INTRODUCTION

Pursuant to Executive Order No. 710 dated July 27, 1981; the Ministry of Public Works and Highways was merged for a more effective and sustained implementation of infrastructure projects. Under the restructured set-up, the agency became known as the Department of Public Works and Highways (DPWH) with fifteen regional offices tasked to implement its programs and infrastructure projects.

Presidential Decree No. 498 dated June 28, 1974, which amended the approved Integrated Reorganization Plan insofar as the number of regional offices of the Department of Public Works and Highways concerned Regional Office No. IV was divided into two: Region IV-A and Region IV-B.

Region IV-A being one of the implementing bodies of the DPWH today in laying down the physical foundation for socio-economic growth of the country had contributed in the attainment of this general objective through the implementation of various infrastructure projects under its regionwide jurisdiction. The region is composed of nine engineering districts and six sub-district offices in the inland provinces of Southern Tagalog Region, also known as the CALABARZON area.

The agency is under the supervision of Engineer Salvador A. Pleyto as Regional Director and assisted by two Assistant Director, Engineer Rodolfo K. Alday for Regional Area II which covers the provinces of Aurora, Cavite and Batangas and Engineer Nestor V. Agustin for Regional Area I which covers the provinces of Laguna, Quezon and Rizal. At the middle part of the year, Engineer Romeo G. Panganiban replaced Engineer Agustin who was transferred to NCR.

FINANCIAL PROFILE

In addition to the 1998 year end balance of continuing appropriation of P 334,434,811 the agency received allotments of P 1,659,571,187 thus total fund of P 1,994,005,998 was available for obligations for calendar year 1999.

For 1999, the Department of Budget and Management (DBM) issued Notices of Cash Allocation (NCA) for the accounts of DPWH Region IV-A in the amount of P909,233,690.99 (Annex 1-A) DBM issued a separate NCA for due and demandable Accounts Payable for specified creditors amounting to P 818,316,586.39 (Annex 2) per DBM Circular No. 99-2 dated January 15, 1999. In addition, the DPWH Central Office issued funding checks in the amount of P 15,033,883.78 (Annex 3). The agency incurred a total expenditure of P 1,641,547,553 thus leaving an unexpended balance of P 352,458,445 at the end of the year.

The agency’s assets, liabilities, residual equity and income for 1999 were P 6,089,682,237, P 2,275,986,292, P 3,813,695,945 and P 2,310,159 respectively.

SCOPE OF AUDIT

A financial and compliance audit was conducted on the accounts and operations of DPWH, Region IV-A for 1999. The audit included verification, reconciliation and analysis of accounts and other procedures necessary in ascertaining the correctness of financial transactions, the reliability of financial reports and adequacy of financial records. Value for Money Audit (VFM) was likewise conducted and the results thereof was reported separately.

STATE AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS

The auditor rendered a disclaimer of opinion on the fairness of the presentation of financial statements since the region failed to submit the required financial reports on time hence, the correctness of balances of cash, inventory, fixed assets and other accounts for the year cannot be established.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS AND FAVORABLE OBSERVATIONS

For the exception cited above, the auditor recommended that the financial reports be submitted within the reglamentary period prescribed in Section 450 of GAAM Volume II.

In addition the following are other findings and recommendations:

1. Copies of contracts and related documents on infrastructure projects were not furnished the Auditor’s Office within five days from execution as required under COA Circular 96-010 dated March 10, 1996, hence, the Auditor was deprived of its timely review and evaluation.

Direct the responsible officials concerned to submit to the Auditor’s Office the copies of contracts and its related documents within five days from its execution.

2. Failure of the agency to reconcile the balances of the Inventory Report and the books of accounts resulted to a discrepancy amounting to P 1,240,657 as of December 31, 1999.

Instruct the accountant and the property officer to conduct periodic reconciliation of accounting and property records.

