EXECUTIVE SUMMARY

A. Introduction

Malabon became a highly urbanized city by virtue of Republic Act (RA) No. 9019
on March 5, 2001. It is the vision of the City Government of Malabon, pursuant to
its charter and in line with RA No. 7160, the Local Government Code of 1991, to
exercise all the powers granted by law in achieving efficient and effective
governance of the City for the promotion of general welfare as defined in Section
16 thereof.

The manpower resources of the City Government as of December 31, 2018 totaled
2,389 broken down as follows:

Permanent/Regular 674
Casual 242
Elective Officials 15
Co-terminus 77
Job Order Personnel 1,140
CMPI/CMU Personnel:
Full/Part Time Instructors 191
Contractual w/ salary grade 42
Student Assistants 8
Total 2,389

B. Financial Highlights

Presented below are the results of operations for CYs 2018 and 2017:

2018 2017 Increase (Decrease)

Assets 3,054,705,586 2,890,892,226 163,813,360
Liabilities 890,341,722 997,898,472 (195,219,095)
Government Equity 2,164,363,864 1,892,993,754 271,370,110

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 2018 2017 Increase (Decrease)
Income 1,686,688,455 1,509,250,815 177,437,640
Expenses 1,380,720,963 1,099,370,261 281,350,701
Transfer, Assistance and
Subsidy To (Net) 44,973,531 33,864,578 11,108,953
Surplus for the period 260,993,962 376,015,976 (115,022,014)

Increase
2018 2017
(Decrease)
Tax Revenue 662,678,208 605,834,796 56,843,412
Share from Internal Revenue
collections 762,824,864 710,939,060 51,885,804
Other Share from National Taxes 3,026,730 - 3,026,730
Service and Business Income 253,453,171 188,971,679 64,481,492
Shares, Grants and Donations 3,549,633 3,112,403 437,230
Other Income 1,155,848 392,877 762,971
Total 1,686,688,455 1,509,250,815 177,437,640

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 The appropriations, allotments and obligations for CYs 2018 and 2017, are as
follows:

2018 2017
Appropriations 2,129,624,466 P1,463,444,541
Allotments 2,020,207441 1,437,880,506
Obligations 1,457,824,961 1,157,003,669

C. Operational Highlights

For Calendar Year (CY) 2018, the City Government reported the following major
accomplishments:

Programs and Projects Amount

1. Installed 1,059 sets of led streetlights, repaired and P148.291 million
maintained 55 sets of metered streetlights and 1,800 led
chips, repaired/rehabilitated covered courts, schools,
clinic, hospital and bahay sandigan, building and public
facilities

2. Undertaken 18 projects that upgraded/rehabilitated P28.658 million

2,626.15 linear meters of road and alleys including
drainage

3. Implemented five flood control projects such as P18.796 million

repair/rehabilitation of flood gates, drainage line, and
roadway shoulder and pumping stations

Other Programs and Projects

1. Maintained and operated Flood Control Facilities thru the City Engineering
Department (CED) and in coordination with the Department of Public Ways
and Highways (DPWH)-Malabon Navotas District Engineering Office and
Metropolitan Manila Development Authority (MMDA) that would help
minimize if not totally eradicate the flooding occurrence in the City;

2. De-clogged and desilted 5,042 linear meters of canals and waterways which
collected 4,115 sacks and 34 teraliters of waste;

3. The number of informal settler families (ISFs) was decreased to 23,124 from
23,310 due to the relocation of 186 ISFs to Malabon Homes Housing Project
located at Labahita St., Barangay Longos;

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 Other Programs and Projects
4. Malabon City crime rate increased by 75 or 3.12 percent but the Crime
Solution Efficiency rate increased from 49.88 percent to 59.90 percent in
2018; and

5. One of the milestones of the locality on its anti-illegal drug activities is the
declaration of its 15 Barangays as “Drug Free Work Place” by the Philippine
Drug Enforcement Agency (PDEA).

The City has received awards/recognitions as follows:

Award/Recognition Description
1. 2018 Best Performing Public For the prompt payment of Special
Employment Service Office Program for Employment of Students
(PESO) Award (SPES) Beneficiaries (Bracket 1) and
Career Guidance & Employment
Coaching – awarded by the
Department of Labor and
Employment- National Capital Region
(DOLE-NCR) last December 4, 2018
during the Year-End Performance
Assessment Planning Exercise at
Aloha Hotel, Malate, Manila.

