MUNICIPALITY OF ROSARIO Northern Samar · 2017. 8. 8. · EXECUTIVE SUMMARY Introduction The...
Transcript of MUNICIPALITY OF ROSARIO Northern Samar · 2017. 8. 8. · EXECUTIVE SUMMARY Introduction The...
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Republic of the Philippines COMMISSION ON AUDIT Regional Office No. VIII
Candahug, Palo, Leyte
ANNUAL AUDIT REPORT
on the
MUNICIPALITY OF ROSARIO Northern Samar
For the Year Ended December 31, 2016
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EXECUTIVE SUMMARY
Introduction
The Municipality of Rosario, Northern Samar, was created by virtue of R.A. No.
5869 which was enacted on June 21, 1969. It is a fifth (5th) class municipality composed
of eleven (11) barangays. Farming, fishing, trade and industry are the main sources of
livelihood.
The municipality is headed by Municipal Mayor Gerardo P. Miranda. He is
assisted by Vice Mayor Ronald M. Turla; Ms. Marilee A. Cinco, Municipal Treasurer;
Mr. Bobby Joel A. Acildo, as the Municipal Accountant; and Ms. Nelia D. Miranda,
Municipal Budget Officer.
A financial and compliance audit was conducted on the accounts and operations
of the Municipality of Rosario, Northern Samar, for the calendar year 2016. The audit
was aimed to ascertain the propriety and validity of disbursements and receipts as well as
the reliability of the accounts as presented in the financial statements. The audit
consisted of review of operating procedures, interview with concerned municipal officials
and employees, verification and analysis of accounts, and such other procedures
considered necessary under the circumstances. The 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.
Financial Highlights
The financial position and financial performance of the municipality for the
current and previous year are presented below:
Account 2016 2015 Increase/Decrease
Amount %
Assets 83,958,689.71 44,087,082.89 39,871,606.82 90.44%
Liabilities 47,296,680.99 14,509,049.46 32,787,631.53 225.98%
Equity 36,662,008.72 29,578,033.43 7,083,975.28 23.95%
Income 43,275,668.21 39,478,293.03 3,797,375.18 9.62%
Expenses 42,742,538.50 35,091,904.52 7,650,633.98 21.80%
The total appropriations for calendar year 2016 amounted to ₱43,494,899.00
representing an increase of ₱3,496,113.00 or 8.74% over last year’s appropriations. The
table below shows its breakdown with comparative figures for 2015, as follows:
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Allotment Class 2016 2015 Increase/Decrease
Amount %
Personal Services 22,030,951.72 20,168,001.56 1,862,950.16 9.24%
Maintenance and
Operating Expenses 21,463,947.28 19,117,284.44 2,346,662.84 12.28%
Capital Outlay - 713,500.00 (713,500.00) (100%)
Total 43,494,899.00 39,998,786.00 3,496,113.00 8.74%
While, the total obligations from current appropriations amounted to
₱37,106,523.66. There was an increase of ₱66,795.90 or 0.18% compared to that of last
year as shown below:
Allotment Class 2016 2015 Increase/Decrease
Amount %
Personal Services 22,024,059.52 20,135,689.57 1,888,369.95 9.38%
Maintenance and
Operating Expenses 15,082,464.14 16,190,538.19 (1,108,074.05) (6.84%)
Capital Outlay - 713,500.00 (713,500.00) (100%)
Total 37,106,523.66 37,039,727.76 66,795.90 (0.18%)
Independent Auditor’s Report
The Auditor rendered a qualified opinion on the fairness of presentation of the
financial statements because the management’s failure to submit the payrolls and other
liquidation reports totaling ₱9,574,481.44 under the General Fund as well as the revenue
accounts and 30 check disbursement vouchers in the Trust Fund created doubt on the
propriety and legality of the transaction which might affect the balances of the accounts
in the financial statements. In addition, the wages amounting to ₱504,150.00 was
improperly charged against the LDRRMF, thus understating the balance of the fund.
Summary of Significant Observations and Recommendations other than the bases
for qualified opinion
1. Out of the total appropriation of ₱8,458,979.80 for 20% Development Fund, only ₱4,658,761.21 or 55.07% was utilized during the year and portion of it amounting
to ₱1,310,667.16 was improperly utilized, thus continuously defeating the
purpose for which the fund was established and failed to attain the socio-
economic development and environmental management outcomes. Moreover,
disbursements lacked the required supporting documents.
In view of the foregoing, we recommend that management :
Give priority to the development projects and programs that partake the nature of investment or capital expenditures.
Utilize the fund in conformity with the guidelines set forth by the DILG-DBM Joint Memorandum Circular No. 2011-1;
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Copies of approved contracts and purchase orders of infrastructure projects and procured goods and services should be submitted within five
(5) days from their execution/issuance;
Paid vouchers should be supported with the necessary documentary requirements to ensure the legality and propriety of the transactions.
2. The accounting and reporting guidelines on the planning and utilization of CY 2016 LDRRMF were not complied with, while payments totaling ₱518,889.05
lacked the required supporting documents, thus, casted doubts on the regularity of
such expenditures. Moreover, ineligible expenses were charged to the LDRRMF
and the utilization report contained inaccurate data.
We recommend that management adhere with the pertinent provisions of
COA Circulars No. 2012-002 and 2014-002 on the accounting and reporting
of LDRRMF and COA Circular No. 2012-001 on the proper documentation
of transactions. Likewise, the Accountant should rectify the deficiencies
noted on the variance per LDRRMF utilization report and per audit and to
submit the disbursement vouchers/liquidation reports and the lacking
supporting documents.
