EXECUTIVE SUMMARY

A. Introduction

Taguig City gained its cityhood and declared as Highly Urbanized City thru
Republic Act (RA) No. 8487 dated December 8, 2004. Originally, Taguig was
founded as a Municipality on the April 25, 1587, as part of the Province of Rizal. It
became completely independent on January 1, 1918, by virtue of Executive
Order No. 108 dated December 19, 1917.

The City’s mission is to provide quality service towards making an ideal community
where people live, work and do business in a peaceful and progressive environment.
It envisions itself to be a loving, caring, peaceful and progressive City and
empowering the citizenry to develop their potentials and lead meaningful lives.

The City of Taguig is headed by Hon. Lino Edgardo S. Cayetano, who assumed post
as Mayor last July 2019. He is supported by Vice Mayor Ricardo S. Cruz, Jr. with
12 regular members of the City Council joined by the President of the Liga ng mga
Barangay and Sangguniang Kabataan as ex-officio members. The City has a total
personnel complement of 15,313 consisting of 435 permanent, 912 contractual,
7,350 job order/contract of service and 6,616 casual employees.

B. Financial Highlights
For Calendar Years (CYs) 2021 and 2020, the appropriations and obligations of
Taguig City under the General Fund (GF) and Special Education Fund (SEF) totaled
P19.816 billion and P10.747 billion, which consist of current appropriations of
P16.512 billion and P10.447 billion, respectively, and continuing appropriations of
P3.304 billion and P300.436 million, respectively, details as follows:

Appropriations Obligations
Fund
CY 2021
Current Appropriation
General Fund (GF) P15,254,538,457.19 P10,043,128,310.73
Special Education Fund (SEF) 1,257,340,801.39 403,668,864.72
Sub-total 16,511,879,258.58 10,446,797,175.45
Continuing Appropriation
GF 1,165,654,688.29 300,436,405.87
SEF 2,138,754,556.65 -
Sub-total 3,304,409,244.94 300,436,405.87
Total P19,816,288,503.52 P10,747,233,581.32

The City’s assets, liabilities and equity for the year were P36.090 billion,
P17.795 billion and P18.295 billion, respectively. On the other hand, income
collected totaled P13.828 billion, while expenses incurred amounted to
P11.434 billion, as summarized in the following table with corresponding figures for
CY 2020:

i
 2020 Increase/
Particulars 2021
(As Restated) Decrease
Assets P36,090,004,701.79 P30,115,294,734.96 P5,974,709,966.83
Liabilities 17,794,590,697.73 14,255,548,577.57 3,539,042,120.16
Government Equity 18,295,414,004.06 15,859,746,157.39 2,435,667,846.67
Revenue 13,828,135,902.39 12,767,554,024.87 1,060,581,877.52
Expenses 11,434,128,770.11 13,055,900,660.05 (1,621,771,889.94)

The total revenue of P13.828 billion during the year was sourced from the following:
Particulars GF SEF Total
Tax Revenue P8,236,661,144.70 P1,653,861,169.62 P9,890,522,314.32
Share from Internal Revenue
Collections 1,886,206,260.00 - 1,886,206,260.00
Share from Other National
Taxes 906,362,862.37 - 906,362,862.37
Service and Business Income 1,136,925,443.72 5,781,684.40 1,142,707,128.12
Shares, Grants and Donations 2,337,337.58 - 2,337,337.58
Other Income - - -
Total Revenue P12,168,493,048.37 P1,659,642,854.02 P13,828,135,902.39

While the total expenses of P11.434 billion was incurred during the year, details are
shown below:

Particulars GF SEF Total

Personnel Services
Maintenance and Other
Operating Expenses
Non-cash Expenses
Total Expenses
P3,035,012,725.70 P132,835,989.28 P3,167,848,714.98
6,952,907,490.06 596,028,180.11 7,548,935,670.17
627,181,997.34 90,162,387.62 717,344,384.96
P10,615,102,213.10 P819,026,557.01 P11,434,128,770.11

