EXECUTIVE SUMMARY

Introduction

The City of Biñan in the Province of Laguna was once a portion of Sta. Rosa. It became

an independent town sometime in the year 1771 and became a City on February 2, 2010 under

Republic Act No. 9740. The City is located 35 kilometers south of Manila with a land area of

4,350 hectares divided into 24 barangays.

The City maintains three funds namely: General Fund, Special Education Fund and Trust

Fund.

The City maintains special account in the General Fund for 20% Local Development

Fund, Hospital, Market, and Cemetery.

Organizational Structure

The Organizational Structure of the City is as follows:

a. Key Officials

City Mayor – Hon. Marlyn B. Alonte-Naguiat

Vice-Mayor – Hon. Walfredo R. Dimaguila, Jr.

Members of the Sanggunian:

1. Hon. Angelo B. Alonte

2. Hon. Cookie Yatco

3. Hon. Vicente Tan Gana

4. Hon. Marielle Therese Micor

5. Hon. Liza Cardeño

6. Hon. JM Carait

7. Hon. Gener Romantigue

8. Hon. Jaime Salandanan

9. Hon. Echit Desuasido

10. Hon. Wilfredo Bejasa

11. Hon. Jay Sauza

City Treasurer – Severina A. Alonalon

City Accountant – Virgilio M. Dimaranan

b. No. of Personnel Complement

Permanent 545

Temporary 64

Casual 67

Contractual 12

Elective Officials 13

Coterminous 43

Job Order 849 __________

Total 1,593

Financial Highlights

For the Calendar Year (CY) 2015, the City generated a total income of P1,606,208,543

from local taxes, permits and licenses, service and business income and internal revenue

allotment and subsidy from other funds which is slightly higher by 2.75% over last year’s total of

P1,563,150,730.

The City’s total assets, liabilities, government equity, income and expenses for CY 2015

are as follows:

Total Assets P4,311,867,946

Total Liabilities 1,225,098,745

Total Equity 3,086,769,201

Total Income 1,606,208,543

Total Expenses 1,105,171,491

The City’s total appropriations, allotments, obligations and unexpended balances for CY

2015 are as follows:

Total Appropriations P2,123,171,809

Total Allotments 2,196,442,421

Total Obligations 1,792,172,316

Total Unexpended Balance 404,270,105

Scope of Audit

Financial and compliance audit, as well as value for money audit were conducted on the

accounts and operations of the City Government of Biñan for the CY 2015. The audit consisted

of interviews with the concerned local officials and employees, tracing account balances with the

general ledger, verification of disbursements with underlying documents, inspection, analysis

and reconciliation of accounts and such other procedures considered necessary.

The audit was conducted to ascertain the propriety of the financial transactions,

compliance with prescribed rules and regulations and the economical, efficient and effective

utilization of resources. 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.

Audit Opinion

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

financial statements of the City of Biñan due to the effects of the unreconciled discrepancy of

P90,144,916.97 between accounting records and inventory report of Land account under the

General Fund (GF) and Special Education Fund (SEF) totaling P355,971,398.64 and

P129,698,600.21, respectively. Likewise a discrepancy of P82,373,260.78 of the Property, Plant

and Equipment account for both the General and Special Education Funds and Infrastructure

Assets and Equipment purchased during the year totaling P30,289,239.89 were not recorded to

their appropriate Property, Plant and Equipment (PPE) accounts, resulting in the understatement

of the PPE and equity accounts.

Significant Observations and Recommendations

For the exceptions cited above, we recommended that the City Mayor direct the City

Accountant and the GSO to reconcile the inventory list of acquired real properties with the

balance of the Land account in the General Fund and Special Education Fund to account for the

discrepancy totaling P90,144,916.97. We also recommended that the City Mayor immediately

direct the City Accountant and the City General Services Officer to thoroughly check, clear and

reconcile the noted discrepancy amounting to P82,373,260.78 between the physical inventory

report and book balances of PPE accounts for both General and Special Education Funds to

ascertain the correctness of PPE account balances in the General Ledger and to establish the

existence and propriety of the valuation of the property. Likewise, we recommended that City

Mayor direct the City Accountant to draw Journal Entry Vouchers (JEVs) to transfer the costs of

completed infrastructure assets and equipment from the books of the Trust Fund to the books of

the General Fund.

