Sample COA Annual Audit Report PDF

Republic of the Philippines
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
ANNUAL AUDIT REPORT
ON THE
PROVINCIAL GOVERNMENT OF
ILOCOS NORTE
For the Year Ended December 31, 2016

COMMISSION ON AUDIT
OFFICE OF THE REGIONAL DIRECTOR
City of San Fernando, La Union
March 24, 2017
Honorable Governor Imee R. Marcos

Province of Ilocos Norte
Laoag City
Dear Governor Marcos:
We transmit herewith the report on the financial and compliance audit of the accounts
and operations of the Provincial Government of Ilocos Norte for the year ended December
31, 2016, in compliance with Section 2, Article IX-D of the Philippine Constitution and
pertinent Sections of Presidential Decree No. 1445.
The audit was conducted to ascertain the propriety of financial transactions and
compliance with prescribed rules and regulations. It was also made to ascertain the accuracy of
financial records and reports, as well as the fairness of the presentation of the financial
statements. Likewise, a Value for Money Audit was conducted to assess or determine whether
the resources of the Province were utilized economically, efficiently and effectively.
We rendered a qualified opinion on the fairness of presentation of the financial

statements for reasons stated in the Independent Auditor’s Report.
The report consists of four parts: Part I – Financial Statements, Part II – Observations
and Recommendations, Part III – Status of Prior Year’s Unimplemented Audit Observations
and Recommendations, Part IV – Annexes. The findings and recommendations were discussed
with concerned management officials and staff during the exit conference held on March 10,
2017. Management comments are incorporated in the report, where appropriate.
We request that comments and observations contained in this report be fully addressed
and we would appreciate being informed of the action taken in this regard within sixty (60)
days from receipt hereof, pursuant to Section 96 of the General provisions of Republic Act No.
10717, otherwise known as the General Appropriations Act Fiscal 2016, by accomplishing the
Agency Action Plan and Status of Implementation attached herewith.
We acknowledge the cooperation extended to the audit team by the officials and staff of
that Province.
Thank you.
Very truly yours,
Regional Director
cc: The Director, DILG, Regional Office No. 1, City of San Fernando, La Union
The Director, BLGF, Regional Office No. 1, City of San Fernando, La Union
The Director, DBM, Regional Office No. 1, City of San Fernando, La Union
The Presiding Officer, Sangguniang Panlalawigan, Province of Ilocos Norte
The Assistant Commissioner, LGS, COA, Quezon City
PROVINCIAL GOVERNMENT OF ILOCOS NORTE
Provincial Capitol, Laoag City
AGENCY ACTION PLAN and

STATUS of IMPLEMENTATION
Audit Observations and recommendations
For the Calendar Year 2016
As of _______________
Agency Action Plan

Reason for
Target Action
Status of Partial/Delay/Non-
Ref. Audit Audit Person/Dept. Implementation Taken/Action
Action Plan Implementation Implementation, if
Observations Recommendations Responsible Date to be taken
applicable
From To
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
COMMISSION ON AUDIT
Regional Office No. I
OFFICE OF THE TEAM LEADER
Audit Group A, R1 – Team 1
March 22, 2017
Director LYNN S.F. SICANGCO
Commission on Audit
Regional Office No. I
San Fernando City, La Union
Thru:
Madam:
In compliance with Section 2, Article IX-D of the Philippine Constitution and

pertinent sections of Presidential Decree No. 1445, we conducted a comprehensive audit on
the accounts and operations of the Provincial Government of Ilocos Norte for the year ended
December 31, 2016.
The audit was conducted to ascertain the propriety of financial transactions and
compliance of the agency to prescribed laws, rules and regulations. It was also made to
ascertain accuracy of financial records and reports, as well as the fairness of the presentation
of the financial statements and whether these statements were prepared in conformity with
Philippine Public Sector Accounting Standards (PPSAS). Likewise, a Value for Money
Audit was conducted to asses or determine whether resources of the Province were utilized
economically, efficiently and effectively.
The results of our audit are embodied in our attached report consisting of four parts:
Part I - Audited Financial Statements, Part II – Audit Observations and Recommendations,
Part III - Status of Implementation of Prior Year’s Unimplemented Audit Recommendations
and Part IV - Annexes. The significant observations and recommendations were discussed
with concerned management officials and employees in an exit conference. Management’s
comments are included in the report, where appropriate.
We rendered a qualified opinion on the fairness of the presentation of the financial

statements for reasons stated in the Independent Auditor’s Report.
Our audit was conducted in accordance with generally accepted state auditing
standards and we believe that it provides reasonable bases for the results of the audit.
We acknowledge the cooperation extended to the audit team by the officials and staff
of the agency which facilitated the submission of this report.
Very truly yours,
Audit Team Leader

COMMISSION ON AUDIT
ANNUAL AUDIT REPORT
ON THE
PROVINCIAL GOVERNMENT OF
ILOCOS NORTE
For the Year Ended December 31, 2016

EXECUTIVE SUMMARY
A. INTRODUCTION
The Province of Ilocos Norte was created by virtue of Royal Decree signed by the
Solicitor General on February 2, 1818, dividing the Ilocos Region into two: Ilocos Norte
and Ilocos Sur. It has two congressional districts with two component cities (Laoag City
and Batac City) and 21 municipalities with a total of 557 barangays, consisting of 434
barangays from the municipalities and 123 barangays from the two cities. The Province
is situated at the northwestern part of Luzon with a land area of 3,622.91 square
kilometers north of Manila.
The Province is under the vibrant and energetic leadership of Honorable Governor
Imee R. Marcos, assisted by the Vice Governor Angelo M. Barba and 12 Sangguniang
Panlalawigan Members. There are 1,151 working force distributed in the 33 offices
which include a tertiary hospital, five district hospitals and three special offices to assist
in the implementation of the Honorable Governor’s vision “Paspas Dur-as”. The Province
is currently working for the attainment of its objective, Ilocos Norte will become the best
little province in the country in 2020 (IN2020).
B. FINANCIAL HIGHLIGHTS
Comparative financial highlights of the Province of Ilocos Norte for the calendar
year 2015 and 2016 are as follows:
Increase %Increase
ACCOUNTS 2016 2015 (Decrease) (Decrease)
Assets 2,496,830,345.20 1,868,001,946.13 628,828,399.07 33.66
Liabilities 669,913,416.13 659,646,320.54 10,267,095.59 1.56
Government
Equity 1,826,916,929.07 1,208,355,625.59 618,561,303.48 51.19
SOURCES Increase % Increase

OF FUNDS 2016 2015 (Decrease) (Decrease)
Tax Revenue 179,095,353.79 130,549,507.10 48,545,846.69 37.19
Gen. Income
Accounts 1,560,502,006.63 1,027,289,238.08 533,212,768.55 51.90
Total Income 1,739,597,360.42 1,157,838,745.18 581,758,615.24 50.25
APPLICATION Increase %Increase
OF FUNDS 2016 2015 (Decrease) (Decrease)
Personal Services 306,072,166.27 296,707,756.13 9,364,410.14 3.16
MOOE 1,010,546,558.43 651,114,612.82 359,431,945.61 55.20
Non-Cash
Expenses 101,640,797.55 66,644,395.39 34,996,402.16 52.51
Financial
Expenses 22,656,630.89 22,731,726.99 (75,096.10) (.33)
Subsidies &
Donations 8,473,205.50 5,816,723.67 2,656,481.83 45.67
Total Expenses 1,449,389,358.64 1,043,015,215.00 406,374,143.64 38.96
APPROPRIA- Increase %Increase

TIONS 2016 2015 (Decrease) (Decrease)
Personal 333,804,493.05 308,567,087.39 25,237,405.66 8.18
MOOE 1,317,671,494.94 981,650,644.17 336,020,850.77 34.23
Capital Outlay 82,036,702.67 69,955,074.85 12,081,627.82 17.27
Total 1,733,512,690.66 1,360,172,806.41 373,339,884.25 27.45
Increase %Increase
ALLOTMENT 2016 2015 (Decrease) (Decrease)
Personal
Services 333,804,493.05 308,567,087.39 25,237,405.66 8.18
MOOE 1,317,671,494.94 981,650,644.17 336,020,850.77 34.23
Capital Outlay 82,036,702.67 69,955,074.85 12,081,627.82 17.27
Total 1,733,512,690.66 1,360,172,806.41 373,339,884.25 27.45
Increase %Increase
OBLIGATIONS 2016 2015 (Decrease) (Decrease)
Personal Services 307,981,930.80 299,813,326.86 8,168,603.94 2.72
MOOE 1,191,478,987.99 916,305,340.26 275,173,647.73 30.03
Capital Outlay 65,589,030.47 52,032,820.61 13,556,209.86 26.05
Total 1,565,049,949.26 1,268,151,487.73 296,898,461.53 23.41
C. OPERATIONAL HIGHLIGHTS
The Provincial Government of Ilocos Norte continues to strengthen its tourism

program. For the year 2016, the province received a total of 2,031,884 visitors which is
19.99% higher than the previous year. This generated about P10.1 billion earnings from
tourists’ expenses. The “Paoay Kumakaway” tourism campaign keeps on flourishing as
the Provincial Government entered into a contract of lease with the Roman Catholic
Bishop of the Diocese of Laoag, Inc. to lease the Paoay “Convent Ruins” for the purpose
of developing the same as a tourists’ destination. The tourism industry remains steadfast
as the Provincial Government continue to promote and further develop various tourism
events and festivals strategically planned in the key months of the year.
The four projects funded under the KALSADA or the Konkreto at Ayos na
Lansangan at Daan Tungo sa Pangkalahatang Kaunlaran Program amounting to
P159,691,709.98 were in progress as at year-end. Also, some accomplishments came
from donations of Special Local Road Fund and DILG-PCF.
Below were among the significant completed infrastructure projects which were
duly inspected by COA Technical Audit Specialist and validated by the Audit Team.
Source of Project Cost

Programs/Projects/Activities Fund
1. Construction of Additional Stalls at Burgos Lighthouse Capital Outlay 1,297,535.63
2. Continuation of the Construction of Dingras Multi- DILG-PCF &
Purpose Building Capital Outlay 8,658,079.86
3. Improvement/Widening of windows (Cross-Vent) at the
Upper Level of the Centennial Arena Building Capital Outlay 5,421,706.63
4. Construction of the Multi-Purpose Building, Paoay,
(Phase II) LGSF/RA 7171 5,421,706.63
5. Construction of Stalls, Kitchen, Comfort Rooms &
Parking Space at Burgos Lighthouse Capital Outlay 2,643,666.41
6. Improvement of Paoay Convent Ruins (Phase I) Capital Outlay 4,395,625.29
7. Repair of Roof Framing & Roofing of Centennial
Arena Capital Outlay 2,284,037.59
8. Construction of Adigi Housing Capital Outlay 2,264,527.43
9. Rehabilitation of Scoured Portion Along Brgy.
Corocor, Bacarra Capital Outlay 4,343,104.37
10. Rehabilitation of Existing PCCP along Burgos-
Nagsurot Via Darisdis Provincial Road 20% Dev. Fund 2,414,749.36
11. PCCP Rehabilitation along Vintar-Sarrat Prov. Road 20% Dev. Fund 616,220.76
12. Rehabilitation Marcos-Rubio Prov. Road 20% Dev. Fund 485,116.96
13.Rehab. & Improvement-Bacarra-Tadao Prov. Road
(Sta. Catalina Section) SLRF 1,539,040.45
14.Preventive/Maintenance of .Bacarra-Tadao Prov. Road
(TeppangSection) SLRF 1,212,114.81
15.Preventive/Maint.Vintar-Tamdagan-Tungel Prov. Road SLRF 1,942,230.46
16.Preventive/Maintenance/Improvement Sta. Rosa-
Pandan-Pariir Prov. Road SLRF 1,855,277.93
17.Preventive/Maint./Improvement Mabuti-Caparian
Prov. Road SLRF 1,904,431.90
18.Preventive/Maintenance/Improvement Paoay-Taytay-
Pasil Prov. Road SLRF 2,487,524.76
Other awards and accomplishments during the year are as follows:
1. The Provincial Government of Ilocos Norte was granted ISO 9001:2015 certification
by the International Organization for Standardization (ISO). Ilocos Norte’s efficient
document tracking system stood out from the best practices that the International
Organization for Standardization (ISO) took notice, making it the first Philippine
province to become fully-ISO compliant.
2. Top Performing and Outstanding Governorship Award - the Department of Interior

and Local Government (DILG) cited Governor Imee R. Marcos on top of an honor
list containing 10 governors, in recognition of her efforts and support against illegal
drugs. Also, in appreciation of her efficient and effective leadership as Governor of
Ilocos Norte for the past six years, Superbrands Marketing Inc. (SMI) honored Gov.
Imee R. Marcos as an Outstanding Governorship Awardee last March 30, 2016. The
award marks the Governor's second citation as an Outstanding Governor, having been
bestowed the same award last October 2015.
3. Seal of Good Local Governance (SGLG) 2016 highly signifying the province’s
adherence to the standards of transparency and integrity in the delivery of services.
This award qualifies the Province to the Performance Challenge Fund (PCF) and
other downloadable funds from the DILG.
D. SCOPE OF AUDIT AND METHODOLOGY
A comprehensive audit was conducted on the accounts and operations of the