C. Operational Highlights
Among the most significant accomplishments/achievements reported by the City
during the year:

1. Programs implemented to address the COVID-19 pandemic;

 Established the Taguig Registry for Access and Citizen Engagement or

TRACE as the official registry system of Taguig City for COVID-19
monitoring and contact tracing in various establishments in the City, as well
as availing government services on COVID-19 vaccination and RT-PCR
testing. The system also featured the digitalization of other COVID-19 related
programs for residents and transients/visitors;
 Provided services for a fully automated cold storage facility, to house and
store vaccine vials under its required temperature;
 Provided vaccination hubs, vaccination bus, home vaccination and
vaccination at health centers; and additional vaccine vials for COVID-19
vaccination and booster shots;
 Extended to its constituents during ECQ, Relief Goods and COVID-19
Hygiene Kits; and

ii
  Provided various medical equipment, and supplies and materials for the
treatment of COVID-19 patients.

2. Construction of New Taguig City Hall Building, Phase 1;

3. Construction of nine Multi Purpose Evacuation Centers;
4. Improvement of various Drainage System;
5. Recipient of the following awards/achievement:

 Achieve the 100 percent vaccination of the target eligible population of the
City based on the Department of Health (DOH) projected population for
CY 2021;
 DOH awardee for the COVID-19 Response Service Award;
 Best LGU in the implementation of Nutrition in Emergencies Program; and
Philippine Integrated Management of Acute Malnutrition (PIMAM) Program;
and
 World Health Organization (WHO) commendation for the City’s vaccination
and COVID-19 response.

D. Scope and Objective of Audit

The audit covered the accounts and operations of the City of Taguig for the period
January to December 31, 2021. The objectives of the audit are to: (a) be able to lend
credence to 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 prior year’s
audit recommendations.

E. Auditor’s Opinion on the Financial Statements

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

financial statements because of the following:

1. Property, Plant and Equipment (PPE) accounts with carrying value of

P7.162 billion excluding Infrastructure Assets and Construction in Progress
accounts with a carrying value of P1.866 billion and P788.652 million,
respectively, included P5.762 billion which could not be ascertained due to non-
completion of the conduct of physical count and non-reconciliation of the Report
of Physical Count of Property, Plant and Equipment (RPCPPE) of the City
General Services Office (CGSO) with the City Accounting Office (CAO) records,
contrary to Section 124 of the Manual on the New Government Accounting
System (MNGAS) for LGUs, Volume I and Section 491 of the GAAM,
Volume I.

We reiterated our previous year’s recommendation that:

iii
 a. The Local Chief Executive, thru the City Administrator –

 Instruct the created overall Inventory and Reconciliation Committee on

PPE accounts to convene, undertake and complete the physical inventory
of property, and conduct the reconciliation with the property and
accounting records. The committee shall be required to render a report on
completion and reconciliation of the PPE accounts within the prescribed
timetable;

 Require the Procurement Office, to provide the CGSO, upon delivery of

the properties, with copies of sales invoice, approved purchase order,
distribution list of the PPE supporting the AIR, as their reference in the
preparation of the PAR, Inventory Tag and completion of the RPCPPE;

b. The Property Custodian/Officer, the CGSO and the CAO to –

 Set-up an effective system to keep track and capture the related

transactions on PPE; reconcile and adjust PPE records regularly
accordingly; and to promptly reconcile the results of the physical count
with the accountabilities recorded in the books of accounts and the
property cards; and

 Submit the reconciled RPCPPE to the Auditor within the prescribed period
in accordance with Section 124 of the MNGAS for LGUs, Volume I.

2. The unrecorded credit and debit memos and other reconciling items of P10.075
million, which included the unreconciled bank and book beginning balance of
P6.408 million is contrary to Sections 3.2 and 3.3 of COA Circular No. 96-011
dated October 12, 1996. Thus, understated the balance of Cash in Bank - Local
Currency, Current Account at year-end.

