EXECUTIVE SUMMARY

Introduction

Southern Leyte State University, Sogod, Southern Leyte was established by virtue
of Republic Act 9261 approved on March 7, 2004 which integrated the then Southern
Leyte State College of Science and Technology in the Municipality of Sogod and the then
Tomas Oppus Normal College in the Municipality of Tomas Oppus. With this, the
university is now composed of five campuses, namely; Sogod-Main Campus,
Hinunangan Campus, Bontoc Campus, San J uan Campus and Tomas Oppus Campus, all
of Southern Leyte. These campuses are operating as one system, guided by the
provisions of the university charter.

Under this Charter, the university is mandated to provide advanced education,
higher technological, professional instruction and training in trade, fishery, agriculture,
forestry, science, education, commerce, engineering and related courses. It is also
mandated to undertake research and extension services, and provide progressive
leadership in its areas of specialization.

The administration of the University and the exercise of its corporate powers is
vested exclusively in the Board of Regents composed of eleven (11), Chaired by the
Commission On Higher Education Chairperson, with the incumbent President as the vice-
Chairman while the rest as members.

Financial Highlights

The agencys assets, liabilities and residual equity in comparison with that of the
previous year are hereunder presented:
Increase
2007 2006 (Decrease)

Assets 168,396,115.45 152,630,579.70 15,765,535.75
Liabilities 20,259,047.18 16,298,656.72 3,960,390.46
Govt Equity 148,137,068.27 136,331,922.98 11,805,145.29

In CY 2007, the Universitys total income amounted to P 138,694,116.44, where
P 101,135,806.09 or 72.92% represents Subsidy Income from National Government
covered by the Notices of Cash Allocation issued by the Department of Budget and
Management. Other sources of funds which amounted to P 37,558,310.35 constitutes the
Special Trust Fund, these are mainly from collection of tuition and other fees from
students. Of the total funds of the University, only P 128,926,318.67 were expended
leaving a balance of P 9,767,797.77.



Operational Highlights

In the era of global convergence, quality education and training have become
more vital factors in the government efforts to achieve progress in the country. Focused
on improving the quality of program offerings and given more impetus to soar upward,
SLSU was granted by the Accrediting Agency of Chartered Colleges and Universities in
the Philippines (AACCUP) are-accreditation Level II for BS in Industrial Education and
BS in Industrial Technology in Sogod Campus. The same accreditation level was
awarded to Tomas Oppus Campus for its Bachelor of Elementary Education and
Bachelor in Secondary Education. Sogod Campus was also accredited under a candidate
status for BS in Mechanical Engineering, BS in Electrical Engineering and BS in
Information Technology and Master of Arts in Teaching.

Likewise, with a total point score of eighteen (18) which is only four (4) points
away from becoming Level III, this state-funded institution is accorded Level II in the
SUC Leveling Evaluation. Obtaining this level required the state university to pass the
four key result areas under the SUC Leveling Instrument and Guidelines, namely: Quality
and Relevance of Instruction, Research Capability and Outputs, Relations with and
Services to the Community and the Management of Resources.

These achievements together with the one hundred percent passing percentage of
the licensure examination for Electrical Engineering bear testimony of the fact that SLSU
has really good institutional performance and development, and to the extent indicative of
academic excellence. With these, quality affordable education could be provided to
economically underprivileged students and employability of graduates could be insured.
It is then worth emphasizing that the focus of SLSU is on faithfully doing what it must as
an institution of higher and advance learning.

Scope of Audit
We have conducted a Financial and Compliance Audit on the accounts and
operations of the Southern Leyte State University for the year ended December, 2007 on
a test basis. The objective of the audit was to express an opinion on the financial
statements, to ascertain the fairness and reliability of the financial position and results of
operation, and compliance of the agency to prescribed rules and regulations. The audit
also aimed to look at opportunities on how to improve government operations.
Auditors Report
Except for the effects on the financial statements of the matters referred to in the
observations and recommendations portion of the report, the financial statements present
in all material respects, the consolidated financial position of the Southern Leyte State
University as of December 31, 2007 and the results of its operation and its cash flows for
the year then ended in accordance with applicable laws, rules and regulations and in
conformity with applicable generally accepted state accounting principles.
Observations and Recommendations
The following are the significant observations and the corresponding
recommendations:
1) Liquidation documents of the four (4) external campuses totaling to
P15,715,107.17 were not submitted to the Accountant of the main campus and for audit
in spite of their having been recorded in the books of the main campus as already
settled/liquidated as of December 31, 2007, contrary to Section 100 and 89 of PD 1445
and Section 179 Vol. I of GAAM, hence, casting doubt on the reliability and accuracy of
the balances of accounts reflected in the year end financial statements.

