EXECUTIVE SUMMARY

HISTORICAL BACKGROUND

Dapitan City is the place of exile of Dr. Jose Rizal, the Philippines’ National hero,
from July 17, 1892 to July 31, 1896. It became a chartered city by virtue of Republic Act
No. 3811 on June 23, 1963, the first chartered city in the Province of Zamboanga del
Norte and officially called the “Shrine City of the Philippines”. It is a 3rd class City with
fifty (50) barangays and 15 kms from the City of Dipolog

When Republic Act No. 7160, otherwise known as the Local Government Code of
1991, was implemented, the city became the partner of the National Government in the
delivery of basic services to the people. It also became one of the tourist attractions of
the country.

To promote tourism, the City hosted the Zamboanga del Norte Hudyaka festival
on June 2009 and 2010. It also hosted the 2010 Zamboanga Peninsula Regional Athletic
Association (ZPRAA) Meet.

For the year 2011 The City of Dapitan hosted again the Zamboanga del Norte
Hudyaka Festival and was chosen to host the big national event the Palarong Pambansa,
from May 8-14, 2011. On the same year, Dapitan was also declared as a Heritage Zone
that gave the City a new status- an official historical and cultural tourist destination in the
country.

ORGANIZATIONAL SET UP –

The City of Dapitan has a working force of 1,299 personnel distributed among the
city’s different departments:

Name of Office Elective Permanent Temporary Co- Casual Job

terminus Order
1. City Mayors Office 1 10 3 2 25
2. Mgt Information System s Office 3 1 11
3. City Vice Mayors Office 1 10 3 6 18
4. Sangguniang Panlungsod 12 12 24
5. Office of the Secretary to the SP 21 2
6. City Administrators Office 1 1
Human Resource Mgt Div 9 4
Licensing & Permits Div 3 2
Tourism & cultural Affairs 10 1 74
City Information 8 1 6
Population & Program 5 2
Nutrition & Program 4 3
Economic enterprise 8 14
7. City Planning & Development 16 5
8. City Civil Registrar’s Office 8 3
9. City Gen. Services Office 91 16 150
10. City Budget Office 11 1 4
11. City Accounting Office 31 2 8
12. City Treasury Office 37 2 17
13. City Assessor’s Office 13 10
14. City Legal Office 1 2
15. City Health Office 40 1 29
16. City Social Welfare % Devl’t 22 32
Office
17. City Agriculture’s Office 21 1 140
18. City Veterinarian’s Office 5 28
19. City Environment & Natural 4 5
Resources
20. City Engineering Office 73 2 136
21. City Prosecutor’s Office 4
22. COMELEC 4
23. Phil National Police 5
TOTAL 14 463 4 20 59 741

The City of Dapitan is headed by City Mayor Dominador G. Jalosjos, Jr. and
assisted by Patri B. Chan, City Vice Mayor, Rodalicia P. Adraincem, City Administrator,
Joseline J. Saycon, City Accountant and Medelyn B. Pacatang City Treasurer.

FINANCIAL PROFILE

INCOME

For calendar year 2011, the City Government generated total revenues from
General and Special Education taxes, fees and economic enterprise in the amount of
P434,359,850.99. The amount of P404,580,399.00 came from Internal Revenue
Allotment.

APPROPRIATIONS

Total budgeted expenditures for CY 2011 was P818.038 million appropriated

in the General Fund, which included Development Fund and Calamity Fund. Out of this,
P815.035 million were obligated and allotted in the different sectoral services, namely:

General Public Services P221.579 million

Economic Services
Health Services and
Social Services
Special purpose Lump Sum
Calamity fund
P 45.260 million
P 31.391million
P 419.470 million
P 19.487 million
 20% Local Dev’t fund P 80.848million
--------------------------
P 815.817 million
------------------------ -

Economic enterprise and special education fund are appropriated with P12.068
and P6.135 million respectively.