We recommended that Management require:

a. The CTO to closely coordinate with the bank officials on the status of the
requested copies of the bank’s credit and debit memos and other reconciling
items for submission to the CAO to support the adjustments to the related
asset and government equity accounts;

b. The CAO to –

 Upon receipt of the documents from the CTO, prepare immediately the
necessary entries for the reconciling items; and

 Coordinate with the CTO for the immediate clearing of reconciling items
pertaining to the difference of P6,408,293.60 between the bank and book
beginning balance.

iv
F. Other Significant Observations and Recommendations

The following are the other significant observations and recommendations in the
audit of the City of Taguig for CY 2021:

1. The City exceeded the over-all revenue projections for the year by P4.410 billion,
despite the dropped projections due to pandemic. The income from Business
Taxes still surpassed the projections for CY 2021 in performance efficiency but it
could perform better had there been a periodic review of financial performance as
required in Section 316 of RA No. 7160 and Local Budget Circular (LBC)
No. 112 dated June 10, 2016. Thus, the inability of the City’s to fully maximize
its revenue collection which would redound to the benefit of its constituents.

We commended management, in particular the Business Permits and Licensing

Office (BPLO) and the City Treasurer’s Office (CTO), in surpassing the
projections for Business Taxes, despite the pandemic in CY 2021.

We still recommended that the Management, thru the Local Finance Committee:

a. Consider a systematic and realistic forecasting of revenue taking into account

the prior years’ experience and statistics as benchmarks in setting targets;

b. Involve the CTO and other Departments in generating revenues to meet the
targets;

c. Require the CTO to accomplish the Quarterly Report of Income to keep track
of the status of revenue generation; and

d. Require the concerned officials to conduct periodic review of the Quarterly

Report of Income to ascertain whether collection targets are attained, to
provide assurance of improved finances for the operations of the City.

2. Collections registered a net increase of P815.528 million or 6.87 percent over the
previous year, despite the COVID-19 pandemic. However, revenue targets on
Real Property Tax were not used in the CY 2021 Approved Annual Budget to
further intensify collections therefrom.

We commended the Management in the increase of revenues over the last year’s
figures, despite the pandemic. However, we still recommended Management thru
the Local Finance Committee to:

a. Conduct periodic review of its collection efficiency to be assured of improved

performance and higher revenues generated. Quarterly review is suggested in
order to keep track of revenue accounts that register decline in performance
efficiency;

v
 b. Use the revenue targets in the real property taxes to further intensity
collections therefrom. Avail of the administrative and judicial remedies in
enforcing payments particularly in tax delinquencies; and

c. Perform close monitoring of income generated from Business Taxes, and

Permit Fees and other decrease in income to ensure efficient collection.

3. Of the Inventory accounts under the General Fund of P1.531 billion as of

year-end, 49.85 percent or P763.319 million pertains to CYs 2020 and prior
years’ balances, with slow utilization movement. This is due to lack in
monitoring and reconciliation of inventory records of the CAO with CGSO/or
concerned Offices. Thus, the correctness of the inventory balance could not be
ascertained, inconsistent with sound internal control.

We recommended that Management require:

a. The CAO to -

 Assign a personnel to handle the supervision and monitoring of financial

accounts and analysis. The task shall preferably be handled by a Certified
Public Accountant;

 Consider the future inclusion/creation in the CAO of a specific division to

handle the financial accounts and analysis, whose task is in addition to
bookkeeping function;

b. The CAO to –

 Temporarily assign, a personnel to analyze the Inventory accounts and

coordinate with the CGSO and/or concerned Offices for the reconciliation
of such account. Thereafter, require the submission of Report of
Summary of Supplies and Materials Issued (SSMI) with Requisition and
Issue Slip (RIS) and other documentation from the Offices concerned,
necessary for dropping the inventory accounts and to reduce the amounts
for slow utilization movement of inventory account balance;

c. The General Services Office (GSO) to –

 Regularly coordinate with the CAO on the status of inventory accounts.

