Republic of the Philippines

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City, Philippines

June 30, 2020

HON. LUCILO R. BAYRON

City Mayor
City Government of Puerto Princesa
Palawan

Dear Mayor Bayron:

We are pleased to transmit the report on the results of the audit of the accounts and
operations of the City Government of Puerto Princesa, Palawan for the Calendar Year
ended December 31, 2019, pursuant to Section 43 of Presidential Decree No. 1445,
otherwise known as the Government Auditing Code of the Philippines, and in line with
the Commission’s effort towards informing management on how fiscal responsibility has
been discharged.

The audit was conducted to (a) determine whether Management presented fairly the
financial statements in adherence to the Philippine Public Sector Accounting Standards;
(b) ascertain the level of assurance that may be placed on management’s assertions in the
financial statements; (c) evaluate the extent of compliance with laws and regulations as
well as the propriety and validity of transactions; (d) recommend agency improvement
opportunities; and (e) determine the extent of implementation of prior years’ audit
recommendations.
Our audit was conducted in accordance with the International Standards of Supreme
Audit Institutions (ISSAIs) and we believe that it provided reasonable basis for the results
of the audit. We rendered a qualified opinion on the fairness of the presentation of the
financial statements of the Province in view of the exceptions noted in audit as stated in
the Independent Auditor’s Report in Part I of the report.

The significant observations and recommendations that need immediate action are as
follows:

1. The correctness of the Cash-in-Bank (CIB) account balances totaling

₱4,068,553,005.75 as of December 31, 2019 was doubtful due to (a) reconciling
items in the Bank Reconciliation Statements (BRS) totaling ₱21,438,323.31
which remained unadjusted/unrecorded in the books of accounts contrary to COA
Circular No. 96-011 dated October 2, 1996; (b) closed bank accounts with
balances amounting to ₱14,486,525.03 were still carried in the books; (c) negative
book and bank balances amounting to ₱128,168.98; and (d) discrepancies
between cashbook balances and accounting records accumulated to
₱343,751,069.88 as of year-end for failure of the City Treasurer to reconcile her
cashbooks with the subsidiary accounting records contrary to Section 63 of the
Local Treasury Operations Manual (LTOM). (Audit Observation No. 1)

We recommended that the:

a. City Accountant (i) prepare the BRS regularly and promptly adjust valid
reconciling items such as book errors, unrecorded interest income and bank
charges in the books of accounts; (ii) exert diligent efforts to obtain from the
bank, in coordination with the City Treasurer, the required documentation
like bank debit and credit advices to support the debit and credit memos
identified in the BRS that as bases in making the necessary adjustments in
the books; (iii) compare the validated deposit slips against the bank
statements and subsidiary ledgers (SLs) of CIB-Local Currency, Current
Account (LCCA) accounts to trace the unrecorded deposits totaling
₱295,107.54; (iv) compare the Accountant’s Advice duly acknowledged by
the bank to the Report of Check Issued (RCI) submitted by the City
Treasurer to ensure complete recording of check disbursements; (v) draw
the necessary adjustments for closed bank accounts with balance of
₱14,486,525.03 which are still carried in the books; and (vi) make necessary
corrections in the BRS of the foreign currency time deposit account of TF-
UNESCO and those accounts with negative adjusted bank balances;

b. City Treasurer (i) immediately submit to the City Accountant the approved
disbursement vouchers (DVs), obligation requests and supporting
documents for check disbursements totaling ₱21,815,957.79 to facilitate
their recording in the books of accounts and for subsequent submission to
the Audit Team for verification and audit; (ii) henceforth, ensure that all
check disbursements are completely reported in the RCI and promptly
submitted to the City Accountant for recording in the books; and (iii) initiate
the reconciliation of the cashbooks with subsidiary accounting records every
end of the month or as the need arises; and (iv) verify with the bank the
existence of NALGU account and maintain a separate cashbook thereof; and

