EXECUTIVE SUMMARY

I. INTRODUCTION

We conducted a financial and compliance audit on the accompanying Consolidated

Balance Sheet of the Province of Sultan Kudarat as of December 31, 2014, and the related
Consolidated Statement of Income and Expenses, and Cash Flows for the year then ended.
The audit which was conducted on a test basis was focused primarily on the validity and
propriety of transactions as well as fairness of the presentation of the financial statements.
Likewise, Value for Money Audit was also conducted on the utilization and
implementation of the 20% Development Fund, Priority Development Assistance Fund
(PDAF), Disbursement Acceleration Program (DAP) and Gender and Development
(GAD).

II. FINANCIAL HIGHLIGHTS

a. Comparative Balance Sheet b. Comparative Income Statement

BALANCE SHEET INCOME STATEMENT

2014 Income Expenses Net Income

1,000,000,000
2013
500,000,000
0 1,000,000,000 2,000,000,000
Assets Liabilities Equity 0
2014 2013

INCREASE/
YEAR 2014 2013
DECREASE %
ASSETS 2,031,927,135 1,867,112,127 164,815,008 8.83%
LIABILITIES 390,346,637 373,589,446 16,757,191 4.49%
EQUITY 1,641,580,498 1,493,522,681 148,057,817 9.91%
INCOME 1,007,469,811 899,292,734 108,177,077 12.03 %
EXPENSES 843,701,245 766,827,443 76,873,802 10.02 %

c. Comparative Appropriation/Allotment/Obligation
 2014
Appropriation Allotment Obligation
General
Fund P 995,516,763 995,516,763 905,647,250
Special
Education 7,550,000 7,550,000 5,750,000
Fund
TOTAL 1,003,066,763 1,003,066,763 911,397,250

2014

2013

0 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000

ALLOTMENT APPROPRIATION OBLIGATION

2013
Appropriation Allotment Obligation
General
Fund 882,125,619 882,125,619 807,001,103
Special
Education 7,375,000 7,375,000 7,365,500
Fund
TOTAL 889,500,619 889,500,619 814,366,603

III. OPINION OF THE AUDITOR

The Auditor rendered a qualified opinion on the fairness of the presentation of the financial
statements due to the effects of the noted deficiencies in the balances of some accounts as discussed
in Part II of the report and summarized as follows:

1. Doubtful validity, existence and accuracy of the Property, Plant and Equipment
account amounting to P1,612,754,197.69 due to continued inability of management to
maintain and reconcile property records with the books of accounts.
2. Doubtful existence, validity and accuracy of the Cash in Bank account amounting to
P333,590,825.36 due to the delay in the preparation of Bank Reconciliation
Statements.
 3. Unreliable existence of receivables totaling P7,920,304.49 that have been dormant for
more than five (5) years.

IV. SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

1. Depreciation expenses were not provided for all depreciable assets amounting to
P924,531,102.54.
We reiterate our recommendation that the Provincial Accountant be required to provide
depreciation expense to the depreciable assets and effect the necessary adjustment and
correction in their books of accounts.

2. Advances to Officers and Employees amounting to P10,423,690.84 had remained

unliquidated beyond the reglementary period prescribed under existing rules and
regulations.

We recommend that management:

a. Adhere strictly with the rules and regulations in the granting, utilization and
liquidation of cash advances under COA Circular No. 97-002 and other related
issuances. To avoid adverse decision on the matter, require all accountable
officers to immediately liquidate the cash advances, either by submission of
liquidation documents or refund the full amount.
b. Require the Accountant to send Demand Letters to the officers & employees
whose cash advances remain unliquidated as of year-end for the proper
recording of expenses in the books, and;
c. Enforce Section 9 of COA Circular 2012-004 on the suspension of salaries as well
as the filing of criminal and administrative charges against erring employees if
they fail to heed the demand for the settlement of their cash advances.

3. The unexpended portion of the Local Disaster Risk Reduction Management Fund
(LDRRMF) amounting to P 19,829,418.28 as of December 31, 2014 were not accrued
to a special trust fund.

We recommend that the unexpended balance be transferred to a special trust fund

pursuant to Section 21 of RA No 10121 to ensure that funds are available for disaster
and risk reduction and management activities of the LDRRMC in times of calamities.

4. Discrepancies between the reciprocal accounts Due from Other Funds and Due to Other
Funds amounting to P3,337,735.47 indicated errors in recording transactions affecting
these accounts,

We recommend that the Provincial Accountant be required to analyze/investigate the

discrepancies and thereafter prepare the necessary adjusting journal entries.
5. Non-preparation and submission of the Report of Supplies and Materials Issued to the
accounting office renders the existence of the accountable forms inventory amounting
to P1,466,663.21 doubtful.
We recommend that management:
a) Require the Inventory Custodian of the accountable forms in the Treasurer’s
Office to regularly prepare and submit the RSMI to the Accounting Office as
basis to record issuances.
b. Require the Accounting Office to record adjustments to book up the
unrecorded issuance.

6. Unexpended/unutilized balances of the DAP Funds amounting to P400,948.20 was not

remitted/returned to the Department of Finance.

We recommend that the unexpended/unutilized balance of the DAP Funds be

remitted/returned to the Department of Finance.

7. Accountable Forms used by the Provincial and Municipal Treasurers in their various
collection activities were procured from Ready Form Incorporated, a private company.

We recommend that management conform to the directive of DILG Memorandum

Circular that the procurement of accountable forms be strictly in accordance with the
GPPB Resolution.
8. The Provincial Solid Waste Management Plan was not submitted to the National Solid
Waste Management Commission for approval.

We recommend that management Comply with the rules and regulations prescribed in
RA 9003 with regard to the preparation of the said plan and forwarding the same to the
National Solid Waste Commission for approval.
9. Program/Activities/Projects under the 20% Local Development Fund for CY 2014 and
CY 2013 were not substantially implemented/completed
We reiterate our recommendation that management closely monitor the utilization and
implementation of projects funded out of the 20% Local Development Fund for the
attainment of desirable socio-economic development and environmental management
outcomes.

10. Projects, programs and activities related to Gender and Development amounting to
P4,700,000.00 were not implemented.
 We recommend that management:
a. Follow the PCW-DILG-DBM-NEDA Joint Memorandum Circular No 2013-01 on
the implementation of programs, projects and activities related to Gender and
Development.
b. Avoid accommodations of unrelated PPAs through their inclusion in the GAD
budget; instead maximize the said budget to those programs that promote women
empowerment, gender equality and gender development.

V. SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND CHARGES

AS OF YEAR-END.

Beginning January 1 – December 31, 2014 Ending Balance

Balance (as of (as of December
Dec 31, 2013) NS / ND / NC NSSDC 31, 2014)

NS / ND / NC P 5,586.78 - - P 5,586.78

VI. STATUS OF PRIOR YEARS AUDIT OBSERVATIONS AND

RECOMMENDATIONS
Out of the fourteen (14) audit recommendations contained in the 2013 and 2012 Annual
Audit Reports, Four (4) were fully implemented, eight (8) were partially implemented, and two
(2) were not implemented.