EXECUTIVE SUMMARY

INTRODUCTION

The Province of Laguna, based on some of the historical records obtained, has
been in existence even during the Spanish Colonialism. Laguna is surrounded by Laguna
Lake, formerly called “La Laguna Encantada”, one of the only 18 living lakes in the
world and the largest inland lake in the country. Laguna is part of the CALABARZON
(Region IV-A), just 30 kilometers south of Metro Manila.

Laguna is a first class province composed of 24 municipalities and six cities with
674 barangays. It is subdivided into four congressional districts, namely:

1st District Cities of : 1) Biñan

2) Santa Rosa
3) San Pedro

2nd District Cities of : 4) Cabuyao

5) Calamba
Municipalities of: 6) Bay
7) Los Baños

3rd District City of : 8) San Pablo

Municipalities of : 9) Alaminos 12) Nagcarlan
10) Calauan 13) Rizal
11) Liliw 14) Victoria

4th District Municipalities of : 15) Cavinti 23) Paete

16) Famy 24) Pagsanjan
17) Kalayaan 25) Pakil
18) Luisiana 26) Pangil
19) Lumban 27) Pila
20) Mabitac 28) Santa Cruz
21) Magdalena 29) Santa Maria
22) Majayjay 30) Siniloan

The administration and supervision over the affairs and operation of the
Provincial Government of Laguna (PGL) for the year 2015 was under the leadership of
Governor Ramil L. Hernandez with the assistance of the Sangguniang Panlalawigan
and the Department Heads.

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The Organizational Structure of the PGL for CY 2015 is as follows:

a. Key Officials Name

Governor Hon. Ramil L. Hernandez
Vice-Governor Hon. Atty. Katherine C. Agapay
Members of the Sangguniang
Panlalawigan:
1st District Hon. Carlo N. Almoro
Hon. Gabnulang A. Alatiit
Hon. Dave M. Almarinez
2nd District Hon. Neptali B. Bagnes
Hon. Juan M. Unico
Hon. Pursino C. Oruga
3rd District Hon. Katherine C. Agapay
Hon. Angelica B. Alarva
4th District Hon. Joseph Kris Benjamin B. Agarao
Hon. Rai-Ann Agustine L. San Luis
Ex-Officio Members Hon. Jeffrey A. Palce (PCL President)
Hon. Lorenzo B. Zuñiga, Jr. (ABC
President)
Provincial Accountant Ms. Evelyn T. Villanueva
Provincial Treasurer Ms. Evelyn A. De Guzman

b. No. of Personnel Complement

Permanent - 1,778
Temporary - 0
Casual - 448
Contractual - 162
Elective Officials - 13
Coterminous - 51
Consultant - 14
Total - 2,466

Economic Enterprises being operated by the PGL are the following:

Hospitals
1. Laguna Medical Center
2. Bay District Hospital
3. San Pablo City District Hospital
4. Jose P. Rizal District Hospital
5. General Juan Cailles District Hospital
6. Luisiana District Hospital
7. Nagcarlan District Hospital

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 8. Majayjay Medicare Hospital
9. San Pedro District Hospital

School
1. Laguna University

FINANCIAL HIGHLIGHTS

Financial Position and Financial Performance

PGL’s financial position and financial performance for Calendar Year (CY) 2015
are summarized below and shown in detail in the attached audited financial statements.

2015
Assets P6,909,642,897.00
Liabilities 1,909,152,476.00
Equity 5,000,490,421.00

Income 3,031,240,975.00
Expenses 2,468,275,065.00

For CY 2015, PGL’s total income of P3,031,240,975.00 consists of total revenue

of P2,551,310,481.00 in the General Fund and Special Education Fund from local taxes,
internal revenue allotment (IRA) and other income including Subsidy from Other Funds
amounting to P479,930,494.00. However, total expenses of P2,468,275,065.00 pertains to
Current Operating Expenses totaling P1,912,562,406.00 and Subsidy to
NGAs/LGUs/Other Funds in the amount of P555,712,659.00.

Budget utilization is presented as follows:

Special
Education
General Fund Fund Total
Current Appropriation P2,724,595,594.77 P138,861,428.21 P2,863,457,022.98
Current Allotment 2,717,646,601.69 133,311,428.21 2,850,958,029.90
Obligations 2,432,900,120.60 105,982,429.72 2,538,882,550.32

Continuing Appropriation 9,651,137.85 0.00 9,651,137.85

Continuing Allotment 504,572,420.79 32,595,954.78 537,168,375.57
Obligation 322,783,426.22 32,588,026.52 355,371,452.74

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Scope of Audit

Financial and compliance audits were conducted on the accounts and operations
of the PGL for CY 2015. The audit was conducted to ascertain the fairness of the
presentation of the financial statements and compliance of the PGL with laws, rules and
regulations, as well as the economical, efficient and effective utilization of resources.

