EXECUTIVE SUMMARY

A. Introduction

The Local Government Academy (LGA), the training arm of the Department
of the Interior and Local Government (DILG), was created by virtue of Section 14,
Executive Order No. 262. Under Section 13 of the Implementing Rules and
Regulations of the DILG Act of 1990 (RA 6975), the Academy shall be responsible
for human resource development and training of local government officials and
personnel for the Department proper and the local government bureaus including
regional field offices.

Functions:

The functions of the LGA are as follows:

 Formulates policies and standards on local government capacity development;

 Coordinates National Government Agencies' capacity development;
 Knowledge management for Local Governance and Development;
 Establishes mechanisms for delivery of capacity development services;
 Performs other functions as may be directed by the Secretary, DILG.

The LGA is under the direct supervision of the Secretary of the DILG. The
Academy is headed by Executive Director Thelma T. Vecina, CESO IV, and assisted
by Assistant Director Esmeralda Daphne N. Purnell, CESE. As of December 31,
2021, the Academy’s personnel complement totaled to 93, consisting of 44 regular
and 49 contractual employees.

B. Financial Highlights

The Academy’s financial position, financial performance and sources and

applications of funds for CY 2021 with comparative figures for CY 2020 are
presented below:

2020 Increase
2021
As restated (Decrease)
Financial Position
Assets 91,754,525.91 45,878,404.20 45,876,121.71
Liabilities 27,584,777.00 34,748,823.41 (7,164,046.41)
Net Assets/Equity 64,169,748.91 11,129,580.79 53,040,168.12

Financial Performance
Total Revenue 165,470.74 13,923.85 151,546.89
Total Current Operating 182,913,920.05 195,749,002.40 (12,835,082.35)
Expenses
Surplus (Deficit) (182,748,449.31) (195,735,078.55) 12,986,629.24

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 2020 Increase
2021
As restated (Decrease)
Net Financial 235,788,617.43 160,618,302.80 75,170,314.63
Assistance/Subsidy
Surplus for the Period 53,040,168.12 (35,116,775.75) 88,156,943.87

Sources and
Application of Funds
Total Allotments 317,592,305.35 237,361,063.75 80,231,241.60
Total Obligations 233,942,153.06 169,889,999.69 64,052,153.37
Balance 83,650,152.29 67,471,064.06 16,179,088.23

The Statement of Allotments, Obligations and Balances (SAOB) as of

December 31, 2021 is shown in Annex A.

C. Operational Highlights

The Academy reported the following accomplishments for the year:

MFO 1: Capacity Development Services for Local Government Units

(LGUs) and DILG Local Government Personnel

Organizational Performance Indicators Target Actual

Outcome (Outcome/Output)
Local Outcome Indicators:
Governance
Capacity of 1. Percentage of trainees 80% 80%
LGU and DILG that achieved the learning
LG sector outcomes of the training
improved they attended (by profile,
position, gender,
geographical, outcome
sector)
2. Percentage of LGUs 80% 80%
provided with training
which achieved learning
outcome

Output indicators:
1. Number of officials/
personnel trained (by
profile, position, gender,
geographical, outcome
sector)
a) LGUs 18,512 68,706
b) DILG 2,146 12,029

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 Organizational Performance Indicators Target Actual
Outcome (Outcome/Output)
2. Percentage of training 85% 86%
activities commenced
according to initial
schedule

3. Percentage of training
course attendees that rate
the training as
satisfactory or better
a) LGUs 94% 96%
b) DILG 96% 97%

D. Scope of Audit

The audit covered the financial transactions and operations of the LGA for
CY 2021.

E. Independent Auditor’s Report

The auditor rendered an unmodified opinion on the fairness of presentation of

the financial statement of LGA as of December 31, 2021.

F. Summary of Observation and Recommendations

1. The balance of Inventory accounts as of December 31, 2021 amounting to P7.930

million is inaccurate and unreliable due to: a) non-recording of issued semi-
expendable properties and equipment amounting to P1.176 million; and b) non-
reconciliation of the accounting and property records with a total variance
amounting to P3.824 million. Moreover, other deficiencies were noted such as
non-disposal of unserviceable semi-expendable properties and non-usage/non-
distribution of inventories.

We recommended and Management agreed to: a) direct the Chief, Property and
Supply Division to submit the Inventory Custodian Slip (ICS) for issued semi-
expendable properties to the Accounting Division and subsequently require the
Chief, Accounting Division to recognize expense for issued semi-expendable
properties amounting to P1.176 million upon receipt of the ICS from the Property
and Supply Division; b) require the Chief, Accounting Division and Chief,
Property and Supply Division to conduct regular reconciliation of records;
c) require the Chief, Property and Supply Division to: i) expedite disposal of
unserviceable semi-expendable properties in accordance with relevant COA rules
and regulations; ii) request the concerned supplier for a possible exchange of
items with the current requirements of the Academy, and if not granted,

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 immediately donate the same to another government agency that requires the
same toner specifications to prevent wastage of the subject toners; and iii)
distribute the remaining knowledge products (KP) to the intended beneficiaries
without further delay to serve the purpose; and henceforth, undertake systematic
monitoring of the distribution of available KP to ensure timely attainment of
intended purpose and avoid unnecessary wastage of government resources.

