INTRODUCTION

The Land Bank of the Philippines (LBP), Imus Branch was established by virtue of LBP Board Resolution No. 91-318 on December 21, 1991 and by the Central Bank on May 21, 1992. It underwent a series of changes in the operational set-up over the years. After the dissolution of the Loans and Discount Division on March 1, 1996 in favor of the creation of Provincial Lending Center (now called Area Lending Center) housed in Silang Branch, the branch was converted into Unified System Project (USP) on July 1, 1996 establishing the Cooperative Loans and Services Division which was finally transferred to Tagaytay City Branch sometime in May 1999. The branch to date served as a Cash Center of all LBP branches in the province pursuant to Unnumbered Memorandum of the AVP - Cash Operations Department servicing their cash requirements beginning June 17, 1997.

The latest innovations in the banking operations was the issuance of Executive Order No. 20 creating the Accounting Processing Centers (APC), APC I and APC II, under the direct supervision of Regional Head, Region IV D. It became operational on May 17, 1999. APC I is housed at Imus Branch. Clustered under APC I include Imus, Cavite, Dasmariñas and Rosario (CEZ) Branches. This concept will enable frontline personnel to focus on marketing and client servicing while the backroom staff concentrated on bookkeeping and accounting functions.

Total resources grew slightly by 4.25%, from P 209.888 M in 1998 to P 218.814 M in 1999. This was due to significant reduction in Loan portfolio accounts which was compensated by higher inter-branch transactions. The rise in liabilities was caused by the increase in deposit accounts totalling P216.228 M this year, from P 207.004 M last year. On the other hand, total income for the year decreased by 81.22% to P5.288 M while operational expenses decreased by 5.76% to P 21.595 M resulting to a net loss of P16.307 M this year from a net income of P 5.244 M last year. This was due to transfer of agrarian operation in Tagaytay City Branch and the transfer of all commercial loans to Area Lending Center, Silang Branch.

SCOPE OF AUDIT

The audit covered the accounts and operations of the branch in 1999. It included verification of accounts and financial reports, to a limited extent. A review of disbursements made in terms of compliance with existing bank’s and government rules and regulations was likewise undertaken. The results of the value-for-money audit conducted are covered by a separate report.

OPINION IN STATE AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS

The Auditor rendered an unqualified opinion on the fairness of the presentation of the financial statements of the Land Bank of Philippines, Imus Branch.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS AND FAVORABLE OBSERVATION

This year’s significant audit findings and observations are the following:

1. The practice of fixing/placing property accountability to the Property Officer instead of to the persons actually using it has caused some difficulty in the determination of persons liable as in the case of lost/carnapped Nissan Power Eagle pick-up with net book value of P261,458 at the time of loss, in conformity with the provisions of Section 102 of PD 1445.

Stop the practice of assigning or fixing all properties owned by the branch to Property Officer in conformity with Section 102 of PD 1445. As much as possible, bank’s properties should be assigned to personnel actually using it or in charge for its custody.

2. The posted bond of P 0.5 M by the Operation Supervisor was inadequate to cover his maximum cash accountability of P 26.77 M. Moreover, there are still two bank Tellers who remained not bonded to date. Thus, interest of the bank was not adequately safeguarded against risk from losses arising from illegal acts or from external factors beyond their control.

Apply for an increase in the amount of bond enough to cover the present cash accountability of P 26.77 M of the Operations Supervisor in accordance with Section 101 of PD 1445 and Sections 2.5 and 11 of LBP Executive order No. 0.38, Series of 1996. Likewise, require the two bank tellers to post bond in accordance with the same regulations.

3. Operational flaws was still evident in the implementation of the Interbranch Transaction/Reciprocal Accounts Reconciliation System (IBT/RARS), thus affecting monitoring of inter-office floats. Moreover, on-line interbranch CA/SA transactions which are over 60 days was still high at P 5.730 M, hence true value of asset/liability accounts in the Branch’s Statement of Condition could not be ascertained, contrary to the provisions of LBP-Primer on Inter-Office Accounting System.

Closely coordinate with the respective clustered branches in-charge of the interbranch transactions to resolve the issue on float items so that proper classification of these accounts into specific asset/liability accounts in the Statement of Condition can be made. Observe strictly the required period within which to respond as provided under LBP-Primer on Inter-Office Accounting System.

Notable favorable audit observation is discussed below:

A substantial increase in government deposit was registered in 1999 amounting to P 25.244 M or 16.18% above the target of P 156.000 M. Compared to last year, deposit increased by 23%, from P 147.346 M last year to P 181.244 M this year. Government deposits account 75.40% of the total Average Daily Balance (ADB) for peso deposit generated for the year. This was largely due to improvement in marketing of deposit accounts within the service area.

The above together with other findings and recommendations contained in the report were discussed with concerned officials of the bank. Management’s views and reactions were considered in the report, where appropriate.

STATUS OF IMPLEMENTATION BY THE BANK OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

Of the three recommendations contained in the 1998 Annual Audit Report, one or 33% was fully implemented. Compliance with regulations cited in the said report relative to the deficiencies in post-audit noted in post-audit is now being observed. The two remaining audit recommendations are still for compliance and reiterated in Part III of this report.