EXECUTIVE SUMMARY
Introduction
The City of Muntinlupa became an urbanized city by virtue of Republic Act No. 7926
dated March 1, 1995. Before its transformation to what is today a bustling city, it was a
village now known as “Poblacion” which later was joined by other barrios to become the
town of Muntinlupa. In 1901, Muntinlupa became one of the towns of the Province of
Rizal. In 1918, Muntinlupa became an independent town by virtue of Executive Order
108 dated December 19, 1917.
Muntinlupa’s mission is to pursue an integrated and sustainable development strategy,
anchored on responsible stewardship, democratic institutions and efficient and effective
management which will provide world class infrastructure and support services to
promote a broad economic base, create a business-friendly environment, institutionalize
community participation, provide quality social services, and ensure equity in the
distribution of goods and services.
During the CY 2013, the City of Muntinlupa has been ruled by two administrations due
to the election in May, 2013. The City Mayor from January to June 30, 2013 was Mayor
Aldrin San Pedro and the present Local Chief Executive is Mayor Jaime R. Fresnedi.
A total of 3,178 personnel are employed by the City as of December 31, 2013
composed of the following:
Elected Officials
Permanent
Casual/ Contractual/consultant
Total
20
464
2,694
3,178
Major Accomplishments during the year include the construction of SAGIP and Red
Cross Building located at Women’s Center, Filinvest, Alabang, costing P15,565,412.64,
construction of Road Rip-rap and Fence at Laguerta, Tunasan, amounting to
P17,430,545.50, construction of Cupang High School, in Cupang, in the total amount
P21,971,886.57 and various asphalting and repair of roads.
The enactment of City Ordinance No. 13-003 dated August 5, 2013 on tax amnesty
effective August 1 to December 31, 2013, has increased the collections of Real Property
and Special Education Taxes, net of discount by P109.78 million. The City’s increased
collections of P72.33 million on business permits may also be due to the “One-StopShop” scheme in the processing of permits.
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The financial condition and result of operation of the economic enterprises operated by
the City are as follows:
Economic
Enterprises
Muntinlupa City
Public Market
Ospital ng
Muntinlupa
Pamantasan ng
Lungsod ng
Muntinlupa
Muntinlupa City
Technical
Institute
Financial Condition
Total
Government
Total Assets
Liabilities
Equity
Total Income Total Expenses Net Income
22,812,322.05
65,090,707.80
5,193,322.85
17,618,999.20
Result of Operation
57,288,978.69
7,801,729.11
168,689,365.46 56,388,114.69 112,301,250.77 276,031,251.55 227,175,229.60 48,856,021.95
64,549,762.75 15,551,928.05
8,531,003.51
12,862.50
48,997,834.70
84,650,935.80
80,261,387.58
4,389,548.22
8,518,141.01
727,600.00
123,049.99
604,550.01
Highlights of Financial Operation
For Calendar Year (CY) 2013, the appropriations of the City Government of Muntinlupa
for the General and Special Education Funds totaled P 6.345 billion. Obligations charged
against these appropriations amounted to P 2.475 billion.
Fund
Appropriation
Obligation
General Fund
Current Appropriation
Continuing Appropriation
Sub-total
P 2,992,500,000
3,037,022,945
6,029,522,945
P 2,236,645,428
2,236,645,428
Special Education Fund
Current Appropriation
Continuing Appropriation
Subtotal
Total
315,230,731
315,230,731
P 6,344,753,676
238,365,851
238,365,851
P 2,475,011,279
The operating income of P2.827 billion collected during the year was sourced from the
following:
Particulars
Local Taxes
Internal Revenue
Allotment
Permits and Licenses
General Fund
P 1,303,963,855
575,564,982
192,339,833
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Special Education
Fund
P
Total
318,705,426
-
P 1,622,669,281
575,564,982
-
192,339,833
Service Income
57,503,475
Business Income
219,597,503
Other Income
157,902,358
Total Operating Income P 2,506,872,006
P
1,162,901
319,868,327
57,503,475
219,597,503
159,065,259
P 2,826,740,333
Scope of Audit
The audit covered the accounts and operations of the City of Muntinlupa for the year
ended December 31, 2013. The objectives of the audit are to: (a) verify the assurance that
may be placed on management’s assertions on the financial statements; (b) recommend
agency improvement opportunities; (c) determine compliance with existing rules and
regulations; and (d) determine the extent of implementation of the prior year’s audit
recommendations..