c. City Treasurer and the City Accountant (i) observe strictly the rules and
regulations on the reporting and accounting for dishonored and stale checks
provided under Sections 57 and 59, respectively, of the Manual on
Government Accounting System (NGAS) for LGUs, Volume I; and (ii)
immediately reconcile their records as of December 31, 2019, submit a BRS
thereon, and take-up the necessary adjusting entries in their respective
records, as appropriate, in accordance with Section 63 of the LTOM.
2. Cash advances totalling ₱91,607,174.92 remained unliquidated as of year-end due
to lack of strict monitoring and additional cash advances were granted to officials
and employees although the previous accountabilities were not yet accounted for
contrary to COA Circular No. 97-002 dated February 10, 1997. Moreover,
₱46,973,627.26 or 51% of the total cash advances aged more than one year to
more than five years remained unliquidated due to Management’s failure to
implement available remedies to enforce their liquidation thus, the related
expenses were not recorded in the year these were incurred. (Audit Observation
No. 2)

We recommended that the:

a. City Accountant (i) serve written notices to all concerned accountable

officers and/or impose the withholding of salaries of those accountable
persons still employed with the CGPP; ii) conduct regular monitoring and
analysis of the cash advance accounts to ensure that these are liquidated
within the prescribed period; (iii) impose strict internal control over granting
of cash advances to ensure proper settlement of previous ones before
granting additional ones; and (iv) ensure that the provisions of COA
Circular No. 97-002 are strictly observed in the granting, utilization and
liquidation of cash advances at all times; and

b. Local Chief Executive (LCE), through the City Legal Officer, institute legal
action against the concerned officials and employees for unjustified failure
to settle their outstanding cash advances within the prescribed period, if
warranted, pursuant to Item 9.1 of COA Circular No 2012-004.

3. The existence and valuation of Property, Plant and Equipment (PPE) and
Investment Property accounts valued at ₱5,090,521,875.93 as of December 31,
2019 could not be ascertained due to (a) non-conduct of physical count of
properties contrary to Section 124 of the Manual on the NGAS for LGUs, Volume
I; (b) inclusion of unidentified properties totaling ₱148,132,368.34 in the PPE
account balances; and (c) depreciation was not provided for depreciable assets
under the Special Education Fund (SEF) and Trust Fund (TF) books valued at
₱2,874,751.66 and ₱2,002,000.00, respectively, as of CY 2019 which was not in
consonance with International Public Sector Accounting Standards (IPSAS) 17.
(Audit Observation No. 3)

We recommended that the:

a. Inventory Committee/Asset Management Council conduct immediately the

physical inventory of all CGPP’s property and prepare the RPCPPE to be
reconciled with the accounting records and submit a copy thereof to the
Audit Team for verification and audit. A definite plan should be developed
covering the timeline on the conduct of physical inventory, the personnel
that will assist in the inventory taking and the procedure to be undertaken in
order to maximize the time and workforce;
 b. City Accountant (i) ensure proper recording of PPE and cause the
reconciliation of PPE items under the “for Reconciliation” account with
reference to Report on the Physical Count of Property, Plant and Equipment
(RPCPPE); (ii) investigate and work back with the accounting records to
determine the unidentified PPE items totaling ₱148,132,368.34; and (iii)
transfer the cost of completed projects from the TF to the General Fund
(GF) and provide depreciation for all depreciable PPE.

c. General Services Officer (GSO) (i) reconcile the Property Cards (PCs) with
their system inventory and accounting records; and (ii) use the proper PPE
accounts prescribed under the Revised Chart of Accounts for uniformity and
to facilitate reconciliation with accounting records; and

d. City Engineer provide the City Accountant and the GSO with the complete
description and location of all completed and on-going infrastructure
projects for proper recording thereof in the SLs and in the PCs, respectively.

