EXECUTIVE SUMMARY

A. INTRODUCTION

The Concepcion Water District (District) was formed by the Sangguniang Bayan of
Concepcion, Tarlac through its Resolution No. 31, series of 1980 pursuant to Title II of PD
No. 198, as amended by Presidential Decree Nos. 768 and 1479, otherwise known as the
Provincial Water Utilities Act of 1973.

Concepcion Water District

Prior to the creation of the District, the water system was under the administration of the
local government. Then it was placed under the National Water and Sewerage Authority
(NAWASA) for a while and transferred back to the local government for supervision.
Eventually, on September 25, 1980, the Local Water Utilities Administration (LWUA)
issued Conditional Certificate of Conformance (CCC) No. 134 to the District.

Among the objectives of the District are the following:

a. To acquire, install, improve, maintain and operate water supply and distribution
system for domestic, industrial and agricultural uses for residents and lands within its
boundaries;

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

c. To conduct such other function and operation incidental to water resource

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

As of December 31, 2021, the District was serving 31 barangays of Concepcion, namely:
Rosepark; Green Village; San Nicolas Poblacion including Little Baguio, Public Market,
Isabel Subdivision and Maabo; Sta. Rita; San Jose including Sitio San Lorenzo; Sto. Cristo;
Alfonso including St Jude and COPE Subd.; Santiago including Sitio Yangca and Siu;
Jefmin including Sitio Dawe; Sta. Maria; Pitabunan; Talimundoc SM including Sitio
Gonzales; San Francisco including Sitio Macabacle, Sitio Dawe and Sitio Macangcong;
Corazon De Jesus; Sta. Cruz including Sitio Pao; San Juan including St. John Village;
Malupa; San Nicolas Balas; San Vicente; Café; Tinang; Caluluan; San Isidro; Parulung;
Culatingan; San Bartolome; San Antonio; Sta. Monica; Sta. Rosa; Sto. Niño; and Sto.
Rosario. It has 16,330 total active concessionaires classified as Residential/ Domestic,
Commercial and Industrial.

Water service is delivered to every household 24 hours a day, without interruption. The
water system is supported by 18 pumping stations, which are strategically located.

As of December 31, 2021, the District’s Board of Directors is composed of the following:

Name Position
Ms. Priscilla C. Gamboa – Chairperson, Business Sector
Mr. Benjamin M. Sengson, Jr. – Vice-Chairman, Civic Sector
Ms. Aurora B. Miclat – Member, Professional Organization Sector
Ms. Norma A. Sese – Member, Women’s Sector
Mr. Benigno P. Aquino – Member, Education Sector

The District belongs to Category “B”. General Manager Rolando T. Estacio headed the
operations and administration, supported by 99 permanent personnel and 10 Job Orders. It
has four divisions: the Administrative/General Services Division, the Commercial Services
Division, the Engineering, Construction and Maintenance Division and Water Production
Division.

B. FINANCIAL HIGHLIGHTS

The comparative analysis of the District’s Financial Condition and Results of Operation
for CYs 2021 and 2020 are shown below.

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Financial Condition
₱250,000,000

₱200,000,000

₱150,000,000

₱100,000,000

₱50,000,000

₱0
ASSETS LIABILITIES EQUITY
Assets Liabilities Equity
2021 ₱229,347,637 28,868,783 200,478,854
2020 ₱212,625,362 23,744,736 188,880,626

Financial Performance
₱120,000,000
₱100,000,000
₱80,000,000
₱60,000,000
₱40,000,000
₱20,000,000
₱0
INCOME EXPENSES NET
INCOME
Income Expenses Net Income
2021 ₱115,460,226 104,528,255 10,931,971
2020 ₱109,488,106 95,124,090 14,364,016

C. SCOPE OF AUDIT

We conducted an audit of the financial transactions and operations of the District for the
year ended December 31, 2021, on a sampling basis in accordance with the International
Standards of Supreme Audit Institutions and Corporate Government Sector Memorandum
dated September 30, 2020, prescribing the General Audit Instructions for the conduct of
CY 2020 Audit of Water Districts and for other matters. We believe that the audit evidence
we have obtained is sufficient to provide a basis for our audit opinion. The audit was
conducted to (a) ascertain the degree of reliance that may be placed on Management’s

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assertions on the financial statements; (b) recommend agency improvement opportunities;
and (c) determine the extent of implementation of prior year’s audit recommendations.

