AgusandelNorteProv_ES2012

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EXECUTIVE SUMMARY

INTRODUCTION

Prior to its proclamation as a province on January 5, 1968, Agusan del Norteformed part of the province of Agusan del Sur. By virtue of Republic Act No. 4979,

Agusan was subdivided into what are now Provinces of Agusan del Norte and Agusan del

Sur.

Pursuant to Republic Act No. 7160, otherwise known as the Local Government

Code of 1991, the Province, like any other local government units, is mandated to deliver

efficient and effective services to its constituents with the aim of enhancing socio-

economic growth in line with the national government’s reconstruction and social

transformation.

To pursue its mandate, the Agency handles three Funds, General Fund, Trust Fund

and Special Education Fund. The sources of the said funds are from the Internal Revenue

Allotment and Collections from real property taxes, business permits and licenses and

miscellaneous fees.

For Calendar Year 2012, the Province total revenue amounted to P568,913,695.04

which includes the internal revenue allotment of P497,149,574.00. Out of this, a total of

P421,651,425.03 was incurred for expenditures.

Total assets, liabilities and equity as of December 31, 2012 were

P1,157,120,926.18, P213,765,852.49, and P943,355,073.69, respectively.

SCOPE OF AUDIT

A financial and compliance and value for money audits were conducted on the

accounts and operations of the Province of Agusan del Norte for calendar year 2012.

The audit included verification of the financial statements as to whether they are

free of a material misstatement/s and fairly presented in accordance with the generally

accepted auditing standards and accounting principles. Transactions were reviewed to

determine whether expenditures were incurred in compliance with existing laws, rulesand regulations. Interviews with the provincial officials and employees and analysis of

accounts were also included and other procedures considered necessary.

STATE AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the fairness of the presentation of the

financial statements of the Province of Agusan del Norte.



SIGNIFICANT FINDINGS AND RECOMMENDATIONS

FINANCIAL AND COMPLIANCE

1. Cash in bank balance as of December 31, 2012, totaling P 328,766,656.19 is ofdoubtful validity due to non-preparation of updated bank reconciliation

statements, contrary to Section 3.2 of Commission on Audit Circular (COA)

No. 96-011.

Require the Provincial Accountant to submit immediately and regularly the

monthly bank reconciliation statements of all cash in bank accounts to establish

the accuracy and reliability of these accounts.

2. Stale checks amounting to P151,137.05 remained unadjusted in the books

resulting in an understatement of the Cash in Bank – Local Currency,

Current Account as well as the Payable Accounts by the same amount as of

December 31, 2012.

Require the Office of the Accountant as well as the Office of the Treasurer to

adhere strictly to the provisions of Section 59 of the New Government Accounting

System (NGAS) Manual Volume I.

3. Reconciling items pertaining to prior years still reflected in the Bank

Reconciliation Statements as of December 31, 2012 contrary to Commission

on Audit Circular No. 96-011 dated October 2, 1996.

Require the Office of the Accountant to prepare necessary adjustments on the

above stated reconciling items in accordance with Commission on Audit Circular

No. 96-011 dated October 2, 1996 and in order that the Cash in Bank balance shall

be accurate.

4. The Province failed to enforce full liquidation of prior year’s cash advances

of its officials and employees in violation of Commission on Audit (COA)

Circular No. 97-002 and Section 2 of Presidential Decree (P.D.) 1445, thereby

exposing the funds to possible misuse.

Send final demand to all concerned officials and employees to settle and liquidate

their outstanding cash advances as of December 31, 2012 as soon as possible.Failure to liquidate outstanding cash advances shall constitute cause for the

withholding of salary and filing of malversation charges under Article 217 or 218

of the Revised Penal Code or Criminal Prosecution under Section 2 of the PD

1445.

5. The honoraria for various school teachers pertaining to CY 2011 totaling

P905,612.02 were charged against the current appropriations, in violation to



Ensure that employees handling cash are adequately bonded, application of which

is based on collections for the last six months prior to the application/renewal of

bond.

10. The 20% Development Fund was not fully utilized for desirable socio-

economic development and environmental outcomes since ineligible expenses

totaling P2,074,616.15 were charged to said fund during the year, contrary to

DILG-DBM Joint Memorandum Circular No. 2011-1.

Adhere strictly to the amended guideline, DILG and DBM Joint Memorandum

Circular No. 2011-1 in the formulation of 20% Development Fund Plan for

implementation in the ensuing year in order to fully maximize appropriations for

the 20% Development Fund. Payment of wages to job order employees and the

other identified inappropriate charges to this fund during the year should be

charged against the regular appropriations for General Fund.

Procurement

11. The Agency failed to comply with the posting requirements on the

procurement of infrastructure projects pursuant to Sections 21.2.1.b and

37.1.6 of the Revised Implementing Rules and Regulations (IRR) of Republic

Act 9184.

Post the Invitation to Bid and Notice of Awards in the PhilGEPS website to

comply with the provisions set forth in Sec. 21.2.1 of the IRR of RA 9184.

