we recommended that the authority perform the following · 2019-01-23 · we recommended that the...

We recommended that the Authority perform the following:

Put up business facilities to enable it to attract additional locators and in the process compete with other Economic Zones

Include in the Authority’s development plan the construction of a port

facility

Employ aggressive and effective marketing strategies to attract investors

We request that the recommendations be immediately implemented and we will

appreciate being informed of the action(s) taken thereon by submitting the attached duly

accomplished Agency Action Plan and Status of Implementation (AAPSI) hereto

attached within sixty (60) days from receipt hereof.

We express our appreciation for the valuable support and cooperation extended

by the officials and staff of the ZCSEZA.

Very truly yours,

VISITACION Q. MENDOZA

Director IV

Regional Director

Copy furnished:

1. President of the Republic of the Philippines

Malacañang Palace, Manila

2. Vice President of the Republic of the Philippines

Coconut Palace, Manila

3. President of the Senate

Batasang Pambansa Building

Quezon City

4. Speaker of the House of Representatives


Quezon City

5. Chairperson – Senate Finance Committee


Quezon City

6. Chairperson – Appropriations Committee


Quezon City

7. Secretary

Department of Budget and Management

Manila

8. The Head

Governance Commission for Government-Owned or Controlled Corporations

Manila

9. Presidential Management Staff

Office of the President

Manila

10. The Administrator

Local Water Utilities Administration

Balara, Quezon City

11. National Library (soft copy)

Kalaw, Ermita

12. University of the Philippines Law Center (soft copy)

Diliman, Quezon City

13. COA Commission Central Library (soft copy)

Commonwealth Ave., Quezon City

Republic of the Philippines

COMMISSION ON AUDIT

Regional Office No. IX

Zamboanga City

ANNUAL AUDIT REPORT

ON THE

ZAMBOANGA CITY SPECIAL

ECONOMIC ZONE AUTHORITY San Ramon, Zamboanga City

For the Year Ended December 31, 2015

i

EXECUTIVE SUMMARY

Introduction

The Zamboanga City Special Economic Zone Authority (ZCSEZA) also referred to as

the ZAMBOECOZONE or Authority was created on February 23, 1995 by virtue of Republic

Act (RA) No. 7903. It shall be managed and operated within the framework and limitations

of the Constitution and applicable provisions of the Local Government Code by a corporate

body known as the ZCSEZA created under Section 5 of the said Act.

The ZCSEZA shall operate, administer, manage and develop the Authority into a

decentralized, self-reliant and self-sustaining agro-industrial, commercial, financial,

investment and tourist center and free port with suitable retirement and residential areas. It

shall regulate and undertake the establishment, operation and maintenance of utilities, other

services, infrastructure and other facilities in the ZCSEZA needed to attract legitimate and

productive foreign investments, generate linkage industries and employment opportunities for

the people of Zamboanga City and its neighboring towns and cities.

The powers of the ZCSEZA are vested in and exercised by the Board of Directors.

The Board is composed of the Chairman-Administrator, Vice Chairman, one member who is

representative from the labor and two representatives from the business sectors who are

presidential appointees to serve for a term of six years; and three ex officio members: the

City’s congressional representative, the mayor of the City of Zamboanga and one

representative of the City Council.

On February 24, 2015, Hon. Christopher Lawrence S. Arnuco was reappointed

Chairman and Administrator for a term that will expire on January 17, 2020. The key

officials composing the Board are the following:

Hon. Rafael G. Evangelista, Jr. Vice-Chairman

Hon. Celso L. LobregatMember, Congressional Representative - 1st District,

City of Zamboanga

Hon. Maria Isabelle G. Climaco-Salazar Member, Mayor, City of Zamboanga

Hon. Benjamin B. Guingona Representative, City Council, City of Zamboanga

Hon. Edgar B. Lim Member, Business Sector on Local Investors

Hon. Jose J. Suan Member, Labor Sector

None Member, Business Sector on Foreign Investors

Board of Directors

In CY 2015, 69 of ZCSEZA’s 102 regular plantilla positions were filled up. These

personnel were assigned to the following functional units: (a) Board Secretariat, (b) Office of

the Administrator, (c) Legal Services Office, (d) Office of the Deputy Administrator, (e)

Administration Department, (e) Finance Department, (f) Planning Department, and (g)

Operations Department.

ii

Audit Methodology

The Commission has been implementing risk-based audit in the conduct of its audit

services. However, to meet the evolving developments in public governance and fund

management, the results-based approach in audit was incorporated. The integration of these

two approaches, called the Integrated Results and Risk-Based Audit (IRRBA) Methodology,

was applied in the audit of the accounts and operations of the Authority.

Scope of Audit

A comprehensive audit was conducted on the accounts and operations of ZCSEZA for

2015. The audit consisted of review of operating procedures, evaluation of the Authority’s

programs and projects, interview of concerned officers and employees, verification,

reconciliation, and analysis of accounts, and such other procedures considered necessary.

Specifically, the objective of the audit is to ascertain the propriety of the financial

transactions and compliance of the agency to prescribed laws, rules and regulations. It was

also made to ascertain the accuracy of the financial records and reports as well as the fairness

of the presentation of the financial statements. Performance audit was likewise conducted

with the objective of informing management where improvement can be instituted in the field

of revenues, expenditures and management of resources.

The audit covered the examination on test basis, the accounts and operations of the

ZCSEZA for the period January 1 to December 31, 2015.

Financial Highlights

I. Comparative Financial Position

Particulars 2015 2014 Increase

(Decrease)

Assets ₱ 632,985,481.75 ₱ 639,128,766.32 ₱ (6,143,284.57)

Liabilities 19,668,716.03 15,646,922.53 4,021,793.50

Government Equity 613,316,765.72 623,481,843.89 (10,165,078.17)

Retained Earnings ₱ (192,956,040.27) ₱ (159,018,406.11) ₱ (33,937,634.16)

II. Comparative Results of Operation

Particulars 2015 2014 Increase

(Decrease)

Income 82,269,407.79 76,151,458.55 6,117,949.24

Expenses 91,875,746.89 85,727,746.81 6,148,000.08

Net Income (Loss) (9,606,339.10) (9,576,288.26) (30,050.84)

iii

III. Comparative Data of Approved Budget and Actual Expenditures

2015

Particulars Approved Budget Actual

Expenditures Variance

Personal Services ₱ 36,118,079.00 ₱ 36,009,836.90 ₱ 108,242.10

Maintenance and Other

Operating Expenses 56,546,386.81 55,865,909.99 680,476.82

Capital Outlay 56,975,798.98 44,914,596.37 12,061,202.61

Totals ₱ 149,640,264.79 ₱ 136,790,343.26 ₱ 12,849,921.53

2014

Particulars Approved Budget Actual

Expenditures Variance

Personal Services ₱ 39,532,864.60 ₱ 34,282,578.58 ₱ 5,250,286.02

Maintenance and Other

Operating Expenses

55,345,330.13 51,445,168.23 3,900,161.90

Capital Outlay 76,854,001.14 24,524,989.58 52,329,011.56

Totals ₱ 171,732,195.87 ₱ 110,252,736.39 ₱ 61,479,459.48

Independent Auditor’s Opinion

The auditor rendered a qualified opinion on the fairness of presentation of the

financial statements for CY 2015 taking exception on the Report on the Physical Count of

Property, Plant and Equipment (RPCPPE) prepared as of December 31, 2015 which failed to

include some items of the Property, Plant and Equipment (PPE) with a total cost of

₱692,153,581.49, and the difference of ₱56,515,173.90 existing between the RPCPPE and

PPE Ledger Cards which affect the fairness of the presentation of the PPE in the Statement of

Financial Position as of December 31, 2015.

