Metro San Fernando Water District Executive Summary 2020

EXECUTIVE SUMMARY
A. Introduction
Metro San Fernando Water District (MSFWD) came into existence by virtue of
Presidential Decree (PD) No. 198, otherwise known as the Provincial Water Utilities Act
of 1973, as amended, on April 28, 1972. From the defunct NAWASA, the old system was
turned- over to the Metro La Union Water District which now covers one city and four
municipalities. MSFWD area of jurisdiction consists of San Fernando City, Bauang, San
Juan, San Gabriel and Bacnotan. The District now serves 8,964 concessionaires.
Responsive to its mission and vision, MSFWD strives to improve its service
concessionaires through continuous monitoring of water supply as well as reduction of
non-revenue water. With the forthcoming implementation of development and expansion
projects, MSFWD, hopefully will be able to meet the parameters set by Local Water
Utilities Administration (LWUA) and improve its revenues.
The Board of the Directors (BOD) is the policy making body of the MSFWD,
composed of the Board Chairman and four Board members representing the Women,
Business, Civic, Education and Professional Sector. MSFWD is under the overall
supervision of the General Manager, assisted by four Division Managers. MSFWD is
manned by 10 permanent personnel and 4 job-order employees paid on a daily basis.
On March 21, 2016, MSFWD entered into a Joint Venture Agreement (JVA)
with the Prime Water Infrastructure Corporation (PRIMEWATER) for the financing,
development, rehabilitation, improvement, expansion and maintenance of potable water
supply and septage management system of the MSFWD.
B. Financial Highlights
Presented below is the summary of comparative financial highlights of the

MSFWD:
Amount (P) Percentage

Particulars
2020 2019 of Change
Total Assets 283,336,595.56 255,049,963.28 11.09
Total Liabilities 64,428,724.24 86,169,573.85 (25.23)
Total Equity 218,907,871.32 168,880,389.43 29.62
Total Income 24,583,566.68 20,968,431.90 17.24
Total Expenses 23,525,410.82 24,235,681.96 (2.93)
Amount (P) Percentage
Particulars
2020 2019 of Change
Budget 19,609,248.24 20,146,330.00 (2.67)
Actual
(2.93)
Expenditures 23,525,410.82 24,235,681.96
C. Scope of Audit
A comprehensive audit was conducted on the accounts and operations of

MSFWD, City of San Fernando, La Union for the year ended December 31, 2020. The
audit was conducted to ascertain the propriety of financial transactions and the accuracy
of financial records and reports, as well as the fairness of the presentation of the financial
statements in accordance with the Philippine Financial Reporting Standards (PFRS). It
was also aimed at determining the compliance by MSFWD with applicable laws, rules
and regulations. It also entailed verification/validation on the implementation of prior
years’ audit recommendations.
D. Auditor’s Opinion on the Financial Statements
The Auditor rendered an unmodified opinion on the fairness of presentation of the

Financial Statements (FS) of MSFWD, San Fernando City, La Union as of December 31,
2020, and the results of its operations and cash flows for the year then ended in
conformity with PFRS.
E. Summary of Significant Observations and Recommendations
Presented below is the summary of the significant Observations and

Recommendations which affected the operations and performance of the District. These
were discussed with the Agency officials concerned during the exit conference and their
corresponding comments are incorporated in Part II of the report, where appropriate.
1. The Miscellaneous Income account amounting to P12,275,117.34 includes accruals

and cash inflows that should have not been recognized as income, contrary to
accounting principles as embodied in the Conceptual Framework in Financial
Reporting, thus failed to present a more reliable receivable and income account.
Likewise, the status, nature and collectability of the said account were not adequately
disclosed in the Notes to FS, contrary to International Accounting Standards (IAS) 1,
thereby affecting the fair presentation of the District’s financial statements.
We recommended that Management instruct the Accountant to:
a. Submit documents to support the asserted claims as basis for the accrual of income;
b. Make necessary adjusting entries to adjust the accrued income pertaining to
unsubstantiated claims from salary increase;
c. Reverse the entry made recognizing the mandatory deposits as income amounting
to P1,200,000.00;
d. Provide additional disclosure to FS regarding the status, nature and collectability of
the related receivables and income account.
e. Incorporate in the JVA the claims for salary increase, payment of mandatory
deposits and the manner and schedule of their payments to MSFWD.
2. The inability of the District to require the PRIMEWATER to remit to the Bureau of
Internal Revenue (BIR) the two per cent franchise taxes from its gross receipts,
contrary to Section 119 of Republic Act (RA) No. 8424 or the Tax Reform Act of
1997, deprived the government of much needed revenue.
We recommended that Management direct the GM to instruct the PRIMEWATER to

(a) remit the franchise taxes due from the joint venture operations; and (b) furnish the
District with copies of franchise taxes remittances together with the monthly water
sales receipts report to determine the correctness of computation.
F. Status of Implementation of Prior Year`s Audit Recommendations
Of the 27 prior years’ audit recommendations, 19 were implemented and 8 were

not yet implemented, which are reiterated in Part II of the Report.
G. Status of Settlement of Audit Suspensions, Disallowances and Charges
For Calendar Year (CY) 2020, audit suspensions, disallowances and charges
totaled P14,859,333.33, P92,949,191.29 and zero, respectively.

Metro San Fernando Water District Executive Summary 2020

Uploaded by

Copyright:

Available Formats

Metro San Fernando Water District Executive Summary 2020

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Metro San Fernando Water District Executive Summary 2020

Uploaded by

Copyright:

Available Formats

EXECUTIVE SUMMARY

Presented below is the summary of comparative financial highlights of the

Amount (P) Percentage

A comprehensive audit was conducted on the accounts and operations of

D. Auditor’s Opinion on the Financial Statements

The Auditor rendered an unmodified opinion on the fairness of presentation of the

E. Summary of Significant Observations and Recommendations

Presented below is the summary of the significant Observations and

1. The Miscellaneous Income account amounting to P12,275,117.34 includes accruals

We recommended that Management instruct the Accountant to:

We recommended that Management direct the GM to instruct the PRIMEWATER to

F. Status of Implementation of Prior Year`s Audit Recommendations

Of the 27 prior years’ audit recommendations, 19 were implemented and 8 were

G. Status of Settlement of Audit Suspensions, Disallowances and Charges

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.