Provincial Government of Ilocos Norte for the calendar year 2016 based on our audit
thrusts for the year, among of which are the following:1) Cash Accounts, 2) Cash
Advances, 3) Gender and Development Fund, 4) Utilization of fund transferred from
National Government Agencies, Funds Transferred to Other LGUs,5) LDRRMF, 6)
Procurement of Goods and Services and Infrastructure Projects, 7) Special Education
Fund. The audit was conducted to ascertain the propriety of financial transactions and
the accuracy of financial records and reports and compliance of agency with prescribed
rules and regulations. It was also made to ascertain whether programs as envisioned were
attained in economical, efficient and effective manner.
E. STATE AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS
The auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements due to: 1) Non-recording under the Due from Other Funds, Intra-
Agency Receivables account of the Trust Fund in the amount of P1,404,084.80
representing the unexpended balance of the Provincial Disaster Risk Reduction
Management Fund, 2) Due from LGUs amounting to P6,934,657.02 was not yet
liquidated by the different municipalities, 3) The fully depreciated Infrastructure Assets-
Road Networks amounting P100,998,000.00 were still included in the Agency Assets and
the overstatement of Accumulated Depreciation of Infrastructure Assets- Road Networks
of P55,470,706.71 due to the incorrect estimated useful life and the provision of Salvage
Value.
F. SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

We are pleased to note that the Province of Ilocos Norte has complied and
implemented the following:
1. The programs/projects/activities under GAD plan have been 100% accomplished.
2. The provincial government has undertaken the funding of mangrove planting

activities in order to protect the vast coastal areas of Ilocos Norte. In partnership with
the Environment and Natural Resources Office and with the coordination of the
coastal local government units (LGUs) of the province, 25 hectares of coastal areas
were planted with mangrove which is very necessary for the conservation, protection,
and sustainable management of coastal and marine resources.
3. The Provincial Government continues its support to the deserving but financially
incapable students. The major qualification of the scholarship is that the student must
have an involvement in the community. The initial number of students who availed
of the scholarship was 457 for the first semester, S.Y. 2016-2017.
However, we noted deficiencies in the course of our audit of the accounts and
transactions of the LGU and the following are the significant observations and
recommendations:
1. The Due to Other Funds, Intra-Agency Payable account of the General Fund
representing the unexpended balance of the Provincial Disaster Risk Reduction
Management Fund (PDRRMF) of P1,404,084.80 was not recorded, under the Due
from Other Fund, Intra-Agency Receivables account of the Trust Fund, thus
understating the latter by the same amount.
We have recommended that management record the unexpended amount of

PDRRMF to Trust Fund-Due from Other Fund account in order to present the same
fairly in the financial statement.
2. The amount of P6,934,657.02 was still unliquidated by the different municipalities

which is contrary to COA Circular No. 94-013 dated December 13, 1994. As a result,
the asset and government equity accounts were overstated and the expense account
was understated by the same amount, thus the fair presentation of the financial
statements is affected.
We have recommended the OIC- Provincial Accountant to require the different
municipalities/cities to submit the reports of utilization of the subsidy given to them
in order to conform to the provision of COA Circular No. 94-013 and in order to
fairly present the financial statements of the province.
3. The incorrect estimated useful life and provision of salvage value of the Infrastructure
- Road Networks which is not in accordance with DPWH Department Order No. 176
dated November 23, 2015 resulted in the recording of fully depreciated Road
Networks amounting P100,998,000.00, thus the overstatement of the said account by
the same amount. It also resulted in the overstatement of the accumulated
depreciation by P55,470,706.71, hence affecting the fair presentation of the accounts
in the financial statements.
We have recommended that management adheres strictly to the provisions of
Department of Public Works and Highways, Department Order No. 176 dated
November 23, 2015 in order to present fairly the Infrastructure Assets - Road
Networks in the financial statements.
G. Summary of Suspension, Disallowances and Charges as of December 31, 2016.
The balance of Notice of Disallowance as of December 31, 2016 is

P12,012,026.00. There was no audit Charges/Suspensions issued for CY 2016.
H. Summary of Implementation of Prior Years’ Audit Recommendations
Out of the 19 prior year’s audit recommendations, 11 were fully implemented

during the year and seven were partially implemented and one was not yet implemented.
TABLE OF CONTENTS
Part I - Audited Financial Statements
 Independent Auditor’s Report 1

 Statement of Management’s Responsibility for
Financial Statements 3
 Consolidated Statement of Financial Position 4
 Consolidated Statement of Financial Performance 5
 Consolidated Statement of Cash Flows 6
 Consolidated Statement of Changes in Assets/Equity 8
 Statement of Comparison of Budget and Actual Accounts 9
 Notes to Financial Statements 13
Part II - Audit Observations and Recommendations
 Financial and Compliance Audit 39

 Value for Money Audit 51
 Statement of Audit Suspensions, Disallowances, and Charges 54
Part III - Status of Implementation of Prior Year’s Unimplemented

Audit Recommendations 55
Part IV - Annexes
A. Schedule of Due from Local Government Units

B. Schedule of Recorded PPE - Road Networks
C. Schedule of PPE Road Networks’ Accumulated Depreciation
D. Schedule of Refunded Salary Loans
E. Schedule of Long Overdue Guaranty/Security/Deposits Payable
F. Schedule of Due to Local Government Units
G. Schedule of Due to National Government Agencies
PART I – AUDITED FINANCIAL STATEMENT
COMMISSION ON AUDIT
_____________________________________________________________________
INDEPENDENT AUDITOR’S REPORT
THE HONORABLE PROVINCIAL GOVERNOR

We have audited the accompanying financial statements of the Province of Ilocos

Norte which comprise the Consolidated Financial Position as of December 31, 2016, and
the Consolidated Statement of Financial Performance, Statement of Condensed Cash
Flows, Changes in Net Assets/Equity, Comparison of Budget and Actual Amounts, and
Notes to Financial Statements for the year ended, and summary of significant accounting
policies and other explanatory information.
Management’s Responsibility of the Financial Statements
Management is responsible for the preparation and fair presentation of these

financial statements in accordance with Philippine Public Sector Accounting Standards
(PPSAS) and for such internal control as management determines necessary to enable the
preparation of financial statements that are free from material misstatements.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on

our audit. We conducted our audit in accordance with Philippine Public Sector Standards
on Auditing (PPSSA). These standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatements.
Our audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances. Our audit also includes assessing the accounting
principles used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that
our audit provides a reasonable basis for our opinion.
Bases for Qualified Opinion
As discussed in detail in Part II of the report, the unexpended balance of the

Provincial Disaster Risk Reduction Management Fund amounting P1,404,084.80 was not
taken up as Trust Fund, hence trust liability was understated by the same amount.
The Due from LGUs amounting to P6,934,657.02 was not yet liquidated by the
different municipalities, thus the receivable account was overstated.
The fully depreciated Infrastructure Assets - Road Networks amounting

P100,998,000.00 were still included in the Agency Assets, thus the assets and the equity
account were overstated by the same amount. Also, the provision of salvage value and
the incorrect estimated useful life of the said assets resulted in the overstatement of its
Accumulated Depreciation by P55,470,706.71.
Opinion
In our opinion, except for the effects of the matters discussed in the preceding
paragraphs, the accompanying financial statements present fairly, in all material respects,
the financial position of the Province of Ilocos Norte as of December 31, 2016 and the
results of its operations and its cash flows for the year then ended in conformity with
generally accepted state accounting principles in the Philippines.
COMMISSION ON AUDIT
BY:
March 15, 2017

Notes to Consolidated Financial Statements
(All amounts in Philippine Peso unless otherwise stated)
Note 1 - Profile
The Province of Ilocos Norte was created by virtue of a Royal Decree signed
by the Solicitor General on February 2, 1818, dividing the Ilocos Region into
two: Ilocos Norte and Ilocos Sur. Its political subdivisions are: two
congressional districts with twenty one municipalities and two component
cities (Laoag City, being the capital and City of Batac, a newly created City in
June 23, 2007. There are five hundred fifty seven (557) barangays 434 of
which come from the 21 municipalities and 123 from the two cities.
It is situated at the northwestern part of Luzon and 487 kilometers north of

Manila. It has a total land area of 3,622.91 square kilometers. Its economy is
primarily agriculture based but with the new administration, Ilocos Norte is
being developed as a tourist destination.
The Province is under the vibrant leadership of Hon. Governor Imee R.

Marcos, assisted by Vice Governor Angelo M. Barba, and 12 Sangguniang
Panlalawigan Members.
Note 2 - The consolidated financial statements of the LGU have been prepared in
accordance with and comply with the Philippine Public Sector Accounting
Standards (PPSAS). The consolidated financial statements are presented in
pesos, which is the functional and reporting currency of the LGU.
Note 3 - Summary of significant accounting policies
3.1 Basis of accounting
The [consolidated] financial statements are prepared on an accrual basis in

accordance with the Philippine Public Sector Accounting Standards
(PPSAS).
3.2 Consolidation
The province maintained three funds namely: General, Special Education

and Trust Funds.
The Province’s source of funds are mainly from the Internal Revenue
Allotment share, Tobacco Excise Tax Share and provincial tax impositions
authorized under Section 135-141 of RA 7160 and under the Revenue Tax
Code of the Province embodied under Provincial Ordinance No. 2008-001
dated August 5, 2008 which are: Real Property Tax, Special Education
Tax, Amusement Tax, Franchise Tax, Sand and Gravel Taxes, Annual Fix
13
Tax, Transfer tax on Real Property, Ownership Tax on Publishing and
Printing and Professional Taxes. Economic enterprises maintained are on
the use of public buildings for rent like the Ilocano Heroes Hall, Dap-ayan,
Centennial Arena, Marcos Stadium Quarters, Rizal Park, Malacañang of
the North and Hotel and Convention Center, known as Plaza del Norte.
The Province is also maintaining one (1) tertiary hospital which is Gov.
Roque B. Ablan, Sr. Memorial Hospital (GRBASMH) and district
hospitals namely Bangui District Hospital, Dingras District Hospital,
Piddig District Hospital, Doña Josefa Edralin Marcos District Hospital,
Vintar District Hospital and Pagudpud Extension District Hospital.
The Provincial Government also have the following offices namely:

