Republic of the Philippines

COMMISSION ON AUDIT
Office of the Regional Director
Regional Office No. VI
Ungka I, Pavia, Iloilo
April 28, 2!!

HONORABLE ALFREDO G. MARAON !R.
"overnor
Province of Negros Occi#ental
$ i r %
Pursuant to $ection 2, Article I&'( of the Philippine )onstitution an# $ection *+
,2- of Presi#ential (ecree No. !**., other/ise kno/n as the 0"overn1ent Au#iting
)o#e of the Philippines2, an# in line /ith this )o11ission3s efforts to/ar#s infor1ing
4anage1ent on ho/ fiscal responsibilit5 ha# been #ischarge#, /e are please# to trans1it
the interi1 report of our Au#itor on his au#it of the accounts an# operations of the
Provincial "overn1ent of Negros Occi#ental for the 5ear en#e# (ece1ber +!, 2!.
6he au#it /as con#ucte# to ascertain the propriet5 of financial transactions an#
co1pliance of the local govern1ent unit to prescribe# rules an# regulations. It /as also
1a#e to ascertain the accurac5 of financial recor#s an# reports, as /ell as the fairness of
the presentation of the financial state1ents.
7e re8uest that the co11ents an# observations containe# in the attache# report
be appropriatel5 acte# upon an# /oul# appreciate being infor1e# through our au#itor of
the action,s- taken thereon /ithin one ,!- 1onth fro1 receipt hereof.
7e ackno/le#ge the cooperation an# support e9ten#e# to our au#itor an# his staff
#uring the au#it.
Ver5 trul5 5ours,
SAL"ADOR #. ISIDERIO
(irector IV
Regional (irector

)op5 furnishe#%
6he $angguniang Panlala/igan, Province of Negros Occi#ental
6he Regional (irector, (epart1ent of Interior an#
:ocal "overn1ent, Region VI

6he Regional (irector, (epart1ent of ;u#get an#
4anage1ent, Region VI
6he Regional (irector, ;ureau of :ocal "overn1ent
<inance, Region VI
Republic of the Philippines
COMMISSION ON AUDIT
Au#it "roup I = Province of Negros Occi#ental
OFFICE OF THE AUDIT TEAM LEADER
6>A4 ! = Province of Negros Occi#ental
;acolo# )it5
<ebruar5 28, 2!!
MEMORANDUM FOR$
SAL"ADOR #. ISIDERIO
(irector IV
Regional (irector
)o11ission on Au#it
Regional Office No. VI
Ungka I, Pavia, Iloilo
6hru% Nativi#a# R. Asentista
$upervising Au#itor
Au#it "roup I
In co1pliance /ith $ection 2, Article I&'( of the Philippine )onstitution an#
pertinent sections of Presi#ential (ecree No. !**., /e con#ucte# a financial an#
co1pliance au#it on the accounts an# operations of the Province of Negros Occi#ental
for the 5ear en#e# (ece1ber +!, 2!.
6he au#it /as con#ucte# to ascertain the propriet5 of financial transactions an#
co1pliance of the local govern1ent unit to prescribe# rules an# regulations. It /as also
1a#e to ascertain the accurac5 of financial recor#s an# reports, as /ell as the fairness of
the presentation of the financial state1ents.
Our attache# report consists of four parts. Part I contains the Au#it )ertificate,
the $tate1ent of 4anage1ent Responsibilit5 for <inancial $tate1ents, Au#ite#
)onsoli#ate# <inancial $tate1ents an# Notes to <inancial $tate1ents. Part II presents
the (etaile# <in#ings an# Reco11en#ations /hich /ere #iscusse# /ith concerne#
4anage1ent officials an# staff, for% a- <inancial an# )o1pliance Au#it an# b- Value
for 4one5 Au#it. Part III contains the $tatus of I1ple1entation of Prior ?ears3 Au#it
Reco11en#ations. Part IV presents the Anne9es /hich inclu#e% a- <inancial $tate1ents
b5 <un# b- $tatus of Appropriations, Allot1ents an# Obligations an# c- Other
$upple1entar5 $che#ules an# Relate# $upporting (ocu1ents.
6here is a reasonable assurance that the financial state1ents are free of 1aterial
1isstate1ent@s an# /ere prepare# in accor#ance /ith applicable la/s, rules an#
regulations an# in confor1it5 /ith generall5 accepte# state accounting principles.
