EXECUTIVE SUMMARY

Introduction

The City of Dasmariñas, Cavite was created by virtue of Republic Act (RA) No. 9723 dated
October 15, 2009 which was ratified and approved in a plebiscite held on
November 25, 2009. The City is composed of 75 barangays. It is a lone congressional
district of the Province of Cavite.

The Organizational Structure of the City is as follows:

a. Key Officials

City Mayor : Hon. Jennifer A. Barzaga

City Vice-Mayor : Hon. Raul Rex D. Mangubat

Members of the Sanggunian:

1. Hon. Francisco A. Barzaga
2. Hon. Teofilo B. Lara
3. Hon. Reynaldo C. Canaynay
4. Hon. Robin Chester J. Cantimbuhan
5. Hon. Martin John T. Reyes
6. Hon. Jerome Napoleon T. Gonzales
7. Hon. Jorge Carlo D. Magno
8. Hon. Kevin P. Tapawan
9. Hon. Glenn Wynne S. Malihan
10. Hon. Mamerto B. Noora, Jr.
11. Hon. Eric S. Aledia
12. Hon. Aquino I. Garcia
13. Hon. Fernando T. Laudato
14. Hon. Jedrick A. Narvaez

City Administrator : Ariel A. San Gabriel

City Budget Officer : Liberty Ann A. Hernandez
City Accountant : Maria Teresa L. Mendoza
City Treasurer : Numeriana R. Bautista

b. No. of Personnel Complement

Permanent : 1,010
Elected : 16
Coterminous : 68
Temporary/Casual/Contractual/Job Order : 2,037
Total 3,131

Scope of Audit and Audit Objectives

The audit covered the accounts and operations of the City Government of Dasmariñas for
the period January 1 to December 31, 2023. The objectives of the audit are to (a) verify the
assurance that may be placed on management’s assertions on the financial statements;
(b) recommend agency improvement opportunities; (c) determine compliance with existing

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laws, rules and regulations; and (d) determine the extent of implementation of prior year’s
audit recommendations.

Financial Highlights

The Comparative Financial Position and Results of Operations of the City for Calendar Year
(CY) 2023 are summarized as follows:

Increase/
2023 2022 (Decrease)
Assets P 14,240,557,920.07 P 13,259,644,457.32 P 980,913,462.75
Liabilities 4,508,304,085.45 4,014,292,155.82 494,011,929.63
Equity 9,732,253,834.62 9,245,352,301.50 486,901,533.12
Income 3,878,683,237.42 4,045,902,429.04 (167,219,191.62)
Personnel Services 695,447,260.43 693,174,883.98 2,272,376.45
Expenses 2,568,629,932.83 2,491,029,053.69 77,600,879.14
Surplus 614,606,044.16 861,698,491.37 (247,092,447.21)

Independent Auditor's Report on the Financial Statements

The Auditor rendered a qualified opinion, except for the effects of the matters described in
the Bases of Qualified Opinion section of our report, the accompanying financials statements
presents fairly, in all material respects, the financial position of the City Government of
Dasmariñas as at December 31, 2023, and its financial performance, its cash flows, and its
comparison of budget and actual amounts for the year then ended in accordance with
International Public Sector Accounting Standards (IPSASs).

Bases for Qualified Opinion

We rendered a qualified opinion on the fairness of the presentation of the financial

statements due to the following observations:

The accuracy, reliability and propriety of the Cash in Bank account with year-end balance of
P3,174,329,145.70 was doubtful due to the following deficiencies:

a. Unreconciled differences amounting to P1,192,226,965.22 were noted between the

subsidiary ledgers and the cashbooks for Cash in Bank – Local Currency, Current
Account (LCCA) maintained by the City Accounting Office (CAO) and City Treasurer's
Office (CTO), respectively, due to non-periodic reconciliation between the two offices,
thus casting doubt on the reliability of the account balances.

b. Twelve (12) stale checks in the total amount of P1,254,132.53 remained outstanding for
six months to more than four years as of year-end, thus, understated both the Cash in
Bank and Liability accounts in the financial statements by the same amount.

c. The Bank Reconciliation Statements (BRS) as of December 31, 2023 showed several
reconciling items with a net amount of P44,524,457.31, which remained unadjusted in
the books of the City, thus, overstated the Cash in Bank account and misstated the
Government Equity and related expense and income accounts.