3. The use of motor vehicles and fuel consumption was not properly regulated in violation of GAAM. Volume I.

Strengthen control over the use of government vehicle and withdrawal of diesel/fuel and oil.

4. Purchases of supplies and materials charged to appropriations were not recorded in the books of accounts in violation of COA Circular Nos. 91-200C and 94-909 dated September 9, 1991 and August 16, 1994 respectively.

Require the accountant to record purchases of supplies and materials charged to appropriations.

The above findings and recommendations were discussed with management on February 9, 2000 and the latter’s comments are incorporated in the report, where appropriate.

FAVORABLE OBSERVATIONS

1. The agency had collected and deposited a total amount of P632, 834.00 realized from the sale of bid proposal forms and material testing conducted by Materials, Hydrology and Quality Control Division.

2. Purchases of supplies and materials from private suppliers have been limited to items that are urgently needed as not to delay the preparation of reports and other activities. Likewise, requisitions for office supplies and materials were based on the Annual Procurement Program and were directly purchased from Procurement Service at much lower costs, thereby generating more savings.

3. The agency limited the amount of per diem and travelling allowances based on Office Order No. 2, Series of 1996.

4. The agency has complied strictly with Bureau of Internal Revenue rules and regulation on withholding of taxes. During the year, a total of P55, 801,027.53 was withheld, of which P52, 908,646.24 was remitted representing taxes withheld from employees salaries/wages and contractors billings on their accomplishments.

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

Of the six audit recommendations contained in the 1998 Annual Audit Report, one or 17% was fully implemented two or 33% was partially implemented and the remaining three or 50% were unimplemented.

FULLY IMPLEMENTED

1. Reevaluate the project as well as the capability of the contractor to continue/complete the project, otherwise initiate termination/rescission of the contract and/or takeover of the remaining work by administration or assignment to another contractor pursuant to DPWH D. O. No. 102 Series of 1988.

The agency strictly followed DPWH Department Order No. 102 Series of 1998.

PARTIALLY IMPLEMENTED

1. Accounts payable (8-81-400) amounting to P48,694.36 have been outstanding for six to seven years in violation of COA Circular No. 99-004 dated August 17, 1999. On the other hand, validity and correctness of the balance of Accounts Payable amounting to P789,538,524.48 cannot be ascertained due to the non-submission by the agency of the Statement of Accounts Payable (B. F. No. 304).

Revert the amount whether documented of undocumented to the Cumulative Results of Operations of the general fund pursuant to COA Circular No. 99-084 dated August 17, 1999. Monitor closely, document completely and record promptly all transaction affecting accounts payable and submit the same to the auditing office for verification.

As per inquiry made, accounts payable which remained outstanding for six to seven years had already been reverted however, the validity and correctness of the balance of accounts payable for 1999 cannot be ascertained due to the non-submission by the agency of the statement of accounts payable.

2. Internal control system over inventories and fixed assets was weak. Physical inventory was not completed during the year; hence, the validity and correctness of the reported inventory could not be ascertained.

Strengthen internal control system over inventory and fixed assets by maintaining an inventory and equipment ledger card for each class of equipment that are being acquired by the agency.

UNIMPLEMENTED

1. Financial reports were not submitted in the auditing office on time thereby delaying the certification of the accounts.

Exert effort to submit financial report on time so as not hamper the operation of other offices using such reports as input data for their operations and control functions.

2. The use of motor vehicles and fuel consumption was not properly regulated in violation of Section 361 of GAAM, Volume I.

Strengthen control over the use of government vehicle and withdrawal of diesel/fuel and oil.

3. Copies of contracts and supporting documents were not submitted to the Auditor’s Office within five days from execution as required under COA Circular 87-278 dated November 12, 1987, hence, the Auditor was deprived of the timely review and evaluation as to legality and propriety of the contracts.

See to it that copies of contracts and its supporting documents are submitted to the Auditor within five days from its execution as required under COA Circular No. 87-278 dated November 12, 1987 for their timely and evaluation.