Significant Audit Observations and Recommendations

After twenty years of existence, with a total ₱792,161,734.00 in subsidies from the

National Government, the ZCSEZA has experienced minimal growth, rendering it unable to

financially sustain itself, and is nowhere close to fulfilling the declared policy of the law

creating it (RA 7903), which is to develop the ZCSEZA into a decentralized, self-reliant and

self-sustaining agro-industrial, commercial, financial investment and tourist center and

Freeport.

We recommended that the Authority perform the following:

Put up business facilities to enable it to attract additional locators and in the process compete with other Economic Zones

Include in the Authority’s development plan the construction of a port facility


iv

Summary of Total Suspensions, Disallowances and Charges

NS/ND/NC NSSDC

Notice of Suspension - - - -

Notice of Disallowance 150,000.00₱ - - 150,000.00₱

Notice of Charge - - - -

Total 150,000.00₱ - - 150,000.00₱

This Period January 1 to

December 31, 2015

Beginning Balance

(As of December

31, 2014)

Ending Balance

(As of December

31, 2015)

NS/ND/NC

Status of Implementation of Prior Year’s Audit Recommendations

Of the four audit recommendations contained in the CY 2014 Annual Audit Report

(AAR), two were fully implemented while two were partially implemented.

One of the seven unimplemented recommendations contained in CYs 2012 and 2013

AARs was implemented while six were partially implemented.

TABLE OF CONTENTS

Page

Part I - Audited Financial Statements 1

Part II - Audit Observations and Recommendations 15

Part III - Status of Implementation of Prior Years’ Unimplemented

Audit Recommendations 23

PART I – AUDITED FINANCIAL STATEMENTS

Independent Auditor’s Report

Statement of Management’s Responsibility for Financial Statements

Statement of Financial Position

Statement of Financial Performance

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

Republic of the Philippines

COMMISSION ON AUDIT

Regional Office No. IX Cabatangan Hills, Zamboanga City

INDEPENDENT AUDITOR’S REPORT

THE CHAIRMAN and ADMINISTRATOR

Zamboanga City Special Economic Zone Authority

San Ramon, Zamboanga City

Report on the Financial Statements

We have audited the accompanying financial statements of Zamboanga City Special

Economic Zone Authority, San Ramon, Zamboanga City which comprise the Statement of

Financial Position as at December 31, 2015 and the Statements of Financial Performance,

Changes in Equity and Cash Flows for the year then ended and a summary of significant

accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial

statements in accordance with State accounting principles, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are

free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our

audit. We conducted our audit in accordance with Philippine Public Sector Standards on

Auditing. Those standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether financial statements are free

from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts

and disclosures in the financial statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

entity’s internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by management as well as

evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our audit opinion.

Basis for Qualified Opinion

The Report on the Physical Count of Property, Plant and Equipment (RPCPPE)

prepared as of December 31, 2015 failed to include some items of the Property, Plant and

Equipment (PPE) with a total cost of ₱692,153,581.49, and the difference of ₱56,515,173.90

existing between the RPCPPE and PPE Ledger Cards which affect the fairness of the

presentation of the PPE in the Statement of Financial Position as of December 31, 2015.

Qualified Opinion

In our opinion, except for the effect of the matter discussed in the Basis for Qualified

Opinion paragraph, the financial statements present fairly, in all material respects, the

financial position of Zamboanga City Special Economic Zone Authority, as at December 31,

2015, and its financial performance and its cash flows for the year then ended in accordance

with the State accounting principles.

GUILLERMO A. ROJAS MATEO

State Auditor V

Supervising Auditor

June 23, 2016

2015 2014

ASSETS

Current Assets

Cash and Cash Equivalents (Note 3) ₱ 11,971,357.37 ₱ 45,107,764.46

Receivables (Note 4) 26,872,992.01 4,997,797.16

Inventories 817,662.29 324,047.73

Prepayments (Note 5) 10,089,787.93 1,240,559.18

Other Current Assets 188,169.82 188,169.82

Total Current Assets 49,939,969.42 51,858,338.35

Non-Current Assets

Property, Plant and Equipment (Note 6) 446,549,832.12 456,233,771.22

Construction in Progress (Note 6) 134,320,150.08 131,014,318.75

Items in Transit 2,153,192.13 -

Other Non-Current Assets (Note 7) 22,338.00 22,338.00

Total Non-Current Assets 583,045,512.33 587,270,427.97

Total Assets ₱ 632,985,481.75 ₱ 639,128,766.32

LIABILITIES

Current Liabilities

Payables (Note 8) ₱ 7,078,848.86 ₱ 4,075,623.50

Inter-Agency Payables (Note 9) 2,829,522.13 2,496,295.63

Other Payables/Liabilities (Note 10) 9,720,854.57 7,190,290.93

Total Current Liabilities 19,629,225.56 13,762,210.06

Non-Current Liabilities

Deferred Credits (Note 11) 39,490.47 1,884,712.47

Total Non-Current Liabilities 39,490.47 1,884,712.47

Total Liabilities 19,668,716.03 15,646,922.53

NET ASSETS/EQUITY (Note 12)

Government Equity 806,272,805.99 782,500,250.00

Retained Earnings (Deficit) (192,956,040.27) (159,018,406.11)

Total Net Assets/Equity 613,316,765.72 623,481,843.89

(with comparative figures for CY 2014)



Statement of Financial Position

As of December 31, 2015

Total Liabilities and Net Assets/Equity ₱ 632,985,481.75 ₱ 639,128,766.42

2015

Revenue

Service and Business Income ₱ 32,270,468.09 ₱

Total Revenue 32,270,468.09

Less: Current Operating Expenses

Personal Services 36,009,836.90

Maintenance and Other Operating Expenses (Note 14) 55,865,909.99

Total Current Operating Expenses 91,875,746.89

Surplus/(Deficit from Current Operations (59,605,278.80)

Subsidy Income from National Government 49,998,939.70

Surplus/(Deficit) for the Period ₱ (9,606,339.10) ₱






2014

26,152,708.55

26,152,708.55

34,282,578.58

51,445,168.23

85,727,746.81

(59,575,038.26)

