EXECUTIVE SUMMARY
HIGHLIGHTS OF FINANCIAL OPERATIONS
For CY 2010, the appropriations of the City Government of Pasay for the General
and the Special Education Funds totaled P2.88 billion. Obligations charged against these
appropriations amounted to P2 billion.
Fund
Appropriation
Obligation
General Fund
Special Education Fund
Total
P2,280,215,199
602,363,735
P2,882,578,934
P1,596,756,042
401,998,226
P1,998,754,268
The operating income of P3.24 billion collected during the year was sourced from
the following:
Particulars
Local Taxes
Internal Revenue Allotment
Permits and Licenses
Service Income
Business Income
Other Income
Total Operating Income
General Fund
P1,913,120,112
513,303,631
83,847,842
38,447,146
186,913,904
56,873,720
P2,792,506,356
Special
Education Fund
P451,543,982
608,224
118,891
P452,271,097
Total
P2,364,664,094
513,303,631
83,847,842
38,447,146
187,522,128
56,992,612
P3,244,777,453
SCOPE OF AUDIT
The audit covered the accounts and operations of the City for the year 2010 and
was aimed at determining whether management presented fairly the financial statements
of the City in adherence to the generally accepted accounting principles; whether
prevailing laws, rules and regulations have been complied with; and whether funds were
utilized in the most efficient, effective and economical manner. Financial, compliance,
and value for money (VFM) audits were conducted to achieve these audit objectives.
AUDIT OPINION ON THE FINANCIAL STATEMENTS
The Supervising Auditor rendered a disclaimer of opinion on the fairness of
presentation of the financial statements because the City’s inadequate records did not
permit the application of other audit procedures to establish the validity of some
accounts, as discussed in Part II of the report.
SIGNIFICANT FINDINGS AND RECOMMENDATIONS
The following are the significant findings and recommendations in the audit of the
City Government of Pasay for the Year 2010:
1.
The existence, validity and valuation of the year-end book balance of the
Property, Plant and Equipment (PPE) accounts totaling P5.60 billion was
doubtful for failure of the General Services Office (GSO) to conduct a complete
physical inventory and to maintain complete and updated property cards as well
as PPE ledger cards by the Accounting Office, contrary to Sections 124, 119 and
120, respectively of the Manual on the New Government Accounting System
(NGAS), Volume I. There were PPE items recorded in the books which were
greater by P5.27 billion than the corresponding valuation in the Inventory
Report while others were booked P167.34 million less than the Inventory
Report. (Finding 1.1 page 24)
We recommend that the City Mayor create a composite team which will
conduct, on a full-time basis, a complete inventory of all the property of the
City and reconcile the same with the Accounting records. Said team shall
consist of the representatives from the Office of the Local Chief Executive as
Chairman, and the Offices of the City General Services Officer, the City
Treasurer, the City Engineer and the Supply Officer of the Department
concerned, as members.
2.
Depreciation was not provided for Property, Plant and Equipment amounting to
P4.30 billion, thus, understating the related Depreciation Expense and
Accumulated Depreciation accounts, contrary to Section 4(o) of the NGAS
Manual, Volume I. (Finding 2.1 page 25)
We recommend that the City Mayor require the City Accountant to
provide depreciation for the property, plant and equipment of the City.
3.
The Real Property Tax (RPT) and Special Education Tax (SET) Receivables
established at the beginning of the year, in the amounts of P792.08 million and
P414.44 million, respectively, were based on estimates due to the nonsubmission by the City Treasurer of a duly Certified List of Taxpayers to the
City Accountant. This rendered the year-end balances of both accounts,
amounting to P90.76 million and P752.86 million, respectively, of doubtful
validity. (Finding 3.1 page 27)
We strongly recommend that the City Accountant set-up at the beginning
of the year the RPT/SET Receivables based on the certified list showing the
names of taxpayers and the amounts due and collectible for the year in
compliance with Section 20 of the NGAS Manual, Volume I.
4.
Hospital and Medical Equipment totaling P38.40 million purchased for the
Pasay City General Hospital and funded by the Manila International Airport
Authority (MIAA) were not recorded in the books of accounts of the City, thus,
resulted in the understatement of the Hospital Equipment (232), Medical, Dental
and Laboratory Equipment (233) and Government Equity (501) accounts in the
amounts of P4.09 million P34.31 million and P38.40 million, respectively.
(Finding 2.2 page 26)
The City Accountant should immediately correct the understatement of the
above-mentioned accounts pursuant to Section 104 of the NGAS Manual,
Volume I.
5.
