Executive Summary by xld14276

VIEWS: 116 PAGES: 5

More Info
									                          EXECUTIVE SUMMARY
Background Information

       The Zamboanga State College of Marine Sciences and Technology
(ZSCMST) located at Rio Hondo, Zamboanga City, formerly known as the Mindanao
Regional School of Fisheries (MRSF) became a state college on January 28, 1986 by
virtue of Presidential Decree No. 2020 with a mandate to develop and implement
courses in fisheries, maritime technology, marine sciences, development
management, food technology and computer science.

        The College received total allotment of P60,116,499.93 during the year from
the Department of Budget and Management which is lower by 2% compared to last
year’s allotment of P61,532,222.07. Income generated during the year amounted to
P4,517,460.10 which is also lower by 53%, giving total available funds of
P64,633,960.03. This year’s total expenditure amounted to P67,582,447.14 resulting
in a net loss of P2,948,487.11.

       The accomplishment of the College include the total enrollment for the school
year 2005-2006 which registered at 4,393 indicating an increase by 2% compared to
last year’s enrollment of 4,333. The College completed the Quality Management
System Manual and Quality Procedures Manual in its desire to meet the standards as
an accredited maritime training institution as well as earn a certification of ISO
accreditation. Total clients served in its extension services increased from 269 in
2004 to 347 in 2005.

Scope of Audit

       The audit covered the financial transactions of the ZSCMST during the
calendar year ending December 31, 2005 as reflected in the financial statements. The
audit was made to determine the fairness of presentation of the financial statements,
and the propriety of financial transactions.

Auditor’s Report

       In view of the materiality of the following observations, we are of the opinion
that the accompanying Balance Sheet and the related Statement of Income and
Expenses and Statement of Cash Flows do not present fairly the financial position of
the Zamboanga State College of Marine Sciences and Technology, Rio Hondo,
Zamboanga City as of December 31, 2005, and the result of its operation for the year
then ended in accordance with applicable laws, rules and regulations and in
conformity with generally accepted state accounting principles.
       a.    There are twelve (12) Property , Plant and Equipment accounts
             amounting to P36,235,888.93 that were not provided with depreciation,
             resulting in the overstatement of the total assets and understatement of
             the total expenses. (paragraph 143)

       b.    The Property, Plant & Equipment accounts recorded in the books of
             accounts do not reconcile with the physical inventory by
             P12,615,810.29. Likewise, the Inventory accounts recorded in the books
             do not reconcile as well with the physical inventory by P3,831,732.49,
             rendering the balances of these accounts doubtful.(paragraphs 33 and
             29)

       c.    The computation of the Accumulated Depreciation and current year
             Depreciation of various properties were erroneous involving variances
             of P4,367,065.94 and P1,870,657.84, respectively, resulting in the
             overstatement in the total assets by a P4,367,065.94 and total expenses
             by P1,870,657.84. (paragraphs 37 & 149)

       d.    Lack of accounting guidelines in the Memorandum of Agreement
             between the College and the source agencies pertaining to inter-agency
             transfer funds may have led to erroneous accounting entries, resulting in
             the overstatement of the total liabilities by P6,538,818.84, total assets by
             P438,200.00 and understatement of the total income by P100,000.00 and
             total expenses by P6,084,618.84. (paragraphs 110 and 113)

       e.    The College failed to prepare Bank Reconciliation Statements for most
             of its current deposits with an aggregate amount of P6,307,821.06,
             rendering the balance of account Cash in Bank-LCCA unreliable.
             (paragraph 2)


Observations and Recommendations

        Specifically, the following deficiencies were noted in the audit of the financial
transactions of the College. These are discussed in detail in Part II - Observations and
Recommendations of this report.

       1. There are twelve (12) Property , Plant and Equipment accounts amounting
          to P36,235,888.93 that were not provided with depreciation, resulting in
          the overstatement of the total assets and understatement of the total
          expenses. Also, the Property, Plant and Equipment accounts recorded in
          the books do not reconcile with the physical inventory by P12,615,810.29.
          Likewise, Inventory accounts reflected in the books of accounts do not
          reconcile as well with the physical inventory by P3,831,732.49. The
          College officials concerned are required to investigate these differences.
          The computation of the Accumulated Depreciation and current year
   Depreciation of various properties is overstated by P4,367,065.94 and
   P1,870,657.84, respectively, thus, overstating the total assets and expenses
   by the same amounts. Also, donated Property, Plant and Equipment
   accounts amounting to P6,609,897.00 were booked-up without complete
   and proper documentation, rendering doubtful the validity and legality of
   the transaction. For these, the Accountant is required to make the
   necessary correcting entries.

