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Basey Water District finally audited by LWUA

June 29, 2011

The Basey Water District, which figured in a recent controversy resulting in about one year assignment of an interim general manager from the Local Water Utilities Administration, had succeeded in convincing the Bureau of Internal Revenue to accept the former’s payment in the amount of P583,270.85 or more than one half of the total amount of P1,094,731.06 to be paid for taxes for calendar years 1996, 1997 and 1998.  The payment was made between September and December, 2009.

The reduced amount actually paid for represented income and franchise taxes and expanded taxes withheld from the claims of suppliers starting from year 1996, up to CY 2000.  Payment was effected “by virtue of the warrant of garnishment issued by the (BIR) to the district’s depositary bank, the Philippine Veterans Bank in Tacloban”.

The water district negotiated with the BIR, thus the reduced amount, but it “is yet to pay the said taxes for years 2001 to 2010”.

This was one of fourteen findings and conclusions made Josephine P. Simene, LWUA’s senior internal control officer B, when she conducted an operations audit of the Basey Water District during her official travel to Basey last February 14-25, 2011.  On February 24, Auditor Simene also contacted the board of directors led by the BWD chairman and, on Feb. 24-25, LWUA-installed IGM Engr. Antonio Ronelo C. Palencia, “Set-Aside General Manager” Elsie V. Merida, and the staff of the water district.

This writer was furnished a copy of the auditor’s March 2 report.

The auditor’s report indicated that the Basey Water District has “no Masterlist of Service Connections that would otherwise provide relevant information on all BWD’s concessionaires” and that some of the water users, including BWD employees themselves “are yet to be disconnected despite being in arrears up to thirteen (13) months”.   Add to that the other finding that collections are “not deposited intact” –“Petty expenses, personal cash advances and other operating expenses are taken directly from collections.”  To conscientious citizens, the practice, as discovered by the auditor is mysterious, anomalous, unfair (MAU [ma-uh]), something which Basaynons may want condemned.

The auditor also stumbled upon the board of director’s failure to seek prior approval from LWUA  to the water district’s utilization of the P746,259.40 savings from the 4 million pesos emergency loan initial release. “Further, portions of the said savings were used to finance projects without the BOD’s approval.  These include labor costs for the 4.2 k.m. rehabilitation project, construction of anchor blocks, pipe anchorage and parallel line.”

Just what can you say about the number 10 finding and conclusion of LWUA’s internal auditor Simene?  “The process of selling the P523,712 worth of scrap Cast Iron from the rehabilitated 4.2 km pipeline did not conform with the COA-prescribed guidelines.  Among others, no auction committee was created, no COA representative was invited, no adequate publicity was made, and no formal report to document the sale of the scrap materials was prepared.  Incidentally, on the reported sale on October 29, 2009, the WD did not receive the said-to-be proceeds of P80,200.  The contractor alleged that it did not haul scrap materials on the said date.  However, the receipts from the weighbridge attested that the contractor’s truck contained 12,600 kgs. of scrap materials on the said date.”

Here are two more eyebrow-raising findings from that audit: “7. There is not established disbursement ceiling on the P5,000 Working Fund (WF).  Thus, the fund easily gets deleted, resulting to frequent replenishment of the WF.”   “8. The project fund is not separately maintained.  It is mingled with the operating fund, hence, it is also being utilized for other purposes.  For the initial release of P4M on the P5M Emergency Loan in 2009, P260,912.50 was used for the district’s operating needs.”

The LWUA auditor also discovered and concluded thus: “Some commercial practices are wanting of governing policies like the 5% additional charge on concessionaire’s unpaid balance on loaned materials (aged at least six months) which has no covering policy.  Meanwhile, the penalty on illegal connections is inconsistently applied on erring concessionaires.  Also, concessionaires who are using electric pumps to boost water supply intake from the distribution lines to their households that may possibly cause water contamination due to high pressure, is yet to be stopped by the WD through a board resolution.”

Her other findings are as follows:

“1. The term of office of the Women’s sector representative is erroneous.  The initial appointment given to her was for six years (1995-2000) instead of the unexpired portion of her predecessor’s term, which is from 1995 to 1998 only.  Thus, the terms of office in her two re-appointments were likewise incorrect, the latest appointment being from 2007 to 2012 instead of 2005 to 2010.

“2. The increases in the board’s per diems have no prior approval from LWUA.  The directors received P450 per diem from January 2008 to December 2009. This was increased to P600 per meeting in January 2010 but due to the water supply problem, it was reverted from February to July 2010.  The following months, it was restored to P600 since the water supply has normalized.

“3. Appointments and personal data sheets of the board members are not properly filed.  Separate folders are maintained for appointment papers, personal data sheets and certifications on non-membership in government service, instead of keeping individual files for each board director.

“4. The appointment of the General Manager on August 4, 2009 is still on a coterminous basis.  This is because despite the 2-year grace period given by the CSC under its Memorandum Circular No. 13 series of 2006, to General Managers with coterminous status in 2006 to acquire the minimum requirements to qualify for permanent appointment, the incumbent GM failed to secure the required CSC second-level eligibility.

“5. Personnel management is not well administered.  Employees’ attendance is not monitored, while employees’ performance is not duly appraised.  In addition, pertinent documents like Statement of Assets, Liabilities and Net Worth (SALN), transcript of record and diploma, are not consistently available on the personnel’s 120 files.”

With these findings and conclusions, what should the present BWD and its board of directors do now?  How will they correct these blunders and deficiencies?  What must the responsible Basaynons do to help?

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