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The inability of the City to effectively follow and complete the procedures for the One-Time
Cleansing of Property, Plant and Equipment (PPE) precluded it from addressing the
discrepancy of P45,884,104.58 between the balances of PPE accounts in the accounting
and property records at year-end, thus, the reliability and verifiability as to the existence and
condition of and accountability over the recorded PPE in the financial statements with a net
carrying amount of P5,510,241,140.29, excluding Construction-in-Progress (CIP), cannot be
established.

Also, 11 completed infrastructure projects totaling P58,269,160.13 for CY 2023 were not
reclassified from CIP to their appropriate PPE accounts, thus, overstated the CIP and
understated the PPE accounts as of year-end. Consequently, no provision for depreciation
was provided for these completed projects, thus, understating the related Accumulated
Depreciation accounts while overstating the Government Equity account as of year-end.

Moreover, long-outstanding and/or unsubstantiated payables amounting to P11,062,584.50,

which were more than two to 10 years old as of December 31, 2023, were not reverted to
the unappropriated surplus of the General Fund or paid or returned to the creditors, if
warranted, thus, unnecessarily withheld funds that could have been used for other priority
projects and casted doubt on the fairness of the presentation of the subject accounts in the
Statement of Financial Position of the City.

For the above-cited deficiencies, we recommended that the City Mayor:

1.a.i. instruct the City Accountant and City Treasurer to conduct timely reconciliation of their
records and make the necessary adjustments in their respective books, if warranted,
to arrive at a correct cash balance every recording period;

1.a.ii. direct the City Treasurer to maintain cashbook for all Cash in Bank-LCCA accounts by
bank account and by fund which shall be updated and balanced daily;

1.b. direct the City Treasurer –

• inform the concerned payees that their checks were already stale and that they
could surrender the check for issuance of a new one;

• coordinate with the City Accountant for reversion of the payables to unappropriated
surplus of the general fund or other necessary adjustment/s in the books of
accounts, if warranted; and

1.c instruct the City Treasurer and City Accountant to exert utmost effort to identify the
details of the reconciling items with a net amount of P44,524,457.31 so that
appropriate journal entries could be drawn by the latter in the books.

2.a direct the City Accounting Office (CAO) and the City General Services Officer
(CGSO) to update and complete the PPE Ledger Cards (PPELCs) and Property
Cards (PCs), respectively, and to compare them with the Report on the Physical
Count of PPE (RPCPPE) and submit the same to the Inventory Committee to be
used as inventory working papers and, on this basis, to revisit and adjust the timeline
of inventory-taking and other activities in the Physical Inventory Plan (PIP);

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2. b. direct the Inventory Committee, together with the CGSO and CAO, to revisit the
Commission on Audit (COA) Circular No. 2020-006, particularly the guidelines on
how to conduct the inventory taking that would likely resolve the issues on the
whereabouts and condition of the PPE, and on how to assign or establish cost/value
based on the market/fair value of PPE or by appraisal, in instances when the unit
values or costs of the PPE, including the subject land properties, were lacking or not
available from property records;

2.c. direct the CGSO and CAO to proceed with the following activities of One-Time
Cleansing of PPE using the procedural guidelines prescribed in subject circular,
especially to address the issue on unaccounted PPE and those which were only
presented in lump-sum amounts:

i. Section 6.3 - Reconciliation of inventory count per RPCPPE with property and
accounting records;

ii. Section 7.0 - Disposition for non-existing/missing PPEs;

iii. Section 8.0 - Derecognition of non-existing/missing PPEs without available record

of accountability; and

iv. Section 9.0 - Accounting entries and disclosure in the notes to the Financial
Statements.

