EXECUTIVE SUMMARY

A. Introduction

1. Bislig City Water District (BCWD) was created pursuant to Resolution No.

44-A of Bislig Municipal Council on September 10, 1974 and later was

awarded by the Local Water Utilities Administration (LWUA) with the

Conditional Certificate Conformance on May 19, 1976. It was classified as

Government Owned and Controlled Corporations (GOCC) on March 12,

1992 through a Supreme Court Decision and automatically adopted the

government policies and systems.

2. BCWD’s mandates are as follows:

a) Acquiring, installing, improving, maintaining and operating water

supply and distribution systems for domestic, industrial, municipal

and agricultural uses for residents and lands within the boundaries of

such districts;

b.) Providing, maintaining and operating wastewater collection,

treatment and disposal facilities

3. As of December 31, 2015, BCWD has a total of 12,804 service connections,

10,659 of which are active and 2,145 are inactive. The District was

reclassified as Category C Water District last April 2012. On March 4, 2015,

the District’s Plantilla of Personnel in accordance with the organizational

structure of Category B Water District were released and approved by the

Department of Budget and Management.

4. Manpower complement as of December 31, 2015 totaled 92 personnel

broken down as follows:

Permanent - 40

Casual - 7

Job Order - 45

Total 92

5. The audit was conducted in accordance with applicable legal and regulatory

requirements and the Philippine Public Sector Standards on Auditing.

Those standards require that we plan and perform the audit to obtain a

reasonable basis for our conclusions.

6. The audit covered the accounts and operations of the District for the year

2015 and was aimed at ascertaining the propriety of financial transactions,

management’s compliance to prescribed rules and regulations and the

fairness of the presentation of the financial statements.

B. Financial Highlights

a) Comparative Financial Position and Results of Operations

Particulars 2015 2014 Increase/ (Decrease)

Assets 84,405,543.44 79,453,134.19 4,952,409.25

Liabilities 5,732,751.50 5,928,442.65 195,691.15

Government Equity 77,733,542.39 73,524,691.54 4,208,850.85

Income 51,660,638.93 48,085,992.13 3,574,646.80

Expenses 46,009,968.20 45,650,770.02 359,198.18

Net Income 5,650,671.00 2,435,222.11 3,215,448.89

b) Comparative Budget and Actual Expenditures

Particulars

Budget

Actual

Expenditure

Unexpended

Balance

Personal Services P 29,050,529.00 P 26,288,194.58 P 2,762,334.00

Maintenance & Other

Operating Expenses

15,158,235.88 12,982,960.00 2,175,276.00

Financial Expenses 0.00 0.00 0.00

Capital Outlay 15,735,251.00 6,465,710.86 9,269,540.14

Total 59,944,015.88 45,736,865.44 14,207,150.02

C. Audit Opinion

7. The Auditor rendered an unqualified opinion on the fairness of presentation

of the financial statements of the Bislig City Water District for CY 2015.

D. Summary of Observations and Recommendations

8. The significant audit observations and recommendations are as follows:

i. The Board of Director’s aggregate reimbursable expenses for the CY

2015 totaling P 167,857.25 were in excess by 35% or P P43,837.25 of

the maximum limit of twenty five (25%) of the actual per diems

received for board meetings while reimbursable transportation expenses

and meals and snacks during BOD meetings amounting to P16,001.00

and P 64,620.70, respectively were found to be excessive and were not

supported with complete documentations.

We recommend that Management shall:

a) Allow legitimate reimbursable expenses of the Board of Directors

within the twenty five (25%) of the actual per diems received for

board meetings limit. Excessive/unauthorized claims will be

disallowed.

b) Ensure that claims for reimbursable transportation expenses are

reasonable enough to cover the cost in going to and from place of

meetings to avoid excessive claims. No reimbursement for

gasoline and fuel used by private vehicles should be allowed.

c) Comply strictly with the documentary requirements to support

payments of meals and snacks expenses during Board Meetings

including, but not limited to, attendance sheet, notices of meetings

and agenda duly signed by the HRMO and the General Manager

(for regular meetings), as well as minutes of meetings signed by

authorized personnel.

ii. Disbursements totaling P 10,190.00 pertaining to legal and filing fees in

connection with the filing of appeal/s and motion for reconsideration

before the Commission on Audit were charged against the District’s

operating fund contrary to Section 4 of COA Circular 2012-003 dated

October 29, 2012 and Paragraph 7 of COA Resolution No. 2013-016

dated August 23, 2013

We recommend that Management shall:

a) Stop the practice of charging of legal fees for appeals/motion for

reconsideration filed by persons identified liable before the

Commission on Audit against the corporate operating fund of the

District.

b) Require the officers and employees concerned to refund

immediately the legal and filing fees paid by the District.

iii. Disbursement for Meals and Snacks amounting to Php 357,106.20 are

deemed unnecessary expenditures as provided for under Item 4.0 of

COA Circular No. 2012-003 dated October 29, 2012 due to incurrence

of meals and snacks during BAC Meetings, Management Team

Meetings, BCWMC ExeCom Meetings and other meetings, as well as

during the conduct of monitoring of water levels, mainline and leak

repairs and other regular field activities. Moreover, procurement of

catering services and charges for meals and snacks did not go through

public bidding or any of the alternative modes of procurement

Likewise, prescribed documentary requirements were not attached to

the claims, resulting to irregular disbursement of public funds.

