EXECUTIVE SUMMARY
A. INTRODUCTION
The Metropolitan Manila Development Authority (MMDA) was created by virtue
of Republic Act No. 7924. In accordance with its mandate, the MMDA, as a special
development and administrative region, shall plan, monitor and coordinate and in the
process exercise regulatory and supervisory authority, the delivery of metro-wide
services within Metro Manila without diminution of the autonomy of the Local
Government Units (LGU’s) concerning purely local matters. Seven basic services are
lodged with MMDA, to wit: Development Planning; Transport and Traffic
Management; Solid Waste Disposal and Management; Flood Control and Sewerage
Management; Urban Renewal, Zoning, Land Use, Planning and Shelter Services;
Health and Sanitation, Urban Protection and Pollution Control; and Public Safety.
In addition, MMDA took jurisdiction over the Flood Control Management in the
National Capital Region from the Department of Public Works and Highways.
The Authority is still headed by Chairman Bayani F. Fernando and assisted by a
Deputy Chairman, a General Manager, Assistant Manager for Finance and
Administration and an Assistant General Manager for Planning. Total Personnel
complement is 8,389.
B. FINANCIAL HIGHLIGHTS
The Metropolitan Manila Development Authority’s financial condition and results
of operations for Calendar Year 2006 compared with that of preceding year are as
follows:
Group of Accounts
Particulars
Total Assets
Total Liabilities
Residual Equity
2006
P5,166,457,973.37
1,015,087,111.85
P4,151,370,861.52
2005
P4,998,919,806.60
1,551,601,711.32
P3,447,318,095.28
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Inc/(Dec)
P167,538,166.77
(536,514,599.47)
P704,052,766.24
Sources and Application of Funds
Particulars
Total Allotment
Current
Appropriations
Continuing
Appropriations
Total Expenditures
Unexpended
Balance
2006
2005
Inc/(Dec)
P2,435,969,000.00 P2,454,667,886.00 P(18,698,886.00)
163,353,560.79
168,237,367.61
(4,883,806.82)
2,296,773,845.43
2,374,798,310.31
(78,024,464.88)
P302,548,715.36
P248,106,943.30
P54,441,772.06
C. SCOPE OF AUDIT
The audit covered the accounts and operation of the Metropolitan Manila
Development Authority for the Calendar Year 2006. Likewise, the extent of
compliance by the MMDA with applicable laws, rules and regulations had also been
looked into.
The following were some of the constraints and/or limitations in the audit of
MMDA accounts and transactions for the year 2006:
1. The delayed/non-submission of financial reports/documents prevented the
substantiation of the propriety of certain disbursements.
2. The failure to establish the subsidiary ledgers’ beginning balances as of
January 1, 2005 in the implementation of e-NGAS also prevented the
substantiation of some accounts.
D. AUDITOR’S REPORT
The Auditor rendered an adverse opinion on the fairness of presentation of the
financial statements of the Metropolitan Manila Development Authority due to
unreconciled cash balances; unliquidated cash advances; unreconciled balances of the
account Due from LGUs; non-recognition of supplies and materials as Inventory;
unreconciled PPE balances; non-transfer of PPE to the Registry of Public
Infrastructures; negative balances of Due to GOCCs – P23,211,746.01; and unfunded
obligations.
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E. OBSERVATIONS AND RECOMMENDATIONS
The following are the significant observations with the corresponding
recommendations:
1. Cash in Bank-Local Currency Savings/Current Account consisting of 12 bank
accounts in the total amount of P402,073,285.79 does not agree with the balance
per bank statement of P487,049,304.00 or a difference of P84,976,098.02 due to
the failure of the Accounting Services to update the preparation of monthly bank
reconciliation statements and make the necessary adjustments for various
reconciling items, thus rendering the account balance inaccurate.
We recommended, and management agreed, to implement the following
recommendations:
a. Make proper representation with concerned depository banks for the timely
submission of monthly bank statements to ensure that monthly bank
reconciliation statements are prepared.
b. Prepare regularly monthly bank reconciliation statements and make the
necessary adjustments for reconciling items to ensure that the balance of cash
account at the end of each month is accurate.
