Executive Summary: Auditee's Information

EXECUTIVE SUMMARY
Auditee’s Information
The Province of Sultan Kudarat along with the Provinces of North Cotabato and
Maguindanao was created on November 22, 1973 by virtue of Presidential Decree No. 341
signed by the late President Ferdinand E. Marcos. It is compose of eleven (11) municipalities
and one (1) component city, namely: Bagumbayan, Columbio, Esperanza, Isulan, Kalamansig,
Lebak, Lutayan, Lambayong, Palimbang, President Quirino, Senator Ninoy Aquino and
Tacurong City. As of 2018, the Province has a total of 255 barangays.
Pursuant to Republic Act 7160 known as Local Government Code of 1991, the Sultan
Kudarat Provincial Government (SKPG) like other Local Government Units enjoys total
independence in managing, deciding and planning its own administrative, fiscal and
development affairs in conformity with the national government’s thrusts for sustainable social
and economic growth. The Province of Sultan Kudarat is envisioned to be a model for
academic excellence, public health and safety, environmental preservation and good
governance, providing equal opportunity for all its constituents in a peaceful, friendly
atmosphere through a God-centered leadership of the incumbent elected officials. To date, the
Province boasts the potentials on agri-based development, manufacturing, infrastructure and
support facilities, eco-tourism, and mining.
Audit Scope and Methodology
Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43 of

the Government Auditing Code of the Philippines (P.D. No. 1445), we have audited the
accounts and operations of the District covering the period January 1 to December 31, 2018.
The audit was conducted in accordance with the generally accepted state auditing
standards, and accordingly included such tests of the accounting records and other related
documents and evaluation of the design and operating effectiveness of the controls and such
other procedures, as necessary, in the audit. The evaluation was performed to (a) verify the
level of assurance that may be placed on management’s assertions on the financial statements;
(b) recommend agency improvement opportunities; and (c) determine the extent of
implementation of prior years’ audit recommendations.
Deficiencies observed in the course of the audit were earlier communicated through the
issuance of the Audit Observation Memoranda (AOMs) and discussed with concerned officials
and personnel of the Province whose comments were incorporated in this report.
Financial Highlights
Figure No. 1 presents the financial position of SKPG from 2016 to 2018. Figure Nos.
2 and 3, on the other hand, present the compositions of SKPG’s assets and liabilities for 2018,
respectively. As can be gleaned, the elements of SKPG’s financial position demonstrate
increasing trends. As also shown, property, the plant and equipment of SKPG comprises 66%
of its assets for 2018. While the financial liabilities account for 48% of SKPG’s liabilities for
2018.
Figure No. 1: SKPG’s Financial Position for 2016 to 2018
Figure No. 2: Composition of SKPG’s Figure No. 3: Composition of SKPG’s

Assets for 2018 Liabilities for 2018
Further, Figure No. 4 provides a graphical view of SKPG’s financial performance.

Despite a skid, SKPG’s financial performance remains favorable. Figure Nos. 5 and 6 show
the compositions of SKPG’s operating revenues and expenses for 2018, respectively. As
presented, 96% of SKPG’s operating revenues for 2018 were from its share in the Internal
Revenue Collections (IRA). As to its operating expenses, maintenance and other operating
expenses accounted for the majority portion at 61%.
Figure No. 4: SKPG’s Financial Performance for 2016 to 2018

Figure No. 5: Composition of SKPG’s Figure No. 6: Composition of SKPG’s
Operating Revenues for 2018 Operating Expenses for 2018
Figure No. 7 below showcases the information about the cash flows of SKPG. As
presented, the net cash flow for 2018 had an abrupt turnaround from 2017 due to the significant
increase in cash utilization for operating activities despite inflows from financing.
Figure No. 7: SKPG’s Cash Flow for 2016 to 2018
Opinion of the Auditor
The Auditor rendered an unmodified opinion on the fairness of the presentation of the
financial statements.
Summary of Significant Observations and Recommendations
The significant observations and recommendations are the following:
Governance
1. SKPG needs to improve on the dependencies affecting the formal institutionalization

of internal control.
We recommended that Management ensure that the dependencies of formally

institutionalizing internal control in SKPG are managed by taking necessary and
appropriate courses of action to formalize and strengthen the component processes of its
risks management, crystalize its accountability policy, and build its organizational control
awareness.
Disaster Risk Reduction and Management
2. SKPG needs to enhance aspects of its DRRM planning process.
We recommended that Management, as far as practicable, undertake actions to establish

