Commission On Audit

Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. 10
J.V. Seriña Street, Carmen, Cagayan de Oro City
May 21, 2021
ATTY. MATEO G. DELEGENCIA

Chairman, Board of Directors
ENGR. BIENVENIDO V. BATAR, JR.
General Manager
Cagayan de Oro City Water District
Cagayan de Oro City
Sirs:
We are pleased to transmit the Annual Audit Report on the Cagayan de Oro City Water
District (COWD), Cagayan de Oro City, for Calendar Year 2020 pursuant to Section 2,
Article IX-D of the Philippine Constitution and pertinent provisions of Section 43 of the
Presidential Decree No. 1445, otherwise known as the Government Auditing Code of the
Philippines (PD 1445).
The audit was conducted to (a) ascertain the fairness of presentation of the financial
statements; (b) ascertain the propriety of financial transactions and compliance with laws,
rules and regulations; (c) recommend agency improvement opportunities; and (d) determine
the extent of implementation of prior years’ audit recommendations.
The attached report consists of Part I- Audited Financial Statements, Part II- Audit
Observations and Recommendations, Part III- Status of Implementation of Prior Years’ Audit
Recommendations, and Part IV- Appendices, which were discussed with the COWD officials
concerned.
We conducted our audit in accordance with International Standards of Supreme Audit

Institutions (ISSAI) and we believe that it provided a reasonable basis for the audit results.
The Auditor rendered a qualified opinion on the fairness of presentation of the financial
statements because the effect of the deviations from the prescribed procedures materially
affected the account balances. The significant observations contained in the report were
discussed with the concerned officials and employees of the District during the exit
conference conducted on May 11, 2021, whose comments were incorporated in the report,
where appropriate. Two of the significant observations are as follows:
1. Erroneous adjusting entries caused negative balances totaling ₱21,219,708.17 for

Machinery and Equipment, and Building and Other Structures Improvement clearing
accounts inconsistent with Philippine Accounting Standard (PAS) 1, thus affecting
management’s assertion on accuracy of the Property, Plant and Equipment as of the
given period.
2. The Construction in Progress account reported a balance of ₱181,896,140.01 as of

October 31, 2020, of which the amount of ₱61,702,197.56 pertains to 100%
completed projects but still not reclassified to its appropriate PPE accounts.
Moreover, the total cost incurred-to date for projects reported under Publicized
Government Projects, Program and Activities (GPPA) as at December 31, 2020 was
still as of October 31, 2020 inconsistent with Philippine Accounting Standards (PAS)
1 and Presidential Decree No. 1445, respectively, thus affect the accuracy of the CIP
and corresponding PPE accounts as well as the timely assessment of the status of
the District’s projects thereof.
These and other findings and observations are discussed in detail under Part II of this
report.
We request that a status report, by accomplishing the attached Agency Action Plan and
Status of Implementation (AAPSI) form, on the actions taken on the audit recommendations
be submitted within sixty (60) days from receipt of this report, pursuant to Section 89 of the
General Provisions of the General Appropriations Act FY 2020.
We appreciate the invaluable support and cooperation extended by the officials and staff of
that Agency to the Audit Team during the audit engagement.
Very truly yours,
CELSO L. VOCAL
Director IV
Regional Director
Copy furnished:
The President of the Philippines

Malacañang Palace, Manila
The Vice-President of the Philippines

Coconut Palace, F. Maria Guerrero St.
CCP Complex, Pasay City
The President of the Senate

Senate of the Philippines
Roxas Boulevard, Pasay City
The Chairman-Senate Finance Committee

Senate of the Philippines
Roxas Boulevard, Pasay City
The Speaker of the House of Representatives
HOR Complex, Constitution Hills, Quezon City
The Chairman – Appropriations Committee

House of Representatives
HOR Complex, Constitution Hills, Quezon City
The Secretary of the Budget and Management

Department of Budget and Management
Gen. Solano St., San Miguel, Manila
The Administrator
Local Water Utilities Administration (LWUA)
MWSS-LWUA Complex, Katipunan Avenue
Balara, Quezon City
The Director
National Library of the Philippines
T.M. Kalaw, Ermita, Manila
The Chief of Office

UP Law Center, UP Diliman, Quezon City
File
CAGAYAN DE ORO CITY WATER DISTRICT
Cagayan de Oro City, Misamis Oriental
AGENCY ACTION PLAN and STATUS OF IMPLEMENTATION

Audit Observations and Recommendations
For the Calendar Year 2020
As of _________, 2021
Sector : Corporate Government Sector

Auditee : Cagayan de Oro City Water District
Audit Period : Calendar Year 2020
Agency Action Plan Reason for

Target Partial/ Action
Person/ Status of
Audit Implement- Delay Non- Taken
Ref Audit Observations Action Dept Impleme
Recommendations ation Date Implement- /To be
Plan Respon ntation
From To ation if Taken
sible
applicable
CY 2020
AAR Erroneous adjusting We recommended that
2020 entries caused Management require the
negative balances Accounting Division to
No. 1 prioritize finalization of the
totaling
fixed asset module of the
p. 38 ₱21,219,708.17 for Remantec Accounting
Machinery and System (RAS) and
Equipment, and subsequently draw
Building and Other adjusting entry to correct
Structures negative balances of the
Improvement PPE accounts.
clearing accounts
inconsistent with
1
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Philippine Accounting
Standard (PAS) 1,
thus affecting
management’s
assertion on
accuracy of the
Property, Plant and
Equipment as of the
given period.
AAR The Construction in We recommended that

2020 Progress account Management require:
reported a balance of
No. 2 a. the Accounting
₱181,896,140.01 as
Division for timely
p. 39 of October 31, 2020, recording of cost after
of which the amount each billing from the
of ₱61,702,197.56 contractor and
pertains to 100% transfer subsequently
completed projects the 100% completed
but still not projects with duly
supported TOP from
reclassified to its
CIP to its appropriate
appropriate PPE PPE account;
accounts. Moreover,
the total cost b. the Engineering
incurred-to date for Department to
projects reported validate submitted
2
AAPSI
Person/ Status of
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sible
applicable
under Publicized TOP and coordinate
Government with Accounting
Projects, Program Division on 100%
completed projects to
and Activities
transfer projects from
(GPPA) as at CIP to appropriate
December 31, 2020 PPE accounts;
was still as of
October 31, 2020 c. Assess current
inconsistent with workload of current
Philippine Accounting processor of GPPA
and consider back-up
Standards (PAS) 1
personnel to aid in
and Presidential the preparation of
Decree No. 1445, GPPA report and
respectively, thus handling CIP
affect the accuracy of accounts.
the CIP and
corresponding PPE
accounts as well as
the timely
assessment of the
status of the District’s
projects thereof.
AAR Non-conduct of PPE We recommended the

2020 physical inventory Management to:
count as of
3
AAPSI
Person/ Status of
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sible
applicable
No. 3 December 31, 2019 a. Conduct physical
and inability of count of PPE as at
p. 42 current accounting year-end and submit
the same to the audit
system to generate
team on or before
PPE depreciation January 31 following
and accumulated year-end close; and
depreciation
schedule inconsistent b. Coordinate with
with Philippine current accounting
Accounting system provider on
the generation of the
Standards (PAS) 1
PPE Depreciation
and the Manual on and Accumulated
the Property and Depreciation
Supply Management schedule duly verified
System, thus cast against the balances
doubt on the presented in the
accuracy on the financial statements
balances of PPE,
Accumulated
Depreciation and
Depreciation
Expense accounts
amounting
₱2,602,179,893.57,
₱1,368,540,475.61
and ₱8,803,466.17,
4
AAPSI
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sible
applicable
respectively.
AAR Non-submission of We recommended

2020 Financial Statement; that Management require:
delayed preparation
No. 4 a. Accounting Division to
and submission of
fast track and prioritize
p. 45 Bank Reconciliation submission of the
Statements and Financial Statement
Journal Entry and its related reports,
Vouchers with Bank Reconciliation
Liquidation Report of and Journal Entry
Cash Advances Vouchers with its
supporting documents.
amounting to
Also, submission of
₱5,528,960.16 liquidation report
inconsistent with should be submitted
COA Circular Nos. monthly together with
2009-006 and 2017- its monitoring report
004 and Presidential showing cash
Decree 1445 may not advances made and
liquidation thereof;
only be considered
as scope limitation in b. Future submissions of
audit but also the above mentioned
preclude timely reports be made within
detection of the prescribed
misstatements reglementary period;
and
arising from error or
5
AAPSI
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sible
applicable
fraud.
c. Revisit and study
current workloads of
personnel preparing
the above reports and
consider transferring
excess workloads to a
new processor.
AAR Absence of adequate We recommend that

2020 planning and Management:
collection efforts,
No. 5
collectability of the
a. Improve or enhance
p. 47 Receivables-
their collection
Disallowances and efforts/strategy to
Charges amounting increase collection
to ₱67,749,716.93 as efficiency;
of December 31,
2020 may be b. Exhaust all possible
doubtful due to remedies to collect
separation of the receivables
especially those that
persons liable
are already separated
inconsistent with from service; and
COA Circular No.
2009-006 dated c. Settle such
September 15, 2009 receivables in
and Presidential accordance with COA
Resolution No. 2017-
6
AAPSI
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sible
applicable
Decree No. 1445, 021 dated November
thereby depriving the 3, 2017.
District of the funds
that could be used to
pay its loan
obligations.
AAR The Cagayan de Oro We recommended the

2020 City Water District Management to review
(COWD) rented a the contract and validate
No. 6 the needed and
4,500-square meter
necessary total area that
p. 52 vacant lot from a will be used for parking
private company with space of all COWD
contract amount of vehicles having
₱3,024,000 for the consideration of the
period April 1, 2020 location and the effects of
to March 31, 2021 for floods during moderate or
heavy rains.
the sole use as
parking area is found Moreover, we recommend
to be large enough to dispose the scrap
as parking space for materials properly and
COWD vehicles that maximize the space in
may constitute waste their sub-office in
of funds inconsistent Kauswagan to be able to
spare some parking
with Section 2 of PD
space for COWD’s small
1445 and Annex H of vehicles so that it will not
Revised IRR of R.A. add-up to vehicles that
7
AAPSI
Person/ Status of
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sible
applicable
9184 thus, will park in the rented
detrimental to the vacant lot.
government.
AAR The setting-up of We recommended the

2020 huge Petty Cash Management to:
Fund amounting to
No. 7
₱400,000 resulted to a. charge to PCF those
expenses consisting
p. 55 large monthly
of small payments for
purchases of maintenance and
supplies and operating expenses
materials for regular which cannot be paid
operations that may conveniently by
violate the COWD’s check or are required
responsibility to to be paid
immediately.
withhold government
money payments b. Procure office
contrary to pertinent supplies at the PS-
provisions of BIR RR DBM based on the
2-98, as amended, quarterly or monthly
thus deprived the requirement of the
National Government District. Purchase of
office supplies
of taxes that could
charged to PCF
have accrued to the should be for
National Treasury emergency only and
that could be used not for regular
8
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
for its programs and procurement.
projects.
c. Catering or Meals
during regular
meeting should not
be charge against
PCF but should be
procured days ahead
of the scheduled
meeting.
d. Reduce the PCF

sufficient enough for
the recurring
expenses of the
District in a month.
e. adhere strictly with

the National Internal
Revenue Code
(NIRC) and the
corresponding rules
and regulations
promulgated by the
Bureau of Internal
Revenue to avoid
penalties and
surcharges, in
addition to the tax
thereon, that may
9
AAPSI
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sible
applicable
become a personal
liability of the persons
responsible.
AAR Non-Revenue Water We recommended that

2020 (NRW) rate of the Management:
District reached
No. 8 58.78%, which is a. Fast track
193.90% above the implementation of
p. 60 LWUA maximum identified CY 2019
acceptable rate of NRW projects;
20% per LWUA b. Revise/revisit the
Board Resolution No. forecast identifying
444 series of 2009 specific timeline of
despite the targeted year to reduce
commencement of NRW by a quantifiable
NRW Reduction rate aligned to the
projects in prior strategic
years; further, NRW comprehensive NRW
projects for CY 2019 plan and in line with
amounting to the vision of the
₱14,598,929.48 were District.
still unimplemented c. NRW programs and
as of CY 2020. projects undertaken
must address root
Moreover, falling cause of the NRW
short by 20.78% on problems especially
the forecasted 38% those already identified
NRW rate for CY area of concern;
2020, inadequate d. Thereafter, evaluate
10
AAPSI
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sible
applicable
long-term strategic and account reduction
plan, concrete and of NRW in cubic meter
long lasting solutions for that specific area or
to address location and submit
aggravating NRW monthly
problem inconsistent accomplishment report
with the District’s to the Audit team
vision of becoming identifying the
an outstanding water following:
district in the country 1.) specific area or
resulted to an location for NRW
estimated NRW reduction, (e.g. street,
financial loss of barangay)
₱336,772,996.80 for 2.) root cause of the
CY 2020. problem in that specific
area (e.g. poor quality
materials and repairs),
3.) course of action
undertaken for that
specific area to
address the root cause
(e.g. replacement of
pipes),
4.) NRW of identified
area or location prior to
project implementation
(in cubic meter), and
5.) NRW after
accomplishment of
project (in cubic meter)
11
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
e. Be responsive to
reported complaints on
leakages from
concerned
stakeholders.
AAR COWD payment of We recommended the

2020 salaries and wages Management to:
of personnel under
No. 9 “job order” status for a. Require the Job Order
CY2020 amounting workers to prepare and
p. 64 to ₱8,313,727.09 attach DTR and
erroneously debited Accomplishment
to Advances to Report as basis for
Officers and payments of their
Employees and lack services performed;
the necessary
accomplishment b. Verify the
report duly verified Accomplishment
and accepted as Report prepared by the
basis for payment Job Order worker
inconsistent with against the specific
COA Circular 2012- function specified in
001 dated January the contract and sign
14, 2012 and accordingly if the work
Presidential Decree performed is
1445, thus, validity satisfactory or
and completeness of acceptable; and
tasks performed for a
12
AAPSI
Person/ Status of
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sible
applicable
particular function c. Record each class of
vis-à-vis to their advances to their
contract cannot be proper account and not
determined. lodged every advances
to Advances to Officers
and Employees
account which is
intended for official
travel of employees
only.
AAR Payment of salaries We recommended the

2020 for COWD regular Management to require
and casual those employees who
No. 10 adopted the alternative
employees
work arrangement to
p. 66 amounting to submit their
₱32,750,092.67 and accomplishment report to
₱22,554,320.71, determine that each
respectively, from functions or tasks were
June to December still performed despite the
2020 during the work-from-home schedule
and that the required 40-
adoption of the
hour workweek is fully
Alternative Work complied with.
Arrangements in the
government due to
the COVID-19
pandemic lack the
required
13
AAPSI
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sible
applicable
accomplishment
report to prove that
the 40-hour
workweek is
complied with
contrary to CSC
Memorandum
Circular (MC) No. 18,
s. 2020, that may
prejudice public
service delivery.
CY 2019
AAR Inadequate cash On delayed and non-
2019 management preparation of BRS
controls resulted to
No. 1 (a) delayed a. Immediately
preparation of the assign a responsible unit
p. 37 Bank Reconciliation or create a special
Statements (BRS) for team/task force to fast-
21 to 176 days thus, track the preparation of
long outstanding Bank Reconciliation
reconciling items in Statements for all bank
the bank accounts and the
(₱995,054.98), book settlement/clearing of
(₱43,902,338.11) outstanding reconciling
and Check items within a specific
Disbursements timeline in order to ensure
14
AAPSI
Person/ Status of
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sible
applicable
Record that the District’s cash
(₱1,380,815.72) records are correct and to
were not detected faithfully represent
and corrected on balances of cash and
time; (b) non- other affected accounts as
preparation of BRS at 31 December 2019.
for 39 bank accounts;
and (c) insufficient b. Establish written
bond coverage; all internal policy on the
contrary to Section procedures on bank
74 and 124 of reconciliation indicating
Presidential Decree specific activities to be
(PD) 1445, Philippine undertaken, the person/
Accounting office responsible for the
Standards (PAS) 1 reconciliation, and the
and Treasury specific timelines to settle/
Circular No. 02-2009 clear both the book and
dated August 6, 2009 bank reconciling items.
thus, affecting the
accuracy, faithful c. Direct the
representation and Accounting Division to
reliability of Cash in perform robust analysis
Bank accounts and and reconciliation
safekeeping of all procedures of outstanding
public funds. book and bank reconciling
items and establish
accountabilities.
d. Designate
personnel from the Cash
15
AAPSI
Person/ Status of
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sible
applicable
or Accounting Division to
secure a copy of the bank
statement/printout/snapsh
ot within 3 – 5 days after
the end of the month and
act as liaison to the bank
to facilitate the recording
of bank reconciling items
by the responsible banks.
e. Enjoin the
Accounting Division
Manager to review the
appropriateness of
designating Ms. Tolentino
to perform bank
reconciliation and her
capacity to handle the
function given her other
assignments in the
Accounting Division.
Consider designating
other personnel whose
primary function at the
end of the month is the
timely review and
verification of the
transactions that were
reflected in the bank
statements vis-à-vis the
16
AAPSI
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sible
applicable
District’s records so that
any errors committed by
the District and the bank
will be cleared
immediately.
Long outstanding bank

reconciling items
a. Require the Cash

Division Manager to
conduct re-orientation
with the tellers on crucial
activities in the collection
process, particularly on
the acceptance of checks
as mode of payment, and
pinpoint accountabilities
to tellers who committed
the errors, considering
that a simple omission of
action (verification of the
bank stamp at the back of
the check) can cause the
Cash and Accounting
Divisions a lot of trouble
and time wasted on
monitoring the redeposit
of the returned check, and
other subsequent actions
17
AAPSI
Person/ Status of
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sible
applicable
to correct the errors
committed.
b. Instruct the Cash

Division to conduct
immediate verification of
validated deposit slips
against bank statement or
its equivalent, and secure
written explanation and
request other necessary
documents to support the
clearing of bank errors.
c. Request written
explanation from the
concerned banks for the
validated deposits that
were not reflected in the
District’s bank accounts.
Review other bank
reconciling items for the
possibility of similar errors
that has understated the
actual Cash in Bank
balances of the District.
Long Outstanding Book

Reconciling Items
18
AAPSI
Person/ Status of
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sible
applicable
a. Require the Cash

and Accounting Divisions
to establish close
coordination so that any
errors detected by either
of the two divisions will be
relayed to the other for
information and
immediate appropriate
action.
b. Instruct the Cash

Division to strictly require
the submission of
LDDAP-ADA from all
government agencies
enrolled in the District’s
ADA payment scheme
and establish a monitoring
system to immediately call
up the latter’s attention in
case of missed
submission. Meanwhile,
request for payment
references from all ADA
paying agencies to aid in
the clean-up process for
unidentified ADA
collections.
19
AAPSI
Person/ Status of
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sible
applicable
c. Direct the
Accounting Division to
immediately furnish a
copy of the subsidiary
ledger to the Cash
Division within a specific
timeline to facilitate early
reconciliation by the latter.
d. Require the
check the report on fund
transfers incorporated in
the Daily Cash Position
Report (DCPR) submitted
by the Cash Division to
review correctness of
entries made for fund
transfers, and draw the
following adjusting journal
entry on fund transfer to
correct the error
previously made:
Debit:
DBP Corrales
₱10,122,372.00
20
AAPSI
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sible
applicable
Credit:
DBP Capistrano
₱9,998,603.15
Interest Income
₱123,768.85
Long Outstanding SL and

CDR Reconciling Items
a. Require the created

special team/task force to
review and clean-up
related records such as
the affected subsidiary
ledgers and Check
Disbursements Record
(CDR).
Insufficient Bond
Coverage
Review the bond

coverage of the
Supervising Cashier in
view of the significant
increase in her daily
collections caused by the
surge in water service
concessionaires.
21
AAPSI
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sible
applicable
AAR The Receivables – Recognize the finality of
2019 Disallowances and the receivables due to
Charges account is disallowed expenditures
No. 2 understated by which are subject of
₱27,778,504.42 as of Notices of Finality of
p. 49 November 2019 due Decisions and direct the
to non-recording of Finance Department
four (4) Manager to record the
disallowances with disallowances amounting
Notices of Finality of to ₱27,778,504.42 as
Decision all dated Receivables –
September 18, 2017, Disallowances and
inconsistent with Charges to fairly present
COA Circular No. the balance of receivables
2009-006 dated in the financial
September 15, 2009. statements.
AAR The Accounts a. Consider the creation

2019 Receivable balance of a special team with
per Accounting time-bounded activities to
No. 3 Division and conduct the reconciliation
Commercial of the noted variance on
p. 51 Department shows a Accounts Receivable
difference of between the Accounting
₱8,590,049.18 Division and Commercial
casting doubt on the Department starting with
validity of presented the current year.
balance of Accounts
Receivable account b. Thereafter, schedule
of ₱349,265,068.05 the reconciliation as one
22
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sible
applicable
as of November 30, of the yearly control
2019, inconsistent mechanisms to ensure
with Philippine that reported balances in
Accounting the financial statements
Standards 1. are accurate and
verifiable.
AAR The reliability and a. Require the

2019 accuracy of the Finance Department
Loans Payable Manager to reexamine the
No. 4 reported in the workload of the
financial statements employees in the
p. 53 as of December 31, Accounting Division and
2019 could not be consider delegating the
ascertained due to completion of the
variance totaling reconciliation process to a
₱4,298,792.64 competent staff in view of
between the District’s the latter’s impending
records and the mandatory retirement this
confirmed loan year;
balances.
b. Should delegation be
unlikely due to maximized
workload in the existing
assignments of personnel,
consider hiring additional
manpower based on
available vacancies in the
District’s Plantilla of
Position (POP)
23
AAPSI
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sible
applicable
particularly for the
Finance Department,
whose primary duties
shall include the
reconciliation of balances
between those recorded
in the books of accounts
and those appearing in
the records of other
departments, as well as
outside parties; and
c. Require the Finance

Department Manager to
immediately coordinate
with LWUA and DBP for
any noted discrepancy
during the reconciliation
process to reduce, if not
yet fully eliminate the
reconciling amounts.
AAR Inaccuracy in the Require the Finance

2019 recording of January Division to:
2019 Waterworks
No. 5 System Fees a. draw a journal
account amounting to entry to adjust recorded
p. 55 ₱87,062,137.05 due revenue for Waterworks
to non-accrual in CY System Fees for January
2018 contrary to 2019; and
24
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sible
applicable
Standards (PAS) 1 b. prepare working
and 18 resulted to papers computing the
overstatement of CY revenue to be accrued as
2019 Statement of at CY 2019 year-end
Comprehensive close and draw a journal
Income revenue entry to record such.
account by
₱45,152,624.16.
AAR The District paid a. Submit to COA an

2019 Provident Fund explanation on the
Employer Share increase in the rate of
No. 6 totaling employer share in the
₱26,111,769.89 for provident fund, together
p. 56 CY 2019, with documents used as
representing 25% legal basis for the
employer share, increase in rate and
which is over and extended grant thereof to
above the 5% newly hired after June 30,
employer share as 1989;
previously granted to
incumbents as of b. Secure from the
July 1, 1989, without Department of Budget
prior approval from and Management the
Department of necessary authority for
Budget and the increase in the
Management (DBM), Provident Fund
inconsistent with government counterpart
25
AAPSI
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sible
applicable
Republic Act No. (ER Share). In the
6758 , Executive absence of such, restore
Order No. 641 and the Provident Fund ER
related DBM Share to 5% as originally
issuances. granted to incumbents as
of July 1, 1989; and
c. Discontinue the
payment of Provident
Fund (ER Share) to those
hired after June 30, 1989
AAR Final payment a. Revisit the

2019 amounting to provisions of the 2016
₱45,224.00 was Revised Implementing
No. 7 made to the supplier Rules and Regulations of
despite absence of RA No. 9184 as refresher
p. 67 the warranty security, of gained knowledge,
permit to extract and particularly on retention
related tax clearance money and warranty
that all taxes on security for procurement
sand, gravel or other of infrastructure projects;
quarry resources
utilized in the project b. Refer to COA
implementation had Circular No. 2012-001 on
been fully paid, the documentary
inconsistent with the requirements for common
2016 Revised government transactions
Implementing Rules for guidance to avoid
and Regulations of audit suspensions;
26
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sible
applicable
Republic Act No.
9184, DPWH c. Issue the
Department Orders Certificate of Final
No. 109 and 119 and Acceptance for
COA Circular No. Infrastructure Projects
2012-001 and only after the expiration of
exposing the District the one-year defects-
to pecuniary loss in liability period.
the event of
structural defects and d. Immediately
liabilities. process the release of
retention money after the
issuance of Certificate of
Final Acceptance; and
e. Require the
contractor to issue a
warranty certificate and
submit the necessary
quarry extraction permit
and tax clearance; and
require contractors of
other on-going and to be
procured infrastructure
projects to comply with
these requirements
AAR Insufficiency of On Absence of plan for

2019 Disaster Risk and earthquakes, tsunami or
Reduction fire
27
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
No. 8 Management plan
(DRRMP) to address a. Immediately
p. 71 calamities other than prepare DRRM plan for
storm/flood and disasters such as
drought such as earthquakes, tsunami or
earthquake, tsunami fire. Incorporate in the
and fire; and plan the four (4) thematic
inadequacy of areas, namely: (1)
allocated budget for Prevention and Mitigation,
DRRM purposes (2) Preparedness, (3)
contrary to the Response and (4)
Implementing Rules Rehabilitation and
and Regulations of Recovery.
Republic Act 10121
thus, the District may On Lack of
not be able to consideration/documentati
immediately respond on on the other 3 thematic
appropriately in times areas: (1)Prevention and
of disaster. Mitigation, (2)
Preparedness, and (3)
Rehabilitation and
Recovery
b. Document DRRM
plan areas on disaster (1)
Prevention and Mitigation,
(2) Preparedness, and (3)
Rehabilitation and
Recovery. This may
include assessing risk
28
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
factors in COWD
buildings and other major
assets including the
proposed construction of
new building in
Kauswagan (Prevention
and Mitigation), conduct
earthquake drill, purchase
of early warning
system/device for
earthquake or flood
(Preparedness),
evaluation of possible
evacuation areas in case
of earthquake, fire or
other disasters
(Response),
reconstruction/repair of
facilities after disasters
(Rehabilitation and
Recovery) and other
necessary activities.
On absence of Training
Programs relating to
Earthquakes, fire,
terrorism and the like
c. Follow-up
scheduled training with
29
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
the Office of the Civil
Defense (OCD) for CY
2020 and secure the final
date of appointment.
Prepare training programs
relating to earthquakes,
fire, terrorism and the like
with its timeline.
d. Regularly conduct
and refresh trainings as
prescribed in the District’s
Emergency Response
Plan (ERP) not just for the
ERP team but for all
employees.
On not updated ERP
e. Update the ERP at

least annually as
prescribed therein
especially if there are
changes on (1) focal
persons assigned to the
task, (2) contact
information of partner
agencies, (3) current list
and status of generators
indicated in the plan and
30
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
(4) other relevant
information.
Result of Inspection of the

City Building Official
Assess effects of
earthquake on pre-
existing building cracks
and conduct repair
especially on offices that
were greatly affected if
necessary.
Insufficient Allocated
Budget for DRRM
Reassess basis for

allocation of DRRM
budget and allocate
sufficient budget for
DRRM in subsequent
years. Further, budgeted
amount must correspond
to available cash.
AAR The Bidder was Require the BAC to:

2019 considered as
“passed” and a. Revisit the
No. 9 declared as the provisions of the 2016
31
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Lowest Calculated Revised Implementing
p. 79 Bid despite Rules and Regulations of
incompleteness of RA No. 9184 as refresher
the bid offered of gained knowledge,
inconsistent with particularly on bid
Section 32.1.1.a of evaluation;
the 2016 Revised
Implementing Rules b. Consistently apply
and Regulations of the non-discretionary
the Republic Act No. criteria in the evaluation of
9184 and Section bids submitted by the
27.3 of Philippine bidders; and
Bidding Documents
for Infrastructure – 5th c. Immediately
Edition, August 2016. declare as non-
responsive and thus,
disqualify, bids which are
incomplete or patently
insufficient and proceed to
the next eligible bidder to
save on time and fast
track the procurement
process.
AAR Non-observance of a. Management

2019 bulk purchases to meticulously, judiciously
avail discount and and timely plan the
No. 10 minimize process of budgeting from
administrative work the preparation of Project
p. 81 with utmost 64 times Procurement
32
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
piecemeal Management Plan
procurement of (PPMP), to the
supplies within the consolidation in the
year; long processing Annual Procurement Plan
time on procurement (APP), and approval of
of goods/materials the corporate operating
ranging from 39 – budget
184 days for
shopping, 22 – 581 b. require the Bids
days for small value and Awards Committee
procurement (SVP) (BAC) and the
and 155 – 647 days Procurement Division to:
for public bidding;
and issuance of both 1. strategize the
Purchase Order (PO) timing of procurement
and agreement so that bulk purchases
although both may be availed for all
constitute a contract purchases. The
for purchases above consolidated purchase
100,000 without clear request shall be
basis contrary to supported with the
Republic Act (RA) proper breakdown of
No. 9184 and Article requested supplies,
1475 of the Civil materials and goods
Code of the from each department
Philippines, thus so that upon delivery,
affecting the distribution of materials
efficiency and delivered can be easily
economy of the made;
procurement.
33
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
2. conduct re-
orientation on the
appropriate
procurement process
to notify all
departments on these
changes to facilitate
smooth transition; and
3. re-assess the
efficiency of the set
₱100,000 threshold on
the issuance of both
the purchase order and
agreement/contract
and its effect on the
procurement process
timeline, and the
eventual attainment of
its mandate.
AAR The Non-Revenue a. Speed up the

2019 Water of the District implementation of already
registered high rates identified projects and
No. 11 of at least 50% since activities as the same are
CY 2006 ending with already very delayed
p. 87 54.98% in CY 2019 based on original target
due to absence of a timeframe and in great
comprehensive NRW consideration of the cost
Strategy, delay in the implication of high NRW;
34
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
implementation of
projects, and b. Take ownership of
absence of a reducing NRW by
comprehensive establishing COWD’s own
monitoring scheme, comprehensive NRW
resulting to Strategy based on the
opportunity loss of results of study of USAID
income amounting to and VEI and commit to a
₱350,981,715.97 as yearly reduced target;
of December 2019.
c. Design a
comprehensive NRW
accomplishment report
summarizing all project
indicators in aid of
decision-making;
d. Review the
effectiveness of the NRW
Task Force in the
delivery/accomplishment
of targeted outcomes and
outputs;
e. Require a strict
and fast procurement
process that will result in
the delivery of goods,
services and
infrastructure at the time
35
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
needed;
f. Hasten the training

and other capacity
development interventions
on personnel involved in
NRW reduction; and
g. Secure the
supplies and materials
from being exposed to
natural elements that will
accelerate its wear and
tear.
AAR Failure of the District a. Revitalize the fire

2019 to institutionalize the hydrant maintenance
areas of cooperation program particularly on
No. 12 for the usage, the sealing of fire
maintenance and hydrants and ensure
p. 96 reimbursement of the consistent application of
407 fire hydrants the required seals;
amounting
₱7,759,857.36 due to b. Execute a
inadequate Memorandum of
coordination between Agreement (MOA) with
Cagayan de Oro City the BFP clearly setting
Water District responsibilities and
(COWD) and the obligations between
Bureau of Fire COWD and BFP
36
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Protection (BFP) regarding the seal and
thus, fire suppression other areas that needs
and Non-Revenue coordination such as, but
Water (NRW) not limited to:
reduction and
monitoring activities 1. Standard
may be at stake. Operating Procedure
(SOP) in the usage of
fire hydrant during fire;
2. cooperation
between the two
parties on its
maintenance in
accordance with the
National Fire Protection
Association (NFPA)
standards; and
3. possible
reimbursement on the
cost of installation and
operation of such fire
protection facilities as
prescribed in Section
32 of PD 198.
c. Set control
mechanisms to limit
usage and access of
water from fire hydrants
only by authorized
37
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
agencies such as the
BFP.
AAR The District failed to Prepare its Septage

2019 prepare its Septage Management Plan (SMP)
Management Plan providing for a strategic
No. 13 (SMP) as required by objective of the District,
RA 9275, PD 856 the courses of action to
p.98 and PD 198 be undertaken with its
depriving its desired/expected
concessionaires of a outcomes and outputs,
sound wastewater target timelines,
treatment and accountabilities, means of
disposal system. monitoring and
evaluation, and key
performance indicators,
among other items, for an
effective and efficient
implementation and
monitoring.
AAR The delayed Require the Finance

2019 submission of Department Manager to:
financial reports,
No. 14 inconsistent with the a. revisit the
timelines prescribed timelines prescribed to
p.102 under COA Circular concerned divisions/
Nos. 2009-006 and offices on the forwarding
2017-004, hindered of source documents for
the timely verification recording of transactions
38
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
of the validity and in the Accounting
regularity of the Division;
covered transactions
and the fair b. prepare a monthly
presentation of the monitoring schedule to
financial statements. verify the actual dates of
submission and call the
attention of divisions/
offices who are delayed;
and
c. consider investing
in high-speed document
and paper scanner in lieu
of taking photos to save
time on making electronic
copies of submitted
documents necessary for
future reference.
CY 2018
AAR The Cash in Bank - a. Accounting Division to
2018 Local Currency identify and record valid
Current Account and reconciling items in the
No. 1 Time Deposit books of accounts;
Account balances prepare BRS on all bank
p.35 were not reconciled accounts and submit to
with the Check COA the Statements
Disbursement within twenty days after
Record, subsidiary receipt of the monthly
39
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
ledger and bank bank statements or
statements due to snapshots, whichever
unrecorded may be received or
reconciling items produced earlier.
amounting to
₱14,325,395.93 b. Cash Management
contrary to Philippine Division to identify and
Accounting Standard record the valid
(PAS) 1. Further, reconciling items in the
Bank Reconciliation Check Disbursement
Statements were not Records.
prepared in violation
of Section 74 of PD c. Accounting and Cash
1445, thus affecting Management Divisions to
the reliability of Cash perform reconciliation of
in Bank accounts. records regularly.
AAR Uncleared clearing a. Prepare working

2018 account balances of papers identifying all
Property, Plant and uncleared PPE accounts
No. 2 Equipment (PPE) and thereafter prepare
amounting to journal entries to correctly
p. 36 ₱36,285,673.97, reclassify it;
unreconciled
Accumulated b. Fast track the
Depreciation and reconciliation of the
Depreciation general ledger balances
Expense account of Accumulated
balances with the Depreciation and
depreciation Depreciation Expense
40
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
schedule amounting accounts against details
to ₱1,214,232,697.47 in the Depreciation
and ₱89,345,161.23 , Schedule generated thru
respectively, and the Accounting System to
non-conduct of PPE arrive at corrected
physical count as of balances that will be
December 31, 2018 forwarded to the new
cast doubt on the system;
accuracy, faithful
representation of the c. Ensure the
affected accounts accuracy of the
and existence of PPE processing of accounting
contrary to Philippine transactions of the new
Accounting accounting system by
Standards (PAS) 1, conducting software
the conceptual validation prior to
framework of useful acceptance to confirm
financial information that the system will work
and the Manual on in all situations and does
the Property and exactly what it is designed
Supply Management to do in a consistent and
System . reproducible manner.
Additionally, all validation
activities and test results
need to be documented;
and
d. Conduct physical
count of all Property,
Plant and Equipment
41
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
(PPE) as of December 31
of each year and submit a
report thereon to the COA
auditor.
AAR Erroneous posting of a. Exercise prudence