12. Procurement of supply and material with a gross amount of P14.45M or 84%

of the high-value population tested in a total amount of P17.26M, did not tally

with the Project Procurement Management Plan (PPMP) and with the budget

of offices, in contradiction to Section 7.2 of the revised IRR of R.A. 9184.

Strictly adhere to Section 7.2 of the Implementing Rules and Regulations of R.A.

9184 of the agency’s procurement planning so as not to prejudice the real intent

and purpose of the above-said provision.

Complete Submission of Accounts

13. Delayed submission of the accounts of all Funds contrary to the provisions of

Section 7.2.1 (a) of COA Circular No. 2009-006 dated September 15, 2009,

thus the Provincial Auditor’s Office was prevented from conducting timely

audit of the financial transactions of the Province, and from ascertaining the

correctness of the disbursements and collections, and from promptly

informing management of deficiencies, if any.



Observe the prescribed period in the submission of the Provincial accounts which

is within the first ten (10) days of the ensuing month as provided in Section 7.2.1

(a) of COA Circular No. 2009-006 dated September 15, 2009.

Unsettled Suspensions, Disallowances and Charges

14. Audit suspension and disallowance balances in a total amount of

P1,629,168.31 and P96,000.00 respectively, remained unsettled as of

December 31, 2012, contrary to Section 9.4 and Section 10.4 of COA Circular

No. 2009-006 dated September 15, 2009.

Strictly follow the provision of Section 9.4 and Section 10.4 of COA Circular No.

2009-006 dated September 15, 2009.

Gender and Development Implementation

15. The Agency had not submitted the Gender and Development (GAD) Plan of

2012 contrary to the provisions of Item 5.1 of Joint Circular No. 2004-1 dated

April 5, 2004 of the Department of Budget and management (DBM), National

Economic and Development Authority (NEDA) and the National Commission

on the Role of Filipino Women (NCRFW).

Strictly follow the provisions of Item 5.1 of Joint Circular No. 2004-1 dated April

5, 2004 of the Department of Budget and Management (DBM), National

Economic and Development Authority (NEDA) and the National Commission on

the Role of Filipino Women (NCRFW).

Credit Financing/Debt Servicing

On loans and payments, records showed that the Provincial Government promptly

paid the monthly installments on their loan amortizations. It also has complete

records on loans released and payments, thus correctly presented in its annual

financial statements. (Annex O-1 & Annex O-2)

The recent loans applied were made thru the Provincial Resolution No. 140-2012

dated May 21, 2012 the amount of Php 86,300,000.00 for the acquisition of eight

(8) units heavy equipments which are to be implemented soon and Provincial

Resolution No. 328-2012 in the amount of Php 200,000,000.00 for the proposed

construction of the new Provincial Capitol Building/Extension at Barangay

Sanghan, Cabadbaran City which will start soon.

Local Disaster Risk Reduction and Management Fund (LDRRMF)

The Agency appropriated a total amount of Php 27,937,065.00 for the Local

Disaster Risk Reduction and Management Fund. Said amount represented 5%



mandatory requirement of the total annual budget. The total obligations incurred

during the year amounted to Php 9,104,392.54 of which obligations liquidated

totaled to Php 7,721,992.54 thus an unliquidated obligation as of year end of

P1,382,400.00. (Annex Q)

The unobligated balance of Php 18,832,672.46 was transferred to trust fund

account for future use of the agency’s Disaster Risk Reduction and Management.

Revenues

The Provincial Government was able to collect for the year 2012 the total amount

of Php4.17M revenue shares out of Real Property collections by every

municipalities from the targeted collectible of Php4.40M. out of their initiatives

and concerted efforts the uncollected amount was barely 5% or in the amount of

Php228,848.68. (Annex P)

Special Education Fund

Disbursements from the Special Education Fund for CY 2012 are in accordance

with the guidelines set forth in Joint Circular issued by DECS, DBM and DILG.

(Annex R)

Outstanding Legal Cases and Final and Executory Decisions on Legal Cases

Out of the three (3) cases filed by the Province of Agusan del Norte, one was

decided in its favor, affirming the notice of assessment in the amount of

P3,401,001.92 against National Transmission Corporation. The other one was

elevated to Court of Appeals having been declared to be invalid the extraction fee

against S.R. Metals. The last case for collection of real property taxes againstPPA, which was still on trial as of year end. (Annex T)

Seal of Good Housekeeping

The Province of Agusan del Norte had been an awardee for the years 2011

(Bronze) and 2012 (Silver), having complied with requirements. However, there

are some transactions in Trust Fund that had not been posted in PhilGEPS as

required, and as embodied in the findings and recommendations.

COMPLIANCE WITH TAX LAWS

For Calendar Year 2012, the Provincial Government of Agusan del Norte had

remitted the total amount of P33,264,911.84 out of the total tax withheld for the year of

P34,405,329.73 and its beginning balance of P5,047,111.43 leaving a balance of

P6,187,529.32 for all funds.



STATUS OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

Of the eight (8) audit recommendations for the year 2011, four (4) were complied

with, two (2) were partially implemented and two (2) were not implemented.

AgusandelNorteProv_ES2012

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