enabling structures and arrangements, provide and capacitate adequate manpower
complement, and adopt modalities to secure and maintain relevant and up-to-date
information that are vital in enhancing coordination efforts with other stakeholders and
integration of cross-cutting themes and principles in its DRRM planning process.
3. SKPG needs to reinforce resiliency and sustainability in its DRRM initiatives.
We recommended that Management adopt a development approach that focuses more on

reducing disaster vulnerabilities than disaster response to reinforce resiliency and
sustainability of DRRM initiatives.
4. SKPG has to strengthen its monitoring and evaluation of DRRM initiatives.
We recommended that Management strengthen the monitoring and evaluation processes of

its DRRM initiatives by institutionalizing arrangements and mechanisms that will enable
dynamic participation of stakeholders and provide relevant and needed information vital to
decision-making.
20% Development Fund
5. SKPG has to improve areas affecting its 20% DF planning process.
We recommended that Management improve its current 20% DF planning process by

effectively managing the related dependencies of the exercise to advance coordination,
cohesion, inclusion and integration in order to enhance the crafting and eventual delivery
of development initiatives.
6. SKPG has to enhance mechanisms relating to the delivery of its 20% DF initiatives.
We recommended that Management institute appropriate arrangements and mechanisms

that will effectively manage matters affecting implementation, and enhance aspects relating
to monitoring and communication to pursue optimum delivery of 20% DF initiatives.
7. SKPG has to address concerns affecting its 20% DF reporting.
We recommended that Management establish necessary operating modalities that will

effectively address concerns affecting the timeliness, accuracy and reliability of 20% DF
reporting in order to reinforce accountability.
Gender and Development
8. SKPG has to improve the dependencies of its gender mainstreaming.
We recommended that Management, moving forward, enhance the delivery of its GAD
initiatives by improving the dependencies of its gender mainstreaming through
strengthening or capacitating its GFPS, establishing and maintaining relevant and up-to-
date SDD, and refining the related management processes, especially planning.
Status of Suspensions, Disallowances and Charges
There was P0.00 in Suspensions as of December 31, 2018.
Status of Implementation of Prior Years’ Audit Recommendations
The table below presents the evaluation of Management’s implementation of the CY

2017 audit recommendations as well as the audit recommendations from CY 2007 which were
reported as either ongoing, partially or not implemented on the previous audit report. Of the
42 audit recommendations evaluated, 17 or 40.48% were considered as fully implemented
while 25 or 59.52% were noted as on-going.
No. of Status of Implementation as of December 31, 2018

Year Observations and Fully Partially Not
Recommendations Ongoing
Implemented Implemented Implemented
2017 5 0 5 0 0
2016 7 4 3 0 0
2015 5 3 2 0 0
2014 8 3 5 0 0
2013 6 2 4 0 0
2012 4 2 2 0 0
2011 1 0 1 0 0
2010 1 1 0 0 0
2009 1 0 1 0 0
2008 2 1 1 0 0
2007 2 1 1 0 0
Total 42 17 25 0 0

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EXECUTIVE SUMMARY

Audit Scope and Methodology

Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43 of

Figure No. 1: SKPG’s Financial Position for 2016 to 2018

Figure No. 2: Composition of SKPG’s Figure No. 3: Composition of SKPG’s

Further, Figure No. 4 provides a graphical view of SKPG’s financial performance.

Figure No. 4: SKPG’s Financial Performance for 2016 to 2018

Figure No. 7: SKPG’s Cash Flow for 2016 to 2018

Opinion of the Auditor

Summary of Significant Observations and Recommendations

The significant observations and recommendations are the following:

1. SKPG needs to improve on the dependencies affecting the formal institutionalization

We recommended that Management ensure that the dependencies of formally

Disaster Risk Reduction and Management

2. SKPG needs to enhance aspects of its DRRM planning process.

We recommended that Management, as far as practicable, undertake actions to establish

3. SKPG needs to reinforce resiliency and sustainability in its DRRM initiatives.

We recommended that Management adopt a development approach that focuses more on

4. SKPG has to strengthen its monitoring and evaluation of DRRM initiatives.

We recommended that Management strengthen the monitoring and evaluation processes of

20% Development Fund

5. SKPG has to improve areas affecting its 20% DF planning process.

We recommended that Management improve its current 20% DF planning process by

We recommended that Management institute appropriate arrangements and mechanisms

7. SKPG has to address concerns affecting its 20% DF reporting.

We recommended that Management establish necessary operating modalities that will

8. SKPG has to improve the dependencies of its gender mainstreaming.

Status of Suspensions, Disallowances and Charges

There was P0.00 in Suspensions as of December 31, 2018.

Status of Implementation of Prior Years’ Audit Recommendations

The table below presents the evaluation of Management’s implementation of the CY

No. of Status of Implementation as of December 31, 2018

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