Office of the Governor, Vice-Governor’s Office, Sangguniang
Panlalawigan Office, Office of the Provincial Accountant, Office of the
Provincial Administrator, Office of the Provincial Assessor, Office of the
Provincial Budget Officer, Office of the General Services Officer, Ilocos
Norte Provincial Jail, Legal Office, Provincial Planning and Development
Office, PABX & radio Communications Unit, Office of the Provincial
Treasurer, Office of the Provincial Agriculturist, Office of the Provincial
Engineer, Environment and Natural Resources Office, Parks, Plazas,
Monuments & Rizal Amusement Park, Office of the Provincial
Veterinarian, I-Hub (Provincial Library), Social Welfare and Development
Office, Communication Media Office, Information Technology Office,
Provincial Tourism Office and Education Department.
There are also special offices created to help in the implementation of the
vision mission of the Governor which are:
- MDG Office
- INVEST, SME, PESO Office
- Ilocos Norte Sports Development Office
- OFW and Office of the Barangay Affairs
- Ilocos Norte Youth Development Office
3.3 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees and fines
The LGU recognizes revenues from taxes and fines when the event occurs
and the asset recognition criteria are met. To the extent that there is a
related condition attached that would give rise to a liability to repay the
amount, liability is recognized instead of revenue. Other non-exchange
revenues are recognized when it is improbable that the future economic
14
benefit or service potential associated with the asset will flow to the entity
and the fair value of the asset can be measured reliably.
The LGU availed of the 5 – year transitional provision for the recognition
of Tax Revenue- Real Property and Special Education Tax. For the first
year, there will be no change in policy for the recognition of the
aforementioned tax revenue.
Revenue from exchange transactions
Rendering of services
The LGU recognizes revenue from rendering of services by reference to

the stage of completion when the outcome of the transaction can be
estimated reliably. The stage of completion is measured by reference to
labor hours incurred to date as a percentage of total estimated labor hours.
Where the contract outcome cannot be measured reliably, revenue is

recognized only to the extent that the expenses incurred.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks
and rewards of ownership have been transferred to the buyer, usually on
delivery of the goods and when the amount of revenue can be measured
reliably and it is probable that the economic benefits or service potential
associated with the transaction will flow to the LGU.
Interest income
Interest income is accrued using the effective yield method. The effective
yield discounts estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount. The method applies
this yield to the principal outstanding to determine interest income each
period.
Rental income
Rental income arising from operating leases on investment properties is

accounted for on a straight-line basis over the lease terms and included in
revenue.
3.4 Investment Property
Investment properties are measured initially at cost, including transaction

costs. The carrying amount includes the replacement cost of components
15
of an existing investment property at the time that cost is incurred if the
recognition criteria are met and excludes the costs of day-to-day
maintenance of an investment property.
Investment property acquired through a non-exchange transaction is

measured at its fair value at the date of acquisition. Subsequent to initial
recognition, investment properties are measured using the cost model and
are depreciated over a 30-year period.
Investment properties are derecognized either when they have been

disposed of or when the investment property is permanently withdrawn
from use and no future economic benefit or service potential is expected
from its disposal. The difference between the net disposal proceeds and
the carrying amount of the asset is recognized in the surplus or deficit in
the period of derecognition. Transfers are made to or from investment
property only when there is a change in use.
3.5 Property, plant and equipment
All property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items. When significant parts
of property, plant and equipment are required to be replaced at intervals,
the LGU recognizes such parts as individual assets with specific useful
lives and depreciates them accordingly. Likewise, when a major
inspection is performed, its cost is recognized in the carrying amount of
the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognized in surplus
or deficit as incurred. Where an asset is acquired in a non-exchange
transaction for nil or nominal consideration the asset is initially measured
at its fair value.
Depreciation on assets is charged on a straight-line basis over the useful

life of the asset.
Depreciation is charged at rates calculated to allocate cost or valuation of

the asset less any estimated residual value over its remaining useful life:
(refer to COA issuances on the prescribed useful life of assets)
Public Infrastructures were not previously recognized in the books. The

LGU availed of the 5-year transitional provision for the recognition of the
Public Infrastructure. For the first year of implementation of the PPSAS,
the LGU will not recognize the Public Infrastructure in the books of
accounts.
16
3.6 Leases
LGU as a lessee
Operating leases are leases that do not transfer substantially all the risks
and benefits incidental to ownership of the leased item to the LGU.
Operating lease payments are recognized as an operating expense in
surplus or deficit on a straight-line basis over the lease term.
LGU as a lessor
Leases in which the LGU does not transfer substantially all the risks and
benefits of ownership of an asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease are added to the
carrying amount of the leased asset and recognized over the lease term.
Rent received from an operating lease is recognized as income on a

straight-line basis over the lease term. Contingent rents are recognized as
revenue in the period in which they are earned.
3.7 Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are classified as financial assets at fair value through

surplus or deficit, loans and receivables, held-to-maturity investments or
available-for-sale financial assets, as appropriate. The LGU determines the
classification of its financial assets at initial recognition.
The LGU’s financial assets include: cash and short-term deposits; trade
and other receivables; loans and other receivables and quoted and
unquoted financial instruments.
Subsequent measurement
The subsequent measurement of financial assets depends on their

classification.
Financial assets at fair value through surplus or deficit
Financial assets at fair value through surplus or deficit include financial

assets held for trading and financial assets designated upon initial
recognition at fair value through surplus and deficit. Financial assets are
classified as held for trading if they are acquired for the purpose of selling
or repurchasing in the near term. Financial assets at fair value through
17
surplus or deficit are carried in the statement of financial position at fair
value with changes in fair value recognized in surplus or deficit.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or

determinable payments that are not quoted in an active market. After
initial measurement, such financial assets are subsequently measured at
amortized cost using the effective interest method, less impairment.
Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the
effective interest rate. Losses arising from impairment are recognized in
the surplus or deficit.
Derecognition
The LGU derecognizes a financial asset or, where applicable, a part of a

financial asset or part of a group of similar financial assets when:
a) The rights to receive cash flows from the asset have expired or is
waived;
b) The LGU has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in
full without material delay to a third party; and either: (a) the LGU
has transferred substantially all the risks and rewards of the asset; or
(b) the LGU has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the
asset.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 are classified as

financial liabilities at fair value through surplus or deficit or loans and
borrowings, as appropriate. The LGU determines the classification of its
financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case
of loans and borrowings.
The LGU Group’s financial liabilities include trade and other payables,
bank overdrafts, loans and borrowings.
18
Subsequent measurement
The measurement of financial liabilities depends on their classification.
Financial liabilities at fair value through surplus or deficit
Financial liabilities at fair value through surplus or deficit include

financial liabilities held for trading and financial liabilities designated
upon initial recognition as at fair value through surplus or deficit.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are

subsequently measured at amortized cost using the effective interest
method. Gains and losses are recognized in surplus or deficit when the
liabilities are derecognized as well as through the effective interest method
amortization process.
Amortized cost is calculated by taking into account any discount or

premium on acquisition and fees or costs that are an integral part of the
effective interest rate. No amortization has been recognized in the books
for 2015.
Derecognition
A financial liability is derecognized when the obligation under the liability

is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same

lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and the recognition of a new
liability.
.
3.8 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash in bank,
deposits on call and highly liquid investments with an original maturity of
three months or less, which are readily convertible to known amounts of
cash and are subject to insignificant risk of changes in value. For the
purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits as defined above, net
of outstanding bank overdrafts.
19
3.9 Inventories
Inventory is measured at cost upon initial recognition. To the extent that

inventory was received through non-exchange transactions (for no cost or
for a nominal cost), the cost of the inventory is its fair value at the date of
acquisition.
Costs incurred in bringing each product to its present location and

condition are accounted for, as follows:
a) Raw materials: purchase cost using the weighted average cost

method;
b) Finished goods and work in progress: cost of direct materials and

labor and a proportion of manufacturing overheads based on the
normal operating capacity, but excluding borrowing costs.
After initial recognition, inventory is measured at the lower of cost and net
realizable value. However, to the extent that a class of inventory is
distributed or deployed at no charge or for a nominal charge, that class of
inventory is measured at the lower of cost and current replacement cost.
Net realizable value is the estimated selling price in the ordinary course of
operations, less the estimated costs of completion and the estimated costs
necessary to make the sale, exchange, or distribution. Inventories are
recognized as an expense when deployed for utilization or consumption in
the ordinary course of operations of the LGU.
3.10 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy

retrospectively. The effects of changes in accounting policy are applied
prospectively if retrospective application is impractical.
The LGU recognizes the effects of changes in accounting estimates

prospectively by including in surplus or deficit.
3.11 Borrowing costs
Borrowing costs are capitalized against qualifying assets as part of

property, plant and equipment. Such borrowing costs are capitalized over
the period during which the asset is being acquired or constructed and
borrowings have been incurred. Capitalization ceases when construction
of the asset is complete. Further, borrowing costs are charged to the
statement of financial performance.
20
3.12 Budget information
The annual budget is prepared on the modified cash basis, that is, all
planned costs and income are presented in a single statement to determine
the needs of the LGU. As a result of the adoption of the Modified cash
basis for budgeting purposes, there are basis, timing or entity differences
that would require reconciliation between the actual comparable amounts
and the amounts presented as a separate additional financial statement in
the statement of comparison of budget and actual amounts.
4 Cash and Cash Equivalent 727,291,275.73
This account is broken down as follows:

2016 2015
Cash Local Treasury 13,179,292.69 14,719,045.68
Cash in Bank - Local Currency, Current Account 613,795,588.22 355,173,202.29
Cash in Bank - Local Currency, Savings Account 100,316,394.82 30,113,522.46
TOTALS 727,291,275.73 400,005,770.43
Cash Local Treasury represents coins, bills and cash in the possession of the Provincial
Treasury which are proceeds of income and other receipts on the last working day of
December 2016 and which are eventually deposited in bank January 2017.
Cash in Bank includes deposits in banking units: current and time deposits in DBP and
Land Bank. Interests earned are debited to their corresponding bank accounts.
5 Investments 66,727,310.04
The amount is broken down as follows:

2016 2015
Current
Cash in Bank - Local Currency, Time Deposit 65,046,299.06 64,424,715.40
Non-current
Guaranty Deposits 100,000.00 100,000.00
Other Investments 1,581,010.98 683,750.00
66,727,310.04 65,208,465.40
Cash in Bank-Local Currency, Time Deposit consist of deposits in DBP that have a
maturity of 180 days. Time deposits are usually pre-terminated when needed.
Guaranty Deposits – deposit for gasoline container of Flying V installed at the Motor
pool as compliance with the terms and conditions of the Memorandum of Agreement
entered into by the Chief Executive and Flying V.
21
Other investments comprise the amount invested for the Metro Ilocos Norte Council
Gasoline Station.
6 Receivables 63,757,735.11
The amount is broken down as follows:

2016 2015
Loans and Accounts Receivable
Accounts Receivable 8,236.38 10,354.42
Notes Receivable - 40,081,184.00
Loans Receivable, Others 43,515,919.44 45,477,950.82
Inter-agency Receivables
Due from National Government Agencies 105,383.02 105,383.02
Due from Local Government Units 14,395,277.53 6,258,931.24
Intra-agency Receivables
Due From Other Funds 2,294,839.79 760,235.71
Advances
Advances for Operating Expenses 1,344,133.72 9,179.00
Advances for Payroll 25,476.54 56,716.87
Advances to Special Disbursing Officer 648,028.17 282,871.95
Advances for Officers and Employees 119,314.78 62,394.60
Other Receivables
Receivables - Disallowances/Charges 1,127,521.42 1,114,089.58
Due from Officers and Employees 29,910.98 43,239.70
Other Receivables 143,693.34 143,693.34
63,757,735.11 94,406,224.25
Receivable items include:
Loans Receivable, others amounting to P43,515,919.44 are loan assistance extended by

the Provincial Government to indigents and farmers and cooperatives from the different
municipalities of the province for livelihood projects, livestock and agricultural purposes.
Due from National Government Agencies accounts includes those amounts that are due
from Home Development Mutual Fund which are over-remittances / payment to various
NGA’s since 1993 amounting to 5,383.02 and the amount due from Mariano Marcos
Memorial Hospital and Medical Center representing the Point of Care Premiums
P100,000.00.
22
Due from Local Government Units includes assistance for municipalities during various
Provincial Activities such as the Provincial Fiesta and Tan-ok Festival. It also includes
assessed local taxes due from various municipalities as of December 31, 2016.
Remittance is expected to be collected in the succeeding month.
7 Inventories 67,006,424.55
The costs of ending inventory of office supplies and materials and other inventory items
are computed using the First in-First out Method (FIFO). Supplies purchased on an
earlier date are consumed first before subsequent ones.
Supplies Inventory includes the following:

2016 2015
Inventory Held for Distribution
Welfare Goods for Distribution 1,815,120.00 -
Agricultural & Marine Supplies for Distribution 1,890,000.00 -
Agricultural Produce for Distribution 143,449.25 6,948,071.80
Textbook & Instructional Materials for 99,780.00 -
Distribution
Inventory Held for Consumption
Office Supplies Inventory 6,875,628.29 5,981,163.54
Accountable Forms, Plates and Stickers 547,857.75 490,989.00
Non-Accountable Forms Inventory 9,690.00 -
Animal & Zoological Supplies Inventory 968,241.64 -
Medical, Dental and Laboratory Supplies
Inventory 3,685,839.00 2,762,959.00
Fuel, Oil & Lubricants Inventory 1,249,139.02 -
Agricultural and Marine Supplies Inventory 907,291.65 2,788,406.65
Textbooks and Instructional Materials Inventory 21,811,988.60 5,637,518.60
Other Supplies and Materials Inventory 27,002,399.35 6,548,530.80
67,006,424.55 31,157,639.39
Welfare Goods for Distribution are stockpiles of the Provincial Government which are to
be distributed to communities that are affected by calamities. Agricultural and Marine
Supplies for distribution are farm inputs that are being distributed to various
municipalities in the Province.
Agricultural produce for distribution include produced stocks that are held for dispersal
by the Provincial Veterinary Office.
Textbook and instructional materials for distribution are those purchased for the use of
Provincial Capitol Children's Learning Center.
Office supplies are those supplies requested per office through purchase requests.
23
Accountable forms, Plates and Stickers inventory are those forms purchased like official
receipts and cash tickets to be used at the Treasurer’s office.
Non - accountable forms inventory include municipal forms which include certificate of
live birth, death certificate, fetal death and other forms which are for the use of the Gov.
Roque B. Ablan Sr. Memorial Hospital.
Medical, Dental and Laboratory Supplies Inventory are those items purchased for use by
the different district hospitals of the Province.
Fuel, Oil and Lubricants Inventory are those maintained at Metro Ilocos Norte Council
Gasoline Station and PGIN Depot.
Textbooks and Instructional Materials Inventory are those books purchased to be used at
the Provincial Library and at the Office of the Governor.
Other supplies and Materials Inventory include all other supplies not covered under
specific accounts.
8 Prepayments 26,614,569.14
Pre-payments is composed of the following:

