EXECUTIVE SUMMARY

A. INTRODUCTION

The Cagayan State University (CSU) was established on June 11, 1978 by virtue
of Presidential Decree No. 1436. Its establishment was the result of the merger of eight
(8) schools and colleges in the Province of Cagayan. Its mission shall provide advance
instruction in the arts, agricultural and natural sciences as well as in technological and
professional fields. The University’s vision aims at leading in tertiary education in
Region 02. Its academic programs are to result in community extension and productivity.
It also aims to excel in humanities, sciences, agriculture and technical education. It is to
make available in the region the community-based medical education. The University
has seven (7) campuses strategically located in the different municipalities that would
cater to the needs of the community for education.

The University is under the helm of Dr. Roger P. Perez, who was reelected as
University President in April 2008 for the third term. Assisting the President are the
three (3) Vice Presidents : Dr. Perfecto V. Vivit, Administration and Business Affairs;
Fr. Ranhillo C. Aquino, for Academics and Dr. Rogelio Matalang, for Research and
Extension.

FINANCIAL HIGHLIGHTS

The University’s financial condition and results of operation for the calendar year
2009 are presented below with comparative data for the calendar year 2008:
Financial Condition: 2009 2008 Increase (Decrease)
Assets (Net) 694,710,774.77 595,683,750.21 99,027,024.56
Liabilities 43,568,602.56 46,011,848.79 (2,443,246.23)
Govt. Equity 651,213,654.54 549,671,901.42 101,541,753.12
Results of Operation:
Income 561,783,353.56 378,538,040.90 183,245,312.66
Expenses 476,515,501.47 323,836,433.91 152,679,067.56
Net Income 85,267,852.09 54,701,606.99 30,566,245.10
 B. OPERATIONAL HIGHLIGHTS

The university registered major accomplishments for the calendar year 2009, the
notable of which are the following:
Instruction:
1. The enrollment reports from the seven campuses for 1 st semester of Academic
Year 2009-2010 showed that total number of students reached 23,045. This shows
a 19.4% increase of enrollees from the 19,296 enrollees during the 1 st Semester of
Academic Year 2008-2009. In the Summer of 2008, the number of students
enrolled was 6,077 while for Summer 2009, enrollment reached 8,235,
representing an increase of 36%. Serving these students are 438 full time faculty
members who are backed up by 358 part-time faculty members. Of these faculty
members 116 hold a Doctorate degree, 285 hold a Master’s degree and 37 hold a
Bachelor’s degree. The presence of faculty members with Bachelor’s degree is
primarily due to the fact that CSU still maintains Laboratory High Schools in Piat
Campus and in Gonzaga Campus.

2. The Graduate School posted a 12.22% increase in enrollment from 270 students
in SY 2007-2008 to 303 students in SY 2008-2009. The increase in enrollment is
attributed to the offering of new curricular programs and majors such as; Master
in Public Administration major in Local Governance, Master in Public
Administration major in Law Enforcement and Doctor of Philosophy in Public
Law in consortium with the San Beda College, Manila. Aside from these new
courses, the employment of experienced, highly-qualified and committed teachers
to further strengthen the Graduate School professorial corps and the offering of
non-thesis master’s degree programs are also factors that helped draw in more
graduate students to the Cagayan State University. The fact that the Graduate
School miscellaneous fees and tuition fee rates have remained constant at
P280.00/unit in the master’s degree level and at P300.00 at the doctoral level
could also be significant factors in attracting more professionals in the Cagayan
Valley area to enroll in the CSU Graduate School.

3. CSU reaped a bountiful harvest in the different Board Examinations in 2009. In

the August 2009 Physicians’ Licensure Examination, CSU had a 100% passing
rate for its 15 examinees, far surpassing the 71.28% national passing rate.
Sanchez Mira Campus likewise posted a 100% passing rate for its 16 examinees
in the Licensure Examination for Criminologists. Although Aparri Campus only
posted a 71.43% passing rate in the same Licensure Examination, it is still way
above 35.68% national passing rate. In the Medical Technologists Licensure
Examination held on September 5-6, 2009, 21 of 23 CSU examinees passed such
that CSU’s passing rate was 91.30% which is again above the 56.91% national
passing rate. The same exam given on March 3-4, 2009 had a 71.43% passing
rate that is again above the 43% national passing rate. It must also be noted that
in the Agricultural Engineering Board Examination held in August 2009, CSU
 consistently maintained a passing rate (38.46%) that is higher than the 29.82%
national passing rate. In the said examination, a CSU graduate, Sherwin
Maruquin garnered the First Place, proving that the quality of CSU graduates
keeps improving.

