,395.90 -0- ₱ 5,454,339.91 ₱ 58,194,055.99
Disallowance ₱ 39,614,604.02 -0- -0- ₱ 39,614,604.02
Charge ₱ 686,670.82 -0- -0- ₱ 686,670.82
63
PART III
STATUS OF IMPLEMENTATION OF PRIOR
YEARS’
AUDIT RECOMMENDATIONS
Part III - STATUS OF IMPLEMENTATION BY THE AUDITEE OF
PRIOR YEARS’ AUDIT RECOMMENDATIONS
AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN
AAR REF. VALIDATION
RECOMMENDATIONS BY MANAGEMENT
RESULTS
Fully Implemented
1 Property, Plant and Equipment 2017 Reconstruction and This is reiterated in
7(PPE) GL balances totaling 2016 reconciliation Observation No. 3
. P2,168,135,600.33 cannot be 2015 between the under Part II of the
completely validated because 2014 Accounting Office report.
accounting and property 2013 and the GSO is on-
records were incomplete and 2012 going.
had an unreconciled difference This year they have
of P816,367.434.10. Also, a already created a
physical inventory was not team to conduct the
conducted for the past several physical inventory.
years to check the existence
and actual physical condition
of the assets.
Require the City Accounting
Office and the General Services
Office to prioritize the
completion of reconstruction
and reconciliation of their
records on PPE to validate the
account balance and the
inventory committee to
conduct a physical count and
submit a report thereon for
reconciliation with accounting
and property records.
2. The ‘Books’ account balance 2017 They have made A JEV was issued for
of P117,286,670.91 under the 2016 several the adjustment.
Special Education Fund is 2014 adjustments in the
unreliable because it includes books of account
the dormant balance of which was non-
P26,537,109.65 of existent due to fire
unidentified ‘Other Assets’ and water damage.
account. Moreover, more than An Inventory,
90% of the remaining balance Inspection and
of P90,749,561.26 were Appraisal of
composed mainly of Unserviceable
textbooks/workbooks and Property Report
instructional materials was prepared to
acquired from 1981 to 2007, support the
which according to the DepEd adjustments
property custodian were enumerating the
already totally damaged and properties that
finally disposed of. were damaged.
We recommend that the This was approved
General Services Office by the then City
submit to the Accounting Mayor.
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
Office the verified list of the
items disposed together with
the other
records/documents on
disposal to support the
Accounting adjustment to be
made.
3. Accounts Payable balance 2017 Adjustments to this Examination of the
is unreliable because it 2014 account were Accounts Payable
included the amount of already effected. was made and only
P27,942,918.80 which transactions in CY
remained unpaid for more 2016 to 2018 were
than one year and were not included.
supported with valid
claims/documents on
record.
We recommend that the City
Accounting Office make the
proper adjustments for
those overdue amounts that
were not supported with
valid claims and henceforth
ensure that Accounts
Payable are recognized and
recorded only when goods
and services are accepted or
rendered and
supplier/creditor bills are
received.
4. The Accounting Office did 2017 Accounting Office At present GSIS will
not fully reconcile 2015 in line with the not accept
remittances to the 2010 requirement for the remittances from
Government Service Seal of Good the city that will not
Insurance System (GSIS) Governance made pass the threshold
with the deductions made reconciliation of limit of 100%.
from employees as the records
manifested by the material between the City
amounts of monthly under and the GSIS of
and over remittances which variances
resulting in the accumulated were pointed out
net unremitted balance in and submitted the
arrears totaling required
P3,516,114.40 for all funds documents
as of December 31, 2017.
Require the City Accountant
to undertake the
reconciliation of all
remittances against amounts
withheld and remit to the
GSIS the overdue amounts
and ensure that employees’
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
accounting records reconcile
with those of the GSIS.
5. Management’s lack of 2017 The City has been Hoops Dome had
determination in pursuing promoting sports really been the
the full operation of the and tourism venue of big events.
Hoops dome and Jeepney through hosting of It also caters to
Terminal according to various activities the
plans, caused its international sports proponents of which
underutilization, resulting events and the are from outside the
in foregone revenues that Hoops Dome has city.
could have lessened the become one of the
impact of borrowing costs venues of this big
incurred totaling gatherings.
P104,040,565.60 and Adjustments to the
P11,444,462.20 for the rental had already
acquisition of the assets at been submitted to
a cost of P192,975,865.96 the SB and
and P20,954,578.14 management has
respectively, through continuously been
financing from the Land looking for ways to
Bank of the Philippines. resolve this
We recommend that concern.
management implement
measures to regulate the
operations and
maintenance of both the
Hoops dome and Jeepney
Terminal and conduct
extensive promotion of the
facilities through regular
information dissemination,
public consultation and/or
hearing to attract potential
users of the play court and
lessees/occupants of the
available
office/commercial spaces
in order to fully attain its
objectives of generating
more income to the City.
6. The City has not optimally 2017 Some projects had Hindrances to
utilized its 20% 2016 remained project
development fund as unimplemented implementation due
manifested by significant due to problems in to problems on lot
balances in unobligated lot acquisition thus acquisition could
allotments of projects were have been
P119,781,231.37 and realigned to addressed during
P172,371,822.24 for the feasible the planning stage
current and prior years development to ensure success to
respectively, hence affecting projects. the complete
its efficiency and accomplishment of
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
effectiveness in contributing projects.
to the achievement of This observation is
desirable socio-economic reiterated in
development and Observation No. 18
environmental outcomes. under Part II of the
Ensure the optimum report due to the
utilization of the 20% very low percentage
Development Fund through of utilization of the
proper planning, 20% DF for current
prioritization and fast- and continuing
tracking the appropriations
implementation of resulting in the
development projects to accumulation of
afford its constituency the unutilized funds.
benefits of enhanced socio-
economic development and
environmental
management outcomes.
7. The City Government 2017 Management
appropriated funds already corrected
amounting to the defects
P7,015,000.00 under CY
2017 Supplemental Budget
No. 3 for the “Concreting of
Portion of Hoops dome”
project which was awarded
on January 29, 2018 for
P7,009,208.56 and
eventually executed even
though the existing
concrete pavement was
still under warranty
against Structural Defects
& Failures of the previous
contractor as prescribed
under the 2016 Revised
IRR of R.A. 9184.
We recommend that
management henceforth
monitor the warranty
securities covering all
completed projects to
ensure that these are made
to answer for defects
discovered within the
warranty period, if
applicable.
8. The City’s Disaster Risk 2017 The City DRRM Observation No. 15
Reduction and Officer explained of this report noted
Management Office did not that his office was the submission of
prepare a Local Disaster able to submit the the LDRRMF but all
67
AUDITOR’S
AAR REF. VALIDATION
RESULTS
Risk Reduction and 2018 LDRRMFIP. the activities and
Management Fund programs were not
Investment Plan fully implemented in
(LDRRMFIP) thus there accordance with the
was no proper planning plan submitted.
and scheduling of the
implementation of its
disaster risk reduction and
management programs,
projects and activities
resulting in the very low
utilization rates of 8.13%
or P5,570,202.00 and
36.6% or P27,840,371.41
out of the appropriations of
P68,509,755.00 and
P76,063,754.25 for the
current and continuing
appropriations,
respectively. Moreover, the
agency has utilized only
0.005% or P340,748.38 of
the unexpended LDRRMF
from CY 2012-2016
amounting to
P67,330,163.61.
We recommend that the City
Disaster Risk Reduction and
Management Office
henceforth prepare annually
the Local Disaster Risk
Reduction Management
Fund Investment Plan
pursuant to Section 5.1.2 of
COA Circular No. 2012-002
to provide a guide for the
efficient and effective
utilization of the LDRRMF
for the attainment of its
purposes.
9. The City’s targeted projects 2017 Management was Observation No. 14
for CY 2017 under its 10- 2016 able to send a of this report
Year Solid Waste follow up letter to contains Solid Waste
Management Plan for the NSWMC. Plan as the subject
“Setting –up of Materials matter.
Recovery Facility (MRF) in
Barangay/Barangay Cluster”
and “Increased Processing
Capacity of the City MRF”
with estimated investment
costs of P3,000,000.00 and
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
P1,000,000.00 respectively,
were not implemented
because no appropriations
were provided in the annual
budget.
We recommend that
Management make a follow
up on the status of the
NSWMC’s review of the
revised Solid Waste
Management Plan and if
found to be still deficient,
seek technical assistance
pursuant to NSWMC
Resolution No. 8 in
complying with its
recommendations, in order
to come up with a Plan that
is fully compliant with the
requirements of RA 9003
and obtain absolute
approval thereof.
10. The City’s 10-Year Solid 2017 Observation No. 14
Waste Management Plan of this report
(2012-2022) was not contains Solid Waste
compliant with the Plan as the subject
requirements of Section 17 matter.
of R.A. 9003, hence cannot
be fully implemented due its
conditional approval by the
National Solid Waste
Management Commission
(NSWMC).
We recommend that
Management make a follow
up on the status of the
NSWMC’s review of the
revised Solid Waste
Management Plan and if
found to be still deficient,
seek technical assistance
pursuant to NSWMC
Resolution No. 8 in