2016 2015
Advances to Contractors 24,809,674.63 1,648,647.21
Prepaid Insurance 1,587,107.20 1,495,289.89
Other Prepayments 217,787.31 198,777.60
26,614,569.14 3,342,714.70
Prepaid Insurance and Other Prepaid Expenses are those remaining unexpired portion of
Insurance Expense and Fidelity Bond Premium for 2016
Advances to Contractors represent 15% advance payment made for the various projects
of the Provincial Government. These includes advance payment for the Rehabilitation
and Improvement of Provincial Roads under the KALSADA Project of DILG, and
advance payment for the air-conditioning unit and upgrading of electrical system of
Centennial Arena, Laoag City.
9 Investment Property 392,304,831.81
2016 2015
Investment Property, Building 486,262,393.78 486,025,461.78
Accumulated Depreciation (93,957,561.97) (77,135,169.35)
392,304,831.81 408,890,292.43
24
10 Property, Plant & Equipment 1,152,954,798.82
The items of PPE include:

2015 Net 2016
(Reduction)/
Addition
Land 132,872,417.87 - 132,872,417.87
Road Networks - 568,404,423.39 568,404,423.39
Water Supply Systems - 1,305,185.52 1,305,185.52
Power Supply Systems 211,036.00 - 211,036.00
Parks, Plazas & Monuments - 65,900.00 65,900.00
Other Infrastructures - 6,251,181.64 6,251,181.64
Buildings 155,144,864.69 2,111,581.68 157,256,446.37
School Buildings 25,671,610.91 (742,407.68) 24,929,203.23
Hospitals and Health Centers 154,837,784.28 - 154,837,784.28
Other Structures 35,123,605.32 4,962,925.05 40,086,530.37
Office Equipment 49,706,434.73 4,622,537.54 54,328,972.27
Furniture and Fixtures 48,554,886.53 1,840,521.52 50,395,408.05
Information and
Communication Technology 47,671,949.09 2,793,567.20 50,465,516.29
Equipment
Books 367,278.60 65,000.00 432,278.60
Machinery 3,022,500.00 - 3,022,500.00
Agricultural and Forestry
Equipment 11,738,602.00 347,000.00 12,085,602.00
Communication Equipment 11,205,118.41 - 11,205,118.41
Construction and Heavy
Equipment 92,362,312.54 20,000,000.00 112,362,312.54
Disaster Response and Rescue
Equipment 3,509,965.48 (304,000.00) 3,205,965.48
Printing Equipment 1,232,000.00 - 1,232,000.00
Medical Equipment 151,663,369.17 23,201,698.88 174,865,068.05
Military & Police Equipment 1,645,894.48 - 1,645,894.48
Sports Equipment 5,856,867.50 432,190.00 6,289,057.50
Technical and Scientific
Equipment 510,710.09 - 510,710.09
Other Machineries and
Equipment 53,329,274.43 491,835.00 53,821,109.43
Motor Vehicles 119,209,274.83 15,880,615.00 135,089,889.83
Watercrafts 1,514,400.00 - 1,514,400.00
Other Transportation
Equipment 3,088,183.65 - 3,088,183.65
Other Property, Plant and
Equipment 32,995,612.67 (4,965,680.50) 28,029,932.17
Leased Asset Improvement,
Land - 59,175.00 59,175.00
25
Construction in Progress -
Buildings & Other Structures 2,366,862.57 - 2,366,862.57
Construction in Progress –
Infrastructure 6,845,859.80 1,738,777.08 8,584,636.88
TOTAL 1,152,258,675.64 648,562,026.32 1,800,820,701.96
Less: Accumulated
Depreciation 287,492,236.11 360,373,667.03 647,865,903.14
TOTAL PPE 864,766,439.53 288,188,359.29 1,152,954,798.82
Fixed assets are valued at cost less depreciation.
The LGU measured the residual value of all items of property, plant and equipment, but
does not expect a residual value of these assets, because these will be utilized for their
entire economic lives and do not have a significant scrap value. During the current
financial year, the LGU reviewed the estimated useful lives and residual values of
property, plant and equipment, where appropriate.
The decreases in the accounts were brought about by depreciation.
Road Network System

The Provincial Government of Ilocos Norte has a total of 171.4825 kilometers of roads
with a total cost of P 568,404,423.39. For the year ended, the agency spent a total of
P8,485,623.39 for local road additions. The accumulated depreciation as of December 31,
2016 amounts to P 309,096,073.89.
Construction in Progress are on-going projects which are expected to be completed this
year and for the succeeding years.
11 Biological Assets 173,400.00
Other Assets is broken down as follows:

2016 2015
Breeding Stocks 173,400.00 224,400.00
173,400.00 224,400.00
12 Financial Liabilities 421,304,405.13
The total current liabilities is broken down as follows:

2016 2015
Accounts Payable
Accounts Payable 68,509,326.51 34,317,570.82
Due to Officers & Employees 13,260,969.20 10,404,708.99
Bills/Bonds/Loans Payable
Loans Payable - Domestic 51,938,351.82 91,586,303.08
133,708,647.53 136,308,582.89
26
Total non-current liability is:
Loans Payable - Domestic 287,595,757.60 339,534,109.42
Loans Payable Domestic Includes:
Loans Payable - Hotel and Convention 299,357,059.60 347,357,059.60
Loans Payable - ADB/MDFO 40,177,049.82 43,682,168.90
Loans Payable - RA 7171 - 40,081,184.00
339,534,109.42 431,120,412.50
Accounts Payable includes obligated vouchers for payment of Other Maintenance and
Operating Expenses and other obligations of the Province while Due to Officers and
Employees represent the amount for Personnel Services and Other benefits due to the
employees of the Provincial Government.
The amount of P51,938,351.82 financial liabilities presented under current liability

represents the loan amortizations which are due for 2017.
The loan from Development Bank of the Philippines represents the balance of loan
granted by DBP for the construction of Hotel and Convention Center and for the purchase
of furniture and fixtures and other facilities for said Hotel and Convention Center, located
at Barangay Calayab, Laoag City.
The MDFO Loan are loans granted by ADB for the constructions/renovation of Governor
Roque B. Ablan, Sr. Memorial Hospital, Bangui District Hospital, and Dingras District
Hospital.
The loan from Land Bank of the Philippines for the loan/monetization of RA 7171 had
been paid in full on June 30, 2016.
13 Inter-Agency Payables 135,639,355.97
2016 2015
Due to BIR 6,674,594.03 5,106,036.01
Due to GSIS 5,897,152.05 6,255,981.44
Due to Pag-IBIG 406,187.92 522,863.05
Due to PhilHealth 354,362.50 345,937.50
Due to NGAs 116,401,550.57 26,732,837.55
Due to GOCCs 1,345,688.11 711,103.06
Due to LGUs 4,559,820.79 2,154,970.79
TOTAL INTER-AGENCY PAYABLES 135,639,355.97 41,829,729.40
The Due to BIR, Due to GSIS, Due to Pag-Ibig, Due to Philhealth, and Due to GOCCs
accounts represents the amount deducted from the salaries of officials and employees and
is remitted to the respective government agencies immediately on the month following
the month for which these were deducted. Other accounts represent balances of funds
27
received by the LGU for specific purposes. The significant increase in the Due to NGAs
account was due to the reclassification of some accounts from Other payables and the
receipt of the Fund from DILG for THE KALSADA project amounting to
P122,689,736.53 with an outstanding balance of P92,104,348.04, DPWH SLRF 2015
fund amounting to P13,685,507.00 with an outstanding balance of 106,810.64.
14 Intra-Agency Payables 4,893,271.58
2016 2015
Due to Other Funds 4,893,271.58 746,035.71
Intra-Agency Payables represents the unexpended balance of the Local Risk Reduction
and Management Fund for the Calendar Year 2016, Philhealth Auto-debit Payment
System, Collection of Guaranty Deposits, and interest earned from Trust Fund for the
current and savings accounts, collection of taxes and return of excess cash advance.
15 Trust Liabilities 20,075,157.91
2016 2015
Guaranty/Security Deposits Payable 13,064,026.26 7,912,534.98
Trust Liability-Disaster Risk Reduction and
Management Fund 7,011,131.65 591,699.11
Bail Bonds Payable - 2,935,208.83
20,075,157.91 11,439,442.92
Guaranty Deposits Payable represents the 10% retainers’ fee of contractors/suppliers,

performance bond from suppliers and the Trust Liability-Disaster Risk Reduction and
Management Fund represent the unexpended balance of the Local Disaster Risk and
Management Fund including amounts donated by various agencies for Calamity
purposes.
The balance of the Bail Bonds Payable as of December 31, 2016 representing
performance bonds from suppliers were already reclassified as Guaranty/Security
Deposits Payable in 2016.
16 Deferred Credits/Unearned Income 6,278,154.16
2016 2015
Deferred Real Property Tax 1,033,057.18 1,332,528.39
Deferred Special Education Tax 1,475,795.98 1,903,612.03
Other Deferred Credits 3,769,301.00 3,690,054.00
6,278,154.16 6,926,194.42
Deferred Credits represents collection for rent and real property taxes that are paid in
advance.
28
Non-current Liability
Other Deferred Credits 6,767,413.05 15,628,573.10
This account represents the Congressional Fund, Agricultural Fund from Department of
Agriculture, Cooperative Funds, Agri-Pinoy Rice Achievers Award Prize for CY 2011
and FY 2013 granted as loans to various farmer beneficiaries of the province and the Self
Employment Assistance Program (SEAP) for capital assistance.
17 Other Payables 74,955,658.33
2016 2015
Other Payables 74,955,658.33 107,233,652.68
74,955,658.33 107,233,652.68
This account represents collections from national agencies of the government and from
various collections intended for specific projects/purpose.
18 Government Equity
2016 2015
Government Equity 1,826,916,929.07 1,208,355,625.59
The Government Equity comprise the following:

GENERAL
FUND SEF
Government Equity as of December 31, 2016 1,688,838,515.01 138,078,414.06
Less: Restricted Government Equity
PPE 1,201,148,831.02 4,576,690.19
Biological Assets 173,400.00
Inventory 27,323,503.95 39,682,920.60
Receivables 45,090,085.97
Continuing Appropriations:
RA7171 155,382,057.20
9911 44,696,143.75
Capital Outlay 114,469,107.49
MOOE 6,305,789.06
SEF 2014 339,969.23
SEF 2015 6,092,775.55
TOTAL 1,594,588,918.44 50,692,355.57
Unrestricted Government Equity 94,249,596.57 87,386,058.49
29
The surplus for the year 2016 under Trust Fund amounting to P 6,419,432.54 is not
included in the total Government Equity since it represents the unexpended balance of the
Trust Liability - Disaster Risk Reduction and Management Fund.
Surplus for the period 6,419,432.54
Add: Beginning Balance 591,699.11
7,011,131.65
19 Tax Revenue 179,095,353.79
2016 2015
Tax Revenue - Individual and Corporation
Professional Tax 181,317.16 168,618.38
Tax Revenue - Property

Real Property Tax- Basic 70,302,516.60 54,269,997.08
Discount on Real Property Tax- Basic (3,808,424.42) (177,915.00)
Special Education Tax- Basic 97,347,774.03 62,529,362.17
Discount on Special Education Tax- Basic (5,440,992.05) (1,129,070.08)
Real Property Transfer Tax 1,089,363.12 529,423.98
Tax Revenue - Goods and Services

Tax on Sand, Gravel and Other Quarry Products 6,028,324.23 4,918,132.46
Tax on Delivery Trucks and Vans 1,337,500.00 1,633,316.25
Amusement Tax 1,335,424.66 1,254,725.97
Franchise Tax 612,957.31 564,162.66
Tax Revenue - Fines and Penalties

