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    Mati City Executive Summary 2014

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    Heart Trixie Tacder Salva
    The document provides a summary of the financial position and results of operations of the City of Mati for the period ending December 31, 2014. It finds that total assets increased 23% to Php 930 million while liabilities decreased 4% to Php 354 million. Total income grew 11% to Php 666 million while expenses rose 13% to Php 569 million, resulting in a 1% increase in net income to Php 96 million. Significant issues noted include a Php 35 million variance in property records, a Php 285 million error in the construction in progress account, and unreliable Php 13 million inventory balance. The auditor issued a qualified opinion due to the impact of these issues.

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    Mati City Executive Summary 2014

    Uploaded by

    Heart Trixie Tacder Salva
    17 views6 pages
    The document provides a summary of the financial position and results of operations of the City of Mati for the period ending December 31, 2014. It finds that total assets increased 23% to Php 930 million while liabilities decreased 4% to Php 354 million. Total income grew 11% to Php 666 million while expenses rose 13% to Php 569 million, resulting in a 1% increase in net income to Php 96 million. Significant issues noted include a Php 35 million variance in property records, a Php 285 million error in the construction in progress account, and unreliable Php 13 million inventory balance. The auditor issued a qualified opinion due to the impact of these issues.

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    Mati-City-Executive-Summary-2014 (2)

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    The document provides a summary of the financial position and results of operations of the City of Mati for the period ending December 31, 2014. It finds that total assets increased 23% to Php 930 million while liabilities decreased 4% to Php 354 million. Total income grew 11% to Php 666 million while expenses rose 13% to Php 569 million, resulting in a 1% increase in net income to Php 96 million. Significant issues noted include a Php 35 million variance in property records, a Php 285 million error in the construction in progress account, and unreliable Php 13 million inventory balance. The auditor issued a qualified opinion due to the impact of these issues.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views6 pages

    Mati City Executive Summary 2014

    Uploaded by

    Heart Trixie Tacder Salva
    The document provides a summary of the financial position and results of operations of the City of Mati for the period ending December 31, 2014. It finds that total assets increased 23% to Php 930 million while liabilities decreased 4% to Php 354 million. Total income grew 11% to Php 666 million while expenses rose 13% to Php 569 million, resulting in a 1% increase in net income to Php 96 million. Significant issues noted include a Php 35 million variance in property records, a Php 285 million error in the construction in progress account, and unreliable Php 13 million inventory balance. The auditor issued a qualified opinion due to the impact of these issues.

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    EXECUTIVE SUMMARY

    INTRODUCTION

    Geographically, the City of Mati is located in the Second Congressional District


    of the Province of Davao Oriental. As a component City of Davao Oriental, it houses
    various national and corporate agencies, educational institutions including that of the
    Provincial Capitol and covers a territorial jurisdiction of twenty-six barangays. It became
    a city thru Republic Act. No. 9408. The City of Mati acquired its corporate existence thru
    ratification by a majority of the votes cast by the qualified voters in a plebiscite
    conducted last June 18, 2007.

    In line with ten-point program and trust of the National Government, the Local
    Government utilized its resources on the different priority programs, infrastructure
    projects and activities which will redbud to the benefits and betterment of its constituents.
    The City Government continuously implements the basic and necessary project and
    activities such as construction/rehabilitation and maintenance of roads, bridges,
    drainages, flood controls and public market. Support to Education, Culture, Sports,
    Manpower Development, Health Services, Labor and Employment, Housing and
    Community Development and Social Welfare Services and Environmental Protection are
    the concerns in this year’s expenditures. In its thrust to encourage investors, projects and
    programs relating to tourism activities such as Sambuokan and Pujada Bay Festival and
    having a business and child friendly programs are highlighted during the year. Enough
    budget is also provided for the implementation of programs and activities relating to
    Agriculture, Social Welfare, Peace and Public Safety, Environmental Protection,
    Community Development and Clean and Green.