complying with its
recommendations, in order
to come up with a Plan that
is fully compliant with the
requirements of RA 9003
and obtain absolute
approval thereof.
11. The City Local School Board 2017 The Notice of the NSSDC No. 19-001
69
AUDITOR’S
AAR REF. VALIDATION
RESULTS
continuously employed 2016 Lifting of the was issued lifting
teachers chargeable against Suspension was the Notice of
the Special Education Fund already received by Suspension.
in the absence of proof of management.
the need for the
establishment of extension
classes based on the teacher
deployment analysis of the
DepEd as approved by the
Secretary thus the
incurrence of
P14,556,406.79 in CY 2017
for salaries and other
benefits of these teachers
may not be justified.
We recommend that the
Local School Board make
representations with the
DepEd, through its
representative, to have the
locally-paid teachers
included for consideration in
the hiring of permanent
positions therein so that the
SEF may be used fully for its
intended purposes. We
further recommend that
henceforth, teachers
chargeable against the SEF
shall be hired only in
elementary and secondary
schools with identified
shortages based on the
teacher deployment analysis
of the DepEd pursuant to
DepEd, DBM and DILG Joint
Circular No. 01, s. 2017.
12. The City did not provide 2017 Management The Minutes of the
counterpart funds for the commented that LPRAT Meeting
BUB project “Construction the fund for the 3 contains the
of Day Care Centers in Day Care Projects attendance of the 2
Barangays Sta. Rosa, of P1,500,000.00 is representatives
Pangan-an and Tungasan” not enough with from the DSWD
and the funds amounting the additional Region 7; DTI and
P1,050,000.00 released by handling cost that DILG Region 7.
DSWD for the purpose was would be incurred
utilized for the since these are
construction of the Sta. located in the
Rosa Day Care Center only island barangays
resulting in the non- and in addition
implementation of the there are no
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
Pangan-an and Tungasan government owned
Day Care Centers thus lots in Pangan-an
partially defeating the and Tungasan thus
purposes for which the only the
funds were intended. construction of the
We recommend that Day Care Center in
management provide the Sta. Rosa was
required counterpart funds implemented.
to fund the cost of the Resolution No.
project in excess of the 2015-03 of the
BUB funds and return to LPRAT Committee
DSWD the unused funds was issued taking
allocated for the up this matter.
unimplemented projects;
otherwise submit an
authority/approval from
the DSWD to justify the use
of the funds intended for
the unimplemented
daycare centers to fund the
Sta. Rosa Daycare Center
only.
13. The LGU did not fully 2017 Management JEV was already
liquidate or return to the already returned issued and
source agencies excess the excess fund adjustments were
funds totaling P402,769.87 balances. made in the books.
of completed BUB projects
contrary to COA Circular
No. 1994-013 thus
depriving the national
government of the use of
the funds.
We recommend that
management always ensure
the return of all excess fund
balances upon completion
of the intended projects to
the different national
government agencies
where the funds originated
so that this can be returned
to the national treasury.
14. The payment of meals and 2017 Justification on the Management
snacks at P250.00 per head reply letter stated already explained
for seminars/trainings that in the on the difference of
conducted under the implementation of the prices.
“Lapu-Lapu City the project
Community-Based Credit adjustments were
and Multi-Purpose made in the venue
Cooperative Strengthening and food
for Viability and preparation and
71
AUDITOR’S
AAR REF. VALIDATION
RESULTS
Sustainability” project was packaging of the
excessive by P70.00 or a food thus the
total amount of difference in the
P234,990.00 compared to amount.
those paid at P180.00 per
head under the “Livelihood
and Entrepreneurship
Development Training”
project, both of which were
served by the same caterer
with the same or similar
menu within the same
period.
BAC submit, for our further
evaluation, its explanation
for the award of several
similar contracts to the
same caterer within the
same period at a higher
cost of P250.00 when it had
awarded other similar
contracts at P180.00
resulting in excessiveness
of P234,990.00.
15. The actual cost incurred for 2017 A Budget
the conduct of Monitoring Ledger
trainings/seminars totaling was already used
P736,183.00 and purchase and a staff was
of equipment of assigned to handle
P123,820.42 under the the monitoring of
“Livelihood & the activities.
Entrepreneurship
Development Training”
program exceeded the
budgeted amounts of
P575,250.00 and
P25,000.00 in the Work &
Financial Plan by
P160,933.00 and
P98,820.42, respectively,
thus compromising the
implementation of the
other components of the
program.
project coordinator
henceforth meticulously
monitor and limit
expenditures to budgeted
amounts to ensure the
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
accomplishment of all
components of the
program for the full
attainment of its objectives.
16. Regularity of expenses for 2017 The officer-in-
honoraria of resource charge submitted
persons and catering the reconciliation
services totaling of the activities and
P188,000.00 and services
P1,092,390.00 respectively, undertaken and
charged to BUB funds from explained that the
DTI for the “Lapu-Lapu City claims for
Community Based Credit honoraria were
and Multi-Purpose processed at a
Cooperative Strengthening much later date
for Viability & thus changes and
Sustainability” and adjustments in the
“Livelihood & scheduled dates
Entrepreneurship and in the actual
Development Training & implementation of
Purchase of Equipment” the trainings were
projects, were doubtful due not taken into
to inconsistencies in the account. There
dates the were also factors
seminars/trainings were considered in the
supposedly conducted. change of the dates.
We recommend that the Also there were 2
LLCLRC office prepare and activities were
maintain a systematic honoraria were not
record of all its activities claimed since these
and related file of were facilitated by
documents as basis in the the staff and they
preparation of claims. considered these as
part of their jobs.
17. The City Accounting Office 2017 An examiner from An audit
had not fully remitted the 2013 the BIR made a observation was
remaining outstanding 2010 thorough issued.
overdue balance of reconciliation of
P12,357,224.39 of the Due the accounts and
to BIR account thus the balance was
depriving the national remitted to the BIR.
government of the use of
the funds.
Accounting Office
henceforth conduct a
monthly reconciliation of
remittances against
amounts withheld to
ensure that the correct
amounts are remitted to
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
the BIR on time and
prevent the recurrence of
unreconciled/ unremitted
balances.
18. The Receivable- 2017 Adjustments to the
Disallowances/Charges account were
account balance as of already effected.
December 31, 2017 of
P2,719,066.86 is unreliable
due to the absence of
subsidiary records, lack of
monitoring and
reconciliation of the
account balance and errors
in recording transactions
affecting the account.
We recommend and the
Accounting Office agreed to
record the necessary
adjustments to correct the
misstatement of the
account balance owing to
the errors/omissions cited;
to maintain updated
subsidiary ledgers for all
persons with
disallowances, closely
monitor settlements made
and undertake monthly
reconciliation of balances
with the controlling
account.
19. Management implemented 2017 Request made by
the settlement of management were
disallowances through forwarded to the
payments/refunds by Commission.
installments in the absence
of an authority from the
Prosecution and Litigation
Office of the COA Central
Office contrary to COA
Resolution No. 2015-031 as
amended by COA
Resolution No. 2017-021
dated November 3, 2017.
Moreover, despite the
demand letters sent by the
City Accountant pursuant
to the NFD, several persons
liable did not comply,
resulting in the collection
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AUDITOR’S
AAR REF. VALIDATION
RESULTS
of only P241,179.68 out of
the total disallowances of
P1,887,200.00.
We recommend that
management secure
authority to pay in
installments from the COA
PLO by submitting a
request by the City Mayor
or her authorized
representative in behalf of
the persons liable
supported with the latter’s
letters of authority. We
further recommend that
management enforce the
settlement of
disallowances pursuant to
the NFD and the COA Order
of Execution to be issued to
the City Treasurer subject
to any authority to pay in
installments that may be
subsequently granted.
20. The City made a total of 2016 Management Notice of
P3,239,100.00 advance conducted an Disallowance No.
payments, equivalent to investigation and 17-001-010 (2015-
90% of the contract cost of required the 16) dated January
P3,599,000.00 out of its personnel whose 18, 2017 was issued
DRRM Fund for the general names were and a decision was
rehabilitation of one (1) unit identified as liable made by the COA
LG2H Model Mitsubishi were issued notices Regional Office
Road Grader even if the to explain. sustaining the
contractor had been in disallowance but a
default in the performance petition for
of its contract. Moreover, reconsideration was
the repair cost is considered filed by
uneconomical and management to COA
unnecessary since the Central Office.
equipment had been The ND amounting
unserviceable for more than to P3,239,100.00 is
37 years already and had a part of the balance
book value of only in the quarterly
P426,412.50. Statement of Audit
Recover the amount Suspensions,
advanced to the contractor Disallowances and
including liquidated Charges (SASDC)
damages that may be
available under existing
laws, otherwise require the
refund thereof by all
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AUDITOR’S
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RESULTS
persons identified as
responsible/liable for the
transaction.
21. The ‘Concreting of Carajay 2016 Management A Notice of