Tax Revenue - Fines and Penalties - Individual
and Corporation 5,537.50 3,075.00
Tax Revenue - Fines and Penalties - Property
Taxes 4,367,228.10 5,648,700.31
Tax Revenue - Fines and Penalties - Special
Education Tax 5,575,461.30 -
Tax Revenue - Fines and Penalties - Goods and
Services 158,366.25 336,977.92
Tax Revenue - Fines and Penalties - Other Taxes 3,000.00
179,095,353.79 130,549,507.10
20 Share from National Taxes 976,772,160.00
Share from Internal Revenue Collections (IRA) 976,772,160.00 891,781,800.00

976,772,160.00 891,781,800.00
30
21 Other Share from National Taxes 469,350,037.53
2016 2015
Share from National Wealth 1,021,330.06 194,502.00
Share from Tobacco Excise Tax (RA 7171 and
8240) 468,328,707.47 385,939.00
469,350,037.53 580,441.00
TOTAL SHARE FROM NATIONAL
TAXES 1,446,122,197.53 892,362,241.00
Share from National Wealth represents the share of the Province for proceeds from
Renewable Energy
Sources under RA 9513 (Renewable Energy Law).
22 Service and Business Income 111,323,122.33

2016 2015
Service Income
Permit Fees 5,494,579.46 5,327,873.70
Registration Fees 73,875.00 78,125.00
Registration Plates, Tags & Stickers Fees 198,000.00
Clearance and Certification Fees 1,530,363.45 1,259,323.51
Inspection Fees 2,101,681.42 1,827,386.70
Other Service Income - 16,090.00
Occupation Fees 27,742.50 27,742.50
Fines and Penalties - Service Income 175,500.00 180,224.30
Other Service Income 48,580.00 40,370.00
Processing Fees 124,485.00 87,503.33
Business Income
School Fees 110,920.00 57,480.00
Affiliation Fees 1,440,371.27 -
Rent Income 22,074,461.25 21,294,912.40
Parking Fees - 34,000.00
Hospital Fees 65,660,085.12 88,724,440.05
Interest Income 2,213,549.46 1,798,287.18
Fines and Penalties - Business Income 189,242.30 16,588.45
Other Business Income 9,859,686.10 9,535,323.50
TOTAL BUSINESS AND SERVICE INCOME 111,323,122.33 130,305,670.62
23 Shares, Grants and Donations 2,752,237.44

2016 2015
Share from PAGCOR - 781,495.90
Share from PCSO 2,752,237.44 2,543,826.91
2,752,237.44 3,325,322.81
31
24 Gains 75,221.25
2016 2015
Other Gains 75,221.25 49,447.50
25 Other Income 229,228.08

2016 2015
Miscellaneous Income 229,228.08 1,246,556.15
26 Personnel Services 306,072,166.27

2016 2015
Salaries and Wages
Salaries and Wages - Regular 168,449,970.09 165,686,177.80
Salaries and Wages - Casual/Contractual 25,365,605.98 28,422,305.44
Other Compensation
Personal Economic Relief Allowance (PERA) 15,641,699.93 16,278,090.45
Representation Allowance (RA) 3,040,643.75 3,065,050.00
Transportation Allowance (TA) 2,370,018.75 2,395,050.00
Clothing/Uniform Allowance 3,240,000.00 3,520,000.00
Honoraria 40,900.00 -
Year End Bonus 16,280,336.95 14,080,944.28
Cash Gift 4,050,795.00 3,086,625.00
Other Bonuses & Allowances 14,766,870.12 -
Pag-IBIG Contributions 782,514.10 815,872.35
Personnel Benefit Contributions
Retirement and Life Insurance Premiums 20,124,551.79 19,812,322.16
PhilHealth Contributions 1,847,162.59 1,862,600.00
Employees Compensation Insurance Premiums 781,568.15 809,963.03
Other Personnel Benefits
Terminal Leave Benefits 13,942,692.13 10,161,115.83
Other Personnel Benefits 15,346,836.94 26,711,639.79
TOTAL PERSONAL SERVICES 306,072,166.27 296,707,756.13
27 Maintenance & Other Operating Expenses 1,010,546,558.43

2016 2015
Traveling Expenses
Traveling Expenses - Local 7,051,402.02 6,531,693.17
Traveling Expenses - Foreign - 4,800.00
Training and Scholarship Expenses
Training Expenses 913,948.32 781,006.00
Scholarship Grant / Expenses 22,084,018.15 -
32
Supplies and Materials Expenses
Office Supplies Expenses 44,653,135.17 51,835,298.77
Accountable Forms Expenses 644,361.25 608,597.00
Animal & Zoological Expense 1,804,572.36 -
Food Supplies Expenses 15,655,978.10 12,123,897.47
Welfare Goods Expense 9,302,046.00 -
Drugs and Medicines Expenses 126,031,982.79 35,575,206.78
Medical, Dental and Laboratory Supplies
Expenses 68,636,591.83 28,099,182.03
Fuel, Oil and Lubricants Expenses 13,746,740.40 8,601,035.30
Agricultural and Marine Supplies Expenses 298,083,056.64 317,901.50
Textbook & Materials Expense 2,750,000.00 -
Military, Police & Traffic Expense 15,556,157.00 -
Other Supplies and Materials Expenses 152,889,120.00 1,923,971.00
Utility Expenses
Water Expenses 1,521,587.90 1,357,196.41
Electricity Expenses 22,681,661.57 23,593,747.94
Communication Expenses
Postage and Courier Services 102,544.04 172,856.09
Telephone Expenses 4,247,185.81 4,323,268.04
Internet Subscription Expenses 958,679.26 953,690.51
Cable, Satellite, Telegraph and Radio Expenses 12,000.00 5,000.00
Awards / Rewards & Prizes
Awards/Rewards Expenses 328,000.00 -
Prizes 2,187,350.00 -
Generation, Transmission and Distribution Expenses
Generation, Transmission and Distribution Expenses - 53,122.00
Confidential, Intelligence and Extraordinary Expenses
Extraordinary and Miscellaneous Expenses - 396,437.00
Professional Services
Consultancy Services 650,000.00 7,500.00
Other Professional Services 875,335.52 -
General Services
Janitorial Services 2,660,962.00 -
Security Services 2,993,981.74 1,571,130.00
Other General Services 492,590.00 -
Repairs and Maintenance
Repair and Maintenance - Infrastructure 362,681.50 -
Repair and Maintenance - Buildings and
Other Structures 6,555,077.01 958,754.28
Repair and Maintenance - Machinery and 4,984,786.21 1,651,997.45
33
Equipment
Repair and Maintenance – Transportation
Equipment 3,165,132.74 2,906,076.49
Repairs and Maintenance - Other PPE 139,750.00 -
Taxes, Insurance Premiums and Other Fees
Taxes, Duties and Licenses 654,256.64 497,910.76
Fidelity Bond Premiums 506,669.04 503,762.34
Insurance Expenses 3,780,671.67 3,644,851.13
Other Maintenance and Operating Expenses
Advertising Expenses 429,039.00 236,950.20
Printing & Publication Expense 1,337,700.00 111,200.00
Rent Expense 1,699,410.00 -
Membership Dues & Contributions to
Organizations 528,300.00 -
Subscription Expenses 42,538.00 99,808.00
Donations 57,099,530.71 1,408,398.36
Other Maintenance and Operating Expenses 109,746,028.04 460,258,366.80
TOTAL MAINTENANCE AND OPERATING
EXPENSES 1,010,546,558.43 651,114,612.82
The increase in other items including Drugs and Medicines Expenses, Medical, Dental
and Laboratory Supplies Expenses, Agricultural and Marine Supplies Expenses, Other
Supplies and Materials Expenses, and Donations represent supplies distributed to various
municipalities affected by Typhoon Lawin and Typhoon Karen. More projects were also
implemented by the Provincial Government because of the Share from RA 7171 which
was received in 2015 but implemented in 2016.
28 Non-cash Expenses 101,640,797.55

2016 2015
Depreciation
Depreciation - Investment Property 16,822,392.62 -
Depreciation - Infrastructure Assets 28,414,329.85 20,048.42
Depreciation - Buildings and Other Structures 7,677,656.29 23,417,685.39
Depreciation - Machinery and Equipment 29,591,510.32 30,032,083.45
Depreciation - Transportation Equipment 12,241,524.93 10,906,446.57
Depreciation - Furnitures & Fixtures 3,260,095.11 -
Depreciation - Leased Asset Improvement 3,747.75 -
Depreciation - Other Property, Plant and
Equipment 1,896,732.94 2,268,131.56
99,907,989.81 66,644,395.39
Loss
Loss on Sale of Assets 100.00 -
Loss on Assets 1,732,707.74 -
1,732,807.74 -
34
29 Financial Expenses 22,656,630.89
2016 2015
Interest Expenses 22,656,630.89 22,727,097.05
Bank Charges - 4,629.94
22,656,630.89 22,731,726.99
30 Transfers, Assistance and Subsidy To 8,473,205.50

2016 2015
Subsidy to National Government Agencies 3,399,129.77 3,672,694.22
Subsidy to Local Government Units 1,315,463.50 1,573,009.25
Subsidy - Others 2,264,527.43 -
Transfers of Unspent Current Year DRRM Funds
to the Trust Funds 1,494,084.80 571,020.20
8,473,205.50 5,816,723.67
31 Local Disaster Risk Reduction Management Fund
The LDRRMF represented the amount set aside by the LGU and assistance from GOCCs,
NGAs, other LGUs, private corporations, organizations and individuals to support its
disaster risk management activities pursuant to RA 10121 otherwise known as the
“Philippine Disaster Risk Reduction and Management Act of 2010”. The amount
available and utilized during the year totalled P66,759,726.91 and P58,254,510.46,
respectively, broken down as follows:
PARTICULARS AVAILABLE UTILIZED BALANCE

Current Year:
QRF 17,566,770.90 16,459,018.90 1,107,752.00
Mitigation Fund
MOOE 40,989,132.10 40,602,799.30 386,332.80
Capital Outlay - - -
Sub-Total 58,555,903.00 57,061,818.20 1,494,084.80
Special Trust Fund:
CY 2014 20,678.91 - 20,678.91
CY 2015 571,020.20 63,557.26 507,462.94
Donations CY 2016 7,612,124.80 1,129,135.00 6,482,989.80
Sub-Total 8,203,823.91 1,192,692.26 7,011,131.65
TOTAL 66,759,726.91 58,254,510.46 8,505,216.45
35
32 Notes to Cash Flow Statement
a) Cash
Cash consist of cash on hand, balances with banks, and investment in time deposits.
Cash and cash equivalents included in the cash flow statement comprise the following
statement of financial position amounts:
Cash on hand and balances with banks 727,291,275.73 400,005,770.43

Investment in Time - Deposits 65,046,299.06 64,424,715.40
792,337,574.79 464,430,485.83
b) Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)
Surplus/(Deficit) 290,208,001.78 114,823,530.18

Non-cash transactions
Depreciation 99,907,989.81 66,644,395.39
Losses 1,732,707.74 -
Prior Period Adjustment (602,226.16) 5,159,608.19
Increase in payables 741,230,439.44 664,590,435.72
Payment of Interest (Interest is now
included under financing activity - 21,433,335.81
Decrease in payables (644,407,493.09) (587,570,740.92)
Sale of Livestock - 636,800.00
Increase in current assets (63,619,650.06) (17,709,975.58)
Decrease in current asset 18,259,701.11 2,225,801.86
Increase in Receivables (302,801,682.05) (67,368,703.71)
Decrease in receivables 323,194,882.56 104,824,457.33
Net Cash from Operating Activities 463,102,671.08 307,688,944.27
36
Reconciliation between actual amounts on a comparable basis as presented in this
statement and in the Statement of Financial Performance for the Year Ended December
31, 2016
Personnel Financial
Income MOOE Capital Outlay
Services Expenses
GENERAL FUND
Comparison Statement of Budget
and Actual
Entity Differences: 1,642,825,972.03 306,162,861.20 1,058,303,137.51 22,656,630.89 3,944,404.25
Basis Differences:
Gain on Sale of Assets 75,221.25
Non-cash expenses:
Depreciation - 99,449,360.66
Losses 1,732,807.74
Timing Differences: -
Premiums charged from prior
- 1,694,067.49
period appropriations
Prepayments charged to
- (1,804,894.51)
current appropriations
Unconsumed Inventories
charged to current - (20,035,650.90)
appropriations
Consumed Inventories 10,692,115.46
Other Reconciling Items:
Reclassification (90,694.93) 4,342,920.60 (4,252,225.67)
Erroneous posting/recording of
2,398,400.50 22,409,560.90
accounts
Return of excess CA that was
1,755.07
posted as Expense
Debt Service (Loan
Amortization, Retirement of
(51,505,119.08)
Debt Instruments) payment
of principal only
Receivables (7,108,076.74)
Capital Expenditures charged
(7,332,226.72) 7,332,226.72
from MOOE
Donations 25,440,916.88
Adjustments from Government 562,264,923.27
Equity
Unserviceable Properties (2,060,819.58)
Expenditure from RA 7171 (1,011,463.00) (1,011,463.00)
Per Statement of Financial
1,641,889,730.28 306,072,166.27 1,089,817,134.08 22,656,630.89 655,078,986.77
Performance - General Fund
SPECIAL EDUCATION
FUND
Comparison Statement of Budget
and Actual
Entity Differences: 97,482,243.28 - 64,956,718.25
Basis Differences: 225,386.86 - 458,629.15 - -
Budgetary items not
considered as expenses
Interest Expenses Capitalized
37
Capital Expenditures
Non-cash Expenses 225,386.86 - 458,629.15 - -
Depreciation 458,629.15
Bank Charges
Income not considered as
budgetary items
Interest Income 225,386.86
Timing Differences: - - (34,571,920.00) - -
Prepayments charged to
current appropriations
Unconsumed Inventories
charged to current
appropriations (34,571,920.00)
Consumed Inventories and
deferred charges charged to
prior period appropriations
Commitments (Obligated but
not delivered/billed)
Per Statement of Financial
Performance – Special 97,707,630.14 - 30,843,427.40 - -
Education Fund
38
PART II – AUDIT OBSERVATIONS AND
RECOMMENDATIONS
AUDIT OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AND COMPLIANCE AUDIT
1. Unrecorded under Trust Fund the balance of the PDRRMF-P1,404,084.80
The Due to Other Funds, Intra-Agency Payable account of the General Fund
(GF)representing the unexpended balance of the Provincial Disaster Risk
Reduction Management Fund (PDRRMF) of P1,404,084.80 was not recorded,
under the Due from Other Fund, Intra-Agency Receivables account of the Trust
Fund (TF), thus understating the latter by the same amount.
Section 5.1.10of COA Circular provides-
“All unexpended/unobligated balance of the Quick Response Fund