Ao/ever, as note# in the au#it fin#ings, the Province faile# to reconcile, i#entif5,
an# properl5 classif5 balances of asset accounts totaling P!,B*8,822,!2.C, /hich
ren#ers #oubtful the vali#it5 of +8D of the total assets recor#e# in the books of accounts
of the :"U. (ela5e# re1ittances an# #eposits an# #ela5e# recor#ing of receipts an#
collections resulte# in the un#erstate1ent of the balances of cash accounts in 5ear'en#
financial state1ents b5 PB,+.!,+C2.C in 2C an# b5 PC,+B.,!C*.E2 in 2!. 4oreover,
the Accounting Office faile# to recor# a#Fust1ents in the books of accounts for
reconciling ite1s re8uiring #ebit to cash a1ounting to P.2,2*2,2..C! an# a#Fust1ents
for cre#its to cash totalling P*C,*E+,C*.++G for the un#erstate1ent of the consoli#ate#
cash balance resulting fro1 fun# transfer fro1 the "eneral <un# to the >>(( of the
a1ount of P+.,.!8,B8!.. on (ece1ber +, 2! /hich /as not i11e#iatel5
ackno/le#ge# as collection of the >>(( on the sa1e #ateG an# for the 1isstate1ent of
the (ue to N"As account, relate# e9pense accounts an# retaine# earnings, as /ell as
unaccounte# #eliveries of rice 1ostl5 pertaining to previous perio#s /hich a1ounte# to
P+.,EBE,**+.2E as at 5ear'en#. 6he ina#e8uac5 of relate# recor#s #i# not per1it us to
appl5 alternative au#it proce#ures.
In our opinion, e9cept for the effect of an5 a#Fust1ents on the #eficiencies
#iscusse# in the prece#ing paragraph, the acco1pan5ing consoli#ate# financial
state1ents present fairl5 in all 1aterial respects, the financial position of the Province of
Negros Occi#ental as of (ece1ber +!, 2!, an# the results of its operations an# cash
flo/s for the perio# then en#e# in confor1it5 /ith generall5 accepte# accounting
principles.
Our au#it /as con#ucte# in accor#ance /ith generall5 accepte# state au#iting
stan#ar#s an# /e believe that it provi#es reasonable basis for the results of au#it.
ERNIE C. "ILLA
$tate Au#itor IV

E%ECUTI"E SUMMAR&
Highlight' of Financial O(eration'
a- $ources an# Application of <un#s
As of (ece1ber +!, 2!, the Province generate# a total operating
inco1e of P!,C!!,2CB,.2+.28, an increase of B..D co1pare# to that of the prece#ing
5ear. 6he bulk of the inco1e consists of the Internal Revenue Allot1ent an# local ta9es.
6otal e9penses for the perio# is P!,+EB,C*2,BC.!8, /hich increase# b5 !.BD
over that of last 5ear an# consists pri1aril5 of Personal $ervices an# 4aintenance an#
Operating >9penses ,4OO>-.
b- Appropriations

6he Province has a total appropriations for )? 2! of P2,8!E,88!,.2.E
consisting of P2,B*B,!!B,.*.+ an# PEC,BE+,C8..B for the "eneral an# $pecial
>#ucation <un#s, respectivel5, broken #o/n as follo/s%
"en. <un# $>< 6otal
Personal $ervices P B!,C2,*!!.2 P C,+.E,B28. P B2,2BB,!+C.2
4OO> !,E!,!*E,8*B.!
!
E,*B,2.2..
B
!,EE!,..*,CC.E
8
)apital Outla5 +BE,..,28!.C +BE,..,28!.C
<inancial >9penses .8,.,. .8,.,.
6otal P 2,B*B,!!B,.*.
+
P EC,BE+,C8..
B
P 2,8!E,88!,.2.E

c- Obligations
As of 5ear'en#, the total obligations for )? 2! totale# P2,.2,8!,C.2.*!
consisting of P2,*B2,8E2,.8+.!8 an# P*B,C*8,+EC.2+ for the "eneral an# $pecial
>#ucation <un#s, respectivel5.
"en. <un# $>< 6otal
Personal $ervices P EC,C.+,EB*.+B P 8,E+.,B.2.8* P ECC,.8C,*2B.2!
4OO> !,*2+,.2E,C+B.!

