EXECUTIVE SUMMARY A. INTRODUCTION

D. SCOPE OF AUDIT An ... We have recommended to Management to stop the practice of recording ... sales being recorded net of withholding tax instead o...

0 downloads 62 Views 165KB Size
EXECUTIVE SUMMARY

A.

INTRODUCTION

The Kolambugan Water District (KOLWD) was created under a special law, Presidential Decree 198 as amended by PD Nos. 768 and 1479 better known as the “Provincial Water Utilities Act of 1973.” KOLWD was awarded with the Certificate of Conditional Conformance No. 228 by the Local Water Utilities Administration (LWUA) on November 8, 1982. The KOLWD is presently categorized as “Category D” Water District serving a total population of 16,485 as of December 31, 2015 with 3,308 total service connections. As of December 31,2015, the governing board is composed of directors representing the different sectors and organizations within the municipality of Kolambugan who were appointed by the Local Chief Executive. They exercise corporate powers and determine policies for the operations of the District. They are as follows: Chairperson: Vicente P. Mejorada Members: Luthgarda C. Villanueva Lucia B. Sudaria Fernandito R. Ridao Maximo B. Dangga All local water districts were declared as Government-Owned and Controlled Corporations (GOCC) by the Supreme Court on September 13, 1991 in the case docketed as GR Nos. 95237-38. B.

HIGHLIGHTS OF FINANCIAL OPERATIONS

Financial Condition

Assets Liabilities Government Equity

Calendar Year 2015 Calendar Year 2014 Increase/(Decrease) P 10,500,944.87 P 10,754,488.31 P (253,543.44) 9,210,374.80 9,791,305.47 (580,930.67) P 1,290,570.07 P 963,182.84 P 327,387.23

Results of Operations

Income Expenditures Net Operating Income

2015 P 6,851,378.81 6,468,575.41 P 384,538.06

2014 P 5,457,716.06 5,901,974.35 P ( 444,258.29)

Increase/(Decrease) P 1,393,662.75 566,601.06 P 828,796.35

D.

SCOPE OF AUDIT

An audit was conducted on the accounts and operations of Kolambugan Water District for calendar year 2015. The audit consisted of testing the adequacy of the related systems and controls set by the agency, verification of the accuracy, legality and completeness of its financial transactions, and the application of the other audit procedures considered necessary under the circumstances. It was also made to determine whether the district’s financial statements present fairly its financial position and results of operations and cash flows, and whether applicable laws, rules and regulations were followed. Further, it was also conducted to determine whether the agency managed and utilized its resources economically, efficiently and effectively in the implementation of its programs, projects and activities. E.

INDEPENDENT STATEMENTS

AUDITOR’S

REPORT

ON

THE

FINANCIAL

The Auditor rendered a qualified opinion on the fairness of the presentation of the Financial Statements due to the inclusion and outright recognition of Fines and Penalties in the Accounts Receivable and income account casting doubt as to the their accuracy and reliability at year end. F.

1.

SUMMARY OF SIGNIFICANT RECOMMENDATIONS

OBSERVATIONS

AND

Fines and penalties totaling P122,350.30 were included in the total Accounts Receivable recognized as income, contrary to PAS 18, thereby overstating the income account. We have recommended to Management to stop the practice of recording penalty charges as outright income, and to instruct the Accounting Unit to make necessary adjustments to the affected income account.

2.

The non-imposition of the 10% penalty on water charges of Government Offices contrary to the Water Service Contract resulted to non-realization of penalty income to the disadvantage of the District. We have recommended to Management to impose penalties for pastdue bills of government offices pursuant to Water Service Contract. It was further recommended to require the Accounting Unit to make necessary adjustments to provide penalty charges on delinquent government offices.

3.

The District’s reported income was understated by P11,162.68 due to water sales being recorded net of withholding tax instead of gross sales contrary to Section 112 of Presidential decree (PD) No. 1445 and PAS 18 thereby affecting the fair presentation of the income account in the balance sheet.

We have recommended to Management to make use of the BIR Form 2307 and to recompute the amount of tax withheld equivalent to 2% and record it as input tax, to be applied as credit to franchise tax payment and to record the senior citizen’s discount as discount expense not as a deduction from gross water sales. 4. The Torrens Title of the land account with an aggregate land area of 100 square meters was not transferred in the name of the District contrary to Section 449 of GAAM Volume 1 thus, rendering the ownership of the land and the accuracy of records questionable. We have recommended to Management to transfer Certificate of the Title of the lot to ensure ownership and dominion over the property in compliance with Section 449 of GAAM Volume 1. 5. Audit of vouchers in relation to the District’s procurement activities lacked some of the required documentary requirements contrary to Section 4.6 of Presidential Decree (PD) No. 1445 and COA Circular No. 2012-001. We have recommended to Management to instruct the Accounting Unit to carefully review the Disbursement Vouchers (DVs) and ensure that they are completely supported with the required documentation using as a guide the Revised Documentary Requirements for Common Government Transactions prescribed under COA Circular 2012-001. 6. No funds were appropriated for the Disaster Risk Reduction and Management (DRRM) System, contrary to RA No. 10121. We have recommended and Management agreed to appropriate funds and formulate plans and policies relative to DRRM and to strictly adhere to the provisions of R.A. 10121 regarding the implementation of activities for knowledge-building, awareness raising and disaster-preparedness. STATUS OF IMPLEMENTATION RECOMMENDATIONS

OF

PRIOR

YEAR’S

AUDIT

Of the 10 audit recommendations contained in the Annual Audit Report on the Water District for the calendar year 2014, six were fully implemented, three were partially implemented and the remaining one was not implemented and was reiterated in Part II .