Subsequently require from end users and property officer/warehouse
keeper the submission of Utilization Report/Distribution List and other
documentation; and

 Submit to CAO the SSMI supported with RIS and necessary

documentation.

vi
4. The City has still to come up with the revision and codification of revenue rules
and regulations embodied in 34 ordinances issued from CYs 1993 to 2021 in
order to have a ready reference for the implementers and the taxpayers. Also, the
latest Business Tax Ordinance enacted in CY 2017 contains unclear provisions on
taxes, fees and charges.

We reiterated our recommendation that Management consider the revision and

codification of the City’s revenue rules and regulations within the prescribed
timeline of implementation, in order to provide a ready reference for the
implementers and the taxpayers.

We also recommended that Management coordinate with the Sangguniang

Panlungsod to revisit the provisions of the CY 2017 Business Tax Ordinance to
come up with amendments that would give clearer interpretation of revenue
provisions.

5. The upgraded Revenue Information System for eRealTax and eBPLTAS showed
no generated reports on the Real Property Tax Receivables (RPT) based on
assessed value of real properties, Abstract of Real Property Tax Collections,
Summary Report of Collections and Deposits (SRCDs), and complete data on
business tax payments. In effect, the requirements of COA Circular No. 2002-003
prescribing the use of the MNGAS for LGUs were not met and limitations in
promoting transparency and accountability occurred, due to absence of these
reports.

In view of the foregoing, we recommended that the Management:

a. Initiate appropriate action against the service provider, to address the

generation of the following reports from the upgraded system, which may,
among others, include:

 Certified list of taxpayers with the corresponding amount due and

collectible which serve as basis of the City Accounting Office in the
recording of RPT Receivables at the beginning of the year in compliance
with Section 20 of COA Circular No. 2002-003 dated June 20, 2002
prescribing the use of MNGAS for LGUs, Volume I;

 The Tax Order of Payment/Tax Bill for business tax payments and
Statement of Accounts (SOA) for RPT payments forming part of the
Official Receipts for tax payments;

 Monthly Abstract of Real Property Tax Collections with detailed

information that would document the distribution and remittance of the
RPT shares of the fund recipient. The report is required pursuant to
Section 52 of the MNGAS for LGUs, Volume I;

vii
  RCDs summarizing the collections and deposits per satellite offices and
summary RCD of the City Cashier; and

 Soft copy of complete business tax payment records.

b. Ensure coordination between Offices of the City Assessor, City Treasurer and
City Accountant particularly on:

 Acceptance of the City Assessor as process owner of data for the

assessed value of real property linked/migrated to the upgraded WBTISM
revenue system; and

 Acknowledgement of the City Accounting Office for the required Monthly

Abstract of Real Property Tax Collections, with detailed information, per
COA regulations.

c. Thereafter, submit regularly to COA Office thru the City Accounting Office
the required reports mentioned in item a and all other requested reports to
COA Office.

6. The lack of specific policies defining the effective and efficient processing
payment timeline, to promote transparency resulted in prolonged time lag in the
processing of payment of claims for goods and infrastructures caused by
clarification issues in documentary requirements, is inconsistent with sound
internal control. In effect, the 45 days payment terms as provided in the contract,
were not met.

We recommended that the Management to:

a. Formulate and set-up policies or updating of a service standards for

processing of payment of claims;

b. Require the head of the department concerned, to adhere with the

requirements of COA Circular No. 2002-003 dated June 20, 2002, or MNGAS
for LGUs Volume I, as follows:

 Certification and approval as to validity, propriety and legality of the

claim signed by the head of the department or office concerned in Box A
of the disbursement voucher. In the absence of the department head’s
signatory to Box A, the printed name and designation of the officer next-
in-rank performing the function of the department head concerned and
fully responsible for the Office should be indicated; and

viii
  Maintain logbooks for incoming and outgoing of disbursement vouchers
to ensure proper, accurate and complete identification of incoming and
outgoing documents and to ensure that timely delivery of the incoming
and outgoing documents to its proper recipients.

c. Include the involvement of the City Accountant as member of BAC

Secretariat or in the Technical Working Group in order to address the
prolonged time in complying with the documentary requirements, initially at
the procurement level.