Audit Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements of the Provincial Government of Laguna due to the following
deficiencies noted:

1. The valuation of the equipment and other property totaling P1,833,840,730.70 and
P89,377,835.31 appearing in the Statement of Financial Position of the General Fund
(GF) and Special Education Fund (SEF) as of December 31, 2015 was unreliable due
to the existence of a net discrepancy of P156,255,455.99 and P10,480,870.00 in the
GF and SEF, respectively, as compared to the total value per count as reflected in the
RPCPPE as of December 31, 2015, missing properties totaling P20,670,853.17 and
P95,560.00 in the GF and SEF, respectively, as well as, unaccounted PPEs amounting
to P135,584,602.82 in the GF and P10,385,310.00 in the SEF.

2. The accounts Advances to Officers and Employees, Accounts Payable and Other
Payables as of December 31, 2015 were not properly converted and presented as
Advances for Operating Expenses/Advances to Special Disbursing Officer, Due to
Officers and Employees and Guaranty/Security Deposits Payable respectively, as
prescribed under COA Circular No. 2015-009 dated December 01, 2015.

3. Discrepancies between the sum of Due from Other Funds and Due From Special
Accounts totaling P9,491,508.30 and the sum of Due to Other Funds and Due to
Special Accounts totaling P5,250,339.20 were noted at the end of CY 2015, contrary
to the Revised Chart of Accounts for Local Government Units under COA Circular
No. 2015-009 dated December 01, 2015, thereby rendering the account balances
unreliable.

4. The accuracy of the inventory accounts appearing in the financial statements as of

year-end totaling P218,534,674.98 was doubtful since the amounts were not reconciled
with the Reports on the Physical Count of Inventories (RPCPPE) as of December 31,
2015 submitted to the Auditor, contrary to Section 124 of the Manual on the New
Government Accounting System, Volume I and Section 488 (c) of the Government
Accounting and Auditing Manual, Volume II.

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Significant Observations and Recommendations

For the exceptions cited above, the Audit Team recommended that the:

1. Honorable Governor direct:

a. the Provincial General Services Officer (PGSO) to:

1) personally supervise the conduct of physical inventory of all properties

of PGL;

2) reconcile the RPCPPE with accounting records;

3) investigate the missing properties worth P20,766,413.17 and

unaccounted PPE totaling P145,969,912.82 and demand a written
explanations from persons responsible and accountable therefor; and

4) gather documents for all unrecorded properties found in all Provincial

hospitals/offices and submit these documents to the Provincial
Accountant for record purposes.

b. the concerned officials to impose legal sanctions against those

persons/employees accountable and responsible for the missing properties.

2. Honorable Governor direct the Provincial Accountant to:

a. prepare the adjusting entries to correct the erroneous classification of

accounts previously discussed; and

b. verify the details of the amounts appearing as “for reconciliation” and

effect the necessary entries in accordance with the Revised Chart of
Accounts prescribed under COA Circular No. 2015-009.

3. Honorable Governor direct the Provincial Accountant to:

a. determine the cause/s of the discrepancies on the reciprocal accounts; and

b. prepare Journal Entry Voucher (JEV) to record the necessary

corrections/adjustments.

4. Honorable Governor to direct:

a. the Provincial General Services Officer (PGSO) to coordinate with the

Provincial Accountant to determine the offices/departments with inventory
balances so that they can require the submission of Report of the Physical

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 Count of Inventories (RPCI) as required under Sec. 124 of MNGAS, Vol.
I;

b. the PGSO and Provincial Accountant to reconcile the general ledger

balances of inventory accounts with the submitted RPCI;

c. the Provincial Accountant to prepare adjusting/correcting entries, if any;

and

d. the concerned officials comply strictly with Sec. 124 of MNGAS and
Section 488 (c) of GAAM.

Other significant audit observations are as follows:

5. Various school projects totaling P129,334,833.64 included in the Annual Investment

Program (AIP) for CY 2015 of the Province of Laguna were charged against the 20%
Development Fund instead to the Special Education Fund, contrary to the Joint
DILG-DBM Memorandum Circular No. 2011-1, which amount could have been
utilized for the priority programs enumerated under the said Circular.

We recommended that the Honorable Governor direct:

a. the Provincial Planning, Development and Coordinating Officer (PPDCO) to:

1) prepare a Local Development Plan every year in accordance with DILG-

DBM Joint Memorandum Circular No. 2011-1 dated April 13, 2011 copy
furnished the DILG; and

2) conduct monitoring of the implementation of the different development

programs, projects and activities contained in the 20% Local Development
Plan and submit a Status Report to the DILG and Office of the Auditor.

b. the concerned officials to refrain from utilizing the fund for

projects/programs/activities contrary to the aforementioned Joint
Memorandum Circular.

6. The Provincial Treasurer failed to transfer the cash representing the unutilized
balance of Disaster Risk Reduction and Management Fund (DRRMF) at the end of
CY 2015 totaling P46,015,732.35, contrary to the guidelines prescribed under COA
Circular No. 2012-002 which may result to misappropriation of the fund in the
General Fund and cash insufficiency in the Trust Fund.

We recommended that the Hon. Governor direct the Provincial Treasurer and the
Provincial Accountant to:

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 a. effect the immediate transfer of the unutilized balance of DRRMF from the
General Fund to the Trust Fund amounting to P46,015,732.35; and

b. comply strictly with the guidelines prescribed under COA Circular No. 2012-
002 cited above.