3. Publication of procurements in the PhilGEPS website was not undertaken by the LGU while, procurements thru reimbursements, shopping and negotiated
procurement amounting to ₱497,785.98, ₱1,444,862.39 and ₱2,325,708.75,
respectively, were made notwithstanding the failure to comply with the conditions
for resorting to alternative modes of procurement.
We recommend that management publish all their procurements in the
PhilGEPS website. Generally, public bidding should be used for all
procurement and all alternative modes of procurement be resorted to only if
the conditions which allows the use of such alternative method were met
pursuant to the Implementing Rules and Regulations of Republic Act 9184.
Moreover, stop the practice of procurement thru reimbursements.
4. Copies of contracts/purchase orders were not submitted within five (5) working days while, delivery documents were not furnished within 24-hours from
acceptance. Moreover, payment for the purchase of lot for road right-of-way and
evacuation center was not supported with proper documentations, casting doubt
on the propriety and legality of the procurement.
We recommend that management strictly observe the submission of
contracts/purchase orders within five (5) working days from
execution/issuance and furnish delivery documents within twenty-four (24)
hours from acceptance of deliveries of goods and services, in line with COA
Circulars No. 2009-001 and 002. Likewise, payment of various purchases
should be supported with complete documentation as mandated in COA
Circular 2012-001 dated June 14, 2012 for propriety and legality.
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5. Systematic and comprehensive solid waste management program was not yet implemented in spite of the existence of an approved Ten-Year Municipal Solid
Waste Management Plan (MSWMP), depriving the constituents and the
environment of ample protection against health and environmental hazards
brought about by improper solid waste management.
We recommend that the Municipal Solid Waste Management Board actively
participate in the gradual implementation of the approved 10-year Municipal
Solid Waste Management Plan to protect the constituents and the
environment against health and environmental hazards brought about by
improper solid waste disposal.
6. Payment of wages to job order personnel in the total amount of ₱4,661,660.00 lacked the necessary supporting documents, thus casted doubt on the propriety
and legality of the transaction. In addition, a total amount of ₱504,150.00 was
improperly charged against the 5% LDRRMF and 20% Development Fund, thus
defeating the purpose for which the funds were established.
We recommend that management submit the basic documentary
requirements to support the payment of wages to job order personnel. The
Accountant should see to it that all claims should be supported with complete
supporting documents before payments are made. We further recommend
that management stop the charging of wages for garbage collectors, office
staffs/aides and street sweepers to 5% LDRRMF and 20% Development
Fund.
7. The submission of accounts was generally delayed, while, revenue accounts for Trust Fund, 161 cancelled checks and 30 check disbursement vouchers totaling
₱9,639,589.63 were not submitted for audit, thus, the legality of the transactions
was not determined. Moreover, the year-end financial statements were likewise
submitted beyond the legal deadline.
We recommend that the Municipal Mayor require the Municipal Accountant
and Treasurer to observe strictly Section 347 of RA 7160 and COA Circular
No. 2009-006 on the submission of financial accounts and reports including
the liquidation/payrolls for salaries and wages and traveling expenses.
Moreover, require the Municipal Accountant to submit the financial
statements on or before February 14 of each year.
8. Overtime services in the total amount of ₱64,235.61 were granted to employees and job order personnel in excess of appropriation and without the required
supporting documents, thereby making it irregular.
We recommend that management limit the grant of overtime services only
when extremely necessary, within its appropriations, and supported with
proper documents in accordance with CSC-DBM Joint Circular No. 1 s 2015
on the policies and guidelines on overtime services of government personnel,
Section 4(1) of PD 1445 and Section 5.10 of COA Circular No. 2012-001 for
its basic documentary requirements.
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This recommendation is without prejudice to the issuance of Notices of
Suspension and/or Notices of Disallowance as the case may be.
Statement of Audit Suspensions, Disallowances and Charges as of December 31,
2016
The total audit suspensions, disallowances and charges found in the audit of
various transactions of the Municipality of Rosario, Northern Samar is ₱221,538.52
based on the Notice of Suspensions/Notice of Disallowances/Notice of Charge issued by
this Commission.
Status of Implementation of Prior Years’ Unimplemented Audit Recommendations
Of the thirty-four (34) audit recommendations embodied in the CY 2015 Annual
Audit Report, one (1) was implemented, seven (7) were partially implemented, while
twenty-six (26) were still not acted upon by management.
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TABLE OF CONTENTS
Page
Part I Independent Auditor’s Report and Audited Financial Statements
Independent Auditor’s Report 1
Statement of Management’s Responsibility for Financial Statements 3
Combined Statement of Financial Position 4
Combined Statement of Financial Performance 5
Combined Statement of Changes in Net Assets/Equity 6
Combined Statement of Cash Flows 7
Statement of Comparison of Budget and Actual Amounts 9
Notes to Financial Statements
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Part II Audit Observations and Recommendations
Financial and Compliance Audit 21
Part III Status of Implementation of Prior Years’ Unimplemented
Audit Recommendations
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Part IV Appendices
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Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. VIII
Candahug, Palo, Leyte
INDEPENDENT AUDITOR’S REPORT
Hon. GERARDO P. MIRANDA
Municipal Mayor
Rosario, Northern Samar
We have audited the consolidated financial statements of the Municipality of Rosario, Province of Northern Samar, which comprise the Statement of Financial
Position as of December 31, 2016, and the Statement of Financial Performance,
Statement of Changes in Net Assets/Equity, Statement of Comparative Budget and
Actual and Statement of 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 the Philippine Public Sector Accounting
Standards and for such internal 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 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 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.