and the Maintenance and Other Operating Expenses Fund shall be
transferred to the Special Trust Fund under the “Trust Liability-
PDRRM” in the Trust Fund books.”
Verification of the year-end financial statements revealed that the

unexpended/unobligated Provincial Disaster Risk Reduction Fund amounting
P1,404,084.80 was recorded as Due to Other Fund – Intra-Agency Payables of the GF
as required in the abovementioned circular. However, the same was not recorded as
Due from Other Fund – Intra-Agency Receivables of the TF resulting in the
understatement of the latter account by the same amount.
The interest on deposit which was included in the Due to Other Fund-Inter-
Agency Payables account of the TF amounting P633,714.96 did not tally with the
interest in the Due from Other Fund, Intra-Agency Receivables account of the GF
totaling P132,694.70. Thus, the affected accounts were not fairly presented in the
financial statements as at year end.
It was observed that the interest earned on deposits under the TF accrue to the
GF. However, the same were not immediately transferred to the latter, hence the
unreconciled balances under the “Due to and Due from Other Funds” accounts.
Furthermore, the interests recorded as Due to Other Funds under the TF were
much bigger than the amount of Due from Other Funds of the GF.
39
Below is a table showing the Due to and Due from of Trust and General Funds:
TRUST FUND GENERAL FUND

Interest Earned
Interest Earned Due to Due from Trust
General Fund Amount Fund Amount
DBP 0545-011959-030 P 255,046.69 June 30, 2015 P 12,438.53
0545-023840-081 11,819.86 August 2015 88,641.68
0545-029464-160 228,997.31 November 2015 12,442.26
0545-029314-160 7,128.57 December 2015 19,172.23
0545-029315-160 80,268.95
0545-030705-030 229.99
0545-032038-030 4,134.11
LBP 0262-0015-39 33,768.03
0262-0241-72 12,321.45
TOTAL P 633,714.96 Total P 132,694.70
The table shows that there were interests on deposits which were taken up as
“Due to General Fund” but were not recorded as “Due from Trust Fund “.
Had the interest earned been transferred to the GF, the same should have been
included as interest income. And consequently, the same should have been included
in the surplus of the GF.
We have recommended that management records the unexpended

amount of PDRRMF to Trust Fund-Due from Other Fund account in order to
present the same fairly in the financial statement. Also, reconcile the interest
recorded both under the GF and TF, prepare adjustments if necessary.
Management Comment
Management commented that the corresponding adjusting entries will be

recorded in 2017.
2. Unliquidated Subsidies to different LGUs-P6,934,657.02
The amount of P6,934,657.02 was still unliquidated by the different

municipalities which is contrary to COA Circular No. 94-013 dated December
13, 1994. As a result, the asset and government equity accounts were overstated
and the expense account was understated by the same amount, thus the fair
presentation of the financial statements is affected.
40
Items No. 5 & 6 of COA Circular 94-013 provides that:
5. DUTIES AND RESPONSIBILITIES OF THE SOURCE AGENCY (SA)
The SA shall:
5.4 require the Implementing Agency (IA) to submit the reports and furnish
the IA with a copy of the journal voucher taking up the expenditures.
Upon receipt of the copy of the Certificate of Settlement and Balances
(CSB) and the Credit Notice (CN) issued by the IA Auditor, the
Accountant shall draw a journal voucher restoring back the amount
previously credited for any disallowance. He shall furnish the IA with
a copy of the JV; and
5.5 issue the official receipt for the unexpended balance and the refunded
disallowance remitted by the IA.
6. DUTIES AND RESPONSIBILITIES OF THE IMPLEMENTING
AGENCIES (IA)
The IA shall:
6.4 within five (5) days after the end of each month, the Accountable
Officer (AO) shall prepare the RCI and the RD and shall submit them
with all supporting vouchers/payrolls and documents to the
Accountant. These reports shall be approved by the Head of the
Agency;
6.5 within ten (10) days after receipt from the AO, the Accountant shall
verify the Reports, provide accounting entries, record and submit the
duplicate copies of the Reports with all the originals of
vouchers/payrolls and all supporting documents to the IA Auditor.
The Accountant shall ensure that only expenses for the project are
included in the Reports. He shall submit the original copy of the
Reports to the SA (Attention: The SA Accountant).
6.6 record the disallowance in audit after receipt of the CSB and the CN
issued by the IA Auditor and require the settlement of any suspension
and disallowance;
6.7 return to the SA any unused balance and refund of disallowance upon
completion of the project.
In the review of the year-end financial statements, we noted that the Due from
LGUs amounting to P6,934,657.02 was still unliquidated by the recipients local
government units. This is a subsidy to different municipalities and cities for the
different activities of the Provincial Government such as Tan-ok Festival, Mini tan-ok
and La Virgen Milagrosa. There are some LGUs that did not yet liquidate their fund
transfer for 31 to more than 360 days from the date of grant. (See Annex “A” for
41
details)
We have recommended the OIC- Provincial Accountant to require the
different municipalities/cities to submit the reports of utilization of the subsidy
given to them in order to conform to the provision of COA Circular No. 94-013
and in order to fairly present the financial statements of the province.
Management Comment:
Management informed that several letters requiring the LGUs to submit
reports of utilization of the subsidy granted to them were already sent to
municipalities and this concern was also being taken up regularly during the meeting
of Local Tourism Officers in the Province. They have been working closely with the
Local Finance Committee members in requiring the submission of reports of
utilization of the subsidy given to local government units. Management will continue
issuing another notice to the concerned local government units for immediate
submission of the said reports. They also reasoned out that the LGUs were not able to
submit their utilization reports due to load of work. Management assured that they
will gather the reports and complete the liquidation procedure.
3. Incorrect Estimated Useful life of Road Networks and Provision of Salvage Value
The incorrect estimated useful life and provision of salvage value of the
Infrastructure - Road Networks which is not in accordance with DPWH
Department Order No. 176 dated November 23, 2015 resulted in the recording of
fully depreciated Road Networks amounting P100,998,000.00, thus the
overstatement of the said account by the same amount. It also resulted in the
overstatement of the accumulated depreciation by P55,470,706.71, hence
affecting the fair presentation of the accounts in the financial statements.
Department Order No. 176 dated November 23, 2015 provides the estimated
useful life of the infrastructure assets as follows:
Public Infrastructure Estimated Useful

Life In Years
Newly Constructed Road networks: Per DO
Concrete 20
Asphalt 10
Box Culvert 20
Bridges (Concrete or Steel) 40
Pipes Culvert 15
Rehabilitation, Repairs & Maintenance:
Concrete Reblocking 10
Asphalt Overlay (Asset Preservation) 5
Bridges (Major Repair)
Concrete 20
42
Steel 10
Lined Canals (Concrete or Grouted Riprap) 2
Flood Control System 25
Water Supply 15
Seaport Systems (Ports, Lighthouses, etc) 20
Parks, Plazas and Monuments 20
Other Infrastructure assets:
Multi-purpose Pavement 5
Solar Dryer 5
There were thirty nine (39) road networks with a total cost of P568,404,423.39
that were taken up as agency assets as of December 31, 2016. (Annex “B”) The
asphalted roads have 20 years useful life instead of 10 and the Box Culvert has 20
years useful life instead of 25 years as provided in the above table.
Department Order No. 176 also states-
“Considering that there is no scrap or salvage expected to be recovered
from the infrastructure assets at the end of the asset’s useful life or
when it is demolished or destroyed, no residual value shall be
recognized in computing the depreciation of Infrastructure assets.
Below is a table showing the effect of the road networks which were already
fully depreciated but were still included due to the incorrect number of estimated
useful life.
Cost of fully Difference of

Per Agency Per DPWH Dept. Depreciated Accumulated
Schedule Order No. 176 Roads Depreciation
Total Cost per 568,404,423.39 467,406,423.39 100,998,000.00
Book
Accumulated
Depreciation 309,096,073.89 253,625,367.18 55,470,706.71
Book Value as of
12/31/2016 359,308,349.50 213,781,056.21
The incorrect estimated useful life of the asphalted road network resulted in the
overstatement the agency assets by P100,998,000.00. (Annex “C”) Also, due to the
provision of salvage value and the incorrect number of useful life of the assets, which
is not in accordance with the above cited Department Order resulted in the
understatement of the accumulated depreciation and the overstatement of book value
of the affected infrastructure assets.
43
We have recommended that management adheres strictly to the
provisions of the Department of Public Works and Highways, Department
Order No. 176 dated November 23, 2015 in order to present fairly the
Infrastructure Assets - Road Networks in the financial statements.
Management Comment
The OIC- Provincial Accountant commented that the necessary adjusting

entries will be made and the provisions of DPWH Department Order No. 176 dated
November 23, 2015 will be strictly observed.
4. Unexpended MOOE amounting-P 6,305,789.06
Unobligated/unexpended MOOE amounting to P 6,305,789.06 pertaining to the

appropriation supposedly for the year 2016 was recorded as Restricted
Government Equity, which is not in place with the guidelines under Philippine
Public Sector Accounting Standard (PPSAS). Likewise, the same was not
disclosed in the notes to financial statements, thus affecting the fair presentation
of the financial statement.
Philippine Public Sector Accounting Standards (PPSAS) was established to

align accounting standards in the public sector with the prevailing international
standards, provide distinct accounting standards thereby enhancing the quality and
uniformity in financial reporting by Philippine public sector entities ensuring
accountability, transparency and comparability of financial information.
It is very true that the amount was allocated for the payment of a particular
expenditure; nevertheless, the recording was misplaced. Restricted Government
Equity is no longer in use with this new standard. The same was not also disclosed to
provide additional information necessary and relevant description of the item for a
fair presentation of the financial statement.
.
We have recommended that management records the amount as expense
during the year it was incurred and as payable to represent the unpaid
obligation. Otherwise, disclose the amount included in the surplus which is no
longer available for appropriation as the same is already restricted for the
previous year’s obligations.
Management Comment
Management commented during the exit conference that the Restricted

Government Equity will be properly disclosed in the financial statements.
44
5. Incorrect classification of Expenses
The total amount of P 600,000.00 classified as Rental Expense instead of