Audit Opinion on the Financial Statements
The Auditor rendered a qualified opinion on the fairness of presentation of the financial
statements due to errors and deficiencies that misstated the affected account balances,
discussion of which are included in Part II of the report and summarized as follows:
Obs.
Nature of Errors
No.
1 Unrecorded book reconciling items
4 Inclusion of the value of burned
properties
6 Negative balances of receivables and
payables accounts
11 Outright expense of supplies inventory
Total
Total Assets
% of Errors to Total Assets
Amount and
% of error to
Effect on the FS Account Balance
Cash in Banks accounts
32,990,729
8.62%
Property, Plant and
74,268,935
2.83%
Equipment
Receivables
and
15,430,726
8.96%
Payables
11,675,885
2.07%
Inventory accounts
3,177,062
5.65%
137,543,337
4,297,411,041
3.20%
Account/s Affected
In addition, the following deficiencies were also noted and added to the unreliability of
the affected account balances:
Obs.
Nature of Deficiency/ies
Accounts Affected
No.
2 Discrepancy between the GL balance of Cash in Cash in bank accounts
Bank – LCCA and cashbook
3 Unliquidated Cash Advance
Cash
and
Receivable
accounts
4 Unvalidated existence of PPE due to failure to PPE accounts
complete Physical Count
Unreconciled PPE accounts with Inventory Report PPE accounts
5 Unreconciled balance and without details
Asset accounts
Liability accounts
7 Dormant accounts in Other Payables
Other Payables
8 Unreliable set-up of RPT & SET Receivables
Real
Property
Tax
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Amount Involved
42,953,970
(88,577,394)
1,026,549,793
179,068,542
392,985,211
9,584,172
47,678,903
718,391,117
9
Receivable
Special Education Tax
Receivables
Due from Other Funds
and Due to Other Funds
Expense accounts
Unadjusted balance in the reciprocal accounts
10
Improper charging of various expense account to
Other MOE
11 Outright expense of supplies inventory
Inventory accounts
12 Improper charging of MMDA share to Membership Dues and
Membership Dues and Contributions to Contributions
to
Organizations account
Organizations account
12 Overdeduction of the 5% MMDA share
Expense account
398,781,355
6,804,033
54,966,189
3,177,062
83,340,000
2,943,376
For the above errors and deficiencies, we recommended that management:
On the unrecorded book reconciling items:
•
•
•
•
Management cause the revision of the stale checks and adjust the books to reflect the
correct account balance considering the requirement in Section 59, Volume I of the
NGAS.
The City Accountant secure credit and debit advices/memos from the bank for
recording purposes.
The concerned officials of Ospital ng Muntinlupa submit the DVs, missing payroll
and supporting documents to the City Accounting Office.
Treasurer’s Office coordinate and work closely with Accounting Office to ensure that
all financial transactions are promptly and properly recorded and reported in the
financial statements.
On the PPE accounts:
•
•
•
•
Complete the additional requirements for their Request for Relief from
Accountability for the properties destroyed by fire.
Conduct a complete physical inventory of the City’s property.
Require the disposal team to take charge of the property/assets subject for disposal
and prepare the Inventory and Inspection Report of Unserviceable Property (IIRUP)
for semi-expendable materials and equipment and non expendable supplies and
recommend the most appropriate mode of disposal given the condition of the assets.
Require the Procurement Officer to maintain equipment and real property cards and
post/record existing City’s unrecorded property as well as subsequent acquisitions.