4. The Local Road Network System account balance of ₱1,197,269,697.25 as of

December 31, 2019 was unreliable due to (a) non-conduct of physical inventory
and non-maintenance of a complete Local Road Network Property Card for all
local roads; and (b) road lots acquired and donated Right-of-Way (ROW)
amounting to ₱41,782,115.88 and various road concreting projects totaling
₱105,613,873.36 were not recorded in the books contrary to COA Circular No.
2015-008 dated November 23, 2015 and International Public Sector Accounting
Standards (IPSAS) 17 requiring faithful representation of accounts. (Audit
Observation No. 4)

We recommended that the:

a. GSO (i) periodically maintain a complete Report on Local Road Networks;

(ii) update Road Map and keep a complete Local Road Network PCs for all
roads and their components; and (iii) furnish copies thereof the concerned
offices, particularly the City Accountant, as basis for reconciliation with the
accounting records;

b. Inventory Committee/Asset Management Council, in coordination with the

City Engineering Office, (i) conduct physical inventory of all existing local
road networks in the City and prepare the corresponding Report on the
Physical Count of Local Road Network to be reconciled with the accounting
records; and (ii) furnish a copy of such report to the Audit Team for
verification and audit;

c. City Assessor (i) faciliate the assessment of the road network and road
mapping to identify the assessed value of the lots where the roads were
constructed as basis of the Accounting Office for the correct costing to be
presented in the registry/SLs; and (ii) reconcile their system inventory with
the records of Asset Management Council;
 d. City Engineering Office provide the City Accountant and the GSO with the
complete description and cost segregation of road components for road
projects;

e. City Accountant (i) prepare the necessary journal entries to recognize

changes upon completion of the required inventory reports and its
reconciliation with the Registry of Public Infrastructures (RPIs); (ii) identify
the road lots recorded under the “Land account” and facilitate their
reclassification to the “Road Network’ account; (iii) ensure that all the
existing road lots including the ROW acquired by and donated to the City
are recorded in the books; (iv) make sure that betterments/replacements are
properly taken-up into account as well as the derecognition of the existing
carrying costs of replaced roads and provide depreciation accordingly; (v)
investigate those road networks classified under the “For Reconciliation
account” to clean the books of accounts; and (vi) adequately disclose the
Road Network Sytem account in the Notes to Financial Statements in
accordance with Annex B of COA Circular No. 2015-008.

f. Local Chief Executive ensure good working coordination among LGU

offices to stricly follow and implement the accounting and reporting
guidelines on the Local Road Network System; and

g. City Accountant, GSO and the City Engineer be mindful of their mandated
duties and responsibilities outlined in COA Circular No. 2015-008 to ensure
that the components of Road Network System of the CGPP are properly
identified, valued and accounted for in the books and completely presented
in the financial statements.

5. Appropriations for Local Disaster Risk Reduction Management Fund (LDRRMF)

for CY 2019 includes expenses and other capital outlay for the operations of the
City Disaster Risk Reduction and Management Office (CDRRMO) totalling
₱5,485,423.00 which do not support Disaster Risk Reduction and Management
(DRRM) activities contrary to Item 4.4 of National Disaster Risk Reduction and
Management Council - Department of the Interior and Local Government -
Department of Budget and Management - Civil Service Commission (NDRRM-
DILG-DBM-CSC) Joint Memorandum Circular (JMC) No. 2014-1 dated April 4,
2014 thus, the fund was not utilized for its intended purposes. (Audit
Observation No. 5)

We recommended that henceforth, the (a) CDRRM Council, CDRRM Officer and
the City Accountant ensure that the operating expenses of the CDRRMO are
sourced from the GF; and (b) all concerned City officials strictly observe the
provisions of NDRRMC-DILG-DBM-CSC JMC No. 2014-1 in allocating
LDRRMF solely for the implementation of DRRM-related programs, project and
activities.
6. The CGPP failed to implement 22 DRMM projects worth ₱201,443,045.75
designed to lessen or limit the impact of hazards and risks despite the availability
of funds therefor and their inclusion in the Local Disaster Risk Reduction
Management Fund Investment Plan (LDRRMFIP) due to lack of proper
coordination among the CDRRM Officer, the City Engineer and the City Mayor
thus, exposing the vulnerable areas to potential risks and hazards. Moreover,
Flood Water Drainage Projects with a lump-sum amount of ₱110,000,000.00
reflected in the Annual Investment Plan (AIP) were not included in the
LDRRMFIP thus, could not be implemented during the year. (Audit Observation
No. 6)