We recommended that management direct the respective Accountants of the
external campuses to immediately submit the supporting liquidation documents to the
Accountant of the main campus for verification, to enable the latter to submit for audit
the transactions of the University on time. Direct the Accountant of the Main Campus to
book up liquidation of cash advances only when the pertinent liquidation documents are
received from the external campuses and to submit them as supporting documents to the
financial reports, to the office of the audit team within the time prescribed by law, rules
and regulations, for the early audit.

2) The balance of the Account Receivable account of P11,540,544.12 as of
December 31, 2007 was understated by P6,668,013.06 due to the failure of the
accountants of all campuses to book-up as Account Receivable the outstanding balances
of students based from the final assessments upon enrollment as directed under COA
Circular Letter No. 2004-002 dated September 30, 2004,

We recommended that management direct the respective accountants to record the
Accounts Receivable for tuition and other fees upon enrollment based on the assessment
slips of the students and to maintain student ledger cards and periodically reconcile them
with the Cashiers records to check accuracy and correctness in recording;

Likewise, we recommend that the Accountant of the Main Campus be given
access to the automated enrollment system in order to keep track of the assessments,
payments, and unpaid balances of students from tuition and other fees anytime of the
year, when necessary.

Furthermore, we also recommended that management strictly implement the NO
PERMIT NO EXAM policy to ensure that all the unpaid balances of tuition and other
school fees are already paid before allowing them to take the final examinations.
Moreover, students should also be required to secure a clearance every end of the
semester which should also be presented upon enrollment in the ensuing semester. This
will give assurance to the University that previous obligations of the students were
already paid/complied with.

3) The personnel and officers of the University including its Board of Regents
(BOR) were paid Strategic Planning Allowance at year end without legal basis and were
charged to the Special Trust Fund contrary to the provisions of Section 2 of PD 1445,
Section 12 of R.A. No. 6758, Section 4 (d) of R..A. No. 8292, and Section 1 of the
Special Provisions Applicable to all State Colleges and Universities of RA 9401 (CY
2007 GAA) resulting in unauthorized expenditures of P3,055,940.00.

We recommended that management refund the amount paid to its employees as
Strategic Allowance in the absence of legal bases for their collections. We also
recommend that henceforth, management should desist and stop granting additional
benefits in the form of allowances unless in pursuance of a lawful appropriation and/or
other statutory authority.

4) The University failed to monitor and send notices/demand letters to student
borrowers or guarantors, hence, due and demandable loans totaling to P453,000.00 were
not yet collected as of December 31, 2007, thereby defeating the objective of the program
of constituting these funds as a revolving fund to be made available for new set of loans
to deserving but financially disadvantaged students.

We recommended that management should strictly follow the guidelines as
embodied in CMO No. 4 series of 2004 and should direct the STUFAP unit to closely
monitor on the status of the loans granted to the student- borrowers and to periodically
submit the status reports to top management to enable them to appraise and devise
strategies to compel repayment of said loans receivable.

5) Non-compliance with Section 5 (e) of Revised Omnibus Rules on Appointments
and Other Personnel Actions, and Section 4 of DBM and CHED J oint Circular No. 2,s.
2003 dated J uly 28, 2003 ,campus personnel designated as Campus Administrators in the
external campuses were given salary differentials amounting to P228,984.00 resulting
in an irregular payment of salary differential and consequently depriving the University
of the use of the funds for other priority projects.

We recommended that management direct the concerned College Administrators
to refund the amount collected since granting of the same was without legal basis.

6) Due to the failure of the IGP personnel to prepare production and other financial
reports and to properly account for the collection and expenses of the operation, the IGP
policy makers, managers were deprived of the basis to properly assess the
profitability/viability of each of the IGP business ventures, formulate desirable plans and
strategies for its productive operation.. As a result, it could not be ascertained whether
the University was able to achieve its thrust to augment its income thru maximized IGPs
profit/income, contrary to the provisions of the Manual of Operations for IGPs for SUCs
in Region VIII.

We recommended that management should require IGP personnel to prepare and
submit production and other related reports required by law, rules and regulation.
Likewise financial reports should be made and a separate set of books be maintained for
each Income Generating Project for management to be able to assess the profitability of
the project.

Implementation of Prior Years Recommendations

We have followed up on the action taken by Southern Leyte State University to
implement the recommendations contained in the CY 2006 Audit Report. Of the 20 audit
recommendations, 11 ( 55 %) was fully implemented, 8 ( 40 %) were partially
implemented 1 (5%) was not implemented.