Road/A. Tumulak Street’ at conducted re- Settlement of the
Barangay Gun-ob project inspection and Suspension/Disallo
which was reported as informed the wance/Correction
100% completed per contractor of the (NSSDC) dated
Statement of Work defects. Contractor January 14, 2019
Accomplished as of April 8, informed was issued for the
2016 was found to be only Management that corrections/ repair
96.09% accomplished due to they will still made on the defects
deficiencies noted during consult third party noted.
COA inspection, computed at experts regarding
an equivalent cost of the possible cause
P430,072.20. of the defects.
Require the contractor to
perform correction/repair
works (remove and replace,
if necessary) on concrete
pavements with noted
defects or pay the equivalent
cost of P430,072.20. Also,
require the conduct of a
coring test of the concrete
pavements and submit a
copy of the test results to
COA.
22. The City Government 2016 Management’s Observation No. 14
continued on maintaining its reply to the Audit of this report
controlled dumpsite in Team’s AOM states commended
Soong, Mactan with tons of that they have duly management for
residual wastes proliferating adopted the their compliance to
therein despite the segregation at Section 12 of
prohibition under Republic source and the Republic Act 9003
Act No. 9003, thus posing responsibility of or the Ecological
serious threat to the the barangays to Solid Waste
environment and the people collect the Management Act of
from the harmful effects biodegradable and 2000.
associated with its the recyclable solid
operation. wastes and the City
Provide enough budget for to receive the
solid waste disposal to residual and the
ensure the continuous and special wastes for
complete transfer/disposal its final disposal.
of all residual wastes
generated and craft a safe
closure and rehabilitation
plan for the existing
dumpsite in compliance
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with Section 25 and 37 of
R.A. 9003.
23. The City’s contracts for the 2016 BAC submitted its Notice of
collection and disposal of explanation Suspension No. 17-
residual wastes from its together with some 003-101 (2016)
controlled dumpsite to a of the documents dated February 2,
private disposal facility required. 2017 was issued.
totaling P42,497,877.79 Submitted
were awarded even if the documents were
contractor had not complied still incomplete and
with the eligibility still for further
requirements in the evaluation.
Invitation to Bid and Terms
of Reference; and payments
thereof were made in the
absence of documentary
proof of the conduct of
mandatory activities relative
to its procurement.
Moreover, the perfected
contracts together with the
required supporting
documents were not
submitted to the Audit Team
within five (5) days after
perfection hence timely
review and evaluation could
not be made.
Submit all the required
supporting documents to
prove the regularity of the
conduct of procurement
activities on the garbage
collection and disposal
contract and the necessary
documents for the technical
evaluation thereof. Further,
require the Bids and Awards
Committee (BAC) to submit
an explanation on why the
contract was awarded
despite the contractor’s
failure to comply with the
eligibility criteria in the
invitation to bid and the
terms of reference.
24. The City did not fill up the 2016 Positions were The CY 2017 annual
three (3) mandatory funded and ready budget had existing
positions for the City for filling up. funding for four
Disaster Risk Reduction and personnel of the
Management Office LDRRM Office, 1
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(CDRRMO), hence item for LDRRMO IV
implementation of actions and 3 items for
and measures pertaining to LDRRMO I, all of
disaster risk reduction and which were still
management may not be vacant. An audit
assured. observation was
Fully institutionalize the issued.
CDRRMO by filling up the
statutory/mandatory
positions required under the
NDRRMC-DILG-DBM-CSC
Joint Memorandum Circular
(JMC) 2014-1 to assure
implementation of actions
and measures related to
disaster risk reduction and
management.
25. The City Accounting Office 2015 An adjustment This is connected
did not provide 2013 totaling with the observation
Accumulated Depreciation P10,563,893.59 on PPE of this report
for depreciable PPE costing was made under where in the
P979,057,158.56, equivalent JEV No. 101-16-12- physical count had
to 48% of total depreciable 1000316 for to be completed.
PPE of P2,053,501,488.34, depreciation of CY
resulting in the 2001 acquired
understatement of assets all of which
Depreciation Expenses and were fully
corresponding depreciated for
overstatement of Net PPE being beyond the
and Government Equity. estimated useful
Instruct the City Accountant life.
to exert efforts in reviewing
accounting records in order
to come up with a complete
listing of all assets
comprising the PPE GL
balance and compute
accumulated depreciation in
accordance with PPSAS and
existing COA issuances and
make proper adjustments,
where necessary.
26. The Special Education Fund 2015 Payment was The grant of the
was unnecessarily stopped starting CY allowance was
decreased because 2016. Refunds discontinued in CY
allowances without legal were required for 2016. Notice of
basis totaling the issuance of Disallowance No.
P29,261,918.13 granted to clearance for 16-001-201 (2014-
DepEd personnel and teachers who 15) was issued
locally-paid teachers, and retired or resigned dated February 26,
expenses for the DepEd and the payments 2016 and an appeal
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Division Office totaling were recorded as is pending at COA
P1,637,736.91 were trust liability RO VII.
improperly charged thereto pending the COA
contrary to the purposes for decision on the
which the fund was appeal filed.
established. Advise the Local
School Board to stop the
grant of additional
compensatory allowance
and require the refund of the
amounts illegally paid and
henceforth strictly comply
with the provisions of
Section 272 of R.A. 7160 and
its implementing rules and
regulation on the utilization
of the Special Education
Fund.
27. The City Accountant did not 2015 Some adjustments An audit
record the necessary 2010 were already observation was
adjustments for several booked. issued for prior
outstanding reconciling years reconciling
items in the bank items not yet
reconciliation statement, adjusted.
resulting in the net
understatement of Cash in
Bank by P10,759,203.88 and
the misstatement of other
affected accounts.
to record the necessary
adjustments in the books to
correct the balances of the
Cash in Bank and other
accounts affected by the
unadjusted reconciling
items.
28. The City still maintains Time 2015 Management has As of December 31,
deposits totaling P168 complied with 2018 the City still
million with a private bank respect to deposits maintained deposits
and P181 million with a in private banks with the “Philippine
non-compliant Government PVB & PNB. Postal Savings Bank
Financial Institution despite (PPSB) renamed as
the issuance of Department Overseas Filipino
of Finance (DOF) Circular Bank“ which is part
Nos. 001.2015 and of the Land Bank of
002.2015. the Philippines
Instruct the City Treasurer group of banks but
to terminate the P169 are already
million time deposit with authorized to accept
PVB and deposit the same to deposits.
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a GFI with universal bank
license and a CAMELS rating
of "3", and transfer all funds
and cash balances with
PPSBI to a compliant GFI
after the lapse of the
transition period in
conformity with Section 6.1
of DOF Circular No.
002.2015 dated July 2015.
29. All the seven (7) 2015 The projects were All the seven (7)
infrastructure projects completed and projects were
implemented under Special computed with already completed
Education Fund, with total liquidated damages and 5 were charged
cost of P90,821,570.62 were where necessary. with liquidated
not completed on target damages.
dates due to deficiencies
involving the need for
variation orders/additional
works and/or corrections,
resulting in delayed
availability of the facilities to
the constituents. Moreover,
ten (10) projects with total
cost of P44,000,472.30
funded from CY 2014
supplemental budgets were
not implemented.
Direct the City Engineering
Office to hasten the
needed projects and
henceforth diligently
undertake sufficient detailed
engineering activities for all
infrastructure projects prior
to the preparation of
program of works to resolve
all possible issues so that
delay in the actual project
implementation can be
avoided. Also require the
City Engineering Office to
compute and deduct
appropriate liquidated
damages from any unpaid
claims or in case full
payments have been made,
collect the same from the
contractors.
30. The payment of honoraria to 2015 Payments were A Notice of Finality
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the officers and members of stopped. of Decision (NFD)
the Talima Marine Sanctuary was already issued.
Board at a rate of P750.00
each per regular/special
meeting attended totaling
P420,000.00 was contrary to
law, rules and regulations.
Stop the payment of
honoraria to the officials and
members of the TMSB and
require the refund of the
P420,000.00 erroneously
paid.
31. Expenses for additional food 2015 Persons Explanation and
supplies at the City Jail responsible documents
totaling P3,503,988.84 were submitted submitted could not
paid through justification. justify the irregular
reimbursement basis to the procurement
Jail Officers, supported only procedures
with reimbursement undertaken for the
expense receipts (RERs) transactions in
instead of official receipts, question. Notice of
contrary to Section 237 of Suspension No. 16-
the Tax Code and 002-101 (2015)
circumventing the dated 2/26/2016
procurement procedures for P3,503,988.84
prescribed under R.A. 9184. was issued.
Require the claimant Jail
Officers to demand for the
issuance of official receipts
from the suppliers and
submit the same to prove
the validity of the payments
made, and henceforth
procure food supplies in
accordance with the
applicable modes of
procurement prescribed in
the revised implementing
rules of R.A. 9184.
32. Several accounts under the 2014 The amounts under A total of
Due to NGA s and Due to 2013 the Due to LGUs P1,202,786.85 funds
LGUs accounts in the Trust 2011 account which in the Due to LGUs
Fund have become dormant pertains to the account were settled