On the negative subsidiary ledger balances:
•
City Accountant analyze the accounts with negative balances and effect the necessary
adjustments to establish the correct and accurate balances of the Receivable and
Payable accounts at year-end.
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On the outright expense of supplies inventory and maintenance of subsidiary ledger
cards:
•
•
•
The Accounting Office to record the purchase of office supplies, materials and other
supplies as inventory following the perpetual inventory method.
The Accounting Office to maintain SL for supplies and material and record
acquisition and issuances thereof. The SLs be maintained for each inventory
item/account.
Head of the Procurement Office maintain the stock cards pursuant to Section 114,
Volume I of the NGAS Manual, consolidate approved Requisition Slip (RIS) and
prepare/submit the SSMI to the Head of Accounting Office for monitoring and
recording purposes. Reconcile their records regularly.
On the discrepancy between the GL balance of Cash in Bank – LCCA and cashbook:
•
•
City Treasurer instruct the City Cashier to exert effort to reconcile the cashbooks with
accounting records as well as the BRS at the end of each month in order to present the
correct Cash in Bank balance of the City Government which is vital in decision
making.
City Treasurer request to City Personnel Office to assign additional employees to his
office to facilitate the said reconciliation.
On the unliquidated cash advance:
•
•
All concerned accountable officers and employees be required to immediately settle
their outstanding cash advances.
Management undertake full and comprehensive evaluation of these outstanding cash
advances by applying all possible remedies to enforce liquidation and settlement and
substantiate any possible resolution in accordance with existing laws, rules and
regulations.
On the unreconciled balance and without details:
•
•
•
The City Accountant analyze the pertinent accounts marked “for reconciliation” and
make the necessary verification against previous financial reports and schedules.
Coordinate with the City Legal Officer and exhaust all possible legal means to collect
the receivables from employees/debtors of the City.
Render a report on payables without valid claims and cause reversion to the
Government Equity.
On the dormant accounts in Other Payables:
•
City Accountant review and analyze the composition of the Other Payables account,
exert effort to produce the documents to support the dormant accounts, and if proven
to be without valid claims, prepare the corresponding adjusting entries, as
appropriate.
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On the unreliable set-up of RPT and SET Receivables:
•
City Treasurer should coordinate with the City Assessor to come up with a certified
list of taxpayers and the amounts of tax due and collectible for the subsequent year
and furnish the same to the City Accountant as basis in setting up the RPT/SET
Receivables and Deferred RPT/SET Income.
On the reciprocal accounts:
•
Accounting Office periodically review and analyze all prior and current year’s
transactions involving reciprocal accounts and effect adjustments in the respective
books of accounts.
On the Other MOE account:
•
•
Chief Accountant ensure that the updated description of accounts under the NGAS be
strictly implemented.
Any correction/adjustment in the records of the Accounting Office which will require
the corresponding adjustment in the appropriate Registry of Appropriation, Allotment
and Obligation (RAAO) shall be coordinated with the City Budget Officer.
On the over-deduction and improper charging of MMDA share:
•
•
Stop the use of Membership Dues and Contributions to Organizations account and
instead, record the contributions to MMDA to its proper expense account, Subsidy to
NGAs.
Make representation with MMDA for reconciliation of their records to recover the
over-remittance made.
Other Significant Observations and Recommendations
1. Delayed submission of reports and transaction documents – up to 277 days
(Observation No. 13, page 55)
We have recommended that the City Treasurer, City Accountant and other concerned
officials submit transaction documents within the prescribed period as provided under
Sections 6.03 COA Circular No. 95-006 and Section 70, Volume I of the NGAS
Manual for LGUs. Likewise, we request for the immediate submission of the
unsubmitted documents to the Office of the Auditor.