4. In the Civil Engineering Board exams, CSU posted a 79% passing rate (national
passing rate = 46%), in the Electrical Engineering Board exams, CSU had a 77%
passing rate (national passing percentage= 41%), in the Electronics and
Communications Engineering Licensure Exam, CSU had a 31% passing rate
(national passing rate = 26%), in the Veterinarian Licensure Examination, CSU
had a 31.25% passing percentage (national passing rate = 27.5%). However, the
Chemical Engineering Board Exam only had a 33% passing rate which is lower
than the national passing rate of 52%. In the Licensure Examination for Teachers,
CSU posted a 42% passing rate for BEED graduates while it had a passing rate of
52% for BSED graduates.

5. The CSU Communicator, the official student publication of CSU, was adjudged
as the Over-all winner in the 8th Higher Education Regional Schools Press
Conference and emerged as the 4th place in Best Sportspage, Newsletter Category
and Broadsheet Category with Ralph Donald Liwanag winning the First Place in
the Editorial Writing (English).

6. The Board of Regents approved the opening of Caregiving, Midwifery and Health
Care Delivery and Practical Nursing (ladderized course) for SY 2009-2010. The
College of Nursing had 58 enrollees for the first semester of SY 2009-2010. In
honor of the donor of the lot on which the Caritan Campus stands and in
recognition of the generosity of the heirs of Mr. Claude Edgar Andrews, the
Board of Regents approved that Caritan Campus be renamed Andrews Campus.
With the transfer of administrative offices to Andrews Campus, the Board also
approved the separation of Carig Campus as a distinct campus and Engr. Arthur
Ibañez was eventually designated as the Campus Executive Officer. The Board of
Regents also approved that CSU would no longer charge tuition fees beginning
SY 2010-2011. This is a milestone in the history of tertiary education in the
Philippines in the face of continuous increase in tuition fees by other schools, be
they under the private sector or the government. By all accounts, CSU is bucking
the trend and is intent to show all SUCs that the money presently allocated to state
universities and colleges is somehow sufficient if only the administrators use the
given budget wisely, monitor and control expenditures and institutionalize an
efficient system of accounting all sources of income of the university.

7. To show its sympathy with the plight of students whose families were affected by
the onslaught of Typhoon Pepeng, the administration implemented the Study
Now, Pay When Able Scheme. This is to ensure that in spite of the calamities
that beset the region, CSU still takes unconventional measures to guarantee the
access of the marginalized sectors of society to quality education.
8. The linkages of CSU with foreign organizations started to bear more fruit in 2009.
Its educational partnership with HCMI (Health Care Management International)
and ALTER (Alliance Learning Training and Education) for the BS Biology
Premed Course and the MD Courses resulted in the enrollment of 16 foreign
students from India, Nepal and Kenya in the Medicine Program and 24 foreign
students from Pakistan, India, Nigeria, Democratic Republic of Congo and Kenya
for the BS Biology Program. These academic partnerships are gradually infusing
a global reach and outlook to CSU education. In a reciprocal manner albeit on a
different level, CSU further increased the deployment of students from the
College of Hospitality Industry Management, College of Business
Entrepreneurship and Accountancy and College of Engineering in Singapore for
their on-the-job training. This does not only give a global exposure to CSU
students but also gives the students a better chance of gainful employment in
foreign companies upon graduation.

9. With the increase of enrollment, the Office of the Dean of Instruction initiated a
very thorough synchronization of workloads in order to maximize the utilization
of classrooms and the teaching hours of the faculty. Inasmuch as there were also
a lot of new part-time teachers hired, they were made to undergo an Orientation
before the start of classes to orient them with the academic and administrative
policies of the university. All newly-hired teachers were required to undergo a
Seminar-Workshop on Test Construction, Item Analysis and in the preparation of
Table of Specifications. Towards the middle of the school year, the teachers
underwent further training on Personality Development, Basic Management Skills
and in Writing Business Correspondence as part of the Continuing Faculty
Development Program.

