EXECUTIVE SUMMARY
Introduction
The Metro Kidapawan Water District was established thru Sangguniang
Panlalawigan Resolution No. 122 dated December 14, 1976 of the Province of Cotabato
with Presidential Decree No. 198, as amended, as the enabling law for the creation of
water districts.
On May 6, 1977, the District was issued the Conditional Certificate of
Conformance (CCC No. 041) by the Local Water Utilities Administration (LWUA).
Pursuant to DBM Circular No. 2011-10 dated November 18, 2011 on the Revised Local
Water District Manual on Categorization and other Related Matters (LWD-MaCRO),
Metro Kidapawan Water District has been re-categorized to “CATEGORY A” effective
October 2016. The mandates of the District are:
• To acquire, install, improve, maintain and operate water supply and
distribution systems for domestic, industrial, municipal and agricultural uses
of residents and lands within the boundaries of the district;
• To provide, maintain and operate wastewater collection treatment and disposal
facilities; and
• To conduct such other functions and operations incidental to water resource
development, utilization and disposal within the district are necessary or
incidental to said purpose.
The powers, privileges and duties of the District are exercised and performed by
and through the Board of Directors, as the policy-making body composed of the
following:
Position Name Sector Represented
Chairman - Virginia L. Dayaday Women
Vice-Chairman - Emmanuel E. Zamoras Civic
Secretary - Alan G. Pandio Education
Member - Lynnie G. Cagape Business
Given the resignation of the Board representing the Professional Sector, the
District is waiting for the LWUA-approved appointment of the new Board of Director
(BOD) in compliance with the provisions of PD 198.
The operational activities at the Metro Kidapawan Water District are under the
direct supervision of Stella M. Gonzales, General Manager.
Audit Scope and Methodology
Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43
of the Government Auditing Code of the Philippines (P.D. 1445), we have audited the
accounts and operations of the District covering the period January 1, 2021 to December
31, 2021.
The audit was conducted in accordance with the generally accepted state auditing
standards. Accordingly, it had such tests of the accounting records and other related
documents and evaluation of the design and operating effectiveness of the controls and
other procedures, as necessary, in the audit.
The audit was conducted to (a) verify the level of assurance that may be placed on
management’s assertions on the financial statements; (b) recommend agency
improvement opportunities; and (c) determine the extent of implementation of prior
years’ audit recommendations.
Financial Highlights
The financial condition and results of operations of the Metro Kidapawan Water
District for Calendar Year (CY) 2021 with comparative figures for CY 2020 are
presented below:
Financial Condition 2021 2020 Increase/(Decrease)
Peso Value %
Assets ₱1,045,672,582.01 ₱770,107,592.66 ₱275,564,989.35 35.78
Liabilities 678,005,959.74 438,845,074.36 239,160,885.38 54.50
Equity 367,666,622.27 331,262,518.30 36,404,103.97 10.99
Results of 2021 2020 Increase/(Decrease)
Operations Peso Value %
Income ₱250,544,411.51 ₱184,994,518.15 ₱65,549,893.36 35.43
Expenses 198,035,353.86 181,439,386.93 16,595,966.93 9.15
Net Income (Loss) 52,509,057.65 3,555,131.22 48,953,926.43 1,376.99
Sources and Application of Funds
Total cash receipts for Calendar Years 2021 and 2020 amounted to
₱466,678,457.31 and ₱189,205,180.68, respectively, which were all sourced from the
District’s operating, investing and financing activities.
Funds were utilized as follows:
Opinion of the Auditor
The auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements of Metro Kidapawan Water District for the calendar year 2021 due to
the incorrect dropping of inactive receivable accounts without authority to write-off
which resulted in the Other Assets’ account overstatement and the Accounts Receivable’s
understatement by the same amount of ₱4.921 million. It also resulted in the
understatement of Allowance for Impairment-Accounts Receivable account and
Impairment Loss-Loans and Receivable account by the same amount of ₱243,276.73.
Moreover, a lot amounting to ₱500,000.00 acquired through donation was not recorded in
the books of accounts as Land, which resulted in the understatement of the land account
reported in the District's financial statements as of year-end.
Summary of Significant Audit Observations and Recommendations
1. Inactive receivable accounts totaling ₱4.921 million were identified as dormant and
derecognized from the Accounts Receivable without proper authority to write off.