2018 transactions resulted in recording the financial
to misstatement of transactions of the
No. 3 various suppliers’ District; and
ledger accounts of at
p.41 least ₱1,596,465.45, b. Require the
inconsistent with Finance Division to
Presidential Decree examine their accounting
(PD) No. 1445 records particularly those
casting doubt on the with abnormal (negative)
reliability of District’s balances and those with
Accounts Payable identified misstatements
balance as of per confirmation-replies
December 31, 2018 submitted by the suppliers
amounting to and effect necessary
₱51,189,436.42 adjusting entries, copy
furnished the COA.
AAR Unreconciled loan a. Require the Head of

2018 balances between the Accounting Division to
the District and the reexamine the workload
No. 4 Local Water Utilities of the employees in the
Administration said Division and delegate
p.43 (LWUA) records to a competent staff the
rendered the Loans completion of the
42
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Payable to LWUA reconciliation schedule;
amounting to and
₱42,695,898.48 as of
31 December 2018 b. Authorize the Head of
doubtful; hence, the the Accounting Division to
financial statements travel to LWUA to discuss
may not be fairly with concerned officials of
presented. the latter the
discrepancies noted in the
reconciliation schedule.
c. Should delegation
be unlikely, consider
utilizing personnel from
other Departments to
assist in the reconciliation
of accounts in the
ensure that accounts in
the financial statements
are fairly presented.
AAR The aggregate Subject the Production

2018 appraised value of Wells to third party
₱7,000,000 of two independent valuation.
No. 5 production wells was
set by the private
p.44 sector partner of the
Water District in the
joint venture,
43
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
contrary to Executive
Order No. 301 dated
July 26, 1987 and
Section 6(b) of the
Revised Guidelines
and Procedures for
Entering into Joint
Venture Agreements
Between
Government and
Private Entities, thus
the Water District
COWD could not
assert that the
agreed rent is
beneficial to the
government nor the
negotiation was
marked with
transparency.
AAR The amount of Submit justification for the

2018 ₱5,684,304.00 for substantial increase in the
Repairs and Repairs and Maintenance
No. 6 Maintenance was budget for CY 2017 but
inadvertently materially underutilized at
p.45 budgeted for year-end;
Generation,
Transmission and
Distribution
44
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Expenses and
included in the
computation of
savings for CNA
2017 purposes
without any authority
for realignment of
budget, inconsistent
with DBM Budget
Circular No. 2017-3
dated November 16,
2017. Moreover, 91%
of total savings is
from Repairs and
Maintenance which
budget increased by
52% for CY 2017 but
was not substantially
utilized by the end of
year.
AAR The Disaster Risk Provide existing

2018 and Reduction guidelines, laws, rules or
Management Fund regulations issued by
No. 8 was utilized for specific government
financial assistance authority directing the
p.51 and tokens release financial
amounting to assistance and distribute
₱618,114.55 to its tokens to COWD
regular, casual and employees, and charging
45
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
job order employees the meals to the Fund.
affected by Typhoon
Vinta, and meal
expenses amounting
to ₱75,249.61
without appropriate
bases contrary to the
Implementing Rules
and Regulations of
Republic Act No.
10121 and Section 4
(7) of PD 1445,
causing ineffective
utilization of the
Fund.
AAR Expenses for a. Liable person to

2018 hospitalization and indemnify the District.
damages caused by
No. 9 negligence b. Strictly observe the
amounting to standard operating
p.53 ₱114,697.05 were procedure stated in the
paid by the District to Water Safety Plan for the
affected persons duration of every
without being installation, repair,
indemnified by liable maintenance or any
employees contrary excavation to decrease
to Section 105 (2) of the risk of accidents and
PD 1445, Section 4.2 payment of damages.
of COA Circular
46
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
2009-006, Article
2176 of the Civil
Code and Water
Safety Plan of the
District, thus, causing
loss of government
fund.
AAR Traveling expenses Require the grantee to

2018 and incidental restitute the expenses
expenses amounting incurred by the District
No. 10 to ₱33,608.61 for related to the foreign
foreign travel of an travel.
p.55 employee were
incurred and paid by
the District despite
not meeting the
criteria for allowing
foreign travel in
violation of Sec. 1 of
the Office of the
President
Memorandum
Circular No. 35 and
Sec. 2 of Executive
Order No. 248, thus
resulting to
unnecessary
expenditures.
47
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
AAR The grant of The release of allowance
2018 Representation for the current month shall
Allowance and be supported by
No. 12 Transportation appropriate DTR;
Allowance (RATA)
p.58 and its utilization
have not been in
accordance with
DBM National
Budget Circular No.
548 dated May 15,
2013, thus rendering
the transactions
irregular.
AAR Approximately a. Strictly implement

2018 16,748 connections the District’s
with accounts disconnection policy.
No. 13 amounting to
₱35,106,702.98, as b. Provide additional
p.59 of June 2018, remain manpower in the
active despite disconnection team to
customers’ non- cater more lines for
payment of more disconnection.
than two months
water service and c. Increase the
District’s issuance of number of job orders
notice of issued to disconnection
disconnection team and quota of lines to
contrary to Board of disconnect and to
48
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Directors Resolution prioritize those accounts
No. 065 s.96 which with very high water bill
orders immediate and those with accounts
disconnection of of more than 12 months,
water service in case except those with
of customers’ failure promissory notes issued.
to pay any two (2)
month period, d. Direct the Non-
resulting to low Revenue Water
collection efficiency Department to fast track
and possible loss to their action addressing
the District due to those water meters
continuous provision located inside the
of water service to customers’ property and
non-paying the Commercial
customers. Department to facilitate
the reconciliation of
accounts for those
customers with letters
requesting reconciliation
to facilitate their payment
of account.
e. Require the
Commercial Department
to assign a person or
group to monitor the
promissory notes issued
by the customers to make
certain that the customers
49
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
comply with the conditions
as stated in the
promissory notes.
f. Devise initiatives
to encourage these non-
paying customers to pay
their long overdue
accounts to enhance the
District’s collection
efficiency.
AAR The detailed a. Contract cost be

2018 estimates for the reduced by
project was not ₱1,225,508.01.
No. 14 examined leading to
an overage in the b. Provide
p.62 contract cost of explanation, with
₱1,225,508.01, and supporting documents as
other provisions of necessary, on the
the bidding following observations:
documents and
contract were not 1. Non-posting of
observed. For these Supplemental Notice in
reasons the Water the PhilGEPS, the
District had been website of the agency
exposed to various and at any
risks. conspicuous place
within its premises;
2. Acceptance of
50
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
payment receipt for
certification fee instead
of for income tax;
3. Not requiring the
LCB to submit latest
business tax return;
winning contractor to
submit proof that
contractor’s all risk
insurance was
obtained, and
5. Issuance of Notice
of Award and Notice to
Proceed beyond the
timeline.
AAR Certain provisions of a. Computer

2018 the 2016 Revised Development Software
Implementing Rules Section to create the
No. 15 and Regulations of application required for
Republic Act. No. the posting of
p.66 9184 and the supplemental notices.
pronouncement of
Government
Procurement Policy
Board were not
adhered to by the
Water District in the
procurement of one-
51
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
unit brand new 6
wheeler light cargo
dump truck, thus,
had affected its
service to the bidders
and to the
government as well,
and had exposed the
Water District to risk
of awarding the
contract to non-
complying bidders.
AAR The District did not Practice procuring

2018 practice bulk common use items
purchase of common sufficient for two months’
No. 16 use items based on requirement, as
submitted PPMPs prescribed by General
p.68 and instead, Appropriations Act of
purchased items 2018, to avail of lower
through the petty prices. Procured items
cash fund, thus may be stored in the
depriving the District District’s storeroom and
of the will be readily available
discounts/savings in upon request of end-
making bulk users.
purchases and use of
the said fund for
more appropriate
charges. Moreover, it
52
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
renders the
procurement process
of the District
inefficient.
AAR Separate general a. Fast track the

2018 ledger account for finalization of the District’s
accountable forms accounting system using
No. 17 inventory was not yet the 2015 Revised Chart of
established by the Accounts under COA
p.70 accounting division Circular 2015-010.
due to flaws in the
existing accounting b. Identify the amounts
system used by the attributable to
District in violation of Accountable Forms,
COA Circular 2015- Plates and Stickers
010 promulgating the Inventory and its expense
Revised Chart of account and properly
Accounts for reflect these in the
Government District’s financial
Corporations. statements.
AAR The non-revenue a. Fast track the

2018 water (NRW) rate of implementation of its Non-
the District reached Revenue Water (NRW)
No. 18 51.69%, which is Reduction Program to
above the LWUA reduce the non-revenue
p.71 maximum acceptable water of the District to a
rate of 20% per maximum of 20% only
LWUA Board and maximize revenue
53
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Resolution No. 444 generation on water
series of 2009 production capacity; and
despite the
commencement of b. Re-evaluate the
the NRW Reduction effectiveness of the
Program in 2016 District’s current NRW
resulting to Reduction Program in
continuous loss on view of the otherwise
the part of the increasing NRW rate.
District.
AAR The District failed to a. Generate the sex-

2018 generate the sex- disaggregated data of the
disaggregated data, District’s concessionaires/
No. 19 monitor the clienteles and use this
implementation of data in identifying priority
p.73 GAD programs and gender issues to be
projects, and analyze addressed by appropriate
GAD PAPs through programs and projects to
the Harmonized be included in the annual
Gender and GAD Plan and Budget of
Development the District;
Guidelines (HGDG)
Tool contrary to b. Monitor the
Republic Act No. implementation of GAD
9710 otherwise programs and projects
known as the Magna that were determined to
Carta of Women and address the gender gaps
PCW-NEDA-DBM and issues initially
Joint Circular No. identified in the planning
54
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
2012-01. stage; and
c. Evaluate the
programs and projects
using the Harmonized
Gender and Development
Guidelines (HGDG) Tool
to determine if the whole
of the budget of the PAPs
can be attributed to the
GAD budget.
CY 2017
AAR Bank reconciliation a. Prepare bank
2017 statements were not reconciliation statements
prepared and immediately upon receipt
No. 2 submitted on time of bank statements and
due to late receipt of submit bank reconciliation
p.39 the bank statements statements, for all bank
and insufficient accounts, monthly, to the
manpower to prepare audit team.
the report in violation
of Section 74 of b. Assign additional
Presidential Decree personnel to handle the
No. 1145, thereby preparation and
affecting reliability of submission of BRSs or
the Cash in Bank – revisit the distribution of
Current Account, and workload of accounting
Restricted Funds of personnel for possible
₱221,674,483.97 and unequal distribution
55
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
₱254,366,579.03 thereof considering the
respectively. number of bank accounts
maintained by the District
and the number of
unsubmitted reports since
January 2017.
AAR Semi-expendable a. Accounting Division

2017 items with aggregate reclassify the PPE items
cost of to retained earnings for
No. 3 ₱14,319,672.26 and those acquired in previous
below the years, and to appropriate
p.40 capitalization expenses account for
threshold remained those items acquired in
in the Property, Plant the current year;
and Equipment determine the
account due to non- accumulated depreciation
implementation of the of the affected tangible
provisions of COA items and subsequently,
Circular 2016-006, provide appropriate
thereby overstating adjusting entries, and
the asset and equity disclose in the Notes to
account by Financial Statements the
₱14,319,672.26 amount of inventories
representing the recognized as an expense
acquisition cost of during the period through
the items. the issuance of Inventory
Custodian Slip.
b. Property Division
56
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
ensure that Inventory
Custodian Slips are
issued to end-users to
establish accountability
over the semi-expandable
property. If no ICS were
issued at the time these
items were issued to the
end-user, the property
office must issue the
same, and maintain a
Schedule indicating the
items reclassified and
issued with ICS.
AAR Costs of repairs and a. Accounting Division

2017 maintenance and/or record as expense if
betterments incurred in the current
No. 4 amounting to year, and adjustment to
₱11,081,227.49 for retained earnings if
p.42 Other Machinery and incurred in prior years all
Equipment, and costs below the threshold
Water, Plant, of ₱15,000, and adjust the
Structure and corresponding
Improvements were depreciation. When
capitalized without necessary, coordinate
observing the criteria with Other Department/s
for recognition, in determining whether
inconsistent with repairs and maintenance
Sections 24 and 25, were minor or major
57
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Chapter 10 of the and/or betterment costing
Government ₱ 15,000 mentioned in the
Accounting Manual, Audit Observation
thus, rendered the Memorandum are
value of the assets appropriate to be
and the equity recognized as assets.
overstated. Thereafter, prepare
adjusting entries for costs
that qualify as expenses.
Where a cost cannot be
easily differentiated
between repair and
betterment, the cost shall
be treated as expenses.
Henceforth, use the
criteria in ca pitalizing the
cost.
AAR The a. Accounting Division

2017 unserviceable/lost revisit the documents
items amounting to affecting the request for
No. 5 ₱8,574,478.72 that relief of accountability and
were not dropped that of the approved
p.44 from the books due request for proper
to some problem on accounting treatment;
the records rendered drop from the books the
the total Plant-Utility lost items but set up
Plant in Service and receivables should the
assets overstated by liability have not been
₱8,574,478.72 and settled.
58
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
the information
conveyed by the b. Accounting Division
financial statements revisit and analyze the
unreliable, contrary entry in setting up the
to Philippine ₱5,250,400.07 under
Accounting UPIS account and assign
Standards 1 and 16. personnel to identify the
sold items with total book
value of ₱676,056.40 and
after that, make
appropriate correcting
entry.
AAR Delayed recording of Accounting Division to

2017 reconciling items and immediately effect the
non-reconciliation of unrecorded
No. 6 records between disbursements upon
Accounting and Cash discovery and to
p.45 Division rendered the periodically reconcile its
Cash-in-Bank -Local records with the Cash
Currency Current Division’s.
Accounts and Other
Assets (restricted
accounts) balances
unreliable, contrary
to COA Circular No.
97-002 and
Standard 1
Qualitative
59
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
characteristics on
Completeness and
free from error.
AAR Details of the Closely coordinate with

2017 depreciation expense the software provider in
charged against the the preparation of detailed
No. 7 District’s operations report by specifying the
amounting to data needed to be
p.48 ₱84,082,918.37, as extracted and included in
of December 2017, the downloading of report.
cannot be provided, Once data had been
casting doubt on the provided, counter check
reliability of assertion with available documents
made on the to verify accuracy of the
District’s financial amounts indicated. We
statement. further recommended to
maintain a backup of files,
preferably hardcopy, to
ensure availability of
information in case of file
corruption.
AAR Unutilized land with a. Accounting

2017 aggregate cost of Division to reclassify the
₱3,346,899.50 were current accounts used to
No. 8 recorded under Investment Property
Plant-Utility Plant in account.
p.49 Service (UPIS) and
Other Assets of b. Fast track the
60
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
which the status of gathering of documentary
ownership of lots was requirements for the
not disclosed in the registration of lots with the
Financial Register of Deeds. Resort
Statements, contrary to legal action should it be
to Philippine needed.
Accounting Standard
(PAS) 40, thereby
affecting the
usefulness of the
financial statements.
AAR Other Receivables Exert effort in collecting

2017 amounting to the accounts amounting
₱989,347.53 to ₱989,347.53. Request
No. 9 remained uncollected for write-off of accounts
for ten (10) years and should collection is certain
p.51 above due to lapses to be impossible due to
of concerned the following conditions:
Departments to
demand immediate 1. Absence of
settlement, affecting records or documents
the probability of to validate/support the
collecting the claim;
accounts. Non- 2. Death of the
disclosure in the employee/ accountable
financial statements officer/ debtor/s;
of the collectability of 3. Unknown
the accounts also whereabouts of the
affected the reliability employee/ accountable
61
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
of the financial officer/ debtor/s and
reports, inconsistent that he/she could not
with Section 124 of be located despite
Presidential Decree diligent efforts to find
No. 1445. him/her;
4. Incapacity to pay,
and
5. Exhaustion of all
possible remedies by
the Management to
collect the receivables.
AAR Negative balance of Require the Accounting

2017 general ledger Division to reconcile the
accounts amounting Accounting subsidiary
No. 10 to ₱711,124.27 due ledgers of the inter-
to erroneous agency payable accounts
p.52 recording of inter- with payrolls’ withholding
agency accounts and remittance especially
rendered the of prior period’s balances,
financial information and thereafter, regularly
unreliable, contrary perform reconciliation
to Philippine after posting and
Accounting Standard payment.
1 which requires the
Financial Statements
to be complete and
free from error.
AAR District’s properties Instruct the Inventory
62
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
2017 of approximately Committee to complete
₱2,026,110,188.87 their annual physical
No. 13 were not provided count of property, plant
with insurance and equipment and
p.55 coverage due to submit their report to the
failure of the Government Service
Inventory Committee Insurance System for their
to complete the insurance application.
physical count, thus, Subsequently, obtain
posing risk of non- insurance coverage for all
indemnification of District properties in
insurable assets in compliance to Republic
case of loss arising Act No. 656, as amended,
from fire, earthquake, and COA Circular 92-390.
storm or other
casualty.
AAR The members of Management to set

2017 Board of Directors expenses to reasonable
spent ₱620.00 to amount and for the
No. 15 ₱4,367.45 for a Accounting Division to
single meal which process for payment
p.58 borders on being allowable expenses.
excessive, and for
unnecessary
expenses amounting
to ₱6,815.00 contrary
to Executive Order
No. 24 and public
interest.
63
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
AAR The payments to the Claims shall be supported

2017 OGCC of ₱20,000 with Office Order issued
monthly representing by the OGCC assigning
No. 16 reimbursement of them to perform specific
expenses of the two and time-bounded
p.59 assigned Counsels of additional assignment or
the District were not special tasks, proof of
supported with expenses and
appropriate accomplishment report.
documents contrary
to Section 4(6) of
Presidential Decree
No. 1445 and
Section 1.3, Rule 3 of
the Rules and
Regulations
governing the
exercise of the
OGCC of its
authority, duties and
powers, thus the
payments were
deemed irregular.
AAR Failure of the Technical Working Group

2017 Technical Working to conduct an assessment
Group to verify the addressing the deficiency
No. 19 reasonableness of and risks noted by
the contract price of providing the following:
64
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
p.63 ₱900,000.00 and comparative analysis on
conduct full the prevailing lease rates
evaluation of the for real properties in
vacant lot leased for conformity with Section B
the parking area of 1.3 of Appendix B of RA
the District’s service 9184; survey of the lot
vehicles is contrary rented and result of
to Section B 1.3 of verification on the
Appendix B of RA ownership of the lot.
9184; thus affecting
the finances and
operation of the
District due to certain
risks.
AAR The GAD Committee a. Identify gender

2017 had not observed issues within the mandate
pertinent provisions of the District;
No. 20 in preparing the
Annual Gender and b. State in the GAD
p.64 Development Plan: Plan the causes of
thus, it is highly likely identified gender issues;
that critical but latent and
gender issues had
not been identified c. Assess the impact
and addressed and of GAD activities in
funds had been spent relation to women
for non-GAD empowerment and rights
activities. through appropriate tool/s.
65
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
AAR Project amounting to For succeeding projects,

2017 ₱2,441,475.63 for require winning bidders to
rehabilitation of the post additional
No. 21 District’s laboratory performance security
remained should variation orders
p.69 uncompleted for result to cumulative
more than one year amount of more than ten
beyond its expected percent.
period of completion
hampering the
execution of another
contract to make the
laboratory usable.
AAR Vacant lots remain Concerned department

2017 unsecured from loss heads to act on the
contrary to Section 2 recommendations of the
No. 23 of Presidential Inventory Committee to
Decree No. 1445 have the vacant lots
p.71 which requires the fenced and installed with
chief or head of the signage.
government agency
to safeguard the
government property
against loss.
CY 2016
AAR The Other Deferred Finance, Commercial and
2016 Credits account Engineering Department,
66
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
includes various to retrieve supporting
No. 1 obligations which documents e.g.
were already underlying contracts,
p.38 completed, without MOA, Completion Reports
supporting of its recorded items
documents to under Other Deferred
ascertain its Credits to ascertain its
existence, and validity as such especially
without those which have been
accompanying long outstanding and to
qualitative close obligations verified
disclosures to enable as completed to proper
effective accounts. In addition, we
understanding of require Finance
accounts presented. Department to provide
sufficient information in
the Notes to enable
effective understanding of
AAR The Bank Prepare bank

2016 Reconciliation reconciliation based on
Statements were the extracted ledger cash
No. 3 prepared late by the in bank balances and
agency and submit them for audit
p.41 submitted for audit within reasonable period.
beyond the
reasonable period,
contrary to Section
74 of Presidential
67
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Decree No. 1445,
thus, hindering the
timely verification of
management’s
assertion on the
CY 2015
AAR The Accounts Require the Accounting
2015 Receivable balance and Commercial
per book of personnel to reconcile the
No. 15 ₱138,724,832.69 is balances of the Accounts
lesser by Receivable to come up
p.55 ₱308,416.85 with the correct amount in
compared with the conformity with PAS 1.
aging of active
accounts with a
balance of
₱139,033,249.54,
casting doubt to the
validity and
correctness of the
account presented.
AAR Failure to finalize the Quarterly reconciliation of

2015 Report on the variance in inventory
Physical Count of accounts must be put at
No. 18 Inventories rendered top priority and
the existence and discrepancies between
p.59 valuation of the physical and book
68
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
Inventory account inventories must be
doubtful. investigated and cleared
immediately.
CY 2014
AAR The balance per Require the Accounting
2014 books of Loans Division to regularly
Payable in the reconcile the balances of
No. 1 amount of the Loans Payable to
₱777,523,982.21 as fairly present the accurate
p.32 of December 31, amount of outstanding
2014 differed from loan balance at the end of
the confirmed each year.
amounts and from
the LWUA Schedule
of Amortization in the
aggregate amount of
₱1,402,343.30 thus
cast doubt on the
reliability of the
AAR The District could a. Make

2014 have increased its representation with the
collection efficiency City Accountant, City
No. 3 had management Treasurer, City Budget
enforce the collection Officer, City Council and
p.35 of water bills and the City Mayor to request
charged penalty fee allocation for the arrears
on overdue accounts with the District through
69
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
from the City the assistance of the
Government of BOD;
Cagayan de Oro City
in the aggregate b. Request the BOD
amount of to amend the Board
₱10,685,511.00. Resolution issued last
December 2006 to strictly
implement the imposition
of penalty charges on
overdue accounts in
accordance with the
Water Service Contract as
the legal basis.
AAR Land and Land Exert best effort in

2014 Rights amounting to facilitating the
₱6,737,265.25 were requirements for these
No. 7 not supported with lots to be issued with
Transfer Certificate Transfer Certificate of
p.40 of Title or other Title (TCT) and properly
documents contrary secure the properties with
to Section 39 (2) of fences to avoid further
PD No. 1445 thus the entry of squatters.
District’s interest
cannot be protected
against third parties.
AAR Pressure Sustaining Be prudent in decision

2014 Valve valued at making more importantly
₱1,978,620.00 in transactions of material
70
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
No. 29 remained unutilized amount since these entail
since its final delivery high cash outflow that the
p.68 on June 6, 2011 thus District expected high
materially depleted level of benefit or higher
the funds of the rate than of the former.
District for an Considering the long
unrealized purpose. lapse of time from date of
delivery of the subject
material, immediate
appropriate action is
called for to gain benefit
from its acquisition.
CY 2013
AAR Total disallowances a. Record the total
2013 amounting to adjusted disallowance
₱1,133,217,880.82, and
No. 35 Notice of
Suspensions of b. Request for the
p.93 ₱17,524,700.01 and immediate settlement of
Notice of Charge disallowance particularly
amounting to those with COA Decision
₱159,890.00 issued whose motion for
in the prior years reconsideration was
were remained denied by the
unsettled. Commission Proper.
CY 2012
AAR The accrual of a. Instruct the
2012 liability for the earned Accounting Division of the
71
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
leave benefits of the Finance Department to
No. 4 employees make the necessary
amounting to adjusting entries to record
p.25 ₱17,290,589.69 as of the accrued liability
December 31, 2012 pertaining to the earned
was not provided by leave benefits of the
the district, hence employees after ensuring
employees' benefits the correctness of the
were not properly accumulated leave credit
accounted for and balances of employees as
disclosed in the of December 31, 2012.
Financial
Statements, resulting b. Set-up a special
to understatement of fund equivalent to the
liability, balance of the pensions
overstatement of and benefits reserve
government equity account for the accrued
and overstatement of earned leave of
net income. employees to defray
expenses of employees’
pensions and benefits in
the future.
AAR Disallowances a. To exert effort to

2012 amounting to cause the settlement of
₱10,728,443.00 audit disallowance.
No. 9 issued on the Settlement of audit
transactions of the disallowances can be
p.36 district in CY 1994 to immediately enforced by
1996 and CY 1997 withholding the salaries or
72
AAPSI
Person/ Status of
Plan Respon ntation
sible
applicable
accounts, with COA other claims due the
Decision No. 2012- persons liable, in
019 dated February satisfaction of the
17, 2012, were not amounts disallowed or
settled as of charged. On the other
December 31, 2012. hand, legal remedies
should be employed by
management to ensure
the settlement of the
liabilities of those officials
and employees who are
already separated from
the government service.
b. The disallowances
should be acted upon
within the required
timelines.
Agency sign-off:
_______________________________ _______
Name and Position of Agency Officer Date
Note: Status of Implementation may either be (a) Fully Implemented, (b) Ongoing, (c) Not Implemented, (d) Partially Implemented, or
(e) Delayed
73
AAPSI
COMMISSION ON AUDIT
May 21, 2021
Atty. CELSO L. VOCAL

Regional Director
Commission on Audit, Regional Office No. 10
Cagayan de Oro City
Sir:
In compliance with Section 2, Article IX-D of the Philippine Constitution and pertinent
provisions of Presidential Decree No. 1445, otherwise known as the Government Auditing
Code of the Philippines, we audited the accounts and operations of the Cagayan de Oro
City Water District, Cagayan de Oro City, for the year ended December 31, 2020.
Recommendations, and Part IV-Appendices, which were discussed with the COWD officials
concerned.

Institutions (ISSAI) and we believe that these standards provided a reasonable basis for the
audit results. We rendered a modified-qualified opinion on the fairness of presentation of the
Very truly yours,
CECILIA A. PONTILLAS
State Auditor V
Supervising Auditor
COMMISSION ON AUDIT
May 21, 2021
Ms. CECILIA A. PONTILLAS

State Auditor V
Supervising Auditor
Water District and Other CGS Stand Alone Agencies
This Region
Madam:
In compliance with Section 2, Article IX-D of the Philippine Constitution and pertinent
provisions of Presidential Decree No. 1445, otherwise known as the Government Auditing
Code of the Philippines, we audited the accounts and operations of the Cagayan de Oro
City Water District, Cagayan de Oro City, for the year ended December 31, 2020.
Recommendations, and Part IV-Appendices, which were discussed with the COWD officials
concerned.

Institutions (ISSAI) and we believe that these standards provided a reasonable basis for the
audit results. We rendered a modified-qualified opinion on the fairness of presentation of the
Very truly yours,
ROSEMARIE E. MAGCANTA
State Auditor IV
Audit Team Leader
COMMISSION ON AUDIT
Cagayan de Oro City
ANNUAL AUDIT REPORT
ON THE
CAGAYAN DE ORO CITY

WATER DISTRICT
Corrales Avenue, Cagayan de Oro City
For the Year Ended December 31, 2020

EXECUTIVE SUMMARY
A. INTRODUCTION
The Cagayan de Oro City Water District (COWD) was created through City Sangguniang
Panlungsod Resolution No. 35, dated July 11, 1973 under Presidential Decree No. 198,
otherwise known as "The Provincial Water Utilities Act of 1972". The COWD was the first
water district to be formed in the country as per Conditional Certificate of Conformance No.
001 on January 4, 1974 by the Local Water Utilities Administration (LWUA).
The District's vision is to be an outstanding Water District in the country with the mission to
provide excellent water service to the community they served.
The District caters to a total of 98,006 water service connections by providing treated
chlorinated water to its concessionaires for over 45 years.
The COWD initiated a milestone project in CY 2015 in partnership with the United States
Agency for International Development (USAID) to address the challenge of reducing levels
of Non-Revenue Water. The international organization committed $800,000.00 worth of
technical assistance, which shall cover an estimated period of two years of research and
survey procedures. Infrastructure works relative to this will commence roughly on its third
year of implementation which substantially constitutes the installation of the Geographical
Infrastructure System, the backbone of the whole project.
The District is governed by five-member Board of Directors representing the civic, business,
professional, education and women sectors. The district is headed by General Manager
Bienvenido V. Batar, Jr. Its personnel complement is composed of 311 permanent, 286
casual and 33 temporary employees. The District personnel are augmented by 65 job
orders.
A financial and compliance audit was conducted on the accounts and operations of the
Cagayan de Oro City Water District, Cagayan de Oro City, for Calendar Year 2020. The
audit consisted of the review of operating procedures, interview and inquiry with concerned
district personnel, verifications, reconciliation and analysis of accounts and such other
procedures considered necessary.
B. FINANCIAL HIGHLIGHTS
b.1 Financial Condition
2020 2019 Increase/(Decrease)

Assets 2,700,047,658.31 2,741,081,003.12 (41,033,344.81)
Liabilities 745,721,110.66 816,691,322.77 (70,970,212.11)
Equity 1,954,326,547.65 1,924,389,680.35 29,936,867.30
b.2 Results of Operations
Increase/
2020 2019 (Decrease)
Income 1,125,653,716.55 1,153,701,701.55 (28,047,985.00)
Expenses 1,113,998,436.11 1,127,627,334.03 (13,628,897.92)
Comprehensive
Income 11,655,280.44 26,074,367.52 (14,419,087.08)
b.3 Budget Utilization
Particulars Budget Actual

Personnel Services 293,050,152.00 259,097,806.30
Maintenance & Other Operating
Expenses 840,521,400.00 974,782,465.91
Financial Expenses 39,807,867.00 32,551,396.09
Capital Outlay 262,058,663.00 131,814,127.80
C. INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS
We rendered a qualified opinion on the fairness of presentation of the financial statements of

the COWD as of December 31, 2020 due to the following findings:

given period.

D. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND RECOMMENDATIONS
Other than the bases for modified opinion stated above, the following are the other
significant observations, with the corresponding recommendations which need immediate
action:
ii
1. Non-conduct of PPE physical inventory count as of December 31, 2020 and inability
of current accounting system to generate PPE depreciation and accumulated
depreciation schedule inconsistent with Philippine Accounting Standards (PAS) 1
and the Manual on the Property and Supply Management System, thus cast doubt
on the accuracy on the balances of PPE, Accumulated Depreciation and
Depreciation Expense accounts amounting ₱2,602,179,893.57, ₱1,368,540,475.61
and ₱8,803,466.17, respectively.
We recommended the Management to:
a. Conduct physical count of PPE as at year-end and submit the same to the audit
team on or before January 31 following year-end close; and
b. Coordinate with current accounting system provider on the generation of the PPE
Depreciation and Accumulated Depreciation schedule duly verified against the
balances presented in the financial statements
2. Non-submission of Financial Statement; delayed preparation and submission of

Bank Reconciliation Statements and Journal Entry Vouchers with Liquidation Report
of Cash Advances amounting to ₱5,528,960.16 inconsistent with COA Circular Nos.
2009-006 and 2017-004 and Presidential Decree 1445 may not only be considered
as scope limitation in audit but also preclude timely detection of misstatements
arising from error or fraud.
We recommended that Management require:
a. Accounting Division to fast track and prioritize submission of the Financial

Statement and its related reports, Bank Reconciliation and Journal Entry
Vouchers with its supporting documents. Also, submission of liquidation report
should be submitted monthly together with its monitoring report showing cash
advances made and liquidation thereof;
b. Future submissions of the above mentioned reports be made within the

prescribed reglementary period; and
c. Revisit and study current workloads of personnel preparing the above reports
and consider transferring excess workloads to a new processor.
3. Absence of adequate planning and collection efforts, collectability of the

Receivables-Disallowances and Charges amounting to ₱67,749,716.93 as of
December 31, 2020 may be doubtful due to separation of persons liable inconsistent
with COA Circular No. 2009-006 dated September 15, 2009 and Presidential Decree
No. 1445, thereby depriving the District of the funds that could be used to pay its
obligations.
We recommended that Management:
a. Improve or enhance their collection efforts/strategy to increase collection

efficiency;
iii
b. Exhaust all possible remedies to collect the receivables especially those that are
already separated from service; and
c. Settle such receivables in accordance with COA Resolution No. 2017-021 dated
November 3, 2017.
4. The Cagayan de Oro City Water District (COWD) rented a 4,500-square meter
vacant lot from a private company with contract amount of ₱3,024,000 for the period
April 1, 2020 to March 31, 2021 for the sole use as parking area is found to be large
enough as parking space for COWD vehicles that may constitute waste of funds
inconsistent with Section 2 of PD 1445 and Annex H of Revised IRR of R.A. 9184
thus, detrimental to the government.
We recommended the Management to review the contract and validate the needed
and necessary total area that will be used for parking space of all COWD vehicles
having consideration of the location and the effects of floods during moderate or
heavy rains.
Moreover, we recommended to dispose the scrap materials properly and maximize

the space in their sub-office in Kauswagan to be able to spare some parking space
for COWD’s small vehicles so that it will not add-up to vehicles that will park in the
rented vacant lot.
5. The setting-up of huge Petty Cash Fund amounting to ₱400,000 resulted to large
monthly purchases of supplies and materials for regular operations that may violate
the COWD’s responsibility to withhold government money payments contrary to
pertinent provisions of BIR RR 2-98, as amended, thus deprived the National
Government of taxes that could have accrued to the National Treasury that could be
used for its programs and projects.
a. charge to PCF those expenses consisting of small payments for maintenance

and operating expenses which cannot be paid conveniently by check or are
required to be paid immediately.
b. Procure office supplies at the PS-DBM based on the quarterly or monthly
requirement of the District. Purchase of office supplies charged to PCF should be
for emergency only and not for regular procurement.
c. Catering or Meals during regular meeting should not be charge against PCF but
should be procured days ahead of the scheduled meeting.
d. Reduce the PCF sufficient enough for the recurring expenses of the District in a
month.
e. adhere strictly with the National Internal Revenue Code (NIRC) and the
corresponding rules and regulations promulgated by the Bureau of Internal
Revenue to avoid penalties and surcharges, in addition to the tax thereon, that
may become a personal liability of the persons responsible.
iv
6. Non-Revenue Water (NRW) rate of the District reached 58.78%, which is 193.90%
above the LWUA maximum acceptable rate of 20% per LWUA Board Resolution No.
444 series of 2009 despite the commencement of NRW Reduction projects in prior
years; further, NRW projects for CY 2019 amounting to ₱14,598,929.48 were still
unimplemented as of CY 2020.
Moreover, falling short by 20.78% on the forecasted 38% NRW rate for CY 2020,
inadequate long-term strategic plan, concrete and long lasting solutions to address
aggravating NRW problem inconsistent with the District’s vision of becoming an
outstanding water district in the country resulted to an estimated NRW financial loss
of ₱336,772,996.80 for CY 2020.
a. Fast track implementation of identified CY 2019 NRW projects;
b. Revise/revisit the forecast identifying specific timeline of targeted year to reduce

NRW by a quantifiable rate aligned to the strategic comprehensive NRW plan
and in line with the vision of the District;
c. NRW programs and projects undertaken must address root cause of the NRW
problems especially those already identified area of concern;
d. Thereafter, evaluate and account reduction of NRW in cubic meter for that
specific area or location and submit monthly accomplishment report to the Audit
team identifying the following:
1) specific area or location for NRW reduction, (e.g. street, barangay)

2) root cause of the problem in that specific area (e.g. poor quality materials and
repairs),
3) course of action undertaken for that specific area to address the root cause
(e.g. replacement of pipes),
4) NRW of identified area or location prior to project implementation (in cubic
meter), and
5) NRW after accomplishment of project (in cubic meter)
e. Be responsive to reported complaints on leakages from concerned stakeholders.
7. COWD payment of salaries and wages of personnel under “job order” status for
CY2020 amounting to ₱8,313,727.09 erroneously debited to Advances to Officers
and Employees and lack the necessary accomplishment report duly verified and
accepted as basis for payment inconsistent with COA Circular 2012-001 dated
January 14, 2012 and Presidential Decree 1445, thus, validity and completeness of
tasks performed for a particular function vis-à-vis to their contract cannot be
determined.
v
a. Require the Job Order workers to prepare and attach DTR and Accomplishment
Report as basis for payments of their services performed;
b. Verify the Accomplishment Report prepared by the Job Order worker against the
specific function specified in the contract and sign accordingly if the work
performed is satisfactory or acceptable; and
c. Record each class of advances to their proper account and not lodged every
advances to Advances to Officers and Employees account which is intended for
official travel of employees only.
E. STATUS OF SUSPENSIONS, DISALLOWANCES AND CHARGES
Pursuant to COA Circular No. 2009-006 dated September 15, 2009, the unsettled
suspensions and disallowances as of December 31, 2020 amounted to ₱1,642,031.49 and
₱1,071,060,166.76, respectively.
Beginning This Period

Balance January 1 to December 31, Ending Balance
(as of January 1, 2020 (as of December
2020) NS/ND/NC NSSDC 31, 2020)
Notice of
Suspension
s 1,642,031.49 0.00 0.00 1,642,031.49
Notice of
Disallowance 1,071,060,166.76 0.00 0.00 1,071,060,166.76
Notice of
Charge 0.00 0.00 0.00 0.00
Total 1,072,702,198.25 0.00 0.00 1,072,702,198.25
In addition, there are disallowances amounting to ₱566,776,384.24 prior to effectivity of the

Revised COA Circular No. 2009-006 which remained unsettled.
F. STATUS OF PRIOR YEARS’ AUDIT RECOMMENDATIONS
Of the 133 audit recommendations embodied in the 2019 Annual Audit Report, 9 were fully
implemented, 52 partially implemented and 72 not implemented. Detail is shown in Part III of
this Report.
vi
TABLE OF CONTENTS
Part Particulars Pages
I - Audited Financial Statements
. Independent Auditor’s Report 1
. Statement of Management’s Responsibility for 4

Financial Statement
. Financial Statements
. Statement of Financial Position 5

. Statement of Comprehensive Income 7
. Statement of Cash Flow 8
. Statement of Changes in Equity 10
. Notes to Financial Statements 11
II - Audit Observations and Recommendations 38
III - Status of Implementation of Prior Years’ Audit 73

Recommendations
IV - Appendices 106
PART I - AUDITED FINANCIAL
STATEMENTS
COMMISSION ON AUDIT
Cagayan de Oro City
INDEPENDENT AUDITOR’S REPORT
ATTY. MATEO G. DELEGENCIA

Chairman, Board of Directors
ENGR. BIENVENIDO V. BATAR, JR.
General Manager
Qualified Opinion
We have audited the financial statements of Cagayan de Oro City Water District, which
comprise the Statement of Financial Position as at December 31, 2020, and the Statement
of Comprehensive Income, Statement of Changes in Net Assets/Equity and Statement of
Cash Flows for the year then ended, and Notes to Financial Statements, including a
summary of significant accounting policies.
In our opinion, except for the effects of the matter described in the Basis for Qualified
Opinion section of our report, the accompanying financial statements present fairly, in all
material respects, the financial position of the Cagayan de Oro City Water District as at
December 31, 2020, and its comprehensive income and its cash flows for the year then
ended in accordance with Philippine Financial Reporting Standards (PFRS).
Basis for Qualified Opinion
Two of the significant audit findings and observations are as follows:

given period.


Institutions (ISSAI). Our responsibility under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We
are independent of the agency in accordance with the ethical requirements that are relevant
to our audit of the financial statements, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Except for the matter described in the Basis for Qualified Opinion section, we have
determined that there are no other key audit matters to communicate in our report.
Responsibilities of Management and Those Charged with Governance for the

Financial Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with PFRS, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Those charged with governance are responsible for overseeing the District’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance but is not guarantee that an audit conducted in accordance with ISSAI will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial
statements.
COMMISSION ON AUDIT
BY:
CECILIA A. PONTILLAS
State Auditor V
Supervising Auditor
2
May 21, 2021
3
REPUBLIC OF THPHILIPPINES
STATEMENT OF MANAGEMENT’S RESPONSIBILITY

FOR FINANCIAL STATEMENTS
The Management of the Cagayan de Oro City Water District is responsible for the
preparation of the financial statements as at December 31, 2020, including the additional
components attached thereto in accordance with the prescribed financial reporting
framework indicated therein. The responsibility includes designing and implementing internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material statement whether due to fraud or error, selecting and applying appropriate
accounting policies and making accounting estimates that are reasonable in the
circumstances.
The Board of Directors reviews and approves the financial statements before such
statements are issued to the regulators, creditors and other users.
The Commission on Audit has audited the financial statements of the Cagayan de Oro City
Water District in accordance with the International Standards of Supreme Audit Institutions
(ISSAI) and has expressed its opinion on the fairness of presentation upon completion of
such audit, in its report to the Board of Directors.
Atty. Mateo G. Delegencia

Chairman of the Board
4/6/2021
Date Signed
Rhedia Martinietta S. Salcedo Bienvenido V. Batar, Jr.

OIC-Finance Manager A General Manager
4/5/2021 4/6/2021
Date Signed Date Signed
4
5
STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31, 2020
(With Comparative Figures for CY 2019)
NOTE 2020 2019
ASSETS
Current Assets
Cash and Cash Equivalent 4 247,427,993.38 353,828,364.89
Investments 5 419,355,915.54 493,210,693.66
Receivables 6 479,738,621.21 356,470,036.95
Inventories 7 188,026,797.98 193,446,581.41
Other Current Assets 8 1,208,488.11 1,002,989.10
Total Current Assets 1,335,757,816.22 1,397,958,666.01
Non-Current Assets
Property, Plant and Equipment,
net 9 1,241,036,548.12 1,219,387,383.21
Intangible Assets 5,728,589.30 5,682,276.47
Other Assets 10 117,524,704.67 118,052,677.43
Total Non-Current Assets 1,364,289,842.09 1,343,122,337.11
Total Assets 2,700,047,658.31 2,741,081,003.12
LIABILITIES
Current Liabilities
Financial Liabilities 11 214,074,581.28 219,237,123.22
Inter-Agency Payables 12 10,872,198.56 14,491,959.09
Trust Liabilities 13 34,466,291.55 29,690,428.56
Provisions 14 15,704,833.79 25,214,458.91
Other Payables 15 9,487,625.73 8,835,041.61
Total Current Liabilities 284,605,530.91 297,469,011.39
Non-Current Liabilities
Loans Payable 16 402,071,258.59 470,810,507.33
Trust Liabilities 13 9,055,066.05 9,056,122.05
Deferred Credits 17 49,989,255.11 39,355,682.00
Total Non-Current
Liabilities 461,115,579.75 519,222,311.38
Total Liabilities 745,721,110.066 816,691,322.77
EQUITY
Government Equity 18 866,925.40 866,925.40
Revaluation Surplus 18 28,265,234.04 28,265,234.04
Retained Earnings/ (Deficit) 19 1,925,194,388.21 1,895,257,520.91
6
NOTE 2020 2019
Total Equity 1,954,326,547.65 1,924,389,680.35

Total Liabilities and Equity 2,700,047,658.31 2,741,081,003.12
(See Accompanying Notes to Financial Statements)
7
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2020
Note 2020 2019

Income
Service and Business Income 20 1,121,714,139.98 1,148,479,405.04
Shares, Grants and Donations 21 164,427.17 1,000,000.00
Other Non-Operating Income 22 3,775,149.40 4,222,296.51
Total Income 1,125,653,716.55 1,153,701,701.55
Expenses
Less: Operating Expenses:
Personal Services 23 259,097,806.30 264,447,911.99
Maintenance and Other Operating
Expenses 24 715,684,659.61 726,443,073.97
Financial Expenses 25 32,551,396.09 38,194,167.80
Non-Cash Expenses 26 106,664,574.11 98,542,180.27
Total Expenses 1,113,998,436.11 1,127,627,334.03
Other Comprehensive Income for the
Period 11,655,280.44 26,074,367.52
Comprehensive Income 11,655,280.44 26,074,367.52
(See Accompanying Notes to Financial Statements)
8
STATEMENT OF CASH FLOWS
2020 2019
Cash Flows from Operating Activities Note

Cash Inflows:
Collection of Revenue 1,016,171,903.40 1,102,492,037.18
Receipt of Assistance/Subsidy - 1,000,000.00
Collection of Receivables 151,739.18 1,455,757.71
Other Receipts 10,707,000.62 10,102,520.28
Total Cash Inflows 1,027,030,643.20 1,115,050,315.17
Adjustments 97,733,562.61 188,466,786.72
Adjusted Cash Inflows 1,124,764,205.81 1,303,517,101.89
Cash Outflows:
Payment of Expenses 456,764,441.80 446,536,128.55
Purchase of Inventories 2,545,855.79 1,013,221.11
Grant of Cash Advances 5,453,329.89 9,505,449.78
Prepayments 17,924,932.66 14,182,266.00
Refund of Deposits 16,165.69 -
Payment of guaranty deposit 762,999.43 1,223,669.98
Payment of Retention Fee to
Contractors 1,747,113.88 3,596,134.84
Remittance of Personnel Benefit
Contributions & Mandatory Ded. 132,804,079.86 128,052,680.50
Other Disbursements 381,850,026.97 433,459,517.46
Total Cash Outflows 999,868,945.97 1,037,569,068.22
Adjustments - -
Adjusted Cash Outflows 999,868,945.97 1,037,569,068.22
Total Cash Provided (used) by
Operating Activities 124,895,259.84 265,948,033.67
Cash Flows from Investing Activities:

Cash Inflows:
Adjustment (Reclassification of -
Time Deposit Beginning Balance) 27 9,382,658.21
Total Cash Inflows - 9,382,658.21
Cash Outflows:
Purchase/Construction of Property,
Plant and Equipment 80,876,276.34 99,821,675.75
Purchase of Intangible Assets 1,342,107.09 872,062.28
Adjustments (Placement of Time 19,000,000.00 39,000,000.00
9
2020 2019
Deposit Investment)
Adjustments (Placement of
Restricted Fund) - 16,869,300.00
Total Cash Outflows 102,598,753.37 156,563,038.03
Total Cash Provided (Used) by
Investing Activities (102,598,753.37) (147,180,379.82)
Cash Flows from Financing Activities

Cash Inflows: 0.00 0.00
Total Cash Inflows 0.00 0.00
Cash Outflows:
Payment of Loan Amortization 96,038,205.25 92,669,904.69
Payment on Interest on Loans and
Other Financial Charges 32,658,672.73 38,186,810.14
Total Cash Outflows 128,696,877.98 130,856,714.83
Total Cash Provided (used) by

Financing Activities (128,696,977.98) (130,856,714.83)
Cash Provided by Operating,
Investing and Financing Activities (106,400,371.51) (12,089,060.98)
Cash and Cash Equivalents – Beginning 353,828,364.89 365,917,425.87
Cash and Cash Equivalents, Ending 247,427,993.38 353,828,364.89
10
STATEMENT OF CHANGES IN EQUITY
(With Figures for CY 2019)
Government Revaluation Retained Total

Equity Surplus Earnings/ (Deficit)
Balance at
January 01, 2019 866,925.40 28,265,234.04 1,902,225,412.57 1,931,357,572.01
Changes in Equity
for CY 2019
Add/
(Deduct):
Additions
(deductions)
Prior period
adjustments (33,042,259.18) (33,042,259.18)
Net income
(loss) for the
period 0.00 0.00 26,074,367.52 26,074,367.52
Balance at
December 31,
2019 866,925.40 28,265,234.04 1,895,257,520.91 1,924,389,680.35
Changes in Equity
for CY 2019
Add/
(Deduct):
Additions
(deductions)
Prior period
adjustments 18,281,586.86 18,281,586.86
Net income
(loss) for the
period 11,655,280.44 11,655,280.44
Balance at
December 31,
2020 866,925.40 28,265,234.04 1,925,194,388.21 1,954,326,547.65
11
NOTES TO FINANCIAL STATEMENTS

December 31, 2020
Note 1: Basis of Reporting
Cagayan de Oro City Water District (COWD) is a government-owned and controlled

corporation that collects, purifies and distributes potable water to its concessionaires in
Cagayan de Oro City and Municipality of Opol.
The financial statements have been prepared in accordance with Philippine Financial
Reporting Standards (PFRS) applied on a consistent basis. The Revised Chart of Accounts
(RCA) for Government Corporations as prescribed per Commission on Audit Circular No.
2015-010 dated December 01, 2015 is used in the recording of the District's financial
transactions and presentation of the Financial Statements.
Note 2: Significant Accounting Policies
Investment in Time Deposits. The District recognizes and records placement of cash in local
currency based on the following:
 The Districts intention whether to keep the funds for the purpose of meeting short
term commitments and is convertible into known amount of cash, subject to an
insignificant risk of change in value or set aside for a specific purpose and are either
notionally or legally ‘ring-fenced’.
 Whether the maturity date is three months or less from the date of placement.
Allowance for Doubtful Accounts. The District uses the aging of accounts receivable for
provision for doubtful account:
Age of Accounts Percentage

1-60 1%
61-180 2%
181-1 year 3%
More than 1 year 5%
Supplies Inventory. The District uses the asset method in recording materials and supplies.
Expense is recognized upon issuance of the items stored in stocks.
Prepayments. The District adopts the asset method in recording payment for insurance, and
vehicle registration which are amortized monthly throughout the period of coverage.
Property, Plant and Equipment (PPE).
 Direct cost of land acquired and other incidental expenses are capitalized as part of
the cost of land.
12
 PPE are carried at cost less accumulated depreciation. The Depreciation is
computed using the straight-line method over the estimated useful lives of the
properties ranging from 5 to 50 years after deducting the residual value equivalent to
10% of the original cost of the asset from the total cost of the asset.
 The cost of maintenance and minor repairs is charged to expense as incurred, while
major repairs, which prolong the life of the assets, are capitalized. When assets are
retired or otherwise disposed of, the cost and related accumulated depreciation and
amortization are removed from the accounts and any resulting gain or loss is
charged to current operation.
Payable Accounts. The District recognized and records payables in the books of accounts
only upon delivery of the goods/inventory/other assets and rendition of services to the
District.
Income Recognition. Revenues are recorded using the accrual basis of accounting.
Correction of Fundamental errors. All prior period Income/Expense Account

Adjustments/Errors are corrected using Retained Earnings Unappropriated Account while
Adjustments/Errors affecting current year’s operation are charged to current year's
accounts.
Note 3: Subsequent Events
The Accounting Division set up payable for various operating and maintenance expenses for
2020 payables in CY 2021. The cut-off period was March 15, 2021.
Due to this cut-off, various operating expenses for CY 2020 that are expected to be paid in
2021 are not included in the total account setup for various payable for CY 2020 because
the necessary data pertaining to these expenses are not yet available at that moment. Some
of these payables are differential Salaries and Wages of Casual & Job Orders, Pensions &
Benefits, Overtime Pay, Fuel, Oil and Lubricants, Advertising Fee and others.
These expenses are charged directly to Retained Earnings Unappropriated Account upon
payment of these payables.
Note 4: Cash and Cash Equivalents
The District's cash account consists of undeposited collections and deposits in banks
available for general expenditures incurred in operations. The Cash Collecting Officers
consists of undeposited cash on hand while Cash in bank - Local Currency is primarily
composed of Current Interest-Bearing Accounts where its disbursements are thru checks
issuances and at the same time earns interest income from its account balances. This
account consists of the following:
CY 2020 CY 2019
Cash- Collecting Officer 4,699,052.50 3,519,612.33
Cash in Bank-Local Currency, Current
Account 158,673,592.73 246,443,106.11
Time Deposits-Local Currency 84,055,348.15 103,865,646.45
13
CY 2020 CY 2019
Cash and Cash Equivalent 247,427,993.38 353,828,364.89
Cash- Collecting Officer

-Corrales-Main Office 3,161,038.12 2,729,884.57
-Kauswagan-Sub Office 779,748.81 571,243.90
-Tinao-Sub Office 758,265.57 218,483.86
Total 4,699,052.50 3,519,612.33
Cash in Bank-LCCA
-Amanah Bank 114,508.92 523,359.56
-DBP 137,777,140.46 232,947,750.08
-LBP 18,962,640.62 11,479,573.36
-Philippine Veterans Bank 568,789.16 133,424.11
-Postal Bank - 106.52
-UCPB 1,250,513.37 1,358,892.48
Total 158,673,592.73 246,443,106.11
Time Deposits-Local Currency

-Capital Improvement 20,865,047.10 41,347,087.97
-Contingency/Disaster Risk Reduction
Program 30,827,123.17 30,470,857.26
-General Fund-Corrales - -
-General Fund-Capistrano 5,234,670.63 5,179,913.35
-NRW Reduction Project 26,088,083.25 25,842,696.95
-RTC Fund 1,040,424.00 1,025,090.92
Total 84,055,348.15 103,865,646.45
Total Cash and Cash Equivalent 247,427,993.38 353,828,364.89
Note 5: Investments
The District's Temporary Investment in Development Bank of the Philippines (DBP) consists
of the following:
CY 2020 CY 2019
Capital Improvement 275,245,959.99 319,104,428.68
Expansion and Operating Expenses 71,064,119.48 61,264,622.34
General Fund-Corrales 15,615,530.85 30,547,892.61
General Fund-Capistrano 5,184,439.19 40,736,149.33
NRW Reduction Project 10,244.204.99 10,060,000.00
RTC Fund 1,024,454.45 1,012,136.61
COWD WSS Project-Sendong 2 20,734,775.01 20,485,464.09
Pension and Benefits Fund 20,242,431.58 10,000,000.00
Total Investment in Time Deposits 419,355,915.54 493,210,693.66
14
Note 6: Receivables
The District's Receivables consists of the following:
CY 2020 CY 2019
Net Accounts Receivable-Customers 411,759,322.55 316,286,404.44
Receivable- Disallowances/Charges 67,749,716.93 39,971,212.51
Due from Officers and Employees 60,499.55 17,480.84
Other Receivables 169,082.18 194,939.16
Total Receivables 479,738,621.21 356,470,036.95
CY 2020 CY 2019
Billing , net of billing adjustments 1,073,064,434.13 1,083,161,654.66
Penalty, net of penalty adjustment 29,231,356.69 43,467,074.94
Collections, net of adjustments (1,003,837,174.82) (1,090,844,498.20)
Net Increase/ (Decrease) 98,458,616.00 35,784,231.40
Beginning Balance 354,171,093.05 318,386,861.65
Total 452,629,709.05 354,171,093.05
Allowance for Impairment-Accounts
Receivable (40,870,386.50) (37,884,688.61)
Net Accounts Receivable 411,759,322.55 316,286,404.44
Receivable- Disallowances/Charges
COA Notice of Disallowance for the period covered CY 1994 to CY1999:
Reference CSB Date Transaction Amount Need Not be Adjusted

No. Period Disallowed Refunded Disallowance
/Lifted
95-001-101(94) 8/24/1995 Jan.-Dec.'94 2,060,962.95
97.001(95) 4/8/1997 Jan.-Dec.'95 4,860,096.26
98-001(96) 6/9/1998 Jan.-Dec.'96 1,603,601.66
99-001-101(97) 3/22/1999 Jan.-Dec.'97 2,236,099.30
Total 10,760,760.17
Less:
Miscalculation 32,317.17
Adjusted Amount 10,728,443.00 6,773,047.36 3,955,395.64
Less: COWD Retirement Plan Fund Returned to General Fund 1,866,177.89
per JV#12-016-10
Net Amount Disallowed 1994-1997 recorded in the books 2,089,217.75
per JV#02-025A-16 dtd. 2/29/16 and JV#12-029-16
Less: Amount deducted from Orlando Romero (P4,450.00) 10,500.00
/Elva Ubay-Ubay (P 4,450.00)/Rommel Gaylo (P 1,600.00)
per DV#15-07-05-021
Net Amount Disallowed 1994-1997 2,078,717.75
2000-001- 9/25/2000 Jan. 1, 1998
(98/99) to May 31,
1999 37,363,278.47 37,363,278.47
Add:
15
Reference CSB Date Transaction Amount Need Not be Adjusted
No. Period Disallowed Refunded Disallowance
/Lifted
COA AOM 2016-11 (Travel to Cambodia) recorded in the 529,216.29
books per JV#12-25A-16
COA ND for CY2009 (AOM no. COWD 20-04(19)dated
2/10/2020) CY2019 Mid-Year & Year-End Incentive Pay,
Service Incentive Pay, Cash Gift and Financial Assistance to
the officers and employees of COWD for calendar year 2009 27,778,504.42
Total COA NDs Recorded in the Book 67,749,716.93
Other Receivables
The District's Receivables consists of the following:
CY 2020 CY 2019
Insurance Claims Receivable 13,558.36 13,558.36
Gov't Agencies 237,852.82 243,367.42
Non-Government Organization 1,727.05 1,727.05
Customers 112,053.15 112,053.15
Ex-employees and Officers 2,393.71 2,393.71
Electric Companies 63,844.00 63,844.00
Employees of Other Water Districts 1,150.00 1,150.00
Hotels 9,089.66 9,089.66
Hospitals 2,129.56 2,129.56
Past Board of Directors 132,185.35 132,185.35
Subdivisions 300,757.04 300,757.04
Schools 33,236.28 33,236.28
Suppliers 5,155.73 5,155.73
Water Districts 86,761.53 86,761.53
Gawad Kalinga Beneficiaries 6,200.00 6,200.00
Calaanan Habitat for Humanity 21,504.00 40,840.00
USAID 84,000.00 84,000.00
Others 49,074.69 49,074.69
Total Other Receivable 1,162,672.93 1,182,008.93
Allowance for Impairment-Accounts
Receivable (993,590.75) (987,069.77)
Net Other Receivables 169,082.18 194,939.16
Note 7: Inventories
This account includes items stored in COWD warehouse, such as office supplies, janitorial
supplies, fuel, oil & lubricants, plant materials, operating supplies, chemicals, construction
materials, finished goods, tools, meters and other supplies.
CY 2020 CY 2019
Inventory Held for Manufacturing 2,143,915.59 1,892,974.67
Inventory Held for Consumption 185,882,882.40 191,583,606.74
Total Inventories 188,026,797.99 193,446,581.41
16
CY 2020 CY 2019
Inventory Held for Manufacturing
-Work-in-Process Inventory 176,324.18 153,060.37
-Finished Goods Inventory 1,967,591.41 1,709,914.30
Total Inventory Held for Manufacturing 2,143,915.59 1,862,974.67
Inventory Held for Consumption

-Office Supplies Inventory 6,173,198.31 6,328,819.38
-Accountable Forms, Plates and
Stickers 1,458,397.20 933,834.10
-Non-Accountable Forms Inventory 472,243.01 346,379.79
-Fuel, Oil and Lubricant 302,085.68 325,563.11
-Chemicals and Filtering Supplies
Inventory 2,093,806.79 2,355,745.17
-Construction, Materials Inventory
Service Connection 73,012,765.82 81,849,927.44
Transmission Distribution Pipe 60,907,188.60 58,948,656.74
Other Construction Materials 20,268,464.73 31,301,569.87
Total 166,067,412.98 172,100,154.05
-Other Supplies and Materials
Inventory
Automotive Inventory 6,987,884.13 7,496,027.24
Tools and Other Suppliers 1,746,498.87 1,451,899.52
Personnel Protective Equipment 413,112.83 174,483.67
Others 97,532.14 28,820.00
Total 9,245,027.97 9,151,230.43
-Semi-Expendable Office Equipment
Inventory 22,026.64 12,684.40
-Semi-Expendable Furniture and
Fixtures Inventory 48,683.82 29,196.32
Total Inventory Held for Consumption 185,882,882.40 191,583,606.75
Total Inventories 193,446,581.42
Note 8: Other Current Assets
The District's Other Current Assets consists of the following:
CY 2020 CY 2019
Prepaid Expenses
Insurance Co. 932,911.15 799,434.32
LTO 63,154.96 60,470.35
Bureau of Treasury 108,000.00 98,576.50
Other Prepayments 100,918.24 40,483.71
Advances to Officers and Employees 3,503.76 4,024.22
Total 1,208,488.11 1,002,989.10
17
Note 9: Property, Plant and Equipment
The District's Property, Plant and Equipment consists of the following:
CY 2020 CY 2019
Land and Land Rights 40,830,774.18 40,830,774.18
Infrastructure Assets 1,662,138,322.40 1,627,797,108.42
Buildings and Other Structures 147,286,008.83 146,902,623.73
Machinery and Equipment 479,089,602.78 446,918,843.53
Transportation Equipment 91,273,630.48 86,584,130.48
Furniture, Fixtures and Books 6,833,738.70 3,676,801.00
Construction in Progress 199,565,609.79 150,281,679.93
Total Property, Plant and Equipment 2,627,017,687.16 2,502,991,961.27
Less: Accumulated Depreciation 1,385,981,139.04 1,283,604,578.06
Total PPE, net 1,241,036,548.12 1,219,387,383.21
CY 2020 CY 2019
Land and Land Rights 40,830,774.18 40,830,774.18
Infrastructure Assets
Plant-Utility Plant in Service (UPIS)
Springs & Tunnels 5,000.00 5,000.00
Wells 108,183,056.13 108,183,056.13
Reservoirs & Tanks 34,058,627.07 34,058,627.07
Transmission & Distribution Mains 955,594,422.74 953,441,675.28
Fire Mains 3,423.70 3,423.70
Services Connections 264,337,553.89 253,074,890.61
Meters 253,082,335.92 236,527,352.97
Meters Installation 35,270,459.34 31,279,358.97
Hydrants 7,841,362.26 7,807,147.21
PPE Held For Future Use 2,986,731.00 2,986,731.00
Clearing 775,350.35 429,845.48
Total 1,662,138,322.40 1,627,797,108.42
Buildings and Other Structures

Water Plant, Structure and Improvements
Source of Supply Structures &
Improvements 23,815,417.57 23,815,417.57
Pumping Structures & Improvements 68,783,729.74 68,783,729.74
Trans. & Dist. Structures &
Improvements 17,463,201.01 17,463,201.01
Gen Plant Structures & Improvements 37,475,015.38 37,153,320.48
Buildings and Other Structures-Clearing (251,354.87) (313,045.07)
Total 147,537,363.70 146,902,623.73
Machinery and Equipment

Office Equipment 61,068,866.40 58,198,771.40
Other Machinery and Equipment
Laboratory Equipment 8,975,678.03 7,918,958.03
Power Production Equipment 48,991,744.43 46,764,244.43
18
CY 2020 CY 2019
Pumping Equipment 197,409,424.04 195,057,631.04
Water Treatment Equipment 29,238,486.55 21,960,588.55
Store Equipment 38,900.00 38,900.00
Power Operated Equipment 52,979,108.05 43,549,839.80
Tools, Shop & Garage Equipment 67,311,720.86 66,657,330.86
Surveying Instrument/ Accessories 41,207.82 41,207.82
Communications Equipment 11,229,051.13 11,229,051.13
Disaster Response& Rescue Equip 300,000.00 300,000.00
Firefighting Equipment and Accessories 749,950.00 749,950.00
Sports Equipment – Table Tennis 16,800.00 16,800.00
Information and Communication
Technology Equipment 14,365,328.57 13,838,838.57
Construction and Heavy Equipment 7,280,000.00 1,495,000.00
Other Machinery and Equipment-
Clearing (for reconciliation) (20,906,663.10) (20,898,268.10)
Total 418,020,736.38 388,720,072.13
Total 479,089,602.78 446,918,843.53
The negative amount of ₱20,898,268.10 in the Other Machinery and Equipment –

Clearing account corresponds to adjustments drawn by the District to temporarily adjust
capitalized repairs and maintenance (AOM No. 2017-23) and capitalized Property, plant
and Equipment below threshold (AOM No. 2017-24). Since the accounting system of the
District still does not have the fixed asset retirement module, as easy mechanism to retire
various PPE accounts and its related Accumulated Depreciation, the account Other
Machinery and Equipment-Clearing was temporarily used instead.
CY 2020 CY 2019
Transportation Equipment
Motor Vehicles 91,273,630.48 86,584,130.48
Furniture, Fixtures and Books

Furniture and Fixtures 6,833,738.70 3,676,801.00
Construction in Progress
Construction in Progress-Infrastructure
Assets
Youngsville Project (P5M loan) 6,100.00 6,100.00
Administration Projects 27,369,977.51 18,988,109.64
Total 27,376,077.51 18,994,209.64
Construction in Progress-Buildings and
Other Structures
Typhoon Sendong Rehabilitation
Projects 29,154.00
Administration Projects 172,189,532.28 131,258,316.29
Total 172,189,532.28 131,287,470.29
Total 199,565,609.79 150,281,679.93
19
CY 2020 CY 2019
Total Property, Plant and Equipment 2,627,017,687.16 2,502,991,961.27
Less: Accumulated Depreciation 1,385,981,139.04 1,283,604,578.06
Total Property, Plant and Equipment,net 1,241,036,548.12 1,219,387,383.21
PPE Held for Future Use
Category Amount
A. Future Site of Production Wells
1. Balulang, Lot Area:250sq.m TCT# 212,500.00
T133577 (Wenceslao Galope)
2. Balulang, Lot Area:324sq.m TCT# 275,400.00
T128589 (Leonel Caballero)
3. Puntakon Igpit Opol, MisOr., Lot Area 251,300.00 739,200.00
718sq.m. No TCT (Jose Taneo)
B. Submersible Motors & Others 268,911.00
C. Pressure Sustaining Valves 1,978,620.00
Total PPE Held for Use 2,986,731.00
Note 10: Other Assets
The District's Other Assets consists of the following:
CY 2020 CY 2019
Advances to Contractors 1,600,315,.64 2,814,583.17
Guaranty Deposits 9,552,147.88 9,557,471.32
Restricted Funds 103,001,318.07 102,309,699.86
Other Assets 3,370,923.08 3,370,923.08
Total 117,524,704.67 118,052,677.43
Guaranty Deposits
This account consists of cash deposits to various offices for specific purposes such as
guaranty for fulfillment of obligations.
Office Purpose CY 2020 CY 2019

CEPALCO Electric bill deposit 5,733,894.40 5,818,346.56
MORESCO Electric bill deposit 83,775.72 83,775.72
MISORTEL Telephone deposit 51,417.00 51,417.00
COACO oxygen/acetylene 2,500.00 2,500.00
tank deposit
Mabuhay Vinyl gas chlorine tank 489,000.00 489,000.00
Corporation deposit
City Treasurer's bond of projects 2,296,097.72 2,269,478.71
Office
Metropolitan Circuit bond of projects 10,000.00 10,000.00
Trial Court
DPWH Region 10 bond of projects 663,696.72 611,187.01
Pryce Corporation tank deposit 7,000.00 7,000.00
20
Office Purpose CY 2020 CY 2019
Incorporated
Cagayan de Oro Deposit 150,000.00 150,000.00
Corporation
MisOr 2nd Dist. Cash bond of 14,766.32 14,766.32
Eng'g OffIce projects
Primestar Realty Rental deposit 50,000.00 50,000.00
&Developer Inc.
Total 9,557,147.88 9,557,471.32
Restricted Funds
This account consists of deposits for special or specific purposes such as guaranty for the
fulfillment of obligations, holdout deposits and garnished bank accounts. This also includes
special & time deposit in bank to set aside the deposits received from the customers and the
balance of this bank account will offset the balance of Customers Deposits.
Description Bank Purpose CY 2020 CY 2019

COWD/LWUA DBP Special Deposit 16,921,976.78 16,909,463.86
JSA DBP Time Deposit 7,842,940.09 7,748,894.84
LBP Garnished Accounts 1,252,905.52 1,244,500.16
Total 26,017,822.39 25,902,858.86
Customers’ DBP Special Deposit 72,276.00 72,232.00

Guaranty DBP Time Deposit 12,014,823.53 11,870,359.61
Deposits
LBP Garnished Accounts 17,451.94 17,451.94
Total 12,104,551.47 11,960,043.55
COWD Capital LBP Garnished Accounts 15,262.67 15,262.67

