EXECUTIVE SUMMARY A. INTRODUCTION The Aklan State College of Agriculture, formerly known as Aklan Agriculture College, is located in the Municipality of Banga, Province of Aklan, and was converted into the Aklan State University under Republic Act No. 9055 and approved by then President Gloria Macapagal - Arroyo on April 4, 2001. The University is primarily responsible in providing advanced instruction and professional training in agriculture, science and technology, education and other related fields, research and extension services, and progressive leadership in these areas. The University is mandated to offer undergraduate, graduate and short-term technical courses within its areas of specialization, especially agriculture, and according to its capabilities, in order to meet the needs of the province and region. The University is also mandated to strengthen the post-graduate courses, particularly the Masteral and Doctorate programs in agricultural courses. The Aklan State University’s policy-making body is the Board of Regents, composed of the Commission on Higher Education (CHED) Commissioner as Chairman; the ASU President as Vice Chairman; eight Members from different Government Offices/Sectors and two Members representing the Private Sector, as follows: Chair /Designate Presiding Officer - Commissioner, Commission on Higher Education Vice Chair - President, Aklan State University Member - Chair of the Senate Committee on Education, Arts and Culture Member - Chair of the House Committee on Higher & Technical Education Member - Regional Director, National Economic and Development Authority, Region VI – Western Visayas Member - Regional Director, Department of Agriculture, Region VI – Western Visayas Member - Regional Director, Department of Science and Technology Region VI – Western Visayas Member - President, Federation of Faculty Associations, Aklan State University Member - President, Federation of Alumni Associations, Aklan State University Member - President, Federation of Supreme Student Councils, Aklan State University Member - 2 Representatives , Private Sector Dr. Danilo E. Abayon, Ph.D., was appointed as President of the Aklan State University, effective March 16, 2011. The consolidated manpower as of December 31, 2013, was 708 consisting of 410 permanent, 3 temporary, 5 casuals, 106 contract of service, and 184 job orders, broken down below: Campus No. of Personnel Banga 3 19 New Washington 95 Makato 23 Kalibo 166 Ibajay 105 Total 708 B. FINANCIAL HIGHLIGHTS The assets and government equity of the university as of December 31, 2013 are P319,509,886.50 and P268,917,410.71 respectively, compared to last year’s P283,393,051.64 and P260,737,523.30 reflecting a corresponding increase of P36,116,834.86 or 12.74% and P8,179,887.41 or 3.14%. Liabilities increased from P22,655,528.34 to P50,592,475.79 or by 123.31% . Total expenses incurred amounted to P313,436,924.38, while total income and collections from tuition and other fees amounted to P322,662,526.67, resulting in excess of income over expenses of P9,225,602.29. The university reported a net income of P345,091.24 generated from this year’s Income Generating Projects (IGPs). C. OPERATIONAL HIGHLIGHTS For CY 2013, One, of the five Veterinarian Licensure Board Passers from ASU- Main Campus, Banga, Aklan, placed Fourth in the said Examination; while 20 examinees from ASU-CFMS, New Washington, Aklan passed the Criminology Licensure Examination. New Washington campus also received a 2nd place Certificate of Recognition from the Management Board of the Department of Environment and Natural Resources relative to their National Search for Sustainable and Eco-Friendly School (Tertiary Category). In addition, four examinees from ASU-CIT, Kalibo, Aklan Campus’ passed the Architect Licensure Examination and 11 successfully passed the Civil Engineering Licensure Examination. A tabulated presentation of the results of the performance of the University in PRC Licensure Examinations in CY 2013 is shown below: Date of No. Of No. of % of Licensure Examination Campus Remarks Examination Takers Passers passing 1 Certified Public Accountant Banga, Aklan May 2013 10 2 20.00% Oct. 2013 22 3 13.64% June & Dec. 2 Nurse Licensure Examination Banga, Aklan 2013 104 54 51.92% 3 Forester Licensure Examination Banga, Aklan July 2013 7 2 28.57% 4 Licensure Examination for Agriculture Banga, Aklan July 2013 46 12 26.09% Ibajay, Aklan July 2013 10 2 20.00% Christine Lynn I. 5 Veterinarian Licensure Examination Banga, Aklan Sept. 2013 29 5 17.24% Marcelino 4th Place 6 Licensure Examination for Teachers Secondary Level Banga, Aklan Sept. 2013 208 79 37.98% Kalibo, Aklan Sept. 2013 117 20 17.09% Ibajay, Aklan Sept. 2013 79 51 64.56% Makato, Aklan Sept. 2013 78 32 41.03% New Washington, Aklan Sept. 2013 44 8 18.18% Elementary Level Banga, Aklan Sept. 2013 26 20 76.92% Ibajay, Aklan Sept. 2013 59 28 47.46% New Washington, Aklan Sept. 2013 27 6 22.22% 7 Criminology Licensure Examination New Washington, Aklan Oct-13 24 20 83.33% 8 Customs Broker Examination New Washington, Aklan Oct-13 5 3 60.00% Jan. & Oct. 9 Architect