We recommended that the (a) Local Chief Executive observe the balanced
implementation of DRRM activities addressing the four thematic areas of disaster
risk reduction and management by making sure that implementation of prevention
and mitigation projects and activities are also given utmost priority; (b) City
Engineering Office ensure the prompt implementation of DRRM infrastructure
projects identified in the LDRRMFIP to reduce the vulnerability of the
constituents and the general public to disasters and hazards and enhance the
disaster preparedness and response capabilities of the CGPP; (c) City
Development Council prepare the AIP for DRRM activities based on the
approved LDRRMPIF; and (d) CDRRM Council ensure that DRRM projects are
integrated in the AIP.

7. The unexpended LDRRMF under the Special Trust Fund (STF) account with a
total amount of ₱257,989,076.08 was invested in High Yield Savings Account
(HYSA) for the period of CY 2014 to CY 2019 instead of utilizing it for the
implementation of DRRM projects contrary to Section 21, paragraph 3 of RA No.
10121, The Philippine Risk Disaster and Management Act of 2010, thus,
defeating the purpose of the fund in supporting disaster risk reduction and
management activities. Moreover, prior year’s unexpended balances of the
LDRRMF were still not incorporated in the LDRRMFIP for CY 2019. (Audit
Observation No. 7)

We reiterated our previous recommendations that the (a) CDRRM Council (i)
review and update annually the LDRRMFIP; and (ii) incorporate the PPAs to be
funded by the unexpended QRF and DRRMF-MOOE of the previous years to
make the City a disaster resilient community; and (b) CDRRMC and the CDRRM
Officer utilize the unexpended LDRRMF balance of prior years’ solely for
DRRM-related activities instead of investing it in HYSA.

8. The correctness of the reported balance of ₱453,240,042.16 of Trust Liabilities -

DRRMF account as of December 31, 2019 was doubtful due to unreliable records
thus, the correct amount available from the STF was not reflected in the financial
statements as of year-end while poor monitoring of STF resulted in the erroneous
appropriation of the CY 2014 unutilized LDRRMF balance of ₱25,751,090.00 in
 CY 2019 contrary to COA Circular No. 2015-009 dated December 1, 2015.
(Audit Observation No. 8)

We recommended that the City Accountant and the City Treasurer (a) make
adjustments on the identified discrepancies and exert more effort to trace the
remaining differences to reflect the correct amount of unexpended DRRMF at
year-end; (b) strictly and carefully monitor the transfer of the correct amount of
the unexpended DRRMF from the GF to STF and the reversion of unutilized STF
to the GF to prevent misuse and misappropriation thereof; (c) on a timely basis,
record transactions relating to DRRMF in the books of accounts; and (d) cause the
immediate transfer of the interest earned from HYSA to the GF using the proper
accounts in recording fund transfers and interest income.

9. The maximum utilization of the Special Education Fund (SEF) was not fully
attained as the amount of ₱118,042,964.90 was invested in HYSA contrary to
Sections 100 and 272 of R.A. No. 7160 and projects totalling ₱26,041,501.00
remained unimplemented as of year-end thereby defeating the purpose of the SEF
as fund source for the operation and maintenance of public schools within the
City. (Audit Observation No. 9)

We recommended that the (a) City Treasurer and the City Accountant (i)
terminate the HYSA from the SEF and notify the Bids and Awards Committee
(BAC), City Engineering Office and City LSB on the availability of the fund for
SEF PPAs; and (ii) be transparent in the financial status of the fund by regularly
reporting to the LSB on the actual collection, utilization and balances of SEF
during budget execution; and (b) City Engineer (i) fast track the implementation
of programmed PPAs to address the classroom shortage; (ii) evaluate whether the
programs and projects funded from prior years’ budget are still relevant and re-
assess the appropriations allocated to these projects if still sufficient otherwise,
request from the City LSB for additional funding; and (iii) make sure that the
timeline set for every project is realistic and is strictly followed since the timing
of execution spells out the success of a project.