The following are the other significant observations and recommendations in the audit of

the City Government of Biñan, Laguna for the CY 2015:

1. Cash – Local Treasury and Income accounts at year-end were understated by

P1,060,248.91 due to non-inclusion of collections from December 29 to 31, 2015 in

violation of Sections 29 and 30 of the Manual on the New Government Accounting

System (MNGAS) for LGUs, Volume I and Section 51 of MNGAS, Volume II, thus,

exposing the funds to possible risk of loss or misuse.

We recommended that the City Mayor direct the ICO-City Treasurer to ensure that all

collections are turned over by the collectors at the end of business day and recorded as

Cash-Local Treasury at the end of the year.

2. The City officials failed to fully implement the rules and regulations on the granting,

utilization and liquidation of cash advances of government officials and employees as

provided under COA Circular No. 97-002, resulting in unliquidated cash advances

totalling P738,497.60 as of December 31, 2015, thus showing ineffective control by

management over cash advances.

We recommended that the City Mayor direct:

a) the concerned City officials to expedite the immediate processing in the grant

of cash advances on a replenishment basis so as not to hamper delivery of

public services;

b) all concerned officers and employees to liquidate their cash advances within

the prescribed period or immediately after the purposes have been served;

c) the City Accountant to monitor and strictly enforce the liquidation of cash

advances and/or refund of the excess amount granted within the prescribed

period and see to it that no additional cash advance shall be allowed unless

the previous ones are settled to prevent the accumulation thereof;

d) the City Accountant to enforce withholding of salaries of accountable officers

who failed to promptly liquidate their cash advances. Otherwise, institute the

appropriate administrative and/or criminal action against accountable officers

concerned for their failure to settle their accounts, if warranted.

3. The Land account under the General Fund and Special Education Fund totaling

P355,971,398.64 and P129,698,600.21, respectively, were not all covered by titles in the

name of the City, contrary to Section 39(2) of PD No. 1445 and Section 449, Volume 1

of the Government Accounting and Auditing Manual (GAAM), hence, ownership and

existence could not be ascertained, thus, posing risk to third party claims and illegal

dispositions.

We reiterated our recommendation that the City Mayor direct the City Accountant and

the GSO to establish and reconcile their reports against the titles on hand and to facilitate

and expedite the immediate transfer of ownership of those lots without titles to protect the

interest of the government.

4. The warranty security from the contract awardee was not required in the procurement of

goods, contrary to Section 62.1 of the Implementing Rules and Regulations (IRR) of

Republic Act (RA) No. 9184, thus, corrections of manufacturing defects could not be

assured. Also, retention monies deducted from some procurement were claimed even

before the lapse of the warranty period.

We recommended that the City Mayor direct the City Accountant to deduct the retention

monies from all claims of suppliers of goods and to release them after the lapse of

warranty period. In case of claims for retention monies, only the special bank guaranty

should be required from the supplier.

5. Accountable Forms (AFs) totaling P837,625.00 were procured from private printer,

Ready Forms Incorporated, contrary to Section 33 of COA Circular No. 2012-003 dated

October 29, 2012 and Department of the Interior and Local Government (DILG)

Memorandum Circular No. 2012-32 dated February 15, 2012, resulting in irregular

expenditures. This may also result in the lack of control over the assignment of series of

numbers which could lead to possible duplication of serial numbers of AFs printed with

recognized government printers.

We recommended that the City Mayor direct the concerned City Officials and Ready

Forms Inc. to refund the cost of accountable forms purchased from RFI totaling

P837,625.00. Also, ensure that the City engage the services of recognized government

printer in the printing of its AFs and that Management adhere strictly to the

aforementioned provisions.

6. The necessity of the City Government for hiring 849 Job Order (JO) personnel for CY

2015, which is more than 114% of the regular employees which cost the City of

P71,342,778.75 for salaries, could not be established due to failure to comply with the

rules and regulations in the employment and payment of salaries and wages for these JO

personnel, as required under Civil Service Commission (CSC) Resolution No. 02-1480

dated November 12, 2002 and COA Circular No. 2012-001 dated June 14, 2012.

We recommended that the City Mayor direct:

the CHRDO to submit the individual statement of duties and responsibilities per

assigned office and the related accomplishment reports of the JO personnel in

order to further evaluate the necessity of the services employed and regularity of

the amount paid by the City Government.

the CHRDO to evaluate the manpower requirements for each department/offices

and project/programs to justify the necessity and legality in hiring JOs to avoid

duplication of functions. Also, the CHRDO comply strictly with the rules and

regulations set in the employment for a period not exceeding six months and the

City officials to require the proper and complete documentation upon payment of

salaries and wages for JOs.