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MUNICIPALITY OF ROSARIO
Province of Northern Samar
COMBINED STATEMENT OF FINANCIAL POSITION
As of December 31, 2016
(With Comparative Figures for CY 2015)
Note 2016 2015
ASSETS
Current Assets
Cash and Cash Equivalents 4 31,686,360.29 9,664,493.69
Investments -
Receivables 5 7,636,471.24 3,156,176.23
Inventories 6 170,971.80 170,971.80
Prepayments and Deferred Charges - -
Total Current Assets 39,493,803.33 12,991,641.72
Non-Current Assets
Investments - -
Receivables - -
Investment Property - -
Property, Plant and Equipment 7 44,464,886.38 31,095,441.17
Biological Assets - -
Intangible Assets - -
Total Non-Current Assets 44,464,886.38 31,095,441.17
TOTAL ASSETS
83,958,689.71 44,087,082.89
LIABILITIES
Current Liabilities
Financial Liabilities
630,683.22 1,134,991.53
Inter-Agency Payables
33,176,220.28 10,152,509.16
Intra-Agency Payables
794,254.15 64,254.15
Deferred Credits/Unearned Income
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Trust Liabilities 9,497,553.25 1,308,501.21
Total Current Liabilities 8 44,098,710.89 12,660,256.05
Non-Current Liabilities
Financial Liabilities
- -
Deferred Credits/Unearned Income
3,197,970.10 1,848,793.41
Provisions
- -
Other Payables
- -
Total Non-Current Liabilities
3,197,970.10 1,848,793.41
Total Liabilities 47,296,680.99 14,509,049.46
NET ASSETS/EQUITY
Government Equity 9 36,662,008.72 29,578,033.43
TOTAL LIABILITIES AND NET ASSETS/EQUITY 83,958,689.71 44,087,082.89
(See Accompanying Notes to Financial Statements)
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MUNICIPALITY OF ROSARIO
Province of Northern Samar
COMBINED STATEMENT OF FINANCIAL PERFORMANCE
For the Year Ended December 31, 2016
(With Comparative Figures for CY 2015)
Revenues Note 2016 2015
Tax Revenue
543,577.82 571,627.03
Share from National Taxes
42,371,100.00 38,498,786.00
Service and Business Income
360,990.39 327,677.06
Shares, Grants and Donations - -
Gains - -
Total Revenue 10 43,275,668.21 39,478,293.03
Less: Current Operating Expenses
Personal Services 25,030,948.18 21,921,368.65
Maintenance and Other Operating Expenses 17,048,015.84 12,506,961.39
Non-cash Expenses 663,574.48 663,574.48
Financial Expenses - -
Total Current Operating Expenses 11 42,742,538.50 35,091,904.52
Surplus (Deficit) from Current Operation 533,129.71 4,386,388.51
Add (Deduct)
Transfers, Assistance and Subsidy From 7,539,416.90 1,552,127.14
Transfers, Assistance and Subsidy To (730,000.00) (338,500.00)
Other Non-Operating Income/(Losses) 81,175.13 -
Surplus (Deficit) for the Period 7,423,721.74 5,600,015.65
(See Accompanying Notes to Financial Statements)
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MUNICIPALITY OF ROSARIO
Province of Northern Samar
COMBINED STATEMENT OF CHANGES IN NET ASSETS/EQUITY As of December 31, 2016
(With Comparative Figures for CY 2015)
2016 2015
Balance, Jan. 1 29,578,033.43 24,777,953.04
Add/(Deduct)
Changes in Accounting Policy - -
Prior Period Errors (339,746.45) (799,935.26)
Restated Balance 29,238,286.98 23,978,017.78
Add/(Deduct)
Changes in Net Assets/Equity during the year - -
Adjustment of net revenue recognized
directly in Net Assets/Equity - -
Surplus/(Deficit) for the period 7,423,721.74 5,600,015.65
Total Recognized Revenue and Expenses for the period 7,423,721.74 5,600,015.65
NET ASSETS/EQUITY, Dec. 31 36,662,008.72 29,578,033.43
(See Accompanying Notes to Financial Statements)
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MUNICIPALITY OF ROSARIO
Province of Northern Samar
COMBINED STATEMENT OF CASH FLOWS
For the Period December 31, 2016
(With Comparative Figures for CY 2015)
2016 2015
Cash Flow From Operating Activities
Cash Inflows
Collection from Taxpayers 832,529.07 575,733.39
Share from Internal Revenue Allotment 42,371,100.00 38,498,786.00
Receipts from business/service income 362,952.09 397,697.86
Interest Income 15,204.71 6,075.78
Other Receipts 40,077,767.75 12,860,755.00
Total Cash Inflows 83,659,553.62 52,339,048.03
Cash Outflows
Payment of expenses 5,502,044.26 -
Payments to suppliers/creditors 27,960,523.18 21,284,692.81
Payments to employees 26,556,097.23 21,245,667.55
Interest Expense 37,142.50
Other Expenses 11,481,879.86 3,390,224.29
Total Cash Outflows 71,537,687.03 45,920,584.65
Net Cash Flows from Operating Activities 12,121,866.59 6,418,463.38
Cash Flow From Investing Activities
Cash Inflows
Proceeds from Sale of Investment Property - -
Proceeds from Sale of PPE 9,900,000.00 -
Proceeds from Sale of Investments - -
Collection of Principal on Loans to other entities - -
Collection of Long-term Loan - -
Total Cash Inflows 9,900,000.00 -
Cash Outflows
Purchase/Construction of Investment Property - -
Purchase/Construction of PPEs - -
Purchase of Bearer Biological Assets - -
Purchase of Intangible Assets - -
Grant of Loans - -
Total Cash Outflows - -
Net Cash Flows from Investing Activities 9,900,000.00 -
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2016 2015
Cash Flows From Financing Activities
Cash Inflows
Proceeds from Issuance of Bills and Bonds - -
Proceeds from Domestic and Foreign Loans - -
Total Cash Inflows - -
Cash Outflows
Payment of Long-term Liabilities - -