10. Lapses were noted in the implementation and reporting of various Bottom-Up
Budgeting (BUB) projects such as (a) projects totaling ₱11,182,684.00 were not
started during the year; (b) unutilized balances of completed projects totaling
₱2,851,995.19 were not returned to the source agencies; and (c) non-completion
of last year’s on-going BUB projects totaling ₱6,687,472.55 contrary to
Department of Budget and Management (DBM)-Department of Interior and Local
Government (DILG)-Departments of Social Welfare and Development (DSWD)-
National Anti-Poverty Commission (NAPC) Joint Memorandum Circular (JMC)
No. 7 dated November 3, 2015 thus, depriving the intended beneficiaries on the
benefits therefrom. (Audit Observation No. 10)

We recommended that the (a) Project-in-Charge of each project evalute if the

projects which were not yet started as of year-end are still feasible to implement
 and make representations to the concerned NGAs if the project can still be
continued, otherwise, recommend the termination of the MOA/project and
recommend the reversion of the LGU counterpart to the GF; (b) City Accountant
(i) cause the return of the unutilized funds of completed projects totaling
₱2,851,995.19 to the source NGAs and revert back the unutilized LGU
counterpart to the GF or request from the source agencies to re-program the
unexpended funds to other related projects; and (ii) review and trace the cause/s
of the negative balances of the two (2) BuB projects and make the necessary
adjustments, as appropriate, to reflect the correct balance of trust fund account in
the financial statements; (c) BUB Focal person strictly oversee and fast track the
completion of on-going BuB projects with unutlized balance of ₱6,687,472.55 so
that the beneficiaries could fully enjoy their benefits at the soonest possible time;
(d) City Engineer (i) submit status on the percentage of completion for BUB
infrastructure projects implemented by administration; and (ii) provide
satisfactory explanation for the delays in their implementation and completion.

11. The accuracy of the reported year-end balance of the Due to Bureau of Internal
Revenue (BIR) account of ₱24,655,263.50 was doubtful due to the (a) negative
balances of individual withholding taxes under the GF books amounting to
₱1,365,166.43 and balances “for reconciliation” totaling ₱8,899,514.47 in the
absence of proper monitoring and control in the maintenance of accounts; and (b)
errors in recording taxes withheld under the TF and SEF paid by the GF.
Moreover, taxes withheld were not promptly and fully remitted to the BIR since
as of CY 2019 there were unremitted taxes of ₱21,782,876.80 contrary to
Revenue Regulation (RR) No. 2-98 dated May 17, 1998, as amended by RR No.
11-2018 dated March 15, 2018, thus, exposing government funds to possible
misapplication and may subject the City of probable imposition of penalty from
the BIR. (Audit Observation No. 12)