D. INDEPENDENT AUDITOR’S REPORT

The Auditor rendered an unmodified opinion on the fairness of presentation of the financial
statements of Concepcion Water District for the year ended December 31, 2021.

E. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND

RECOMMENDATIONS

The significant audit observations noted during the audit and the corresponding
recommendations are presented below.

1. The collectability of the inactive Accounts Receivable- Customers (AR) balance of

₱6,169,043 which constitutes 54.98% of total AR- Customers as at December 31, 2021 is
remote due to lack of adequate and strict collection strategies as prescribed under Section
64 of the Government Accounting and Auditing Manual (GAAM), Volume I, thus,
depriving the District of additional fund to finance its activities or settle its obligations.
(Observation No. 1)

We reiterated our prior years’ recommendation that the General Manager B through the
Commercial Division collectors (a) develop strategies to intensify collections and institute
appropriate legal action, if necessary; and (b) instruct the Division Manager C –
Administrative and Finance to re-evaluate the status of the past due accounts and consider
filing to the Commission on Audit another request for write-off of the overdue and dormant
accounts after all remedies for their collection had been exhausted.

2. The completeness, accuracy and existence of the District’s Inventories account with
carrying value of ₱13,093,478 as at year-end could not be ascertained due to lack of Report
of the Physical Count of Inventories (RPCI), the non-maintenance of Supplies Ledger
Cards and Stock Cards, and unreconciled differences between the General Ledger (GL)
and Inventory Status Report balances for CY 2021, contrary to Section 490 of Government
Accounting and Auditing Manual (GAAM), Volumes I, Philippine Accounting Standards
(PAS) 1, and Section 114 of Presidential Decree (PD) No. 1445. (Observation No. 2)

We recommended that the General Manager B instruct the (a) Inventory Committee to
conduct physical inventory taking and prepare the required RPCI to support the Inventories
Account reported in the FS; (b) Accounting Unit and Supply Officer to prepare the Supplies
Ledger Card and Stock Cards and regularly reconcile their balances; and (c) make
necessary adjusting entries to correct the balances of the Inventories Account and present
fairly the financial statements.

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3. Inadequate procurement planning and monitoring of stocks resulted in overstocking
of Chemical and Filtering Supplies Inventory, Construction Materials Inventory and Other
Supplies and Materials Inventory contrary to the policy declaration of the government in
Section 2 of PD No. 1445, Section 26 of the General Appropriations Act for FY 2020 and
COA Circular 2012-003, which may already be considered excessive, while some of these
Inventories have been proven to be potentially dangerous when overstocked. (Observation
No. 3)

We reiterated our recommendation that the General Manager B require the Storekeeper to
(a) monitor closely the movement of inventories to avoid purchasing supplies in excess of
the two-month stocking requirement; and (b) strictly adhere to Section 2 of PD No. 1445
and Section 25 of the General Appropriations Act for FY 2020.

We also recommended the General Manager B submit justification on why these

overstocking of supplies should not be subjected to disallowance.

F. SUMMARY OF AUDIT SUSPENSIONS, DISALLOWANCES AND

CHARGES

The total unsettled audit disallowances of the District pertaining CYs 2012 to 2017
amounted to ₱4,895,636.16 as of December 31, 2021. There were no audit suspensions,
disallowances and charges issued in CY 2021 transactions.

G. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S

UNIMPLEMENTED AUDIT RECOMMENDATIONS

Of the ten recommendations embodied in the CY 2020 Financial Audit Report, four were
fully implemented, two were partially implemented and four was not implemented.