Improvement
COWD Savings LBP Garnished Accounts 10,302.26 10,302.26
Account
Loan Hold Out DBP Hold-out Deposits 29,223,424.53 28,872,047.73
Deposits-
Previous Yr.
Deposits-CY
2017
Deposits-DLSC
Total 103,001,318.07 102,309,699.86
DBP-Hold Out Deposit
Per Continuing Deed of Assignment with Hold-out with the DBP dated September 30, 2008,
under no. 3 Terms and Conditions:
21
At any time while the Term Loan is outstanding, the Assignor shall cause to be maintained
in the Deposit Account an amount equivalent to at least two (2) monthly amortizations
(principal & interest) due on the Term Loan, mentioned in the Term Loan Agreement
(collectively, the “Amount Held-Out”). For this purpose, the Assignor agrees not to make any
withdrawal from the deposit account that will diminish the balance thereof to an amount less
than the Amount Held-Out. The Assignor agrees that the Assignee shall have full control
over the Amount Held-Out while the Term Loan and other amounts due thereon or by
reason thereof remain outstanding and the Assignor cannot withdraw the same or any
portion thereof without the prior written consent of the Assignee, Furthermore, the Assignor
hereby authorizes the Assignee to debit from the Deposit Account all amounts due and
payable by the Assignor to the Assignee under the Term Loan Agreement and other
documents executed in connection with the Term Loan.
Per Deed of Assignment with Hold-out Agreement dated Feb. 07, 2017
The Assignee has granted the Assignor a total Loan of ₱433,039,067.00 to be secured by
an assignment with hold-out of Assignor's Peso Deposit with the Assignee. The Assignor
has a deposit with the Assignee the amount of ₱125,099,740.74, ₱75,055,289.53 and
₱5,500,000.00 covered by the Savings Account Nos. 0810-020011-531, 0810-027324-530
and 0810-020011-160. Therefore, by these presents, hereby assigns, transfers and conveys
unto the Assignee all its rights, title to and interests in the deposit, together with all the
interest due thereon and/or any renewal, roll-over or substitution thereof issued to and its
name to the extent of the amount due and payable. The Assignor agrees that the Assignee
shall have full control over the Amount Held-Out while the Term Loan and other amounts
due thereon or by reason thereof remain outstanding and the Assignor cannot withdraw the
same or any portion thereof without the prior written consent of the Assignee, Furthermore,
the Assignor hereby authorizes the Assignee to debit from the Deposit Account all amounts
due and payable by the Assignor to the Assignee under the Term Loan Agreement and
other documents executed in connection with the Term Loan.
DBP-Hold Out for Irrevocable Domestic Standby Letter of Credit
DBP Corrales issued on April 18, 2018 an Irrevocable Domestic Standby Letter of Credit No.
DSLC18006 of Cagayan de Oro City Water District to be opened against COWD deposit
hold-out per Account No. 0810-020011-531. This will serve as a Guarantee in compliance
with the Bulk Water Supply Agreement dated October 30, 2017, under no. 4.07 of the Terms
and Conditions.
Garnished Accounts
On April 03, 2007 the Bureau of Internal Revenue ordered the garnishment of the COWD
funds from depository banks. Therefore, these current accounts are frozen until BIR will lift
its garnishment order.
Other Assets
This account consists of the following:
CY 2020 CY 2019
Visayan Surety-Injunction Bond 400,407.96 400,407.96
Land Transfer Cost -Deferred Costing 193,658.56 193,658.56
22
Non-moving Items for disposal 168,813.61 168,813.61
Idle Land 2,363,042.95 2,363,042.95
Land Occupied by Squatters 245,000.00 245,000.00
Total 3,370,923.08 3,370,923.08
The ‘Idle Land’ & ‘Land Occupied by Squatters’ are properties owned by COWD but are not
currently being used.
Note 11: Financial Liabilities
The District's Financial Liabilities consists of the following:
CY 2020 CY 2019
Accounts Payable-Suppliers 119,036,849.76 93,279,477.68
Due to Officers and Employees 17,225.85 17,225.85
Other Financial Liabilities 95,020,505.67 125,940,419.69
Total 214,074,581.28 219,237,123.22
CY 2020 CY 2019
Other Financial Liabilities -Loans Payable
Development Bank of the Philippines 87,864,158.79 116,214,626.99
Local Water Utility Administration 7,156,346.88 9,725,792.70
Total 95,020,505.67 125,940,419.69
Other Financial Liabilities refers to the current portion of Loan's Payable disclosed in Note
No. 15.
Note 12: Inter-Agency Payables
The District's Inter-Agency Payable consists of the following:
CY 2020 CY 2019
Due to BIR 6,774,460.42 9,259,032.86
Due to GSIS 3,558,597.84 4,738,435.79
Due to Pag-ibig 120,616.45 134,497.10
Due to Philhealth 417,924.45 359,393.94
Due to Government Corporation -SSS 599.40 599.40
Total 10,872,198.56 14,491,959.09
Note 13: Trust Liabilities
The District's Trust Liabilities consists of the following:
CY 2020 CY 2019
Retention on contract payments 28,426,223.15 23,253,851.28
Performance and Bids Securities 6,040,068.40 6,436,577.28
Total – Current portion 34,466,291.55 29,690,428.56
23
Customers' Deposits Payable 9,055,066.05 9,056,122.05
Total – Non-Current portion 9,055,066.05 9,056,122.05
The Customers' Deposits Payable account pertains to the deposits made by customers
normally before the extension of any service connections as security for the payment of
subsequent bills, or as a meter deposit.
Note 14: Provisions
The Districts Provisions consist of:
CY 2020 CY 2019
Leave Benefits Payable 15,704,833.79 25,214,458.91
Note 15: Other Payables
The District's Other Payables consists of the following:
CY 2020 CY 2019
Accrued Light and Power (reclassified to -
Accounts Payable)
Legal Counsel (Notarial Fee) 1,723,139.00 1,458,589.00
COWD Provident Fund 221,605.08 219,050.52
Hospitals 8,999.76 8,999.76
FLOW 350,453.87 182,469.68
Various Payables 7,183,428.02 6,965,932.65
Total Other Payables 9,487,625.73 8,835,041.61
Note 16: Loans Payables
The District’s Loan Payables consists of the following:
CY 2020 CY 2019
Local Water Utility Administration 14,835,214.90 22,980,418.78
Development Bank of the Philippines 387,236,043.69 447,830,088.55
Total 402,071,258.59 470,810,507.33
Loans Payable consists of the following loans granted by Local Water Utilities Administration
(LWUA) and Development Bank of the Philippines. Details is shown below:
24
Particulars Start
Year Repay
Mat of
LAN Cont Lende Inter ment Balance as of
urity Amo Principal Repayments
/ Title ract r est Period 12-31-2020
Date rtizat
PN ed (Years)
ion
1- Phase II-A Prod 10/0 LWUA 11% 12/3 01/3 26 5,000,000.00 5,001,181.00 (1,181.00)
057 Wells 1/19 1/20 1/19
83 15 90
1- Phase II-B Projects 02/1 LWUA 13% 07/3 08/3 26 95,079,394.29 88,889,133.41 6,190,260.88
051 – Schedules A, B 1/29 1/20 1/19
and C 88 21 95
3- Phase III-520.128M 03/3 LWUA 13% 09/3 10/3 26 520,128,000.00
747 0/19 0/20 1/20
96 31 05
Less: Payments as of 08/2008 (9,334,840.00)
Balance 510,793,160.00
Less: Amount refinanced by DBP (296,118,104.0
0)
Loan Amount – Phase 3 214.6 M 13% 09/3 09/3 23.08 214,675,056.00
0/20 0/20
31 08
Less: Payments as of April 2013 (10,144,575.00)
Balance 204,530,481.00
Less: Amount refinanced by DBP (183,623,730.1
0)
Balance for Amortization 20,906,750.90 5,104,269.00 15,82,481.90
3- Phase 3-191.121M 07/0 LWUA 13% 191,121,000.00
840 5/20
06
Less: Payments as of 08/2008 (2,320,113.00)
Balance 188,800,887.00
Amount refinanced by DBP (188,800,887.0
0)
Balance 0.00 0.00
4- Phase III – 200M 08/3 LWUA 12.5 12/3 01/3 20 100,000,000.00
231 1/20 % 1/20 1/20
7 06 26 07
13.5 100,000,000.00
%
Total 200,000,000.00
Less: Payments as of April 2013 (20,678,853.00)
Balance 179,321,147.00
Amount refinanced by DBP (179,321,147.0
0)
Balance 0.00 0.00
4- Youngsville WSS- 02/0 LWUA 7.5 11/3 12/2 5 4,108,071.24 4,108,071.24 0.00
254 4.108M 3/20 % 0/20 1/20
7 09 16 11
Total LWUA LOANS 418,862,521.53 103,102,654.65 21,991,561.78
200 502.011M 02/0 DBP 9% 09/3 10/3 15 502,011,668.62 363,592,444.67 138,419,223.95
8- Refinanced Loan 3/20 0/20 0/20
181 08 23 08
201 370.203M 05/3 DBP 7.6 05/3 05/3 15 370,203,774.64 187,158,575.24 183,045,199.40
3- Refinanced Loan 0/20 % 0/20 0/20
007 13 28 13
201 200M Back to Back 03/1 DBP 4.65 09/0 09/0 .50 200,000,000.00 200,000,000.00 0.00
7- Loan 3/20 % 8/20 8/20
002 17 17 17
201 180.090 NRW 09/0 DBP 5.70 09/0 10/0 15 180,090,092.00 39,019,519.89 141,070,572.11
7- Reduction Program 8/20 % 8/20 8/20
008 17 32 17
201 23.45M NRW 09/0 DBP 4.65 09/0 10/0 7 23,455,053.00 10,889,845.98 12,,565,207.02
7- Reduction Program 8/20 % 8/20 8/20
009 17 24 17
TOTAL LWUA & 1,694,623,109. 903,763,040.43 497,091,764.26
DBP 79
Less: Current Portion of Long Term Debt 95,020,505.67
Total Long Term Liabilities 402,071,258.59
SUMMARY:
25
Particulars Start
Year Repay
Mat of
LAN Cont Lende Inter ment Balance as of
urity Amo Principal Repayments
/ Title ract r est Period 12-31-2020
Date rtizat
PN ed (Years)
ion
I. LWUA Long Term Loans Current Portion Total Loans
1- Phase II-A Prod Wells 0.00 (1,181.00) (1,181.00)
057
1- Phase II-B Projects 0.00 6,190,260.88 6,190,260.88
051 – Schedules A, B
and C
3- Phase III-520.128M 14,835,214.90 967,267.00 15,802,481.90
747
TOTAL LWUA 14,835,214.90 7,156,346.88 21,991,561.78
II. DBP
200 502.011M 90,592,044.80 47,827,179.15 138,419,223.95
8- Refinanced Loan
181
201 370.203M 158,364,947.72 24,680,251.68 183,045,199.40
3- Refinanced Loan
007
201 180.090 NRW 129,064,565.99 12,06,006.12 141,070,572.11
7- Reduction Program
008
201 23.45M NRW 9,214,485.18 3,350,721.84 12,565,207.02
7- Reduction Program
009
TOTAL DBP 387,236,043.69 87,864,158.79 475,100,202.48
GRAND TOTAL 402,071,258.59 95,020,505.67 497,091,764.26
The amount of ₱502,011,668.662 was credited to LWUA's LBP-Commonwealth branch

savings account no. 511357455-9 on September 30, 2008 and was applied as follows:
LAN Loan Application of 2% Pre- Total Outstanding

Outstanding as the 50% Loan termination Refinanced Balance
of Aug 2008 Fee Loan
1-051 79,122,331.80
1-057 2,440,640.00
3-747 510,793,160.00 296,118,104.00 5,933,362.08 302,040,488.08 214,675,056.00
3-840 188,800,887.00 188,800,887.00 3,776,017.74 192,576,904.74
4- 196,075,261.00
2317
OAB 7,394,297.80 7,394,297.80 7,394,297.80
Total 984,626,577.60 492,313,288.80 9,698,379.82 502,011,668.62
The amount of ₱370,203,774.64 was credited to LWUA's LBP Commonwealth Branch

Savings Account No. 511357455-9 on May 30, 2013 and was applies as follows:
Loan 2% Pre- Total

Application of
LAN Outstanding as termination Refinanced
the 80% Loan
of April 2013 Fee Loan
1-051 63,500,316.61
1-057 1,020,592.00
3-747 204,530,481.00 183,623,730.10 3,672,474.60 187,296,204.70
4-2317 179,321,147.00 179,321,147.00 3,586,422.94 182,907,569.94
4-2547 3,095,481.24
Total 451,468,017.85 362,944,877.10 7,258,897.64 370,203,774.64
26
The pre-termination fees charged by DBP and the front-end fees/documentary stamps:
Front End
Refinanced 2% Pre-term Start of No. of
Fee/Doc Total Amount
Loan fee Amortization Years
Stamp DBP
 501.011 M 9,698,379.82 6,651,664.61 October 2008 15 16,350,044.43
 370,203M 7,258,897.54 2,905,039.00 June 2013 15 10,163,936.54
Refinance Loan
 200M Back to 490,411.00 Sept 2017 50 490,411.00
Back Loan
 180.090 NRW 900,451.00 Oct 2017 15 900,451.00
Reduction
Program
 23.45M NRW 117,276.00 Oct 2017 7 117,276.00
Reduction
Program
Note 17: Deferred Credits
The District's Deferred Credits consists of the following;
CY 2020 CY 2019
Office of the President Sendong OP Grant 2,317,749.69 2,317,749.69
COWD Bugo Village 303,555.18 313,726.38
Service Connection Materials paid by 11,224,511.19 15,356,546.37
customers
Barangay Lapasan Rehab 1,036,823.15 1,036,823.15
COWD NHA CDO Bayanihan Village 10,691,220.60 10,691,220.60
Project
WSS Calaanan Project 5,816,797.21 5,816,797.21
COWD Service Connection Fee 1,051,960.00 1,051,960.00
Others (Acct. 45900) 17,546,638.09 2,770,858.60
Total 49,989,255.11 39,355,682.00
CY 2019
LWUA Grant (Sendong) from:
Office of the Pres. per COWD 52,791,000.00
OR#3542064 dtd. 1/4/12
Speaker Belmonte per COWD OR# 1,000,000.00
3534291 dtd. 1/24/12
Total LWUA Grant 53,791,000.00
Less: Disbursements 51,473,250.31
LWUA Grant Balance 2,317,749.69
Note 18: Government Equity
The District's Government Equity consists of the following;
27
CY 2020 CY 2019
A. City Government
1. Fixed Assets turned over by the 544,711.22 544,711.22
City Gov't to WD on Dec. 31, 1973 ,
net of P1,035,562.30
Less: Land reverted to donors (JV (18,900.00) (18,900.00)
12-60-05)
2. A/R -Customers turned over on 167,199.08 167,199.08
Dec. 31, 1973
3. Cost of Cogon Market Pipeline 28,419.94 28,419.94
Sub -total 721,430.24 721,430.24
B. USAID Grant
Regional Water Supply Training & 145,495.16 145,495.16
Library
Total 866,925.40 866,925.40
Capital/Equity Reserve
This account is set up for the Expansion of Operating Reserves in the amount of
₱3,170,523.91, which was taken from the COWD-DBP General Fund and transferred to a
new account at Postal Bank. This reserve was approved by the Board of Directors per
Board Resolution No. 159, s-03 dated Sep. 24, 2003. On Sep. 30, 2008, the amount of
₱3,170,522.91 plus the accumulated interest of ₱755,010.49 was transferred to DBP-
Corrales as holdout deposit for the DBP-P502.011 Million Refinanced Loan. This amount
was returned to Retained Earnings-Unappropriated per JV#07-011-16.
Donated Property, Plant and Equipment
Amount
Laboratory Equipment 102,504.19
Transmission and Distribution Mains 42,631,006.51
Office Furnitures & Fixtures 66,950.00
Distribution Lines 843,073.25
Fire Hyrants 2,622,454.25
Meter Stub-out -
M.STB-Iponan, Westfield Home 941,247.09
PPE(by LWUA Sendong Grant) -
PPE-TranspoEquip-Geo-Transprt 763,000.00
PPE-JICA Donation 40,994,730.00
PPE-Swiss Humanitarian Aid Donation 1,999,957.90
Total 90,964,923.19
Note 19: Revaluation Surplus
28
The total amount of ₱28,442,834.04 was taken up representing under valuation of land and
land rights and booked up per JV 11-36-96 and JV12-51-96. The amount of ₱177,600.00
representing appraisal cost of land reverted to donors per JV 12-20-05. Breakdown of
parcels of land and its corresponding appraisal cost are as follows:
Location Area sq.m. Appraisal Cost

Aluba Reservoir 1441 386,057.50
Balulang PW No. 14 300 42,325.00
Balulang PW No. 4 200 20,000.00
Balungis PW No. 17 300 90,000.00
Bantiles, Bugo PW No. 11 400 103,127.25
Bontola PW No. 2 600 220,000.00
Bontola Reservoir 2784 395,232.00
Bugo, Reyes PW No.5 482 96,400.00
Bugo Reservoir 420 37,800.00
Bugo PW No. 6 150 21,000.00
Calaanan PW No. 10 1409 650,008.18
Calaanan PW No. 12 400 165,010.00
Calaanan PW No. 15 400 167,780.00
Calaanan 396 172,000.00
Camaman-an Reservoir 2698 187,844.37
Carmen 120 93,600.00
Carmen Reservoir 3600 879,650.00
Corrales Ave., Main Bldg. 991 9,806,307.00
Gaston Park 281 269,760.00
Greehills Reservoir 420 252,000.00
Gusa 490 161,700.00
Kauswagan Shop Bldg. 4789 6,055,985.00
Macasandig Booster Pump 750 810,000.00
Macasandig PW No. 1 Operation Bldg. 1620 2,218,600.00
Macasandig PW No. 4 116 115,416.00
Macasandig 252 70.18
Macasandig PW No. 3 & 3A 254 189,616.56
Macasandig 348 156,600.00
Macasandig PW No. 9 7743 3,677,925.00
Macasandig Old Pump 218 320,460.00
Total 28,442,834.04
Land reverted to donor 150 (21,000.00)
Land reverted to donor 348 (156,600.00)
Total 28,265,234.04
Note 20: Service and Business Income
29
The District's Business Income consists of the following:
CY 2020 CY 2019
Waterworks System Fees 1,078,738,314.40 1,088,203,239.23
Interest Income 7,347,970.99 9,689,534.28
Fines and Penalties-Business Income 29,405,595.59 43,708,324.94
Other Business Income 6,222,259.00 6,878,306.59
Total 1,121,714,139.98 1,148,479,405.04
Effects of COVID-19 pandemic on the revenue from Waterworks System Fees and
Penalties. Per approved Board Resolution Nos. 026, 034, 042, 048, 053, 057, 058 series of
2020, COWD have permanently waived penalties for water bills with due dates that fall
within the period March 17 to July 15, 2020 and to defer the disconnection of overdue
accounts until further notice. These resolutions are in line with the declaration of Inter-
Agency Task Force (IATF) Resolution no. 13 stating Cagayan de Oro will remain under
Modified Community Quarantine. Details as follows:
Waterworks System
Fees Actual Budget Over/(Under)
January 2020 91,728,560.38 99,885,692.00 (8,157,131.62)
February 2020 94,855,176.37 100,263,992.00 (5,408,815.63)
March 2020 89,678,761.25 100,642,292.00 (10,963,530.75)
April 2020 95,909,627.08 101,020,592.00 (5,110,964.92)
May 2020 91,248,915.15 101,398,892.00 (10,149,976.85)
June 2020 91,157,909..32 101,777,192.00 (10,619,282.68)
July 2020 92,718,424.57 102,155,492.00 (9,437,067.43)
August 2020 88,956,626.02 102,533,792.00 (13,577,165.98)
September 2020 85,372,029.17 102,912,092.00 (17,540,062.83)
October 2020 86,299,599.58 103,290,392.00 (16,990,792.42)
November 2020 85,457,904.37 103,668,692.00 (18,210,787.63)
December 2020 85,354,781.14 104,046,997.00 (18,692,215.86)
Total 1,078,738,314.40 1,223,596,109.00 (144,857,794.60)
Penalties Actual Budget Over/(Under)

January 2020 3,874,228.02 4,922,168.00 (1,047,939.98)
February 2020 3,849,939.08 4,941,083.00 (1,091,143.92)
March 2020 2,637,331.87 4,959,998.00 (2,322,666.13)
April 2020 (34,978.28) 4,978,913.00 (5,013,891.28)
May 2020 (14,802.60) 4,997,828.00 (5,012,630.60)
June 2020 (28,114.04) 5,016,743.00 (5,044,857.04)
July 2020 (82,673.74) 5,035,658.00 (5,188,331.74)
August 2020 904,327.4 5,054,573.00 (4,150,245,.86)
September 2020 4,859,688.51 5,073,488.00 (213,799.49)
October 2020 4,562,146.45 5,092,403.00 (530,256.55)
November 2020 4,387,633.09 5,111,318.00 (723,684.91)
December 2020 4,316,631.19 5,130,233.00 (814,601.81)
Total 29,231,356.09 60,314,406.00 (30,083,049.31)
Per approved Board Resolution No. 008, s. 2020, total income budgeted for CY 2020
includes 500 million grant from the Local Government of Cagayan de Oro City. This was
30
intended to fund capital expenditure for CY 2020 but not yet received as of December 31,
2020.
Note 21: Assistance and Subsidy
The District's Assistance and Subsidy consists of the following;
CY 2020 CY 2019
Subsidy from National Government 164,427.17 1,000,000.00
Note 22: Other Non-Operating Income
The District's Other Non-Operating Income consists of the following;
CY 2020 CY 2019
Miscellaneous Income 3,775,149.40 4,222,296.51
Note 23: Personnel Services
The District's Personal Services consists of the following;
CY 2020 CY 2019
Salaries and Wages 155,428,885.48 146,543,855.19
Other Compensation 65,139,473.58 61,539,189.35
Personnel Benefit Contributions 30,993,287.24 49,098,937.45
Other Personnel Benefits 7,536,160.00 7,265,930.00
Total 259,097,806.30 264,447,911.99
Note 24: Maintenance and Other Operating Expenses
CY 2020 CY 2019
Traveling Expenses 374,705.80 2,512,228.59
Training and Scholarship Expenses 306,959.71 3,521,437.30
Supplies and Materials Expenses 14,925,699.59 15,345,553.18
Utility Expenses 5,148,144.79 5,355,871.84
Communication Expenses 1,963,379.19 1,955,773.75
Awards/Rewards, Prizes & Indemnities 171,500.05 171,071.50
Survey, Research, Exploration and 34,000.00 8,000.00
Development Expenses
Generation, Transmission and Distribution 625,191,219.02 620,752,528.89
Expenses
Reforestation Expenses 42,500.00 28,443.25
Confidential, Intelligence and Extraordinary 91,887.80 117,600.00
Expenses
Professional Services 889,823.00 1,020,270.19
General Services 889,823.00 13,394,445.80
31
CY 2020 CY 2019
Repairs and Maintenance 13,788,182.33 18,949,269.44
Taxes, Insurance, Premiums and Other
Fees 12,085,641.33 24,490,068.76
Labor and Wages 22,949,561.90 7,008,763.15
Other Maintenance and Operating
Expenses 6,402,951.23 11,811,748.33
Total 715,684,659.61 726,443,073.97
Note 25: Financial Expenses
The District's Financial Expenses consists of the following;
CY 2020 CY 2019
Interest Expenses 32,551,396,.09 38,194,167.80
Note 26: Non-Cash Expenses
The District's Non-Cash Expenses consists of the following;
CY 2020 CY 2019
Depreciation 102,376,560.98 95,795,242.24
Amortization 1,295,794.26 1,024,326.70
Doubtful Accounts 2,992,218.87 1,722,611.33
Total 106,664,574.11 98,542,180.27
Note 27: Cash Inflow Adjustment
The District's Cash Inflow Adjustment consists of Accounts reclassified to/from Cash & Cash
Equivalent in CY 2019. Details are as follows:
CY2020 CY 2019
Investment in Time Deposits as of
December 31, 2018 reinvested for less
than 90 days in CY 2019 9,382,658.21 9,382,658.21
Total Cash Inflow Adjustment for CY 2019 9,382,658.21 9,382,658.21
Note 28: Significant Disclosures
Bulk Water Supply Agreement (BWSA) between COWD and Rio Verde Consortium,Inc.
A. The Bulk Water Supply Agreement (BWSA) was entered into between Cagayan de
Oro City Water District (COWD) and Rio Verde Water Consortium, Inc. and
conformed by LWUA on December 23, 2004.
32
B. A supplemental agreement on January 21, 2005 stipulated that Rio Verde will supply
treated bulk water to COWD, and the latter in turn, guaranteed to purchase at least
Forty Thousand (40,000) cubic meters per day throughout the Contract Period of 25
years that started in CY 2007.
C. COWD's actual payments made to Rio Verde was based on the purchase order in
accordance with the contract and not based on the actual delivered bulk water
supply.
On June 5, 2014, COWD filed a complaint for the Nullification of Contract against RVWCI
before the Regional Trial Court of Cagayan de Oro City, Branch 38, which was docketed
therein as Civil Case No. 2014-141.
Per Judgment by Compromise dated December 21, 2017 relative to Civil Case No. 2014-
141-R for the Nullification of Contract between the Cagayan de Oro City Water District and
Rio Verde Water Consortium, Inc. it was agreed that both parties are no longer interested in
pursuing the Disputes against each other and they hereby agree to mutually terminate the
proceedings involving the same, as well as to mutually pre-terminate the BWSA, dated
December 23, 2014 and the Disputes arose, which shall be deemed cancelled, revoked and
legally terminated upon the signing of the agreement by the parties, without prejudice to
their operative effects prior to the effective date of their mutual termination.
Joint Venture Agreement dated August 14, 2017 between COWD and Metropac Water
Investment Corporation (MWIC)
On June 8, 2015, COWD accepted the unsolicited MWIC's proposal to enter into a joint
venture under the Revised Joint Venture Guidelines issued by the National Economic
Development Authority. The parties agreed to divide the JV activities into two phases: (1)
the design and construction of transmission facilities and rehabilitation of the existing
reservoir located at Camaman-an, Cagayan de Oro City to enable the distribution of at least
40MLD of potable bulk water within the eastern sector of Cagayan de Oro City to be
completed within 12 months from the effectivity of the agreement; and (2) the supply of at
least 60MLD of treated bulk water to the service requirement of western sector, to be
implemented within 2 months from the effectivity of the agreement.
The JV Agreement was signed on August 14, 2017 under the JV Corporation corporate
name Cagayan de Oro Bulk Water Inc.
The initial authorized capital stock in the amount of ₱140,000,000.00 was divided into
140,000,000 shares with par value of ₱1.00 per share. The allocation of share of stocks is
as follows:
COWD MWIC TOTAL

Initial No. of Shares Subscribed 1,750,000.00 33,250,000.00 35,000,000.00
Additional No. of Shares 5,250,000.00 99,750,000.00 105,000,000.00
Subscribed
Total No. of Share Subscribed 7,000,000.00 133,000,000.00 140,000,000.00
Amount Subscribed 7,000,000.00 133,000,000.00 140,000,000.00
% of Outstanding Capital 5.00% 95.00% 100.00%
33
The subscription price for the Parties' additional subscriptions for an aggregate of
105,000,000 Shares shall be paid at such times and on such terms as may be determined
by the Board: provided, that the Parties hereby acknowledge that the payment for the
COWD's subscriptions for Shares shall be sourced from the rentals to be paid on COWD
under the Lease Agreement.
The Bulk Water Supply Agreement dated October 30, 2017 between COWD and Cagayan
De Oro Bulk Water Inc. (COBI) shall supply treated water for 50 years.
Billing Month Bulk Water Rates
1-24 ₱ 16.00
25-36 ₱ 16.60
37-600 Base Rate Fee + Fee Adjustment based on BWSA Agreement
Lease Agreement of COWD Existing Facilities dated October 30, 2017 between COWD and
Cag. De Oro Bulk Water Inc. (COBI).
In pursuance to the Joint Venture Agreement, COWD agreed to lease the following facilities
to Cagayan De Oro Bulk Water Inc. This shall commence from the execution date dated
October 30, 2017 and shall remain effective and binding upon the Parties for as long as the
JVA remains in effect, unless otherwise terminated in accordance with Section 5 of the
agreement. For the exclusive use of these facilities, the lessee shall pay the rental payment
in the amount of ₱7,000,000.00 covering the entire term of the Rent on the Commencement
Date.
1. Deep Well#18 is located at Barangay Canito-an, Cagayan de Oro City. It has an

approximate capacity of 1,476 cubic meters/per day and has an effective elevation of
26 meters above mean sea level. It is in standby mode and only serves as
alternative Deep Well source of COWD. It has an appraised market value of
₱1,770,000.00.
2. Deep Well#12 is located at Barangay Canito-an, Cagayan de Oro City. It has an

approximate capacity of 633 cubic meters/per day and has an effective elevation of
17.40 meters above mean sea level. It is in standby mode and only serves as
alternative Deep Well source of COWD. It has an appraised market value of
₱2,364,000.00.
Humanitarian Donation of the Government of Switzerland to COWD
As part of the relief operation for the Victims of the Typhoon Sendong, the Government of
Switzerland, thru its Swiss Humanitarian Aid (SHA) donated the following Equipment to
Cagayan de Oro City Water District with a total amount of ₱2,092,736.60 (CHF 44,647 X
₱46.87295 per CHF to Php exchange rate dated January 30, 2012) per Memorandum of
Agreement and Letter of Donation between the COWD and the Swiss Humanitarian Aid of
the Swiss Confederation dated June 1, 2012 and GM Memorandum 15, s-2012.
2 Bladders 5,000 litres with drinking water distribution stand

1 Bladders 10,000 litres with drinking water distribution stand
1 water laboratory
1 well cleaning set
34
2 tool kit
1 repair kit for drinking water distribution stand
18 WATASOL
Equipment Turn-over by Japan International Cooperation Agency (JICA) to COWD
As part of the Rehabilitation Project for COWD Facilities Damaged by Typhoon Sendong,
Japan International Cooperation Agency (JICA) turned-over in CY 2013 the following
Equipment to Cagayan de Oro City Water District with a total amount of ₱40,994,730.00.
This was recorded in COWD books per JV#12-048-13.
Amount
I. Production Facilities
A. New Booster Pump (3-Phase 440 V)
150 Hp submersible pump & motor 7,500,000.00
150 Hp VFD complete w/ panel 3,500,000.00
board & accessories
Software 1,000,000.00 12,000,000.00
B. Production Well Motors (3-Phase

440V Submersible Pump-Motor
Assembly complete w/ controllers &
accessories
PW No. 1-125 Hp 2,000,000.00
PW No. 4- 60 Hp (240V) 1,500,000.00
PW No. 7- 60 Hp 1,500,000.00
PW No. 9-125 Hp 2,000,000.00
PW No. 19-100 Hp 2,000,000.00
PW No. 24-30 Hp 800,000.00 9,800,000.00
C. Transformer
Power Cable for BPS old 800,000.00
Secondary Cable for BPS New-Yen
Loan 800,000.00 1,600,000.00
D. Chlorinating System
100 ppd 1,000,000.00
E. Generator Set
219 KVA for PWs 4,7,9 & 19 6,000,000.00
75 KVA for PW 24 1,094,730.00 7,094,730.00
II. Other Facilities

A. Laboratory Apparatus and
Equipment
Biosafety Cabinet 1,000,000.00
III. Service Connection Rehab

A. Materials
5/8"1/2" water meter 8,500,000.00
35
Amount
Total 40,994,730.00
GSIS Payable- Premium Deficiency (ER) under MOA signed on October 31, 2013
Approved per Board Resolution Nos. 101, S-12 and 061, S-13, (Annex "A") dated
September 25, 2012 and July 15, 2013 respectively the Memorandum of Agreement (MOA)
between COWD and GSIS for the settlement of unpaid premiums and interest for the period
covered June 1978 to March 1992 with the net total obligation of ₱6,410,706.93 and such is
payable within a period of sixty (60) months, with interest rate of twelve percent (12%) per
annum on a diminishing balance.
Approved per Board Resolution No. 010, S-2015 the 5-year term mode of payment of
Government Share (GS) back Premium, Arrearages & Interest including 50% interest for
retired and separated employees covering the period from June 1978 to March 1992 with a
maximum total estimated amount of ₱3,155,157.21 and authorized the General Manager to
enter into and sign a Supplemental Memorandum of Agreement (MOA) with GSIS for and in
behalf of COWD. However, this was amended per Board Resolution No. 024, S-15.
Approved per Board Resolution No. 024, S-15 the resolution to pay the Government Share
of Back Premium, Arrearages & Interest with 50% condonation covering the period from
June 1978 to March 1992 for retired and or separated employees in the total amount of
₱1,380,681.56 on on time basis rather than the 5-year term mode of payment to save on
interest charges that would amount to ₱62,068.36.
Memorandum of Agreement (MOA) dated March 19, 2014 between National Housing
Authority (NHA) and Cagayan de Oro City Water District (COWD).
The COWD Board of Directors Resolution No. 100, S-13 approved the Memorandum of
Agreement (MOA) by and between NHA and COWD for the Installation, Operation and
Maintenance of the Development of Water Source with Overhead Steel Tank at the NHA-
CDO Bayanihan Village Phase I located at Macapaya, Camaman-an, Cagayan de Oro City.
The Project was to be undertaken at an Estimated Total Project Cost of Eleven Million Eight
Hundred Seventy-Nine Thousand One Hundred Thirty-Four Pesos (₱11,879,134.00) to be
completed within a period of 120 calendar days, breakdown as follows:
Amount
Lot Acquisition 280,000.00
Production Well Drilling 2,836,690.00
Support Facilities 6,365,950.00
Overhead Steel Tank 2,396,494.00
Total 11,879,134.00
Funds for Installation of the said project provided by NHA at Forty Percent (40%) of the total
project cost shall be released upon perfection of the Agreement while the rest of the project
cost shall be released on progress payment basis. The said partial payment of 40% of the
total project cost was received by COWD per OR No. 3789040 dated September 3, 2014
amounting to ₱4,751,653.60.
36
Amount
Total Project Cost per MOA 11,879,134.00
Total Funds Received from NHA
OR No. 3789040 dated 03-Sept-2014 4,751,653.60
OR No. 4044236 dated 24-Feb-2017 5,939,567.00 10,691,220.60
Balance 1,187,913.40
Work Orders Related to NHA Macapaya Bayanihan Village Water Supply:
Project Cost
Purchase Request No. 19388 3,349,289.21
Work Order No. 15-041-D 335,206.00
Work Order No. 15-046-D 223,332.00
Work Order No. 15-048-D 2,147,938.29
Work Order No. 15-052-D 162,268.00
Work Order No. 15-053-D 1,062,922.00
Work Order No. 15-057-D 624,875.00
Work Order No. 15-114-D 3,500,000.00
Work Order No. 15-120-D 275,939.00
Total Estimated Project Cost 11,681,769.50
Memorandum of Agreement (MOA) dated June 29, 2015 between DILG, LGU of Cagayan
de Oro City and COWD
The COWD Board of Directors' Resolution No. 070, S-15 dated 6/2/2015 approved the
Memorandum of Agreement (MOA) by and between DILG, LGU-CDOC and COWD for the
Proposed Expansion of Level II Water Supply System for CDORSHP-1 Phase III at
Calaanan, Canitoan, this city, as one of the 2014 Bottom-up Budgeting (BUB) Program of
the present administration which will be funded by the DILG (as source agency), LGU (as
implementing partner) and COWD (as implementing agency). The said project will serve
1,274 families that have been displaced by typhoon Sendong.
The total cost for this project follows:
Amount
DILG (OR No. 3878055 dated 04-Aug-2015 and LBP 4,900,000.00
Carmen ADA dated 22-May-2018)
LGU of Cagayan de Oro City (OR No. 3878053 dated 2,100,000.00
12-Aug-2015)
COWD 3,400,146.00
Total Project Cost per Work Order NO. 15-88-D 10,400,146.00
Memorandum of Agreement (MOA) dated 8/16/16 between Local Water Utilities