2. Unliquidated cash advances remained at P12,402,370.77 as of year-end despite
the liquidation of P139,116,171.28, or 92% during the year due to the non
settlement thereof by the accountable officers within the prescribed period which
tend to overstate Cash Disbursing Officers account and understate related expense
accounts.
We recommended and management agreed to implement our prior years’
recommendations such as: (a) faithfully observe the rules and regulations on the
grant, utilization and liquidation of cash advances pursuant to P.D. 1445 and COA
Circular No. 97-002; and (b) require the Accountant to determine which of the
dormant accounts could no longer be settled even after exerting all out efforts, and
thereafter, to request authority from COA for the write-off of these dormant
accounts.
3. The balances of Due from LGUs account representing the 5% statutory
mandatory contributions totaling P3,162,594,805.89 as of year-end do not
reconcile with the LGUs’, thereby casting doubts on the accuracy and
collectibility of these balances.
We reiterate our prior year’s audit recommendations, to wit:
a) Exert best efforts to reconcile the accounts with the concerned LGUs and
collect the amounts due from them pursuant to R.A. 7924.
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b) Request from COA the authority for write-off dormant and uncollectible
receivables from LGUs or request for condonation, if appropriate.
4. The balances of Inventory account was misstated due to the practice of directly
charging to the expense account some supplies and materials procured and
existence of dormant balances of inventories which have remained unadjusted as
of year-end.
We recommended and management agreed to:
a. Record supplies and materials purchased under the Inventory account unless
the same is procured out of petty cash fund to properly establish supply
accountability and prevent possible pilferage.
b. Conduct an inventory of all supplies and materials on hand; prepare an
inventory report; reconcile the inventory report with accounting records;
investigate variances for purposes of making the necessary adjustments.
5. Out of the total Advances to Contractors amounting to P52,654,481.98 the
amount of P10,522,582.00 granted to ITP Construction, Inc. as mobilization fee
for the Development of North Transport Terminal A Component of Greater
Manila Area Mass Transportation System remained outstanding or unsettled as of
year-end despite the indefinite deferment of the project implementation due to
court injunction.
We recommend that Management make proper representation or arrangement
with ITP Construction, Inc. for the latter to return the advance payment of
P10,522,582.00 while waiting for the resolution of the case under court
injunction.
6. Comparison of the Report on the Physical Count of Property, Plant and
Equipment (RPCPPE) in the amount of P922,554,513.61 with the accounting
records of P922,554,513.61 showed an unreconciled difference of P4,558,066.87,
thereby rendering the balances of PPE accounts inaccurate.
We reiterate our prior years’ recommendation that Management should:
a) Require the Chief Accountant and the Property Accountable Officer to
reconcile and update their records, and to investigate the noted differences;
b) Require the Chief Accountant to maintain individual SLs of all PPE and to
effect adjustments for the difference noted.
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7. Completed public infrastructure projects amounting to P141,674,436.29 have not
been dropped from the Property, Plant and Equipment (PPE) account and
transferred to the Registry of Public Infrastructures, thereby overstating the PPE
and the Government Equity accounts.
We recommend that Management require the Accounting Services to:
a) draw a Journal Entry Voucher closing the completed infrastructure projects
which were accounted for under the Public Infrastructure account to
Government Equity account, and
b) transfer said completed infrastructure projects to the Registry of Public
Infrastructure Projects.
8. Environment/Sanitary services of P445,324,299.28 and other expenses amounting
to P942,567.84 or a total of P446,266,867.10 incurred in prior years were only
recognized as expense upon payment using current year’s allotment due to
insufficient funds, contrary to Sec. 4 of the NGAS and existing budget rules and
regulations.
We recommended and Management agreed to strictly adhere to Sec. 4 of the
NGAS and existing budget rules and regulations and also, make proper
representation with the Department of Budget and Management and the Congress
for approval of sufficient budget to cover all operating and maintenance expenses
of the MMDA.
The above findings and recommendations contained in the report were
discussed with the concerned officials of the Authority. Management views and
reactions were considered in the report, where appropriate.
F. IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS
Out of the eleven (11) audit recommendations contained in the 2005 Annual
Audit Report, one (1) was fully implemented and nine (9) were partially implemented
and one (1) was not implemented as of December 31, 2006.
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