Retirement/Redemption of debt securities - -
Payment of loan amortization - -
Total Cash Outflows - -
Net Cash Flows from Financing Activities - -
Net Cash Provided by Operating, Investing and
Financing Activities 22,021,866.60 6,418,463.38
Add: Cash at the Beginning of the year 9,664,493.69 3,246,030.31
Cash Balance Ending December 31, 2016 31,686,360.29 9,664,493.69
(See Accompanying Notes to Financial Statements)
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Municipality of Rosario
Northern Samar
Statement of Comparison of Budget and Actual Amounts
For the Year Ended December 31, 2016
Particulars
Budgeted Amounts
Original Final
Difference
Original and
Final Budget
Actual
Amounts
Difference
Final Budget
and Actual
General Fund
REVENUE
A. Local Sources
1. Tax Revenue
a. Tax Revenue - Property 738,000.00 369,000.00 369,000.00 151,879.99 217,120.01
b. Tax Revenue - Goods and Services - - - 176,779.99 (176,779.99)
c. Other Local Taxes 72,000.00 72,000.00 - 85,619.50 (13,619.50)
Total Tax Revenue 810,000.00 441,000.00 369,000.00 414,279.48 26,720.52
2. Non-Tax Revenue
a. Service Income 270,000.00 270,000.00 - 301,309.50 (31,309.50)
b. Business Income 105,000.00 105,000.00 - 59,650.89 45,349.11
c. Other Income and Receipts 15,000.00 15,000.00 - 11,910.02 3,089.98
Total Non-Tax Revenue 390,000.00 390,000.00 - 372,870.41 17,129.59
B. External Sources
1. Share from the National Internal Revenue Taxes (IRA) 42,294,899.00 42,294,899.00 - 42,371,100.00 (76,201.00)
2. Share from GOCCs - - - - -
3. Other Shares from National Tax Collections
a. Share from Ecozone - - - - -
b. Share from EVAT - - - - -
c. Share from National Wealth - - - - -
d. Share from Tobacco Excise Tax - - - - -
4. Other Receipts
a. Grants and Donations - - - - -
b. Other Subsidy Income - - - - -
5. Inter-local Transfer - - - - -
6. Capital /Investment Receipts - - - - -
a. Sale of Capital Assets - - - - -
b. Sale of Investments - - - - -
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Particulars
Budgeted Amounts
Original Final
Difference
Original and
Final Budget
Actual
Amounts
Difference
Final Budget
and Actual
c. Proceeds from Collections of Loan Receivable - - - - -
C. Receipts from Borrowings - - - - -
Total Revenue and Receipts 43,494,899.00 43,125,899.00
369,000.00 43,158,249.89 (32,350.89)
EXPENDITURES
Current Appropriations
General Public Services
Personnel Services 16,799,211.12 16,799,211.12 - 16,792,968.30 6,242.82
Maintenance and Other Operating Expenses 4,836,900.00 4,836,900.00 - 4,422,532.95 414,367.05
Capital Outlay - - - - -
Education
Personnel Services - - - - -
Maintenance and Other Operating Expenses - - - - -
Capital Outlay - - - - -
Health, Nutrition and Population Control
Personnel Services - - - - -
Maintenance and Other Operating Expenses - - - - -
Capital Outlay - - - - -
Labor and Employment
Personnel Services - - - - -
Maintenance and Other Operating Expenses - - - - -
Capital Outlay - - - - -
Housing and Community Development
Personnel Services - - - - -
Maintenance and Other Operating Expenses - - - - -
Capital Outlay - - - - -
Social Services and Social Welfare
Personnel Services 3,608,853.52 3,608,853.52 - 3,608,466.64 386.88
Maintenance and Other Operating Expenses 1,055,200.00 1,055,200.00 - 937,123.77 118,076.23
Capital Outlay - - - - -
Economic Services
Personnel Services 1,622,887.08 1,622,887.08 - 1,622,624.58 262.50
Maintenance and Other Operating Expenses 411,000.00 411,000.00 - 372,007.64 38,992.36
Capital Outlay - - - - -
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Particulars
Budgeted Amounts
Original Final
Difference
Original and
Final Budget
Actual
Amounts
Difference
Final Budget
and Actual
Other Purposes:
Debt Service
Financial Expense - - - - -
Amortization - - - - -
5% LDRRMF
Maintenance and Other Operating Expenses 2,174,744.95 2,174,744.95 - 1,032,390.70 1,142,354.25
Capital Outlay - - - -
20% Development Fund
Maintenance and Other Operating Expenses 8,458,979.80 8,458,979.80 - 4,658,761.21 3,800,218.59
Capital Outlay - - - - -
Gender and Development
Maintenance and Other Operating Expenses 455,000.00 455,000.00 341,140.00 113,860.00
Capital Outlay - - - - -
Share from National Wealth
Maintenance and Other Operating Expenses - - - - -
Capital Outlay - - - - -
Allocation for Senior Citizens and PWD
Maintenance and Other Operating Expenses 422,948.99 422,948.99 - 74,550.00 348,398.99
Capital Outlay - - - - -
Others (Statutory and Contractual)
Personnel Services - - - - -
Maintenance and Other Operating Expenses 3,649,173.54 3,649,173.54 - 3,243,957.87 405,215.67
Capital Outlay - - - - -
Total Current Appropriations 43,494,899.00 43,494,899.00 - 37,106,523.66 6,388,375.34
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Province of Northern Samar
MUNICIPALITY OF ROSARIO
Notes to Financial Statements
Note 1 - Agency Profile
The Local Government Unit of Rosario, Northern Samar is a Fifth (5th) class
municipality and is composed of eleven (11) barangays. It was created on June 21, 1969
under Republic Act No. 5869. It serves primarily as a general purpose government which
delivers basic services, social, health services and effective governance of the inhabitants.