2. The balance of the Property, Plant and Equipment (PPE) accounts totaling
P57.677 million is unreliable due to: a) unreconciled balances between the
accounting and property records with a total variance amounting to P16.335
million; and b) non-recognition of unserviceable properties due to non-preparation
of the Inventory and Inspection Report of Unserviceable Property (IIRUP) and
non-disposal thereof. Further, various lapses were noted during the physical count
of the agency’s PPE contrary to the provisions of COA Circular No. 2020-006
dated January 31, 2020.

We recommended and Management agreed to: a) require the Chief, Accounting

Division and Chief, Property and Supply Division to reconcile the variance of
₱16.335 million between the Accounting and Property records and henceforth,
conduct regular reconciliation of both records; b) direct the Chief, Property and
Supply Division to prepare and submit to the AD without further delay the IIRUP,
and require the Chief Accountant to prepare the necessary Journal Entry Voucher
(JEV) to recognize the total impairment loss pertaining to the unserviceable
property; and c) strictly comply with the procedural guidelines in the conduct of
physical count of PPE.

3. The balances of Due from National Government Agencies, Local Government

Units (LGUs) and Non-Government Organizations/Civil Society Organizations as
at year-end totaling P59.302 million is unreliable due to non-reconciliation of
records between the source agency (SA) and implementing agencies (IA) and the
inclusion of long outstanding and dormant fund transfers amounting to P3.934
million, which affect the fair presentation of the financial statements.

We recommended and Management agreed to direct the Chief Accountant to:

a) reconcile records with the Chief Accountant in the DILG Regional Offices and
LGUs and thereafter make necessary adjustments, if warranted; b) send demand
letters to IAs to require submission of liquidation reports or the return of unused
funds, if any; c) confirm from the Securities and Exchange Commission the
current operational status of Cebu Plus Association, Inc. and request for a copy of
the Association’s General Information Sheet, if allowed, to be used as basis in
sending communications relative to the unliquidated fund transfer; and d) if all
actions fail to collect from concerned LGUs, file a request for authority to write-
off said dormant accounts to the Commission on Audit.

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4. The unliquidated cash advances of P74,917.00 and Other Receivables account of
P113,319.64 remained dormant in the books of accounts for 12 to 17 years;
thereby affecting the fair presentation of accounts in the financial statements.

We reiterated our recommendation that Management submit the required

documents to expedite evaluation of the request for authority to write-off dormant
receivable accounts and unliquidated cash advances following the guidelines and
procedures under COA Circular No. 2016-005 dated December 19, 2016.

5. Fund transfers to implementing agencies totaling P59.302 million remained

unliquidated as at year-end, of which P16.538 million had been outstanding from
one to 12 years. Relatedly, it was noted that P5.449 million of these fund transfers
were unutilized and reverted back to the Academy in full, casting doubt on the
capability of the identified IAs to implement the project and implying weaknesses
in monitoring controls relative to the utilization of fund transfers, which may have
affected the LGA’s operational efficiency and effectiveness.

We recommended and Management agreed to: a) exhaust all efforts to enforce the
liquidation of outstanding balances of fund transfers and file a request for
authority to write-off said dormant accounts to the Commission on Audit, if
warranted; and b) revisit the Partnership Agreement with the IAs to ensure that
specific PPAs, expected outputs to be delivered, and agreed timelines/completion
date are indicated therein to avoid non/low-utilization of the fund transfers.

6. The properties of the LGA amounting to P45.496 million or 78.88 percent of the
total insurable assets of P57.677 million as at December 31, 2021 remained
uninsured with the Government Service Insurance System–General Insurance
Fund (GSIS-GIF); thus, exposing LGA to unnecessary risk of not being
indemnified for any damage or loss due to any fortuitous events such as fire,
earthquake, typhoon and/or flood.

We recommended that Management require the Property Officer to prepare and

submit inventory reports of all insurable properties to GSIS and ensure that all
insurable assets and properties are adequately covered/insured with the GIF to
properly protect LGA interests in the event of serious loss such as fire,
earthquake, storm or floods.

7. Out of the total cash allocations received for CY 2021 of P256.411million, LGA
utilized P227.226 million, leaving an unused cash of P29.185 million, which was
accordingly reverted to the National Treasury. Consequently, the expected full
utilization of the released budget was not achieved and the desired results/outputs
for some projects/activities were not delivered on time.

We recommended that Management require the planning and implementing units

within the Agency to formulate a realistic and attainable work plan and budget
and stick to the approved timeframe of project implementation, if warranted, to

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 ensure expeditious utilization of cash allocation thereby avoiding reversions of
NCAs.

Other significant audit observations are also discussed in detail under Part II
of this report.

The foregoing observations and recommendations were discussed with

concerned officials of the agency during the exit conference held last March 15,
2021. Management views and comments were considered in the report, where
appropriate.

G. Status of Implementation of Prior Years’ Audit Recommendations

Of the 21 recommendations embodied in the CY 2020 Annual Audit Report,

15 were implemented while six were not implemented. Details are shown in Part III
of this report.

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