49,998,750.00

(9,576,288.26)






2015

Government Equity

Balance at the beginning of the year ₱ (159,018,406.11) ₱

Adjustments -

National Government Equity for the year -

Balance at the end of the year (159,018,406.11)

Retained Earnings (Deficit)

Balance at the beginning of the year -

Net Income (Loss) for the Year (9,606,339.10)

Adjustment of Prior Years (Note 13) (24,331,295.06)

Balance at the end of the year (33,937,634.16)

Government Equity, Ending Balance ₱ (192,956,040.27) ₱

Zamboanga Special Economic Zone Authority



For the period ended December 31, 2015

(with comparative figures of CY 2014)

2014

(149,959,689.37)

-

-

(149,959,689.37)

-

(9,576,288.26)

517,571.52

(9,058,716.74)

(159,018,406.11)

Zamboanga Special Economic Zone Authority



For the period ended December 31, 2015

(with comparative figures of CY 2014)

2015

Cash Flow from Operating Activities

Cash Inflows

Collections ₱ 22,023,035.28 ₱

Liquidation of Cash Advance - Capital Outlay -

Deposits

Disbursement 118,496.24

Other Adjustments 808,549.87

Interests on Bank Deposits

Receipt of Notice of Cash Allocation 45,541,890.58

Staled/Cancelled Checks 448,411.33

Other Manual Transactions 679,037.80

Transfer of Funds 17,195,164.00

Total Cash Inflows 86,814,585.10

Cash Outflows

Disbursements 84,783,808.84

Liquidation of Cash Advance 2,075,129.71

Loss on Foreign Exchange

Deposits

Other Adjustments 1,012,049.74

Other Manual Transactions 394,269.77

Authority to Debit Account -

Total Cash Outflows 88,265,258.06

Cash Provided (Used) by Operating Activities (1,450,672.96)

Cash Flow from Investing Activities

Cash Inflows

Collections -

Other Adjustments 1,756,900.00

Total Cash Inflows 1,756,900.00

Cash Outflows

Disbursement 32,326,777.96

Liquidation of Cash Advance 258,955.17

Other Adjustments 856,901.00

Total Cash Outflows 33,442,634.13

Cash Provided (Used by Investing Activities) (31,685,734.13)

Cash Provided (Used) by Financing Activities -

Net Increase (Decrease) in Cash and Cash Equivalents (33,136,407.09)

Cash, Beginning 45,107,764.46

Cash, End ₱ 11,971,357.37 ₱




Cash Flow Statement


2014

31,469,579.93

-

54,843.58

4,949,888.61

45,832,000.00

150.00

16,037.74

82,322,499.86

64,812,762.73

3,484,544.12

10,749.44

3,500.00

68,311,556.29

14,010,943.57

-

-

-

21,879,588.36

-

21,879,588.36

(21,879,588.36)

-

(7,868,644.79)

52,976,409.25

45,107,764.46




Cash Flow Statement


ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY


NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

The Zamboanga City Special Economic Zone Authority (ZCSEZA), otherwise known

as the ZAMBOECOZONE or Authority, was created by virtue of Republic Act (RA)

No. 7903, which was signed into law by former President Fidel V. Ramos on February

23, 1995. The Authority is guided by its vision of a sound and balanced industrial,

economic and social development through the promotion of private enterprises.

ZCSEZA is a Government Owned and Controlled Corporation, and is managed by an

eight-man board headed by the Chairman and Administrator

RA 7903 calls for the development of viable business opportunities in the ZCSEZA,

such as an Agro-Industrial Center, a Tourism Center, a Retirement Center, Information

Technology Parks, and a Commercial Center. Other viable investments in the ZCSEZA

include Medical Tourism, E-Gaming Enterprises and a Financial Center for off-shore

banking.

To date, twenty (20) registered locators are enjoying the perks of doing business in the

zone. These locators are from varied industries such as facilities operations, trading,

food processing and canning, manufacturing, banking and rubber processing.

The registered office address of ZCSEZA is San Ramon, Zamboanga City, 7000

Philippines.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

Our financial statements have been prepared under the historical cost convention and

presented in Philippine pesos.

Statement of Compliance

We applied the New Government Accounting System-Corporate (NGAS) in preparing

our financial statements, with January 1, 2005 as the date of transition.

On February 27, 2008, the Authority started with the initial stages of Electronic NGAS

(eNGAS) implementation. As of December 31, 2008, the system has been running and

being utilized by the Authority.

The Authority prepared the 2015 Financial Statements in accordance with Philippine

Public Sector Accounting Standards (PPSAS) in accordance with the Commission on

Audit’s (COA) adoption of the said standards effective January 1, 2014.

Our financial statements have been prepared in conformity with generally accepted

accounting principles set forth by the Philippine Financial Reporting Standards.

Foreign Currency Transaction

The functional and presentation currency of the ZAMBOECOZONE Authority is the

Philippine peso. Transactions in foreign currencies are initially recorded in the

functional currency based on the Bangko Sentral ng Pilipinas exchange rate prevailing

at the date of transaction. All differences are taken to the Statement of Financial

Performance.

Property, Plant and Equipment (PPE)

PPE, except for land, are stated at cost less accumulated depreciation.

The initial cost of property and equipment comprises its purchase price and any costs

directly attributable to bringing the asset to its working condition and location for its

intended use. Expenditures incurred after the assets have been put into operation, such

as repairs and maintenance are normally charged against income in the year the costs

are incurred. In situations where it can be clearly demonstrated that the expenditure

have resulted in an increase in the future economic benefits expected to be obtained

from the use of an item of property and equipment beyond its originally assessed

standard of performance, the expenditures are capitalized as additional costs of property

and equipment. When property is disposed, the cost and the related accumulated

depreciation are removed from the accounts and any resulting gain or loss is credited or

charged to current operations.

Depreciation is calculated using the straight-line method over the estimated useful lives

of the assets, ranging from one to thirty (30) years.

Property under construction is stated at cost. This includes costs of construction, plant

and equipment and other direct costs. The Construction Period Theory is applied for

costing purposes. Related expenses incurred after construction form part of the

operating cost. Property under construction is not depreciated until such time that the

relevant assets are completed and put into operational use.

Cash

Cash include cash on hand and in banks.

Trade and Other Receivables

Trade and other receivables are stated at face value.

Inventories

Inventories which include, among other things office supplies, accountable forms,

gasoline, spare parts, construction materials, are valued at historical cost.

Payables

Payable accounts are recognized and recorded in the books of accounts only upon

delivery of the goods or rendition of services to the Authority.

Revenue Recognition

Revenues for services are stated at amounts invoiced to locators and customers. The

Authority leases out property to prospective locators, rent out facilities and provide

water and electrical services to locators and other clients. Revenues represent the value

of fixed consideration that have been received or are receivable. Revenues are

recognized when there is evidence of an arrangement, collectability is reasonably

assured and the delivery of the services has occurred.