+C,+!2,E!E.+
C
!,*E2,8+C,..+.*
C
)apital Outla5 +,+!+,.82.2+ +,+!+,.82.2+
<inancial >9penses .8,E8,+8C.*8 .8,E8,+8C.*8
6otal P 2,*B2,8E2,.8+.!
8
P *B,C*8,+EC.2
+
P 2,.2,8!,C.2.*
!

#- <inancial Ratios
2! 2C
Increase
,(ecrease-
)urrent Assets Ratio 2.*B%! 2.!E%! .+!
Huick Ratio 2.!2%! !.8B%! .2.
Net 7orking )apital P C+!,CCE,E8..C
*
P B+2,!E8,CB.8
.
P !CC,82B,BB8.C
Operating Inco1e .28%! .+%! ,.2-
Net Inco1e .2%! .2%! .
Return on 6otal
Assets
.8%! .8%! .
(ebt Ratio .2%! .22%! ,.2-
(ebt'>8uit5 Ratio ..%! .E%! ,.!-
Sco(e of A)*it
A financial an# co1pliance au#it on the accounts an# operations of the Province
of Negros Occi#ental /as con#ucte# for the perio# en#e# (ece1ber +!, 2!. 6he au#it
/as con#ucte# to ascertain the propriet5 of financial transactions an# co1pliance of the
Province to prescribe# rules an# regulations. It /as also 1a#e to ascertain the accurac5
of financial recor#s an# reports, as /ell as the fairness of the presentation of the financial
state1ents.
A)*itor+' O(inion on the Financial State,ent'
6he au#itor ren#ere# a 8ualifie# opinion on the acco1pan5ing consoli#ate#
financial state1ents because the fairness of presentation of assets of the Province is
#oubtful pri1aril5 #ue to its failure to reconcile, i#entif5, an# properl5 classif5 balances
of asset accounts totaling P!,B*8,822,!2.C, /hich ren#ers #oubtful the vali#it5 of +8D
of the total assets recor#e# in the books of accounts of the :"U. (ela5e# re1ittances an#
#eposits an# #ela5e# recor#ing of receipts an# collections resulte# in the un#erstate1ent
of the balances of cash accounts in 5ear'en# financial state1ents b5 PB,+.!,+C2.C in
2C an# b5 PC,+B.,!C*.E2 in 2!. 4oreover, the Accounting Office faile# to recor#
a#Fust1ents in the books of accounts for reconciling ite1s re8uiring #ebits to cash
a1ounting to P.2,2*2,2..C! an# a#Fust1ents for cre#its to cash totalling
P*C,*E+,C*.++G for the un#erstate1ent of the consoli#ate# cash balance resulting fro1
fun# transfer fro1 the "eneral <un# to the >>(( of the a1ount of P+.,.!8,B8!.. on
(ece1ber +, 2! /hich /as not i11e#iatel5 ackno/le#ge# as collection of the >>((
on the sa1e #ateG an# for the 1isstate1ent of the (ue to N"As account, relate# e9pense
accounts an# retaine# earnings, as /ell as unaccounte# #eliveries of rice 1ostl5
pertaining to previous perio#s /hich a1ounte# to P+.,EBE,**+.2E as at 5ear'en#.
Significant Fin*ing' an* Reco,,en*ation'
!. 6he Province of Negros Occi#ental faile# to reconcile, i#entif5, an# properl5 classif5
balances of asset accounts totalling P!,B*8,822,!2.C, /hich ren#ers #oubtful the
vali#it5 of +8D of the total assets recor#e# in the books of accounts of the :"U as at
5ear'en#.
7e reco11en# that the Provincial Accountant effect reconciliation of the balances of
the asset accounts against relevant recor#s an# recor# the appropriate a#Fust1ents to
reflect the correct balances.
2. 6he Province faile# to i1ple1ent e9isting rules an# regulations pertaining to the
granting, utiliIation an# li8ui#ation of cash a#vances of officials an# e1plo5ees of
the :"U, resulting in the unli8ui#ate# cash a#vances a1ounting to P*+,2+.,28..2
as at 5ear'en#.
7e reco11en# that the Province shoul# co1pl5 /ith the provisions of )OA
)ircular CB'2 an# ensure proper granting, utiliIation an# li8ui#ation of cash a#vances.