We recommended that the (a) City Accountant and the City Treasurer (i) cause
the timely and full remittance of the taxes withheld to the BIR in compliance with
BIR Regulations No. 2-98, as amended; and (ii) ensure that the recorded tax
remittances in the accounting books represents the correct amount of taxes paid
by the Treasurer’s office without variances; and (b) City Accountant (i) trace the
accounting entries to the source documents to identify the cause/s of the abnormal
account balances of individual withholding taxes under the GF books totaling
(₱1,365,166.43) including the variance of (₱2,872,386.70) between the treasury
and accounting records on BIR remittances and effect the necessary adjustments,
as appropriate; (ii) exert efforts to determine the nature of “for reconciliation”
account totaling ₱8,899,514.47 including the variance of ₱1,408,172.07 between
the Due to and Due from Other Funds account balances and adjust the affected
accounts, as appropriate, to reflect the correct balance of Due to BIR account; and
(iii) ensure proper recording of taxes withheld from employees and suppliers and
the amounts of taxes remitted to BIR to reflect the correct amount due to the
Bureau.
12. The accuracy of the reported year-end balances of the Due to GSIS, Philhealth
and Pag-IBIG accounts was doubtful due to the (a) presence of negative balances
of individual accounts totalling (₱353,229.90) in the absence of proper monitoring
and control in the maintenance of accounts; (b) existence of “for reconciliation
balances” totalling ₱2,484,750.16 which had been dormant since CY 2010; and
(c) partial remittance of amounts due to these agencies contrary to COA Circular
No. 92-382 dated July 3, 1992, Section 6.b of RA No. 8291 or the Government
Service Insurance System (GSIS) Act of 1997, Section 18b of the Revised
Implementing Rules and Regulations (IRR) of the National Health Insurance Act
of 2013, and item E(6) of Home Development Mutual Fund (HDMF)/Pag-IBIG
Circular No. 274 dated January 7, 2010 which could deter the concerned
employees/members from availing the programs and services offered by these
agencies. (Audit Observation No. 13)

We recommended that the (a) City Accountant and the City Treasurer (i) observe
and implement the provisions of Section 36 of COA Circular No. 92-382 and the
existing laws and regulations on prompt remittances of amounts due to GSIS,
Philhealth and Pag-IBIG by remitting in full all collections for the accounts of
these agencies; and (ii) ensure that remittances are correctly reported by the City
Treasurer as basis in accurate recording in the accounting books to eliminate
variances; and (b) City Accountant (i) trace the causes of the individual abnormal
account balances in the sub-accounts of due to GSIS, Philhealth and Pag-IBIG
and effect the necessary adjustments, as appropriate; (ii) thoroughly check and
review the schedules and reports on amounts due to these agencies to ensure
proper recording of the amounts withheld and remitted to the GOCCs to avoid
errors in recording in the books and reporting in the financial statements; and (iii)
exhaust all available remedies to verify those “for reconciliation” balances with
over or under-deduction or remittance and exert effort to analyze those long
oustanding unremitted premium contributions subject for reconciliation for proper
disposition.

13. The GSO failed to obtain insurance coverage with the GSIS for all insurable
assets of the City Government totaling ₱596,937,012.01 contrary to Section 5 of
RA No. 656 or the Property Insurance Law due to incomplete physical inventory
of PPE and delayed submission of list of completed projects thus, the City is at
risk of non-indemnification for any damages to properties that may occur in case
of natural calamity and other casualties. Moreover, the submitted Property
Inventory Form (PIF) by the GSO to the Audit Team was not properly
accomplished contrary to COA Circular No. 2018-002 dated May 31, 2018 thus,
the proper of the valuation of insurable properties was not ensured. (Audit
Observation No. 14)

We recommended that the (a) General Services Officer (i) cause the conduct of
physical inventory and proper appraisal of all insurable properties of the City
Government pursuant to Section 4(c) of R.A. No. 656; and (ii) submit the duly
accomplished PIF to GSIS for the proper evaluation of insurance coverage of
 insurable assets and the computation of premiums thereon; and (b) City Engineer
regularly provide the GSO with the list of all completed projects as basis in
applying for additional insurance coverage for these assets.

