EXECUTIVE SUMMARY
A. INTRODUCTION
The Province of Pangasinan is the largest province in Region I and the third
biggest in the Philippines with four cities, 44 municipalities and 1,364 barangays divided
into six congressional districts. It is strategically situated and easily accessible from
urban areas where business and economic activities are situated, 170 kilometers north of
Manila, 50 kilometers southwest of Baguio City.
Pangasinan is bordered by La Union to the north, Benguet and Nueva Vizcaya to
the northeast, Nueva Ecija to the southeast, and Zambales and Tarlac to the south. Its
capital is Lingayen. Several rivers traverse the province as it is situated on the western
area of the island of Luzon along the Lingayen Gulf and West Philippine Sea. It has a
total land area of 5,451.01 square kilometers with a total population of 3,163,190 based
on the latest census of the Philippine Statistics Authority (PSA).
Agriculture is the major source of economy of the province due to its vast fertile
plains. More than 44 percent of its agricultural area is devoted to crop production. Aside
from being one of the Philippine's rice granaries, Pangasinan is also a major producer of
coconut, mango and eggplant, making it as the richest province in the Ilocos Region.
Pangasinan is competently headed by Honorable Amado I. Espino III as
Provincial Governor and Honorable Vice Governor Mark Ronald D. Lambino as the
Presiding Officer of the legislative body, who are supported by 15 provincial officials,
1,473 permanent employees, 36 co-terminus employees, 1,851 casual employees, 181
consultants and 2,842 job order personnel as of December 31, 2021. The Pangasinan
Provincial Capitol located at Capitol Complex, Lingayen, Pangasinan is the present seat
of the provincial government.
B. OPERATIONAL HIGHLIGHTS
In line with its vision and mission, the agency had undertaken various programs,
projects and activities sought to deliver basic services to promote progress and
development within the province. The most significant of which are presented below.
Name of Project/ Program/
No. Location Total Cost (₱) Remarks
Activity
Rehabilitation of Basista-
Basista,
1 Urbiztondo Road (Phase II) 75,014,150.00 Completed
Pangasinan
(CMGP)
Upgrading of Urdaneta- Urdaneta City,
2 69,842,525.40 Completed
Asingan Road (CMGP) Pangasinan
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Name of Project/ Program/
No. Location Total Cost (₱) Remarks
Activity
Construction of Pangasinan
Convention and Multi-Purpose Bugallon, (On-going;
3 279,992,481.16
Center – Phase I (Design and Pangasinan 40.35%)
Build Scheme)
Construction of Pangasinan
Bugallon, (On-going;
4 Convention and Multi-Purpose 17,558,054.80
Pangasinan 73.81%)
Center Perimeter Fence
Manaoag, (On-going;
5 Construction of Lipit Bridge 20,746,566.34
Pangasinan 93.00%)
Construction of 2 Storey Lingayen District
6 28,283,445.42 Completed
Hospital Building – Phase I Hospital
Conversion of Old Emergency
Room into Molecular
Laboratory with Automated San Carlos City,
7 16,976,630.56 Completed
RNA Extract Rrt-PCR testing Pangasinan
at Pangasinan Provincial
Hospital (PPH)
Construction of Isolation San Carlos City,
8 10,000,000.00 Completed
Facility (Phase I) at PPH Pangasinan
Improvement of Main Building Urdaneta District
9 6,186,241.04 Completed
and Extension of Laboratory Hospital
Construction of 2 Storey
Lingayen,
10 Provincial Engineering Office 14,984,973.25 Completed
Pangasinan
Building at Capitol Complex
C. FINANCIAL HIGHLIGHTS
The financial position, financial performance and source and utilization of funds,
appropriations, obligations and disbursements of the agency for CY 2021, with
corresponding figures for CY 2020, as restated, are as follows:
Condensed financial statements presented by fund were attached in Annexes A.1
– A.5.
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D. SCOPE OF AUDIT
The audit covered the operations of the Province of Pangasinan for CY 2021. It
was conducted to ascertain the fairness of presentation of the financial statements, check
compliance with existing rules and regulations and determine whether management in the
implementation of its programs, projects and activities has attained its goals and
objectives in an economical, efficient and effective manner.
The audit included analysis of accounts, review of transactions, test of compliance
with existing laws, rules and regulations, inspection of programs and projects, review of
operating procedures, interview of officials and employees and such other procedures
considered necessary under the circumstances.
We conducted our audit in accordance with International Standards of Supreme
Audit Institutions (ISSAI).
E. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS
The auditor rendered a qualified opinion on the fairness of presentation of the
financial statements due to uncorrected misstatements amounting to ₱563,402,227.18
comprising of a) understatement of Cash in Bank - Local Currency, Current Account
(LCCA) in the amount of ₱2,801,973.29 due to non-adjustment of stale checks; b)
overstatement of Office Supplies Inventory and Other Supplies and Materials Inventory
in the amount of ₱1,461,257.00 and ₱1,962,052.00, respectively, due to erroneous
recording of issuance of office and janitorial supplies; c) overstatement of School
Buildings, Other Structures and Other Land Improvements totaling ₱447,995,040.31 due
to non-recognition of depreciation in prior years and current year; d) overstatement of
School Buildings amounting ₱21,048,317.43 due to erroneous recording of non-
capitalizable expenses; e) understatement of School Buildings amounting ₱5,004,403.55
due to erroneous footing of the account; f) understatement of Construction in Progress
(CIP) accounts for Infrastructure Assets, Buildings and Other Structures and Land
Improvements in the total amount of ₱39,891,191.43 due to unbilled amount of
completed projects, improper computation of recoupment of advance payment and
deficient payment of progress billing; and g) overstatement of Infrastructure Assets,
Buildings and Other Structures in the total amount of ₱43,237,992.17 due to non-
recognition of depreciation in prior years for completed projects still recorded as CIP.
F. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND
RECOMMENDATIONS
Part II of the report contains audit observations and recommendations that need to
be addressed and were discussed with the management during the exit conference
conducted on March 24, 2022. Management comments were incorporated in the report,
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where appropriate. The other significant observations and recommendations are as
follows:
1. Unrecognized work accomplishments on completed projects totaling
₱37,257,483.21 deviated from the provision of International Public Sector
Accounting Standards (IPSAS) I, particularly, adoption of accrual basis of
accounting; thus, rendering the Construction-in-Progress and Accounts Payable
accounts understated by the same amount. Likewise, various accounting errors in
the recording of progress payments in the CIP account resulted in the
overstatement of asset and liability in the amount of ₱1,449,982.93 and
₱3,639,035.74, respectively and understatement of equity in the amount of
₱2,189,052.81. Moreover, completed projects still carried in the CIP account in
the total amount ₱280,893,432.41 were not provided with depreciation, while
completed projects totaling ₱282,597,639.73 were not depreciated from
completion date up to the date of transfer to the appropriate PPE accounts, which
is not in conformity with Paragraph 71 of IPSAS 17; thus, overstating PPE and
equity accounts by ₱43,237,992.17.
We recommended that Management instruct the Provincial Accountant to (a) take
up adjustments on Accounts Payable and Construction in Progress accounts
corresponding to the unbilled amount of ₱37,257,483.21 based on Certificate of
Completion and quarterly reports of the PEO on infrastructure projects; (b) record
the corresponding depreciation on completed projects in the total amount of
₱43,237,992.17; (c) effect the necessary adjustments on errors and omissions for
overstatement of asset and liability in the amount of ₱1,286,993.75 and
₱3,476,046.56, respectively, and understatement of equity in the amount of
₱2,189,052.81; and (d) collect overpayment made in the amount of ₱202,679.71
and ₱275,244.36 to the contractors of the Construction of Stone Masonry and
Rehabilitation of ICU and NICU of PPH or deduct the same from any amount due
them.
2. Expenditures not related to the implementation of projects, programs and
activities of the 20 percent Development Fund (DF) totaling ₱50,541,225.66 were
incurred which is not in conformity with pertinent provisions of DILG-DBM Joint
Memorandum Circular (JMC) No. 2017-1 dated February 22, 2017 and JMC No.
1 dated November 4, 2020, therefore, not maximizing the fund for the delivery of
services and other projects essential to the general welfare of the constituents.
We recommended that Management a) instruct the Provincial Planning and
Development Officer (PPDO) to ensure that all development projects funded
under the 20 percent DF, as embodied in its duly approved local development
plans and Annual Investment Plan (AIP), shall contribute to the attainment of
desirable socio-economic development and environmental plans of the province
and shall partake the nature of investment or capital expenditures; b) instruct the
Provincial Budget Officer (PBO) to stop charging unrelated expenses to the 20
percent DF to ensure strict compliance in the proper utilization of the 20 percent
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DF; and c) instruct the Provincial Accountant to ensure that proper charges to the
fund are made.
G. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT
RECOMMENDATIONS
Of the 76 audit recommendations contained in the 2020 Annual Audit Report, 32
were implemented and 44 were not implemented. In view of their significant effects in
the financial statements, the unimplemented recommendations were reiterated in this
report.
H. STATUS OF SETTLEMENT OF AUDIT SUSPENSIONS, DISALLOWANCES
AND CHARGES
As of December 31, 2021, the Province of Pangasinan has unsettled suspensions,
disallowances and charges, as follows:
Beginning January 1 to December 31, Ending
Balance as of 2021 Balance as of
Dec. 31, 2020 NS/ND/NC NSSDC Dec. 31, 2021
Notice of Suspension 369,166,275.72 110,185,399.11 411,227,746.27 68,123,928.56
Notice of Disallowance 1,966,994.69 0.00 0.00 1,966,994.69
Notice of Charge 0.00 0.00 0.00 0.00
TOTAL 371,133,270.41 110,185,399.11 411,227,746.27 70,090,923.25