7. The organizational structure and staffing pattern of the City Accounting Office
(CAO) and City Budget Office (CBO) is not attuned to the current needs of a
highly urbanized City due to increasing volume of financial transactions and the
non-inclusion in the budget proposal of the functions/activities segregated into
divisions of tasks involving the preparation, review and monitoring controls,
inconsistent with the principle of sound internal control system of accounting

We recommended that Management require the HRMO to:

 Immediately conduct study and design an organizational structure for CAO

and CBO with due consideration as a department by expanding the existing
office and set up the ideal six divisions, by functions, namely: Administrative
and Records Management Division; Financial Accounts and Analysis
Division (FAAD); Barangay Accounting Services Division; Revenue Abstract
and Statistics Division (RASD); Fiscal Management and Control Division
(FMCD); and Payrolls, Bills and Remittance Division (PBRD). This is to
ensure that the staffing complement are aligned with the functions,
performance targets and programs of the City; and

 In addition to the CBO’s current structure, set up the ideal five divisions
namely: Administrative Division; Budget Development Division; Barangay
Operations Affairs Division; Budget Management and Information Service
and Budget Operations Control Division. This is to take charge of the City’s
Annual and Supplemental Budget, evaluation and consolidation of budget
proposal from all departments and monitoring expenditures on Statutory and
Contractual Obligation of the City which would serve as database in the
funding requirements for each expenditure item to ensure efficient delivery of
service.

8. The 402,916 affected families during ECQ were recipients of the Emergency
Relief Allowance (ERA) and Financial Assistance (FAs) out of the transferred
funds from the national government amounting to P1.612 billion. The
requirements on the grant of assistance to low-income families pursuant to Local
Budget Circular (LBC) Nos. 136, 138, and 139 and DSWD, DILG and DND
JMC No. 03, s. 2021 were substantially complied, with exceptions on delays in
the liquidation of cash advances and incomplete documentation.

ix
 We commended Management for the substantial compliance with the
requirements on the grant of financial support to the identified low-income
individuals and families pursuant to DBM Local Budget Circular Nos. 136, 138,
and 139 and DSWD, DILG and DND Joint Memorandum Circular No. 03,
s. 2021.

For few exceptions on delays in the liquidation of cash advances and incomplete
documentation, we recommended Management to:

a. Require the SDOs on the strict adherence to the provisions in COA Circular
No. 97-002 dated February 10, 1997, on the full liquidation of cash advances
at year-end or as soon as the purpose is served; and

b. Request the CSWDO to adhere with the requirements of Section 4(6) of

PD No. 1445, by submitting the required documents such as: ID with address
of the beneficiary, beneficiaries’ information on family members as proof
that recipients of the same address were eligible, waitlisted Beneficiaries
with names not previously included in the masterlist, and specimen
signatures of beneficiaries, among others.

The above observations and recommendations were discussed with the concerned City
officials and staff on May 19, 2022. Management’s views and comments were
incorporated in the report, where appropriate.

G. Summary of Audit Suspensions, Disallowances and Charges

The audit disallowances and charges of P8,711,265.00 and P1,799,510.26,

respectively, as shown in the Report on Enforcement and Monitoring of Final and
Executory Decisions (REMFED) and Statement of Audit Suspensions, Disallowances
and Charges (SASDC) as of December 31, 2021, were not settled at the end of the
year.

The Notices of Disallowance (NDs) of P8,711,265.00 issued prior to the

implementation of COA Circular No. 2009-006, pertains to NDs covered with Motion
for Appeal filed before COA in CY 2008 and Petition for Certiorari filed before the
Supreme Court on August 6, 2014.

H. Status of Implementation of Prior Years’ Audit Recommendations

Monitoring of implementation of the 50 audit recommendations embodied in the

CYs 2020, 2019, 2018, 2017, 2016 and 2015 Annual Audit Reports, disclosed that 29
or 58 percent were fully implemented, 16 or 32 percent were partially implemented
and 5 or 10 percent was not acted upon.