2.d. The City Government to take note of the sunset provision in COA Circular
No. 2020-006 emphasizing that the procedures could no longer be used to further
derecognize missing properties and/or cleanse subsequent discrepancies or
unreconciled balances in PPE accounts.

3. direct the City Accountant to reclassify the aforementioned completed infrastructure

projects to their appropriate PPE accounts and provide the same with corresponding
depreciation expense.
4. instruct the City Accountant to:

• thoroughly review the long and/or unsubstantiated outstanding payables totaling

P8,295,693.53 and prepare appropriate adjusting entries to revert them to the
unappropriated surplus of the general fund, unless sufficient evidence is submitted to
the Audit Team to establish that the payables are founded on valid claims; and

• inform in writing the concerned suppliers and contractors about their unclaimed
retention money with the advice that the amount will be reverted to the
unappropriated surplus of the general fund of the City should proper claim be not
made within reasonable period.

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Other Significant Observations and Recommendations

Hereunder are the other significant observations and corresponding recommendations

contained in the report:

1. Warranty security for procured goods and retention money from progress payments to
various contractors for infrastructure projects were erroneously recorded in the books as
Other Payables instead of Guaranty/Security Deposits Payable account, contrary to the
Revised Chart of Accounts (RCA) for Local Government Units (LGUs) under Commission
on Audit (COA) Circular No. 2015-009, thus, resulted in overstatement of Other Payables
by P273,709,549.17 and understatement of Guaranty/Security Deposits Payable by the
same amount.

We recommended that the City Mayor direct the City Accountant to draw Journal Entry
Vouchers (JEVs) to adjust the aforementioned deficiency by debiting the account Other
Payables and crediting the account Guaranty/Security Deposits Payable both by
P273,709,549.17.

In addition, ensure that appropriate accounts are used in recording warranty security and
retention money, in accordance with the RCA for LGUs, as prescribed by COA Circular
No. 2015-009.

2. The rules and regulations in the grant and liquidation of cash advances (CAs) were not
strictly adhered to by the Accountable Officers (AOs), contrary to pertinent provisions of
COA Circular No. 97-002 dated February 10, 1997, thereby signifying weak internal
control over CAs and exposing the government funds to possible losses, theft, misuse
and/or misappropriation as manifested in the following observations:

a. CAs totaling P11,868,183.65 remained unliquidated as of December 31, 2023,

contrary to Item 5.8 of COA Circular No. 97-002.

We recommended that the City Mayor direct the accountable officers to immediately
liquidate their outstanding CAs and henceforth ensure that all CAs are fully liquidated
at the end of each year pursuant to COA Circular No. 97-002.

b. Additional CAs totaling P171,652,567.30 were granted to seven AOs despite non-
liquidation of previous cash advances, contrary to Item 4.1.2 of COA Circular No. 97-
002.

We recommended that the City Mayor direct the City Accountant to refrain from
granting additional CAs to any official or employee without liquidating first his/her
previous cash advances, and to instead designate additional Special Disbursing
Officers (SDOs) for the grant of additional cash advances for special activities/projects.

c. Delay of three to 24 days was noted in the liquidation of CAs amounting to

P31,955,631.95 by the AOs in CY 2023, contrary to Items 4.1 and 5.1 of COA Circular
No. 97-002.

We recommended that the City Mayor direct all AOs and employees to ensure
liquidation of CAs within the prescribed period as required by COA Circular 97-002.

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 Moreover, instruct the City Accountant and City Treasurer to propose specific and
achievable measures to resolve delays in the liquidation of CAs, which include, among
others, the City Accountant’s regular sending of demand letters to accountable officers
with a reminder that their salaries could be withheld should they still fail to liquidate
after demand.

