EXECUTIVE SUMMARY

A. INTRODUCTION

The Province of Capiz is a 1st Class Province and dubbed as the Seafood Capital of the
Philippines.

Its vision and mission statement contained in the Annual Budget for CY 2019 states:

“Mission - A progressive, resilient, sustainable and globally competitive

province by empowered Capiznon.

Mission Statement - We are committed to uphold good governance for

Capiznon through the delivery of responsive quality social services,
promotion of a vibrant and technology driven economy propelled by agro-
industrial, fisheries and tourism development, improvement of infrastructure
and enhancement of capabilities for environmental and disaster risk
reduction management.”

The personnel complement of the Province of Capiz together with the key officials
Provincial Governor, Provincial Treasurer and Provincial Accountant totaled to 3,129,
broken down as follows:

Regular employees 992

Temporary/contractual/Casual/Job Orders/Co-Terminus 2,124
Elective Officials 13
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Total Personnel Complement 3,129

A financial and audit compliance was conducted on the accounts and operations of the
Province of Capiz for the Calendar Year (CY) ended December 31, 2019. The audit was
conducted to ascertain the propriety of financial transactions and compliance of the
agency to prescribed laws, rules and regulations. It was also made to ascertain the
accuracy of financial records and reports, as well as the fairness of the presentation of
the financial statements.

B. FINANCIAL AND OPERATIONAL HIGHLIGHTS

The financial highlights for CY 2019 are as follows:

Asset 2019 2018 Increase/Decrease %
General Fund 4,487,533,762.98 3,832,732,967.07 654,800,795.91 17.08
Special
Education Fund 61,911,311.08 44,301,079.70 17,610,231.38 39.75
Trust Fund 700,367,181.95 802,218,285.20 (101,851,103.25) (12.70)
Total 5,249,812,256.01 4,679,252,331.97 570,559,924.04 12.19

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Liabilities 2019 2018 Increase/Decrease %
General Fund 534,210,209.47 538,535,277.24 (4,325,067.77) (0.80)
Special Education
Fund 2,299,498.91 1,019,498.91 1,280,000.00 125.55
Trust Fund 700,367,181.95 802,218,285.20 (101,851,103.25) (12.70)
Total 1,236,876,890.33 1,341,773,061.35 (104,896,171.02) (7.82)

Equity 2019 2018 Increase/Decrease %

General Fund 3,953,323,553.51 3,294,197,689.83 659,125,863.68 20.01
Special Education
Fund 59,611,812.17 43,281,580.79 16,330,231.38 37.73
Trust Fund 0.00 0.00 0.00 0
Total 4,012,935,365.68 3,337,479,270.62 675,456,095.06 20.24

Revenue 2019 2018 Increase/Decrease %

General Fund 2,140,623,360.38 1,629,024,584.76 511,598,775.62 31.41
Special Education
Fund 16,391,658.89 15,885,234.21 506,424.68 3.19
Total 2,157,015,019.27 1,644,909,818.97 512,105,200.30 31.12

Personnel
Services 2019 2018 Increase/Decrease %
General Fund 617,832,230.07 518,915,768.43 98,916,461.64 19.06
Special Education
Fund 0.00 0.00 0.00 0
Total 617,832,230.07 518,915,768.43 98,916,461.64 19.06

Maintenance and %
Other Operating 2019 2018 Increase/Decrease
Expenses
General Fund 680,650,876.00 668,600,508.82 12,050,367.18 1.80
Special Education
Fund 0.00 7,666,840.37 (7,666,840.37) (100)
Total 680,650,876.00 676,267,349.19 4,383,526.81 0.65

Non-Cash %
Expenses 2019 2018 Increase/Decrease
General Fund 106,830,916.09 89,660,714.87 17,170,201.22 19.15
Special Education
Fund 61,427.51 73,773.76 (12,346.25) (16.74)
Total 106,892,343.60 89,734,488.63 17,157,854.97 19.12

Financial %
Expenses 2019 2018 Increase/Decrease
General Fund 9,604,471.80 12,120,663.51 (2,516,191.71) (20.76)
Special Education
Fund 0.00 0.00 0.00 0
Total 9,604,471.80 12,120,663.51 (2,516,191.71) (20.76)

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 Appropriations 2019 2018 Increase/Decrease %
General Fund 1,789,335,135.15 1,698,964,206.22 90,370,928.93 5.32
Special Education
Fund 22,600,000.00 12,562,250.00 10,037,750.00 79.90
Total 1,811,935,135.15 1,711,526,456.22 100,408,678.93 5.87

Allotments 2019 2018 Increase/Decrease %

General Fund 1,789,335,135.15 1,698,964,206.22 90,370,928.93 5.32
Special Education
Fund 22,600,000.00 12,562,250.00 10,037,750.00 79.90
Total 1,811,935,135.15 1,711,526,456.22 100,408,678.93 5.87

Obligations 2019 2018 Increase/Decrease %

General Fund 1,489,600,161.62 1,494,661,266.03 (5,061,104.41) (0.34)
Special Education
Fund 1,680,000.00 7,666,840.37 (5,986,840.37) (78.09)
Total 1,491,280,161.62 1,502,328,106.40 (11,047,944.78) (0.74)

C. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

A qualified opinion was rendered on the fairness of presentation of the financial

statements due to non-recognition in the books of the 27 parcels of land owned by the
Capiz Provincial Government with a total land area of 507,834 square meters valued at
₱317.36 million which resulted in understatement of Land and Equity accounts contrary
to Sections 26 and 27 of Philippine Public Sector Accounting Standards (PPSAS) 17.

D. SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

1. Periodic monitoring and evaluation on the progress/accomplishment and proper

utilization of funds and liquidation of outstanding financial assistance granted by the
Province to other Local Government Units (LGUs) and entities were not strictly
observed contrary to Section 2 of Presidential Decree (P.D.) No. 1445, Section 4.6 of
Commission on Audit (COA) Circular No. 94-013, and specific provisions of the
Memorandum of Agreement (MOA) signed by the parties which resulted in difficulty
in determining its status of accomplishment and whether the subject funds were
spent in accordance with its purpose.

We recommended that:

a. The Office of the Governor make sure that the Project Monitoring Team (PMT)
under the Provincial Planning and Development Office (PPDO) is furnished
with all the documents with regard to all financial assistance granted, for their
guidance in monitoring and inspecting each of the projects’ implementation;

b. The Internal Audit Service (IAS) assign personnel to participate in the

inspection/monitoring conducted by the PMT, or conduct their own independent
monitoring and inspection as part of their function;

c. The Accounting Office regularly monitor the liquidation of financial assistance

granted and send out demand letters for overdue accounts; and

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 d. The PPDO and the Accounting Office furnish the IAS with copies of
Inspection/Monitoring Report, Liquidation Reports and Demand Letters for their
own monitoring/evaluation and appropriate action.

2. Qualifications for 2,037 students granted new college scholarships have not been
properly set and its initial disbursements amounting to ₱1.800 million were charged
to the Gender and Development (GAD) Fund contrary to Executive Order (EO) No.
273, 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. 2013-001 and Section 2 of Presidential Decree (P.D.) No. 1445 which could
result to improper identification of beneficiaries.

We recommended that:

a. Management set-up and regularly update its GAD database and sex-
disaggregated data in order to properly program and implement its GAD related
budget;

b. Management set clear guidelines in the grant of its scholarship program and
identify its proper funding source. Thereafter, a corresponding MOA should be
executed by the parties: Capiz Province, Scholars and Schools;

c. The duly formulated and approved guidelines be publicly disseminated so as to

attract more qualified and deserving beneficiaries;

d. Considering that provision of scholarship grants is one of the prioritized agenda

of the Capiz Provincial Government and being aligned with its Gender and
Development programs, the Provincial Sangunian work with the Gender and
Development (GAD) Office, in developing a GAD responsive Scholarship
Program, complete with a standard set of requirements/guidelines, and then
pass an ordinance in order to institutionalize the same;

e. Refrain from releasing funds while respective requirements/guidelines have not

yet been set;

f. Management regularly evaluate its financial capacity in maintaining the

program and its effect to other services that also needs funding allocation from
the Provincial Government; and

g. Henceforth, utmost prudence be exercised in handling government funds and

resources and limitations/requirements set by laws, rules and regulations be
properly observed.

3. Collection of local revenues/taxes from quarrying operations was not maximized due
to inadequate resources provided to the Capiz Provincial Environment and Natural
Resources Office (CAPENRO) which are needed to oversee operations of permit
holders and to assess and collect the correct taxes, thus, depriving the LGU of the
much needed revenue which is not in consonance with Section 2 of Presidential

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 Decree (P.D.) No. 1445 and pertinent provisions of Republic Act (RA) No. 7160 and
the Revised Revenue Code of the Province of Capiz.

We recommended that Management:

a. Deputize barangay officials to aid in overseeing quarry operations and allocate

necessary funds to put it into effect;

b. Allocate funds to augment the manpower capabilities and to procure better and
suited equipment, vehicles and facilities to CAPENRO in order to maximize
income gained from sand, gravel and other quarry resources; and

c. Continue to look for other viable options to improve monitoring and revenue
collection from quarrying operations.

The other audit observations together with the recommended courses of action which
were discussed with Management officials and staff during the exit conference
conducted on March 12, 2020 are discussed in detail in Part II of the report.

E. SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND CHARGES AS OF

YEAR-END

As of December 31, 2019 the Province had unsettled balances of suspensions and
disallowances of ₱5.791 million and ₱3.468 million, respectively.

F. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

Of the 17 recommendations embodied in 2018 Annual Audit Report, one was fully
implemented, eight were partially implemented and eight were not implemented.