The major fields of livelihood are farming, fishing and trade and industry in the locality.
Note 2 – Basis of Financial Presentations
The Financial Statements have been prepared in accordance with Philippine
Public Sector Accounting Standards, as well as the regulations issued by the Commission
on Audit in pursuance with its constitutional mandate “to promulgate accounting and
auditing rules and regulations”. It consists of the consolidated statements of transactions
of three (3) funds – General Fund, Special Education Fund and Trust Fund.
Note 3 – Summary of Significant Accounting Policies
3.1 The Local Government Unit uses a modified accrual basis of accounting. All expenses are recognized when incurred and reported in the financial
statements in the period to which it relates. Income is on accrual basis
except in transactions where accrual basis is impractical or when other
methods are required by law.
3.2 The Real Property Taxes due to the LGU shall be recorded in the books of accounts as “Real Property Tax Receivable and Special Education Tax
Receivable” at the beginning of the year.
3.3 Inventories in the books are carried at cost. It is the practice of the LGU not to maintain inventory for office supplies and materials due to limited
fund allocation and the lack of personnel to control inventory items. The
inventory account shown in the Trial Balance represents the amount
forwarded from prior years.
3.4 Property, Plant and Equipment are carried at historical cost. Infrastructures under Construction in Progress are valued following the Construction
Period Theory. The cost of Public Infrastructure such as roads, bridges,
and other infrastructures for general public use are not carried in the books
of our agency, it is transferred to Registry of Public Infrastructure upon
completion of the project.
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3.5 Depreciation charges were provided the Straight-line Method.
3.6 Liability shall be recognized at the time goods and services are accepted or rendered and supplier/creditor bills are received.
3.7 Fundamental errors of prior years are corrected using the Prior Year’s Adjustment account, while errors are affecting the current years’
operations are charged to the current year’s account.
Note 4 - Cash and Cash Equivalents
Account Title 2016 2015
Cash–Local Treasury (24.05) (24.05)
Petty Cash 20,000.00 0.00
Cash in Bank–LCCA 31,666,384.34 9,664,517.74
Total 31,686,360.29 9,664,493.69
4.1 Fundamental errors of the prior years are corrected using Prior Year’s
Adjustment account while errors affecting the current year’s operation are
reflected the current accounts.
4.2 General Fund Cash and Cash Equivalents account is composed of:
General Fund (Acct. No. 0011921012-19 6,585,742.98
20% Development Fund 00119-1424-11 499,640.00
5% LDRRMF 1192-1296-52 60,749.06
Petty Cash Fund 15,000.00
Cash-local Treasury (24.05)
Total 7,161,107.99
Note 5 – Receivable
Account Title 2016 2015
RPT Receivables 1,813,721.27 1,043,728.89
SET Receivables 1,016,886.54 324,950.87
Due from LGUs 40,549.15 100,000.00
Due from Other Funds 19,731.96 40,549.15
Advances for Payroll 2,802,645.80 0.00
Advances to Special DO 0.00 120,000.00
Advances to Officers & Employees 1,495,072.81 1,158,935.72
Due from Officers & Employees 431,863.11 332,279.04
Other Receivables 16,000.60 16,000.60
Total 7,636,471.24 3,156,176.23
5.1 Real Property Tax Receivable and Special Education Tax Receivable are the amount which has been set up at the beginning of the year.
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5.2 Due from NGAs of Trust Fund account was carried forward from January 2004 financial statements.
