EXECUTIVE SUMMARY
1. Agency’s Creation, mandate and organizational set-up
The Province of Shariff Kabunsuan, an infant province, was constituted with the
passage into law of Muslim Mindanao Autonomy Act No. 201 dated August 28, 2006 of
the Regional Legislative Assembly, Autonomous Region in Muslim Mindanao, Cotabato
City, known as “An Act Creating the Province of Shariff Kabunsuan, Providing Funds
Therefor, and for Other Purposes”. The province, which was curved out from the mother
province of Maguindanao, is composed of 11 municipalities, a first (1st) class province
and basically an agricultural rich province.
Pursuant to Muslim Mindanao Autonomy Act No. 25, known as the Local
Government Code for the ARMM, the province, like any other local government units,
exercises the powers and discharges the duties and functions expressly granted, as well as
those implied therefrom, and such other powers, functions and responsibilities as are
necessary, appropriate, or incidental to efficient and effective provision of the basic
services and facilities.
Honorable Ibrahim P. Ibay, DMD, an elective candidate for the Office of the Vice
Governor, became the Provincial Governor by operations of law, due to the failure of the
COMELEC to hitherto proclaim the candidates for the Office of the Provincial Governor.
On parallel ground, Honorable Bai Nariman A. Ambolodto, the highest ranking
Sangguniang Panlalawigan Member proclaimed by the COMELEC, became the
Provincial Vice Governor.
It bears stressing to state that the Supreme Court declared void the creation of the
province in an En Banc consolidated Decision promulgated on July 16, 2008 entitled Bai
Sandra S.A. Sema, Petitioner vs. COMELEC and Didagen P. Dilanggalen, Respondents
under G.R. No. 177597 and Perfecto F. Marquez, Petitioner vs. COMELEC, Respondent,
under G.R. 178628.
With this development, the different stakeholders, not being a party to the
foregoing case, the Court, in an En Banc resolution dated August 5, 2008, granted the
several motions for leave to file motion for reconsideration in intervention by the
Provincial Government of Shariff Kabunsuan, represented by Hon. Ibrahim P. Ibay,
Provincial Governor; the Shariff Kabunsuan Provincial Employees Association,
represented by its President, Engr. Abdulrakman K. Asim and Movants-Intervenor Ali
Pendinatar, Datu Tucao O. Mastura, the latter being a candidate for the Office of the
Provincial Governor and Liga ng mga Barangay sa Pilipinas, Shariff Kabunsuan Chapter,
represented by its President, Datu Ali Gumaga. Also, Perfecto F. Marquez, a party in the
instant case, filed his motion for reconsideration.
On December 16, 2008, the Court, in an En Banc Resolution, denied with finality
the foregoing motions for reconsideration in intervention.
2. Highlights of Financial Operations
Its assets, liabilities and government equity comparatively are as follows:
CY 2007
Assets
Liabilities
Government Equity
General Fund
P 158,855,860.43
98,839,490.17
60,016,370.26
Trust Fund
P 4,190,469.74
4,190,469.74
Consolidated
P 163,046,330.17
103,029,959.91
60,016,370.26
CY 2008
Assets
Liabilities
Government Equity
P 156,799,856.50
82,789,296.45
74,010,560.05
P 29,179,145.61
10,000.00
29,169,145.61
P 185,979,002.11
82,799,296.45
103,179,705.66
For calendar year 2008, the collections representing its share from the internal
revenue allotment totaled to P447,901,818.12 and the real property tax and other income
in the total amount of P204,530.43. It expended P434,112,158.76 out of the current
year’s appropriations amounting to P435,734,159.00 for various functions, programs,
projects and activities.
3. Scope of Audit
A Financial and Compliance Audit as well as Value for Money Audit were
conducted on the accounts and operations of the Province of Shariff Kabunsuan for
calendar year ended December 31, 2008. The audit included the verification of the
accounts in the financial statements based on the generally accepted auditing standards
and evaluation of compliance with government accounting and auditing laws, rules and
regulations. An evaluation as to whether efficiency, economy and effectiveness in its
operation was also observed.
4. Auditor’s Opinion on the Financial Statements
In our opinion, except for the effects of adjustments of the Cash in Bank-Local
Currency Current Account and Construction and Heavy Equipment, the financial
statements present fairly, in all material respects, the financial position of the Provincial
Government of Shariff Kabunsuan as of December 31, 2008 and the results of its
operations and its cash flows for the year then ended in conformity with applicable
generally accepted accounting principles.
