INTRODUCTION

By virtue of Republic Act No. 183 otherwise known as the Charter of Rizal City, the town of Pasay which was then a municipality of Rizal Province was declared a city on August 16, 1947. It was on June 7, 1950 when it regained its historic name Pasay by the passage of Republic Act No. 437 an "Act changing the name Rizal City to Pasay City."

Despite financial constraint, the city government stretched its meager resources to finance various programs geared towards the delivery of basic services to its constituents. During the year, Pasay City emerged as the best in the delivery of quality health services among the cities and municipalities in the National Capital Region by winning six "Sentrong Sigla" awards out of eight awards given in the NCR.

FINANCIAL PROFILE

A.  Sources of Funds

For 1999 the city collected P1,107,058,531.85 which is 27 percent lesser than the targeted collections of P1,521,015,711.76. This amount however is 23.07 percent higher than that of the previous year.

B.  Application of Funds

The total expenses incurred during the year amounted to P1,165,238,942.70 or an increase of 16.31 percent against last year’s expenditures. Personal Services amounted to P439,782,733.61 or an increase of 37.01 percent than the previous year. Maintenance and Other Operating Expenses registered at P513,850,304.23 while capital outlay amounted to P211,605,904.86.

C.  Highlights of Financial Operations

As of December 31, 1999, the city’s Assets was recorded at P2,929,812,392.92; Liabilities, P976,842,936.67 and Residual Equity, P1,952,969,456.25. This registers a corresponding increases of 8.1 percent, 23 percent and 2 percent respectively over those of the preceding year’s figures. Likewise its current ratio of .45:1 and debt-equity ratio of .50:1 displayed a poorer financial condition as compared to the 1998 ratio.

SCOPE OF AUDIT

A comprehensive audit was conducted on the accounts and operations of the Pasay City government which consisted in the review of its operating procedures, inspection of projects, verification and analysis of accounts, interview of concerned officials and employees and such other auditing procedures deemed necessary. Emphasis was likewise given on revenue audit in view of the request of the members of the Sangguniang Panlungsod under Resolution No. 1361 S-1999 to audit the operations of the Cuneta Astrodome. The results of the VFM audit conducted are in a separate report.

OPINION IN THE STATE AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS

We rendered an adverse opinion on the fairness of presentation of the financial statements as the Cash-in-Bank for the three funds was overstated by P17,499,062.05 due to failure of the agency to record reconciling items. The Fixed Assets-Building and Structure account still include the amount of P75,355,899.04 which pertains to the cost of demolished building of the Pasay City Hall and Pasay City General Hospital and the booking up as income of the amount of P7.5 million representing the balance of unreleased loan.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

For the exceptions cited above, we recommend that the City Accountant coordinate with the bank for the needed documents to effect the adjustments of the reconciling items. The request for relief from accountability for losses of property with all the supporting documents should be re-submitted to COA and inventory and inspection report be prepared for the dropping of the demolished buildings. Likewise, the entries made on the unreleased loan should be adjusted. In addition, the following are the other significant findings and the corresponding recommendations:

1. The total appropriation of P491,591,954.58 for personal services exceeded the 45 percent limitation set under Section 325 (a) of the Local Government Code based on the annual income from regular sources realized in the next preceding fiscal year.

Require the budget officer to strictly comply with the budgetary limitations set by law in preparing the budget for the city.

2. The city government incurred a cash overdraft of P45,699,379.09 and P60,690,680.25 in the General Fund and Trust Fund, respectively, due to unauthorized use of trust deposits contrary to Section 4 (3) and Section 84 (2) of P.D. 1445.

Direct the City Treasurer to stop utilizing the trust fund for purposes other than those for which these were intended. Strictly adhere to the provisions of Section 4 (2) of P.D. 1445 in the use of trust fund.

3. Payment for garbage services to Greenline Envirotech Phil. Inc. exceeded the contract price by P15,629,459.00 thus, casting doubt on the regularity, propriety and accuracy of the transactions.

Stop the payments of garbage collections to Greenline Envirotech Phil., Inc. until and after proper review and evaluation of the total payments as well as an accounting of the overpayment is made including that of other garbage contractor, if applicable. Require the City Accountant to maintain special subsidiary ledger for each of the contractors to monitor the billing periods and payments made.

4. Audit suspensions, disallowances and charges as of December 31, 1999 totalled P266,396,940.88, P232,460.17 and P2,728,905.77 respectively, of which only two percent of suspensions and Charges were settled in violation of Section 9.01 of COA Circular No. 94-001 the Revised Manual of CSB.

Require the persons liable under Notices of Suspensions to comply with the requirements cited in the said notice/s within the reglementary period of ninety (90) days from the issuance of such suspensions to avoid the maturing of subject suspensions into disallowances. Also require the persons liable under the Notices of Disallowance and Notices of Charge to settle the same through submission of the required explanation/ justification and/ or documentation or by payment of the amount disallowed in audit.

5. Failure of the city officials to execute lease contracts with the occupants of the stalls of the Cuneta Astrodome and to demand payments from delinquent stallholders deprived the city government of an additional income of P1,143,562.40 for the CY 1999.

Execute contract of lease immediately between the City Mayor and the stallholders. The contract should include a stipulation prohibiting the lessees to sublease said stallholders to third parties. A provision should likewide be included in the contract of lease that in case of default in the payment of the rentals due, the contract will be outrightly rescinded and the occupants will be prohibited from continuing their business.

6. Lack of implementation of the control mechanism sponsored by the Sangguniang Panlungsod on the verification of the correctness of Monthly Reports of Gross Receipts submitted by operators of cinemas or theaters, deprived the city government of income on the collection of the 30 percent amusement tax.

The City Treasurer should require operators of cinemas or theaters to submit a duly certified monthly report of gross receipts to ensure the validity of the reports submitted.

The City Treasurer should implement the following procedures in compliance with Sangguniang Panlungsod ordinance No. 1488 S-1999:

1. All rolls of admission tickets should be presented by the operators or its representatives to the City Treasurer’s Office prior to their sale to the movie-going public, for imprinting of security markings and recording of their serial numbers to ensure that all tickets are accounted for;

2. The unsold tickets should be presented to the City Treasurer’s Office;

3. A representative from the City Treasurer’s Office should be authorized to conduct an actual checking of all movie houses in the city from time to time.

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

Of the 33 prior years’ audit recommendations embodied in the 1998 Annual Audit Report, 21 were partially implemented and 12 were not acted upon by the city.