2. The College failed to prepare Bank Reconciliation Statements for most of
   its current deposits with total amount of P6,307,821.06, rendering the
   balance of account Cash in Bank-LCCA, unreliable. To address this
   deficiency, the Accountant is required to prepare Bank Reconciliation
   Statements monthly.

3. Collections of the Cashier were not deposited intact and regularly in
   violation of Sec. 69, P.D. 1445 and DBM-DOF Joint Circular No. 1-81
   dated January 1, 1981, thereby exposing the cash in the hands of the
   Cashier to possible misuse and loss. The Cashier is required to observe
   the above stated law and regulation in handling collections.

4. The cash advances of some officials and employees of the College for
   special purpose and travel amounting to P736,080.20 and P408,495.57,
   respectively, remained unliquidated as of December 31, 2005, resulting in
   the understatement of the total expenses and overstatement of the total
   assets. Also, the cash advance of Dr. Enrie A. Caraecle amounting to
   P127,000.00 was not in accordance with COA Circular No. 97-002 dated
   10 February 1997, rendering the transaction irregular. Management is
   required to observe COA Circular No. 97-002 in the granting, utilization
   and liquidation of cash advances.

5. Procurement of several equipment by the College with an aggregate
   amount of P666,970.00 were not in accordance with RA 9184 and its
   Implementing Rules and Regulations Part A, otherwise known as the
   Government Procurement Reform Act, rendering the transactions
   irregular. For this, management and the concerned personnel are required
   to observe the said law in the procurement of equipment and to submit the
   documents required therein.

6. Lack of accounting guidelines between the College and source agencies
   for inter-agency transfer funds may have led to erroneous accounting
   entries, resulting in the overstatement of the total liabilities by
   P6,538,818.84, total assets by P438,200.00 and understatement of the total
   income by P100,000.00 and total expenses by P6,084,618.84. The
   Accountant is required to coordinate with the source agencies as to the
   proper accounting treatment of the fund received and to make the
    necessary adjusting/correcting entries to present reliable Financial
    Statements.

7. The College paid monthly honorarium to officials/employees designated
   as Directors/Executive Assistants of various offices/institutes amounting
   to P198,500.00 as of December 31, 2005 which is not within the
   conditions allowed under Section 47 of the General Provisions of RA
   9336, otherwise known as the General Appropriations Act (GAA) of 2005,
   thereby rendering the payment to be without legal basis. It also granted
   honoraria to the members of the Board of Trustees for its Board Meetings
   in 2005 which was not in accordance with Budget Circular No. 2003-06
   dated September 29, 2003. The amount of honoraria paid was excessive
   by P115,000.00, resulting in the loss of government funds. Management
   is required to observe the law and regulation in granting honorarium.

8. The College paid hazard pay amounting to P1,016,000.00 without the
   certification from the Secretary of the National Defense, a requirement of
   Section 54 of the General Provisions of RA 9336 also known as the
   General Appropriations Act, rendering the transaction irregular.
   Management is required to submit the required certification from the
   Secretary of National Defense.

9. The College failed to submit Monthly Reports of Fuel Consumption and
   Monthly Reports of Official Travels in violation of COA Circular No. 77-
   61 dated September 26, 1977, posing difficulty in evaluating the College’s
   fuel consumption. The concerned officials are required to observe strictly
   the requirements stated in the aforementioned Circular, in order to avert
   any unfavorable audit action on all corresponding payments for fuel
   consumed.

10. The College entered into a retainer ship agreement with a private lawyer
    without securing first the written conformity and acquiescence of the
    Solicitor General and written concurrence of the Commission on Audit, in
    violation of COA Circular 95-011 dated 04 December 1995, rendering the
    payment of the lawyer’s services without legal basis. Management should
    not make payments for legal services unless the same are supported with
    the written conformity and acquiescence of the Solicitor General and
    written concurrence of the Commission on Audit pursuant to COA
    Circular 95-011 dated 04 December 1995.

11. The College entered into an agreement with a private physician for
    medical retainer hip without adhering to the provisions of RA 9184 and its
    Implementing Rules and Regulation Part A (IRR-A), otherwise known as
    The Government Procurement Reform Act, rendering the transaction
    irregular. Management is required to strictly observe the procedures in RA
    9184 in the procurement of goods and services.
        These observations and recommendations were discussed with the concerned
management officials and staff and their comments were noted and incorporated in
the detailed discussion.


Implementation of Prior Year’s Recommendations

        The previous year’s Annual Audit Report on the accounts and operations of
the College reported nineteen (19) audit observations and recommendations. Nine (9)
of these were fully implemented, four (4) were partially implemented, three (3) are
still under implementation and three (3) were not implemented.

								
To top