10. In the summer of 2009, the second part of the Faculty Retraining/Retooling
Program that lasted for two weeks was conducted. These were in the fields of
English, Philosophy, Math, Criminology and Hospitality Industry Management.

11. A review of the General Education Curriculum was also undertaken covering
Math, English, Social Science and Natural Science. As a result, Functional
English 1 and 2 were incorporated into the curriculum in order to improve the
students’ English communication skills. A Curriculum Development and Review
was also undertaken for AB English, Computer Science, Nursing and Industry
Commercial Communication

12. For 2009, there were 41 Seminars/Trainings/Conventions costing the university P

357,077.00 that were attended by faculty members in order to keep them abreast
of the developments in their own fields of expertise. These faculty development
thrusts were allocated according the existing need of a particular college in order
to ensure that the university’s financial resources are expended only in those
fields where there is a genuine need for improvement. This seminars and
 trainings were further supplemented by a regular Colloquium organized by the
Vice President of Academic Affairs, Fr. Ranhilio C. Aquino.

13. In line with the relentless drive to upgrade the quality of education offered by
CSU, 2009 marks the year when the administration decided to put itself under the
scrutiny of the Institutional Quality Assurance Monitoring and Evaluation
(IQuaME), a flagship program of the CHED as per CMO No. 16, s. 2005. The
IQuaME is a mandatory program designed to evaluate the over-all strategic and
operational management by an institution of its academic affairs. By subjecting
itself to such monitoring and evaluation, the present administration hopes to
jumpstart the process of transforming CSU into a world-class educational
institution in as much as it will involve a comprehensive review of its systems and
processes.

14. To further boost the morale of deserving faculty members, the university initiated
the promotion of 19 part-time faculty members to regular positions and the
promotion of 110 regular faculty members in August 2009 through the
Institutional Promotion scheme. At the same time, NBC 461 Cycle 4 Evaluation
is already in its final stages in order to pave the way for the promotion of other
faculty members.

15. The University further funded the installation of Wifi equipment in Andrews
Campus, making it one of the few schools in the Region having such wireless
access to the Web. This development has enabled faculty members and students
alike to avail of Web resources in their respective classrooms.

Research

1. The Research and Development Office approved/implemented a total of 62

studies that were funded by CSU and by outside agencies for CY 2008-2009.
Broken down into different disciplines and areas, 14 were in Higher Education,
14 were in the Social Sciences, 2 in Health, 11 in Agriculture, 7 in Fisheries and
14 in the field of Engineering, Technology, Advanced and Applied Sciences.
Among these researches, CSU has already allocated funds amounting to
P255,000.00. The study titled, Development of a Solid Waste Decision Support
Tool for Tuguegarao City won 2nd Place for Best Paper and was conferred an
Award during the CVARRD Anniversary in December 2009.

2. Of the 7 external projects funded by PCARRD-DOST, 3 projects are already on-

going with a total funding of P1,759,840.00 while 4 are still on-the-pipeline.
Among these is the Adoption of S&T-Based Integrated Crop Management and
Good Agricultural Practices for Saba, Lakatan and Latundan in Region 2, and
Cagayan Valley Organic Vegetable Research and Development Program.

3. The different campuses actively participated in the CSU-DATBED Program

which aims to empower students towards financial self-reliance and
 entrepreneurship. In this program, students enroll in the said program to show
their interest and enthusiasm to engage in agricultural production. The proposed
projects submitted by the different campuses of the university are currently under
review by the DOST.

4. The Research Office was also able to secure patent on the technology on
Eucheuma Candy during the second quarter of 2009.

Extension and Community Services

1. The CSU Extension and Community Services maintained the Techno Gabay
Program which is an extension delivery modality to build the capability of LGUs
to deliver extension services to their clientele and partners. At the same time,
Technology Commercialization was also undertaken in order that students and
unemployed graduates of agriculture will become partners in technology
promotion, adoption and commercialization.

2. Among the commodities assessed for commercialization in 2009 were mushroom

culture, apiculture, banana production, goat/sheep production, vegetable
production, peanut production, fish and seaweeds processing and food processing.

Infrastructure Development

1. For 2009, the university undertook several major infrastructure projects using
internal funds in order to provide state-of-the-art facilities and equipment to its
students.

