EXECUTIVE SUMMARY

Introduction

The Pigcawayan Water District was established thru Sangguniang Bayan Resolution
No. 58 dated September 6, 1982 of the then Sangguniang Bayan of the Province of Cotabato
with Presidential Decree No. 198, as amended, as the enabling law to the creation of water
districts. On January 15, 1991, the District was issued the Conditional Certificate of
Conformance (CCC No. 477) by the Local Water Utilities Administration (LWUA). The
mandates of the District are:

• To acquire, install, improve, maintain and operate water supply and distribution
systems for domestic, industrial, municipal and agricultural uses for residents and
lands within the boundaries of the district;

• To provide, maintain and operate waste water collection treatment and disposal
facilities; and

• To conduct such other functions and operations incidental to water resource

development, utilization and disposal within the district, as are necessary or
incidental to said purpose.

The District’s Mission, Vision and Service Pledge are quoted below:

Mission
“At the Pigcawayan Water District, we improve the quality of life of the
concessionaries by providing them potable water.”
Vision
“To be able to reach out and provide abundant potable water to as many residents
as we can in the Municipality of Pigcawayan.”
Service Pledge
“To improve the production of quality water coupled with valuable services to our
concessionaires.”

The Board of Directors (BOD) is the policy making body of the District. The following
are the members of the board for the Calendar Year 2021:

Chairperson - Norma A. Talagtag

Vice-Chairperson - Ignacito P. Panzo
Secretary - Jacqueline O. Vegafria
Treasurer - Quintin S. Yap
Auditor - Francisco P. Balucas, Jr.
 The operational activities at the Pigcawayan Water District are under the direct
supervision of Ms. Susan L. Lao, General Manager F. Multi-tasking was observed at the
district having employed only six (6) organic personnel, three (3) employees in casual status
and four (4) job orders to perform varied office tasks and services to its 1,583 water
concessionaires.

The District, upon resolutions passed by the Board of the Directors, accepted two (2)
barangay water systems of Brgy. New Culasi and Brgy. Malu-ao in July 2021. The District
also gradually recovered from severe losses and water shortages when a new water source and
pumpstation was constructed as part of the GAA 2017 loan with LWUA wherein it registered
an increase in concessionaires by 157 or 11% from 1,426 to 1,583.

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. 1445), we have audited the accounts
and operations of the District covering the calendar period January 1, 2021 to December 31,
2021.

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 audit was conducted to determine (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 in exit conference
conducted with concerned officials and personnel of the District whose comments are
incorporated in this report.

Financial Highlights

The financial profiles of the Pigcawayan Water District for CYs 2021 and 2020 are
presented below:

Increase/(Decrease)
Particulars 2021 2020
Amount Percentage
A. Financial Condition
Assets P 7,851,406.00 P 7,126,873.44 P 724,532.56 10.17%
Liabilities 31,452,417.34 30,724,646.49 727,770.85 2.37%
Equity (23,601,011.34) (23,597,773.05) 3,238.29 0.01%
 Increase/(Decrease)
Particulars 2021 2020
Amount Percentage
B. Results of Operation
Income P 7,894,443.01 7,584,755.86 309,687.15 4.08%
Expenses 7,916,655.68 7,555,344.54 361,311.14 4.78%
Surplus (Deficit) (22,212.67) 29,411.32 51,623.99 (175.52%)

Opinion of the Auditor

The auditor rendered unmodified opinion on the fairness of the presentation of the
financial statements as of December 31, 2021.

Summary of Significant Audit Observations and Recommendation

1. Reconciling items reflected in the Monthly Bank Reconciliation Statements remained

unadjusted in the books of account for a long period resulting in an understatement of the
Cash in Bank account by P3,463.61.

We recommended that Management (a) advise the Accounting Unit Head to exert extra
effort to locate the documents supporting the reconciling items and effect the necessary
adjustments; and (b) henceforth, prepare adjusting entries to record reconciling items on
a timely basis.

2. The District was unable to provide at least three (3) to 10 per cent of its metered water
sales of ₱7.0170 million as of December 31, 2021 for Cash Reserve.

We recommended that Management regularly provide at least 3% of the district’s gross

revenue for cash reserves, as mandated under Section 2.a (6), Chapter I of the MWR,
Sections 37 and 63 of PD No. 198, and LWUA MC No. 003-00.

3. Abnormal balance in Due to Pag-ibig Account amounting to P10,100.40 as of December

31, 2021, was contrary to Section 112 of PD 1445 and Paragraph 15 of International
Accounting Standard (IAS) 1 – Presentation of Financial Statements.

We recommended that Management advise the Accounting Unit to conduct a thorough

review of the Due to Pag-ibig account to determine the cause of the abnormal balances,
initiate corrections/adjustments, and come up with all accounts in their normal balances,
fairly presented in the financial statements, in compliance with Section 112 of PD No.
1445 and Paragraph 15 of IAS 1.