3. Purchases of various supplies and materials held for stockpiling/distribution under Local
Disaster Risk Reduction and Management Fund (LDRRMF) in the total amount of
P3,687,945.00 were directly charged to expense account instead of Inventory account,
and the Accounting Office also had not maintained Supplies Ledger Cards (SLCs),
contrary to the provisions of IPSAS 12 and COA Circular Nos. 2014-002 and 2015-009,
thereby effective monitoring of receipts and issuances of supplies and proper valuation
and presentation of inventory and expense accounts in the financial statements at any
given time were not facilitated.

We recommended that the City Mayor direct the City Accountant to properly record the
purchases of welfare goods under the account Welfare Goods for Distribution and
recognize distributed portion to Welfare Goods Expenses only upon receipt of report/proof
of distribution by the CGSO or other concern to reflect actual asset and expenses
incurred during the year.

Moreover, require the City Accountant to maintain SLCs for all welfare goods as
prescribed under COA Circular No. 2014-002.

4. Authority to write-off or derecognize dormant receivables totaling P859,749.99 was not

requested by the City to the COA, inconsistent with the COA Circular No. 2016-005, as
amended by COA Circular No. 2023-008 dated August 17, 2023, thus affecting the fair
presentation of receivable accounts and Government Equity account in the financial
statements.

We recommended that the City Mayor require the City Treasurer and the City Accountant
to jointly evaluate the impairment of the receivables and to comply with the documentary
requirements and guidelines prescribed under COA Circular No. 2016-005 to facilitate the
submission to the COA of the request for authority to write-off the dormant receivables
amounting to P859,749.99 or to avail of the one-time cleansing of dormant receivables
within one year from the effectivity of COA Circular No. 2023-008.

5. The City maintained a time deposit account with a balance of P113,559,198.29 under the
Special Education Fund (SEF), contrary to Sections 21 and 22 of COA Circular
No. 92-382 and Section 100 (c) of Republic Act (RA) No. 7160, thus, hindering the
appropriation and immediate use of such funds for priority projects under SEF that could
benefit various public schools and students in the City.

We recommended that the City Mayor instruct the City Treasurer to terminate the time
deposits under SEF and appropriate and use the funds for the projects enumerated in
Section 100 (c) of RA No. 7160 among the different schools of the City as may be
determined by the Local School Board (LSB).

6. Implementation of the six infrastructure projects with total contract cost of P95,924,748.39
was suspended mostly due to site problems which could have been addressed had
detailed engineering has been conducted by the City Engineering Office prior to

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 procurement in conformance with pertinent provisions of the 2016 Revised Implementing
Rules and Regulations (IRR) of RA No. 9184, thus the target beneficiaries were deprived
of the timely use and enjoyment of the projects.

We recommended that the City Mayor direct the:

a. City Engineer to formulate and implement an action plan to fast-track the completion
of the six projects amounting to P95,924,748.39 and thereafter, ensure strict
compliance with the guidelines on the issuance of suspension order provided under
the 2016 Revised IRR of RA No. 9184 to avoid unnecessary delay in the
implementation of infrastructure projects;

b. City Engineer and City Planning and Development Coordinator to ensure that
necessary detailed engineering activities are conducted prior to procurement of
infrastructure projects; and

c. Bids and Awards Committee (BAC) to require the submission of certification from the
Chief Executive Officer (CEO) that detailed engineering surveys and designs have
been conducted by the latter.

7. The following deficiencies were noted in the audit of Local Disaster Risk Reduction and
Management Fund (LDRRMF):

a. The monthly Reports on Sources and Utilization of the LDRRMF were not submitted to
the Audit Team on or before the 15th day after the end of each month, contrary to Item
5.1.5 of COA Circular No. 2012-002, thus, precluded the Audit Team from prompt
verification on the status of utilization of LDRRMF.