3. CASH

Cash is comprised of the following:

Cash – Collecting Officer ₱ 246,850.00

Petty Cash Fund 99,265.97

Payroll Fund 615,595.67

Cash in Bank (CIB) – Local Currency (LC) 10,964,902.91

CIB – Foreign Currency (FC) 44,742.82

Total ₱ 11,971,357.37

The balance of the CIB – FC is computed as follows:

CY 2015 CY 2014

Bank Balance, Ending $ 1,002.82 1,002.82

FOREX Rate (Dec 31, 2015) 44.617 44.41

Total 44,742.82 44,535.24

4. RECEIVABLES

Receivables account is composed of the following:

Accounts Receivable (AR) ₱ 15,172,730.06

Due from National Treasury 11,034,000.00

Advances to Officers and Employees 492,071.04

Other Receivables 174,190.91

Total ₱ 26,872,992.01

AR includes accounts due from locators for leased properties, billed electricity and

water consumption. Due from Officers and Employees represents collectible from

officers and employees other than cash advances granted for travel and for special

purpose undertakings. Advances to Officers and Employees represents cash advances

granted for travel and other special purpose / time-bound undertaking pursuant to

Commission on Audit Accounting Circular No. 2006-001 dated November 9, 2006.

The material increase in receivables is due to the substantial amount of unpaid rent from

locators and the unreleased subsidy from the National Government (NG).

5. PREPAYMENTS

Advances to Contractors represent 15% mobilization fees paid to contractors for

infrastructure projects deductible from progress payments. The material increase in this

account was brought about by mobilization fees for projects initiated in CY 2015.

6. PPE

His to rica l

Co s t

Accumula ted

Deprec ia tio n a t

12/31/2014

Net Bo o k

Value (NBV)

At 12/31/2014

Additio ns Deprec ia tio n NBV a t end o f

year

Land and Land Impro vements 118,073.32 101,142.56 16,930.76 - 1,459.89 15,470.87

Office Buildings 100,141.25 31,422.21 68,719.04 - 3,004.24 65,714.80

Other P ublic Infras truc tures 220,286.82 34,516.46 185,770.36 865.34 8,858.59 177,777.11

Office Equipment 21,560.92 18,376.18 3,184.74 1,907.00 362.74 4,729.00

Furniture & Fixtures 9,297.86 6,480.89 2,816.97 26.38 415.19 2,428.16

IT Equipment and So ftware 13,708.02 11,561.40 2,146.62 2,889.41 265.64 4,770.39

Library Bo o ks 2,000.00 60 1,940.00 - 90 1,850.00

Co mmunica tio n Equipment 259.1 182.67 76.43 - 14.51 61.92

Co ns truc tio n and Heavy Equipment 57,761.16 51,671.78 6,089.38 - 20.48 6,068.90

Firefightng Equipment and Acces s o ries 37.64 27.1 10.54 355 6.34 359.19

Spo rts Equipment 14,165.66 8,074.68 6,090.97 - 1,682.32 4,408.65

Mo to r Vehic les 17,226.16 14,907.01 2,319.15 - 390.45 1,928.70

Ro ads , Highways and Bridges 160,138.81 - 160,138.81 843.32 - 160,982.13

To ta l 734,656.72 278,422.94 456,233.77 6,886.45 16,570.39 446,549.83

Co ns truc tio n in P ro gres s 131,014.32 - 131,014.32 3,305.83 - 134,320.15

To ta l 8 6 5 ,6 7 1.0 4 2 7 8 ,4 2 2 .9 5 5 8 7 ,2 4 8 .0 9 10 ,19 2 .2 8 16 ,5 7 0 .3 9 5 8 0 ,8 6 9 .9 8

(in tho us ands )

The consolidated useful life of assets is estimated as follows:

Land Improvements 10 years

Furniture and Fixtures 10 years

Construction and Heavy Equipment 10 years

Office Buildings 30 years

Office Equipment 5 years

IT Equipment & Software 5 years

Motor Vehicles 7 years

7. OTHER NON-CURRENT ASSETS

This amount represents September 2014 purchase of equipment and accessories for two

bomb sniffing dogs that will be acquired by the authority for security purposes.

8. PAYABLES

The accounts payable represents payables to various suppliers for goods delivered and

services rendered but not yet paid as of the end of the year. Due to Officers and

Employees represents the share of the Bids and Awards Committee (BAC), the

Secretariat and the Technical Working Group in the bidding fees as BAC Honoraria as

authorized in Department of Budget and Management (DBM) Budget Circular No.

2005-4A and the unused earned vacation and sick leave credits of regular employees in

compliance to AOM 007-2008 and with reference to Philippine Accounting Standards

(PAS) and International Accounting Standards (IAS) 19, with breakdown as follows:

Accounts Payable ₱ 5,472,197.49

Due to Officers and Employees 1,606,651.37

Total ₱ 7,078,848.86

9. INTER-AGENCY PAYABLES

Inter-Agency Payables is composed of Due to Bureau of Internal Revenue (BIR),

Government Service Insurance System (GSIS), Home Development Mutual Fund

(HDMF) and Philippine Health Insurance Corporation (PHIC), with the following

breakdown:

Due to BIR ₱ 1,579,302.19

Due to GSIS 819,544.23

Due to HDMF 246,308.46

Due to PHIC 184,367.25

Total ₱ 2,829,522.13

10. OTHER PAYABLES/LIABILITIES

Guaranty Deposits Payable ₱ 3,765,599.24

Performance/Bidders/Bail Bonds Payable 5,527,938.16

Others 427,317.17

Total ₱ 9,720,854.57

Guaranty Deposits Payables are cash received from various locators to guaranty specific

performances which are refundable to the depositor upon completion of these

performances.

Performance/Bidders/Bail Bond Payables are retention money deducted from payments

to contractors which will eventually be released upon completion and acceptance of the

projects.

11. OTHER DEFERRED CREDITS

Other deferred credits represent the amount received as Security Deposits from the

locators.

Breakdown of this account is as follows:

Security Deposits

Mabuhay Philippines Satellite Corporation ₱ 10,002.68

Hanwook Philippines Inc. 9,488.49

Others – Registered Locators prior to

implementation of the e-NGAS System

19,999.30

Total ₱ 39,490.47

12. EQUITY

The ZAMBOECOZONE has an authorized capital stock of two billion (2,000,000,000)

no par shares with a minimum issue value of ten pesos (₱10.00) each. The NG shall

initially subscribe and fully pay for three hundred million (300,000,000) shares of such

capital stock. As of December 31, 2015, the NG has paid ₱806,272,805.00, or 26.88%

of its subscribed shares.