Administration and Cagayan de Oro City Water District
Board Resolution No. 014, s-2018 dated January 17, 2018 approved the amendment of
Resolution No. 067, s-2017 dated June 1, 2017 for the release of ₱60,278,254.00 to support
the water supply system projects in Cagayan de Oro City for displaced families affected by
Typhoon Sendong in 2011. The approved financial assistance from DBM through National
37
Risk Reduction and Management Council (NDRRMC) was released through LWUA per
LWUA Equity Account Check No. 0000024792 dated April 23, 2018. Details are as follows:
Amount
Relocation Sites
8. Calaanan, Barangay Canitoan (Mahogany, 30,111,900.00
Talongan, Phase III & Expansion Area
9. Barangay Canitoan (Gawad Kalinga) 8,973,996.85
10. Xavier Eco-Ville Relocation Sites, Barangay 23,126,746.05
Lumbia
11. NHA-Bayanihan Relocation Village Phase 1, 1,410,502.11
Sitio Macapaya, Barangay Camaman-an
Total Project Cost per LWUA validated Program of 63,623,145.01
Works
Less: LWUA's Engineering, Administrative & 3,344,891.01
Overhead Cost
Net Amount released to COWD per COWD OR No. 60,278,254.00
4201101 dated 5/10/18 deposited to DBP Corrales
Account Number 081004110Z030 *
Add:
Fund Transfer from DBP Sendong OP Grant Acct. 437,964.93
Interest Income 45,070.69
Total 60,761,289.62
Less:
Time Deposit 20,244,130.75
Disbursement 28,613,679.35
Bank Charges 510.00
Adjusted Cash Balance as of December 31, 2020 11,902,969.52
Memorandum of Agreement (MOA) dated 1/14/2019 between Local Government Unit of

Cagayan de Oro and Cagayan de Oro City Water District
The MOA was for the proposed water supply system of Sitio Tipolohon in Camaman-an
under Bottom-up Budgeting (BUB) 2016. The respective counterparts of COWD and funding
from BUB Program are as follows:
Amount
Bottom-Up Budgeting (BUB) Fund (COWD
OR Nos. 4233711 and 4233748) 1,000,000.00
COWD 826,448.49
Total Project Cost 1,826,448.49
38
PART II –AUDIT OBSERVATIONS
AND RECOMMENDATIONS
AUDIT OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AND COMPLIANCE
1. Erroneous adjusting entries caused negative balances totaling ₱21,219,708.17

for Machinery and Equipment, and Building and Other Structures Improvement
clearing accounts inconsistent with Philippine Accounting Standard (PAS) 1,
thus affecting management’s assertion on accuracy of the Property, Plant and
Equipment as of the given period.
PAS 1 on the Presentation of Financial Statements discussed the conceptual

framework for financial reporting. It requires financial statements to be verifiable, free from
error and presented with faithful representation. These are the fundamental and enhancing
qualitative characteristics of useful financial information, among others.
Review of the General Ledgers (GL) on the Machinery and Equipment, and Buildings
and Other Structures Improvement clearing accounts revealed the following negative
balances:
Accounts Amount
Machinery and Equipment – clearing (₱20,906,663.10)

account
Buildings and Other Structures (313,045.07)
Improvement – clearing account
(₱21,219,708.17)
Clearing accounts are temporary accounts initially used by COWD in the preparation
of disbursement voucher (DV) journal entries. The entries are subsequently closed thru
journal voucher (JV) entries and transferred to the appropriate PPE accounts once correct
PPE classifications are finally identified.
These clearing accounts were initially used to facilitate adjusting entry made to
supposedly correct the PPE accounts based on the previous audit recommendations of the
audit team for CY 2017 relative to the capitalization of repairs and maintenance expenses
(AOM No. 2017-23) and capitalization of PPE accounts below threshold (AOM No. 2017-
24). However, the District has initially credited to the Machinery and Equipment, and
Buildings and Other Structures Improvement clearing accounts instead of directly crediting
the specific PPE account. These adjustments resulted to negative balances of the above
mentioned clearing accounts.
Review also of the Financial Statements disclosed that the individual negative
balances PPE-clearing accounts were added to the respective PPE accounts of the same
classification, thus showing a positive balance in the Statement of Financial Position.
Considering that the District is still finalizing the fixed asset module of the Remantec
Accounting System (RAS), their currently used Accounting System; and volume of the
accounting entries involved, the Accounting Division has not yet drawn an adjusting entry to
38
finally adjust the correct PPE account and transfer initial credits of the clearing accounts.
Also, the COVID-19 pandemic has delayed the finalization of the fixed asset module of the
Remantec Accounting System (RAS).
Uncorrected negative balance totaling ₱21,219,708.17 may cast doubt on

management’s assertion on the accuracy of the Property, Plant and Equipment accounts of
the District as of the given period.
Recommendations:
We recommended that Management require the Accounting Division to prioritize

finalization of the fixed asset module of the Remantec Accounting System (RAS) and
subsequently draw adjusting entry to correct negative balances of the PPE accounts.
Management comments:
Clearing account is a temporary account in which funds are kept to get it smoothly
transferred to the required account when the transfer cannot be done directly from one
account to another account. COWD has initially set this account in preparation of the DV
journal entries. The entries are subsequently closed thru journal voucher (JV) entries and
transferred to the appropriate PPE account. In the case of COWD, the amount was credited
to the clearing account and not directly to the various PPE account because of the following
reasons:
1. The Fixed Asset Module has not yet been installed, making it difficult to credit directly to
the individual PPE subsidiary account.
2. Although we have already identified PPE account as recommended by COA under AOM
no. 2017-23 (capitalization of repairs and maintenance expenses) and AOM no. 2017-24
(capitalization of PPE accounts below threshold), we have not reflected it in the individual
subsidiary PPE accounts, instead credited to the clearing account.
This year, Management will request REMANTEC to install the complete Fixed Asset
Module to facilitate the required corrections.
2. The Construction in Progress account reported a balance of ₱181,896,140.01

as of October 31, 2020, of which the amount of ₱61,702,197.56 pertains to 100%
Government Projects, Program and Activities (GPPA) as at December 31, 2020
was still as of October 31, 2020 inconsistent with Philippine Accounting
Standards (PAS) 1 and Presidential Decree No. 1445, respectively, thus affect
the accuracy of the CIP and corresponding PPE accounts as well as the timely
assessment of the status of the District’s projects thereof.
39
100% completed projects per Engineering report were still reported as in progress in the
Financial Statement
PAS 1 on the Presentation of Financial Statements discusses the conceptual

Review on the submitted Report of Government Projects, Program and Activities

(GPPA) of COWD and confirmation thru email disclosed that projects reported as 100%
completed by the Engineering Department were still accounted as part of the Construction in
Progress account as of October 31, 2020. (Appendix A)
Inquiry with the personnel in charge of the CIP account disclosed that majority of
these projects reported by the Engineering Department as 100% completed still has no
Turnover of Project (TOP) documents. However, confirmation thru phone call with the
Construction Division Manager disclosed that these TOP are either already submitted or still
in process for submission by the Engineering Department, anyhow, they will verify TOP
submission of these projects.
Although some TOP documents for 100% completed projects may have been
already submitted by the Engineering Department, Accounting Division still failed to transfer
CIP accounts to its appropriate Property, Plant and Equipment (PPE) account.
The personnel in-charge of the CIP reasoned that the Accounting Division could not
yet reclassify the 100% completed project to its corresponding PPE accounts due to
incomplete and delayed recording of cost.
However, reference to the project completion date revealed that several of the 100%
completed projects still lodged under CIP account were from previous years that were
completed way back CY2017.
We believed that the constant and close coordination between the Accounting
Division and Engineering Department on the status of completed projects for transfer from
the CIP to the proper PPE accounts and the timely recording of cost after each billing from
the contractor/ supplier will most likely aid in the gap of accounting the correct balances of
the said accounts.
Reporting the projects in the financial statement as still in-progress although 100%
completed may affect the fair representation and accuracy of the balance of the CIP and
PPE accounts.
Submission of Report on Government Projects, Programs and Activities (GPPA)
Section 122 of Presidential Decree No. 1445 provides the authority of the
Commission on Audit (COA) to secure reports from government agencies:
“Submission of reports. Whenever deemed necessary in the exigencies of the

service, the Commission may under regulations issued by it require the agency
heads, chief accountants, budget officers, cashiers, disbursing officers,
40
administrative or personnel officers, and other responsible officials of the various
agencies to submit trial balances, physical inventory reports, current plantilla of
personnel, and such other reports as may be necessary for the exercise of its
functions.”
The Report on Government Projects, Programs and activities (GPPA) is one of the
quarterly reports required by the Commission on Audit (COA) to be submitted for
consolidation and transmittal to the Office of the Chairperson of COA. This report shows
status of government projects and its cost incurred for the specific projects subject to
verification of the Commission. Percentage of completion on the physical status of the
project is confirmed by the Engineering Department while cost incurred for the project is
confirmed by the Accounting Division.
It was noted, based on the submission of GPPA report for the 4th Quarter of CY
2020, that the Engineering Department already submitted the status of the project as of
December 2020, however, the Accounting Division’s recorded balances were either as of
September or October 2020. This delayed recording by the Accounting Division on the cost
incurred by 2 to 3 months compared to the physical status of projects as reported by the
Engineering Department resulted to inaccurate balance as at December 31, 2020.
Recent resignation of an Accounting Division personnel who turned-over reports to

recent processor of GPPA report and work scheme during this COVID-19 pandemic affects
timely accounting of cost incurred for the projects.
Submission of GPPA report with incomplete cost incurred for projects in a given
period of time affects transparency and accuracy of reported status of government projects,
programs and activities.
Recommendations:
a. the Accounting Division for timely recording of cost after each billing from the contractor
and transfer subsequently the 100% completed projects with duly supported TOP from
CIP to its appropriate PPE account;
b. the Engineering Department to validate submitted TOP and coordinate with Accounting
Division on 100% completed projects to transfer projects from CIP to appropriate PPE
accounts;
c. Assess current workload of current processor of GPPA and consider back-up personnel
to aid in the preparation of GPPA report and handling CIP accounts.
Management will undertake to do the following:
1. Engineering department to furnish Turn-over of Projects (TOP) based on the

attached list amounting to 61,702,197.56 and for Finance Department to adjust
the amounts through journal vouchers upon receipt of pertinent documents.
41
2. Finance department to furnish the Engineering department with a list of work
orders without TOP and which remains in the CIP account. The amount will then
be adjusted upon submission of TOPs, and cancellation reports.
3. For Engineering department to regularly submit a report on turn-over projects,
including cancelled projects, to ensure proper and timely recording.
4. For proper verification of the cost of in-house projects, Engineering department
will include in the TOP a monitoring report on materials and labor costs. This is to
validate the completeness of the recorded transactions for the specific work-
order account before re-classifying it to the particular PPE account.
3. Non-conduct of PPE physical inventory count as of December 31, 2020 and

inability of current accounting system to generate PPE depreciation and
accumulated depreciation schedule inconsistent with Philippine Accounting
Standards (PAS) 1 and the Manual on the Property and Supply Management
System, thus cast doubt on the accuracy on the balances of PPE, Accumulated
Depreciation and Depreciation Expense accounts amounting
₱2,602,179,893.57, ₱1,368,540,475.61 and ₱8,803,466.17, respectively.
Non-conduct of PPE Physical count as of 12/31/2019

The Manual on the Property and Supply Management System states that: “the
Report on the Physical Count of PPE shall be prepared yearly in three copies, certified
correct by the Inventory Committee and approved by the Head of the Agency. It shall be
submitted to the Auditor concerned not later than January 31 of each year.”
Review of the submitted financial statement of the District disclosed the following
balances as of October 31, 2020:
Nature of Property, Plant and Equipment Amount
Lands ₱40,830,774.18
Plant-Utility Plant in Service (UPIS) 1,656,120,193.79
Buildings 37,475,015.38
Water Plant, Structure and Improvements 109,749,303.25
Machinery 307,401,767.97
Office Equipment 60,959,683.40
Information and Communication Technology Equipment 14,349,338.57
Communication Equipment 11,229,051.13
Construction and Heavy Equipment 7,280,000.00
42
Nature of Property, Plant and Equipment Amount
Disaster Response and Rescue Equipment 1,049,950.00
Sports Equipment 16,800.00
Technical and Scientific Equipment 41,207.82
Other Equipment 75,673,298.89
Motor Vehicles 91,273,630.48
Furniture, Fixtures and Books 6,833,738.70
Construction in Progress 181,896,140.01
Total ₱2,602,179,893.57
Inquiry with the Accounting Division personnel disclosed that physical count of PPE
of the District was only until October 2019. Scheduled physical inventory to be conducted on
January 18 to 22, 2021 for CY 2020 was only for Inventories account excluding PPEs
although PPE account constitute 45.71% of the total asset of the District as of October
2020.
The committee in charge of the physical count of PPE was not able to conduct the
required physical count as at the year-end of CY 2019 and for CY 2020 because of other
important deliverables and the COVID-19 pandemic.
The non-conduct of physical count casts doubts on management’s assertion on the

existence of the PPEs, including its status as to whether they are still serviceable,
unserviceable or missing as of December 31, 2020, which all have an effect on how the
PPEs are to be disclosed in the financial statements for fair presentation.
Inability of the district’s accounting system to generate depreciation and accumulated

depreciation schedule
PAS 1 on the Presentation of Financial Statements discusses the conceptual

Review on the submitted financial statement of the District as of October 31, 2020
also disclosed the following balances of Depreciation Expense and Accumulated
Depreciation Expense accounts:
Account Amount
Depreciation Expense 8,803,466.17
43
Account Amount
Accumulated Depreciation 1,368,540,475.61
It is noted thru inquiry with the Accounting Division personnel that current accounting
system of the District fails to generate depreciation and accumulated depreciation
schedules. Although, it is possible to manually prepare the schedule, it was revealed that it
is impractical to do the same considering the volume of PPEs and constraint of human
resource handling the account. Previous in charge on the preparation of reports for PPE
accounts resigned last February 2020. Current in charge of the report is also handling other
important deliverables on top of the turned-over PPE accounts.
Failure to conduct physical inventory count, prepare and submit report on all COWDs
PPEs as well as submission of the corresponding Depreciation and Accumulated
Depreciation Lapsing Schedule questions the existence and verifiability of the accounts
presented in the financial statement, thus cast doubt on management’s assertion on the
accuracy on the balances of the accounts.
Recommendations:
a. Conduct physical count of PPE as at year-end and submit the same to the audit team
on or before January 31 following year-end close; and
b. Coordinate with current accounting system provider on the generation of the PPE
Depreciation and Accumulated Depreciation schedule duly verified against the balances
presented in the financial statements
We were not able to conduct the required physical count of the PPE due to health
and safety considerations. We did not allow our employees to go on field and visit the
locations of our PPE to reduce their chances of being infected of the corona virus.
Moreover, the area of some of our PPEs were placed under lockdown. For CY 2021,
Management will ensure that proper and timely physical inventory of PPE shall be
conducted. As proof of this commitment, we have issued an office memorandum directing
the responsible personnel to conduct inventory of the PPE. Management will also comply
with the audit recommendation to coordinate with REMANTEC on installing the module on
Fixed Assets.
4. Non-submission of Financial Statement; delayed preparation and submission

of Bank Reconciliation Statements and Journal Entry Vouchers with
Liquidation Report of Cash Advances amounting to ₱5,528,960.16 inconsistent
with COA Circular Nos. 2009-006 and 2017-004 and Presidential Decree 1445
may not only be considered as scope limitation in audit but also preclude
timely detection of misstatements arising from error or fraud.
44
Section 7.2 of COA Circular No. 2009-006 dated September 15, 2009 provides for
the responsibilities of the Agency Accountant as follows:
“7.2.1 The Chief Accountant, Bookkeeper or other authorized official

performing accounting and/or bookkeeping functions of the audited agency
shall ensure that:
a) the reports and supporting documents submitted by the accountable

officers are immediately recorded in the books of accounts and submitted to
the Auditor within the first ten (10) days of the ensuing month; xxx”
Further, for the year-end financial statements (FS), Section 5.1 of COA Circular
2017-004 dated December 13, 2017 provides that:
“5.1 All GCs shall submit separately to the COA Auditors and the GAS,
COA, in printed and digital copies the FS in paragraph 4.2, together with the
detailed FS (Annexes A-1 or E-1, B-1 and C-1 for GBEs and F-1 to H-1 for
Non-GBEs) and TB (Annex L) on or before February 14 of each year.
(emphasis supplied)”
Furthermore, Section 74 of PD 1445 provides that “at the close of each

month, depositories shall report to the agency head, in such form as he may direct,
the condition of the agency account standing on their books. The head of the agency
shall see to it that a reconciliation is made between the balance shown in the reports
and the balance found in the books of the agency.”
Also, it is stressed in Section 124 of PD 1445 that “It shall be the direct responsibility
of the agency head to install, implement, and monitor a sound system of internal control.”
As of this writing, it is noted that the District has not yet submitted its Financial
Statement and other related financial reports and Bank Reconciliation Statement for CY
2020 except for the account of DBP Corrales no. 0810-020011-030. Further, Journal Entry
Vouchers for CY 2020 were only submitted last March 15, 2021. Latest submission of
Financial Statement is only as of November 2020, for BRS on the remaining accounts with
BRS was only as of March, May and July 2020. (see Annex B to B-1)
Although Reconciliation between the Cash Division’s record and bank records are
prepared regularly, this would not suffice the BRS to be prepared by the Accounting
Division. BRS prepared by the Accounting Division validates that the accounting records
such as ledgers and cash in bank balances as presented in the Financial Statement are
reconciled with the bank records. This special tool is important for timely detection of
misstatements or errors, if any, committed by the District or the Bank.
Further, Journal Entry Vouchers will show adjustments drawn by the District such as
liquidation of cash advances made by COWD personnel together with supporting
documents proving its liquidation. For CY 2020, total cash advances granted based on the
submitted ledger amounted to ₱5,528,960.16
45
Furthermore, these financial reports such as the BRS and JEV are analyzed together
with the Financial Statement to support management’s assertion on the accuracy of its
reported financial balances to the public.
Inquiry with the Senior Corporate Accountant A revealed that delayed preparation
and submission of FS, BRS and JEV by the Accounting Division are caused by the COVID-
19 pandemic. Personnel from the Accounting Division were quarantined for a period of time.
Also, she explained that various workloads were performed by few personnel that caused
financial report to be delayed in finalization and submission. Factors such as transition of
management handling the Finance Division also contributes to these.
However, it must be noted that delayed submission of financial reports is not a

current or a new concern of the District. Previous audit observations disclosing delayed,
non-submission and/or unadjusted reconciling items of BRS form part of the Annual Audit
Report (AAR) since CY 2014 and still recurs to date. Further, delayed and/or non-
submission of financial reports including DV form part of the audit observation for CY 2019,
CY 2017, CY 2016 (DV) and 2014 (DV).
Delayed preparation of financial reports such as the FS, BRS and JEV within the
reglementary period as prescribed precludes the District’s timely detection of misstatements
whether intentional or unintentional. It must be reminded that as expressed in Section 124 of
PD 1445 “it shall be the direct responsibility of the agency head to install, implement, and
monitor a sound system of internal control”. Further, delayed submission and/or non-
submission of financial statements hindered the audit team from conducting timely
verification of the validity and regularity of the amounts presented, and the over-all fair
presentation of the financial statements. This also includes verification whether the
liquidation of cash advances for CY 2020 amounting ₱5,528,960.16 were properly made by
the District’s personnel in line with the assertion of management in the Financial Statement.
Further, non-submission of JEV and its supporting documents to verify liquidation of cash
advances may be subject to Notice of Suspensions (NS).
Recommendations:
a. Accounting Division to fast track and prioritize submission of the Financial Statement
and its related reports, Bank Reconciliation and Journal Entry Vouchers with its
supporting documents. Also, submission of liquidation report should be submitted
monthly together with its monitoring report showing cash advances made and
liquidation thereof;
b. Future submissions of the above mentioned reports be made within the prescribed
reglementary period; and
c. Revisit and study current workloads of personnel preparing the above reports and
consider transferring excess workloads to a new processor.
5. Absence of adequate planning and collection efforts, collectability of the

Receivables-Disallowances and Charges amounting to ₱67,749,716.93 as of
December 31, 2020 may be doubtful due to separation of persons liable
46
inconsistent with COA Circular No. 2009-006 dated September 15, 2009 and
Presidential Decree No. 1445, thereby depriving the District of the funds that
could be used to pay its obligations.
Section 22.6 of COA Circular No. 2009-006 dated September 15, 2009 on the Rules
and Regulations on Settlement of Accounts provides that:
“The chief accountant shall, on the basis of the NFD, record in the books of
accounts, the disallowances and/or charges as a receivable.”
Recording such as Receivables as provided in the above circular suggests

management’s assertion of its existence and occurrence as reported in the Statement of
Financial Position.
Notice of Finality of Decision (NFD) is a decision of the Commission Proper, ASB,

Director or Auditor upon any matter within their respective jurisdiction; if not appealed as
provided in the abovementioned circular, shall become final and executory.
Also, item 23.4 of the same Circular states that: “The Auditor shall monitor the
implementation of the COE and report to the Director of the action taken by the
agency thereon. Unsettled COEs shall be referred to the General Counsel for
appropriate action including referral to the Office of the Solicitor General and the
Ombudsman.” (emphasis supplied)
Further, Section 124 of Presidential Decree No. 1445 states that it shall be the direct
responsibility of the agency head to install, implement, and monitor a sound system
of internal control.
Furthermore, COA Resolution No. 2017-021 dated November 3, 2017 or the

Amendment of COA Resolution No. 2015-031 dated August 22, 2015 on the Policy on
Settlement of audit disallowances on Salaries and Other Personnel Benefit by Persons
liable provides:
“1. Only disallowed Salaries, personnel benefits, allowances, or emoluments

classified under the expenditure item of Personal Services shall be allowed to be
settled by installment payment under the following schedule:
Amount of Disallowance Maximum Number of Monthly

Installment Payments
Not exceeding ₱1,000.00 Three (3)
Above ₱1,000.00 up to ₱10,000.00 Six (6)
Above ₱20,000.00 up to ₱40,000.00 Eighteen (18)
Above ₱40,000.00 up to ₱60,000.00 Twenty-four (24)
Above ₱60,000.00 up to ₱100,000.00 Thirty-six (36)
Above ₱100,000.00 up to ₱150,000.00 Forty-eight (48)
Above ₱150,000.00 Sixty (60)
1. The monthly installment payment shall be deducted from the payroll salary,
subject to the minimum take-home pay requirement under the General
Appropriations Act, other payroll for allowances or benefits, or any amount due
47
the persons liable. Any deficiency in the monthly installment payment shall be
paid directly by the persons liable to the agency cashier within five days after the
due date of the installment payment.
2. Request for installment of payment may be made directly by the persons liable to
settle their liabilities. For audit disallowances involving several persons liable, the
head of agency or its authorized official may request installment payment in their
behalf, provided that a written authority is issued by the persons liable and
attached to the request. Only those persons liable with written authority shall be
allowed to settle their liability in installment.
XXX
7. For persons liable who are already separated from the service for whatever
reason upon finality of the COA Decision or Notice of Disallowance, or upon
issuance of Notice of Finality of Decision or COA Order of Execution, their liability
should be paid in full to the agency cashier.
8. All requests for installment payment shall be submitted to and reviewed by the
Prosecution and Litigation Office (PLO), Legal Services Sector (LSS), through the
concerned auditors and Cluster/Regional Directors, with appropriate comment,
recommendation, proposed installment schedule, and supporting documents.
Upon due evaluation, the PLO Director shall approve/grant the request for
installment payment strictly in accordance with the schedule provided hereunder,
which shall be effective immediately upon receipt thereof…”
Review of the Notes to Financial Statements of the District as of December 31, 2020
disclosed Receivables-Disallowances and Charges amounting to ₱67,749,716.93. These
disallowances have its corresponding NFD stating that the Disallowances have become final
and executory. Details of these accounts as follows:
Reference Amount/Balance Nature of Date NFD Status of the

No, of Disallowance Disallowance received Disallowances
with NFD by the
District
CSB Nos. 98- ₱2,078,717.75 Payment of per diems, 2/16/2015 Supreme Court
001-001 (96) contributions to the Entry of
and 99-001- Retirement Fund and Judgement
101 (97) Retirement Plan, dated January
liquidated damages, 10, 2015 in the
fringe benefits, hazard case entitled
pay, honoraria, “Cagayan de
representation Oro City Water
allowance, and other District vs.
miscellaneous Commission on
allowances Audit” G.R No.
213755
affirmed COA
En Banc
Resolution
dated April 4,
48
with NFD by the
District
2014 and COA
Decision No.
2012-019
dated February
17, 2012 on
various
disallowances
CSB No. 37,363,278.47 Grants of various 2/16/2015 Commission
2002-001 (98 benefits and Proper denied
and 99) allowances to the motion for
Board of Directors and reconsideration
employees of COWD. for lack of
merit. The
movant failed
to raise a new
matter or show
sufficient
ground to
justify a
reconsideration
of COA
Decision No.
2012-036
dated March
22, 2012 (COE
is deferred,
pending
resolution by
the supreme
court of petition
certiorari)
COWD 14- 529,216.29 Travel of various 3/2016 COA RX

001-GF (13) officers to Cambodia Decision No.
without authority 2020-005
dated April 20,
2020 denied
appeal of NFD.
ND No. 11- 9,040,281.86 Management has not 3/19/2018 Commission
022- GF (09) complied with the Proper (CP)
required parameter on issued COA
unaccounted water Decision No.
ratio of the District 2019-251
which has reached an dated June 13,
average of 56% based 2019 stressing
on the twelve months the attained
49
with NFD by the
District
operations which finality and
exceeded the 40% executory of
ceiling set by the DBM. the subject
NDs and COA
ROX Decision
No. 2017-02
ND No. 11- 12,197,749.22 Payment contrary to 3/19/2018 Commission
018-GF(10) Section 28 of GAA Proper (CP)
2009 and COA Circular issued COA
No. 2006-001 dated Decision No.
January 3, 2006 2019-251
dated June 13,
2019 stressing
the attained
finality and
executory of
the subject
NDs and COA
ROX Decision
No. 2017-02
025-GF (09) complied with the Proper (CP)
NDs and COA
ROX Decision
No. 2017-02
024-GF (09) complied with the Proper (CP)
NDs and COA
50
with NFD by the
District
ROX Decision
No. 2017-02
Total 67,749,716.93
Employee separation thru retirement or end-term of Board of Directors who were

identified as persons liable to the disallowances and without availing or settling the
disallowances in accordance with COA Resolution No. 2017-021 dated November 3, 2017
has caused the accumulation and non-collectability of the outstanding receivables arising
from these disallowances.
The absence of adequate planning and collection efforts are some of the factors that
caused the ballooning balance of the receivables on disallowances with finality, which
remained unsettled despite lapse of time, thereby depriving the District of the additional
funds that could be used to pay its loan obligations and other charges.
Recommendations:
a. Improve or enhance their collection efforts/strategy to increase collection efficiency;
b. Exhaust all possible remedies to collect the receivables especially those that are
already separated from service; and
c. Settle such receivables in accordance with COA Resolution No. 2017-021 dated
November 3, 2017.
During the exit conference conducted last May 11, 2020, GM Batar asked the team
for some time to answer the audit observation and they will look into the uncollected
disallowances for possible action/resolution.
6. The Cagayan de Oro City Water District (COWD) rented a 4,500-square meter
vacant lot from a private company with contract amount of ₱3,024,000 for the
period April 1, 2020 to March 31, 2021 for the sole use as parking area is found
to be large enough as parking space for COWD vehicles that may constitute
waste of funds inconsistent with Section 2 of PD 1445 and Annex H of Revised
IRR of R.A. 9184 thus, detrimental to the government.
Section 2 of Presidential Decree No. 1445 states that:
“It is the declared policy of the State that all resources of the government shall be
managed, expended or utilized in accordance with law and regulations, and safeguard
51
against loss or wastage through illegal or improper disposition, with a view to ensuring
efficiency, economy and effectiveness in the operations of government. The
responsibility to take care that such policy is faithfully adhered to rests directly with the chief
or head of the government agency concerned.” (emphasis supplied)
Also, Item 9, Annex H of the Revised Implementing Rules and Regulations of

Republic Act No. 9184 on the Lease of Privately-owned Real Estate and Venue, it states,
among others that:
b) Policy Considerations
i. Publicly-owned vis-à-vis privately-owned real property and venue
It is more preferred that government agencies lease publicly-owned real

estate and venue from other government agencies.
ii. Location
The location of the real estate or venue to be leased should have been
meticulously selected by the procuring entity after taking into
consideration, among others, the need for prudence and economy in
government service and suitability of the area in relation to the mandate of
the office, and its accessibility to its clients. Xxx (emphasis supplied)
iii. ABC and rental rates
The ABC shall be set using the mid-point of the range obtained from the
results of the market analysis on the prevailing lease rates for real property or
venue within the vicinity of the selected location complying with the criteria
and technical specifications of the End-user unit. In no case shall the rental
rates, including additional expenses, such as association dues in the case of
lease of real property, exceed the ABC.
As a general rule, rental rates are considered reasonable when they

represent or approximate the value of what the Lessee gets in terms of
accommodation, facility, amenities, and convenience from the leased real
estate of venue, and the Lessor gets and equitable return of capital or
investment.
Rental rates should also be within the prevailing market rates for lease of real
property or venue with the same or similar condition or classification and
located within the vicinity. xxx
In our review, we observed that COWD rented 2 adjacent vacant lot totaling 4,500
square meters located at Kauswagan High-way, Cagayan de Oro City (at the back of old
Toyota Building) for a total rental fee of ₱3,024,000 for the period April 1, 2020 to March 31,
52
2021, payable in every 15th of the month or ₱252,000 per month. The 4,500-square meter
area is divided into two lots, the 2,000 and 2,500-square meter lot that will be used by
COWD as parking area for all its vehicles.
However, upon visit to the said area, we learned that the vacant lot rented is large
enough to be used solely as parking space. Upon inquiry with the personnel in-charge, the
2,000- square meter lot will reach its maximum capacity to park all COWD vehicles after
4:00 in the afternoon and before 8:00 in the morning, but the 2,500-square meter lot
adjacent to the 2,000-sq.m lot is large enough for the remaining vehicles. We believed that
with proper arrangement and parking, the 2,500-sq. m. lot could be enough to house all the
vehicles including that vehicles parked in the 2,000-sq.m. lot. (see Appendix B to C-1)
Moreover, it is a well-known fact in Cagayan de Oro City that with moderate to heavy
rains, the Kauswagan High-way, where the rented area was located, gets to be impassable
quickly due to floods. Upon inquiry, the person-in-charge disclosed that the floods never
reached the rented area, however, they have to wait for the waters from the main road to
subside before the vehicles could park. (Appendix C-2)
COWD has 75 total vehicles, 9 of which are non-operational wherein 5 are under
repair and 4 were already approved for disposal.
We also noticed that while its main office located in Corrales Avenue, Cagayan de
Oro City has no adequate space for the parking, the sub-office as COWD’s Property Division
and NRW Department located in Barangay Kauswagan, in which large portion is also used
as their warehouse, could spare some space for parking area for COWD’s other small
vehicles.
Per visit, we noticed that several scrap materials and other waste materials are not in
order and only scattered everywhere, thus could eat up large portion of the area.
Considerable portion also of the area were used as parking space of the employees’
personal vehicles. (Appendix C-3)
Therefore, we believed that if COWD could maximize the space in the 2,500-sq.m.
lot and at Barangay Kauswagan Sub-Office, they don’t have to rent the entire 2,000-sq. m.
lot that in effect could save them up to ₱1,344,000 (2,000 x 672/ sq. m.) of total rent in one
year that can be used to purchase land instead.
Recommendations:
We recommended the Management to review the contract and validate the needed
and necessary total area that will be used for parking space of all COWD vehicles having
consideration of the location and the effects of floods during moderate or heavy rains.
Moreover, we recommend to dispose the scrap materials properly and maximize the
space in their sub-office in Kauswagan to be able to spare some parking space for COWD’s
small vehicles so that it will not add-up to vehicles that will park in the rented vacant lot.
The management explained/commented the following:
53
1. The Office resorted to public bidding and strictly followed R.A. 9184 with regards to the
rental of parking lot for COWD vehicles. Evaluation of bids were done using the
established Table of Rating Factors for Lease of Venue per Annex H, Appendix B. of
R.A. 9184. On the other hand, the decision to rent a parking area was a result of the
cost-benefit analysis conducted. Further, establishing of ABC for rental rate was based
on the result of an inquiry made by the Administrative Department on the current rental
rate per square meter within the vicinity which is at ₱50/sqm. exclusive of tax.
2. While it is true that the current area rented is large enough for the existing number of
vehicles, please take note that during the time it was decided to lease additional 2,500
square meters, the following were considered:
a. The 2,000 square meter parking area is not sufficient to cater the existing number of
vehicles including those that were due for disposal (unserviceable equipment and
vehicles). The disposal of these unserviceable items only took place on June 2020
through the issuance of NTP. Actual hauling was done only late last year.
b. The additional area is necessary in anticipation for the additional vehicles which
were projected to be acquired/purchase by 2nd quarter of 2020. Unfortunately, due
to pandemic, the authority to purchase from DBM for vehicles included in the 2019
CAPEX Budget has yet to be received. At present, the additional 2,500 square
meter area houses about 18 vehicles and is also being utilized as storage area for
our big pipes and aggregates.
c. Topography is part of the rating factor considered in the evaluation for leasing a
parking area. During our first engagement with the existing parking area, flooding
along the Kauswagan High-way is not as worst as it is today. Our vehicles during
that time could still safely maneuver during heavy rains. The situation only worsens
with the on-going construction of drainage in the area. Hopefully, this will be
resolved upon completion of the said drainage system.
In view of the above, the Office intends to retain only the 2,500 square meter as parking
lot for COWD vehicles for the contract period 2021 to 2022. Additional area will be sought if
the necessity arises.
7. The setting-up of huge Petty Cash Fund amounting to ₱400,000 resulted to

large monthly purchases of supplies and materials for regular operations that
may violate the COWD’s responsibility to withhold government money
payments contrary to pertinent provisions of BIR RR 2-98, as amended, thus
deprived the National Government of taxes that could have accrued to the
National Treasury that could be used for its programs and projects.
Pertinent provisions of BIR Regulation 2-98, as amended, are the following:
SECTION 2.57 Withholding of Tax at Source
(A) Final Withholding Tax. — Under the final withholding tax system the amount of
income tax withheld by the withholding agent is constituted as a full and final payment of the
income tax due from the payee on the said income. The liability for payment of the tax rests
54
primarily on the payor as a withholding agent. Thus, in case of his failure to withhold the tax
or in case of under withholding, the deficiency tax shall be collected from the
payor/withholding agent. The payee is not required to file an income tax return for the
particular income.
The finality of the withholding tax is limited only to the payee's income tax liability on the
particular income. It does not extend to the payee's other tax liability on said income, such
as when the said income is further subject to a percentage tax. For example, if a bank
receives income subject to final withholding tax, the same shall be subject to a percentage
tax.
(B) Creditable Withholding Tax. — Under the creditable withholding tax system, taxes
withheld on certain income payments are intended to equal or at least approximate the tax
due of the payee on said income. The income recipient is still required to file an income tax
return, as prescribed in Sec. 51 and Sec. 52 of the NIRC, as amended, to report the income
and/or pay the difference between the tax withheld and the tax due on the income. Taxes
withheld on income payments covered by the expanded withholding tax (referred to in Sec.
2.57.2 of these regulations) and compensation income (referred to in Sec. 2.78 also of these
regulations) are creditable in nature.
Under the new Tax Reform for Acceleration and Inclusion (TRAIN) Act or the
Republic Act 10963, BIR RR 11-2018 further amended RR 2-98 as follows:
“Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates
Prescribed Thereon.
XXX
(J) Income Payments made by a government office, national or local, including

barangays or attached agencies or bodies, and government-owned or controlled
corporations to its local/resident supplier of goods/services, other than those covered
by other rates of withholding tax. [formerly under letter (N)]-Income payments, except single
purchase which is 10,000 and below, which are made by a government office, national or
local, including barangays, or their attached agencies or bodies, and government-owned or
controlled corporations, on their purchases of goods and purchases of services from
local/resident suppliers.
Supplier of goods-one percent (1%)