either due to the non- barangays were by the City with the
implementation of intended settled by the City. different barangays.
purposes or non-liquidation The LGU still has to
and disposition of excess coordinate with the
funds, thus funds totaling Bureau of the
P19,867,707.07, which could Treasury on the
have been put to better use return of unused
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AUDITOR’S
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by the grantor/owner funds from the
agencies, were allowed to national
become idle. government and
Inform the Bureau of the with the Provincial
Treasury of management’s Government of Cebu
inability to comply with the for unused funds
requirement to submit Fund coming from the
Utilization Reports giving province.
the reasons therefore and An audit
seek advice on other observation was
alternative courses of action issued.
to take to be able to return
the unused funds so that
these can be utilized for
other important and urgent
projects.
33. Out of the unexpended 2014 Management This is reiterated in
balance of P64,185,310.31 of 2013 promised to return this report under
Priority Development the PDAF Funds of Observation No. 12.
Assistance Fund (PDAF) which was included
under the Trust Fund as of in the Time
December 31, 2013, only Deposit.
P16,303,848.83 or 25% was
reported as utilized in CY
2014 either due to delayed
or non-implementation of
intended
programs/projects, thus
defeating the purposes for
which they were allocated,
or non-liquidation by the
implementing agency/
NGO/PO of funds released to
them. In addition, a total of
P4,955,733.55 representing
excess balances after full
intended programs/projects
were not returned but
remained idle in the Fund
despite the Supreme Court
declaration that PDAF is
unconstitutional.
 Speed up the
implementation/
completion of the
intended projects and
submit the required
liquidation reports to the
source agency.
 Monitor the usage of the
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AUDITOR’S
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funds released to VSMMC
and KONKA and follow up
the submission of
liquidation reports to
ensure proper utilization
of the funds in accordance
with the intended
purposes
 Return all funds for
unimplemented projects
which can no longer be
pursued or are no longer
needed including excess
funds of fully
implemented projects so
that these can be fully
utilized by the grantors for
other important
programs/ projects of the
government.
34. The contract cost of two 2014 Submitted the The management
completed infrastructure variation orders letter-reply together
projects were observed to relative to the with the variation
be excessive by a total project – orders were
amount of P1,550,876.08 Installation of submitted to COA
contrary to COA Circular No. Drainage Line (Box Technical Services
2012-003 and COA Type) along S. for further
Resolution No. 91-52, thus Osmeña Street, evaluation and
disadvantageous to the Poblacion. On the comments.
government. project, Repair and
Require the City Engineering Improvement of
Office to submit the Hoops dome (Phase
approved variation/change I), Gun-ob, Lapu-
order and other documents Lapu City, the
in support of management’s Engineering Office
comments to the audit defended the
observation memorandum correctness of their
for our evaluation. estimates with
Instruct the City Engineer’s respect to
Office to exercise extra care quantities and
and diligence in the price and
preparation of program of requested for
work for infrastructure details of the COA
projects to ensure that estimates.
determination of quantities
and cost estimates are in
accordance with Annex A of
the Revised IRR of R.A. 9184
to arrive at the most
equitable Approved Budget
for the Contract to be bid
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AUDITOR’S
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and implemented. If due to
unforeseen causes, changes
to the original
plans/contract are required,
management should
immediately copy-furnish
COA with the variation/
change order for further
evaluation.
35. Financial assistance 2014 Compliance with Outstanding
extended to Barangays were 2012 documentary balances were not
released even in the absence 2011 requirements for fully liquidated. An
of the required certification the grant of audit observation
from the Accountant that financial assistance was issued.
funds previously received already imposed in
has been liquidated and accordance with
other documentary accounting and
requirements enumerated auditing rules and
under COA Circular 2012- regulations.
001 resulting in the Additional grant of
accumulation of financial assistance
unliquidated grants totaling is suspended for
P14,480,847.08 as of year- barangays with
end. unliquidated
Require all barangays to financial assistance.
liquidate all long
outstanding financial
assistance received and
henceforth strictly enforce
submission by the
barangays of complete
documentary requirements
enumerated under COA
Circular 2012-001 as a
condition for the grant of
another financial assistance.
36. The provision of birthday 2014 Management The practice was not
cakes to senior citizens of justified that the stopped by the City
the City with total cost of provision for giving since they already
P4,801,130.00 for CY 2014 of cakes is included have the authority
was observed to be an in the Add Quality given by the
unnecessary expenditure in Handbook duly Sangguniang
relation to RA 9994 and is approved by Panglungsod and
not in keeping with COA Sangguniang this is part of the
Circular 2012-003. Panglungsod social services given
Discontinue or at least limit complementing the to the senior
the giving of birthday cakes existing RA 9994 citizens.
only on the occasion of the specifically on
senior citizens’ reaching social services to
their milestone years (i.e. Senior Citizens who
every 65th or 70th year, had once been the
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AUDITOR’S
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etc.) and use the savings in City’s taxpayers
devising other worthwhile and the source of
programs/projects for their wisdom to the
benefit. younger
generations. It
encourages the
senior citizen to be
productive and
reactive in sharing
their time, talent
and treasures to
the community as
well as nation
building.
37. Honoraria were paid to 2013 Management has Notice of Finality of
Chairs and members of the stopped the Decision dated
different committees/ payment of 11/17/2016 was
boards created by the City honoraria to the served to appellants
government in the discharge different on 11/25-
of its basic functions, in committees/ 12/01/2016.
violation of existing laws, boards that were Management has
rules and regulations, issued notices of started collecting
resulting in illegal disallowance. from the persons
disbursement of public liable.
funds.
Stop the grant of honoraria
to the designated Chairs and
members of the different
committees/boards and
require the refund by the
concerned personnel of the
amounts wrongly collected
by them.
38. Non-adherence by 2013 One personnel is Reconciliation with
management to the policies 2011 assigned to handle GSO was not
and procedures provided the account and completed. This is
under the NGAS Manual in some adjusting/ reiterated in this
reporting and recording correcting entries report. This is
inventory transactions had been made reiterated in this
caused the breakdown of report.
internal control over
inventories resulting in the
overall unreliability of the
account balance of
P43,403,298.40.
 Require the City
Accountant to maintain
complete and updated
supplies ledger cards for
all inventory items, as
basis in computing and
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AUDITOR’S
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controlling the costing of
issuances of supplies and
ensure that total of the
ledger cards always
reconcile with the general
ledger inventory control
account;
 Require all inventory
custodians to maintain
complete stock cards with
assigned stock number for
every inventory item and
prepare and submit a
weekly report of issuances
to the GSO, who should
consolidate the reports by
inventory type and submit
the consolidated report to
the City Accountant for
recording and posting to
the ledger cards.
Accountant and the GSO to
regularly reconcile their
records on inventories to
check the correctness of
both records.
 Require the inventory
team to conduct a physical
count of all inventory
items at every year end
and reconcile the count
with the stock cards and
accounting ledger cards
and investigate
discrepancies.
Accountant to reclassify to
other assets the cost of
obsolete items found on
stock and book other
required adjustments,
where necessary, to
validate the correctness of
the reported inventory
account balances.
39. Management did not strictly 2013 Employees from This is reiterated in
enforce the laws, rules and 2012 attached National this report as
regulations governing the Agencies are no Observation No.
grant, utilization and longer allowed to
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AUDITOR’S
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liquidation of cash advances, draw cash
thus the amount of advances for travel;
P3,369,074.26 remained instead they are
unliquidated as of year-end, paid through
consisting of current year reimbursement;
and prior years’ balances
totaling P1,460,260.49 and Those who do not
P1,908,813.77 respectively. liquidate their cash
 Strictly require the advances right after
liquidation of previously travel are either
granted cash advances as dropped from the
a condition prior to the payroll or their
grant of another cash salaries put on hold
advance and enforce the until liquidation is
full liquidation of all cash submitted and the
advances at the end of salaries of those
each year or within the who have long
prescribed periods. outstanding
 Communicate and balances remain on
coordinate with the admin hold until full
offices of the mother payment.
agencies of the concerned
non-LGU personnel who
have long outstanding
cash advances, in
demanding for the
liquidation so that
appropriate disciplinary
action may be imposed by
the mother agencies in
case of non-compliance.
 Henceforth, consider the
policy of granting
assistance for travel
expenses to non-LGU
employees, only on a
reimbursement basis
instead of through cash
advances, since the LGU
has no control over these
personnel.
40. Taxes withheld totaling 2013 Review of The overdue