6he Provincial Accountant shoul# rectif5 errors in the recor#ing of accounts to
ensure proper 1onitoring of li8ui#ation of cash a#vances an# i1ple1entation of e9isting
rules an# regulations on cash a#vances, inclu#ing the /ithhol#ing of salaries of
accountable officers /ho fail to effect pro1pt li8ui#ation in accor#ance /ith e9isting
rules an# regulations.
+. >9tant practices an# proce#ures of the Province pertaining to receipts an# collections
resulte# in #ela5e# re1ittances an# #eposits an# #ela5e# recor#ing of receipts an#
collections, thereb5 /eakening accounting controls over the cash transactions an#
ulti1atel5 resulting in the un#erstate1ent of the balances of cash, inco1e an# relate#
accounts in the perio#ic an# 5ear'en# financial state1ents a1ounting to
PB,+.!,+C2.C in 2C an# PC,+B.,!C*.E2 in 2!, contrar5 to the accounting
policies set forth in the 4anual on the Ne/ "overn1ent Accounting $5ste1.
7e reco11en# that 1anage1ent shoul# i1ple1ent 1easures to ensure pro1pt
reporting, re1ittances an# #eposit of collections in or#er to reflect the correct cash
balances in the financial state1ents%
a. )ollecting officers shoul# be re8uire# to prepare R)(3s at the close of each
business #a5 an# effect re1ittance of their collections #ail5, particularl5 /hen
collections e9cee# P.,.G
b. 6he Province shoul# consi#er the #esignation of a##itional li8ui#ating officers
an# 1erging their functions /ith the verification unit, in or#er to facilitate the
verification an# re1ittance process. Proce#ures for verification of receipts shoul#
be strea1line# to ensure pro1pt recor#ing an# re1ittance of collectionsG
c. 6he Province shoul# like/ise consi#er the #esignation of a regular cashier an#@or
collecting officers for 4a1bukal resort, consi#ering the substantial volu1e of
cash han#le# b5 sai# enterpriseG
#. >nterprises /ith assigne# cashiers ,regular or #esignate#- shoul# be re8uire# to
#eposit collections in authoriIe# #epositor5 banks ,#irectl5 or through inter'bank
transfers- to re#uce risk of loss in transit as /ell as to ensure pro1pt #eposit of
collections. 6he verifie# R)(3s shoul# be sub1itte# to accounting for recor#ing,
an# the transactions of the cashiers as accountable officers of sai# enterprises
shoul# be recor#e# in their respective cashbooks.
e. 6he Provincial Accountant an# the Provincial 6reasurer shoul# con#uct Fointl5 a
revie/ of the accounting an# reporting policies of the Province /ith regar# to
collection, #eposit an# recor#ing of revenues, in or#er to ensure correctness an#
accurac5 of cash balances in 6reasur5 reports an# in the financial state1ents an#
to preclu#e an5 #uplication of proce#ures an# functions.
*. A fun# transfer fro1 the "eneral <un# to the >>(( on (ece1ber +, 2! /as not
i11e#iatel5 ackno/le#ge# as collection of the >>(( on the sa1e #ate, resulting in
the un#erstate1ent of consoli#ate# )ash accounts of the Province as at 5ear'en# b5
P+.,.!8,B8!...
7e reco11en# that the appropriate a#Fust1ents be recor#e# in the books as at 5ear'
en# to correct the un#erstate1ent of the )ash accounts, an# that henceforth, transactions
involving fun# transfers shoul# be si1ultaneousl5 recogniIe# in the books of accounts
1aintaine# for the fun#s involve# in sai# transactions.
.. 6he lack of proper revie/ of the vali#it5 of reconciling ite1s in the bank
reconciliation state1ents an# 1onitoring of their #isposition b5 the Accounting
Office #espite in#icators of possible frau#ulent transactions a1ounting to
P!*,+B8,+...2+ cast #oubts on the vali#it5 of the reconciliation process an# the
accurac5 of the valuation of the cash accounts in the financial state1ents, in vie/ of
unrecor#e# a#Fust1ents in the books of accounts for reconciling ite1s re8uiring
#ebit to cash a1ounting to P.2,2*2,2..C! an# a#Fust1ents for cre#its to cash
totalling P*C,*E+,C*.++.