Supplier of services-2 percent (2%)
XXX”
SECTION 4.114. Withholding of Creditable Value-Added Tax
In general, value-added tax due on sales of goods and services are not subject to
withholding since the tax is not determinable at the time of sale. However, sale of goods and
services to the government subject to VAT shall be subject to withholding pursuant to Sec.
114 (C) of RA 8424.
(A) Rates and basis of creditable value-added tax to be withheld. — The gross payments
made by the government to sellers of goods and services shall be subject to withholding tax
at the rates herein prescribed.
XXX
(B) Persons required to deduct and withhold. — All local government units, represented
by the Provincial Treasurer in provinces, the City Treasurer in cities, the Municipal Treasurer
55
in municipalities, and Barangay Treasurer in barangays, Treasurers of GOCCs and the
Chief Accountant or any person holding similar position and performing similar
function in national government offices, as withholding agents, shall deduct and
withhold the prescribed creditable value-added tax before making any payment to
seller of goods and services.
Where the government as herein defined has regional offices, branches or units, the
withholding and remittance of the creditable VAT may be done on a decentralized basis as
such, the treasurer or the chief accountant or any person holding similar function in said
regional office, branch or unit shall deduct and withhold the creditable VAT before making
any payment to the seller of goods and services.
XXX
(E) Liability of designated officers. —

(1) Additions to the tax. — The designated Treasurers, Chief Accountants and other
persons holding similar positions, who have the duty to withhold and remit the value added
tax in their respective offices shall be personally liable for the additions to the tax
prescribed in Sec. 247 of the Code.
(2) Punishable acts or omissions. — Every officer or employee of the government of the
Republic to the Philippines or any of its agencies and instrumentalities, its political
subdivisions, as well as government owned or controlled corporations charged with the duty
to deduct and withhold any internal revenue tax and to remit the same in accordance with
these regulations shall, upon conviction for each act or omission herein-below specified, be
fined in a sum of not less than five thousand pesos (P5,000.00) but not more than fifty
thousand pesos (P50,000.00) or imprisoned for a term of not less than six months and one
day but not more than two years, or both.
(a) Fails or causes the failure to deduct and withhold any internal revenue tax covered
by these regulations;
(b) Fails or causes the failure to remit the taxes deducted and withheld within the time
prescribed therein;
(c) Fails or causes the failure to file the return or issue certificate required.
In the course of our review we observed that a single Petty Cash replenishment
amounted to ₱305,099.00 for petty cash expenses from July 22 to August 27, 2020. Per
inquiry, the Petty Cash Fund (PCF) was increase from ₱200,000 to ₱400,000.00 per Board
Resolution no. 004, s-2018, to accommodate COWD’s operational expenses.
However, we noticed that some of the expenses are regular expenses such as
purchase of office supplies, monthly cell card allowance, meals during meetings and other
supplies and materials not for maintenance and other operating expenses.
COA Circular 97-002 on cash advances, states, among others, that:
“Regular cash advances are those granted to cashiers, disbursing officers,

paymasters, and/or property/supply officers for any of the following purposes: xxx 3.1.4
Petty operating expenses consisting of small payments for maintenance and operating
expenses which cannot be paid conveniently by check or are required to be paid
immediately. (emphasis supplied)
56
Its General Principles also provides that all payments must be made by checks and
only payments in small amounts may be made through the petty cash fund.
Although the purchases made were not more than ₱15,000 per transaction, and
some are emergency considering the COWD’s nature of business, there are also purchases
that we believe were not of emergency in nature and can conveniently paid through checks,
thus should undergo regular process of disbursement and withholding of taxes, as
applicable. Some of the identified purchases are the following:
PCV no./Date Payee Particulars Amount

2020086454/8/26/20 Joseph Caseñas Purchase of 300pcs face 15,000
shield
2020086455/8/26/20 Joseph Caseñas Purchase of 25 Gallons of 15,000
zip liquid soap
2020086444/8/24/20 Joseph Caseñas Purchase of 19 pcs cell 9,500
cards
2020086436/8/20/20 L.A.Acuta Centrifugal pump repair 11,020*
2020086395/8/6/20 Joseph Caseñas Purchase of 30gals. 13,800
alcohol
2020086388/8/5/20 Joseph Caseñas Purchase of 6 pcs. 5,880
Ribbon cartridge
2020086389/8/5/20 L.A.Rueta Mechanical seal, oil seal, 13,590**
skf bearing
2020086386/8/5/20 Joseph Caseñas Purchase of 5 pcs laserjet 15,000
85A
2020086367/8/5/20 Joseph Caseñas Purchase of 100pcs face 8,900
shield
2020076377/7/30/20 Joseph Caseñas 1 box Rubber band, 10 8,760
boxes continuous form,
keyboard
2020086382/8/3/20 Joseph Caseñas 1 unit Seagate-HDD 4TB 6,675
2020076366/7/23/20 Joseph Caseñas Cell cards 9,500
2020076361/7/22/20 Joseph Caseñas 1 unit Seagate-HDD 4TB 6,675
2020086390/8/5/20 L.A.Rueta 100m quantum stereo mic 5,800
cable wire
*Letter request for emergency dated 7/14/ 2020 but paid only on 8/13/2020
** Letter request for emergency dated 7/15/ 2020 but paid only on 7/30/2020
As can be gleaned from above, there are purchases that is above ₱10,000 for a
single transaction that is already required to withhold the corresponding taxes.
Additionally, it was also observed that the item stereo mic cable wire amounting to
₱5,800 was withdrawn in advance from the supplier. The same with the rewinding work of
57
pump motor costing ₱14,350. Instead of paying these payables thru the issuance of checks,
it was paid directly thru cash advance of the PCF.
While maintaining large amount of PCF is risky and may prone to abuse, payment
directly to suppliers thru cash advances may not only compromised the transparency of the
procurement process, but COWD also failed to withhold taxes to these purchases and
ensure remittance to the BIR that may violate COWD’s responsibility as government agent
on withholding all government money payments.
Recommendations:
a. charge to PCF those expenses consisting of small payments for maintenance and
operating expenses which cannot be paid conveniently by check or are required to be
paid immediately.
b. Procure office supplies at the PS-DBM based on the quarterly or monthly requirement of
the District. Purchase of office supplies charged to PCF should be for emergency only
and not for regular procurement.
c. Catering or Meals during regular meeting should not be charge against PCF but should
be procured days ahead of the scheduled meeting.
d. Reduce the PCF sufficient enough for the recurring expenses of the District in a month.
e. adhere strictly with the National Internal Revenue Code (NIRC) and the corresponding
rules and regulations promulgated by the Bureau of Internal Revenue to avoid penalties
and surcharges, in addition to the tax thereon, that may become a personal liability of
the persons responsible.
In 2018, the Board, through Board Resolution #4 s. 2018, approved Management’s

recommendation to increase the Petty Cash Fund from ₱200,000.00 to ₱400,000.00. This
amount is based on a thorough and careful study of transactions so as to sufficiently pay for
recurring operational expenses. Replenishment is done once 75% of the fund has been
used up.
Management agrees to comply with the audit recommendation to:
1. Adhere strictly with the National Internal Revenue Code (NIRC) and withhold tax
for purchases above 10,000.00 for a single transaction.
2. Procure office supplies to the PS-DBM based on the quarterly or monthly
requirement of the District.
As to catering of meals during regular meetings, only those bought in fast food
chains shall be charged to the PCF since this expense cannot be conveniently paid by
58
check. If availing of catering services, we comply with the recommendation of procuring
days ahead of the scheduled meeting.
However, during the exit conference, GM Batar commented that currently, the
District is already withholding tax for the Petty Cash Fund. He also said that the District will
review the limit established for the PCF which is ₱400,000.
Auditor’s rejoinder:
The team did not only recommend to withheld taxes for purchases above ₱10,000
for a single transaction. Rather we also recommended to adhere strictly with the National
Internal Revenue Code (NIRC) and the corresponding rules and regulations promulgated by
the Bureau of Internal Revenue. In fact, it was emphasized and provided in the AOM
Section 4.114 of BIR Regulation 2-98 on the Withholding of Creditable Value-Added Tax
(VAT) as part of the criteria. It was stated therein, among others, that “sale of goods and
services to the government subject to VAT shall be subject to withholding pursuant to Sec.
114 (C) of RA 8424.”
While it is true that it was also stated in the said AOM the withholding of creditable
tax for income payments and the ceiling of ₱10,000 and below to be not subjected to
withholding tax, however, it was for income payments for purchases of goods and services
and not for withholding of creditable value-added tax.
The said BIR ruling on withholding of creditable value-added tax did not provide any
ceiling or exception to not withheld 5% final VAT on purchases of goods or services ₱10,000
and below from VAT registered supplier. In fact, BIR Revenue Memorandum Circular no.
23-007 was issued to give clarifications on the computations of withholding taxes and other
requirements on Government money payments due or payable to supplier of goods and/or
services xxx. It was stated therein, among others, that “Purchases of the government that
are covered by Purchase Orders duly signed by the authorized official/s as well as
purchases using the Petty Cash Fund shall be subject to the 5% final VAT withholding.”
It was also provided on the same Memorandum that “government purchases that are
subject to percentage tax shall be governed by R.A. no. 1051 on the withholding of
percentage tax, as well as, by RR 2-98, as amended, on the withholding of Percentage Tax
and Income Tax. Xxx.. casual government purchases amounting to not more than 10,000
are not subject to the 1% and 2% withholding of income tax.”
Based on the above provision, it is clear that all purchases made from VAT
registered and NON-VAT supplier must be subjected to withholding of 5% final VAT and 3%
percentage tax, respectively.
Aside from the reason that maintaining huge PCF is risky and prone to abuse, this
Office also believed that if purchases not of urgent in nature (e.g. purchase of several
gallons of zip dishwashing liquid, monthly cell cards, numerous office supplies) will be paid
in check in consonance with the regulation that “all payments must be made by checks and
only payments in small amounts may be made through the petty cash fund”, the current
Petty Cash Fund of ₱400,000 can be lowered sufficient enough for the recurring expenses
of the District in a month.
59
8. Non-Revenue Water (NRW) rate of the District reached 58.78%, which is
193.90% above the LWUA maximum acceptable rate of 20% per LWUA Board
Resolution No. 444 series of 2009 despite the commencement of NRW
Reduction projects in prior years; further, NRW projects for CY 2019
amounting to ₱14,598,929.48 were still unimplemented as of CY 2020.
Moreover, falling short by 20.78% on the forecasted 38% NRW rate for CY 2020,
inadequate long-term strategic plan, concrete and long lasting solutions to
address aggravating NRW problem inconsistent with the District’s vision of
becoming an outstanding water district in the country resulted to an estimated
NRW financial loss of ₱336,772,996.80 for CY 2020.
NRW of 58.78% more than the 20% maximum acceptable rate
The Local Water Utilities Administration (LWUA) issued Resolution No. 444 series of
2009 dated September 15, 2009 reducing the maximum acceptable non-revenue water from
25% to 20%.
Further, it is the vision of Cagayan de Oro City Water District “to be an outstanding
water district in the country”. (http://www.cowd.gov.ph/mission-vision.htm)
The Non-Revenue Water is water that has been produced and “lost” before it
reaches the customer. NRW comprises three components as follows:
a. Physical (or real) losses comprise leakage from all parts of the system and
overflows at the utility’s reservoirs. They are caused by poor operations and
maintenance, the lack of active leakage control, and poor quality of underground
assets.
b. Commercial (or apparent) losses are caused by customer meter under-

registration, data handling errors, and theft of water in various forms.
c. Unbilled authorized consumption includes water used by the utility for operational
purposes, water used for firefighting, and water provided for free to certain
consumer groups.
For CY 2020, the NRW of Cagayan de Oro City Water District has reached 58.78%,
with the highest rate since CY 2005 occurring in January 2020 at 59.50%. Summary of the
percentage of NRW from year 2005 to 2020 disclosed high rates of at least 50% since CY
2006 as follows:
End
of the Monthly Growth
Year Lowest Highest Year Average Rate
2005 37.63 47.96 43.40 43.25 1.70
2006 36.20 50.85 45.93 45.64 1.54
2007 47.52 59.02 52.48 52.34 1.24
2008 45.18 58.50 53.31 53.08 0.87
2009 52.86 59.20 56.09 56.05 0.50
60
End
of the Monthly Growth
Year Lowest Highest Year Average Rate
2010 50.41 58.59 55.26 55.19 -0.43
2011 53.37 59.23 55.55 55.58 0.73
2012 51.46 56.70 54.35 54.35 -0.07
2013 50.98 57.97 54.10 54.03 2.08
2014 50.93 58.12 53.68 53.60 1.34
2015 48.10 58.19 52.65 52.53 0.32
2016 47.07 54.13 50.49 50.40 -0.11
2017 55.64 46.94 51.26 51.11 0.02
2018 41.23 58.49 51.69 51.32 1.69
2019 49.62 59.06 54.98 54.84 0.73
2020 52.15 59.50* 55.53 55.47 0.08
*highest NRW rate since 2005
NRW Projects for CY 2019 amounting ₱14,598,929.48 still unimplemented as of 2020
Submitted Report on Government Projects, Programs and Activities (GPPA) of the

District as of December 2020 also disclosed that of the NRW projects amounting to
₱17,204,150.92, only 2.58% or ₱444,180.50 of which are 100% completed. Inflow chamber
construction projects at KSY and COC Carmen were in-progress amounting to
₱2,161,040.94, while projects amounting to ₱14,598,929.48 were still unimplemented as of
December 2020. These are all CY 2019 projects. Further, it must be noted as disclosed in
the prior year’s audit observation that several projects in the prior years were already
undertaken by the District financed thru bank loans and assistance from private
organizations. Despite these efforts, NRW rate as of December 2020 still soaring.
Falling short by 20.78% on the forecasted 38% NRW rate for CY 2020, inadequate long-
term strategic plan, concrete and long lasting solutions
Board Resolution No. 170, series of 2016 approves the NRW Strategy of COWD.
This strategy includes technical assistance from private counterparts. Covered in this
strategy is the NRW reduction forecast which projects that as of the year 2020 NRW in
percentage of system input volume would be 38%. However, in contrary, NRW rate of
COWD as of December 2020 surged to 58.78% which fall short by 20.78%. Although
Management Strategy is available, these plans will become inadequate once
implementation of expected projects and activities deviates from what was originally planned
and those already identified root cause of the problems but were not yet properly addressed
with concrete and long lasting solutions.
This unresolved and increased NRW of COWD has been subjected to research and
study in the previous years. In CY 2015 thru a Board Resolution, COWD and its private
counterparts collaborated for technical assistance on the matter. NRW Management
Strategy Report dated September 2016 was prepared stressing that the single most
important factor for the high level of physical losses is the inferior quality of the service
connections combined with poor quality materials and repairs.
61
A more recent study with the help of its private counterpart dated June 21, 2019
disclosed that there are many technical reason behind this NRW such as old revenue
meters, clusters of illegal connections, poor pipe materials, sub-standard installation, and
manual meter reading. There are also many institutional contributions including lack of
company-wide awareness on how all departments can reduce NRW, insufficient training and
resources, and complacency caused by years of familiarity and a general impression that
NRW problem is hopeless.
Further, delay in the implementation of projects, lack of capacity, absence of

comprehensive NRW strategy and accomplishment report are some of the reasons that
could exacerbate the condition of the NRW. Moreover, delayed and complacent response to
reported leakages from concerned stakeholders may contribute to these factor.
More essentially, a firm and robust management’s action and conviction to reduce
NRW while cascading the same attitude and spirit to COWD personnel is a big factor to
address the issue.
The cost of NRW represents lost or foregone revenue and lost water resources
which COWD could have used for other operational costs or projects. For CY 2020, it is
estimated that with a Non-Revenue Water of 41,584,240 cubic meter and production cost
per cubic meter of ₱8.82 based on the CY 2019 production costs (CY 2020 data production
cost is not yet available), the District’s equivalent financial value of NRW for the year
amounts to ₱336,772,996.80. On the related audit observation for CY 2019, it was disclosed
that the NRW from CY 2009 to CY 2019 has a total estimated financial value of
₱2,149,359,579.34.
Recommendations:
a. Fast track implementation of identified CY 2019 NRW projects;
b. Revise/revisit the forecast identifying specific timeline of targeted year to reduce NRW
by a quantifiable rate aligned to the strategic comprehensive NRW plan and in line with
the vision of the District;
c. NRW programs and projects undertaken must address root cause of the NRW problems
especially those already identified area of concern;
d. Thereafter, evaluate and account reduction of NRW in cubic meter for that specific area
or location and submit monthly accomplishment report to the Audit team identifying the
following:
1) specific area or location for NRW reduction, (e.g. street, barangay)
2.) root cause of the problem in that specific area (e.g. poor quality materials and
repairs),
3.) course of action undertaken for that specific area to address the root cause (e.g.
replacement of pipes),
4.) NRW of identified area or location prior to project implementation (in cubic meter),
and
5.) NRW after accomplishment of project (in cubic meter)
62
e. Be responsive to reported complaints on leakages from concerned stakeholders.
NRW of 58.78% more than the 20% maximum acceptable rate – The soaring percentage
of COWD’s non-revenue water is an operational challenge that we continuously addressed
fervently. Reduction of our NRW is given apt importance through recognizing it as one of our
major key performance indicators as found in our Strategy Road Map in achieving our vision
of becoming an outstanding Water District in the country.
Unimplemented 2019 NRW Reduction Projects amounting to Php14,598,929.48 – This

unimplemented reduction project cost covers the Inflow Assembly for the remaining 10
District Metering Areas (DMA). In as much as we wanted to implement it promptly in CY
2020 as planned but there are some inevitable factors that caused its delay such as the
issuance of mandatory permits in the installation of Isolation/Boundary Valves and the
occurrence of the COVID-19 pandemic which affected our manpower resources while we
adapt the revised work scheme. Installation of isolation/boundary valves and conduct of
Zero-Pressure Test is a pre-requisite in the installation of the Inflow Assembly.
The District values your recommendations stated in the specified AOM, to fast track the
implementation of the identified CY 2019 NRW Projects, to date, this recommendation is
workable since permits for the installation of the valves were already issued. In order to
hasten the implementation, COWD establishes a prioritization list of the DMA.
Falling short by 20.78% of the forecasted 38% NRW rate for CY 2020, inadequate long-
term strategic plan, concrete and long lasting solutions – Your recommendation to
revise/revisit the forecast identifying specific timeline of targeted year to reduce NRW by
quantifiable rate aligned to the strategic comprehensive NRW plan is highly well-taken.
The NRW Task Force have created a Milestone Planner containing strategic action plans for
the following components:
a. Calibration of production meters;

b. Water theft;
c. Replacement of revenue meters;
d. Billing and data handling;
e. Pressure management;
f. Leak repairs; and
g. Installation, maintenance or replacement of pipes & appurtenances.
The CY 2019-2020 planner enumerates the corresponding accomplishments to the

sustainable themes for each component, however, the NRW level is still high. It is on this
ground that COWD shall conduct a root cause analysis to determine the applicability and
effectiveness of the existing action plans. The analysis can direct us in designing new
programs and projects that will directly address the root cause.
Submission of Monthly Accomplishment report to the Audit Team – COWD finds the
creation of DMA as an effective approach in NRW reduction. The District piloted barangay
Carmen, Lapasan and Poblacion in the city that resulted to the establishment of 20 DMA’s.
The District is currently monitoring the following 8 DMA’s:
63
DMA Location Baseline NRW NRW as of No. of connections
Feb. 2021 as of Feb. 2021
Western Service Area
1. Bellevue Subd. 48.82% 31.69% 647
2. Golden Village Subd. 75.63% 33.10% 189
3. Silver Creek Subd. – Phase 14.37% 20.80% 426
1
4. Silver Creek Subd. – Phase negligible 130
2
5. SDA 7.37% 24.70% 485
6. Landfill 56.05% 48.62% 1,853
Eastern Service Area
7. Lim Ket Kai 95.70% (4.80%) 18
8. Dacudao 49% 54.30% 401
Generally, applicable interventions such as repair of leaks after the conduct of Step-Test
and lead detection, Pressure Regulating Valve (PRV) installation, replacement of aged
meters, were implemented within the DMA that resulted to the correct accounting
(decrease/increase) of NRW in the area.
COWD commits to submit a monthly evaluation report and percentage of NRW in the above-
mentioned DMA’s. The report shall contain relevant information as cited in your
recommendation.
Be responsive to complaints on leakages – is another recommendation in the AOM that

is highly well-taken. COWD intend to adhere to our commitment to the public, as it is written
in the citizen’s charter, to repair reported service connection leakages within 2 calendar
days and 24 hours for mainline leakages.
In order to be responsive to leakage complaints coming from both east and west service
area: additional resources were acquired, overtime works during Saturdays were conducted
and providing leakage repair team even after office hours.
The General Manager also commented that the District’s problem on NRW is really
challenging. He said that there are at least 450 complaints received by the District every
month for repairs and 10% of which cannot be attended. He also said that contract of
contractor assigned on repair was already rescinded due to dissatisfaction of service.
Further, he said that by year 2023 the District hopes to achieve 30% NRW rate.
9. COWD payment of salaries and wages of personnel under “job order” status
for CY2020 amounting to ₱8,313,727.09 erroneously debited to Advances to
Officers and Employees and lack the necessary accomplishment report duly
verified and accepted as basis for payment inconsistent with COA Circular
2012-001 dated January 14, 2012 and Presidential Decree 1445, thus, validity
and completeness of tasks performed for a particular function vis-à-vis to their
contract cannot be determined.
64
Section 1.2.1 of COA Circular No. 2012-001 dated June 14, 2012 provides that for
liquidation of payroll fund in case of payment of personnel under the “job order” status, duly
verified/accepted accomplishment report must form as part of the documentary
requirements.
Further, Section 4 (6) of Presidential Decree No. 1445 also provides that:
“Claims against government funds shall be supported with complete documentation.”
Also, COA and DBM Joint Circular No. 2, series of 2020 dated October 20, 2020
provides, among others the following:
Contract of Service refers to the engagement of the services of an individual, private firm,
other government agency, non-governmental agency or international organization as
consultant, learning service provider or technical expert to undertake special project or job
within a specific period.
Job Order refers to piece work (pakyaw) or intermittent or emergency jobs such as clearing
of debris on the roads, canals, waterways, etc. after natural/ man-made
disasters/occurrences, and other manual/trades and crafts services such as carpentry,
plumbing, electrical, and the like. These jobs are of short duration and for a specific piece of
work.
Audit of cash advances for payroll and its liquidation revealed that payment of
salaries and wages of COWD personnel under “job order” status for CY 2020 amounting to
₱8,313,727.09 lack the necessary accomplishment report duly verified and accepted as
basis for payment to determine the completeness of tasks performed for individual functions
as stated in the contract. Moreover, it was noted that aside from the duly signed payroll list
there was no DTRs or certificate of service attached as supporting documents to prove that
services were rendered.
Further, it was also disclosed that cash advances either for payroll or operating were
debited to Advances to Officers and Employees account. Per inquiry, this has been the
practice of the District already.
In contrast, COA Circular 2015-010 issued the updated list of chart of accounts and
defined the four (4) kinds of Advances to facilitate the proper recording, to wit:
Advances for Operating Expenses -This account is used to recognize in the agency
books the amount of advances granted to accountable officers for payment of operating
expenses of operating/field units and foreign posts not maintaining complete set of books of
accounts.
Advances for Payroll-This account is used to recognize the amount granted to regular
disbursing officers for payment of salaries, wages, honoraria, allowances and other
personnel benefits.
Advances to Special Disbursing Officers-This account is used to recognize the amount

granted to agency’s accountable officers and employees for special purpose/time-bound
65
undertakings to be liquidated within a specified period. It also includes labor payroll for
projects undertaken by administration.
Advances to Officers and Employees-This account is used to recognize amount

advanced to officers and employees for official travel.
Based on the above, advances for salaries and wages should have been recorded to
Advances for Payroll or Advances to Special Disbursing account for labor payroll for projects
undertaken by administration.
The absence of DTRs or certificate of service and duly verified and accepted
accomplishment report of each personnel under “job order” status is not only contrary to the
one of the fundamental principles of government disbursement that “claims against
government funds shall be supported with complete documentation” but also cast doubt as
to the validity and propriety of the payment having no proof to prove that services were
indeed rendered and the provisions of the job order contract were fulfilled.
Also, the non-recording of advances to their proper account may render the account
balances of each account unreliable that could have a material effect in the Financial
Statement for proper decision making.
Recommendations:
a. Require the Job Order workers to prepare and attach DTR and Accomplishment Report
as basis for payments of their services performed;
b. Verify the Accomplishment Report prepared by the Job Order worker against the
specific function specified in the contract and sign accordingly if the work performed is
satisfactory or acceptable; and
c. Record each class of advances to their proper account and not lodged every advances
to Advances to Officers and Employees account which is intended for official travel of
employees only.
During the exit conference, GM Batar commented that they will look into the
observation for possible action.
10. Payment of salaries for COWD regular and casual employees amounting to
₱32,750,092.67 and ₱22,554,320.71, respectively, from June to December 2020
during the adoption of the Alternative Work Arrangements in the government
due to the COVID-19 pandemic lack the required accomplishment report to
prove that the 40-hour workweek is complied with contrary to CSC
Memorandum Circular (MC) No. 18, s. 2020, that may prejudice public service
delivery.
66
The Civil Service Commission issued MC No. 10, s. 2020 based on CSC Resolution
no. 2000540 s. 2020 promulgated on May 7, 2020. This is the Revised Interim Guidelines
for Alternative Work Arrangements and Support Mechanism for Workers in the Government
during the Period of State National Emergency due to COVID-19 Pandemic.
To align with the amended Inter-Agency Task Force on the Management of

Emerging and Infectious Diseases (IATF) Omnibus Guidelines on Implementation of the
Community Quarantine in the Philippines, CSC promulgated CSC Resolution no. 2000912
on October 14, 2020 and issued MC no. 18, s. 2020, an amendment to the Revised Interim
Guidelines, which shall take effect retroactively on March 16, 2020.
Its pertinent provisions, among others, provides the following:
2.0 Alternative Work Arrangements
Government agencies may adopt any or a combination of the following alternative

work arrangements:
2.1 Work-from-Home – refers to an output-oriented work arrangement that authorizes the

worker to produce outputs/results and accomplishments outside of the office;
2.2 Skeleton (Skeletal) Workforce – refers to a work arrangement where a minimum number
of employee is required to man the office to render service when full staffing is not possible;
2.3 Four-day (Compressed) Workweek – refers to a work arrangement whereby employees’

workweek is compressed to four (4) days each week;
2.4 Work Shifting/Flexible (Staggered) Working Hours – refers to a work arrangement

applicable to offices/agencies that observe work shifting or flexible working time; and
2.5 Other Alternative Work Arrangements – refers to work arrangements consisting of a

combination of the above enumerated work arrangements or other work arrangements
subject to the prevailing community quarantine in the area where the agency is located and
appropriate/applicable to the agency mandate/functions.
3.0 Parameters in the Implementation of Alternative Work Arrangements
3.1 Work-from-Home
a. XXX
b. The work-from-home arrangement may be adopted in areas placed under
General Community Quarantine (GCQ) and Modified General Community
Quarantine (MGCQ), where public transportation shall operate at a
reduced capacity and physical/social distancing is required in the
workplace.
XXX
3.2 Skeleton (Skeletal) Workforce
67
XXX
3.3 Four-day (Compressed) Workweek
Agencies located in areas placed under GCQ and MGCQ may adopt 4-day
workweek in combination with other alternative arrangement/s provided that
required 40-hour workweek is complied with.
3.4 Work Shifting/Flexible (Staggered) Working Arrangements
a. Agencies may adopt work shifting/flexible working hours

appropriate/applicable to their mandate/functions regardless of
community quarantine classification their agency is located;
XXX
3.5 Other Alternative Work Arrangements
a. Agencies may adopt other alternative work arrangements that are

appropriate/applicable to the agency mandate/functions as well as their
place of work other than the above-enumerated work arrangements; and
b. Agencies may adopt a combination of the above enumerated work
arrangements or a combination with the other work arrangements it
adopted, such as three-day workweek and 2-day work-from-home
arrangement to complete the 40-hour workweek.
XXX
e. To facilitate the implementation of the work-from-home arrangement, the

agency head shall ensure the following:
XXX
6. Agencies under WFH arrangement may adopt performance

standards to guide the employees in the delivery of assigned tasks,
like a point system where each output is assigned points based on
length, complexity, or other criterion which are aligned with CSC-
approved agency SPMS.
XXX
5.0 General Guidelines
XXX
5.7 Agencies shall adopt a monitoring mechanism such as submission of

daily/weekly accomplishment report/s, etc., during the implementation of
the alternative work arrangements to ensure that public service delivery is
not prejudiced.
68
During the pandemic, Cagayan de Oro City was placed from GCQ to MGCQ by
proper authorities. Relative to this, Cagayan de Oro City Water District adopted the other
alternative work arrangement, that is 7-hour per day work in the Office and 1-hour work-
from-home or an 8-4pm work-in-the office scheme.
In the audit of payroll, we noted that payment of salaries for COWD regular and
casual employees from June to December 2020, during the adoption of the alternative work
arrangement, amounted to ₱32,750,092.67 and ₱22,554,320.71, respectively. We also
observed that DTRs were not attached to the DVs as supporting documents. Per inquiry,
DTRs were not attached due to the bulk of documents to be submitted to COA audit team.
Nevertheless, we still required to submit the DTRs as part of the documentary requirements.
For the succeeding submission of payroll, we noticed that the approved DTRs indicated
mostly the 7-hour working time in the office. This was also observed in the actual office
hours of the District. This means that the total hours of service rendered per week for most
of the employees is less than forty (40). We also learned that prior to the adoption of the 1-
hour work-from-home scheme, the District’s employees were on a work-from-home
arrangement with gradual return of each department to the office daily adopting 7-working
hour scheme.
COWD Memorandum GM 135, s-2020 dated July 17, 2020 disclosed that the
rotational work schedule of the District shall be from 8:00 am to 4:00 pm (except certain
units identified by their respective Department Managers). When an employee is on a Work-
from-home schedule, he/she is required to stay at home unless on very important matters.
However, inquiry on the adoption of the alternative work arrangement and the related
monitoring on the performance of each tasks particularly on the preparation and submission
of the accomplishment report revealed that there was no accomplishment report prepared
by each employee on their work-from-home arrangement.
Absence of the accomplishment report fails the District to determine that despite the
alternative work arrangement, performance of each functions and delivery of assigned tasks
were still achieved and that public service delivery was not prejudiced.
Moreover, completion of the required 40-hour workweek will be doubtful in absence

of proof that services were rendered even on their work-from-home schedule.
Recommendation:
We recommended the Management to require those employees who adopted the

alternative work arrangement to submit their accomplishment report to determine that each
functions or tasks were still performed despite the work-from-home schedule and that the
required 40-hour workweek is fully complied with.
The COVID-19 pandemic has disrupted our normal course of life. It has brought
unprecedented challenges to all of us and the world as a whole. We were not prepared of
the devastating effects of the virus and we’re not able to formulate measures to cushion its
69
impact. But despite of this impediment, COWD remained steadfast in its commitment to
serve the water needs of the City and its neighboring communities. Hence, in response to
this commitment and complying with CSC MC 10, s. 2020, COWD adopted alternative work
arrangements we thought of were best, appropriate and applicable to our mandate.
We have adopted the skeleton/skeletal workforce during the General Community

Quarantine, work from home scheme to decongest the office and the latest was the 8-4
schedule from Monday to Friday. We believed that the adoption of this schedule is not
violative of the aforementioned circular since it did not hinder our continuous service to the
public and we have complied with the required 40-hours workweek. All offices were open
during noon break and we did not use our 15-minute break in the morning and in the
afternoon. We stayed in our respective work stations all the time so we can immediately
attend the concerns of our clients.
We have also continued to adopt the work from home (WFH) schedule expressed
under MC 18, s. 2020 only for employees who are 60 years old and above as well as those
with immunodeficiency comorbidities or other health risk, pregnant women and nursing
mothers except when their services are indispensable under the circumstances or when
office work is permitted. This WFH scheme is allowed or permitted only upon written request
and presentation of a medical certificate.
On the matter of the accomplishment report, its absence does not necessarily mean
that we did not perform the assigned task and that public service delivery was prejudiced.
Our OPCRs and IPCRs will speak for the accomplishments of our Major Final Outputs.
Using CSC MC 18, s. 2020 section 3.1.e as analogy, agencies…may adopt performance
standards to guide employees in the delivery of assigned task like point system where each
output is assigned based on the length of time, complexity or other criterion which is aligned
with CSC-approved SPMS.
Auditor’s rejoinder:
The audit team would like to clarify that we did not question the scheme (WFH arrangement)
used by the District. Our AOM only pointed out the undocumented 1-hour work from home
(WFH) or equivalent to a weekly 5-hour WFH considering that guideline requires the
submission of daily/weekly accomplishment for monitoring. She also mentioned the concern
on timely submission of important reports which may compromised.
COMPLIANCE WITH TAX LAWS
In compliance with tax laws, taxes withheld for the month (employees and suppliers)
were remitted on or before the tenth day of the following month. Quarterly franchise taxes
are remitted on or before the 25th of the following month.
The Water District was able to remit a total of ₱70,428,917.53 in taxes withheld
during the year and franchise taxes; mandatory withholding taxes for salaries and other
procurement of goods and other services was likewise undertaken. Unremitted balances as
of December 2019 were remitted the following month within the prescribed period.
70
Records showed that for CY 2020, the District withheld and remitted taxes to the
Bureau of Internal Revenue Office as shown below:
Total Tax Unremitted

Tax Withheld From Withheld Remitted to BIR Dec. 31, 2020
Employees 9,215,427.61 9,195,811.75 895,467.18
Suppliers 41,746,782.59 43,283,954.58 1,627,481.84
Franchise Tax 17,454,463.40 17,949,151.20 4,178,596.73
TOTAL 68,416,673.60 70,428,917.53 6,701,545.75
The unremitted balances as of December 31, 2020 were subsequently settled in

January 2021.
PHILHEALTH AND PAG-IBIG PREMIUMS
The Water District had been compliant with Title III Rule III, Section 18 of the
Implementing Rules and Regulations of Republic Act (RA) No. 7875 as amended in the
payment of national health insurance premium contributions to the PhilHealth.
The Water District was also compliant with Rule VII, Section 3 of the Implementing
Rules and Regulations of RA No. 9679 in the collection and remittance of contributions to
the Pag-Ibig Fund.
GSIS CONTRIBUTIONS AND REMITTANCES
The Water District has been compliant with the rules and regulations implementing
the GSIS Act of 1997, particularly on the collection and remittance of contributions to GSIS
as follows:
a. Mandatory monthly contribution of covered employees and employer in

accordance with Section 18; and
b. Remittance of employees’ and employer’s contributions and employees’
compensation premium within the due date pursuant to Section 19.
SETTLEMENT OF SUSPENSIONS, DISALLOWANCES AND CHARGES
Pursuant to COA Circular No. 2009-006 dated September 15, 2009, the unsettled
suspensions and disallowances as of December 31, 2020 amounted to ₱1,642,031.49 and
₱1,071,060,166.76, respectively.