We recommend that Management shall:

a) Strictly observe prudence on the use of government funds for

meals and snacks by ensuring that these are utilized only for

expenses which are regular and necessary.

b) Discontinue the provision of meals and snacks during BAC

Meetings, Management Team Meetings and other regular

meetings, as well as, during the conduct of monitoring of water

levels and repairs as these meetings and activities are embedded in

the regular functions and responsibilities of the concerned officials

and employees.

c) Stop the practice of disbursing for expenses that are personal in

nature, such as meals and snacks during basketball and bowling

practices, vigils and garbage collections and the likes.

d) Require officials with Representation Allowance (RA) to provide

meals and snacks during meetings and activities that are incidental

to and in connection with the actual performance of their functions.

e) Strictly observe the proper procedures and appropriate mode of

procurement in the purchase of meals and snacks as prescribed in

Republic Act No. 9184 and its Revised Implementing Rules and

Regulations.

f) Attach to the disbursement vouchers for meals and snacks

purchase requests, requests for quotations, abstract of canvass,

purchase orders, delivery receipts and inspection and acceptance

report, together with the activity/training designs, targeted list of

participants, attendance sheets, visitor’s log, notices of meetings

and agenda duly signed by the HRMO and the General Manager

(for regular meetings), minutes of meetings duly signed by

authorized personnel and other significant documentary

requirements.

iv. Claims for replenishment of working/petty cash fund were made three

(3) to four (4) times in a month with an average amount of P58,637.56

per month or a total of P703,650.66 for Calendar Year 2015 due to

payments of recurring expenses for materials for operation, meals and

snacks, office supplies, repairs and maintenance and other regular

expenses. Moreover, disbursements for fares during meter reading and

service of Notices of Disconnections paid thru Petty Cash Fund

amounting to P58,778.00 were not supported with complete

documentation, hence, necessity, reasonableness and appropriateness of

the charges cannot be determined.

We recommend that Management shall:

a) Require the Petty Cash Custodian to use the Petty Cash Fund only

for non-recurring, emergency and petty expenses.

b) Discontinue the practice of paying spare parts for the repair and

maintenance of vehicles and pumping stations out of the Petty

Cash Fund. Instead, use check with Disbursement Vouchers

supported with purchase request, quotations and other necessary

documents.

c) Procure materials and supplies in accordance with the provisions

of the Republic Act 9184, otherwise known as the Government

Procurement Act.

d) Complete information and specific details should be indicated in

the Petty Cash Voucher especially those claims for fares during

meter reading and serving of Notices of Disconnections. The

amount of the claim should not be shown in lump sum but rather

be specified based on the actual fare that will be incurred from one

point of origin to the point of destination.

e) Ensure that all charges to Petty Cash Fund are supported with

complete documentation as prescribed by Item 1.2.1 of COA

Circular No. 2012-001 dated June 14, 2012.

v. Temporary receipts that are not pre-numbered were issued to

acknowledge receipt of public funds contrary to Section 72 of

Government Accounting and Auditing Manual (GAAM), Volume I.

a) Stop the practice of using temporary receipts to acknowledge

receipt of public funds.

b) Install the necessary controls to properly monitor the collections

and remittance by the designated collectors.

E. Summary of total Suspensions, Disallowances, and Charges

9. During Calendar Year 2015, Notices of Disallowances for the excess payments of

RATA to Department Managers and the District’s overpayment of HDMF’s

government share amounting to P 180,000.00 and P 178,698.90, respectively were

issued. Moreover, the District has an existing disallowances issued in March 2009

totaling P 1,066,309.13 which was appealed before the Commission Proper (CP).

Said appeal was denied under COA Decision No. 2015-086 dated March 26, 2015.

A Motion for Reconsideration was filed and is now pending before the CP.

F. Statement on the quantity/number of recommendations implemented, partially

implemented and not implemented for the current year.

10. Of the twenty seven (27) audit recommendations embodied in the CY 2014 and previous

year’s Annual Audit Reports, eleven (11) were fully implemented, fourteen (14) were

partially implemented and two (2) were not implemented.