2. The construction of the 4-Storey HIM/Hotel Building has started to accommodate

the anticipated greater influx of HIM students in the coming school year and to
provide a Hotel Laboratory for the College. As of the end of 2009, the completion
of the structure stands at 12%.

3. The Grand Entrance and the adjacent structures housing the administrative offices
and the Office of the President was completed at a cost of P24.7 M and was
inaugurated by Her Excellency President Gloria Macapagal-Arroyo on August 28,
2009 together with the 4-Storey Education Building which cost P34.6 M. The
expanse of land fronting the new Education Building was developed at a cost of
P4.2 M and was named the Athena Park, after the Greek goddess of learning to
remind the students that CSU is intent on making itself the premier center of
learning in the Region and in the whole country.

4. To complete the Greek-themed structures in Andrews Campus, the construction

of the fence surrounding the campus was started.
 5. To make comfort rooms more accessible to the students attending classes in the
new Education Building, a 4-Storey Comfort Room was annexed to the said
building. As of the end of 2009, completion of the structure was 60%.
6. Aside from the buildings in Andrews Campus, the university also started the
construction of the 12- room Aparri Academic Building B in 2009. This is still in
keeping with the thrust of the present administration to develop all campuses.

Administrative Services

1. August 28, 2009 is a red-letter date for CSU as it marks the inauguration of the
Grand Entrance, Administrative Offices and the 4-storey Education Building in
Andrews Campus by Her Excellency Gloria Macapagal Arroyo. Built solely on
internal funds, the new structures are a proud testimony to the CSU advocacy that
wise use of funds that are generated by the University’s income generating
projects and those allocated by the national government could result in massive
changes in the state universities. Complementing the impressive classic structures
is the well-manicured Athena Park which has become a favorite venue for holding
evening parties and events by the students of the College of Hospitality Industry
Management.

2. The new offices were furnished with brand-new tables and office chairs, new PCs
with flat screen monitors and a local area network that facilitates exchange of data
among offices in the university and for data to and from entities outside the
university. A new PABX system was also installed to ensure that working
ambiance in the administrative offices is not only efficient but also world-class.

Income Generating Projects

1. In 2009, the Business Office developed and implemented the New IGP Internal
Accounting and Auditing Policies. These policies are in harmony with COA
Rules and Regulations and Generally Accepted Accounting Principles. This is to
ensure better monitoring of all income generating projects of the university. The
income from the different IGPs were transferred to Fund 164 (Special Budget) to
augment the MOOE of the University. To further motivate employees involved
in the income generating projects, incentives were given to them.

D. SCOPE OF AUDIT
The audit covered the accounts and operations of the agency for calendar year 2009.
The audit was aimed at determining the fair presentation of the accounts in the
financial statements and the propriety of financial transactions.

E. STATE AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the fairness of presentation of the

university’s financial statements due to the following:
  Cash shortages of Accountable Officer of Piat Campus amounting to P733,889.22
were still included in the balance of accounts Cash - Collecting Officer and Cash
– Disbursing Officer;
 non taking up of necessary adjustments/reconciling items of Cash in Bank-LCCA
and non preparation of monthly Bank Reconciliation Statement;

 inclusion of entries with negative balances in the Due from Officers and
Employees account and several advances of over P10,000.00 which remained
outstanding and unadjusted over a period of time;

 understatement of the PPE account due to non recording of lot of Lallo Campus
amounting to P13,271,360.00 ;

 non reconciliation of the Property, Plant and Equipment (PPE) of Piat Campus amounting
to P2,801,138.78 as of December 31, 2009 in the Report of Physical Count of PPE;

F. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND

RECOMMENDATIONS

1. Cash shortages of Accountable Officer of Piat Campus amounting to P733,889.22

were still included in the balance of accounts Cash - Collecting Officer and Cash –
Disbursing Officer contrary to Section 49, Accounting for Loss of Cash and Property
of the Manual on the New Government Accounting System.

We recommend that the Campus Accountant should draw a Journal Entry Voucher to
reclassify the Cash – Collecting Officer and Cash – Disbursing Officer accounts to
Due from Officers and Employees.