Balance January 1 to Ending Balance
(as of January 1, December 31, 2020 (as of December 31,
2020) NS/ND/NC NSSDC 2020)
Notice of 1,642,031.49 0.00 0.00 1,642,031.49
Suspensions
Notice of 1,071,060,166.76 0.00 0.00 1,071,060,166.76
Disallowance
71
Balance January 1 to Ending Balance
(as of January 1, December 31, 2020 (as of December 31,
2020) NS/ND/NC NSSDC 2020)
Notice of Charge 0.00 0.00 0.00 0.00
Total 1,072,702,198.25 0.00 0.00 1,072,702,198.25
In addition, there are disallowances amounting to ₱566,776,384.24 prior to effectivity

of the Revised COA Circular No. 2009-006 which remained unsettled.
Date
Particulars Amount Remarks
Issued
CSB No. 98-001 (96) 6/9/1998 8,524,660.87 With Notice of Finality of Decision
dated January 6, 2015 amounting
CSB No. 99-001 (97) 3/22/1999 2,203,782.13 to ₱10,760,760.17. However,
COA Decision No 2012-019
dated February 17, 2012 already
adjusted the amount to
₱10,728,443 due to
miscalculation and the amount to
be refunded was reduced to
₱3,995,395.64. (See details on
next page)
CSB No. 2002-001 1/31/2002 37,363,278.47 With COE No. 2018-010 dated
(98 and 99) January 16, 2018 amounting to
₱35,780,486.57.
The COWD request for deferral

of execution of COE No. 2018-
010 in view of the Petition for
Certiorari was approved per
COA-Legal Services Sector
letter dated January 22, 2019
received by COWD on March
14, 2019.
ND No. 2007-01A to 111,372,370.79 With COA Decision RX 2019-030
65 (2006) affirming the disallowances
received by agency on April 10,
2019.
ND No. 2007-002 to 81,359,819.66 With Notice of Appeal
049
ND No. 2008-050-051 325,952,472.32 With Notice of Appeal
Total 566,776,384.24
Under COA Decision No. 2012-019 dated February 17, 2012:
Particulars Amount
Total amount of Notice of Disallowance as corrected 10,728,443.00
Less: Allowances need not be refunded by members of BOD 4,354,949.81
Amount Lifted insofar as per diems do not exceed 2,418,097.55
72
Particulars Amount
₱50.00 per meeting attended by members of BOD and
insofar as recipient officer/employees are incumbents as
of July 1, 1989
Net Amount to be refunded 3,955,395.64
To be refunded in full by the following:
Amount
Members of the BOD 1,755,230.50
COWD Officers & Employees 2,200,165.14
Total 3,955,395.64
73
PART III - STATUS OF
IMPLEMENTATION OF PRIOR
YEARS’ AUDIT RECOMMENDATIONS
STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT
RECOMMENDATIONS
Monitoring and evaluation of the actions taken by the management relative to the
implementation of prior year's audit recommendations disclosed that of the one hundred
thirty-three (133) audit recommendations embodied in 2019 Annual Audit Report, nine (9)
were fully implemented, fifty-two (52) partially implemented and seventy-two (72) not
implemented. Hereunder is the detail:
Status/ Extent
Ref. Audit observations Audit Recommendations of Implementa-
tion
AAR Inadequate cash On delayed and non- Partially
2019 management controls preparation of BRS Implemented
resulted to (a) delayed
No. 1 preparation of the Bank a. Immediately assign a
Reconciliation Statements responsible unit or create a Reiterated in
p. 37 (BRS) for 21 to 176 days special team/task force to this report
thus, long outstanding fast-track the preparation of
reconciling items in the Bank Reconciliation
bank (₱995,054.98), book Statements for all bank
(₱43,902,338.11) and accounts and the
Check Disbursements settlement/clearing of
Record (₱1,380,815.72) outstanding reconciling
were not detected and items within a specific
corrected on time; (b) non- timeline in order to ensure
preparation of BRS for 39 that the District’s cash
bank accounts; and (c) records are correct and to
insufficient bond coverage; faithfully represent
all contrary to Section 74 balances of cash and other
and 124 of Presidential affected accounts as at 31
Decree (PD) 1445, December 2019.
Standards (PAS) 1 and b. Establish written internal
Treasury Circular No. 02- policy on the procedures on Partially
2009 dated August 6, 2009 bank reconciliation Implemented
thus, affecting the indicating specific activities
accuracy, faithful to be undertaken, the
representation and person/ office responsible
reliability of Cash in Bank for the reconciliation, and
accounts and safekeeping the specific timelines to
of all public funds. settle/ clear both the book
and bank reconciling items.
c. Direct the Accounting Partially

Division to perform robust Implemented
analysis and reconciliation
procedures of outstanding
book and bank reconciling
73
Status/ Extent
tion
items and establish
accountabilities.
d. Designate personnel from Partially

the Cash or Accounting Implemented
Division to secure a copy of
the bank
statement/printout/snapsho
t within 3 – 5 days after the
end of the month and act
as liaison to the bank to
facilitate the recording of
bank reconciling items by
the responsible banks.
e. Enjoin the Accounting Partially

Division Manager to review Implemented
the appropriateness of
designating Ms. Tolentino
to perform bank
reconciliation and her
capacity to handle the
function given her other
assignments in the
Accounting Division.
Consider designating other
personnel whose primary
function at the end of the
month is the timely review
and verification of the
transactions that were
reflected in the bank
statements vis-à-vis the
District’s records so that
any errors committed by
the District and the bank
will be cleared immediately.
Long outstanding bank

reconciling items
a. Require the Cash Division Partially

Manager to conduct re- Implemented
orientation with the tellers
on crucial activities in the
collection process,
particularly on the
acceptance of checks as
74
Status/ Extent
tion
mode of payment, and
pinpoint accountabilities to
tellers who committed the
errors, considering that a
simple omission of action
(verification of the bank
stamp at the back of the
check) can cause the Cash
and Accounting Divisions a
lot of trouble and time
wasted on monitoring the
redeposit of the returned
check, and other
subsequent actions to
correct the errors
committed.
b. Instruct the Cash Division Partially

to conduct immediate Implemented
verification of validated
deposit slips against bank
statement or its equivalent,
and secure written
explanation and request
other necessary documents
to support the clearing of
bank errors.
c. Request written
explanation from the
concerned banks for the
validated deposits that
were not reflected in the
District’s bank accounts.
Review other bank
reconciling items for the
possibility of similar errors
that has understated the
actual Cash in Bank
balances of the District.
Long Outstanding Book

Reconciling Items
a. Require the Cash and

Accounting Divisions to
establish close coordination
75
Status/ Extent
tion
so that any errors detected
by either of the two
divisions will be relayed to
the other for information
and immediate appropriate
action.
b. Instruct the Cash Division

to strictly require the
submission of LDDAP-ADA
from all government
agencies enrolled in the
District’s ADA payment
scheme and establish a
monitoring system to
immediately call up the
latter’s attention in case of
missed submission.
Meanwhile, request for
payment references from
all ADA paying agencies to
aid in the clean-up process
for unidentified ADA
collections.
c. Direct the Accounting

Division to immediately
furnish a copy of the
subsidiary ledger to the
Cash Division within a
specific timeline to facilitate
early reconciliation by the
latter.
d. Require the Accounting

Division to check the report
on fund transfers
incorporated in the Daily
Cash Position Report
(DCPR) submitted by the
Cash Division to review
correctness of entries
made for fund transfers,
and draw the following
adjusting journal entry on
fund transfer to correct the
error previously made:
76
Status/ Extent
tion
Debit:
DBP Corrales ₱10,122,372.00
Credit:
DBP Capistrano
₱9,998,603.15
Interest Income
₱123,768.85
Long Outstanding SL and CDR

Reconciling Items
a. Require the created special

team/task force to review and
clean-up related records such
as the affected subsidiary
ledgers and Check
Disbursements Record (CDR).
Insufficient Bond Coverage
Review the bond coverage of

the Supervising Cashier in view
of the significant increase in her
daily collections caused by the
surge in water service
concessionaires.
AAR The Receivables – Recognize the finality of the

2019 Disallowances and receivables due to disallowed
Charges account is expenditures which are subject Fully
No. 2 understated by of Notices of Finality of implemented
₱27,778,504.42 as of Decisions and direct the
p. 49 November 2019 due to Finance Department Manager Already
non-recording of four (4) to record the disallowances recorded
disallowances with Notices amounting to ₱27,778,504.42
of Finality of Decision all as Receivables –
dated September 18, Disallowances and Charges to
2017, inconsistent with fairly present the balance of
COA Circular No. 2009- receivables in the financial
006 dated September 15, statements.
2009.
AAR The Accounts Receivable a. Consider the creation of a Not
2019 balance per Accounting special team with time-bounded implemented
Division and Commercial activities to conduct the
No. 3 Department shows a reconciliation of the noted A team was
77
Status/ Extent
tion
difference of variance on Accounts created but was
p. 51 ₱8,590,049.18 casting Receivable between the not convene
doubt on the validity of Accounting Division and due to this
presented balance of Commercial Department COVID-19
Accounts Receivable starting with the current year. pandemic thus,
account of were assigned
₱349,265,068.05 as of b. Thereafter, schedule the to other tasks.
November 30, 2019, reconciliation as one of the
inconsistent with Philippine yearly control mechanisms to
Accounting Standards 1. ensure that reported balances
in the financial statements are
accurate and verifiable.
AAR The reliability and a. Require the Finance Partially

2019 accuracy of the Loans Department Manager to Implemented
Payable reported in the reexamine the workload of
No. 4 financial statements as of the employees in the Delegation was
December 31, 2019 could Accounting Division and already made
p. 53 not be ascertained due to consider delegating the by management
variance totaling completion of the on the
₱4,298,792.64 between reconciliation process to a reconciliation of
the District’s records and competent staff in view of loans payable
the confirmed loan the latter’s impending
balances. mandatory retirement this
year; On-going
reconciliation
b. Should delegation be
unlikely due to maximized
workload in the existing
assignments of personnel,
consider hiring additional
manpower based on
available vacancies in the
District’s Plantilla of
Position (POP) particularly
for the Finance
Department, whose primary
duties shall include the
reconciliation of balances
between those recorded in
the books of accounts and
those appearing in the
records of other
departments, as well as
outside parties; and
c. Require the Finance

Department Manager to
78
Status/ Extent
tion
immediately coordinate
with LWUA and DBP for
any noted discrepancy
during the reconciliation
process to reduce, if not yet
fully eliminate the
reconciling amounts.
AAR Inaccuracy in the recording Require the Finance Division Not

2019 of January 2019 to: implemented
Waterworks System Fees
No. 5 account amounting to a. draw a journal entry to
₱87,062,137.05 due to adjust recorded revenue for No JEV
p. 55 non-accrual in CY 2018 Waterworks System Fees submitted
contrary to Philippine for January 2019; and
Accounting Standards
(PAS) 1 and 18 resulted to b. prepare working papers
overstatement of CY 2019 computing the revenue to
Statement of be accrued as at CY 2019
Comprehensive Income year-end close and draw a
revenue account by journal entry to record
₱45,152,624.16. such.
AAR The District paid Provident a. Submit to COA an (a Notice of

2019 Fund Employer Share explanation on the increase Disallowance
totaling ₱26,111,769.89 for in the rate of employer was issued)
No. 6 CY 2019, representing share in the provident fund,
25% employer share, together with documents Not
p. 56 which is over and above used as legal basis for the implemented
the 5% employer share as increase in rate and
previously granted to extended grant thereof to
incumbents as of July 1, newly hired after June 30,
1989, without prior 1989;
approval from Department
of Budget and b. Secure from the
Management (DBM), Department of Budget and
inconsistent with Republic Management the
Act No. 6758 , Executive necessary authority for the
Order No. 641 and related increase in the Provident Not
DBM issuances. Fund government implemented
counterpart (ER Share). In
the absence of such,
restore the Provident Fund
ER Share to 5% as
originally granted to
incumbents as of July 1,
1989; and
79
Status/ Extent
tion
c. Discontinue the payment of Fully

Provident Fund (ER Share) implemented
to those hired after June
30, 1989
AAR Final payment amounting a. Revisit the provisions of the Partially

2019 to ₱45,224.00 was made 2016 Revised Implemented
to the supplier despite Implementing Rules and
No. 7 absence of the warranty Regulations of RA No. Still for
security, permit to extract 9184 as refresher of gained submission of
p. 67 and related tax clearance knowledge, particularly on sufficient
that all taxes on sand, retention money and justification
gravel or other quarry warranty security for
resources utilized in the procurement of
project implementation had infrastructure projects;
been fully paid,
inconsistent with the 2016 b. Refer to COA Circular No.
Revised Implementing 2012-001 on the
Rules and Regulations of documentary requirements
Republic Act No. 9184, for common government
DPWH Department Orders transactions for guidance to
No. 109 and 119 and COA avoid audit suspensions;
Circular No. 2012-001 and
exposing the District to c. Issue the Certificate of
pecuniary loss in the event Final Acceptance for
of structural defects and Infrastructure Projects only
liabilities. after the expiration of the
one-year defects-liability
period.
d. Immediately process the

release of retention money
after the issuance of
Certificate of Final
Acceptance; and
e. Require the contractor to

issue a warranty certificate
and submit the necessary
quarry extraction permit
and tax clearance; and
require contractors of other
on-going and to be
procured infrastructure
projects to comply with
these requirements
80
Status/ Extent
tion
AAR Insufficiency of Disaster On Absence of plan for Partially
2019 Risk and Reduction earthquakes, tsunami or fire implemented
Management plan
No. 8 (DRRMP) to address a. Immediately prepare
calamities other than DRRM plan for disasters
p. 71 storm/flood and drought such as earthquakes, Nearly
such as earthquake, tsunami or fire. Incorporate completed
tsunami and fire; and in the plan the four (4) manual
inadequacy of allocated thematic areas, namely: (1)
budget for DRRM Prevention and Mitigation,
purposes contrary to the (2) Preparedness, (3)
Implementing Rules and Response and (4)
Regulations of Republic Rehabilitation and
Act 10121 thus, the District Recovery.
may not be able to
immediately respond On Lack of
appropriately in times of consideration/documentation
disaster. on the other 3 thematic areas:
(1)Prevention and Mitigation,
Rehabilitation and Recovery
b. Document DRRM plan

areas on disaster (1)
Prevention and Mitigation,
Rehabilitation and
Recovery. This may include
assessing risk factors in
COWD buildings and other
major assets including the
proposed construction of
new building in Kauswagan
(Prevention and Mitigation),
conduct earthquake drill,
purchase of early warning
system/device for
earthquake or flood
(Preparedness), evaluation
of possible evacuation
areas in case of
earthquake, fire or other
disasters (Response),
reconstruction/repair of
facilities after disasters
(Rehabilitation and
Recovery) and other
necessary activities.
81
Status/ Extent
tion
On absence of Training
Programs relating to
Earthquakes, fire, terrorism and
the like
e. Follow-up scheduled
training with the Office of the
Civil Defense (OCD) for CY
2020 and secure the final date
of appointment. Prepare
training programs relating to
earthquakes, fire, terrorism and
the like with its timeline.
f. Regularly conduct and

refresh trainings as prescribed
in the District’s Emergency
Response Plan (ERP) not just
for the ERP team but for all
employees.
On not updated ERP
f. Update the ERP at least

annually as prescribed therein
especially if there are changes
on (1) focal persons assigned
to the task, (2) contact
information of partner agencies,
(3) current list and status of
generators indicated in the plan
and (4) other relevant
information.
Result of Inspection of the City

Building Official
Assess effects of earthquake

on pre-existing building cracks
and conduct repair especially
on offices that were greatly
affected if necessary.
Insufficient Allocated Budget for

DRRM
Reassess basis for allocation of
82
Status/ Extent
tion
DRRM budget and allocate
sufficient budget for DRRM in
subsequent years. Further,
budgeted amount must
correspond to available cash.
AAR The Bidder was considered Require the BAC to: Not
2019 as “passed” and declared Implemented
as the Lowest Calculated a. Revisit the provisions of the
No. 9 Bid despite 2016 Revised No submission
incompleteness of the bid Implementing Rules and of relevant
p. 79 offered inconsistent with Regulations of RA No. existing
Section 32.1.1.a of the 9184 as refresher of gained guidelines,
2016 Revised knowledge, particularly on laws, rules or
Implementing Rules and bid evaluation; regulations
Regulations of the issued by
Republic Act No. 9184 and b. Consistently apply the non- specific
Section 27.3 of Philippine discretionary criteria in the government
Bidding Documents for evaluation of bids authority
Infrastructure – 5th Edition, submitted by the bidders; directing
August 2016. and release of
financial
c. Immediately declare as assistance.
non-responsive and thus,
disqualify, bids which are
incomplete or patently
insufficient and proceed to
the next eligible bidder to
save on time and fast track
the procurement process.
AAR Non-observance of bulk a. Management meticulously, Not

2019 purchases to avail discount judiciously and timely plan Implemented
and minimize the process of budgeting
No. 10 administrative work with from the preparation of
utmost 64 times piecemeal Project Procurement Still for strict
p. 81 procurement of supplies Management Plan (PPMP), implementation
within the year; long to the consolidation in the
processing time on Annual Procurement Plan
procurement of (APP), and approval of the
goods/materials ranging corporate operating budget
from 39 – 184 days for
shopping, 22 – 581 days b. require the Bids and
for small value Awards Committee (BAC) and
procurement (SVP) and the Procurement Division to:
155 – 647 days for public
bidding; and issuance of 1. strategize the timing of
both Purchase Order (PO) procurement so that bulk
83
Status/ Extent
tion
and agreement although purchases may be availed
both constitute a contract for all purchases. The
for purchases above consolidated purchase
100,000 without clear request shall be supported
basis contrary to Republic with the proper breakdown
Act (RA) No. 9184 and of requested supplies,
Article 1475 of the Civil materials and goods from
Code of the Philippines, each department so that
thus affecting the efficiency upon delivery, distribution
and economy of the of materials delivered can
procurement. be easily made;
2. conduct re-orientation on
the appropriate
procurement process to
notify all departments on
these changes to facilitate
smooth transition; and
3. re-assess the efficiency of

the set ₱100,000 threshold
on the issuance of both the
purchase order and
agreement/contract and its
effect on the procurement
process timeline, and the
eventual attainment of its
mandate.
AAR The Non-Revenue Water a. Speed up the Not

2019 of the District registered implementation of already Implemented
high rates of at least 50% identified projects and
No. 11 since CY 2006 ending with activities as the same are Reiterated in
54.98% in CY 2019 due to already very delayed based this report
p. 87 absence of a on original target timeframe
comprehensive NRW and in great consideration
Strategy, delay in the of the cost implication of
implementation of projects, high NRW;
and absence of a
comprehensive monitoring b. Take ownership of reducing
scheme, resulting to NRW by establishing
opportunity loss of income COWD’s own
amounting to comprehensive NRW
₱350,981,715.97 as of Strategy based on the
December 2019. results of study of USAID
and VEI and commit to a
yearly reduced target;
84
Status/ Extent
tion
c. Design a comprehensive
NRW accomplishment
report summarizing all
project indicators in aid of
decision-making;
d. Review the effectiveness of

the NRW Task Force in the
delivery/accomplishment of
targeted outcomes and
outputs;
e. Require a strict and fast

procurement process that
will result in the delivery of
goods, services and
infrastructure at the time
needed;
f. Hasten the training and

other capacity development
interventions on personnel
involved in NRW reduction;
and
g. Secure the supplies and

materials from being
exposed to natural
elements that will
accelerate its wear and
tear.
AAR Failure of the District to a. Revitalize the fire hydrant Not

2019 institutionalize the areas of maintenance program Implemented
cooperation for the usage, particularly on the sealing
No. 12 maintenance and of fire hydrants and ensure
reimbursement of the 407 consistent application of
p. 96 fire hydrants amounting the required seals;
₱7,759,857.36 due to
inadequate coordination b. Execute a Memorandum of
between Cagayan de Oro Agreement (MOA) with the
City Water District BFP clearly setting
(COWD) and the Bureau of responsibilities and
Fire Protection (BFP) thus, obligations between COWD
fire suppression and Non- and BFP regarding the seal
Revenue Water (NRW) and other areas that needs
reduction and monitoring coordination such as, but
activities may be at stake. not limited to:
85
Status/ Extent
tion
1. Standard Operating
Procedure (SOP) in the
usage of fire hydrant
during fire;
2. cooperation between the
two parties on its
maintenance in
accordance with the
National Fire Protection
Association (NFPA)
standards; and
3. possible reimbursement
on the cost of
installation and
operation of such fire
protection facilities as
prescribed in Section 32
of PD 198.
c. Set control mechanisms

to limit usage and access of
water from fire hydrants only by
authorized agencies such as
the BFP.
AAR The District failed to Prepare its Septage Not

2019 prepare its Septage Management Plan (SMP) Implemented
Management Plan (SMP) providing for a strategic
No. 13 as required by RA 9275, objective of the District, the Awaiting funds
PD 856 and PD 198 courses of action to be from the City
p.98 depriving its undertaken with its government for
concessionaires of a desired/expected outcomes the infra
sound wastewater and outputs, target timelines, projects
treatment and disposal accountabilities, means of
system. monitoring and evaluation, and
key performance indicators,
among other items, for an
effective and efficient
implementation and monitoring.
AAR The delayed submission of Require the Finance Not

2019 financial reports, Department Manager to: Implemented
inconsistent with the
No. 14 timelines prescribed under a. revisit the timelines Reiterated in
COA Circular Nos. 2009- prescribed to concerned this report
p.102 006 and 2017-004, divisions/ offices on the
hindered the timely forwarding of source Still for strict
86
Status/ Extent
tion
verification of the validity documents for recording of implementation
and regularity of the transactions in the
covered transactions and Accounting Division;
the fair presentation of the
financial statements. b. prepare a monthly
monitoring schedule to Not
verify the actual dates of Implemented
submission and call the
attention of divisions/ Additional
offices who are delayed; manpower is
and still needed
c. consider investing in high-

speed document and paper Not
scanner in lieu of taking Implemented
photos to save time on
making electronic copies of
submitted documents Additional
necessary for future manpower is
reference. still needed
AAR The Cash in Bank - Local a. Accounting Division to Partially

2018 Currency Current Account identify and record valid implemented
and Time Deposit Account reconciling items in the books
No. 1 balances were not of accounts; prepare BRS on all
reconciled with the Check bank accounts and submit to
p.35 Disbursement Record, COA the Statements within
subsidiary ledger and bank twenty days after receipt of the
statements due to monthly bank statements or
unrecorded reconciling snapshots, whichever may be
items amounting to received or produced earlier.
₱14,325,395.93 contrary to
Philippine Accounting b. Cash Management Division
Standard (PAS) 1. Further, to identify and record the valid
Bank Reconciliation reconciling items in the Check
Statements were not Disbursement Records.
prepared in violation of
Section 74 of PD 1445, c. Accounting and Cash
thus affecting the reliability Management Divisions to
of Cash in Bank accounts. perform reconciliation of
records regularly.
AAR Uncleared clearing e. Prepare working papers Not

2018 account balances of identifying all uncleared PPE implemented
Property, Plant and accounts and thereafter
No. 2 Equipment (PPE) prepare journal entries to Reiterated in
87
Status/ Extent
tion
amounting to correctly reclassify it; this report
p. 36 ₱36,285,673.97,
unreconciled Accumulated f. Fast track the
Depreciation and reconciliation of the general
Depreciation Expense ledger balances of
account balances with the Accumulated Depreciation and
depreciation schedule Depreciation Expense accounts
amounting to against details in the
₱1,214,232,697.47 and Depreciation Schedule
₱89,345,161.23 , generated thru the Accounting
respectively, and non- System to arrive at corrected
conduct of PPE physical balances that will be forwarded
count as of December 31, to the new system;
2018 cast doubt on the
accuracy, faithful g. Ensure the accuracy of
representation of the the processing of accounting
affected accounts and transactions of the new
existence of PPE contrary accounting system by
to Philippine Accounting conducting software validation
Standards (PAS) 1, the prior to acceptance to confirm
conceptual framework of that the system will work in all
useful financial information situations and does exactly
and the Manual on the what it is designed to do in a
Property and Supply consistent and reproducible
Management System . manner. Additionally, all
validation activities and test
results need to be documented;
and
h. Conduct physical count

of all Property, Plant and
Equipment (PPE) as of
December 31 of each year and
submit a report thereon to the
COA auditor.
AAR Erroneous posting of a. Exercise prudence in Fully

2018 transactions resulted to recording the financial implemented
misstatement of various transactions of the District; and
No. 3 suppliers’ ledger accounts Management
of at least ₱1,596,465.45, b. Require the Finance will submit JEV
p.41 inconsistent with Division to examine their
Presidential Decree (PD) accounting records particularly
No. 1445 casting doubt on those with abnormal (negative)
the reliability of District’s balances and those with
Accounts Payable balance identified misstatements per
as of December 31, 2018 confirmation-replies submitted
amounting to by the suppliers and effect
88
Status/ Extent
tion
₱51,189,436.42 necessary adjusting entries,
copy furnished the COA.
AAR Unreconciled loan a. Require the Head of the Not

2018 balances between the Accounting Division to implemented
District and the Local reexamine the workload of the
No. 4 Water Utilities employees in the said Division
Administration (LWUA) and delegate to a competent
p.43 records rendered the staff the completion of the
Loans Payable to LWUA reconciliation schedule; and
amounting to
₱42,695,898.48 as of 31 b. Authorize the Head of
December 2018 doubtful; the Accounting Division to
hence, the financial travel to LWUA to discuss with
statements may not be concerned officials of the latter
fairly presented. the discrepancies noted in the
reconciliation schedule.
c. Should delegation be
unlikely, consider utilizing
personnel from other
Departments to assist in the
reconciliation of accounts in the
Accounting Division to ensure
that accounts in the financial
statements are fairly presented.
AAR The aggregate appraised Subject the Production Wells to Not

2018 value of ₱7,000,000 of two third party independent implemented
production wells was set valuation.
No. 5 by the private sector
partner of the Water Third-party
p.44 District in the joint venture, valuation was
contrary to Executive for lot only
Order No. 301 dated July
26, 1987 and Section 6(b)
of the Revised Guidelines
and Procedures for
Entering into Joint Venture
Agreements Between
Government and Private
Entities, thus the Water
District COWD could not
assert that the agreed rent
is beneficial to the
government nor the
negotiation was marked
with transparency.
89
Status/ Extent
tion
AAR The amount of Submit justification for the Not

2018 ₱5,684,304.00 for Repairs substantial increase in the implemented
and Maintenance was Repairs and Maintenance
No. 6 inadvertently budgeted for budget for CY 2017 but No justification
Generation, Transmission materially underutilized at year- submitted
p.45 and Distribution Expenses end;
and included in the
computation of savings for
CNA 2017 purposes
without any authority for
realignment of budget,
inconsistent with DBM
Budget Circular No. 2017-
3 dated November 16,
2017. Moreover, 91% of
total savings is from
Repairs and Maintenance
which budget increased by
52% for CY 2017 but was
not substantially utilized by
the end of year.
AAR The Disaster Risk and Provide existing guidelines, Not

2018 Reduction Management laws, rules or regulations implemented
Fund was utilized for issued by specific government
No. 8 financial assistance and authority directing the release Management to
tokens amounting to financial assistance and submit legal
p.51 ₱618,114.55 to its regular, distribute tokens to COWD basis
casual and job order employees, and charging the
employees affected by meals to the Fund.
Typhoon Vinta, and meal
expenses amounting to
₱75,249.61 without
appropriate bases contrary
to the Implementing Rules
and Regulations of
Republic Act No. 10121
and Section 4 (7) of PD
1445, causing ineffective
utilization of the Fund.
AAR Expenses for a. Liable person to indemnify Not

2018 hospitalization and the District. implemented
damages caused by
No. 9 negligence amounting to b. Strictly observe the standard
₱114,697.05 were paid by operating procedure stated in Justification to
90
Status/ Extent
tion
p.53 the District to affected the Water Safety Plan for the be submitted
persons without being duration of every installation,
indemnified by liable repair, maintenance or any
employees contrary to excavation to decrease the risk
Section 105 (2) of PD of accidents and payment of
1445, Section 4.2 of COA damages.
Circular 2009-006, Article
2176 of the Civil Code and
Water Safety Plan of the
District, thus, causing loss
of government fund.
AAR Traveling expenses and Require the grantee to restitute Not

2018 incidental expenses the expenses incurred by the implemented
amounting to ₱33,608.61 District related to the foreign
No. 10 for foreign travel of an travel. ND will be
employee were incurred issued if not
p.55 and paid by the District restituted
despite not meeting the
criteria for allowing foreign
travel in violation of Sec. 1
of the Office of the
President Memorandum
Circular No. 35 and Sec. 2
of Executive Order No.
248, thus resulting to
unnecessary expenditures.
AAR The grant of The release of allowance for Fully

2018 Representation Allowance the current month shall be implemented
and Transportation supported by appropriate DTR;
No. 12 Allowance (RATA) and its
utilization have not been in
p.58 accordance with DBM
National Budget Circular
No. 548 dated May 15,
2013, thus rendering the
transactions irregular.
AAR Approximately 16,748 a. Strictly implement the Partially

2018 connections with accounts District’s disconnection implemented
amounting to policy.
No. 13 ₱35,106,702.98, as of Prior to
June 2018, remain active b. Provide additional Pandemic this
p.59 despite customers’ non- manpower in the disconnection was
payment of more than two team to cater more lines for implemented
months water service and disconnection.
91
Status/ Extent
tion
District’s issuance of notice
of disconnection contrary c. Increase the number of
to Board of Directors job orders issued to
Resolution No. 065 s.96 disconnection team and quota
which orders immediate of lines to disconnect and to
disconnection of water prioritize those accounts with
service in case of very high water bill and those
customers’ failure to pay with accounts of more than 12
any two (2) month period, months, except those with
resulting to low collection promissory notes issued.
efficiency and possible
loss to the District due to d. Direct the Non-Revenue
continuous provision of Water Department to fast track
water service to non- their action addressing those
paying customers. water meters located inside the
customers’ property and the
Commercial Department to
facilitate the reconciliation of
accounts for those customers
with letters requesting
reconciliation to facilitate their
payment of account.
e. Require the Commercial

Department to assign a person
or group to monitor the
promissory notes issued by the
customers to make certain that
the customers comply with the
conditions as stated in the
promissory notes.
f. Devise initiatives to
encourage these non-paying
customers to pay their long
overdue accounts to enhance
the District’s collection
efficiency.
2018 The detailed estimates for a. Contract cost be reduced by Not

AAR the project was not ₱1,225,508.01. Implemented
examined leading to an
#14 overage in the contract Contract cost
cost of ₱1,225,508.01, and not reduced
p.62 other provisions of the
bidding documents and b. Provide explanation, with Partially
contract were not supporting documents as Implemented
observed. For these necessary, on the following
92
Status/ Extent
tion
reasons the Water District observations: Still for
had been exposed to submission of
various risks. 1. Non-posting of sufficient
Supplemental Notice in the explanation with
PhilGEPS, the website of the supporting
agency and at any documents
conspicuous place within its
premises;
2. Acceptance of
payment receipt for
certification fee instead of for
income tax;
3. Not requiring the LCB to

submit latest business tax
return;
winning contractor to submit
proof that contractor’s all risk
insurance was obtained, and
5. Issuance of Notice of
Award and Notice to Proceed
beyond the timeline.
2018 Certain provisions of the a. Computer Development

AAR 2016 Revised Software Section to create the Fully
Implementing Rules and application required for the Implemented
#15 Regulations of Republic posting of supplemental
Act. No. 9184 and the notices.
p.66 pronouncement of
Government Procurement
Policy Board were not b. BAC state in the Bid Data
adhered to by the Water Sheet what latest income and
District in the procurement business tax returns means for
of one-unit brand new 6 clarity, and to observe the
wheeler light cargo dump pronouncement of the GPPB as
truck, thus, had affected its regards to ISO certification.
service to the bidders and
to the government as well,
and had exposed the
Water District to risk of
awarding the contract to
non-complying bidders.
2018 The District did not Practice procuring common Partially

AAR practice bulk purchase of use items sufficient for two Implemented
93
Status/ Extent
tion
common use items based months’ requirement, as
#16 on submitted PPMPs and prescribed by General Reiterated
instead, purchased items Appropriations Act of 2018, to
p.68 through the petty cash avail of lower prices. Procured
fund, thus depriving the items may be stored in the
District of the District’s storeroom and will be
discounts/savings in readily available upon request
making bulk purchases of end-users.
and use of the said fund
for more appropriate
charges. Moreover, it
renders the procurement
process of the District
inefficient.
2018 Separate general ledger a. Fast track the finalization of Partially

AAR account for accountable the District’s accounting system Implemented
forms inventory was not using the 2015 Revised Chart
#17 yet established by the of Accounts under COA Already
accounting division due to Circular 2015-010. discussed with
p.70 flaws in the existing Remantec
accounting system used by
the District in violation of b. Identify the amounts Not
COA Circular 2015-010 attributable to Accountable Implemented
promulgating the Revised Forms, Plates and Stickers
Chart of Accounts for Inventory and its expense Amount not yet
Government Corporations. account and properly reflect identified
these in the District’s financial
statements.
2018 The non-revenue water a. Fast track the Partially