7e reco11en# that the Provincial Accountant shoul# i1ple1ent the provisions of
)OA )ircular No. CE'!! an# recor# a#Fust1ents for vali# reconciling ite1s as reflecte#
in the ;R$ prepare# b5 the Accounting Office. 6he Province shoul# like/ise 1ake
representations to the respective banks for correction of bank errors note# in the ;R$.
Aenceforth, the ;R$ sub1itte# to the )OA Au#itor shoul# be supporte# b5 copies of
the J>V recor#ing reconciling ite1s that re8uire correction in the books of accounts, as
/ell as a cop5 of the letter to the respective bank infor1ing the1 of errors note# in the
;R$ ,other than those resulting fro1 the ti1ing of recor#ing of transactions-. Upon
receipt of the bank state1ents an# prior to actual reconciliation, verification of supporting
pai# checks, #ebit 1e1os an# cre#it 1e1os shoul# be 1a#e to ensure that #ebits an#
cre#its 1a#e in the bank state1ents are properl5 #ocu1ente# b5 the ;ank.
6he Accounting Office shoul# re8uire banks to sub1it original copies of the bank
state1ents, asi#e fro1 the fa9e# a#vance# copies. )ash balances an# transactions shoul#
be 1onitore# regularl5 to #eter1ine proper use of the accounts an# prevent charges per
;$P regulations for #or1ant accounts.
E. 6he Province faile# to effect pro1pt li8ui#ations of fun#s release# to non'
govern1ental organiIations@private organiIations ,N"O@PO3s- pursuant to the
provisions of )OA )ircular 2B'! #ate# October 2., 2B, resulting in the
accu1ulation of unli8ui#ate# releases a1ounting to P!8,*!.,8EE.8 as at 5ear'en#
along /ith the conse8uent un#erstate1ent of e9penses an# overstate1ent of assets
an# retaine# earnings.
7e reco11en# that the Province shoul# i1ple1ent the provisions of )OA )ircular
2B'! an# ensure proper granting, utiliIation an# li8ui#ation of cash fun# transfers.
6he Provincial Accountant shoul# revie/ all outstan#ing accounts an# recor#
a#Fust1ents for transfers that actuall5 partake of the nature of #onations rather than that
of proFect i1ple1entation as conte1plate# in the regulations.
6he Province shoul# institute action against N"O@PO3s an# their officers@organiIers
that faile# to i1ple1ent the progra1s an# proFects fun#e# b5 the Provincial govern1ent
pursuant to the provisions of the 4e1oran#u1 of Agree1ent covering these transactions.
B. :ack of 1onitoring an# proper accounting for #eliveries of rice procure# through
negotiate# procure1ent fro1 the National <oo# A#1inistration ha# resulte# in the
1isstate1ent of the (ue fro1 N"As account, relate# e9pense accounts an# retaine#
earnings, as /ell as in unaccounte# #eliveries of rice 1ostl5 pertaining to previous
perio#s /hich a1ounte# to P+.,EBE,**+.2E as at 5ear'en#.
7e reco11en# that the Provincial Accountant shoul# anal5Ie the (ue fro1 N"As
account an# reclassif5 charges an# cre#its to the appropriate accounts. N<A /arehouse
stock issue for1s shoul# be co1pare# against 8uantities procure# per P.O., an# if in#ee#
inco1plete #eliveries ha# been 1a#e, #iscrepancies shoul# be reporte# to N<A along for
the #e1an# to 1ake goo# the shortfall@unserve# purchase or#ers, if an5.

Re8uisitioning ProFect i1ple1enters shoul# in turn be 1a#e to account for all rice
/ith#ra/n per verifie# N<A /arehouse stock issue slips b5 presenting
pa5rolls@#istribution sheets #ul5 ackno/le#ge# b5 recipients. Unaccounte# #eliveries
shoul# be charge# to the accountabilit5 of ProFect i1ple1entors.
Aenceforth, purchase or#ers shoul# be supporte# b5 sche#ules of #eliveries, an#
proFect proposals shoul# incorporate ti1e'tables for proFect i1ple1entation an# i#entif5
beneficiaries, to facilitate 1onitoring of accountabilities as /ell as acco1plish1ent of
proFect obFectives.
8. 6he Office of the Provincial Accountant faile# to effect pro1pt sub1ission to the
Office of the Provincial Au#itor of all vouchers issue# b5 the Province, contrar5 to
the provisions of $ection !B of P( !**. an# the Rules an# Regulations on the
$ettle1ent of Accounts.