4. The Non-Revenue Water (NRW) for the year exceeded by 11.09 percent the maximum
acceptable rate of 20 percent required under LWUA Memorandum Circular No. 004-10
 dated February 23, 2010, resulting in an estimated revenue loss of ₱.896 million for CY
2021.

We recommended that Management (a) create a non-revenue water reduction program

and evaluate their efficiency and effectiveness; and (b) Implement intensified specific
NRW reduction strategies, such as the conduct of a regular investigation of technical aides
on possible leakages and replacement of old water meters and service lines to manage
water losses to reduce the high level of NRW to the maximum rate of 20%.

5. The District has neither prepared nor implemented a Septage Management Plan as
required under R.A. No. 9275 and P.D. No. 198.

We recommended that Management coordinate with the Local Government Unit of

Pigcawayan, DPWH, DENR-EMB, DOH and other stakeholders in the locality to fast
track the formulation of a sound and effective Septage Management Plan in its area of
jurisdiction and for the possible generation of additional fund sources for its proper
implementation. Also, coordinate and benchmark with other Water Districts in nearby
rural areas which have implemented an SMP and attend seminars and/or training relative
to SMP to acquire knowledge and increase awareness on its proper preparation and
implementation

6. Due to insufficient coordination between Pigcawayan Water District (PWD) and the
Bureau of Fire Protection (BFP), the District failed to institutionalize areas of cooperation
for the use, maintenance, and reimbursement of fire hydrants, contrary to Section 32 of
P.D. No. 198. In addition, the District failed to maintain Hydrant Record Cards under
LWUA Operations and Maintenance Manual Item 7.5.3.4.f.

We recommended that Management:

a. Prepare Fire Hydrant Maintenance Program;
b. Execute a Memorandum of Agreement (MOA) with the BFP setting
responsibilities between PWD and BFP regarding Standard Operating Procedure
(SOP) in the usage of a fire hydrant during the fire and possible reimbursement on
the cost of installation and operation of such fire protection facilities as prescribed
in Section 32 of PD 198; and
c. Establish regular monitoring of fire hydrants by requiring the concerned personnel
to maintain Hydrant Record Cards to record inspections, actual condition, and
maintenance needs.

7. The lack of performance audit of water meters and established policies and procedures on
the Water Meter Installation, Calibration, Repair, and Replacement Program could lead
to erroneous water metering and may have a detrimental impact on the District's water
sales revenue.
 We recommended that Management:
a. Direct the concerned personnel to periodically conduct a performance audit of
water meters used by the concessionaires after five years from their installation
under LWUA MC No. 014-10 to ensure accuracy of water metering;
b. Develop policies and implement a Water Meter Installation, Calibration, Repair,
and Replacement Program; and
c. Establish a water meter testing facility, should their budget allow, and ensure that
a PAB-accredited testing and calibration laboratory calibrate all procured water
meters to guarantee their accuracy.

8. Gender issues identified by the District were not adequately supported by proper analysis
of sex-disaggregated data (SDD) and other gender-related information.

We recommended that Management:

a. Improve the collection of sex data from its employees and clients, as prescribed
under PCW Memorandum Circular No. 2014-05 and Part I, Third Edition of the
Harmonized Gender and Development Guidelines for Project Development,
Implementation, Monitoring, and Evaluation. The collection of sex-disaggregated
data and gender-related information, such as through the administration of GAD
surveys to both employees and clients, is strongly encouraged, as these will be used
as inputs in the analysis of the development; problem and, as a result, will identify
the gender issues that the District's proposed/planned GAD project should address;
b. Consider seeking the assistance of PCW, other oversight agencies, civil society
organizations, non-government organizations, gender experts or specialists, and
other stakeholders in tracking key results, outputs, and outcomes of the District’s
GAD PAPs; and
c. Incorporate a GAD corner in the District’s official website, which shall disclose
Pigcwayan Water District’s GAD Plans and Budgets, Accomplishment Reports,
the composition of its GAD Focal Point System (GFPS), other gender
mainstreaming efforts, as well as the GAD Database, which will show the results
of analysis of sex-disaggregated data collected by the District from its employees
and clients.

Summary of total Suspensions, Disallowances and Charges

The summary of audit suspensions, disallowances and charges of the District as of

December 31, 2021 is presented as follows:

Particulars Amount (Php)

Beginning CY 2021 Issuances Ending Balance
Balance NS / ND / NC NSSDC (12/31/2021)
(12/31/2020)
Suspensions 0.00 0.00 0.00 0.00
Disallowances 0.00 0.00 0.00 0.00
Charges 0.00 0.00 0.00 0.00
Total 0.00 0.00 0.00 0.00
Status of Implementation of Prior Years’ Audit Recommendations

Of the thirty-nine (39) prior year’s audit recommendations embodied in the 2020
Annual Audit Report, nine (9) were fully implemented, four (4) are partially implemented and
twenty-six (26) are on the on-going status of implementation.