5.3 Due from LGUs was carried forward from December 2010 financial statements.
5.4 Advances to Officers and Employees account consists of cash advances granted for traveling expenses.
Note 6 - Inventories
Account Title 2016 2015
Medical, Dental & Laboratory Supplies 102,971.80 102,971.80
Textbooks & Instructional Materials 68,000.00 68,000.00
Total 170,971.80 170,971.80
Note 7 - Property, Plant and Equipment
Account Title (General Fund) 2016 2015
Land 3,951,116.50 2,541,082.00
Land Improvements 368,320.70 368,320.70
Infrastructure Projects
Road Networks 898,121.04 599,023.03
Flood Control Systems 265,441.67 265,441.67
Water Supply Systems 1,120,178.14 1,120,178.14
Power Supply Systems 224,479.95 126,669.95
Seaport Systems 407,750.00 407,750.00
Parks, Plazas, Monuments 152,732.15 152,732.15
Other Infrastructure Assets 133,775.00 133,775.00
Buildings and Other Structures
Buildings 9,815,443.47 9,815,443.47
Hospitals & Health Centers 568,926.88 568,926.88
Other Structures 2,942,500.69 2,942,500.69
Machinery and Equipment
Machinery 124,000.00 124,000.00
Office Equipment 1,329,563.77 1,234,747.18
IT Equipment & Software 2,879,770.01 2,645,965.60
Agricultural & Forestry Equipment 67,000.00 67,000.00
Medical, Dental & Lab. Equipment 103,346.00 95,846.00
Technical & Scientific Equipment 16,850.00 16,850.00
Other Machinery & Equipment 124,196.00 28,196.00
Transportation Equipment
Motor Vehicles 2,724,100.31 2,724,100.31
Watercrafts 130,000.00 130,000.00
Other Transportation Equip. 90,920.00 90,920.00
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Furniture, Fixtures & Books
Furniture & Fixtures 1,694,330.37 1,690,430.37
Books 172,672.00 172,672.00
Construction in Progress
CIP-Infrastructure Assets 5,284,535.01 5,284,535.01
Other Property, Plant & Equipment 19,480.00 19,480.00
Total Book Value 35,609,549.66 33,978,981.83
Less: Depreciation 6,372,653.70 5,709,079.22
Net Book Value 29,236,895.96 27,657,506.93
Account Title (SEF)
Buildings and Other Structures
Other Structures 54,061.00 54,061.00
Machinery and Equipment
Technical & Scientific Equip. 11,500.00 11,500.00
Construction in Progress
CIP-Buildings & Other Structures 91,110.38 91,110.38
Total 156,671.38 156,671.38
Account Title (Trust Fund)
Land - -
Land Improvement - -
Buildings and Other Structures
Office Buildings - -
Other Structures - -
Machinery and Equipment
Office Equipment - -
IT Equipment and Software 49,028.00 -
Med., Dental and Lab. Equip. - -
Furniture, Fixtures and Books
Furniture and Fixtures - -
Transportation Equipment
Watercrafts - -
Construction in Progress
CIP-Infrastructure Assets 14,090,843.77 3,281,262.86
CIP-Buildings and Other Structures 931,447.27 0.00
Total 15,071,319.04 3,281,262.86
Grand Total (All Funds) 44,464,886.38 31,095,441.17
7.1 Land
Lot 441,082.00
Covered Court/Evacuation Center 1,950,000.00
Transferred from Trust Fund 150,000.00
Balance as of CY 2015 2,541,082.00
Additions in CY 2016 (Evacuation Center) 1,410,034.50
Total 3,951,116.50
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7.2 Office Buildings
Municipal Building 8,069,552.99
Post Office 50,000.00
Legislative Building Improvements 181,269.30
MPL Building (Multipurpose Hall) 672,988.00
8,973,810.29
Transferred from Trust Fund 649,416.78
Legislative Building 192,216.40
Accumulated Depreciation (360,818.09)
Net Book Value 9,454,625.38
7.3 Construction in Progress
Covered Court 3,737,704.34
Multipurpose Building 1,068,482.70
Transferred from Trust Fund CY 2015 478,347.97
Total 5,284,535.01
Note 8 - Liabilities
Account Title 2016 2015
Financial Liabilities
Accounts Payable 132,137.01 1,013,894.00
Due to Officers and Employees 498,546.20 121,097.53
Inter-Agency Payable
Due to BIR 873,535.74 314,291.69
Due to GSIS 284,780.31 279,447.00
Due to Pag-IBIG 119,955.66 117,929.58
Due to Philhealth 55,052.08 56,552.08
Due to Other NGAs 30,489,456.08 9,020,661.79
Due to Other GOCCs 27,662.64 28,383.73
Due to LGUs 1,325,777.77 335,243.29
Intra-Agency Payables
Due to Other Funds 794,254.15 64,254.15
Trust Liabilities -
Trust Liabilities 9,497,553.25 1,308,501.21
Trust Liabilities-DRRMF - -
Total Current Liabilities 44,098,710.89 12,660,256.05
Deferred Credits/Unearned Income
Deferred RPT 1,905,513.87 1,248,272.85
Deferred SET 1,105,150.10 413,214.43
Other Deferred Credits 187,306.13 187,306.13
Total Non-Current Liabilities 3,197,970.10 1,848,793.41
Total Liabilities 47,296,680.99 14,509,049.46
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Note 9 - Net Assets/Equity
NET ASSETS/EQUITY 2016 2015
Balance at January 1 29,578,033.43 24,777,953.04
Add (Deduct)
Change in Accounting Policy - -
Prior Period Errors (339,746.45) (799,935.26)
Restated Balance 29,238,286.98 23,978,017.78
Add (Deduct) Changes in net
assets/equity during the Year
Adjustment of net revenue recognized
directly in net assets/equity - -
Unrealized Gain/(Loss) from
Changes in the Fair Value of
Financial Assets
- -
Surplus (Deficit) for the period 7,423,721.74 5,600,015.65