2. Documents required to complete technical review of contracts not submitted P88.300 million (Observation No. 14, page 57)
We have recommended that the City Mayor instruct the concerned City Engineer to
comply with the submission of the required documents pursuant to Section 4(6) of PD
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1445 and in order to complete the technical review and evaluation of the identified
projects.
3. Disbursement vouchers not submitted for audit - P26.089 million (Observation No.
15, page 58)
We have recommended that the City Mayor require the Head of the Accounting
Office to cause the submission of the above paid vouchers and to strictly comply with
the provisions of COA Circular Nos. 2009-006 and 95-006 dated September 15, 2009
and May 18, 1995, respectively and Section 100 of Presidential Decree No. 1445.
4. Non-preparation of the Local Disaster Risk Reduction Management Fund Investment
Plan (LDRRMFIP), inadequate supporting documents for expenditures charged to the
Local Disaster Risk Reduction Management Fund (LDRRMF) –P3.882 million and
non-classification of the unexpended balance of the LDRRMF under the Trust
Liability – DRRM in the Trust Fund book – P61.204 million (Observation No. 16,
page 60)
We have recommended that Management concerned strictly follow the guidelines
outlined under COA Cir. No. 2012-002 dated September 12, 2012 on the accounting
and reporting of its Local LDRRMF.
5. The amount appropriated for Gender and Development (GAD) for the year 2013 was
deficient by P2.000 million. Likewise, the agency failed to submit the GAD
accomplishment and utilization report for CY 2013. (Observation No. 17, page 63)
We have recommended that management:
• Strictly comply with the 5% mandatory appropriation for GAD, wherein the basis
of computation is the total appropriation for the year.
• Require the GAD Focal Point to prepare the GAD accomplishment report in order
to monitor the implementation of the GAD Plan and GAD related
program/activities and projects.
• Require the City Accountant to submit GAD utilization report and the nature for
which GAD fund was expended.
6. The releases of the barangay shares from Real Property Tax (RPT) collections of
P121.435 million for the first, second and third quarters of 2013 were delayed by 3 to
151 days while the barangay shares in 2013, 2012 and 2011 in the total amount of
P4.655 million were still not released as of December 31, 2013. Moreover,
accounting records showed four barangays with unreconciled amount totaling to a
negative P.207 million. (Observation No. 18, page 64)
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We have recommended that the City release the barangay shares from the RPT
collections within the prescribed period as provided under Section 271(d) of RA
7160. Likewise, we recommended that the City Accountant adjust /reconcile the
shares of the four barangays with a total negative balance of P207,086.28 and record
the cost of electric bills of barangay streetlights deducted from the barangay shares to
establish the correct balance of the Due to LGUs account (418).
7. Payments for the garbage collection and disposal services were processed and paid
despite the lack and insufficiency of documents in violation of Section 4(6) of P.D.
1445, thus, the validity and regularity of the transaction could not be ascertained.
(Observation No. 19, page 66)
We have recommended that management submit bidding documents and additional
documentary requirements provided under COA Circular No. 2012-001 dated June
14, 2012 to avoid suspensions of the transactions. Also, include the detailed
breakdown of the ABC and contract amount to determine the reasonableness of the
contract price.
8. Non-revision of the Schedule of Fair Market Value for real property (Observation No.
20, page 68)
We have recommended that the –
a. City Assessor undertake the general revision of real property assessments once
every three years pursuant to Section 212, 219 and 220 of RA 7160 and recent
directive from Department of Finance and Department of Interior and Local
Government to ensure that the bases for the collection of RPT and SET are
current and realistic that may afford the City of additional income to finance its
various programs, projects and activities.
b. City Council facilitate the enactment of an ordinance of the SFMVs of real
property that will serve as a basis in the general revision of real property
assessment and classification.
9. Forgone income from business permits and licenses - P1.658 million (Observation
No. 21, page 71)
We have recommended that the personnel tasked in the assessment of business taxes
and licenses verify the accuracy of the gross receipts being declared by the
contractor/supplier of the City. Likewise, conduct the review and examination of
books of accounts and records of businesses operating in the City as provided for
under Section 171 of R.A. 7160 and authorized under Section 172, Title VI of the
City’s Revenue Code.