    FINANCIAL HIGHLIGHTS

    For the period ended December 31, 2014, comparative information on the
    financial condition and results of operation is summarized below, to wit;

     Financial Position

    The following are the comparative figures of the balance sheet accounts of the
    City as of December 31, 2014 and 2013:

    Account 2014 2013 Increase (Decrease)


    Amount Percentage
    Assets 930,430,565.77 755,642,902.91 174,787,662.86 23%
    Liabilities 354,523,778.89 369,380,755.21 (14,856,976.32) -4%
    Equity 575,906,786.88 406,262,147.70 169,644,639.18 42%

    i
    The substantial increase of Php174,787,662.86 or 23.13% in total assets of the
    City is attributable to the procurement of various equipment and the delayed liquidation
    of Advances to Officers and Employees.

     Results of Operation

    Account 2014 2013 Increase (Decrease)


    Amount Percentage
    Income 666,171,749.12 599,444,923.27 66,726,825.85 11%
    Expenses:
    Personal Services 286,478,533.46 252,039,539.52 34,438,993.94 14%
    MOOE 231,793,621.49 216,165,271.34 15,628,350.15 7%
    Financial Expenses 15,561,365.05 9,804,154.51 5,757,210.54 59%
    Subsidies/Donations 37%
    (net) 35,727,616.36 26,125,674.77 9,601,941.59
    Total Expenses 569,561,136.36 504,134,640.14 65,426,496.22 13%
    Net Income 96,610,612.76 95,310,283.13 1,300,329.63 1%

    The increase of Php66,726,825.85 or 11.13% of the total income is due to the


    increase in the Internal Revenue Allotment (IRA) received and collection of local taxes.
    The net income increased by 1.36% for the year in spite of the increase in the total
    expenses by 12.98%.

     Financial Condition – Sources and Application of Funds

    In the implementation of programs, projects and activities, the City depended


    largely on the IRA. The City also derived its income from collection of other fees. The
    total cash inflows and outflows are shown below:

    Operating Activities 2014 2013 Increase (Decrease)


    Amount Percentage
    Total Cash Inflows 768,278,887.93 798,555,003.20 (30,276,115.27) -4%
    Total Cash Outflows 766,840,739.33 817,843,074.51 (51,002,335.18) -6%
    Net Cash Flows 1,438,148.60 (19,288,071.31) (20,726,219.91) -107.45%

    The total appropriations for calendar year 2014 for the General Fund and Special
    Education Fund had amounted to Php726,172,029.86 and Php11,602,580.00, respectively
    are broken down as follows:

    Current Total General Fund Special


    Appropriations Education Fund
    Personal Services 149,653,560.47 149,653,560.47
    MOOE 399,069,284.33 387,466,704.33 11,602,580.00
    Capital Outlay 189,051,765.06 189,051,765.06
    Total 737,774,609.86 726,172,029.86 11,602,580.00

    ii
    The actual obligations incurred for the period ended December 31, 2014 are
    shown hereunder, viz:

    Actual Obligations Total General Fund Special Education


    Fund
    Personal Services 142,935,718.06 142,935,718.06
    MOOE 391,361,577.78 382,421,174.13 8,940,403.65
    Capital Outlay 178,307,646.27 178,307,646.27
    Total 712,604,942.11 703,664,538.46 8,940,403.65

    SCOPE OF AUDIT

    A Financial and Compliance Audit was conducted on the accounts and operations
    of the City of Mati, Davao Oriental, for the period ended December 31, 2014, on a test
    basis, to ascertain the propriety of financial transactions and operations and compliance
    of the agency to prescribed rules and regulations. It was also made to ascertain the
    accuracy of financial records and reports as well as the fairness of the presentation of the
    financial statements.

    AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

    We rendered a qualified opinion on the presentation of the accompanying


    Financial Statements, due to the effects of the noted deficiencies on the balances of some
    accounts as discussed in Part II of the report and summarized as follows:

    1. Non-reconciliation of the accounting records and the Report on the Physical


    Count (RPC) of the City’s Property, Plant and Equipment (PPE) with a net
    variance amount of Php35,152,845.69 and error in recording and classification
    of the Construction in Progress account amounting to Php284,765,819.32.