Total recognized revenue and
expenses for the period 7,423,721.74 5,600,015.65
Balance at December 31 36,662,008.72 29,578,033.43
Note 10 - Income Accounts
Account Title 2016 2015
Tax Revenue-Individual & Corporation
Community Tax 85,619.50 78,264.00
Tax Revenue-Property
Real Property Tax 151,879.99 182,956.27
Special Education Tax 129,298.34 240,364.66
Tax Revenue-Good and Services
Business Tax 176,779.99 70,042.10
Share from Internal Revenue Allotment 42,371,100.00 38,498,786.00
Service Income
Permit fees 92,663.75 55,881.56
Registration Fees 51,823.50 65,957.00
Clearance & Certification Fees 63,537.00 82,300.00
Inspection Fees 20,220.00 7,475.00
Occupation Fees 10,900.00 4,050.00
Fees for Sealing & Licensing of Weights 3,005.25 1,000.00
Other Service Income 59,160.00 42,431.36
Business Income
Receipt from Market Operations 29,845.00 28,265.00
Receipt from Slaughterhouse Operations 9,800.00 4,100.00
Hospital Fees 4,800.00 30,085.00
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Account Title 2016 2015
Interest Income 9,435.89 6,132.14
Lease Revenues 5,800.00 -
Assistance and Subsidy
Transfers, Assistance and Subsidy From 7,539,416.90 1,552,127.14
Miscellaneous Income 81,175.13 8,202.94
Total Income 50,896,260.24 40,619,920.17
Note 11 - Expenditure Accounts
Account Title 2016 2015
Personal Service
Salaries & Wages-Regular 12,669,852.53 11,642,585.11
Salaries & Wages-Casual/Contractual 333,834.33 229,451.50
Other Compensation
Personal Economic Relief Allowance 1,066,000.00 1,100,000.00
Representation Allowance (RA) 1,293,750.00 1,341,000.00
Transportation Allowance (TA) 1,293,750.00 1,341,000.00
Clothing/Uniform Allowance 225,000.00 230,000.00
Subsistence Allowance 117,000.00 117,000.00
Honoraria 1,491,700.02
Productivity Incentive Allowance
313,791.00
Hazard Pay 337,971.12 339,171.12
Overtime & Night Pay 64,235.61 29,505.77
Other Personnel Benefits
675,701.10
Year-end Bonus 2,261,065.34 975,901.50
Cash Gift 112,500.00 230,000.00
Other Bonuses and Allowances
Personnel Benefit Contributions
Retirement and Life Insurance Premium 1,506,092.82 1,383,119.76
Pag-IBIG Contributions 52,800.00 230,519.96
Philhealth Contributions 144,550.00 139,300.00
Employees Economic Insurance Premiums 51,213.60 51,181.66
Other Personnel Benefits
668,069.32
Terminal Leave Benefits 2,009,632.81 884,070.85
Total Personal Services 25,030,948.18 21,921,368.65
Maintenance & Other Operating Expenses
Traveling Expenses
Traveling Expenses - Local 1,445,268.40 1,870,568.54
Training and Scholarship Expenses
Training Expenses 69,326.00 220,421.31
Scholarship Grants/Expenses 22,500.00 60,000.00
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Account Title 2016 2015
Supplies and Materials Expense
Office Supplies Expense 251,051.29 477,899.43
Accountable Forms Expenses 5,367.15 10,752.00
Food Supplies Expenses - 1,193,541.88
Drugs and Medicines Expenses 482,609.22 419,951.34
Medical, Dental & Lab. Supply Exp. 777,302.60 89,600.00
Fuel, Oil and Lubrication Expenses 278,798.84 185,280.35
Agricultural & Marine Supplies Exp. 55,158.82 43,310.00
Other Supplies and Materials Exp. 200,000.03 -
Utility Expenses
Electricity Expenses 430,353.47 311,747.39
Telephone Expenses 7,200.00 79,949.00
Communication Expenses
Internet Expenses 49,543.42 13,100.00
Cable, Satellite, Telegraph & Radio Exp. 38,187.78 3,600.00
Generation, Transmission & Distribution 33,854.00 -
Intelligence Expenses 12,350.00 13,899.80
Professional Services - -
Legal Services 6,650.00 5,000.00
General Services
Environmental/Sanitary Exp. 130,000.00 -
Janitorial Services 2,632,516.16 -
Other General Services 2,951,540.00 4,399,770.00
Repairs and Maintenance
Rep. & Maint –Infrastructure Assets - 34,600.00
Rep. & Maint –Buildings. & Other Structures 434,553.00 231,281.00
Repairs & Maint. - Machinery & Equipment 20,195.00 12,420.00
Repairs & Maint. – Transportation Equip. 437,947.62 142,040.00
Taxes, Insurance Premiums & Other Fees
Fidelity Bond Premiums 39,633.75 39,633.75
Other Maintenance & Operating Expenses
Advertising Expense 67,200.00 248,640.00
Representation Expenses 1,500.00 6,000.00
Donations 5,032,600.00
Membership Dues 3,000.00
Rent Expenses 4,700.00
Other Maintenance & Operating Expenses 1,127,109.29 2,393,955.60
Total MOOE 17,048,015.84 12,506,961.39
Financial Expenses -
Non-Cash Expenses
Depreciation-Infrastructure Assets 21,483.52 21,483.52
Depreciation-Buildings & Other Structures 95,222.66 95,222.66
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Account Title 2016 2015
Depreciation-Machinery & Equipment 75,598.29 292,753.31
Depreciation-Transportation Equipment 101,080.00 101,080.00
Depreciation-Furniture, Fixtures & Books 370,190.01 153,034.99
Non-Cash Expenses 663,574.48 663,574.48
Total Current Operating Expenses
Transfers, Assistance and Subsidy
Transfers, Assistance and Subsidy To (730,000.00) (338,500.00)
Total Transfers, Assistance & Subsidy To (730,000.00) (338,500.00)
Total Operating Expenses 42,012,538.50 34,753,404.52