5. Significant Findings and Recommendations
9
The existence, accuracy and validity of the Cash in Bank-LCCA in the total
amount of P2,993,078.91 could not be ascertained due to the failure to submit
the bank reconciliation statements. Likewise, there were delays in the
submission of financial statements, disbursement vouchers and payrolls,
report of disbursements and other financial reports.
We recommend that a particular personnel in the Office of the Provincial
Accountant be assigned to prepare the monthly bank reconciliation statement
for submission to the Office of the Auditor. Additional personnel be likewise
assigned to meet the deadlines in the submission of the financial reports.
Management commented that the bank reconciliation statements was prepared
but not yet submitted to the Office of the Auditor. The same will be submitted
as soon as possible per account.
9
The accuracy of the Construction and Heavy Equipment in the amount of
P40,014,340.00 could not be ascertained due to the failure to regularly
conduct inventories of said construction and heavy equipments.
The conduct of inventory is a management duty which shall be undertaken at
least once every year in the presence of the representative of the Office of the
Auditor. Each construction and heavy equipment shall be recorded in the
Property Card being maintained by the accounting department for each class
of equipment/property to determine its acquisition, description, custody,
estimated life, depreciation, disposal and other information about the
equipment/property based on the source documents of the transactions.
Management commented that the conduct of physical inventory of
construction and heavy equipment is still in progress. The Office of the
Provincial Accountant is still reconciling with the records as appearing the
General Services Office. The latter, on the other hand, find it difficult to
reconcile due to incomplete records transferred to this newly created province
and the fact that there were three (3) changes of administration.
9
The accuracy of the income account out of the proceeds on real property tax in
the total amount of P192,390.43 could not be ascertained due to the failure of
the province to segregate the proceeds of one percent (1%) basic real property
tax as against the additional collection of one percent (1%) tax on Special
Education Fund.
We recommend that the province shall establish and maintain the Special
Education Fund to record collections pertaining to the additional one percent
(1%) tax on real property pursuant to Section 309, par. a of RA 7160,
otherwise known as the Local Government Code of 1991.
This shall be appropriated by the Sangguniang Panlalawigan to meet the needs
for the operation and maintenance of public schools based on the annual
school board budget as determined by the Provincial School Board.
Management commented that the Provincial Revenue Code was enacted on
June 5, 2008 and took effect only sometime on the later part of the 3rd quarter
of the year after its complete publication in a newspaper of general
circulation, hence, the failure to establish and segregate the Special Education
Fund.
9
Again, the value of the money as to efficiency, economy and effectiveness of
the operation of the province pertaining to the development projects funded
from its share in the internal revenue allotment could not until now be
determined due to the failure of the province to segregate from the General
Fund the disbursements made under the 20% Economic Development Fund.
We reiterate our recommendation to open and maintain a special account
under the General Fund, pursuant to Section 313 par. c of RA 7160, known as
the Local Government Code of 1991.
Management commented that, indeed, it was not segregated but the
disbursements were duly accounted for.
They had already made
representations with the Sangguniang Panlalawigan but the authorization to
open an account was obtained after a couple of months since it has more
pressing matters to attend to, like the decision of the Supreme Court declaring
the creation of the province void.
6. Status of Implementation of Prior Year’s Audit Recommendations
Of the five (5) recommended remedial measures, One (1) was implemented,
Three (3) were partially implemented and One (1) not implemented.
7. Subsequent Event
After series of consultations between the officials and employees of the mother
province of Maguindanao and the province of Shariff Kabunsuan and pending the entry
of judgment and consequent writ of execution of the foregoing case, the latter agreed to
withdraw their motion for reconsideration in intervention filed with the Supreme Court,
in view of the appointment made by the Regional Governor-ARMM on January 26, 2009
of the following to the reconstituted Province of Maguindanao, to comprise the 1st district
of Maguindanao (formerly the Shariff Kabunsuan Province) and the 2nd district of
Maguindanao (Mother Province of Maguindanao), viz:
1. Hon. Datu Sajid Islam Uy Ampatuan – OIC Provincial Governor;
2. Hon. Datu Akmad M. Ampatuan, Sr., OIC-Provincial Vice Governor
The OIC-Sangguniang Panlalawigan Members are as follows:
First District:
1.
2.
3.
4.
5.
Hon. Datu Russman Q. Sinsuat
Hon. Asnawi S. Limbona
Hon. Nashrullah A. Imam
Hon. Nariman A. Ambolodto
Hon. Talib M. Abo, Jr.
Second District:
1.
2.
3.
4.
5.
Hon. Datu Sarip K. Ampatuan
Hon. Datu Puti M. Ampatuan
Hon. Datu Nuali S. Ampatuan
Hon. Borgiva Tasmi G. Datumanong
Hon. Sultan Abbas A. Pendatun, Jr.