13. PRIOR PERIODS ADJUSTMENTS

2015 2014

Reversal of Accounts Written-Off

Adjustment for Stale Checks (PNB) ₱ 396,598.21

Adjustment for Lost/Stale Checks (DBP) ₱ 7,431.00 150.00

Settlement of COA Disallowance 120,823.31

Adjustment on Inventory of Fuel and

Lubricants

23,425.55

Adjustment on Salaries (Allan Tutanes) (30,080.00)

Adjustment on Newspaper Advertisement for

Public Bidding

3,830.40

Adjustment on Refund of Rental of Gazebo (2,000.00)

Adjustment on Productivity Enhancement

Incentive (Ashram)

(5,000.00)

Adjustment of CIP-Reforestation to MOOE (24,328,902.01)

TOTAL ₱ (24,331,295.06) ₱ 517,571.52

14. MAINTENANCE AND OTHER OPERATING EXPENSES (MOOE)

Travelling Expenses – Local ₱ 4,143,728.60

Travelling Expenses – Foreign 3,693,383.20

Training Expenses 354,301.00

Office Supplies Expenses 1,933,337.66

Gasoline, Oil and Lubricants Expenses 2,129,630.72

Water Expenses 2,006.21

Electricity Expenses 2,741,384.08

Telephone Expenses - Landline 188,983.18

Telephone Expenses – Mobile 258,265.55

Internet Expenses 297,299.89

Cable, Satellite, Telegraph and Radio Expenses 14,379.58

Membership Dues and Contributions to Organizations 11,200.00

Awards and Indemnities 7,950.00

Advertising Expenses 72,777.60

Printing and Binding Expenses 62,785.00

Rent Expenses 688,488.50

Representation Expenses 1,574,809.65

Transportation and Delivery Expenses 98,387.81

Subscription Expenses 55,824.99

Legal Services 180,000.00

Auditing Services 2,427,562.67

Security Services 2,528,400.00

Other Professional Services 11,056,099.78

Repair and Maintenance 1,442,490.72

Confidential Expenses 500,000.00

Intelligence Expenses 500,000.00

Extraordinary Expenses 77,816.85

Miscellaneous Expenses 144,461.51

Taxes, Duties and Licenses 57,505.93

Fidelity Bond Premiums 91,125.00

Insurance Expenses 101,598.06

Depreciation 16,570,386.81

Other MOOE 1,859,539.44

Total ₱ 55,865,909.99

Breakdown of Other MOOE is as follows:

Marketing and Promotional Collaterals ₱ 518,472.56

Sports/Special Events/Condominium Dues 1,190,766.88

Other Legal Fees 150,300.00

Total ₱ 1,859,539.44

Part II – OBSERVATIONS AND RECOMMENDATIONS

1. After twenty years of existence, with a total ₱792,161,734.00 in subsidies from the

National Government (NG), the ZCSEZA has experienced minimal growth, rendering

it unable to financially sustain itself, and is nowhere close to fulfilling the declared

policy of the law creating it (Republic Act (RA) No. 7903), which is to develop the

ZCSEZA into a decentralized, self-reliant and self-sustaining agro-industrial,

commercial, financial investment and tourist center and Freeport.

Section 3 of the Implementing Rules and Regulations (IRR) of RA 7903 or the

“Zamboanga City Special Economic Zone Authority” states the following:

Declaration of Policy – Within the framework and subject to the mandate of

the Constitution and applicable provisions of the Local Government Code, it is

hereby declared the policy of the Authority to develop the ZAMBOECOZONE into a

decentralized, SELF-RELIANT, and SELF-SUSTAINING agro-industrial,

commercial, financial investment and tourist center and Freeport with suitable

retirement and residential areas, to generate employment opportunities in and

around the ZAMBOECOZONE, to attract and promote productive foreign

investments, and to enhance the benefits to be derived from the ZAMBOECOZONE

in order to promote the economic and social development of the City of Zamboanga

and its surrounding areas.

Examination of ZCSEZA’s financial records as of December 31, 2015 or after 20

years of existence reflected the following:

Total Subsidy from the NG ₱ 792,161,734.00

Total Deficit as of December 31, 2015 192,956,040.27

Total Cash Expenses for CY 2015 ₱ 75,305,360.08

A 4-year horizontal analysis on the Authority’s financial performance revealed that

it has generated losses as shown in the table below:

2015 2014 2013 2012

Service and Business Income ₱ 32,270,468.09 ₱ 26,152,708.55 ₱ 18,883,863.00 ₱ 17,827,317.00

Operating Expenses 91,875,746.89 85,727,746.81 80,693,457.00 76,832,356.00

Income/(Loss) from Operations ₱ (59,605,278.80) ₱ (59,575,038.26) ₱ (61,809,594.00) ₱ (59,005,039.00)

Based on the trend shown in the table above, we can only expect minimal

improvement in the Authority’s financial performance in the succeeding years. We have

also noted that the Authority’s growth and development is slow and snail-paced due to its

inability to attract additional locators/investors brought about by the following factors:

Absence of business facilities for it to compete with other Economic Zones in attracting potential locators

Absence of port facility

Peace and order situation in the City

Inadequate marketing strategies

On the other hand, a vertical analysis of the Authority’s “cash” expenses for CY

2015 shows the following:

"Cash" Expenses Amount Percentage of Total

"Cash" Expenses

Personal Services ₱ 36,009,836.90 ₱ 47.82%

Travelling Expense 7,837,111.80 10.41%

Representation Expenses 1,574,809.65 2.09%

Other Professional Services 11,056,099.78 14.68%

Repairs and Maintenance 1,442,490.72 1.92%

All Other "Cash" Expenses 17,385,011.23 23.09%

Total ₱ 75,305,360.08 ₱ 100.00%

It can be observed from the table above that Personal Services, Travelling Expense

and Other Professional Services make up the bulk or 75% of ZCSEZA’s “cash” expenses.

Personal Services pertains to the salaries, wages and other benefits of ZCSEZA’s

employees. Travelling Expenses include expenses incurred in local and foreign travels of

the Authority’s employees and officers. Other Professional Services pertain to salaries and

wages of Job Order employees of the Authority; and meals served in meetings and

corporate affairs make up the bulk of ZCSEZA’s Representation Expense.

Considering the ZCSEZA financial position and condition, and as it aims to be self-

sustaining and self-reliant in the future, ZCSEZA should try to minimize expenses that are

non-essential and can be dispensed with. After an examination of the various expenditures,

we have identified the following areas where the Authority can minimize its expenses:

Seminars, trainings, Board Meetings and Conferences can be conducted within the premises of ZCSEZA instead of out-of-town venues. This also helps in

promoting ZCSEZA as a good venue for similar events conducted by other

agencies/companies, private or public.

Management should evaluate which of its employees’ presence can be dispensed with in meetings, trainings, board meetings and conferences. This can translate

to savings in meals.

Evaluate the actual duties and responsibilities of the Job-Order employees and see if they are already performing the duties/tasks of the Authority’s regular

employees.

Management exemplify by leadership in directing the employees to minimize

expenses during travels by staying in hotels and eating at restaurant with

reasonable prices.

Direct the accountant to only accept reimbursements of expenditures that are essential, indispensable and reasonable.

Management should see to it that all disbursements are properly supported by documents and there is a legal basis for the said payments.