We have recommended that Management:
a) instruct the Corporate Accountant to prepare a report on the aging of dormant
receivables every quarter (Annex 1 of COA Circular No. 2016-005) as one of
the supporting documents in requesting for writing-off subject receivables,
indicating in the Remarks column the existence of the applicable conditions;
b) strictly adhere to the Guidelines and Procedures on the Write-off of Dormant
Receivable Accounts as required under COA Circular No. 2016-005; and
c) derecognize the ₱4.921 million receivables erroneously recorded in the Other
Assets account and restore the same in the Accounts Receivable account. The
accountant shall ensure that writing off of receivable accounts is duly supported
by a decision from COA granting the request for authority to write-off these
subject accounts prior to preparing the necessary journal entries prescribed under
the aforementioned COA Circular.
2. A lot amounting to ₱500,000.00 acquired through donation was not recorded in the
books of accounts as Land.
We have recommended that Management instruct the Accountant to effect the
necessary journal entries to recognize the unrecorded land. Shown below are the
suggested journal entries:
Land 500,000.00
Retained Earnings 500,000.00
3. Audit Disallowances totaling ₱10,515,280.49 remain unresolved beyond the
prescribed period.
We have recommended that Management:
a) strictly monitor and enforce the settlement of the disallowances in accordance
with the procedure outlined in COA Circular No. 2009-006's Rules and
Regulations on Settlement of Accounts (RRSA) and COA Resolution No. 2017-
021 dated November 3, 2017; and
b) pursue all available collection methods from persons liable who is no longer
associated with the District. Otherwise, it should be enforced against other
solidary liable individuals as prescribed under Section 16 of COA Circular No.
2009-006.
4. The Metro Kidapawan Water District has developed Septage Management Plan but
fell short of implementation, thus necessitating actions deemed appropriate for
attaining a sound wastewater treatment and disposal system for concessionaires.
We have recommended that Management continuously coordinate with the Local
Government Unit of Kidapawan and other local stakeholders to expedite the
implementation of a sound and effective Septage Management Program in its area of
jurisdiction and for the possible generation of additional fund sources for its proper
implementation.
5. Due to lack of authority or approval from the Secretary of Budget and Management
as required under National Budget Circular (NBC) No. 446, motorcycle rentals
disbursement for a continuous period of more than fifteen (15) days totaling
₱655,247.19 rendered the said transactions irregular.
We have recommended that Management secure/request an authority to rent motor
vehicles/motorcycles for more than fifteen (15) days to the Secretary of Budget and
Management. Said request shall be accompanied by the information requirements set
under Item 12.3 of National Budget Circular (NBC) No. 446. Without such
approval/authority, concerned employees shall claim the appropriate daily travel
expenses (DTE) rate prescribed under Executive Order No. 77.
6. Expenditures on major projects totaling ₱9.296 million were all attributed to GAD
without accomplishing first the HGDG Checklist.
We have recommended that Management:
a) regularly furnish the audit team a copy of the District’s GAD Accomplishment
Report within five (5) working days from the end of January of the preceding
year by the deadline set under Item V of COA Circular No. 2014-001; and
b) ensure the complete submission of supporting documents that shall be attached
to the District’s GAD Accomplishment Report as required under 1.5.3 of PCW
Memorandum Circular No. 2021-06 to include among others, PDF copies of the
results of HGDG PIMME/FIMME checklist, the program/project
accomplishment report; details of expenditure; as well as the relevant means of
verification (MOVs) for the agency self-rating, such as activity reports,
monitoring and evaluation reports, list of sex-disaggregated data (SDD) or
gender statistics that were used and/or collected; and consider seeking the
assistance of PCW, other oversight agencies, civil society organizations, non-
government organizations, gender experts or specialists, and other stakeholders
in tracking key results, outputs, and outcomes of the District’s GAD programs,
activities and projects (PAPs) as provided under Item 9.3 of PCW-NEDA-DBM
Joint Circular No. 2012-01.
Summary of Suspensions, Disallowances and Charges
The total audit suspension, disallowances and charges found in the audit of
various transactions of the agency as of December 31, 2021 is ₱10,547,316.99, based on
the Notice of Suspension (NS)/ Notice of Disallowance (ND)/ Notice of Charge (NC)
issued by the Commission, as summarized below:
Particulars Suspensions Disallowances Charges
Summary of Audit Suspensions, ₱0.00 ₱12,064,740.94 ₱0.00
Disallowances and Charges as of
December 31, 2020
Add: Issuances - - -
Less: Settlements - 1,517,423.95 -
Balance, December 31, 2021 ₱0.00 ₱10,547,316.99 ₱0.00
Status of Implementation of Prior Years’ Audit Recommendations
Of the twenty (20) prior years’ audit recommendations contained in the 2020
Annual Audit Report, seventeen (17) were fully implemented, two (2) were partially
implemented, and one (1) is on the ongoing status of implementation.