2. The balance of Cash in Bank-LCCA (111) amounting to P14,245,475.39 as of

October 31, 2009 could not be relied upon due to non-taking up of necessary
adjustments/reconciling items and non-preparation of monthly Bank Reconciliation
Statements.

We recommend that the Accountant should immediately take up necessary

adjustments/reconciling items as identified in the Bank Reconciliation Statement.
This is to establish fair presentation of the affected accounts including the
Government Equity.

Likewise, it is recommended that the University shall maintain a single bank account
for the Special Budget Fund. This is to facilitate control and monitoring of the Cash
in Bank account, including the preparation of monthly Bank Reconciliation
Statement. It is emphasized that the preparation of monthly Bank Reconciliation
Statement is indispensable as it serves as a tool to identify possible errors in
recording/posting, make the necessary adjustments, and eventually establish the
correct balance of the account as of any given period.
3. The account Due from Officers and Employees (123) amounting to P621,574.08 as of
October 31, 2009 was not fairly presented due to the inclusion of accounts with
negative balances and several advances of over P10,000.00 which remained
outstanding and unadjusted over a period of time.

We recommend that the Accountant should strictly comply with the pertinent rules
and regulations on the granting, liquidation, and accounting of cash advances
pursuant to COA Circular No. 97-002 dated February 10, 1997.

Concerned officers and employees should be required to immediately liquidate their

cash advances after the purpose/s for which these were granted had been served. Any
unused cash advance should be returned or refunded. It is emphasized that non-
compliance hereof calls for the imposition of corresponding sanctions.

Further, accounts with negative balances should be properly accounted for possible
mispostings before making the necessary adjustments/reclassification.

Furthermore, the corresponding aging schedule should be updated to reflect the true
status or age of the individual accounts.

4. The University failed to observe specific provisions of the revised Procurement Law
in the procurement of pre-fabricated granite lavatory counter top amounting to
P118,000.00 for its comfort rooms, kitchen and grand entrance. It also failed to
observe the required procedures in the recording and accounting thereof.

We recommend for the University to strictly comply with the pertinent provisions of
the procurement law to ensure valid and competitive procurement activities.

Corollary hereto, each procurement should be within the ABC. The supporting
documents should be properly filled up and should reconcile with one another.

For the subject-procurement, the Accountant and Budget Officer should reconcile
their records and thereafter make the necessary adjustments in order to reflect the
correct balances of the affected accounts.

5. The school lot covering a total area of more or less 1,274 hectares with assessed value
amounting to P13,271,360.00 in the name of the Cagayan State University (formerly
Cagayan Valley Agricultural School) Lallo Campus, in the Assessment Rolls of the
Municipal Assessor’s Office were without land titles and unrecorded in the books of
accounts of the school in violation of Section 449 of the Government Accounting and
Auditing Manual (GAAM), Volume I, thus understating the Property, Plant and
Equipment accounts as of December 31, 2009.

We recommend to management to coordinate with the concerned government

authorities to facilitate the immediate titling of the lot owned by the school, so that
the ownership thereto could be properly secured and to avoid future litigations against
 the school by unknown claimants. The assessed value of the land should likewise be
recorded in the books of accounts.

6. The balance of Property, Plant and Equipment (PPE) of Piat Campus amounting to
P2,801,138.78 as of December 31, 2009 was not reconciled with the balance reflected
in the Report of Physical Count of PPE, hence the financial statements of the
University cannot be relied upon.

We recommend that the Accounting Office and the Inventory Committee should
conduct the required reconciliation procedures between the Report on Physical Count
and the balances in the books of accounts. Any discrepancies should be immediately
verified and adjusted in the books.

7. Some properties of Piat Campus already identified as Unserviceable were still

included in the RPCPPE instead of reporting it separately in the Inventory and
Inspection Report for Unserviceable Property in violation of Section 64 of the Manual
on the New Government Accounting System, Volume II.

Management should properly identify all unserviceable properties and should be

reported in the Inventory and Inspection Report for Unserviceable Property. Require
the Campus Accountant to draw a Journal Entry Voucher to record the same as Other
Assets. However, Management should also be able to assess how to dispose these
unserviceable items properly so that these shall be dropped from the books as soon as
they are disposed.

G. IMPLEMENTATION OF PRIOR YEAR’S RECOMMENDATIONS

All the seventeen (17) prior year’s recommendations were implemented.