Management should direct employees to look for other areas where savings can

be made.

This is a reiteration of a prior years’ audit finding.

Recommendations

In view of the above observations, we recommended that the Authority perform

the following:

Put up business facilities to enable it to attract additional locators and in the

process compete with other Economic Zones

Include in the Authority’s development plan the construction of a port

facility


Look into the suggested areas where savings can be made and take

necessary action to realize said savings

Management Comments

The initial capitalization by the NG to ZCSEZA is about P3 Billion. However, after

20 years of existence, only around P824 Million or about 27.45% was released by the NG.

Without full government support to realize its mandate for being a self-

sufficient/sustaining GOCC cannot be achieved.

The Authority has identified four (4) major products for its development agenda,

among which are the 1) San Ramon Newport, 2) Biotechnology Farms in the

Highlands, 3) West Corporate Centre, and the 4) Asian Halal Centre.

The San Ramon Newport shall fulfill the vision of the Authority in becoming a

world-class economic zone that will link resources, markets and other logistical activities

that can contribute to the economic development of the Zamboanga City. In its desire to

become a seaport-driven city, Zamboanga can boost employment, business and industries.

The results to be achieved are accessibility of goods, continuous inflow of passenger-

tourists and the enhancement of facilities and overall development of Zamboanga City

and the Zamboanga Peninsula.

Once established, the port facility, in effect, can help stimulate the opening of

markets for agricultural activities, movement of goods, and other related activities such as

education, trade, tourism and construction (bringing in of materials and equipment).

The San Ramon Newport will complement the Bypass Road Project that will link

the East and West Coasts of Zamboanga City.

The Biotechnology Farms in the ZAMBOECOZONE Highlands principally seeks

to make a portion of the La Paz Highlands a profitable area for the development of

biotechnology farm community with farm facilities for research and development in the

community to ensure food security for Zamboanga City and the Zamboanga Peninsula

(region). Lots in the ZAMBOECOZONE Highlands shall be apportioned for lease to

interested business investors for the growing and processing of various farms products,

poultry raising and livestock, and as a component of the farm, the integration of the

cutflower industry.

The West Corporate Centre brings the services to the people, providing

convenience and reduced time and effort exertion in completing transactions with offices

such as Philhealth, GSIS, SSS and the like. In addition, the ZAMBOECOZONE had

required manpower service providers to hold office in the zone to address labor

complaints and related issues of existing locators, and to ensure swift and just action on

labor matters. The West Corporate Centre will also be an ideal training and events center

in the vicinity.

The Asian Halal Centre project facility principally seeks to make a portion of the

ZAMBOECOZONE 2nd Industrial Park a profitable area for the development and

establishment of a 100-hectare Halal Industrial Park wherein a community of Halal-

oriented business enterprises shall be built, and where they are provided infrastructure

and service support.

The Asian Halal Centre is an agro-production facility with particular focus on

generating employment for the surrounding community, research and development,

ecology and sustainability and as founded on the principles of the Halal industry.

With enough funding from the Government to accommodate these projects we will

be able to become self-sufficient/sustaining.

The Authority will comply with the last recommendation and will also look for

additional areas where savings can be made.

2. The Report on the Physical Count of Property, Plant and Equipment (RPCPPE)

prepared as of December 31, 2015 failed to include some items of the Property, Plant

and Equipment (PPE) with a total cost of ₱692,153,581.49, thus affecting the fair

presentation of PPE in the financial statements (FS).

The New Government Accounting System (NGAS) provides for the use of the

RPCPPE to report on the physical count of PPE by type as of a given date. It shows the

balance of property and equipment per cards and per count and shortage/overage, if any.

On January 15, 2016, the ZCSEZA submitted its RPCPPE as of December 31, 2015

with a total amount of ₱105,904,764.35, comprised of Office Equipment, Furniture and

Fixtures and IT Equipment and Software as noted in Audit Observation No. 3. Review of

the said report revealed that the following types of PPE were not included as follows:

Type of PPE Cost

Land ₱ 2,000,000.00

Land Improvements 116,073,323.91

Office Buildings 100,141,252.05

Other Structures 221,152,166.55

Library Books 2,000,000.00

Communication Equipment 259,100.00

Construction and Heavy Equipment 57,761,159.49

Fire fighting Equipment and Accessories 392,635.00

Sports Equipment 14,165,656.40

Motor Vehicles 17,226,162.11

Roads, Highways and Bridges 160,982,125.98

Total ₱ 692,153,581.49

The physical count of PPE and its corresponding RPCPPE is an indispensable

activity to ascertain the existence, whereabouts and condition of the Authority’s PPE. As of

December 31, 2015, the balance of the PPE net of depreciation is ₱446,549,832.12,

representing 70.55% of the ZCSEZA’s total assets. As such, the RPCPPE must include all

PPE owned by the agency.

Recommendation

We recommended that management direct the Inventory Committee to include

all the PPE owned by ZCSEZA in the physical count of PPE and the corresponding

RPCPPE.

Management Comment

The Authority will comply with the recommendation and will include all its PPE in

its physical count and the RPCPPE.

3. A difference of ₱56,515,173.90 exists between the RPCPPE and Property, Plant and

Equipment Ledger Cards (PPELC) thus affecting the fairness of the presentation of

the PPE in the Statement of Financial Position (SFP) as of December 31, 2015.

Section C of Appendix 8, Volume II of the NGAS states the following regarding the

reconciliation of the records of the Accounting Division/Unit and the Property and Supply

Office/Unit:

The physical inventory of the asset shall be reconciled with the Property,

Plant and Equipment Ledger Cards and the General Ledger and any discrepancies

shall be immediately verified and adjusted.

Examination of ZCSEZA’s SFP which is based on the General Ledger (GL)/PPELC

revealed that the balances were not reconciled with the records of the Property and Supply

Office/Unit with details as follow:

Type of Equipment Balance per GL/PPELC

Office Equipment ₱ 23,467,921.18

Furniture and Fixtures 9,324,241.23

IT Equipment and Software 16,597,428.04

Total 49,389,590.45

Less: Total per RPCPPE 105,904,764.35

Discrepancy ₱ (56,515,173.90)

It is imperative that records between the Accounting Division/Unit and Property and

Supply Office/Unit be reconciled to ascertain the existence, whereabouts and condition of

its PPE for its fair presentation in the FS.

Recommendation:

We recommended that Management direct the Accounting Division/Unit and

Property and Supply Office/Unit to reconcile their records of PPE regularly.

Management Comment

The Authority will comply with the recommendation.

4. ZCSEZA spent a total amount of ₱60,000.00 for the payment of professional fees for

the conduct of Staff Development Training from a training institution not accredited

by the Civil Service Commission (CSC).