7. Chiefs of Hospitals failed to monitor the proper use and safekeeping of hospital
equipment and facilities resulting in unutilized equipment and unserviceable
equipment totaling to P59,613,897.00 and P32,278,260.78 as of December 31, 2015,
respectively, contrary to Section 2 of Presidential Decree (PD) No. 1445 and
Sections 375 and 376 of Republic Act (RA) No. 7160 which resulted in waste of
fund and accumulation of unserviceable equipment.

We recommended that the Honorable Governor direct:

a. the Provincial General Services Officer (PGSO) to initiate immediate action

on all repairable hospital equipment to deter further damage/deterioration of
hospital equipment;

b. all Chiefs of Hospitals to devise/formulate a standard operating procedures in

the use, safekeeping and maintenance of hospital equipment for approval of
the Hon. Governor;

c. the PGSO to devise a procurement plan as a guide in deciding what and when
to buy, and from what source; and

d. the concerned officials to comply strictly with the above-cited provisions of

PD No. 1445 and RA No. 7160.

8. Repainting and labeling of rescue vehicles in the amount of P1,784,280.00 was

incurred, in violation of Section 4.0 of COA Circular No. 2012-003, RA No. 101211,
DILG Memorandum Circular No. 2012-73 and DBM and DILG Joint Memorandum
Circular No. 2013-1 which amount could have been used to support disaster risk
reduction and management activities.

We recommended that the Hon. Governor direct the concerned officials to:

a. submit justification on the repainting and labeling of the rescue vehicles as the
Requesting Official appearing in the Purchase Request;

b. submit:

1) copies of pictures of all the vehicles after the repainting and labelling
works and copies of the old and new LTO registrations (change color) for
audit purposes;

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 2) justification why two vehicles have the same temporary plate Nos.; and

3) permanent Plate Nos. of the seven (7) vehicles with temporary Plate Nos.,
if available/registered already; and

c. strictly comply with all the provisions above-cited.

9. Utilization of the Local Disaster Risk Reduction and Management Fund (LDRRMF)
amounting to P6,374,322.15 were not in accordance with RA No. 10121 otherwise
known as the Philippine Disaster Risk Reduction and Management Act of 2010,
Section 3 of COA Circular 2012-002 dated September 12, 2012 and DILG
Memorandum Circular No. 2012-73 dated April 17, 2012.

We recommended that the Hon. Governor, Provincial Budget Officer and the
Provincial Accountant to:

a. refrain from allowing expenditures which are not considered disaster related
activities; and

b. comply strictly with the provisions of Section 21 of RA No. 10121, Section 3

of COA Circular 2012-002 and DILG MC No. 2012-73 relative to the
utilization of the LDRRMF.

10. The Provincial Government of Laguna still failed to formulate a Solid Waste
Management Plan, contrary to Section 11 of Republic Act (RA) No. 9003 or the
“Ecological Solid Waste Management Act of 2000 and Its Implementing Rules and
Regulations”, hence, a systematic, comprehensive and ecological solid waste
management program was not adopted during the Calendar Year 2015.

We recommended that the Honorable Governor direct the Provincial Solid Waste
Management (PSWM) Board to:

1. consolidate immediately all the submitted SWM Plan to arrive at an initial

PSWM Plan, in compliance with RA No. 9003 and its Implementing Rules
and Regulations; and

2. coordinate with SWM Board of the Municipalities of Bay and Santa Maria to
expedite the preparation and submission of their SWM Plan.

3. if possible, implement immediately the general program of action to achieve

the government’s policy specifically to ensure the protection of public health
and environment.

11. Compliance with existing laws and regulations relative to the implementation of
GAD could not be established (1) due to absence of details of the expenses presented
in the Accomplishment Report for CY 2015; and (2) failure of the Focal Point Person

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 to monitor the activities and expenses pertaining to GAD programs, contrary to the
provisions of Republic Act No. 9710 and DBM/NEDA/NCRFW Joint Circular No.
2004-1.

We recommended that the Honorable Governor direct:

1. the concerned officials to comply strictly with the provisions of RA No. 9710
and DBM/NEDA/NCRFW Joint Circular No. 2004-1;

2. the Provincial Planning and Development Officer (PPDO) to include in the

GAD Plan only those activities and programs which are supportive of gender
issues which are specific and not in general;

3. the GAD Focal Point to closely monitor the implementation of GAD planned
activities and programs and prepare the annual GAD accomplishment reports
that contain actual accomplishments vis-à-vis targets as well as the amounts
utilized for the achievement of such;

4. the Provincial Budget Officer not to allow expenses to be charged to GAD

budget if the activities/programs are not supportive of gender issues;

5. the Accounting Office to maintain a subsidiary ledger for GAD expenses; and

6. the concerned officials to submit explanation/justification why

activities/programs enumerated above must be considered to be supportive of
gender issues thus, included in GAD Plan.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 33 prior year’s audit recommendations embodied in the 2014 Annual Audit
Report, 20 were fully implemented, 11 were partially implemented and two were not
implemented by the PGL.

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