P26,821,679.61, 2010 attachments to amount had
representing 76% of the vouchers/ payrolls decreased to
year-end account balance of for unremitted P12,357,224.39 as
P35,111,723.67 for all funds taxes are being of December 31,
were not remitted in made. 2017. An audit
accordance with existing Partial remittances observation was
revenue regulations due to of overdue issued.
the failure of the Accounting amounts also made.
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Office to reconcile actual Detailed
monthly remittances of reconciliation with
withholding taxes with the BIR examiner was
amounts withheld per completed and
accounting records. arrived at a
Require the Accounting reconciled balance
Office to undertake the of P11,570,261.11
immediate reconciliation of as of December 31,
all remittances against taxes 2017.
withheld and
correspondingly remit to
BIR all overdue amounts to
avoid personal liability for
penalties and surcharges
that may be imposed due to
non-compliance with
revenue regulations. If prior
reconciliation cannot be
made within the month, this
should be done immediately
on the succeeding month so
that any under/over
remittance may be
accordingly
remitted/adjusted, in which
case only the current month
will remain unreconciled.
41. Rules and regulations in the 2012 Demand Letters Some NGOs/ POs
grant of financial assistance have been sent. did not submit their
to Non-Government Granting of liquidation. As of
Organizations (NGOs) and assistance to December 31, 2017,
People’s Organizations NGOs/POs with the account was
(POs) and monitoring over unliquidated composed of the
the submission of balances was following:
liquidation reports on the completely Year
utilization thereof as stopped. Grant Amount
provided under COA ed
Circular No. 2007-001 dated CY
October 25, 2007 were not 2012 P2,030,78
strictly enforced resulting in & 2.26
unliquidated grants of prior
P7,469,511.80. Further, CY
additional financial 2013 - 250,000.0
assistance was still granted 2016 0
in spite of unsettled CY
balances resulting in the 2017 2,629,000.
accumulation thereof. 00
Make concrete efforts by Total P4,909,78
sending demand letters to 2.26
NGOs/POs for the
immediate settlement of An audit
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AUDITOR’S
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their outstanding balances observation was
and improve the present issued.
monitoring and control
measures on the liquidation
of fund releases. For future
grants of financial assistance
to NGOs/POs, strict
adherence to COA Circular
No. 2007-001 is enjoined to
ensure prompt liquidation
thereof. It is also
recommended that the City
Accountant stops the
granting of additional fund
assistance unless the
previous ones are first
settled.
42. The failure of the City 2012 Current Prior years’
Accountant to reconcile transactions balances still
inter-agency fund transfers already reconciled. unreconciled. An
under account Due from audit observation
LGUs with Barangay records was issued.
on the reciprocal account
Due to LGUs resulted in an
unreconciled difference of
P4,553,222.98 as of
December 31,2012 thus,
affecting the fairness of the
presentation of the accounts
in the financial statements.
Direct the City Accountant
and the Barangay
Bookkeeper to reconcile
their records and effect the
necessary adjustments to
present the correct financial
condition of the agency.
43. Five (5) procurement 2012 Upon verification Based on the
contracts for drugs and by the BAC, the forgoing reasons,
medicines totaling DOH Botica does the BAC opted to
P3,517,461.26 can be not maintain the procure drugs and
obtained for only desired quantity medicines thru
P1,849,892.61 at the retail needed and the POs public bidding
botica managed by the will have to be sent instead of availing of
Department of Health out to several the cheaper
(DOH). Thus, the City lost different suppliers medicines from the
the opportunity to save at before the DOH retail botica.
least P1,667,568.65. requirements could
be served causing
Procure medicines which so much delay in
are available and cheaper at the delivery, which
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the DOH retail botica to save in most cases were
and sustain well-meaning incomplete
government initiated prompting the BAC
program/ project. to conduct another
Direct the BAC to scrutinize bidding.
purchase requests on drugs
and medicines and conduct The BAC Chairman
market surveys at DOH made a query from
retail botica and the Government
distributors/ suppliers to Procurement Policy
obtain the most Board asking for
advantageous price for the opinion on how to
City with due consideration reconcile the
to the timely response to the general policy of
needs of the hospital. the government on
procurement which
requires open and
competitive public
bidding as the
general rule, as
against DOH
Administrative
Order which
endorses
procurement of
medicines at DOH
retail boticas, an
alternative mode of
procurement.
Management sent a
follow letter dated
March 22, 2016 to
the GPPB since no
reply was received
on their previous
query.
44. Due to want of careful study 2011 The Sangguniang Per inventory report
and proper data in Panglungsod has of the accountable
determining the possible passed Ordinance forms custodian as
number of commemorative No. 13-130-2015, of December 31,
car plates (CCPs) needed approved on Feb. 2017, the balance of
and aggressive advertising 10, 2015 unsold plates was
strategies, only 115 pieces authorizing the 243 pieces.
or 6% out of 2,000 pieces Office of the City
CCPs purchased were Treasurer to sell
disposed of to promote and the remaining
highlight the celebration of commemorative
the 50th year anniversary of car plates as
the City of Lapu-Lapu. Business
Consequently, the City Registration Plates.
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stands to lose P1,885,000.00
worth of government funds
thru wastage if no
appropriate action is taken
to fast track the disposal
thereof before the expiration
of its usage on June 30,
2012.
 Institute appropriate
measures and aggressive
promotion or advertising
strategies to dispose and
sell the remaining 1,885
CCPs before the expiration
of its usage on June 30,
2012.
 Direct the concerned
parties to account for the
four (4) unaccounted
CCPs, otherwise, instruct
those found accountable
thereof to pay the
purchase cost of subject
car plates.
 Henceforth, observe
proper planning and/or
study before undertaking
a particular project or
activity for an effective
and successful
implementation thereof to
avoid wasteful utilization
of government funds.
45. Payment of overtime 2010 The LGU has Required documents
services totaling stopped paying were submitted but
P1,377,483.76 could have overtime effective could not support
been dispensed with had CY 2012. the urgency of
there been proper planning overtime thus the
and prudent fund necessity of refund
management in the grant of the amount
thereof, thus resulting in the claimed, which has
irregular payment of not been made yet.
overtime. More so, A Notice of
authorization granted was Disallowance was
not specific as to work to be issued in CY 2016
accomplished, names of and the persons
employees authorized to liable filed an appeal
render overtime and period to the COA Director.
covered in contrary to
Sections 278 and 280 of the
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GAAM, Volume 1 and
Section12.1 (a) of the IRR of
RA 9433 or the Magna Carta
for Public Social Workers.
a) Require offices
requesting for authority
to render overtime
services to submit the
following
documents/data and
evaluate the urgency or
necessity of subject
services before
appropriate action is
made:
 list of personnel
required to render
overtime and the work
activities to be
undertaken should be
shown in detail with a
fixed or definite
completion date duly
supported with
justification signifying
the urgency and
necessity of overtime
services and the adverse
consequences if the
same is not rendered.
 the number of
personnel involved to
render overtime shall be
proportionate to the
scope, magnitude,
importance and
complexity of the work.
b) Direct the personnel
concerned to submit
individual work program
showing targeted
number/quantity of
work to be done together
with the individual
accomplishment report
covering overtime