AAR (NRW) rate of the District implementation of its Non- Implemented
reached 51.69%, which is Revenue Water (NRW)
#18 above the LWUA Reduction Program to reduce Reiterated
maximum acceptable rate the non-revenue water of the
p.71 of 20% per LWUA Board District to a maximum of 20%
Resolution No. 444 series only and maximize revenue
of 2009 despite the generation on water production
commencement of the capacity; and
NRW Reduction Program
in 2016 resulting to b. Re-evaluate the Partially
continuous loss on the part effectiveness of the District’s Implemented
of the District. current NRW Reduction
Program in view of the Reiterated
otherwise increasing NRW rate.
2018 The District failed to a. Generate the sex- Partially
94
Status/ Extent
tion
AAR generate the sex- disaggregated data of the Implemented
disaggregated data, District’s concessionaires/
#19 monitor the implementation clienteles and use this data in Human
of GAD programs and identifying priority gender Resource
p.73 projects, and analyze GAD issues to be addressed by Information
PAPs through the appropriate programs and System for
Harmonized Gender and projects to be included in the employees was
Development Guidelines annual GAD Plan and Budget started but
(HGDG) Tool contrary to of the District; none for the
Republic Act No. 9710 District’s clients
otherwise known as the yet
Magna Carta of Women
and PCW-NEDA-DBM b. Monitor the Partially
Joint Circular No. 2012-01. implementation of GAD Implemented
programs and projects that
were determined to address the Still for
gender gaps and issues initially submission of
identified in the planning stage; GAD
and Accomplishmen
t report and for
strict
implementation
c. Evaluate the programs Not

and projects using the Implemented
Harmonized Gender and
Development Guidelines HGDG tool is
(HGDG) Tool to determine if not yet used.
the whole of the budget of the
PAPs can be attributed to the Still to conduct
GAD budget. GAD seminar
for CY 2020
thru COA
resource
speaker
Management
will submit an
update
CY 2017
2017 Bank reconciliation a. Prepare bank reconciliation Partially
AAR statements were not statements immediately upon Implemented
prepared and submitted on receipt of bank statements and
#2 time due to late receipt of submit bank reconciliation Reiterated
the bank statements and statements, for all bank
p.39 insufficient manpower to accounts, monthly, to the audit
prepare the report in team.
95
Status/ Extent
tion
violation of Section 74 of
Presidential Decree No. b. Assign additional personnel Not
1145, thereby affecting to handle the preparation and Implemented
reliability of the Cash in submission of BRSs or revisit
Bank – Current Account, the distribution of workload of Reiterated
and Restricted Funds of accounting personnel for
₱221,674,483.97 and possible unequal distribution
₱254,366,579.03 thereof considering the number
respectively. of bank accounts maintained
by the District and the number
of unsubmitted reports since
January 2017.
2017 Semi-expendable items a. Accounting Division Partially

AAR with aggregate cost of reclassify the PPE items to Implemented
₱14,319,672.26 and below retained earnings for those
#3 the capitalization threshold acquired in previous years, and JEV No. 02-
remained in the Property, to appropriate expenses 24D-19 was
p.40 Plant and Equipment account for those items drawn to adjust
account due to non- acquired in the current year; capitalized
implementation of the determine the accumulated semi-
provisions of COA Circular depreciation of the affected expendable
2016-006, thereby tangible items and items. However,
overstating the asset and subsequently, provide no disclosure in
equity account by appropriate adjusting entries, the notes to
₱14,319,672.26 and disclose in the Notes to financial
representing the Financial Statements the statement the
acquisition cost of the amount of inventories amount of
items. recognized as an expense inventories
during the period through the recognized as
issuance of Inventory expense.
Custodian Slip.
Partially
b. Property Division ensure Implemented
that Inventory Custodian Slips
are issued to end-users to There is still no
establish accountability over submission of
the semi-expandable property. documents from
If no ICS were issued at the property
time these items were issued to Division
the end-user, the property confirming
office must issue the same, and issuance and
maintain a Schedule indicating detailing the
the items reclassified and semi-
issued with ICS. expendable
items with ICS
on reclassified
semi-
96
Status/ Extent
tion
expendable
items. However,
ICS were
issued for
current period.
2017 Costs of repairs and Division record as expense if Partially

AAR maintenance and/or incurred in the current year, Implemented
betterments amounting to and adjustment to retained
#4 ₱11,081,227.49 for Other earnings if incurred in prior Still for
Machinery and Equipment, years all costs below the finalization
p.42 and Water, Plant, Structure threshold of ₱15,000, and
and Improvements were adjust the corresponding JEV to be
capitalized without depreciation. When necessary, submitted
observing the criteria for coordinate with Other
recognition, inconsistent Department/s in determining
with Sections 24 and 25, whether repairs and
Chapter 10 of the maintenance were minor or
Government Accounting major and/or betterment costing
Manual, thus, rendered the ₱15,000 mentioned in the Audit
value of the assets and the Observation Memorandum are
equity overstated. appropriate to be recognized as
assets. Thereafter, prepare
adjusting entries for costs that
qualify as expenses. Where a
cost cannot be easily
differentiated between repair
and betterment, the cost shall
be treated as expenses.
Henceforth, use the criteria in
capitalizing the cost.
2017 The unserviceable/ lost a. Accounting Division revisit Partially

AAR items amounting to the documents affecting the Implemented
₱8,574,478.72 that were request for relief of
#5 not dropped from the accountability and that of the Still for
books due to some approved request for proper verification of
p.44 problem on the records accounting treatment; drop relevant
rendered the total Plant- from the books the lost items documents by
Utility Plant in Service and but set up receivables should the District.
assets overstated by the liability have not been
₱8,574,478.72 and the settled.
information conveyed by Partially
the financial statements b. Accounting Division revisit Implemented
unreliable, contrary to and analyze the entry in setting
Philippine Accounting up the ₱ 5,250,400.07 under Still for
Standards 1 and 16. UPIS account and assign verification of
personnel to identify the sold relevant
97
Status/ Extent
tion
items with total book value of documents by
P676,056.40 and after that, the District.
make appropriate correcting
entry.
2017 Delayed recording of a. Accounting Division Partially

AAR reconciling items and non- immediately effect the Implemented
reconciliation of records unrecorded disbursements
#6 between Accounting and upon discovery and to Reiterated
Cash Division rendered the periodically reconcile its
p.45 Cash-in-Bank -Local records with the Cash
Currency Current Accounts Division’s.
and Other Assets
(restricted accounts)
balances unreliable,
contrary to COA Circular
No. 97-002 and Philippine
Accounting Standard 1.
2017 Details of the depreciation Closely coordinate with the Partially

AAR expense charged against software provider in the Implemented
the District’s operations preparation of detailed report
#7 amounting to by specifying the data needed Accounting
₱84,082,918.37, as of to be extracted and included in System is still
p.48 December 2017, cannot be the downloading of report. for finalization
provided, casting doubt on Once data had been provided,
the reliability of assertion counter check with available
made on the District’s documents to verify accuracy of
financial statement. the amounts indicated. We
further recommended to
maintain a backup of files,
preferably hardcopy, to ensure
availability of information in
case of file corruption.
2017 Unutilized land with a. Reclassify the current Not

AAR aggregate cost of accounts used to Investment Implemented
₱3,346,899.50 were Property account;
#8 recorded under Plant- No
Utility Plant in Service reclassification
p.49 (UPIS) and Other Assets made
of which the status of
ownership of lots was not b. Fast track the gathering of Partially
disclosed in the Financial documentary requirements for Implemented
Statements, contrary to the registration of lots with the
Philippine Accounting Register of Deeds. Resort to Still for retrieval
Standard (PAS) 40, legal action should it be of relevant
98
Status/ Extent
tion
thereby affecting the needed. documents
usefulness of the financial
statements.
2017 Other Receivables Exert effort in collecting the Partially
AAR amounting to ₱989,347.53 accounts amounting to Implemented
remained uncollected for ₱989,347.53. Request for write-
#9 ten (10) years and above off of accounts should Still for strict
due to lapses of concerned collection is certain to be implementation
p.51 Departments to demand impossible due to the following
immediate settlement, conditions:
affecting the probability of
collecting the accounts. 1. Absence of records or
Non-disclosure in the documents to validate/
financial statements of the support the claim;
collectability of the 2. Death of the employee/
accounts also affected the accountable officer/
reliability of the financial debtor/s;
reports, inconsistent with 3. Unknown whereabouts of
Section 124 of Presidential the employee/ accountable
Decree No. 1445. officer/ debtor/s and that
he/she could not be located
despite diligent efforts to
find him/her;
4. Incapacity to pay, and
5. Exhaustion of all possible
remedies by the
Management to collect the
receivables
2017 Negative balance of Accounting Division reconcile Partially

AAR general ledger accounts the Accounting subsidiary Implemented
amounting to ₱711,124.27 ledgers of the inter-agency
#10 due to erroneous recording payable accounts with payrolls’ On-going
of inter-agency accounts withholding and remittance reconciliation
p.52 rendered the financial especially of prior period’s
information unreliable, balances, and thereafter,
contrary to Philippine regularly perform reconciliation
Accounting Standard 1 after posting and payment.
which requires the
Financial Statements to be
complete and free from
error.
2017 District’s properties of Instruct the Inventory Partially

AAR approximately Committee to complete their Implemented
₱2,026,110,188.87 were annual physical count of
#13 not provided with property, plant and equipment Still for
99
Status/ Extent
tion
insurance coverage due to and submit their report to the finalization of
p.55 failure of the Inventory Government Service Insurance Physical count
Committee to complete the System for their insurance
physical count, thus, application. Subsequently,
posing risk of non- obtain insurance coverage for
indemnification of all District properties in
insurable assets in case of compliance to Republic Act No.
loss arising from fire, 656, as amended, and COA
earthquake, storm or other Circular 92-390.
casualty.
2017 The members of Board of a. Board of Directors/ Not
AAR Directors spent ₱620.00 to Management set expenses for Implemented
₱4,367.45 for a single reasonable amount and for the
#15 meal which borders on Accounting Division to process
being excessive, and for for payment allowable
p.58 unnecessary expenses expenses only.
amounting to ₱6,815.00
contrary to Executive
Order No. 24 and public
interest.
2017 The payments to the Claims be supported with Office Partially

AAR OGCC of ₱20,000 monthly Order issued by the OGCC Implemented
representing assigning them to perform
#16 reimbursement of specific and time-bounded Still for strict
expenses of the two additional assignment or implementation
p.59 assigned Counsels of the special tasks, proof of
District were not supported expenses and accomplishment
with appropriate report.
documents contrary to
Section 4(6) of Presidential
Decree No. 1445 and
Section 1.3, Rule 3 of the
Rules and Regulations
governing the exercise of
the OGCC of its authority,
duties and powers, thus
the payments were
deemed irregular.
2017 Failure of the Technical Technical Working Group Partially

AAR Working Group to verify conduct an assessment Implemented
the reasonableness of the addressing the deficiency and
#19 contract price of risks noted by providing the Still to conduct
₱900,000.00 and conduct following: sufficient
p.63 full evaluation of the assessment on
vacant lot leased for the a. Comparative analysis on the matter
100
Status/ Extent
tion
parking area of the the prevailing lease rates
District’s service vehicles for real properties in
is contrary to Section B 1.3 conformity with Section B
of Appendix B of RA 9184; 1.3 of Appendix B of RA
thus affecting the finances 9184;
and operation of the b. Survey of the lot rented;
District due to certain risks. and
c. Result of verification on the
ownership of the lot.
2017 The GAD Committee had GAD Committee to:

AAR not observed pertinent
provisions in preparing the a. Identify gender issues Not
#20 Annual Gender and within the mandate of the Implemented
Development Plan: thus, it District;
p.64 is highly likely that critical No GAD plan
but latent gender issues submitted in CY
had not been identified and 2019
addressed and funds had
been spent for non-GAD Not
activities. b. State in the GAD Plan the Implemented
causes of identified gender
issues; and No GAD plan
submitted in CY
2019
Not
c. Assess the impact of GAD Implemented
activities in relation to
women empowerment and No GAD plan
rights through appropriate submitted in CY
tool/s. 2019
2017 Project amounting to For succeeding projects, Partially

AAR ₱2,441,475.63 for require winning bidders to post Implemented
rehabilitation of the additional performance security
#21 District’s laboratory should variation orders result to Still for strict
remained uncompleted for cumulative amount of more implementation
p.69 more than one year than ten percent.
beyond its expected period
of completion hampering
the execution of another
contract to make the
laboratory usable.
2017 Vacant lots remain Concerned department heads Partially

AAR unsecured from loss act on the recommendations of Implemented
101
Status/ Extent
tion
contrary to Section 2 of the Inventory Committee to
#23 Presidential Decree No. have the vacant lots fenced and Still for fencing
1445 which requires the installed with signage. remaining lots
p.71 chief or head of the and installation
government agency to of signage
safeguard the government
property against loss.
CY 2016
2016A The Other Deferred a. Finance, Commercial and Partially
AR Credits account includes Engineering Department, to Implemented
various obligations which retrieve supporting documents
#1 were already completed, e.g. underlying contracts, MOA, Still for retrieval
without supporting Completion Reports of its of relevant
p.38 documents to ascertain its recorded items under Other documents
existence, and without Deferred Credits to ascertain its
accompanying qualitative validity as such especially
disclosures to enable those which have been long
effective understanding of outstanding and to close
accounts presented. obligations verified as
completed to proper accounts.
2016 The Bank Reconciliation Prepare bank reconciliation Partially

AAR Statements were prepared based on the extracted ledger Implemented
late by the agency and cash in bank balances and
#3 submitted for audit beyond submit them for audit within Reiterated
the reasonable period, reasonable period.
p.41 contrary to Section 74 of
Presidential Decree No.
1445, thus, hindering the
timely verification of
management’s assertion
on the financial
statements.
CY 2015
2015 The Accounts Receivable Require the Accounting and Partially
AAR balance per book of Commercial personnel to Implemented
₱138,724,832.69 is lesser reconcile the balances of the
#15 by ₱308,416.85 compared Accounts Receivable to come On-going
with the aging of active up with the correct amount in reconciliation
p.55 accounts with a balance of conformity with PAS 1.
₱139,033,249.54, casting
doubt to the validity and
correctness of the account
presented.
102
Status/ Extent
tion
2015 Failure to finalize the Quarterly reconciliation of Not
AAR Report on the Physical variance in inventory accounts Implemented
Count of Inventories must be put at top priority and
#18 rendered the existence discrepancies between physical Still for strict
and valuation of the and book inventories must be implementation
p.59 Inventory account doubtful. investigated and cleared of the
immediately. reconciliation
CY 2014
2014 The balance per books of Require the Accounting Partially
AAR Loans Payable in the Division to regularly reconcile Implemented
amount of the balances of the Loans
#1 ₱777,523,982.21 as of Payable to fairly present the On-going
December 31, 2014 accurate amount of outstanding reconciliation
p.32 differed from the confirmed loan balance at the end of each
amounts and from the year.
LWUA Schedule of
Amortization in the
aggregate amount of
₱1,402,343.30 thus casted
doubt on the reliability of
the financial statements.
2014 The District could have a. Make representation Partially

AAR increased its collection with the City Accountant, City Implemented
efficiency had Treasurer, City Budget Officer,
#3 management enforce the City Council and the City Still for strict
collection of water bills and Mayor to request allocation for implementation
p.35 charged penalty fee on the arrears with the District
overdue accounts from the through the assistance of the
City Government of BOD;
Cagayan de Oro City in the Partially
aggregate amount of b. Request the BOD to Implemented
₱10,685,511.00. amend the Board Resolution
issued last December 2006 to Still for strict
strictly implement the implementation
imposition of penalty charges
on overdue accounts in
accordance with the Water
Service Contract as the legal
basis.
2014 Land and Land Rights Exert best effort in facilitating Partially
AAR amounting to the requirements for these lots Implemented
₱6,737,265.25 were not to be issued with Transfer
#7 supported with Transfer Certificate of Title (TCT) and Still processing
Certificate of Title or other properly secure the properties TCT
103
Status/ Extent
tion
p.40 documents contrary to with fences to avoid further
Section 39 (2) of PD No. entry of squatters.
1445 thus the District’s
interest cannot be
protected against third
parties.
2014 Pressure Sustaining Valve Be prudent in its decision Partially

AAR valued at ₱1,978,620.00 making more importantly in Implemented
remained unutilized since transactions of material amount
#29 its final delivery on June 6, since these entail high cash Consistent and
2011 thus materially outflow that the District strict
p.68 depleted the funds of the expected high level of benefit or implementation
District for an unrealized higher rate than of the former. is still required
purpose. Considering the long lapse of
time from date of delivery of the
subject material, immediate
appropriate action is called for
to gain benefit from its
acquisition.
CY 2013
2013 Total disallowances a. Record the total adjusted Fully
AAR amounting to disallowance; and Implemented
₱1,133,217,880.82, Notice
#35 of Suspensions of Reiterated
₱17,524,700.01 and
p.93 Notice of Charge b. Request for the immediate Not
amounting to ₱159,890.00 settlement of disallowance Implemented
issued in the prior years particularly those with COA
were remained unsettled. Decision whose motion for Full settlement
reconsideration was denied by not made
the Commission Proper.
CY 2012
2012 The accrual of liability for a. Instruct the Accounting Partially
AAR the earned leave benefits Division of the Finance Implemented
of the employees Department to make the
#4 amounting to necessary adjusting entries to On-going
₱17,290,589.69 as of record the accrued liability finalization of
p.25 December 31, 2012 was pertaining to the earned leave accrual
not provided by the district, benefits of the employees after
hence employees' benefits ensuring the correctness of the
were not properly accumulated leave credit
accounted for and balances of employees as of
disclosed in the Financial December 31, 2012.
Statements, resulting to
104
Status/ Extent
tion
understatement of liability, b. Set-up a special fund Partially
overstatement of equivalent to the balance of the Implemented
government equity and pensions and benefits reserve
overstatement of net account for the accrued earned On-going
income. leave of employees to defray finalization of
expenses of employees’ accrual
pensions and benefits in the
future.
c. Suggested adjusting entries Fully

to recognize accrued payable Implemented
on terminal leave benefits
earned by each employee per
year of the district.
d. Suggested entry every time Fully

an employee is paid Implemented
monetization leave within the
year.
2012 Disallowances amounting a. Exert effort to cause the Not

AAR to ₱10,728,443.00 issued settlement of audit Implemented
on the transactions of the disallowance. Settlement of
#9 district in CY 1994 to 1996 audit disallowances can be Full settlement
and CY 1997 accounts, immediately enforced by not made
p.36 with COA Decision No. withholding the salaries or
2012-019 dated February other claims due the persons
17, 2012, were not settled liable, in satisfaction of the
as of December 31, 2012. amounts disallowed or
charged. On the other hand,
legal remedies should be
employed by management to
ensure the settlement of the
liabilities of those officials and
employees who are already
separated from the government
service.
Not
b. Act on disallowances Implemented
within the required timelines.
Full settlement
not made
105
PART IV-APPENDICES
TABLE OF CONTENTS
Appendices Particulars Pages
A 100% Completed Projects but still part of the Construction 106

in Project (CIP) account
B Monitoring on the Submission Trial Balance, Disbursement 107
Vouchers and Journal Entry Vouchers
B-1 Monitoring of submission of BRS 108
C Pictures of the 2,000 s.q. meter lot rented by COWD as 110

parking area
C-1 Pictures of the 2,500 s.q. meter adjacent lot rented by 111
COWD as additional parking area
C-2 Pictures of flash floods during heavy rains at Kauswagan 112
National High-way, Cagayan de Oro City
C-3 Pictures of COWD Kauswagan Sub-Office 113
Appendix A
AAR page 39
Commission on Audit
Schedule on 100% Completed projects per Engineering Department and still part of Construction in Progress account
As of October 31, 2020
Still part of the
Construction in
W.O. No. PROJECT DESCRIPTION LOCATION Date Completed Progress account
15-055-D 250mm Discharge Testline PW#31A Ayesa Subd. 02/11/2017 1,847,137.40
15-068-D Prop. Construction of warehouse Bldg. Kauswagan Shop (Property Building) 08/14/2018 12,254,240.84
15-071-D Proposed Perimeter Fence and Site Development PW#31 Ayesa Subd., Camaman-an 03/03/2017 1,291,314.20
17-013-D Transmission & Distridution Phase 3 Mahogany Calaanan 4/15/2019 7,267,193.12
18-004-F 200MMØ TRANSLINE & INTERCON@ LUMBIA CDOC 01/04/2019 4,122,370.26
18-016-D Prop. Genset Shedhouse Booster Pumping Station Balulang 01/19/2019 1,081,367.87
17-014-D Prop. Water Supply System w/ 113 cu.m Elevates Steel tank Xavier Ecoville, Brgy Lumbia 16,233,660.15
17-060-F Prop. 100mmØ Distribution Line with 3 Units 50mmØ Meter Stub-out Tejero St. 02/12/2020 269,545.91
17-061-F Prop. 75mm Distribution Line w/ 2 units 50mmØ Meter Stub-outs Zone 1 Balulang 221,174.55
18-038-F Prop. 100mmØ Distribution Line Gen. Antonio Luna St. 5/29/2020 122,302.48
19-003-F Prop. 75mm Pipline Extension w/ 4 units MSO Brgy. 36 Lutheran Reloc Site CDOC 05/05/2020 317,906.61
19-007-F Prop. 250mm Pipe Realignment Kauswagan Highway 10/23/2019 85,239.55
19-008-F Prop. 450mmØ Pipe Realignment Gumamela St. Carmen 06/11/2019 426,264.87
19-010-F Prop. Pipeline Interconnection w/ 1 unit Mother Meter Glacierplus, Igpit opol 06/13/2019 1,293.57
19-012-F Prop. 100mm Pipeline Extension w/ 3 units MSO Zone 12 B-Carmen 10/30/2019 430,088.26
19-018-D Prop. Restoration of Concrete Pavement Phase 2, Sta. Cecilia subd., Gusa 05/15/2019 47,224.60
19-019-D Prop. Restoration of Concrete Pavement San Pedro St. Bayabas 07/04/2019 20,900.48
19-020-f Prop. 75mmØ Pipeline Interconnection 06/04/2019 1,983.44
19-025-F Prop. 75mm Distrinution Line w/ 3 units MSO Zone 2B Pagatpat 02/03/2020 221,715.27
19-026-F Prop. 100 UPVC Pipeline Extension w/ 1 unit 50mm MSO Zone 6, Bugo 05/05/2020 213,097.29
19-038-F Prop. 200mm Interconnection line w/ 75mm Electromagnetic flowmeter Amaia Scapes, Anhawon Upper Bulua 03/03/2020 128,345.92
19-039-F Prop. 150mm PVC Pipeline nterconnection Xavier Ecoville Lumbia 54,560.88
19-040-F Prop. 100mm Distribution Line w/ 1 unit MSO Zone 2, Tabok Bulua CDO 436,503.22
19-044-F Prop. Transfer of 500mm Eletromag flowmeter & oyher fittings Macasandig booster station 03/03/2019 115,798.78
19-046-F Prop. Interconnection St. Francis Hts. Subd. Pontefino 02/24/2020 239,747.91
19-047-D Prop. Restoration of Concrete Pavement Near Xavier Heights subd. 09/20/2019 29,570.72
19-048-D Prop. Restoration of Conrete Pavement Zone 4, Kauswagan 02/20/2020 24,963.87
19-049-D Prop. Restoration of Conrete Pavement Luyong Bonbon 11/14/2019 37,680.64
19-050-D Prop. Restoration of Conrete Pavement Opol Highway 12/05/2019 29,790.76
Berjaya Reloc site and Camaman-an
19-054-f Prop. Installation of Data Loggers at COBI Pipeline Nat'l. High schl. 12/09/2019 20,129.77
19-062-D Prop. Restoration of Conc. Pavement Taboc Opol 02/20/2020 24,941.86
19-067-A Prop. 300mm Pipe Realignment Western Kolambog 01/27/2020 228,943.76
19-071-D Prop. 300mm & 150 mm UPVC pipeline replacement PW#19, Balulang 04/21/2020 124,114.45
19-076-F Replacement of 65mm to 40 mm Water Meter Sunrise Bliss Lumbia 11/08/2019 1,939.87
19-077-D Prop. Restoration of Conc. Pavement CM Recto Av. Lapasan 04/06/2020 28,958.10
19-082-F Prop. Installation of 1 unit MSO P-1A Macapaya, Camaman-an CDO 01/27/2020 57,406.45
19-086-D Prop. Elevated Tank Scaffoldings Soldier's Hill 03/04/2020 84,155.82
Com2019-009-F Prop. 50mm Public Stub-out Z-6, Riverside Bugo 03/04/2020 14,934.18
Com2019-010-F Prop. 50mm Public Stub-out Zone 5, Cugman 11/11/2019 15,935.24
Com2019-012-F Prop. 50mm Public Stub-out Colrai, Macabalan 06/07/2019 54,752.27
Com2020-007-F Prop. 2 units Public MSO San Antonio Lumbia 09/05/2020 60,946.34
17-081-D Prop. Const'n. Of 3 storey Bldg, Tin-ao, Agusan 13,412,056.03
Total 61,702,197.56
Prepared by:
Christian Niel B. Clapano

Audit Team Member
106
Appendix B
AAR page 45
Commission on Audit
Monitoring on the Submission Trial Balance, Disbursement Vouchers and Journal
Entry Vouchers
CY 2020
Trial Balance* Disbursement Vouchers* Journal Entry Vouchers*

No. of days No. of days No. of days
Month Date Submitted Date Submitted Date Submitted
delayed delayed delayed
January 09/09/2020 212 2/20/2020 10 3/15/2021 399
February 09/09/2020 183 3/6 &10/2020 - 3/15/2021 370
March 09/09/2020 152 04/06/2020 - 3/15/2021 339
April 09/09/2020 121 5/28/2020 18 3/15/2021 309
May 09/09/2020 91 6/19/2020 9 3/15/2021 278
June 09/09/2020 61 7/13/2020 3 3/15/2021 248
July 09/16/2020 37 08/10/2020 - 3/15/2021 217
August 10/08/2020 28 09/09/2020 - 3/15/2021 186
September 11/05/2020 26 10/10/2020 - 3/15/2021 156
October 12/28/2020 48 11/18/2020 8 3/15/2021 125
November 01/18/2021 39 1/29/2021 50 3/15/2021 95
December No Submission 02/05/2021 26 No Submission
* Deadline - within the first 10 days of the ensuing month
Prepared by:

State Auditor I
Audit Team Member
107
Commission on Audit
Appendix B-1
Monitoring on the Submission of Bank Reconciliation Statements (BRS) to COA AAR page 45
CY 2020
Jan BRS Feb BRS Mar BRS Apr BRS May BRS Jun BRS Jul BRS Aug BRS Sept BRS Oct BRS Nov BRS Dec BRS
Date Due* Feb 25, 2020 Mar 25, 2020 Apr 25, 2020 May 25, 2020 Jun 25, 2020 Jul 25, 2020 Aug 25, 2020 Sep 25, 2020 Oct 25, 2020 Nov 25, 2020 Dec 25, 2020 Jan 25, 2020
Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days Date No. of Days
Bank Account No.
Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed Submitted Delayed
1 DBP Disaster Risk Reduction Program Account (0810-020017-031) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
2 DBP Corrales (0810-020011-030) 03/12/2021 381 03/12/2021 352 03/12/2021 321 03/12/2021 291 03/12/2021 260 03/12/2021 230 03/12/2021 199 03/12/2021 168 03/12/2021 138 03/12/2021 107 03/12/2021 77 No Submission
3 DBP COWD NHA CDO Bayanihan Project (0810-036899-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
4 DBP COWD Online Collection Account (0811-032722-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
5 DBP Expansion & operating Reserve (0810-020010-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
6 DBP POS/IPG Payment (0810-036322030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
7 DBP RTC Fund (0810-020015-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
8 DBP Sendong OP Grant (0810-028965-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
9 DBP NRW Reduction Project (0810-0388110-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
10 DBP E-Gov Account (0810-020011-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 No Submission
11 DBP COWD WSS Projects - Sendong 2 (0810-04110Z-031) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
12 LBP Puerto (3532-0026-20) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
13 LBP Savings Macabalan/Limketkai (1712-0087-99) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
14 LBP Capistrano Branch (0152-1026-31) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
15 LBP CGD (2412-1009-59) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 No Submission
16 LBP Velez Savings (2412-1035-91) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 No Submission
17 DBP CGD (0810-020018-080) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
18 DBP COWD-LWUA Savings (0810-027356030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
19 DBP Special Project (0810-020008030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
20 DBP Contingency Fund (0810-020017030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
21 DBP Corrales - Pension & Benefits Fund(0810-04206Y-030) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
22 DBP Corrales - Capital Improvement (0810-027324-160) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 10/13/2020 80 10/13/2020 49 No Submission
23 LBP - Savings (2412-1009-67) 10/13/2020 231 10/13/2020 202 10/13/2020 171 10/13/2020 141 10/13/2020 110 No Submission
24 Amanah Bank (002 01-00003-7) No Submission
25 DBP Capistrano (0811-002060-080) No Submission
26 DBP - Capital Improvement (0810-027324-030) No Submission
27 LBP Capistrano WSS Calaanan Project (0152-1021-51) No Submission
28 LBP Carmen Branch (3142-1017-68) No Submission
29 Philippines Veterans Bank (023-006970-002) No Submission
30 UCPB Savings Bulua (820-01-00873-0) No Submission
31 UCPB Savings Capistrano (083-800-01-00705-5) No Submission
32 UCPB Lapasan (810-00-00588-5) No Submission
33 DBP Corrales - Capital Improvement (0810-034961-160) No Submission
108
36 DBP Corrales - Capital Improvement (0810-03863E-160) No Submission
37 DBP Corrales - Capital Improvement (0810-03914F-160) No Submission
40 DBP Corrales - Capital Improvement (0810-04010E-160) No Submission
41 DBP Corrales - Capital Improvement (0810-04031H-160) No Submission
42 DBP Corrales - Capital Improvement (0810-040947-160) (A)* No Submission
43 DBP Corrales - Capital Improvement (0810-040947-160) (B)* No Submission
45 DBP Corrales - General Fund - Hold out (0810-020011-160) (A)* No Submission
46 DBP Corrales - General Fund - Hold out (0810-020011-160) (B)* No Submission
47 DBP Corrales - General Fund - Hold out (0810-020011-160) (C)* No Submission
48 DBP Corrales - Customer's Guaranty Deposit (0810-020018-160) No Submission
49 DBP Corrales - Customer's Guaranty Deposit (0810-035978-160) No Submission
50 DBP Corrales - LWUA Joint Savings Account(0810-027356-160) No Submission

51 LBP - Velez - LWUA Joint Savings Account (2411-0292-31) No Submission
52 DBP Corrales - NRW Reduction Project (0810-038811-160) (A)* No Submission
53 DBP Corrales - NRW Reduction Project (0810-038811-160) (B)* No Submission
54 DBP Corrales - Contingency Fund (0810-020017-160) No Submission
DBP Corrales - Expansion and Operating Reserve (0810-020010-
55 No Submission
160)
DBP Corrales - Expansion and Operating Reserve (0810-03816Z-
56 No Submission
160)
DBP Corrales - Expansion and Operating Reserve (0810-03863B-
57 No Submission
160)
DBP Corrales - Expansion and Operating Reserve (0810-03784L-
58 No Submission
160)
59 DBP Corrales - Expansion and Operating Reserve (0810-041268B- No Submission
DBP Corrales - Expansion and Operating Reserve (0810-039014-
60 No Submission
160)
61 DBP Corrales - General Fund (0810-03863C-160) No Submission
62 DBP Corrales - General Fund (0810-038160-160) No Submission
63 DBP Corrales - General Fund (0810-04010F-160) No Submission
64 DBP Corrales - General Fund (0810-04010G-160) No Submission
65 DBP Corrales - General Fund (0810-04069K-160) No Submission
68 DBP Capistrano - General Fund (0811-002060-160) (A)* No Submission
69 DBP Capistrano - General Fund (0811-002060-160) (B)* No Submission
70 DBP Capistrano - General Fund (0811-002060-160) (C)* No Submission
71 DBP Corrales - WSS Projects Sendong 2 (0810-04126A-160) No Submission
72 DBP Corrales - RTC Fund (0810-020015-160) No Submission
73 DBP Corrales - RTC Fund (0810-041257-160) No Submission
74 DBP Corrales - DSLC for COBI (0810-020011-531) No Submission
Assumption:
* Bank statements/snapshots/printouts are obtained from banks within 5 days after the close of each month
Prepared by:

State Auditor I
109
Appendix C
AAR page 52
Commission on Audit
Rented lot used as Parking Area located at Kauswagan National High-way,
Cagayan de Oro City
2,000-sq. meter lot (pictures taken before 8:00 am)
110
Appendix C-1
AAR page 52
Commission on Audit
Rented adjacent lot used as additional Parking Area located at Kauswagan
National High-way, Cagayan de Oro City
2,500-sq. meter lot (pictures taken before 8:00AM)
(pictures taken @ 10:45am)
111
Appendix C-2
AAR page 52
Commission on Audit
Flash Floods during heavy rains at Kauswagan National High-way,
Cagayan de Oro City
(photo courtesy of aboutcagayandeoro.com)
(photo courtesy of cdodev.com)
112
Appendix C-3
AAR page 52
Commission on Audit
Kauswagan Sub-Office
113

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Republic of the Philippines

May 21, 2021

ATTY. MATEO G. DELEGENCIA

We conducted our audit in accordance with International Standards of Supreme Audit

1. Erroneous adjusting entries caused negative balances totaling ₱21,219,708.17 for

2. The Construction in Progress account reported a balance of ₱181,896,140.01 as of

Very truly yours,

The President of the Philippines

The Vice-President of the Philippines

The President of the Senate

The Chairman-Senate Finance Committee

The Chairman – Appropriations Committee

The Secretary of the Budget and Management

The Chief of Office

AGENCY ACTION PLAN and STATUS OF IMPLEMENTATION

Sector : Corporate Government Sector

Agency Action Plan Reason for

AAR The Construction in We recommended that

AAR Non-conduct of PPE We recommended the

AAR Non-submission of We recommended

AAR Absence of adequate We recommend that

AAR The Cagayan de Oro We recommended the

AAR The setting-up of We recommended the

d. Reduce the PCF

e. adhere strictly with

AAR Non-Revenue Water We recommended that

AAR COWD payment of We recommended the

AAR Payment of salaries We recommended the

Long outstanding bank

a. Require the Cash

b. Instruct the Cash

Long Outstanding Book

a. Require the Cash

b. Instruct the Cash

Long Outstanding SL and

a. Require the created

Review the bond

AAR The Accounts a. Consider the creation

AAR The reliability and a. Require the

c. Require the Finance

AAR Inaccuracy in the Require the Finance

AAR The District paid a. Submit to COA an

AAR Final payment a. Revisit the

AAR Insufficiency of On Absence of plan for

On not updated ERP

e. Update the ERP at

Result of Inspection of the

Reassess basis for

AAR The Bidder was Require the BAC to:

AAR Non-observance of a. Management

AAR The Non-Revenue a. Speed up the

f. Hasten the training

AAR Failure of the District a. Revitalize the fire

AAR The District failed to Prepare its Septage

AAR The delayed Require the Finance

AAR Uncleared clearing a. Prepare working

AAR Erroneous posting of a. Exercise prudence

AAR Unreconciled loan a. Require the Head of

AAR The aggregate Subject the Production