Travelling Expense as required under COA Circular No. 2004-002 dated April
29, 2004 and repealed by COA Circular 2015-009 dated December 1, 2015
affects the fair presentation of the financial statements of the agency.
COA Circular No. 2004-002 dated April 29, 2004 covers the revised chart of
accounts under the New Government Accounting System and repealed by COA
Circular 2015-009 dated December 1, 2015. It was issued to ensure the proper
accounting of all financial transactions of local government and to comply with the
requirements of Philippine Public Sector Accounting Standards.
Audit conducted for the year 2016 revealed that transactions for the payment
of travelling expenses of students in attending the Region I Athletic Association
(RIAA) in the total amount of Php600,000.00 was misclassified to Rent Expense
instead of Travelling Expense.
We have recommended that the OIC – Provincial Accountant reclassifies
the account to the appropriate account classification in conformity with the
Chart of Accounts of PPSAS.
Management Comment
Management commented that future transactions of the same nature

corresponding entries will be followed.
6. Additional cost of two pesos per liter of fuel and oil of Provincial Depot
The Ilocos Norte Provincial Gasoline Station/Depot provided additional two

pesos on top of the purchase cost for every liter of diesel and premium
issued/used to the provincial government vehicles, thus the objective of
generating possible savings or income for the Provincial Government of Ilocos
Norte (PGIN) is defeated.
The purposes of having the gasoline depot for the provincial government were
to provide fuel needs of the provincial government vehicles and to generate savings
by purchasing in bulk at a possible lower cost. However, when the provincial
government vehicles were issued fuel/oil from the depot, these were charged of
additional two pesos per liter on top of the purchase cost. This resulted in the
increase of expenses on fuel/oil/lubricants of the Provincial Government and it also
defeats the purpose of generating savings/income.
We have recommended that the additional two pesos per liter of diesel
and gasoline for the Provincial Government of Ilocos Norte depot be stopped,
charging additional cost defeats the purpose of establishing depot. Moreover,
45
imposition of price additional cost per liter is inconsistent as the buyer and the
seller is no other than the PGIN.
Management Comment
During the exit conference, the Local Finance Committee members agreed that
the two pesos additional cost will be stopped.
7. Frequent refunds to officials and employees for loans deducted from their salaries
Refunds of the loan amortizations were made to some officials and employees
due to the renewal of the loans, thus new due dates and amount of amortization
were agreed upon. Consequently, the net pay were sometimes overstated or
understated.
In the post-audit of disbursement vouchers, it was disclosed that loans were

obtained by the officials and employees from both government and private
institutions. Loan amortizations were regularly deducted from their salaries in the
payroll.
Preparing monthly payrolls with inaccurate net balances due to inaccurate

itemized monthly deductions is not in consonance with Section 261 b and c of
GAAM stating that:
“b. The payroll for the first half of the month shall reflect the basic
monthly salary, all allowances and itemized monthly deductions.
c. The net pay for the first half and second half shall be computed as
follows: Basic salary plus allowances less total deductions divided
by two (2).”
Kindly see attached schedule (Shown as Annex “D”) pertaining to Refund of

Salary Loan from July-November 2016 in 196 Disbursement Vouchers
correspondingly paid through issuance of the same number of checks with an
aggregate amount of P 427,672.64.
Having frequent changes of entries for transactions particularly the deductions

and remittances as well as refunds to employees would muddle up the transactions
and confuse the personnel doing the recording. This is a result of improper
coordination between the agency’s officials and employees and the department in
charge with the preparation of payroll relative to the amount and effectivity of the
monthly loan deduction.
46
We have recommended that management reconciles the loan deductions
in the salary prior to the preparation of the payroll so that monthly deductions
in the payroll as well as the net pay for a particular period are reflective of the
correct amounts in consonance with Section 261 b and c of GAAM.
Also, adopt a policy wherein officials and employees of the agency who
wish to obtain loan from various financial institutions should promptly and
properly coordinate with the Accounting Office of the terms of the loan that will
be granted particularly the amount and due date of the monthly amortization so
that such data will be accurately effected in the payroll.
Management Comment:
Management commented that the deductions reflected in the payroll were

based on the Billing Statements forwarded to the Accounting Office. Refunds cannot
be totally avoided because requests for refund usually arise at the time new loans
were granted to employees and payrolls or salaries for the period were already paid.
The refund covers the loan amortization deducted from the payroll and
remittance is still in transit. This will always occur, as the policy of banks, or lending
institutions is to deduct the first amortization on the proceeds of the loan, and
deduction from the payroll is usually remitted at the 10th day of the following month
for GSIS and at the end of the month for banks. However, refunds are only given due
course if there is a new loan and there is an in transit loan amortization.
8. Dormant/long overdue payables-P 17,623,847.05
The Guaranty/Security Deposits Payable and the Due to Local Government

Units amounting P13,064,026.26 and P4,559,820.79 respectively consist of
dormant/long overdue payables, thus the fair presentation of the financial
statements is affected.
The Guaranty/Security Deposits Payable under the General Fund and Trust
Fund totaling P6,557,706.31 and P6,506,319.95 respectively or a total of
P13,064,026.26 consist of retention fees withheld from suppliers and contractors as
provided in the pertinent provisions of Republic Act 9184 and bail bonds for several
civil and criminal cases which were deposited to the Provincial Treasury so many
years ago. The schedule (Annex “E”) shows that the account includes security/bail
bond payables which were recorded in the year 1947 or approximately 69 years as at
year end.
The surety/bail bonds consist of private or public monies which have officially
came into the possession of the local government as trustee, agent or administrator, or
which have been received as a guaranty for the fulfillment of some obligation.
However, when the trial courts started maintaining their cashbooks and accounts for
47
the security/bail bonds, there were several accounts which were not withdrawn and
transferred to the custody of the corresponding accountable persons of the respective
regional, city or municipal trial courts.
The Due to Local Government Units amounting P4,559,820.79 (Shown as

Annex “F”) includes Real Property Tax and Sand and Gravel fees due to other local
government units. These collections were made when the provincial treasury was
receiving payments of realty taxes due other LGUs and the same should be remitted
in accordance to Section 36 of the COA Circular No. 92-382 dated July 3, 1992.
COA Circular No. 92-382 dated July 3, 1992 states-
“Remittance of collections to other government units, - Collections

made by provincial, city, or municipal treasurers for other government units,
shall be promptly remitted to the government units concerned. At least once
a week, the accountant concerned shall prepare the disbursement vouchers
covering such remittances and the supporting statements containing complete
descriptions of the collections being remitted. The disbursement vouchers
and statements shall then be returned to the treasurer for the preparation of
the checks to cover the remittances. The checks duly approved or signed,
each accompanied by a copy of the corresponding statements, shall be
transmitted to the government units concerned. The remittances shall be
acknowledged by the recipient government units by the issuance of official
receipts.”
Verification of the schedules revealed that the real property taxes were
collected as early as in 1979. However, corresponding remittances were not made
due to the unavailability of supporting documents to determine whom the realty taxes
be remitted or credited. There were also sand and gravel fees which were collected in
1993 onwards which were still unremitted to the corresponding municipalities.
Also, included in the schedule were deposits made in 1995 by the different
municipalities of the Province of Ilocos Norte. The concerned municipalities were
not able to reconcile the receivable account balances in their books of accounts with
the payable account of the Province, hence claim was not made.
In addition, a Seed Money Allotment Fund of P18,000.00 which was deposited

in 1980 remained unused. The schedule did not mention the source and usage of the
fund, resulting in the non-usage of the same in 36 years.
Considering the length of time that these were outstanding, the

creditors/suppliers/contractors who have delivered goods/services and implemented
projects for the agency should have filed their valid claims. Likewise, the real
properties corresponding to the collections made were believed to have been already
cleared from any unpaid taxes by the land owners.
48
We have recommended that management exerts more efforts to determine
the payees/creditors of the dormant/non-moving accounts and remit/pay the
same. Inform the payees/claimants of their claims for at least three
notices/letters. After which, failure on their part to file their valid claim, the
management may revert the amount to the surplus account to enable the agency
to appropriate the funds for other priority projects.
The surety/bail bonds posted for civil or criminal cases may be reverted
to surplus or be remitted to the Bureau of the Treasury. Maintain a schedule of
the reverted accounts for future reference and when in case a valid claim may be
filed in the future.
Management Comment:
Management commented that efforts had been exerted in the verification or
determination as to the needed documents to remit the said accounts. The payables
recorded did not come from the coffers of the Provincial Government. The amounts
were only entrusted to the Province in the form of bail bonds, deposit of municipal
treasurers, realty payments and others. So to revert it to surplus is very much
welcome, provided that no law will be violated.
9. Additional works of utility workers and lack of cleaning materials
Additional works of utility workers and lack of cleaning materials resulted to

poor maintenance of sanitation and cleanliness of the Governor Roque B. Ablan,
Sr. Memorial Hospital (GRASMH), consequently affecting the patients and
health workers in the said institution.
The audit team conducted an ocular inspection along the hallways and rest
rooms of the GRASMH and observed that cleanliness was not well maintained. The
unpleasant smell in the ward rooms came from the respective rest rooms. There were
crawling insects like ants along the window panes and cobwebs at the ceilings.
An interview with one of the personnel revealed that there were 24 utility
workers on shifting basis, thus eight utility workers in every shift except when one or
two are taking their day-off or when on leave of absence. The utility workers were
under the Damili Service Provider of which services were secured for the
maintenance of cleanliness and orderliness of the hospital premises.
It was found out that the utility workers were not limited to cleaning works as
they also help in conveying the patients to their respective rooms; remove used/dirty
bed linens and replace the same with clean ones. They also deliver oxygen tanks for
patients and help in conveying them to the laboratory rooms when needed.
49
Inadequate cleaning materials including disinfectants contributed to the stench
smell especially when the ward rooms were fully occupied. The patients’ improper
use of the rest rooms and disposal of waste materials also added up to the said
concern.
Had the hospital have nurses’ helpers and/or assistants instead of the utility
workers, the latter would have enough time in doing their main duties which is the
maintenance of cleanliness and orderliness of the hospital.
We have recommended that management:
a. Hires additional personnel in order for the utility workers to maximize their
time in maintaining cleanliness and orderliness of the hospital.
b. Upon admission of patients, discuss briefly and give them a copy of the rules
and regulations on the proper usage of the hospital’s rest rooms and the
proper disposal of waste materials. Monitor the implementation of the same
and reprimand any violators.
c. Provides adequate cleaning materials and disinfectants but issuance of the

same should be properly controlled.
Management Comment
The audit observations were well considered. Management will revisit their
budget for CY 2017 to determine if they could accommodate the hiring of additional
personnel to resolve the situation.
10. Low stock of medicines and medical supplies
The hospital’s pharmacy has low stock of medicines and medical supplies
resulting in the inability to dispense the same especially for the emergency cases
hence the objective of providing sufficient medicines is not realized.
The Audit Team conducted a walk through to the Governor Roque B. Ablan,
Sr. Memorial Hospital’s Pharmacy and observed that it has limited stock of medicines
and medical supplies. Because of this, the pharmacy could not respond to the needs
of the patients. It was also disclosed that in cases of emergency when the patients
were not prepared for any contingencies and the pharmacy could not provide the
needed medicines and/or medical supplies, the patients’ relatives end up borrowing
money or looking for possible financial help before the medicines needed be made
available for their patients.
50
Had there been sufficient stock of medicines and/or medical supplies, the
needs of the patients could be easily provided. The cost of the medicines and/or
medical supplies would then be included in the hospital bills of which payment could
be remedied later.
We have recommended that management gives priority to health services

by providing adequate stocks of medicines and medical supplies inside the
hospital’s pharmacy. Determine the medicines which are fast moving or easily
dispense with and procure more volume of the same. Expedite replenishment of
medicines for the pharmacy in order to meet the needs of the patients.
Management Comment:
The management commented that the officials of the GRBASMH will discuss
to act on the problem on the limited stocks of medicines in the pharmacy.
Management commented that the observation was well taken.
B. VALUE FOR MONEY
11. Unused fund from NGAs - P116,029,701.09
Due to NGAs of the Trust fund in the total amount of P116,029,701.09 remained
unused and were not implemented, thus depriving the constituent of the benefits
that could be derived therefrom. Likewise, the excess of the funds from the
completed projects were not yet returned to the Source agency in accordance to
the provisions of Section 4.9 and 6.7 of COA Circular No. 94-013 dated
December 13, 1994.
Section 4.9 of COA Circular No. 94-013 dated December 13, 1994 states:
“The Implementing Agency shall return to the Source Agency any
unused balance upon completion of the project.”
Also, Section 6.7 of said COA circular provides-
“The Implementing Agency shall return to the source agency any unused
balance and refund of disallowance upon completion of the project.”
The balance of P116,029,701.09 in the Subsidiary Ledger-Due to National
Government Agencies under the Trust Fund was not yet implemented and/or used
entirely. Likewise, the excess of the funds for the projects which were already
accomplished were not yet returned to the Source Agency.
It was mentioned in the last year’s observation that the LGU will seek approval
from the Source Agencies to use the excess funds of the completed projects for other
priority projects of the LGU. However, to date the large amount representing the
excess fund of completed projects remained idle in the book of the LGU.
51
A typical example is the balance of P1,125,123.89 under the schedule of Due to
NGAs-Agricultural Fund is kept in the book from eight years extending to nineteen
(19) years which we find it disagreeable with the abovementioned provision. A table
assigned as Annex “G” is provided for farther illustration.
Moreover, the deferred implementation of the projects funded by the different
National Government Agencies and development funds of the senators denied the
constituents of the immediate benefits that could be derived therefrom. Also, the
balances of completed projects should be returned to the corresponding Source
Agency as provided under the aforementioned circular.
We have recommended that management initiates prompt execution of