On the other hand, total continuing appropriations has an allotment of P64.087

million , of which P3.733 million was obligated; thus a balance of P60.353 million
remained available for obligation in the succeeding year

Financial condition
(In thousand pesos)
2011 2010 Variance
Assets 814,676,848.20
Liabilities 233,297,805.08
Government Equity 581,379,043.12

Financial Position
(In thousand pesos)
2011 2010 Variance
Income (Incl. subsidies & Extra items) 406,840,448.97
Expenses 331,999,126.95
Net Income 74,841,322.02

Cash Flows
(In thousand Pesos)

2011 2010 Variance

Net Cash from Operating Activities 77,715,373.55
Cash from Investing Activities (114,439,848.94 )
Cash from Financing Activities 5,763,533.43
Net Cash Provided (Used) ( 30,960,941.96)
Cash Bal. Beg 82,245,635.54
Cash Bal. End

AGENCY ACCOMPLISHMENTS –

The following are some of the accomplishments of the City of Dapitan for the
year 2011 vis-avis its targets:
 Name of Project Accomplishments

1.Completion of Fishery Division Office Laboratory and Bodega, 100%

City Agricultures Office
2. Proposed shower room for Palarong Pambansa 2011 100%
3. Installation of Street Lamp Post, Polo terminal and DAMPA 100%
4. Installation of street lights in National Road left portion
Area from Brgy Talisay to Taguilon 100%
5. Installation of street lights from Polo bridge to Bagting Bridge,
Road 12 and 17 100%
6. Improvement of meat stall, Public Market 100%
7. Proposed lighting of JRMSU oval for Palaro 2011 100%
8. Volleyball court lightings at Dapitan City High School 100%
9. Construction of perimeter fence at JRMSU 100%
10. Widening/improvement of Guading Adaza St. Phase V 100%
11. Concreting of DAMPA parking area with drainage component 100%
12. Construction of 2 units swimming pool, JRMSU 100%
13. Construction of riverbank protection, DAMPA, Polo 100%
14. Construction/completion of New City Hall 74%

SCOPE OF AUDIT

The audit was conducted in accordance with laws, COA and INTOSAI standards
and applicable generally accepted auditing standards that require planning to obtain
reasonable assurance that the financial statement is free from material misstatement. It
includes examining, on a test basis, evidences supporting the amounts and disclosures. It
also includes assessing the accounting principles used and review of significant estimates
made as well as evaluating the over-all financial statement presentation. An assessment
was also made whether the City Government utilized the funds economically , efficiently
and effectively in attaining its desired objectives.

AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

A qualified opinion was rendered on the fair presentation of the financial

statements due to non-reconciliation/unupdating of the Property, Plant and Equipment
Ledger Cards with accounting records rendering the account unreliable. Likewise the
accumulated unliquidated cash advances amounting to P46,205,640.65 at the end of the
year caused the understatement of the expense account.
SIGNIFICANT FINDINGS AND RECOMMENDATIONS

1. Cash Advances amounting to P46,205,640.65 remained unliquidated as of

December 31, 2011 contrary to sec. 5.8 of the COA Circular No, 97-002 dated February
10, 1997 and Sec. 89 of PD 1445 which states that cash advances shall be fully
liquidated at the end of each year.

RECOMMENDATIONS:

Management must exert effort in the liquidations of cash advances. Those who
still have unliquidated cash advances should not be granted another one. Compliance of
laws, rules and regulations regarding cash advance must be strictly observed to lessen
the accumulation of the same. Failure to liquidate within the prescribed period will cause
for the deductions of the unliquidated amount to their respective salaries.

Retiring/resigning/transferring employees should not be cleared if he/she still has

unliquidated cash advances. Demand letters should be sent to all accountable officers
who have retired/transferred to other offices. No clearance should be issued to
retiring/resigning/transferring employees unless he settled his accountabililty, otherwise
the clearing official will also be administratively and equally liable.

A written notice or a reminder be issued to the concerned Accountable Officers

(AO) to comply within 10 days before the expiration of the 30 days or 60 days period as
stated under Sec. 14 of EO 298 and other laws and regulations enjoining them to
liquidate their outstanding cash advances.

The City should minimize/stop the practice of granting cash advances to other
employees when the accountable officer concerned had not liquidated his cash
advances. This caused the accumulation of the amount of cash advances. Instead of
using another accountable officer, enforce the liquidation of the cash advances of the
current AOs in relation to the expenses incurred in the City’s various activities. To cite an
example is the Office of the City Tourism. Currently, the AO concerned has unliqudated
cash advances amounting to P971,995.87 in relation to tourism activities from 2007 to
2009. Hence, he was not allowed to draw another advances, instead another employee
was used.

