Table 2 - Actual by Source% to Grand % to TotalParticulars Total Total LocalForeign 10.653 0.28%Local:NG Support 3,354.573 87.75%LBP Borrowings 24.468 0.64%WD Equity 2.600 0.07%ICG 441.065 11.54%Total Local 3,822.706 99.72% 100.00%Grand Total 3,833.359 100.00%The P26.8M difference between the(originally) Approved Budget (P833.0M) and theApproved Realigned Budget (P859.8M) representsthe supplemental budget for Local Travel and theincrease in RATA pursuant to National BudgetCircular No. <strong>2009</strong>-520 covered by Board ResolutionNos. 051 s. <strong>2009</strong> and 532 s. the <strong>2009</strong> respectively.The favorable bottom line figures of<strong>LWUA</strong>’s CY <strong>2009</strong> Corporate Operating Budget Statusare the results of the budgetary controls adopted bythe Management in pursuance to the continuedimplementation of the austerity measures underAdministrative Order No. 103.The budget balance represents portion ofthe forced budgetary cutback enunciated under theapproved Memorandum for the Administrator dated23 April <strong>2009</strong>.Water District Audit DepartmentFor year <strong>2009</strong>, the Water District AuditDepartment conducted 19 WD audits (operations/financial/special) and reviewed the operatingperformance of two water districts through financialanalysis.The audits were conducted basically inline with <strong>LWUA</strong>’s regular monitoring function, and inparticular cases, in response to the formal requestsof the concerned water districts and otherstakeholders. Among the operational problemsaddressed include internal conflicts, allegedirregularities, internal control system and institutionaldevelopment deficiencies, and debt servicearrearages. The financial analyses, on the otherhand, were made either to determine the progressso far attained by the WDs after the audit, or to reviewand evaluate the operational and financial status ofa district in lieu of an operations audit.B. Operating Expenses (OPEX)ApprovedRealignedExpense Account Approved Realigned Actual Budget % ActualBudget Budget Utilization Balance to BudgetPersonal Services 546.074 644.295 644.295 - 100.00%Maintenance & OtherOperating Expenses 220.342 164.220 134.490 29.730 81.90%Total Operating Expenses 766.416 808.515 778.785 29.730 96.32%Capital Outlays 66.622 51.304 43.254 8.050 84.31%Grand Total 833.038 859.819 822.039 37.780 95.61%24 Local Water Utilities Administration
<strong>Annual</strong> <strong>Report</strong> <strong>2009</strong>AUDIT CERTIFICATERepublic of the PhilippinesCOMMISSION ON AUDITCommonwealth Avenue, Quezon City, PhilippinesINDEPENDENT AUDITOR’S REPORTThe Board of TrusteesLocal Water Utilities AdministrationKatipunan Road, BalaraQuezon CityWe have audited the accompanying financial statements of the Local Water Utilities Administration (<strong>LWUA</strong>) which comprise the balance sheet as ofDecember 31, <strong>2009</strong>, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significantaccounting policies and explanatory notes.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with generally accepted accounting principlesin the Philippines. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; andmaking accounting estimates that are reasonable in the circumstances.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Except as stated in the following paragraphs, we conducted ouraudit in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance whether the financial statements are free from material misstatements.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selecteddepend on the auditor’s judgment, including the assessment of the risks of material misstatements 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 inorder 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’sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, 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 OpinionMiscellaneous Receivables arising from claims from Government of the Philippines amounting to P1.254 billion has no legal basis or document tosupport the claim contrary to the Accounting Principle on Objectivity. There was only a commitment on the part of the Office of the President thru thePresidential Social Fund to release the Subsidy to <strong>LWUA</strong> which represents 40% of the P3.166 billion net realizable value of Receivables as of December31, <strong>2009</strong>.Qualified OpinionIn our opinion, except for the effects on the financial statements of the matters referred to in the preceding paragraph, the financial statements present fairly,in all material respects, the financial position of Local Water Utilities Administration as of December 31, <strong>2009</strong> and of its financial performance and its cashflows for the year then ended in accordance with generally accepted state accounting principles.Emphasis of MatterWithout further qualifying our opinion, we draw attention to Note 30 of the financial statements which stated that <strong>LWUA</strong> did not declare dividends for CYs<strong>2009</strong> and 2008 in view of its pending request with the Department of Finance (DOF) for exception from dividend remittances because of its dire need forhuge capital to finance its projects. It is also worthy to note that upon the request, the Office of the President approved a reduced rate of 14% but not lowerthan P50 Million for CY 2005 only, and rate of 24% for CY 2006 only, which were paid in 2008 as stated in the Statement of Cash Flows.Pending the approval of the said request, <strong>LWUA</strong> is still liable to pay the dividends computed at 24% for both years which amounted to P91.216 million andP162.914 million for CYs <strong>2009</strong> and 2008, respectively.COMMISSION ON AUDITMay 28, 2010PRISCILLA DG. CRUZSupervising Auditor25
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