projects funded by NGAs and return to the Source Agencies the unused funds of
completed projects.
Management Comment:
Management appreciates the recommendation and is more than willing to follow.
12. Negokart units which were distributed but were no longer in used
Several Negokart units which were distributed to the qualified beneficiaries
from the different municipalities of the Province were no longer in used thus,
defeating the purpose for which the same were purchased and distributed to the
beneficiaries.
The Province of Ilocos Norte provided a total amount of P187,500.00 as its
counterpart in addition to the amount of P750,000 given by the Department of Labor
and Employment. The program aimed at providing assistance to the ambulant
vendors through the implementation of the Manang Imee’s Negokart.
The fund was allocated as follows:
Sources of
Funds Activities/ Purpose/s Amount
50 Vending Carts @ P12,000.00 P600,000.00
DOLE Working Capital for procurement of
marketable goods or services @P2,500 125,000.00
per beneficiary
DOLE Training on Entrepreneurship 25,000.00
Vending Carts Paint and sticker 47,500.00
Mobilization and monitoring 18,000.00
Training Venue 4,500.00
PGIN Honorarium for trainers 13,500.00
Meals and Snacks 50,000.00
Permits and Licenses 50,000.00
Total 937,500.00
52
Interview with several beneficiaries revealed that the bicycle could hardly hold
and carry the side cart especially when it is loaded with goods to be sold, thus
resulted to the wrecking and smashing of the corresponding bicycle. While the cart
workmanship may have been designed for the mobile vendors, the bicycles were
observed to have been weak and unfit for the side carts, thus the purpose for the
distribution of the Negokart units was defeated.
We have recommended that the project proponent monitors the
beneficiaries and prepare a corresponding report as to the condition of the
Negokarts. Consider the supplier’s retention fee to resolve for whatever
deficiencies noted on the delivered negokarts.
Management Comment:
The management personally checked/monitored the distributed negokarts.
Based from the management’s findings, out of the 50 negokarts distributed, six were
found to have ceased operation. The gathered reasons for their discontinuity of
implementation, a primary reason beyond their control is health and personal family
decision. Of the six negokarts beneficiaries who discontinued, four were already
turned over to other beneficiaries while the two other inactive ambulant vendors had
already turned over to possible recipients with the help of their Barangay Chairman
and with the management’s assistance and monitoring.
As to the wrecked and smashed bicycle wheels, the management made
representations with the concerned supplier and the latter already replaced defective
parts immediately. It was also found out that the rugged roads caused the damaged.
They conveyed their gratitude for our concern for them to tackle the matter on their
end. They reiterated their commitment to truly implement the program in the name of
public service.
Also, management commented that the Department of Labor and Employment
purchased and designed the 50 vending carts and the Provincial Government of Ilocos
Norte was responsible for the paint and sticker of the same.
53
STATEMENT OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES
(SASDC)
Status of audit suspensions, disallowances and charges for the year 2016 is shown
below.
Beg. Balance Balance as of Dec.

Issued (Jan. 1, 2016) Total issued Settlement 31, 2016
NS -0- -0- -0- -0-
ND 12,012,026.00 -0- -0- 12,012,026.00
NC -0- -0- -0- -0-
Total 12,012,026.00 -0- -0- 12,012,026.00
The balance of the disallowance amounting to P11,996,576.00 pertains to

disallowed Productivity Enhancement Incentive (PEI) for Calendar Year 2014 which is
on appeal at the Commission Proper.
54
PART III – STATUS OF IMPLEMENTATION OF
PRIOR YEARS’ AUDIT
UNIMPLEMENTED
RECOMMENDATIONS
STATUS OF IMPLEMENTATION OF PRIOR YEARS’
UNIMPLEMENTED AUDIT RECOMMENDATIONS
Audit Status of COA

Ref. Observation/Recomme Management Action Implementation VALIDATION
ndation FI PI NI
AAR Due from LGUs in the Management alleged ✓ Letters requiring the
2015 amount of that the letters through municipalities/cities
Finding P4,200,990.75 was still registered mail were to submit utilization
No. 6 unliquidated by the regularly sent to LGUs reports were given
different municipalities requiring them to and the matter is
which is contrary to submit their being taken up every
Circular No. 94-013 Utilization Report of time the Provincial
dated December 13, their subsidy. Some Tourism Office
1994. municipalities conducts a meeting
however, have already with the tourism
We have recommended submitted their officers of
the OIC – Provincial Utilization Report. municipalities/cities.
Accountant to require Requested the tourism
the different officer to take this up
municipalities/cities to as one of the most
submit the reports of important agenda
utilization of the during their meetings
subsidy given to them with all local tourism
in order to conform to officers and he gave
the provisions of COA an assurance that this
Circular No. 94-013 shall be complied with
and in order to present the soonest possible
fairly the financial time.
statements of the
province.
AAR Accountable forms were Management ✓

2015 purchased from a private committed to strictly
Finding entity thus departed follow our
No.9 from the section 24 of recommendation.
the General
Appropriations Act of
2015 and disturbed the
mandate of the duly
recognized government
printers to control the
printing and publication
of accountable forms.
We have recommended
55
that the printing of
accountable forms only
be undertaken by
recognized government
printers as stated in the
general provision of the
GAA.
AAR Due to NGAs and Other Management alleged ✓ The PDAF of Sen.
2015 Payables in the total that the funds are still Pangilinan is already
Finding amount of being utilized by the being utilized and
No.10 P4,006,422.35 remained implementing units for the other funds are
unutilized and were not ongoing projects and being utilized by
implemented, thus the remaining balance implementing units.
depriving the for completed projects
constituents of the are being negotiated as
benefit that could be to where to use the
derived therefrom. fund. Moreover, for
Likewise the excess of the PDAF of Sen.
funds from the Pangilinan, it was
completed projects were given with no specific
not yet returned to the project to which the
source agency in money shall be spent
accordance to the and the requesting
provisions of Section office was not even
4.9 and 6.7 of COA mentioned or
Circular No. 94-013 identified. However,
dated December 13, during the exit
1994. conference, after they
look over the records
We have recommended on the PDAF of Sen.
that the OIC- Provincial Pangilinan, they
Accountant strictly assured us to
adhere to section 4.9 and implement this year in
6.7 of COA Circular No. coordination with the
94-013.their Provincial
disallowances in Engineering Office
accordance with Section and PPDO for the
7.1.1 of COA Circular preparation of POW
No. 2009-006 dated and other related
September 15, 2009. documents relative to
its implementation.
AAR The Provincial Management ✓ Sales reports are

2015 government was not commented that in being submitted by
Finding able to distribute garlic their planning the Special Project
No.12 seeds to identified advocacy, the Development Office
farmer recipients within Provincial headed by Mr.
56
the planting season as Government Cariño to the
embodied in the “Garlic considered the Accounting Office.
Buyback Program” thus economic benefits for
the objective of the the needy garlic
project was not attained. farmers. The agency
We have recommended
management to follow
strictly the program so
that the maximum
benefit that could be
derived by intended
farmer beneficiaries
could be attained.
Likewise, possible
losses of government
funds could be avoided
due to risk of storage.
AAR Loans granted to the 175 PSWDO coordinates ✓ Total collection for
2014 beneficiaries under the with MSWDO 2016 amounts to
Finding Self Employment 294,376.00
No.8 Assistant Program under
the General Fund not
paid as per Amortization
Schedule embodied in
the agreement.
We have recommended
that the Social Welfare
and Development office
in coordination with the
Municipal Social
Welfare and
Development Officer
ensure regular follow-up
of the roll back payment
in order that other
qualified beneficiaries
could avail of the
benefits that could be
derived from this
program.
AAR Unliquidated advances Management ✓ There were still

2014 to officers and requested a write-off advances that were
Finding employees amounting to of the cash advance of not liquidated
No.9 P949,289.01 remained Atty. Castor Raval
57
outstanding as of
December 31, 2014.
We have recommended
that the management file
request for write-off
through channels in
accordance with the
provision of Sec 4 of
Rule VIII, 2009 Revised
Rules of Procedures of
the COA on the
unliquidated cash
advances of the
employees no longer in
service and the
immediate liquidation of
the advances granted to
various officials and
employees in
accordance to Section
5.7 to 5.9 of COA
circular no. 97-002.
AAR Excess payment of PEI Management made an ✓ An appeal on the

2014 of the officials and appeal for the matter was filed at
Finding employees amounting to disallowances COA Region I
No.10 P11,975,098.00
We have recommended
the refund of the excess
amount of PEI granted
to officials and
employees.
AAR The PGIN has An amount of ✓

2012 substantial loans P150,000.00 was
Finding receivable from collected from the
No.6 cooperatives and Municipality of
farmers as livelihood Bacarra for 2016.
assistance totaling Letters to follow-up
P31,698,653.01 which the status of loans
remained outstanding were sent to
for a number of years as implementing offices.
a consequence of poor
collection efforts of the
implementing offices.
58
We recommend that the
remaining assets of the
INFC should be
appraised for the
purpose of possible
taking over of these
warehouses by PGIN to
offset/answer for the
uncollected loans. The
Provincial Agriculture
Office should make an
inventory of the
remaining loan
beneficiaries and it is
further suggested that
condonation of interests,
surcharges and penalties
be considered in order to
encourage them to pay
their obligations.
59
PART IV - ANNEXES

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Republic of the Philippines

ANNUAL AUDIT REPORT

For the Year Ended December 31, 2016

March 24, 2017

Honorable Governor Imee R. Marcos

Dear Governor Marcos:

We rendered a qualified opinion on the fairness of presentation of the financial

AGENCY ACTION PLAN and

Agency Action Plan

Name and Position of Agency Officer Date

In compliance with Section 2, Article IX-D of the Philippine Constitution and

We rendered a qualified opinion on the fairness of the presentation of the financial

Very truly yours,

Audit Team Leader

ANNUAL AUDIT REPORT

For the Year Ended December 31, 2016

SOURCES Increase % Increase

APPROPRIA- Increase %Increase

The Provincial Government of Ilocos Norte continues to strengthen its tourism

Source of Project Cost

2. Top Performing and Outstanding Governorship Award - the Department of Interior

D. SCOPE OF AUDIT AND METHODOLOGY

A comprehensive audit was conducted on the accounts and operations of the

E. STATE AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

F. SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

1. The programs/projects/activities under GAD plan have been 100% accomplished.

2. The provincial government has undertaken the funding of mangrove planting

We have recommended that management record the unexpended amount of

2. The amount of P6,934,657.02 was still unliquidated by the different municipalities

G. Summary of Suspension, Disallowances and Charges as of December 31, 2016.

The balance of Notice of Disallowance as of December 31, 2016 is

H. Summary of Implementation of Prior Years’ Audit Recommendations

Out of the 19 prior year’s audit recommendations, 11 were fully implemented

Part I - Audited Financial Statements

 Independent Auditor’s Report 1

Part II - Audit Observations and Recommendations

 Financial and Compliance Audit 39

Part III - Status of Implementation of Prior Year’s Unimplemented

A. Schedule of Due from Local Government Units

INDEPENDENT AUDITOR’S REPORT

THE HONORABLE PROVINCIAL GOVERNOR

We have audited the accompanying financial statements of the Province of Ilocos

Management’s Responsibility of the Financial Statements

Management is responsible for the preparation and fair presentation of these

Our responsibility is to express an opinion on these financial statements based on

As discussed in detail in Part II of the report, the unexpended balance of the

The fully depreciated Infrastructure Assets - Road Networks amounting

March 15, 2017

It is situated at the northwestern part of Luzon and 487 kilometers north of

The Province is under the vibrant leadership of Hon. Governor Imee R.

Note 3 - Summary of significant accounting policies

3.1 Basis of accounting

The [consolidated] financial statements are prepared on an accrual basis in

The province maintained three funds namely: General, Special Education

The Provincial Government also have the following offices namely:

3.3 Revenue recognition

Revenue from non-exchange transactions

Taxes, fees and fines

Revenue from exchange transactions

The LGU recognizes revenue from rendering of services by reference to

Where the contract outcome cannot be measured reliably, revenue is

Rental income arising from operating leases on investment properties is