Licensure Examination Kalibo, Aklan 2013 6 4 66.67% 10 Civil Engineering Licensure Examination Kalibo, Aklan Nov. 2013 20 11 55.00% D. SCOPE OF AUDIT A comprehensive audit was conducted on the accounts and operations of the Aklan State University, Banga, Aklan and its three campuses for Calendar Year 2013. The audit was aimed to ascertain whether the financial transactions were carried out in accordance with existing laws, rules and regulations. The objective of the audit was to ascertain the fairness and reliability of the agency’s report on its financial position and results of operation. It also included test of compliance of transactions with existing laws, rules and regulations to ensure their regularity and propriety. E. AUDITOR’S REPORT ON THE FINANCIAL STATEMENT The auditor rendered a qualified opinion on the fairness of presentation of the financial statements of the University as of December 31, 2013, due to the non-reconciliation of the Property, Plant and Equipment Account of the four campuses of the University and overstatement of its depreciation expense. F. SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS The following are the significant findings and the corresponding recommendations: 1. Depreciation of various Property, Plant and Equipment accounts of Funds 101, 161 and 164 were overstated by P9,451,177.73 contrary to Sec. 67-68 of NGAS and COA Circular No. 2003-007, hence, understating the income account by the same amount and affecting the correctness, reliability and propriety of the financial statements. We recommend that the Accounting Unit should adjust the estimated useful life of the various PPEs and the corresponding accumulated depreciation to conform to COA Circular No.: 2003 – 007, dated December 11, 2003. Management of ASU Main Campus agreed to comply with the audit recommendation to adjust the accumulated depreciation of various PPEs. On the other hand, ASU-CIT, Kalibo Campus and ASU-CHARRM, Ibajay Campus will make the necessary adjustments on the useful life of the agency’s PPEs and adjusting entries on the corresponding depreciation. 2. Unserviceable properties totaling P17,173,827.07 were not reclassified, disposed or dropped from the books contrary to the provision of Section 502 of the GAAM, Volume I, which resulted to overstatement of PPE, thereby, affecting the reliability of the said account and the fair presentation of the financial statements. We recommend the following: a. That reclassification, disposal and dropping from the books of unserviceable properties of ASU-Main Campus should be effected based on existing rules and regulations. b. The Agency Head of ASU-CHARRM, Ibajay, Aklan should: - Create an Inventory and Inspection Committee to conduct and evaluate the present condition of the various reported unserviceable Property, Plant and Equipment (PPE); - Prepare an Inventory and Inspection Report for Unserviceable Property (IIRUP), and, - Effect the reclassification, disposal and dropping from the books of unserviceable properties based on existing rules and regulations. Management of ASU-Main Campus commented that their Inventory and Inspection Report on unserviceable PPEs as of December 31, 2013 was completed after the preparation of the financial reports and is due for submission to COA Office. The reclassification and dropping from the books of the said unserviceable properties will be effected after going through established rules and regulations. Moreover, the Campus Director of ASU-CHARRM, Ibajay Campus instructed its Inventory Committee to schedule the physical inventory of agency’s PPEs; evaluate its condition; and submit the required Inventory and Inspection Report. 3. Physical Count of Properties of the two Campuses was not conducted as of December 31, 2013, thus, the validity of reported PPE amounting to P71,229,922.23 cannot be ascertained, thereby, affecting its fair presentation in the Financial Statements contrary to Section 66, Volume II of the NGAS National. We recommend the following: a. The Agency should create a Committee to conduct actual inventory of Property, Plant and Equipment annually, prepare and submit the corresponding Inventory Report, or issue directive to existing Committee, if any, to do the same. b. A Periodic reconciliation of records between the Supply Officer and the Accountant must be observed. The Campus Director of ASU-CIT, Kalibo, Aklan will issue directives to the Inventory Committee to conduct actual physical inventory of PPEs before the year ends and submit a complete inventory report not later than January 31 of the next year. Meanwhile, during the exit conference, ASU-CFMS, New Washington, Aklan Campus commented that they will schedule the physical count of its PPEs this summer in order to reconcile the records between the Property Officer and the Accountant. 4. Accounts Receivable of P778,789.11 from various IGP Projects as of December 31, 2013 were not booked-up, thus, understating the Accounts Receivable and Income accounts for the same amount, as well as affecting the propriety and reliability of the financial statements and contrary to Par.