CSC Memorandum Circular (MC) No. 21, Series of 2013 states that training for

government personnel can only be acquired from any of the following institutions:

1. Any CSC accredited private-training institution;

2. Government training institutions;

3. Non-accredited private institution offering training of highly

technical/specialized nature;

4. Local training institution that is internationally acclaimed for meeting the global

standards of excellence in training;

5. Institution recognized by Commission on High Education (CHED) as Center of

Excellence (COE) or Development (COD);

6. Foreign institution that offers training for scholarship purposes for personal

advancement or participants; or

7. Other institutions that partner with CSC in building capabilities of civil servants.

Examination of Disbursement Voucher (DV) No. 15-03-0274 revealed that

ZCSEZA availed of the services of Arete Leadership Development Consultancy for the

conduct of Staff Development Training on March 4, 2015. Obligated expenses for the said

training are as follows:

Professional Fee (3rd Module – Conflict Management ₱ 60,000.00

Plane fare (Atty. Marc Castrodes and Staff) 12,000.00

Accommodation (Atty. Marc Castrodes and Staff) 13,000.00

Food and venue 15,000.00

Total ₱ 100,000.00

Although the seminar could be beneficial to ZCSEZA, the ZCSEZA should have

availed of the seminar from a CSC-accredited private institution or other training

institutions enumerated by CSC MC No. 21, Series of 2013.

Recommendation

We recommended that management avail seminars/training only from those

enumerated in CSC MC No. 21, Series of 2013.

Management Comments

The Authority will comply with the recommendation and will only avail

seminars/trainings from those enumerated in CSC MC No. 21, Series of 2013.

Compliance with Tax Laws

In 2015, ZCSEZA withheld and remitted the following taxes to the Bureau of

Internal Revenue:

Compliance with Government Service Insurance System (GSIS), Home Development

Fund (HDMF) and Philippine Health Insurance Corporation (PHIC) Regulations

The GSIS mandatory personal and government shares on life and retirement

insurance premiums, HDMF and PHIC membership contributions, for CY 2015 were

remitted to the said corporations as follows:

GSIS HDMF PHIC

Employee Share ₱ 2,012,686.35 ₱ 181,193.56 ₱ 224,187.50

Employer Share 2,683,581.76 70,950.00 224,187.50

Total ₱ 4,696,268.11 ₱ 252,143.56 ₱ 448,375.00

It also remitted to the GSIS employees compensation contribution of ₱80,000.00.

Gender and Development (GAD)

ZCSEZA conducted the following activities/projects/programs to address various

gender needs and concerns of employees:

GAD Activities

Participation in the Marcha De Las Mujeres

Conduct of Breast Cancer Awareness Seminar

Participation in the Breast Cancer Awarement Month

Provision for the availment of Special Leave under RA 9710 after surgical procedures due to

gynecological disorders.

Conduct of Transvaginal Ultrasound, Prostate Examination, Hepatitis B Screening and Blood

Chem for Blood Sugar and Cholesterol

Conduct of Livelihood Training Seminars to augment ZCSEZA employees income

Tax Amount

Compensation (1601-C) ₱ 3,091,974.60

VAT on Goods and Services (1600) 1,169,966.39

Expanded Withholding Tax (1601-E) 489,282.52

Total ₱ 4,751,223.51

Status of Suspension, Disallowance and Charges

NS/ND/NC NSSDC

Notice of Suspension - - - -

Notice of Disallowance 150,000.00₱ - - 150,000.00₱

Notice of Charge - - - -

Total 150,000.00₱ - - 150,000.00₱

This Period January 1 to

December 31, 2015

Beginning Balance

(As of December

31, 2014)

Ending Balance

(As of December

31, 2015)

NS/ND/NC

PART III - STATUS OF IMPLEMENTATION OF PRIOR YEARS’

UNIMPLEMENTED AUDIT RECOMMENDATIONS

Of the four audit recommendations contained in the CY 2014 Annual Audit Report (AAR), two

were fully implemented while two were partially implemented.

One of the seven unimplemented recommendations contained in CYs 2012 and 2013 AARs was

implemented while six were partially implemented.

Observations and

Recommendations Ref. Management Action

Status of

Implementation

Reason for

Partial/Non-

Implementation

CY 2014

1. The Zamboanga City

Special Economic Zone Authority

(ZCSEZA) did not conduct the

physical count of its Property,

Plant and Equipment (PPE) as of

year-end for CYs 2014, 2013 and

2012 which is non-compliant with

Section 490, Volume I of

Government Accounting and

Auditing Manual (GAAM), thus

their existence and condition

could not be established.

It was recommended that

management strictly adhere with

Section 490, Volume I of the

GAAM by conducting a physical

count of its PPE and submitting

the required RPCPPE within the

deadline set by regulations. The

RPCPPE should be reconciled

with the accounting records as a

means of ensuring the accuracy

and completeness of the financial

records.

Page 16,

AAR

2014

A RPCPPE has been

prepared as of

December 31, 2015

Partially

implemented

Some items of

the PPE with a

total cost of

₱692,153,581.49

were not

included in the

RPCPPE as

noted in Finding

No. 2, Part II of

this report.

2. Completed projects with a

total amount of ₱69,270,327.71

that are already being used in

operations are still recorded under

the Construction in Progress

(CIP) accounts, and depreciation

was not provided for a no. of

these completed projects, contrary

to Sections 41 and 67,

respectively, Volume I of the

Manual on NGAS and affecting

Page 17,

AAR

2014

₱51,001,396.36, or

74% of the total

amount has already

been transferred to

the appropriate PPE

account

Partially

implemented

the fair presentation of the said accounts in the financial

statements (FS).

It was recommended that the

management direct the Chief of

the Accounting Division to make

the necessary entries to record

completed projects from CIP to

the appropriate PPE accounts and

to properly record depreciation on

these, for a fair presentation of

the affected accounts in the FS.

3. The cost of maintenance

of various completed projects and

assets amounting to

₱36,781,594.70 are recorded

under the CIP accounts, and

various expenses like salaries and

consultancy fees were still

capitalized as part of the project

in the CIP accounts, the balances

of which were carried over from

2007 or earlier, instead of being

treated as outright expenses in the

period these were incurred.


management direct the Chief-

Accounting Division to:

a. Analyze the composition of

the CIP accounts to

determine whether charges

to the accounts are directly

related to the projects, and

to prepare entries as

necessary to adjust the CIP

accounts to properly reflect

their cost.

b. Ensure that only expenses

that are directly related to

the projects and those that

meet the recognition criteria

set paragraph 14 of PPSAS

17 be capitalized.

Page 19,

AAR

2014

The Accounting

Section has already

prepared all the

necessary entries to

adjust the following

CIP accounts:

Maintenance of Facilities and

Utilities

Maintenance of Light and Heavy

Equipment

Maintenance of

Water System

Motorpool Services

Fully

implemented

4. Management spent an amount of ₱2,000,000 for a

"Strategic Planning and ISO

Accreditation Preparation"

workshop meant for 81

participants, but participated in by

only 70 participants.


management exercise due

diligence and prudence in

examining and undertaking

similar proposals/ activities in the

future to avoid excessive

expenditures.