Appropriate legal sanction should be instituted by the Agency against concerned

employees/officials or by withholding or suspension of their salaries.

2. Physical Inventory of Property, Plant and Equipment was not conducted, thus,
validity, existence and correctness of the net fixed assets totaling P855,397,123.65
could not be ascertained.
RECOMMENDATIONS:

Conduct Physical Inventory of Property, Plant and Equipment and submit the
report to the Auditor in accordance with sec. 492 of the GAAM, vol. 1. In cases of
deficiencies/discrepancies necessary adjustment must be made in the fixed asset
account. Equipment issued by property officer shall be covered by Acknowledgement
receipt for Equipment, which shall be renewed every January of the 3rd year after issue.
(Sec. 492 of GAAM Vol. 1)

Government property, which has become unserviceable for any cause, or is no

longer needed, shall upon application of the officer accountable therefore, be inspected
by the Head of the Agency or his duly authorized representative in the presence of the
auditor concerned and, it found valueless, may be destroyed in their presence. If found
to be valuable, it maybe sold at public auction to the highest bidder under the
supervision of the proper committee on award in the presence of the auditor or his duly
authorized representative. (Sec. 502 GAAM Vol. 1)

3. The City incurred P4,343,398.40 for reimbursement of expenses for purchased of

food and services, other supplies n violation of Sec. 10 of the Revised IRR that all
procurement shall be done through competitive bidding except a provided by the law.

RECOMMENDATION:

Payment of goods and services shall be properly bid, payment should be paid
directly to the winning suppliers in compliance to Sec. 10 of the Revised IRR and so
proper taxes can be withheld.

4 The City did not procure their common use supplies and materials amounting to
P20,519,295.45 from the Procurement Service of the Department of Budget and
Management (DBM) contrary to the provisions of Rule III Sec. 8 of the Revised Rules
and Regulations of RA 9184, as well as Administrative Order No. 17 dated July 28, 2011
and DBM Circular letter No. 2011-6 dated August 25, 2011 directing the use of the
Procurement Service (PS) and the Philippine Government Electronic Procurement
System (PhilGEPS) in procuring activities

RECOMMENDATION:

The City should immediately register with the PhilGEPS and make full use thereof;
consequently all procurement activities should be posted in the said System in
accordance with RA 9184, the General Provisions of the GAA and DBM Circular Letter No.
2011-6 dated August 25, 2011.
5. The amount of P18,807,393.45 were disbursed by the City during 2011 Palarong
Pambansa, with only P8,700.00 income were recorded in adherence to Sec. 347 of the
Local Government Code which prescribes the Rendition of Accounts.

RECOMMENDATION:

In as much as the Dapitan City Tourism and Investment Council (DCTIC) was given
the authority by the Sangguniang Panlungsod to impose Palaro fees from business
establishment supposedly due to the City, hence any expenses in relation to their
expenses should be shouldered by the Council itself.

Accounting of the expenses incurred by the DCTIC and income received is also
requested for reference.

Compliance with Tax Laws: (Based on November FS)

The amount of P12,150,156.69 ,P2,102,955.51 , P5,926,780.59, P1,537,908.58,

and P115,766.60 or a total of P21,833,567.97 were withheld from compensation of
employees, VAT-GF, (LBP and PNB) VAT 20% Dev.t fund, and Hotel respectively.
Remittances are shown in the attached schedule.

Total amount remitted for the year was P13,904,597.37 with unremitted balance
of P7,928,973.60 as reflected also in the trial balance. Based on the schedule submitted,
the supposed amount unremitted as of December 31, 2011 is P5,210,811.58 a
difference of P2,718,162.02.

Based on the attached schedule remittances were made every succeeding

months. However, the remitted amount was not exact amount withheld from the
previous months.

RECOMMENDATION:

Compliance to tax laws must be strictly enforced. Direct the personnel concerned
to remit in full the amount withheld from suppliers and compensation of employees to
avoid accumulation of the same.

Status of Implementation of Prior Year’s Audit Recommendation

Out of seven (7) recommendations cited in the Annual Audit Report for Calendar
Year 2009, two (2) were fully implemented three (3) were partially implemented and
two (2) were not implemented.