7e reco11en# that the Accounting Office shoul# sub1it all the unaccounte#
original vouchers an# supporting #ocu1ents to the Office of the Au#itor. 7e like/ise
reco11en# that the Provincial 6reasurer release checks onl5 to clai1ants an# for/ar#
the vouchers an# supporting #ocu1ents to the Office of the Provincial Accountant in
accor#ance /ith proce#ures lai# out in the 4anual on N"A$.
C. 6he Province of Negros Occi#ental ha# effecte# onl5 partial settle1ent of all
#isallo/ances an# suspensions issue# upon the effectivit5 of the )OA Rules an#
Regulations on the $ettle1ent of Accounts, re#ucing unsettle# balances to P!,B2*.
an# PE.,..2,!8*..B, respectivel5, as at (ece1ber +!, 2!.
7e reco11en# that 1anage1ent effect full settle1ent of suspensions b5
sub1itting the re8uire# #ocu1entation an# e9planations@Fustifications liste# in the notices
of suspension, in or#er to avoi# unnecessar5 co1plications arising fro1 suspensions
lapsing into #isallo/ances.
!. A revie/ of transactions pertaining to trust fun#s grante# b5 the ;ureau of
Postharvest Research an# >9tension ,;PR>- for the establish1ent of agricultural
tra1line in the province of Negros Occi#ental reveals #eficiencies in the
i1ple1entation of the proFect as /ell as in the han#ling, accounting an# utiliIation
of fun#s, resulting in the overcharging of a#1inistrative costs a1ounting to
P!,*,*8.. an# the failure to full5 i1ple1ent the proFect /ithin the perio# of
effectivit5 of the covering 4e1oran#u1 of Agree1ent ,4OA- as /ell as to
li8ui#ate the fun#s receive# for the purpose to #ate%
!.!6he Province through the Office of the Provincial Agriculturist ,OPA- ha#
charge# proFect fun#s /ith e9cessive a#1inistrative costs totalling
P!,!*,B*.BE, 1ost of /hich are not relevant to the ProFect, although the
4OA provi#e# for a#1inistrative an# non'#irect cost of onl5 !D of total
proFect cost a1ounting to P!+E,2E.2EG
!.2Onl5 one proFect thus far ha# been co1plete# an# accepte# as at 5ear'en#, /ell
be5on# the one'5ear perio# of effectivit5 of the 4OAG <our proFects /ere all
a/ar#e# to onl5 one contractor, /hile three proFects, inclu#ing t/o proFects
suppose# to have been i1ple1ente# un#er Phase I, have not been a/ar#e# to
an5 contractor as of #ate of e9pir5 of the 4OAG
!.+6he a1ounts release# b5 ;PR> as trust fun# /ere not #eposite# in a separate
trust liabilit5 account in an authoriIe# govern1ent #epositor5 bank, contrar5 to
the provisions of the 4OAG
!.*6he Accounting Office faile# to properl5 1onitor utiliIation of fun#s to ensure
that #isburse1ents are 1a#e onl5 for the specific purpose provi#e# in the
4OA.
7e reco11en# that the Province shoul# en#eavor to co1plete the i1ple1entation
of the proFects an# li8ui#ate the fun#s #ue ;PR>.
Progra1 of /orks prepare# b5 the ProFect i1ple1enting office shoul# in#icate
specific ti1e'table for the proFectsG a1en#1ents, #eviations an# e9tensions shoul# bear
concurrence of the fun#ing agenc5 an#@or the proFect 1anage1ent co11ittee, particular
/hen these e9ten# be5on# the effectivit5 of the 4OA@trust agree1ent.
6he Provincial Accountant shoul# ensure that the progra1 of /orks prepare# for
ProFects, particularl5 its financial co1ponent, are in confor1it5 /ith provisions of the
bu#get@trust agree1ent ,a file of /hich shoul# be 1aintaine# in the Accounting Office
for gui#ance an# reference-.
6he Offices of the Provincial Agriculturist an# the Provincial Accountant shoul#
properl5 revie/ charges an# ensure that onl5 costs an# e9penses relevant to the specific
purpose of the ProFect are charge# against trust fun#s, /hile relevant a#1inistrative
e9penses shoul# never e9cee# li1its set un#er the 4OA. Other unnecessar5 an#
irrelevant costs an# charges /hich cannot be fun#e# un#er the regular bu#get of the OPA
shoul# be charge# to the account of persons responsible therefor.