2. a. 2nd place in City of Malabon For its effort in addressing illegal

Anti-Drug Abuse Council drugs concerns in the locality given by
(CMADAC) Functionality the Department of the Interior and
Audit 2017 Local Government (DILG)-NCR on
December 4, 2018 at Legend Villas,
b. Performance Award in Mandaluyong City
complementing the national
government’s Anti-Illegal Drug
Campaign and in gathering a
score between 85 to 99
functionality points during the
conduct of 2017 CMADAC
Performance Audit

3. Seal of Good Local Governance For the two consecutive years of

(SGLG) commitment to good local governance,
transparency and public accountability
awarded by the DILG last November
6, 2018 at Manila Hotel

4. Plaque of Recognition for having For exemplifying commendable

landed as the Finalist of the 2018 initiatives toward good governance

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 Award/Recognition Description
Most Business-Friendly Local reform that promote trade and
Government Unit – City Level investments and significantly
contribute to local economic
development given by the Philippine
Chamber of Commerce and Industry
(PCCI) on October 9, 2018 at the
PCCI Headquarters, Fort Bonifacio,
Taguig City.

D. Scope and Objectives of Audit

The audit covered the accounts and operations of the City of Malabon for the period
January to December 31, 2018. The objectives of the audit are to: (a) verify the
degree of assurance that may be placed on management’s assertions on the financial
statements; (b) recommend agency improvement opportunities; (c) determine
compliance with existing laws, rules and regulations; and (d) determine the extent
of implementation of the prior years’ audit recommendations.

E. Audit Opinion on the Financial Statements

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

financial statements due to the noted errors and deficiencies that misstate the
affected account balances, details of which are discussed in Part II of the report and
summarized as follows:

1. The balance of the Property, Plant and Equipment (PPE) accounts of

P2.487 billion is unreliable due to (a) unreconciled difference of
P315.766 million between the book balance and the Report on the Physical
Count of PPE (RPCPPE) of P2.171 billion; (b) presence of items costing below
P10,000 amounting to P63.021 million which should have been reclassified to
the semi-expendable accounts; and (c) inclusion of unserviceable items
amounting to P5.152 million.

We reiterated last year’s recommendations that:

a. The City General Services Department (CGSD) and the Inventory

Committee complete the reconciliation of the RPCPPE with the City
Accounting Department (CAD) and CGSD records;

b. The CAD –

 Effect the necessary adjustments to correct the balances of the PPE

accounts based on the results of the reconciliation made;

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  Reclassify items costing below P10,000.00 to the appropriate semi-
expendable accounts; and

c. The CGSD cause the immediate disposal of unserviceable items and the
CAD to record the dropping from the books of the items disposed.

2. The reported cash account balance of P702.969 million is unreliable due to the
(a) unrecorded disbursements and unidentified reconciling items in the amount
of P19.772 million and P5.894 million, respectively, carried over from CYs
1999 to 2003 in the General Fund (GF) books; and (b) discrepancies between
the book and bank balances of P4.684 million for the Special Education Fund
(SEF), P1.438 million for Trust Fund (TF) and P386,506.72 for the City of
Malabon University (CMU), which cannot be adjusted/ascertained in the
absence of supporting documents and Bank Reconciliation Statements (BRS).

We reiterated the prior year’s recommendations that -

a. The City Treasurer coordinate with the depository banks as regards the
documents to support the unadjusted and unidentified reconciling items
under the GF;

b. The City Accountant -

 Assign personnel to prepare the BRS on a monthly basis for all

depository accounts pursuant to COA Circular No. 96-011; and

 Effect immediately the adjusting entries in the books for reconciling

items identified in the BRS.

3. The City did not conduct physical inventory of supplies and materials and did
not maintain supplies ledger cards and other inventory records to support the
balances per books, thereby casting doubt on the correctness of the inventory
accounts balance of P27.890 million at year-end.

We recommended that Management require:

a. The Inventory Committee to conduct a semestral inventory of supplies and

materials and prepare inventory report which shall be reconciled with the
CGSD and CAD records before submission to the City Auditor’s Office in
accordance with Section 124, Volume I of the NGAS Manual; and

b. The CAD to maintain Supplies Ledger Cards to ensure that all purchases
and issuances of supplies and materials are recorded, in conformity with
Section 120, Volume I of the NGAS Manual.