7. Forty (40) Disbursement Vouchers (DVs) totaling P1,478,605.80 were not submitted to

the Office of the Auditor for audit, in violation of COA Circular Nos. 2009-006 and 95-

006 dated September 15, 2009 and May 18, 1995, respectively, and Section 100 of

Presidential Decree (PD) No. 1445; hence, accuracy, validity and reliability of

transactions could not be determined.

We recommended that the City Mayor direct the City Accountant to strictly comply with

the provisions of COA Circular Nos. 2009-006 and 95-006 dated September 15, 2009 and

May 18, 1995, respectively, and Section 100 of Presidential Decree No. 1445 in the

submission of the reports and paid vouchers.

8. The City Government failed to fully implement/comply with the Environmental Code of

the City in its solid waste management plan in establishing Materials Recovery Facilities

(MRF), contrary to Republic Act No. 9003, thus, may result in increasing problems on

solid waste which would affect the protection of public health, safety and environment.

We recommended that the CSWMB headed by the City Mayor to strictly comply with the

provisions of RA No. 9003 in the establishment of MRFs for the barangays. Likewise,

the City Government and the concerned barangay should strictly adhere with the

provisions in the MOU for the two existing MRFs. The City Mayor direct the officials

concerned to submit documents to justify the private use of the City Centralized MRF at

Barangay Timbao or impose appropriate action against those involved in the operation.

9. Various programs and projects implemented during the year under the 20% Development

Fund totaling P97,715,326.98 were utilized more on the agency’s economic development

and environment management while the project for improvement of barangay hall/day

care center in the amount of P921,915.79 considered for social development was not in

accordance with the Joint Memorandum Circular No. 2011-1 of the Department of

Interior and Local Government (DILG) and the Department of Budget and Management

(DBM), thus, the complete attainment of the purposes for which the funds are to be

appropriated and utilized were not achieved.

We recommended that the City Mayor direct the City Planning and Development Office

and the Budget Office to strictly comply with the guidelines specified in Joint

Memorandum Circular No. 2011-1 and to prioritize PPAs that are in the nature of

investment or capital expenditures, classified under social development, economic

development and environmental management for the attainment of socio-economic and

ecosystem well-being in their jurisdictions.

10. Prior years’ unexpended balances of Local Disaster Risk Reduction and Management

Fund (LDRRMF) for Quick Response Fund (QRF) and the LDRRMF- MOOE were not

transferred to the Special Trust Fund in the Trust Fund books, thus, the risk that the

unexpended balance may be appropriated for purposes other than those for which it was

intended.

We recommended that City Mayor direct the City Accountant to compute and account for

the accurate amount for the transfer of prior years’ unexpended balances to TF-DRRM

account in accordance with the pertinent provisions of COA Circular No. 2012-002 in

order to ensure that the fund is used for LDRRMF purposes only.

11. The City failed to submit a copy of the Gender and Development (GAD) Plan and Budget

and corresponding accomplishment report to the Philippine Commission for Women

(PCW) and DBM. Further, out of P120,667,000.00 allotted for the implementation of

GAD, only P2,230,000.00 or 1.85% have been utilized in CY 2015, contrary with the

provisions of the General Appropriations Act (GAA) for FY 2015 and Joint Circular No.

2012-01 of the DBM-NEDA-NCRFW, thus, the intent of GAD on promoting gender-

responsive governance, protecting and fulfilling women’s human rights, and promoting

women’s empowerment were not fully achieved.

We recommended that the City Mayor direct:

the Chairperson, GAD Focal Point Officer and the Budget Officer to provide the

NCRFW and the DBM with a copy of the approved Annual Gender and

Development (GAD) Plan and Budget and corresponding Accomplishment

Report on GAD.

the GAD Focal Point Officer to fully implement the GAD Plan so that the intent

of GAD on promoting gender-responsive governance, protecting and fulfilling

women’s human rights, and promoting women’s empowerment as mandated by

the policies enumerated under DBM-NEDA-NCRFW Joint Circular No. 2012-01

and the general provisions of the Annual General Appropriations Act.

Status of Implementation of Prior Year’s Audit Recommendations

Out of the 27 audit recommendations contained in the CY 2014 Annual Audit Report, 12

were fully implemented, 11 were partially implemented and four were not implemented by the

City Government.