services rendered from
January 16 - November
30, 2010.
c) Instruct the employees
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concerned to refund the
amount claimed for
overtime pay if they
failed to validly justify
the rendition of overtime
work.
d) Endeavor to eventually
phase out overtime
services in line with the
austerity measures of the
government pursuant to
Administrative Order No.
103 by implementing the
24 hour work shifting
schedule except in the
exigencies of the service
or by proper distribution
and prioritizing its work
activities.
PARTIALLY IMPLEMENTED
46. Several Asset and liability 2017 Subsidiary ledgers Several dormant
accounts totaling 2015 were maintained to accounts whose
P1,859,591,400.83 and 2014 some accounts but balances could not
P1,985,599.603.09 2013 those with previous be validated due to
respectively, some with 2011 years balances non preparation of
dormant balances, cannot be which were not yet subsidiary
validated because the incorporated with schedules still exist.
Accounting Office did not the current An audit
prepare/maintain accounting system observation was
subsidiary ledgers and/or were done issued.
supporting schedules. manually and have
We recommend that the City to await its
Accountant prepare and integration with
maintain subsidiary the system.
ledgers/supporting
schedules for all asset and
liability accounts to prove
their validity and for the
information of all concerned
parties.
47. An undetermined amount of 2015 Recommendation Implemented for
unpaid cost of Land acquired was implemented current
for road project of the City for subsequent transactions; for
and the corresponding transactions, still to previous
liability for the full payment coordinate with transactions PDMO
thereof were unobligated PDMO for the has not submitted a
and unrecorded in the books remaining cost of complete inventory
resulting in the unpaid lots. of unpaid accounts.
understatement of both
assets and liabilities and the
absence of internal
93
AUDITOR’S
AAR REF. VALIDATION
RESULTS
accounting control over the
unpaid accounts.
Require the City Budget
Officer and the City
Accountant to coordinate
with the PDMO in retrieving
the data together with the
supporting documents and
record the remaining cost
and corresponding liability
for the unpaid balances of
the acquired lots to present
the correct account
balances.
48. The City failed to undertake 2013 City Legal Office Title to the lot was
the Punta Engaño continued to work still not transferred
resettlement project on the for the transfer of in the name of the
lot purchased for the the title in the City and the project
purpose out of the P2M loan name of the City. implementation has
availed in January 2008 not been initiated.
contrary to the provisions of The result of the
the Memorandum of review of the
Agreement (MOA) with the design for the
National Housing Authority housing units has
(NHA). Moreover, it was already been
remiss in causing the submitted to the
transfer of the title to the lot Local Housing
in its name, despite full Board for
payment to the seller in May appropriate action.
2008 yet. As a result, the
City was placed at a losing Survey for the
end for incurring access road has
unnecessary expenses in already been
terms of interests totaling completed and has
P821,068.67 as of December been submitted to
31, 2013 and shouldering the Local Housing
the burden of repaying the Board for
loan effective CY 2009 appropriate
without having taken full endorsement.
possession of the lot and
deriving any benefit there As to the transfer of
from, to the disadvantage of the title, it is now
the intended beneficiaries. more on the legal
Facilitate the transfer of the proceeding, such as
title of the property in the the constitution of
name of the City and the the Confirmation of
acquisition of the right-of- Sale, legal basis for
way thereto. More tax exemption from
importantly, hasten the UDHA, etc. which
development of the project are now being
in order to solve the plight expedited by the
94
AUDITOR’S
AAR REF. VALIDATION
RESULTS
of the displaced families. City Legal Office.
Ensure that all possible
areas of concern over the Approval and/or
property, such as title, recommendation
boundaries, right of way, etc. for the
be cleared prior to final development of the
payment, in future project are greatly
transactions involving dependent upon
property acquisition by the the Housing Board.
City. Moreover, ensure that
decisions involving the
availment of loans, being
onerous to the City are
based on considerations of
necessity and urgency to
avoid wastage of
government funds.
49. Checks issued and cleared 2013 Some vouchers The unrecorded
by the bank totaling 2012 were already amount for CY 2013
P123,342.07 were not submitted and & prior years’
recorded in the books due to recorded in the disbursements was
non-submission by the books; demand reduced to
Treasurer of the Report of letters were issued P79,496,48 as of
Checks Issued and to persons 12.31.2017.
corresponding responsible for the However, CY 2016-
disbursement vouchers and submission of the 2017 DVs totaling
supporting documents to the remaining P377,989.93 were
Accountant, resulting in the vouchers. also not submitted
overstatement of Cash in thus bringing the
Bank–LCCA by the same total unrecorded
amount and the amount as of end of
misstatement of other CY 2017 to
accounts affected by these P457,486.41. This is
transactions. Moreover, also one of the
propriety, legality and observations in this
validity of the subject report since the
transactions could not be November and
determined. December, 2018
Submit to the City disbursement
Accountant the subject vouchers were not
disbursement vouchers submitted as of
together with the supporting December 31, 2018.
documents for recording;
otherwise these
disbursements will be
disallowed in audit and will
be charged to the accounts
of the persons responsible
for their loss/non-
submission.
95
AUDITOR’S
AAR REF. VALIDATION
RESULTS
50. The City spent 2011 The City has No report was
P1,020,225.00 for road right devised a payment submitted on the
of way and lot acquisitions scheme thru result of the
of portions of three (3) expropriation investigation
cadastral lots affected by the proceeding so that conducted, if any, on
development and payments to lot the possible double
implementation of various owners can be payment/
agency projects, without safely deposited compensation for
appropriate protection and with the court until the property of
guarantee as absolute owner questions of Aniceta Yu.
or possessor thereof, owing ownership on the
to the presence of lot subject to
encumbrances and several acquisition by the
claimants annotated in the City has been
original certificate of title or totally settled.
transfer certificate of titles
and/or tax declarations of The requested
the foregoing properties documents
which is prejudicial to the enumerated in the
interest of the City, that may last paragraph of
likewise result in the the
possible misspending or recommendation
wastage of government were already
funds, contrary to Section 2 submitted.
of PD 1445.
Recently, an order
o Avoid paying claims for of finality
road right of way or lot validating full
acquisitions affected by ownership of Enna
the implementation of the Igot of one of the
City’s development affected lots has
projects if subject already been
properties had existing issued. Hence,
encumbrances or cancellation of the
involved in ownership questioned
issues which could not be annotation in the
settled by mere title is being
prescription but through facilitated.
a court ruling or
intervention, unless the Final payment of
subject concerns are the 50% balance
properly addressed will not be
ensuring that the interest processed until the
of the government is fully cancellation of the
protected. encumbrances.
o If the preceding
recommendation has to
be set aside due to the
pressing demands of the
96
AUDITOR’S
AAR REF. VALIDATION
RESULTS
project and/or necessity
of installation of risk
reduction measures
attributable to
emergency or calamity
situations, devise a policy
by entering into a
compromise agreement
with the lot owners
providing therein
appropriate provisions
for safety nets and other
legal means in favor of
the City without
sacrificing its interests
and objectives thereof.
o Advise the legal office to