Cash advances amounting to P20.19 million remained unliquidated as of yearend due to the failure of the accountable officers concerned to settle their
accountabilities, contrary to Section 89 of PD 1445 and Sections 5.8 and 5.9 of
COA Circular No. 97-002 dated February 10, 1997. The inability to record the
expenses incurred out of these cash advances overstated the cash account and
understated the related expense accounts. (Finding 5.1 page 32)
We recommend that both the accountable officers and the approving
officers strictly comply with the guidelines set in the grant and
settlement/liquidation of cash advances.
We also recommend that the City Treasurer and the City Accountant
demand the immediate settlement/liquidation of all outstanding cash advances
and monitor the settlement of the new ones as they fall due to prevent
accumulation. Those which have long been outstanding should be referred to
the Office of the City Legal Officer for the appropriate legal action.
6. The deliberate updating of the records of some delinquent taxpayers in the
Subsidiary Ledger File (Payment History) of the Real Property Tax Assessment
System (RPTAS) through manual intervention by using the 79 Official Receipts
previously issued to other taxpayers in CY 2009 resulted in the non-collection
of Real Property Taxes computed at P10.19 million. Subsequent reassessment
by the City Treasurer was not done to correct the real property taxes of the said
delinquent taxpayers. (Finding 4.1 page 29)
We recommend that: (a) Management should continue the conduct of an
in-depth investigation on the manipulation of tax records to determine the
personnel involved in the scam including the taxpayers and the extent of their
participation. Accordingly, appropriate legal action should be taken against
those found involved in this anomaly; (b) Management cause the immediate
correction of the records of the subject delinquent taxpayers in the Subsidiary
Ledger File (Payment History) of the RPTAS and thereafter send out
Reassessment Notices and collect the correct RPT including penalties and
surcharges; and (c) The Management Information Technology System (MITS)
Office should revisit the RPTAS, establish controls on all fields to prevent the
manual intervention.
Further, we recommend that Management require from the City Treasurer
a written report on the action/s taken on the anomalous posting in the SL File of
the subject delinquent taxpayers.
7. Three loan payable accounts with a total negative book balance of P8.43 million
and another loan account with a total book balance of P0.46 million remained
unadjusted in the books although these had been certified as fully paid by the
Philippine National Bank (PNB). On the other hand, one loan account in the
amount of P116 million, which was acquired in 1997 with a one-year maturity
period, was undocumented hence, could not be validated. (Finding 2.3 page 27)
We recommend that the OIC-City Accountant adjust the Loans PayableDomestic account accordingly as the loans comprising said accounts are no
longer outstanding. Likewise, the City Treasurer should make representations
with the PNB to determine the status of the P116 million loan which remained
undocumented.
8. The propriety of the payments to sixty-nine (69) consultants in the amount of
P4.83 million were doubtful due to: 1) absence of consultancy contracts; and 2)
non-submission of outputs/accomplishment reports and certificates of
attendance or proof of service to the City. Further, all payments were not
subjected to withholding tax. (Finding 5.2 page 34)
We recommend that Management (a) revisit and strictly observe the
guidelines, rules and regulations in the hiring of consultants; (b) submit
immediately the contracts of the 69 consultants, their accomplishment reports
and certificates of attendance or proof that services had been rendered; and (c)
the City Accountant is advised to strictly implement the provisions of BIR
Regulation No. 2-98 on withholding of taxes.
9.
Miscellaneous fees collected from the five thousand students of the Pamantasan
ng Lungsod ng Pasay (PLP) were acknowledged by issuing temporary receipts
which could not be accounted. Thus, the collection of the City Government was
short by P3.07 million. (Finding 4.2 page 30)
We recommend that the PLP Cashier/Collecting Officer render an
accounting of the collections from miscellaneous fees and immediately stop the
issuance of temporary receipts. Any collection for all kinds of fees should be
officially receipted and then remitted to the City Treasurer.
10.
Income from the operations of the City Sports Complex amounting to P1.96
million was deposited in the bank account for the Cuneta Astrodome. Similarly,
the operating expenses were not charged from this bank account. Thus,
Management was deprived of the information on whether the income generated
was sufficient to meet the operating expenses of the said Complex. (Finding 6.1
page 38)
We recommend that the City Treasurer strictly deposit all the collections
from the operations of the Sports Complex to its separate account with the LBP,
in the same manner that all expenses pertaining to its operations should be
charged separately, pursuant to Section 106 of the Manual on the New
Government Accounting System (NGAS), Volume I.
Four (4) other deficiencies noted in audit are discussed in Part II of this Report.
STATUS OF PRIOR YEAR’S AUDIT RECOMMENDATIONS
Of the eight (8) audit recommendations embodied in the CY 2009 Annual Audit
Report, six (6) were partially implemented, while two (2) were not acted upon by
Management.