We also enjoined the Chief, Business Permit and Licensing Office (BPLO) to conduct
thorough tax mapping of all businesses operating in the City to come up with correct
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business taxes due and demandable that could have finance more City Projects. For
those contractors/suppliers of the City Government, the Chief, BPLO should request
from the City Accountant/City Treasurer the amount of payments made by the City to
them as basis in the assessment of their business taxes.
10. The duties and responsibilities of the consultants were not indicated in the contract of
services and their accomplishment reports were not submitted. Moreover, payments
to consultants were recorded in the books as Salaries and Wages – Contractual (Code
706) instead of Consultancy Services (Code 793). (Observation No. 22, page 73)
We have recommended that the City indicate the duties and responsibilities of the
consultants in the contract of service as required under the CSC Resolution.
Likewise, require the submission of accomplishment reports for proper evaluation
and record the payment under Consultancy Services.
11. Audit of Salaries and Wages – Contractual (Code 706) account disclosed: (a)
Personnel hired under Contract of Services/contractual employees were appointed/
designated as department heads and to other various career positions contrary to
Section 15, Rule XIII, of the CSC Revised Omnibus Rules on Appointments; and (b)
Payments of salaries and wages under contractual/ or contract of services amounting
to P20.663 million were recorded under the Consultancy Services (Code 793) account
instead of Salaries and Wages – Contractual (Code 706), while, some payrolls were
paid without the certification and approval of the authorized City officials.
(Observation No. 23, page 74)
We have recommended that the City Accountant review thoroughly the recording of
transactions to avoid error/or misclassifications of accounts resulting in the
misstatements of the account balances in the financial statements. Moreover, entries
in the Journal Entry Vouchers should be correctly recorded and posted to the
appropriate GLs and subsidiary ledgers. Likewise, ensure that all claims are
supported with complete documentations.
12. Transportation allowances were granted to City Officials in spite of the assignment of
motor vehicles for their use in the performance of their official functions.
(Observation No. 24, page 76)
We have recommended that Management stop the granting of transportation
allowances to City government officials and employees who are assigned government
vehicles in compliance with the provisions of Local Budget Circular No. 79, 102 and
COA Circular No. 2000-005 dated April 1, 2005 January 17, 2013 and October 4,
2000, respectively. Require the said City government officials and employees to
refund the transportation allowances granted to them during the year. The City
Accountant should ensure that Transportation Allowance is not given to those who
were issued government vehicles.
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13. Honoraria totaling P4.431 million were granted to officers and members of various
special committees the function of which were inherent to the regular functions of the
City. (Observation No. 25, page 78)
We reiterated our previous recommendation that payment of honoraria to officers and
members of the committees performing functions inherent to their regular duties and
responsibilities be stopped. The officers and members of said committees should be
required to refund the honoraria paid to them.
14. Payments to service providers not subjected to withholding tax – P117.358 million
(Observation No. 26, page 80)
We have recommended that the Accounting Office ensures that the required and
appropriate withholding taxes are deducted before making payments to service
providers and utility companies in accordance with the above-mentioned provisions
and the same are remitted to the BIR within the prescribed period.
15. Audit suspensions and disallowances amounting to P72.490 million and P1.853
million, respectively, remained unsettled as of year-end. (Observation No. 27, page
81)
We recommended that management enforce the immediate settlement of suspensions
and disallowances in accordance with Section 7.1.1 of COA Circular No. 2009-006.
Henceforth, ensure that government auditing rules and regulations are strictly
complied with before effecting payment to minimize suspensions and disallowances
in audit.
Status of Implementation of Prior Years’ Audit Recommendations
Of the 22 audit recommendations contained in the 2012 Annual Audit Report, two were
fully implemented, 16 were partially implemented and four were not implemented.
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