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F. Other Significant Observations and Recommendations

The following are the other significant observations and recommendations in the
audit of the City of Malabon for CY 2018:

1. Various Inter-Agency Payable accounts include unremitted withheld taxes,

contributions, premiums and loan payments to BIR, GSIS and Pag-IBIG
covering the period July 2014 to November 2018 totaling P674,818.55,
P1.370 million and P924,671.35, respectively. Furthermore, over/double
remittances of taxes and contribution made to BIR, GSIS, Pag-IBIG and
PhilHealth from October 2015 to December 31, 2018 totaling P480,280.42,
P28,961.91, P9,664.12 and P2,936.81, respectively, had remained
unsettled/unadjusted.

We recommended that:

a. The City Treasurer remit immediately to the BIR, GSIS, Pag-IBIG and
PhilHealth the unremitted taxes, contributions and loan payments;

b. Management exert efforts to recover the amount due to over/double

remittances to the different national government agencies (NGAs), and
identify the person/s who caused the over/double remittance or
overpayment and make him/her/them accountable; and

c. The CAD institute appropriate measures to minimize, if not to eliminate,

the occurrence of over/double remittances.

2. The City was not able to meet its over-all revenue projections for CY 2018 in
the amount of P627.205 million due to lack of periodic review of collection
performance of the Income accounts.

We recommended the following:

On revenue accounts that reported decreases in collections -

a. The City Business Permits and Licensing Department (CBPLD) conduct

an analysis of the identified revenue accounts pertaining to business tax to
address the decreasing trend in collection; and

b. The City Treasury Department (CTD) look into the possible causes of the
decline in the identified revenue accounts pertaining to RPT and strategize
to improve collection; and

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 On revenue accounts that reported collections without income estimates and
those revenue accounts that have targets but without reported collections –

c. The Committee faithfully exercise its mandate under Section 316, Article
I, Chapter III of the said Act to have realistic projections for each revenue
accounts and exert efforts to collect the projected amount.

3. The assessment and collection of Real Property Taxes (RPT) on improvements

and machineries were still based on the 1992 Schedule of Fair Market Values
(SFMV) of properties instead of an updated schedule, thus, resulted in lower
assessed values and lower RPT collection.

We recommended that Management adopt and implement an updated Schedule

of Fair Market Values for land, land improvements and machineries to increase
RPT collections which can be used to fund programs and projects and activities
of the city to benefit its constituents.

4. Out of the 21 barangays, only three have constructed Materials Recovery

Facilities (MRF), of which only two were operating as of CY 2018, thus, the
objective of the Solid Waste Management Program in putting up waste facilities
to ensure environmentally-sound methods in solid waste management, in
accordance with Section 32 of Republic Act (RA) No. 9003, was not attained.

We recommended that the Management consider prioritization of the

establishment of the required MRF in every barangay or a cluster of barangays
in the City in compliance with Section 32 of RA No. 9003.

The aforementioned observations together with the corresponding recommendations

were discussed with Management officials concerned during the exit conference on
May 28, 2019. Management views and comments were incorporated in the report,
where appropriate.

G. Summary of total suspensions, disallowances and charges as of year-end

As of December 31, 2018, audit suspensions and disallowances totaling

P4.557 million and P11.087 million, respectively, remained unsettled as of year-
end.

Particulars Balance Issued in 2018 Settled in 2018 Balance

1/1/ 2018 12/31/ 2018
Suspensions P28,642,631.25 P4,557,275.75 P28,642,631.25 P 4,557,275.75
Disallowances 11,981,840.10 - 894,860.00 11,086,980.10

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 We reiterated the previous year’s recommendations that the Local Chief Executive
direct concerned officials to coordinate with all persons responsible/liable and
facilitate the settlement of all outstanding audit suspensions and disallowances as
required under the existing rules and regulations. It was also advised that unsettled
disallowances be endorsed to the City Legal Office for necessary action/
disposition.

H. Status of Implementation of Prior Years’ Audit Recommendations

Of the 77 audit recommendations contained in the CY 2017, 2016 and 2015 Annual
Audit Reports, 24 or 31 percent were fully implemented, 39 or 51 percent were
partially implemented, while the remaining 14 or 18 percent were not acted upon
during the year. The partially and unimplemented recommendations are reiterated in
this report.

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