We recommended that the City Mayor direct the City Disaster Risk Reduction and
Management (DRRM) Officer and City Accountant to ensure that the monthly Report
on Sources and Utilization of the LDRRMF is submitted on or before the 15th day after
the end of each month to facilitate timely review and verification of the City’s DRRMF
transactions, such that corrective measures can be recommended, if necessary.

b. The prior year’s unexpended balance of LDRRMF totaling P52,295,699.68 were not
included in the LDRRMF Investment Plan (LDRRMFIP) for CY 2023, contrary to Item
5.1.2 of COA Circular No. 2012-02, thus affected management decisions in identifying
additional programs, projects and activities that would help address disaster risks and
enhance disaster preparedness and response capabilities.

We recommended that the City Mayor direct the LDRRM Council to decide on the use
of the unexpended balance of the LDRRMF, and review and update annually the
LDRRMFIP to incorporate the Projects, Programs and Activities (PPAs) to be funded
from the unexpended Quick Response Fund (QRF) and Disaster Risk Reduction and
Management Fund- Maintenance and Other Operating Expenses (DRRMF-MOOE) of
the previous years to enable the City to further enhance its ability to address disaster
risks, disaster preparedness and response capabilities.

c. Subsidiary Ledgers of the unexpended prior years LDRRMF totaling P52,295,699.68

were not maintained by year of transfer, inconsistent with Item 5.1.12 of the COA
Circular No. 2021-002 dated September 12, 2012, thus, the five year period in which

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 these funds shall remain in the Special Trust and reversion of any unexpended balance
to General Fund after said period could not be properly monitored.

We recommended that the City Mayor instruct the City Accountant to maintain the
subsidiary ledgers of the unexpended balances of LDDRMF by year of transfer to
facilitate the monitoring of the five-year period in which the funds shall remain in the
Special Trust Fund and the reversion of any remaining balance thereof to the General
Fund after said period.

8. Gender analysis was not conducted using the Harmonized Gender and Development
Guidelines (HGDG) tool as required under Item 4.1.C.4 of the of the Philippine
Commission on Women (PCW) - Department of the Interior and Local Government
(DILG) - Department of Budget and Management (DBM) - National Economic and
Development Authority (NEDA) Joint Memorandum Circular (JMC) No. 2013-01, as
amended by JMC No. 2016-01, due to lack of training thereon of concerned agency
personnel, hence, casted doubt on the gender responsiveness of the City’s Gender and
Development (GAD) PPAs.

We recommended that the City Mayor direct the City GAD Focal Point System (GFPS)
and the Technical Working Group (TWG) to undergo trainings on HGDG to build their
competence in the conduct of gender analysis of programs and projects for purpose of
GAD budget attribution.

9. Taxes withheld by the City from suppliers of goods and services and compensation of
City personnel were not remitted intact within the prescribed period to the Bureau of
Internal Revenue (BIR) with P2,414,547.36 past due taxes included in the unremitted Due
to BIR balance as of December 31, 2023, contrary to Section 5(A) paragraph 3 of BIR
Regulation No. 11-2018, thus, might result to payment of surcharges and penalties.

We recommended that the City Mayor require the City Treasurer to:

a. immediately remit to the BIR the unremitted taxes totaling P2,414,547.36 to avoid
incurrence of penalties and surcharges due to late remittances of taxes; and

b. henceforth, remit all taxes withheld by the City within the prescribed period of 10 days
following the end of the month as required under Section 5(A) paragraph 3 of BIR
Regulation No. 11-2018. Otherwise, all penalties and surcharges that may be
incurred due to late remittances of taxes will be the personal liability of the City
Treasurer in accordance with Section 251 of National Internal Revenue Code of the
Philippines.

Summary of Total Suspension, Disallowances, and Charges as of December 31, 2023

The Statement of Audit Suspensions, Disallowances and Charges (SASDC) as of December

31, 2023 showed disallowance of P20,000,387.53 and zero suspension and charges. The
disallowance was issued in CY 2022 and pertains to excessive contract cost of
infrastructure project.

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Status of Implementation of Prior Year’s Audit Recommendations

Of the 14 audit recommendations contained in the CY 2022 Annual Audit Report (AAR),
nine were fully implemented and five were not implemented by the City of Dasmariñas.

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