14. The CGPP failed to utilize the 20% share from the Fire Code Realty Taxes
(FCRT) collections amounting to ₱1,859,358.06 for its intended purpose as
provided under Section 13 of RA No. 9514 or the Revised Fire Code of the
Philippines of 2008 thus, depriving the local fire station of firefighting equipment
which could enhance the efficient and effective delivery of services related to fire.
Likewise, the City Government failed to collect its FCRT share for CYs 2016 to
2019 contrary to Section 12.C of the same Code. (Audit Observation No. 15)

We recommended that the (a) City Treasurer coordinate with the District Fire
Marshal for the immediate appropriation of the remaining balance of the 20%
share of the City in the collection of Fire Code taxes and fees for the procurement
of essential needs and requirements of the BFP to optimize its utilization and
further strengthen the local fire station’ capabilities in the prevention and
suppression of all kinds of destructive fires; and (b) City Treasurer and the City
Fire Department Head of the City to coordinate with the BFP headquarters for the
regular remittance of the City’s 20% share from the BFP Fire Code fees and the
possible remittance thereof directly to the City Government’s account.

15. In CY 2019, the CGPP has implemented 51 out of the total 103 development
projects programmed under the 20% Development Fund (DF) registering an over-
all delivery rate of 49.51% due to poor planning thus, the desired socio-economic
development and environmental outcome of the CGPP as contemplated under
Item 5 of the DILG and DBM JMC No. 2017-1 dated February 22, 2017 was not
fully achieved and the constituents were deprived of the maximum benefits that
could have been derived therefrom. (Audit Observation No. 16)

We recommended that the (a) City Development Council (i) conduct a thorough
planning for the development projects for inclusion in the 20% DF as basis in
determining the appropriate implementation scheme, by adminsitration or by
contract, to avoid delay of projects’s implementation; and (ii) consider the
appropriate timing and phasing of their implementation and completion; and (b)
CPDO and the City Engineer (i) use and study historical data/records to decide
through inclusion in the Annual Procurement Plan whether the identified project
is feasible for procurement through public bidding or by administration; (ii)
monitor the effective and efficient implementation of the projects under the 20%
DF so that the necessary and timely intervention can be made to ensure that the
timeline of the programmed projects are met; and (iii) seek the help of other
experts for technical knowledge in conducting feasibility studies and projects
development by hiring additional engineers to help with the feasibility studies and
preparation of detailed engineering and program of works.
16. Despite the diligent effort of the City Government to maintain the cleanliness of
the City, the CGPP is still non-compliant with RA No. 9003, otherwise known as
the “Philippine Ecological Solid Waste Management Act of 2000”, due to (a)
failure to implement the mandatory waste segregation at source; (b) direct transfer
of wastes from source to the sanitary landfill (SLF) which filled it up faster and
reached its maximum capacity earlier than its estimated lifespan; and (c) non-
operational leachate treatment plant that could lead to environmental
contamination and would greatly affect the health of the inhabitants, the city
tourism activities and its economy. (Audit Observation No. 17)

We recommended that the Local Chief Executive and the City Solid Waste and
Disposal Management Program Manager (a) design an effective waste
management and collection plan that is in accordance with the Ecological Solid
Waste Management Act to replace the existing waste collection system and
ensure its gradual implemention until completion thereof; (b) intensify the City’s
information dissemination and awareness campaign on educating the constituents
on the importance of waste segregation at source and their key role to the success
of its implementation to instill discipline and cooperation from them until waste
segregation becomes everyone’s habit and not just an obligation; (c) excercise the
City’s general supervision over barangays and compel their officals to strictly
enforce the segregation and collection of solid wastes at their level including the
mandatory operation of their respective MRF and provide logistical and
operational support for their waste mangement program; (d) consider establishing
a new landfill or other alternative solution before the closure and
decommissioning of the existing SLF; and (e) reconsider other leachate treatment
as temporary solution to resolve the disposal of collected leachate while the LTP
remains unoperational.