investigate whether or
not Aniceta Yu was
properly compensated on
the use of her lot for the
construction of a
concrete fence in which
an overlapped portion
thereof was also used in
the subject road
widening/opening
project which could
possibly result in double
payment in favor of the
lot owner. If it can be
established that Ms. Yu
has indeed been paid
twice, institute
appropriate action to
recover the amount paid
by the City equivalent to
the overlapped portion.
o Submit the following for

evaluation:
 Memorandum of
agreement entered into
by and between Nono
T. Yu and heirs of
Saturnino Catagcatag
executed before a
Notary Public, Atty.
Bienvinido Saniel Jr.
entered as Doc. No.
97
AUDITOR’S
AAR REF. VALIDATION
RESULTS
382, Page 79, Book No.
XIX, series of 2002.
 eight (8) tax
declarations indicated
in TD No. 01924,
mentioned as follows;
TD Nos. 00336, 01383,
01384, 00341, 00342,
01293, 01294 and
01386.
 explanation from the
Register of Deeds,
Lapu-Lapu City relative
to the deletion of
encumbrances on the
adverse claims of
Siegfredo Dublin
recorded as entry no.
5708-A-V-XVI-D.B.,
Benito P. Diamos,
former manager of
MCIAA with entry no.
5708-B-V-XVI-D.B., and
Vicente Lawas with
entry no. 5758-V-XVI-
D.B. upon issuance of
TCT No. 37742.
Not Implemented
51. The contract of services for 2017 Management The contract is the
the 24 hired consultants, commented in their law between the
which entailed a total cost reply letter that parties, so whatever
of P6,317,000.00 as of although the the parties want to
December 31, 2017, did contract did not be included therein
not provide the details or provide any should be expressly
breakdown of the cost of specifics as to the stated.
each consultancy contract, scope of work as it
hence the reasonableness only spelled out
of the rates were not management’s
properly City justified and intent in general
cannot be evaluated. terms, it is mutually
Moreover, the qualification understood form
documents submitted could them to render due
not support some of the performance of
hired consultants’ required their respective
expertise to perform the field of expertise.
highly technical or policy-
determining jobs of their
fields of assignments.
We recommend and
management agreed to
include in its consultancy
98
AUDITOR’S
AAR REF. VALIDATION
RESULTS
contract the terms of
reference clearly defining
among others the Scope of
Works including the Work
Program/Schedule and the
basis for the derivation of
the rates for each hired
consultant in order to
properly maximize their
fields of expertise and for
proper monitoring of the
desired outputs.
52. Funds received from DBM- 2017 Management stated Management still
LGSF for the that the project was failed to submit
implementation of Core already documents showing
Local Road implemented when that the use of the
Construction/Maintenance the funding was LGSF Funds other
/Rehabilitation totaling received thus the than for the project
P8,890,900.00 was used to City Local Poverty for which the fund
finance the ‘Concreting of Reduction Action was released was
Malinao-Ibabao Road, Team (CLVPRAT) concurred by the SP
Agus, Lapu-Lapu City’ and duly approved
instead of ‘Concreting of by the DBM to
Radar Road, Babag, Lapu- justify and support
Lapu City’ as indicated in the regularity of the
the LGU’s FY 2016 BUB project modification.
Detailed Project List
contrary to DBM Local
Budget Circular No. 109
dated March 17, 2016.
We recommend that
management submit
documents showing that
the use of the LGSF Funds
other than for the project
for which the fund was
released, contrary to DBM
LBC No. 109, was
concurred in by the SP and
duly approved by the DBM
to justify and support the
regularity of the project
modification.
53. Irregular use of financial 2013 Management is PAGCOR Funds is
assistance received from the planning for the recorded in the
Philippine Amusement and return of the funds Trust Fund.
Gaming Corporation to the Trust Fund in
(PAGCOR) to pay for CY CY 2018.
2012 electricity bills and
Christmas cash gift of senior
citizens of the City in the
99
AUDITOR’S
AAR REF. VALIDATION
RESULTS
aggregate amount of
P28,890,000.19 had
depleted the funds from
P31,804,559.91 to only
P2,914,559.72 as of
December 31, 2013, and
defeated the intended
purposes for which the
funds had been received.
Appropriate funds from
available savings of the
general fund and
reimburse/restore the
amount improperly
disbursed from the trust
fund. Henceforth, refrain
from using trust funds for
purposes other than those
for which these were
intended.
Invest the funds in projects
contemplated in the
guidelines provided by
PAGCOR and comply with
the guidelines in the proper
handling of the fund, so that
the purposes for which the
fund had been received may
be attained. Thereafter,
submit to PAGCOR the
required quarterly report on
the projects financed and
amounts involved.
54. Disaster Risk Reduction 2014 Safekeeping of the DRRM funds used
Management Funds units is still with for the purchase
(DRRMF) totaling the personnel of were not restored.
P1,159,342.00 were used to the City Treasurer’s
purchase 23 units android Office since it is
smart phones, laptops, needed for tax
desktop computers, printers mapping but the
and other items which were memorandum
utilized for routine official receipts were
functions contrary to Section cancelled since the
121 of R.A. 10121 and COA units are intended
Circular No. 2012-002, thus for DRRM use.
defeating the purposes for
which the funds were
allocated.
Allocate funds from the
General Fund to reimburse
the DRRMF for the
100
AUDITOR’S
AAR REF. VALIDATION
RESULTS
improperly charged cost of
the 18 units smart phones
issued to CTO personnel for
tax mapping activities.
Exercise prudence in the
utilization of DRRM funds
and faithfully comply with
the provisions of COA
Circular Nos. 2012-002 and
2012-003 to avoid the
incurrence of irregular/
excessive expenditures.
55. The PDAF of Congressman 2014 The documents
Arturo Radaza, particularly were not submitted
on the “Livelihood Project and no update has
from the Materials Recovery been received on the
Facility (Hollow Block project completion.
Making Using Plastic
Products)”, was utilized in
purchasing various
construction materials
totaling P996,500.00 for the
fabrication of bricks
contrary to Section 4 (3) of
Presidential Decree 1445.
Moreover, the project was
implemented without
project details, program of
work and detailed estimates
and approved plans and
specifications and was not
completed despite the lapse
of more than a year.