    2. Unreliability of the Inventory account amounting to Php13,157,583.95 as of


    December 31, 2014 due to lapses in recording and the lack of maintenance of
    the inventory records.

    3. Inappropriate use of the Due to Other Funds (424) account amounting to


    Php1,457,372.74.

    iii
    SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

    Summarized below are the significant findings together with their corresponding
    recommendations:

    I. Financial and Compliance Audit

    Property, Plant and Equipment

    1. The non-reconciliation of the accounting records and the Report on the Physical
    Count (RPC) of the City’s Property, Plant and Equipment (PPE) with a net
    variance amount of Php35,152,845.69 affects the fair presentation of the balance
    on the affected PPE accounts in the financial statements as of year-end.

    It is recommended for the City Accountant’s Office and the City General Services
    Office to reconcile their records pertaining to the City’s property, plant and
    equipment.

    Property, Plant and Equipment Account

    2. Error in recording and the inability of the Accounting Office to reclassify


    completed projects to their appropriate Property, Plant and Equipment account
    affect the fair presentation of the balance of the Construction in Progress account
    amounting to Php284,765,819.32 in the financial statements as of year-end.

    We recommended for the City Accountant to effect the necessary adjustments in


    the books to rectify the erroneous entry made.

    We also recommended the City Accountant to secure the list of completed


    infrastructure projects from the implementing offices concerned to serve as basis
    in making the necessary adjustments in the books for the reclassification or
    transfer of the completed projects from the Construction in Progress account to
    their appropriate PPE accounts or public infrastructure registries.

    It is also recommended for the management to instruct the offices involved in the
    implementation of the City’s infrastructure projects to periodically submit a status
    report on the projects being undertaken to the City Accountant’s Office that
    would appraise the latter facilitating the necessary adjustments in the books to
    reclassify the completed projects as included in the Construction in Progress
    account.

    iv
    Inventories

    3. Failure of the agency to properly account the purchase of various supplies during
    the year and maintain its inventory records affect the fair presentation of the
    balance of the Inventory account amounting to Php13,157,583.95 in the financial
    statements as of year-end.

    During the exit conference, the management explained that they do not have
    enough manpower for the implementation of the recommendations, but will still
    strive to implement the same.

    The City Accountant assured the audit team that he will immediately make the
    necessary adjustments for the reclassification of the Medical, Dental, and
    Laboratory Supplies Inventory (160) account amounting to Php325,000.00 to its
    appropriate Property, Plant and Equipment account.

    Due to Other Funds (424) account

    4. The inappropriate use of the Due to Other Funds (424) account resulted to the
    irregularity of its balance amounting to Php1,457,372.74 and thereby affects
    the fair presentation of the payable account in the financial statements as of
    year-end.

    We recommend for the City Accountant’s Office to verify the existence and
    validity of the balance of the account Due to Other Funds (424) and make the
    necessary adjustment in the books to record the amounts involved to their
    appropriate account/s.

    STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT


    RECOMMENDATIONS

    Out of the thirty-five (35) prior years’ audit recommendations, seventeen (17) or
    49% were implemented, fourteen (14) or 40% were partially implemented, while four (4)
    or 11% was not implemented.

    v
    STATEMENT OF AUDIT SUSPENSIONS, DISALLOWANCE AND CHARGES

    As of December 31, 2014, the status of audit suspensions, disallowance and


    charges for Mati City is as follows:

    Suspensions Disallowance Charges Total


    Balance, Jan. 1, Php3,822,102.86 Php9,990,070.00 - Php13,812,172.86
    2014
    Issuances Jan - - - -
    2014 – Dec. 2014
    Total Php3,822,102.86 Php9,990,070.00 - Php13,812,172.86
    Less: Settlements - - - -
    Balance, Dec. 31, Php3,822,102.86 Php9,990,070.00 - Php13,812,172.86
    2014

    vi

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