17. Cash donations totaling ₱37,516,600.00 and rice subsidy amounting to

₱51,094,566.55 were made in the absence of clear-cut policies and guidelines
relative thereto resulting in (a) disbursements without appropriate and complete
documentation; (b) payments of financial assistance without valid purpose; and
(c) grant of donations to various individuals not considered indigents nor qualified
beneficiaries of the program in violation of Sections 2 and 4 of PD No. 1445 and
Section 335 of the RA No. 7160. (Audit Observation No. 18)

We recommended that the:

a. Local Chief Executive, through the CSWDO, formulate clear-cut policies

and procedural guidelines on the grant of rice subsidy and financial
assistance to indigent clients, subject to approval of the Sangguniang
Panglungsod, using DSWD Administrative Order (AO) No. 5, series of
2008, as amended by DSWD AO No. 01, Series of 2011, and DSWD
Memorandum Circular No. 02 dated February 17, 2014 as guide in the
formulation thereof which should contain the (a) kind of financial assistance
(burial, transportation, medical, educational, livelihood or other emergency
 assistance) to be granted; (b) definite range of amount per kind of financial
assistance to avoid inequality; (c) criteria in granting the donation and the
documentary requirements for each particular case; and (d) well-defined
roles and responsibilities of the officials to be involved in the evaluation and
processing requests for assitance.

b. City Accountant (i) thoroughly review the disbursements of

subsidy/donation or liquidation vouchers to determine the completeness of
supporting documents; (ii) establish the legality, validity and propriety of
the disbursements before recording the liquidation and deducting the
amount from the accountabilities of the SDOs; and (iii) record the goods
procured for distribution/donation under the account Inventory Held for
Distribution for proper monitoring of the issuance/distribution and
recognition of expenses;

c. City Accountant and the City Treasurer ensure that all payments of financial
assistance which are non-recurring be made thru issuance of check except
those minimal outright cash assistance authorized to be paid out of cash
advances. To augment the assistance given to qualified beneficiaries of the
program, the CGPP may issue guarantee letters to service providers such as
funeral parlors, medical institutions, pharmacies, transport services,
school/universities; and

d. LCE (i) designate an SDO under the Office of the City Treasurer to handle
release/payment of donations to beneficiaries as a control measure to
separate it from processing and approval of requests for donations; and (ii)
consider also the service of Automated Teller Machine (ATM) in releasing
the monthly cash assistance to senior citizens, PWDs and students to
prevent long queues and discomfort among senior citizens and PWDs.

18. The total unsettled audit suspensions and disallowances in the audit of various
financial transactions of the CGPP as of December 31, 2019 amounted to
₱12,052,269.19 and ₱583,134,958.21, respectively,

The above observations together with the other audit findings with the recommended
courses of action which were discussed by the Audit Team with Management through the
Audit Observation Memoranda, 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 on the actions taken within 60 days from receipt of
this report pursuant to Section 93 of the General Provisions of Republic Act No. 10964,
the General Appropriations Act for FY 2019, by submitting the duly accomplished
Agency Action Plan and Status of Implementation (AAPSI) form, (copy attached).
We acknowledge the support and cooperation that you and your staff extended to the
Audit Team which facilitated the completion of the report.

Very truly yours,

MA. CORAZON S. GOMEZ

Regional Director

Copy furnished:
- The Regional Director
Department of the Interior and Local Government, Region IV-B
- The Regional Director
Department of Budget and Management, Region IV-B
- The Regional Director
Bureau of Local Government Finance, Region IV-B
- The Secretary to Sangguniang Panlungsod
City Government of Puerto Princesa
- The Director
National Library of the Philippines
- The Dean
University of the Philippines (UP) College of Law
 [NAME OF AGENCY AND ADDRESS]

AGENCY ACTION PLAN and

STATUS of IMPLEMENTATION
Audit Observations and Recommendations
For the Calendar Year 2019
As of _____________________

Reason for
Agency Action Plan Partial/Delay/
Status of Action Taken/
Audit Audit Non-
Ref. Target Implementation Action to be Taken
Observations Recommendations Action Person/ Dept. Implementation,
Implementation if applicable
Plan Responsible
From To

Agency sign-off:

_______________________________ __________________
City Mayor Date