Stat)' of I,(le,entation of #rior &ear+' A)*it Reco,,en*ation'
Of the 2! au#it reco11en#ations containe# in the prior 5ears3 Au#it Reports, one
,!- /as full5 i1ple1ente#, si9teen ,!E- /ere partiall5 i1ple1ente# an# four ,*- /ere not
i1ple1ente#.
TABLE OF CONTENTS
PAR6 I Page No.
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Republic of the Philippines
COMMISSION ON AUDIT
OFFICE OF THE REGIONAL DIRECTOR
Regional Office No. VI
Ungka I, Pavia, Iloilo
AUDIT CERTIFICATE
HON. ALFREDO G. MARAON !R.
"overnor
Province of Negros Occi#ental
Pursuant to $ection 2, Article I&'( of the Philippine )onstitution an# pertinent
provisions of Presi#ential (ecree No. !**., /e have au#ite# the acco1pan5ing
)onsoli#ate# ;alance $heet of the Provincial "overn1ent of Negros Occi#ental as of
(ece1ber +!, 2! an# the relate# consoli#ate# state1ents of inco1e an# e9penses an#
cash flo/s for the 5ear then en#e#. 6hese financial state1ents are the responsibilit5 of
the Negros Occi#ental Provincial "overn1ent3s 1anage1ent. Our responsibilit5 is to
e9press an opinion on these financial state1ents base# on our au#it.
>9cept as #iscusse# in the follo/ing paragraph, /e con#ucte# our au#it in
accor#ance /ith la/s, )OA an# IN6O$AI stan#ar#s an# applicable "enerall5 Accepte#
Au#iting $tan#ar#s ,"AA$-. 6hose stan#ar#s re8uire that /e plan an# perfor1 the au#it
to obtain reasonable assurance /hether the financial state1ents are free of 1aterial
1isstate1ents. An au#it inclu#es e9a1ining on a test basis, evi#ence supporting the
a1ounts an# #isclosures in the financial state1ents. An au#it also inclu#es assessing the
accounting principles use# an# significant esti1ates 1a#e b5 1anage1ent, as /ell as
evaluating the overall financial state1ent presentation. 7e believe that our au#it
provi#es reasonable basis for our opinion.
As #iscusse# in our <in#ings, the fairness of presentation of the assets of the
Province is #oubtful #ue to the failure of the Accounting (epart1ent to reconcile,
i#entif5, an# properl5 classif5 balances of asset accounts totaling P !,BB+,2*8,+E2.C+,
/hich ren#ers #oubtful the vali#it5 of +8D of the total assets recor#e# in the books of
accounts of the :"U. (ela5e# re1ittances an# #eposits an# #ela5e# recor#ing of receipts
an# collections resulte# in the un#erstate1ent of the balances of cash accounts in 5ear'
en# financial state1ents b5 PB,+.!,+C2.C in 2C an# b5 PC,+B.,!C*.E2 in 2!.
4oreover, the Accounting Office faile# to recor# a#Fust1ents in the books of accounts
for reconciling ite1s re8uiring #ebit to cash a1ounting to P.2,2*2,2..C! an#
a#Fust1ents for cre#its to cash totalling P*C,*E+,C*.++G for the un#erstate1ent of the
consoli#ate# cash balance resulting fro1 fun# transfer fro1 the "eneral <un# to the
>>(( of the a1ount of P+.,.!8,B8!.. on (ece1ber +, 2! /hich /as not
i11e#iatel5 ackno/le#ge# as collection of the >>(( on the sa1e #ateG an# for the
1isstate1ent of the (ue to N"As account, relate# e9pense accounts an# retaine#
earnings, as /ell as unaccounte# #eliveries of rice 1ostl5 pertaining to previous perio#s
/hich a1ounte# to P+.,EBE,**+.2E as at 5ear'en#.
In our opinion, e9cept for the effect of an5 a#Fust1ents on the #eficiencies
#iscusse# in the prece#ing paragraph, the acco1pan5ing consoli#ate# financial
state1ents present fairl5 in all 1aterial respects, the financial position of the Province of
Negros Occi#ental as of (ece1ber +!, 2!, an# the results of its operations an# cash
flo/s for the 5ear then en#e# in confor1it5 /ith generall5 accepte# accounting
principles.
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