AUDIT OBSERVATION MEMORANDUM NO. 1

AUDIT OBSERVATION MEMORANDUM NO. 1. The Municipal Government of Bulan, Sorsogon failed to submit Monthly Report of Official Travels and the corresponding report of Fuel Consumption of government motor vehicle in violation of pertinent provisions of Section 361 of the Government Accounting and Auditing Manual (GAAM) Vol. I.

DISCUSSION:

Section 361 of GAAM Vol. I provides the following:

“Regulation on the use of government vehicles. Hereunder are the basic rules on the use of government vehicles:

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(e) Use of government vehicles shall be properly controlled and regulated.

1. The use of government vehicles should be through properly accomplished and duly approved driver’s trip ticket which should be serially numbered, a summary of which shall be made at the end of the month in a Monthly Report of Official Travels for audit purposes.

2. All motor vehicles owned by the government should be plainly marked “FOR OFFICIAL USE ONLY,” under which should be written the corresponding name of the Agency operating or using the same. The mark should appear on each side of the motor vehicle.

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(g) Monthly Report of Fuel Consumption of government motor transportation shall be submitted to the auditor within the first ten (10) days of the succeeding month by the Chief, General Services Division or equivalent.”

Records of this Office showed that as of this writing LGU Bulan, Sorsogon failed to submit said Monthly Reports covering the period from January 2006 to July 31, 2008 in open defiance to the aforequoted provisions.

This deficiency in the submission of these required reports deprived the auditor to timely examine and review the transactions made by the LGU Bulan, Sorsogon on its operations.

COA’S RECOMMENDATION:

Require the concerned officials or its equivalent to strictly observe the provisions of Section 361 par (e) & (g) of GAAM Volume I on the submission of mandatory reports, relative to the use of government vehicles and henceforth.

LGU’S COMMENT:

Vehicles maintained by the LGU are used mostly in its waste management and road maintenance programs. They are marked LOCAL GOVERNMENT UNIT OF BULAN and/or ALSA BULAN. Corresponding trip tickets are attached as supporting documents to disbursement vouchers. In compliance with the recommendation, the LGU will mark the vehicles “FOR OFFICIAL USE ONLY.” Further, Monthly Report of Fuel Consumption and other schedules and attachments shall be prepared by the General Services Office and shall be submitted to the commission within the period specified.

SPECIAL AUDIT REPORT ON LGU BULAN, SORSOGON RELEASED

The Commission on Audit (COA) released last August 8, 2009 the 143-page Special Audit Report on Local Government Unit (LGU) of Bulan, Sorsogon. The special audit stemmed from letter request dated January 17, 2008 of Mr. Romeo H. Valeriano, former COA auditor and member of the Sorsogon Crusade for Good Government of Bulan, Sorsogon. The said audit was pursuant to Office Order No. 2008-05-18 dated May 27, 2008, wherein the COA thru the Office of the Team Leader of LGS Masbate led by Mr. Ross A. Obejas, State Auditor IV and his audit team have conducted an audit investigation on LGU Bulan, Sorsogon covering Calandar Years 2006, 2007 and 2008 on the following areas:

· Construction of the Bulan Integrated Bus Terminal

· Construction of the Slaughterhouse; and

· Income/revenue from Operations of LGU’s heavy equipment

The Findings and Observation of the special audit are as follows:

1. The Municipal Government of Bulan, Sorsogon failed to submit Monthly Report of Official Travels and the corresponding report of Fuel Consumption of government motor vehicle in violation of pertinent provisions of Section 361 of the Government Accounting and Auditing Manual (GAAM) Vol. I.

2. The Municipal Government of Bulan, Sorsogon failed to secure/apply for Land Use Conversion and Exemption Clearance from Agrarian Reform Regional Office of the lot donated by Mrs. Anecita O. De Castro property with an area of one (1) hectare on the site of Bulan Bus Terminal located at Brgy. Fabrica, Bulan, Sorsogon in violation of DAR Administrative Order (AO) No. 1 series of 2002 and AO NO. 6, series of 1994 as amended by AO No. 4, series of 2003, respectively.

3. Construction of Bulan Integrated Bus Terminal at Brgy. Fabrica, Bulan, Sorsogon showed an accomplishment of 99.42% showing a deficiency of 0.58% unaccomplished or an equivalent amount of P191,536.13 for refund/completion by the Contractor.

4. The Municipal Engineer of Bulan, Sorsogon failed to strictly observe and conform to the policy, standard and guidelines in the establishment, construction, improvement, and operation of Bulan Slaughterhouse/Abbatoir pursuant to Executive Order No. 137 series of 1993.

5. The Feasibility/Investment study conducted by DPEM Inc. failed to realize what was projected and envisioned as far as financial and economic viability of Bulan Integrated Bus Terminal project is concerned.

6. Construction of Bulan Integrated Bus Terminal and Slaughterhouse as published on the “Philippine Star” dated September 15 and 22, 2006 issues states that funding source was through Municipal Bond Issue in the amount of P33 million and P5million respectively, while on the contrary, said twin projects was funded through a loan from LBP in the amount of P38,486,744.52 dated September 10, 2007 to refinance the same.

7. Premature conversion activities were undertaken by LGU Bulan, Sorsogon of a Riceland donated by Mrs. Anecita O. De Castro to be developed into a Bus Terminal from October 4, 2006 prior to awarding of the contract to S.R. Baldon Construction and Supply on December 11, 2006.

8. Bond Flotation semi-annual interest from December 05, 2006 to December 05, 2007 in the amount of P3.436 million could have been saved had the municipal government of Bulan, Sorsogon set-aside bond flotation as the mode of financing the project, although as a consequence a loan agreement made, executed and notarized on September 03, 2007 by and between LGU Bulan, Sorsogon and LBP Legazpi Branch, to refinance the same project.

9. LGU of Bulan, Sorsogon failed to post a procurement opportunity with the PhilGEPS in violation of Section 8-IRR-A of Republic Act No. 9184.

Details of the abovementioned findings and observations, including COA’s recommendations and comments of the LGU will be posted on the succeeding blog entries.