Page 21, AAR

2014

Fully implemented

CY 2013

1. Lack of coordination and

check and balance in the

preparation of the Billing

Statements (BS)/ Statement of

Accounts (SOA) of various

locators of the Authority resulted

to inaccurate billing statements

which some locators contested

and could lead to unwarranted

legal cases filed against the

agency


there should be good coordination

between higher levels of the

Authority and the different

departments so that policy made

through Board Resolutions could

be properly disseminated to all

concerned departments for proper

guidance. The Accounting or

other departments should prepare

the SOA for control purposes and

to serve only correct SOA to

locators to prevent unwarranted

legal cases filed against the

Authority.

Page 16,

AAR

2013

Approved and

implemented revised

billing collection

system as of

September 2013.

Partially

implemented

It is a continuing

activity of the

Authority.

3. The satellite office of the

ZCSEZA in Makati City is being

manned by only one personnel

who does everything including

being a marketing agent to lure

Page 19,

AAR

2013

The Marketing and

Enterprise

Development

Division (MEDD) is

currently working on

Fully

implemented

investors while the marketing staff based in Zamboanga City

were deprived to do their share to

improve the financial status of the

Authority.


marketing personnel from

Zamboanga City be assigned, on

a rotation basis, in the satellite

office to augment the staff since

most of the marketing activities

are done there and to be able to

lure more investors to improve

the financial status of the

Authority.

the documents for their application for

registration and their

continuing visits to

the ZCSEZA.

CY 2012

1. The Authority failed to

recover the advances made to

contractors for two discontinued

or terminated relocation of San

Ramon Prison Farm and Penal

Farm projects at Curuan,

Zamboanga City in the amount of

₱2,125,863.58. Also, the

completed project, Duplex

Building and Land Development -

Phase II totaling to ₱6,655,026.51

as part of the relocation projects

remained idle.


adequate planning be made on

projects to be implemented.

Enough preparation should be in

place to avoid unwarranted

spending of government

resources.

The following remedial

measures should be undertaken:

a) Recover from the contractors

the unrecouped 15%

mobilization fee of

₱2,125,863.58;

b) Keep the completed structures

operational and of use to

As of August 16,

2012, the Authority

recovered

₱991,026.83 from

ACO Construction

by off-setting on

ACO Construction’s

account. The

remaining amount of

₱235,564.79 will be

deducted from the

retention money of

ACO Construction

of ₱969,240.74.

In the case of SEIS

Construction, the

Authority already

sent the demand

letter to the said

contractor. The BOD

also instructed the

Legal Service

Division to pursue

legal action in case

of non-payment.

Partially

implemented/On-

going

implementation

Only

₱991,026.83 or

46.62% has so

far been

recovered of the

advances made

to two

contractors of

two terminated

projects.

The Duplex

Building and

Land

Development –

Phase II was

originally

intended for the

relocation of the

San Ramon

Prison and Penal

Farm. As the

said relocation

did not

materialize, the

project remains

idle and unused.

prevent deterioration of the same. Ensure that government

resources are managed,

expended or utilized with

prudence and safeguarded

against loss or wastage.

2. The Construction

Materials Inventory account with

a balance of ₱1,365,440.60 is

misstated due to the direct

charging of procured construction

materials to Construction in

Progress (CIP) account and the

non-preparation and submission

of RSMI.


the Chief of the Accounting

Division record all purchases of

construction materials under the

appropriate Inventory account to

present a correct balance as of a

certain period. Reconciliation and

adjustments should also be made

based on the actual inventory on

hand at the warehouse. Require

the Warehouse-in-Charge to

prepare the monthly Report of

Construction Materials Issued

(RCMI) and submit said Report

to the Accounting Division for

recording.

An inventory system

is being studied and

developed by the

Authority in

coordination with all

Divisions and

Offices concerned.

Once implemented,

this will ensure the

recording of all

purchases of

supplies and

materials under the

appropriate

inventory account

based on the actual

inventory on hand at

the warehouse as per

report of the

Warehouse In-

Charge

Partially

implemented

Construction

materials

purchased were

not yet recorded

to the

appropriate

Construction

Materials

Inventory.

3. Facilities, equipment and

other structures totaling to

₱24,879,600.12 remained idle and

unable to generate income while

they continue to deteriorate.


management coordinate with

other government agencies and

local government units on

possible assistance in making the

developed Freeport financially

and economically viable.

It was further

recommended that a thorough

Partially

implemented

preliminary study be conducted on the viability of infrastructure

development projects taking into

consideration its justifiable need

before their implementation to

avoid waste of government

resources.

4. Other Receivables of

₱142,985.84 from resigned

collecting/ disbursing officers

remained unsettled for more than

five (5) years.


management exert more effort to

collect the amount by continued

sending of demand letters to the

concerned persons.

Continued legal

actions are being

pursued and

undertaken. Demand

letters were sent out

to the concerned

persons.

Partially

implemented

The amount is

still unsettled as

of the end of CY

2015.

5. After 15 years of

existence and despite the

substantial investments, the

ZCSEZA has not significantly

achieved its goals and objectives.


Management:

a) Include in the Authority’s

development plan the

construction of a port

facility;

b) Ensure that every

infrastructure project is

supported with adequate

feasibility studies;

c) Planning Division and

Marketing and Enterprises

Development Division

(MEDD) explore new

marketing strategies and

employ a far-reaching change

in marketing aspects that will

suit to the culture of the

general public;

d) Bring to the attention of

Coordinated with

RDC for the

following

endorsements:

a) RDC Resolution

No. IX-086.B-

14, A Resolution

Endorsing the

Proposed World

Class

International

Seaport Project

to the Office of

the President and

other Concerned

Entities for

Support in the

Sourcing of

Funds for the

Project

b) RDC Resolution

No. IX-052-14,

A Resolution

Endorsing the

Proposed

Construction of

the ZCSEZA

International

Partially

implemented

The huge

amount involved

in the

construction

costs hinders

ZCSEZA from

building its own

port. It will need

to find other

funding sources

for the

construction of a

World-Class port

facility.

A World-Class

port facility will

make

Zamboanga

ECOZONE a

center of

maritime

activities that

will encourage

trade and

investment. It

will also greatly

help ZCSEZA in

realizing its

declared policy

higher authorities and/or appropriate government

offices for coordination and

possible assistance in inviting

or bringing in investors; and

e) Double the exerted efforts

and consult experts for

possible realization of how

its goals and objectives on

how to become self-reliant

and self-sustaining Freeport

and independent

government-owned or

controlled corporation.

Cargo Terminal (ZICT) to the

DBM

which is to develop

Zamboanga

ECOZONE into

a decentralized,

self-reliant and

self-sustaining

agro-industrial,

commercial,

financial,

investment and

tourist center and

free port.

Reiterated in

Finding No. 1,

Part II of this

report.

we recommended that the authority perform the following · 2019-01-23 · we recommended that the...

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