to provide the lacking
documentary requirements
and the CENRO Officer who
is in-charge of the project to
explain why it has not been
completed despite the lapse
of more than a year.
101
PART IV
ANNEXES
PART IV
ANNEXES
Particulars Annex
FINANCIAL STATEMENTS BY FUND - Statement of Financial A

Position
1. General Fund
2. Trust Fund
3. Special Education Fund
FINANCIAL STATEMENTS BY FUND - Statement of Financial B

Performance
1. General Fund
2. Trust Fund
FINANCIAL STATEMENTS BY FUND - Statement of Changes in C

Net Assets/Equity
1. General Fund
2. Trust Fund
FINANCIAL STATEMENTS BY FUND - Statement of Cash D

Flows
1. General Fund
2. Trust Fund
FINANCIAL STATEMENTS BY FUND - Statement of E

Comparison of Budget and Actual Amounts
1. General Fund
STATUS OF APPROPRIATIONS, ALLOTMENTS AND F

OBLIGATIONS
1. General Fund – Current Appropriations

2. General Fund – Continuing Appropriations
3. Special Education Fund – Current Appropriations
4. Special Education Fund – Continuing Appropriations
102

Lapu Lapu City Executive Summary 2018

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Lapu Lapu City Executive Summary 2018

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Republic of the Philippines

June 25, 2019

HONORABLE PAZ C. RADAZA

Dear Mayor Radaza,

We expressed a qualified opinion on the fairness of the presentation of the financial

We request that the recommended remedial measures be immediately implemented and

Very truly yours,

(Name of the Agency and Address)

Ref Audit Audit Agency Action Plan Reason for Action

ANNUAL AUDIT REPORT

For the Year Ended December 31, 2018

As of 31 December 2018, the City Government of Lapu-Lapu had a personnel

Nature of Appointment to Office Number

Comparative analysis of the Statement of Financial Position, as graphically illustrated,

Statement of Financial Performance

The following graph illustrates the increase of Allotments, Appropriations and

Allotments, Appropriations, and Obligations

AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

We rendered a qualified opinion on the fairness of the presentation of the financial

SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

We recommended that Management require the issuance of pre-numbered Official

We recommended that Management:

3. Hospital Fee collections were recorded in the General Fund-Proper amounting to

We recommended that Management:

We recommended that management submit an approved SP Resolution authorizing

UNSETTLED SUSPENSIONS, DISALLOWANCES AND CHARGES

Balance Issuance Settlement Balance

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S RECOMMENDATIONS

Part Subject Page No.

AUDITED FINANCIAL STATEMENTS

A. Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT

Honorable PAZ C. RADAZA

Basis for Qualified Opinion

We conducted our audit in accordance with International Standards of Supreme Audit

Key Audit Matters

MARIA DAISY O. BERCEDE

February 28, 2019

Notes to Condensed Financial Statements

3.1 Basis of accounting

The consolidated Financial Statements are prepared on an accrual basis in

The Consolidated Financial Statements include the Consolidated General

3.3 Revenue recognition

Revenue from non-exchange transactions

Taxes, fees and fines

Transfers from other government entities

Revenues from non-exchange transactions with other government entities

The LGU recognizes revenue from rendering of services by reference to

Where the contract outcome cannot be measured reliably, revenue is

Rental income arising from operating leases on investment properties is

3.4 Property, plant and equipment

Depreciation on assets is charged on a straight-line basis over the useful

Depreciation is charged at rates calculated to allocate cost or valuation of

Public Infrastructures were not previously recognized in the books. The

Rent received from an operating lease is recognized as income on a

3.5 Cash and cash equivalents

Inventory is measured at cost upon initial recognition. To the extent that

Where the LGU expects some or all of a provision to be reimbursed, for

The expense relating to any provision is presented in the statement of