Note 12 - Local Disaster Risk Reduction and Management Fund (LDRRMF)
Particulars
LDRRMF
Quick Response
Fund (QRF)
Mitigation
Fund Total
30% 70%
A. Sources of Funds:
Current Operations 652,423.49 1,522,321.46 2,174,744.95
Continuing Appropriations - 262,435.97 262,435.97
Previous Year’s Appropriation
Transferred to the Special Trust Fund
Transfers/Grants
Total Funds Available 652,423.49 1,784,757.43 2,437,180.92
B. Utilization
Provision of trainings 13,038.00 13,038.00
Counterpart-Evacuation Center 350,000.00 350,000.00
Office supplies 34,529.73 34,529.73
Traveling exp.-MDRRMC 29,801.00 29,801.00
Communication expenses 8,823.92 8,823.92
Maintenance of garbage trucks 12,844.80 12,844.80
Formulation of 10-yr. SWM Plan 60,000.00 60,000.00
Stockpile essentials 96,448.27 200,542.54 296,990.81
IT/communication equipment 37,108.90 37,108.90
MRRMO maintenance 189,253.54 189,253.54
Total Utilization 96,448.27 935,942.43 1,032,390.70
Unutilized Balance 555,975.22 848,815.00 1,404,790.22
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PART II
AUDIT OBSERVATIONS AND RECOMMENDATIONS
The LGU has substantially complied DILG Memorandum Circular No. 2011-134
dated September 19, 2011 which amended DILG Memorandum Circular No. 2010-83,
series of 2010 on Full Disclosure of Local Budget and Finances and Bids and Public
Offering as amended. However, our financial and compliance audit for CY 2016 revealed
the following deficiencies.
Cash Advances –
1. Advances for Payroll and Advances to Officers and Employees accounts totaling ₱2,802,645.80 and ₱1,495,072.81, respectively, remained outstanding as of
December 31, 2016, contrary to the pertinent provisions of COA Circular No.
97-002 dated February 10, 1997, thus exposing government funds to the risk of
possible loss or misuse. In addition, payrolls and other liquidation reports in the
total amount of ₱9,574,481.44 were not submitted for audit, rendering the
untimely review of said reports.
COA Circular No. 97-002 dated February 10, 1997 restated with
amendments the rules and regulation/s on the granting, utilization and liquidation of
cash advances. The relevant provisions of the Circular are as follows:
a. Item 4.1.2 - No additional cash advances shall be allowed to any official or employee unless the previous cash advance given to him is first settled
or a proper accounting thereof is made.
b. Item 5.1 - The AO shall liquidate his cash advance as follows:
5.1.1 Salaries, Wages, etc. – within five (5) working days after each
fifteen (15) day/end of the month pay period.
5.1.2 Petty Operating Expenses and Field Operating Expenses – within
twenty (20) days after the end of the year, subject to
replenishment as frequently as necessary during the year.
5.1.3 Official travel – within sixty (60) days after return to the
Philippines in the case of foreign travel or within thirty (30) days
after return to the permanent official station in the case of local
travel, as provided for in EO 248 and COA Circular No. 96-004.
Failure of the AO to liquidate his cash advance within the prescribed period
shall constitute a valid cause for the withholding of his salary and the instruction of
other sanctions as provided for under paragraph 9.2 and 9.3 hereof.”
In addition, Section 7.2.1(a) of COA Circular No. 2009-006 dated
September 15, 2009 states that: “The Chief Accountant, Bookkeeper, or other
authorized official performing accounting and/or bookkeeping functions of the
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audited agency shall ensure that the reports and supporting documents submitted by
the accountable officers are immediately recorded in the books of accounts and
submitted to the Auditor within the first ten (10) days of the ensuing month.”
The Statement of Financial Position showed balances of Advances for Payroll
and Advances to Officers and Employees accounts under General Fund and Trust
Fund amounting to ₱2,802,645.80 and ₱1,495,072.81 respectively or a total of
₱4,297,718.61 which remained outstanding as of December 31, 2016. The ages of
Advances to Officers and Employees accounts based on the schedule of cash
advances are shown below.
Age Amount Percent
General Fund
31-90 days 34,180.00 2.29%
91-365 days 636,665.27 42.58%
Over 1 year 60,020.00 4.01%
Over 2 years 23,654.94 1.58%
Over 3 years 454,193.85 30.38%
Subtotal 1,208,714.06
Special Education Fund
Over 3 years 5,997.00 0.40%
Subtotal 5,997.00
Trust Fund
Over 1 year 26,279.72 1.76%
Over 3 years 254,082.03 16.99%
Subtotal 280,361.75
Grand Total 1,495,072.81 100%
Examination of pertinent records disclosed that additional cash advances were
granted to officers and employees despite the non-liquidation of previous ones. We
also noted that several cash advances were liquidated beyond the prescribed period of
liquidation. Also, several officers and employees had outstanding cash advances in
aggregate amount of ₱50,000.00 as follows:
Name 31-90
days
91-365
days
Over 1
year
Over 3
years Total
Cinco, Marilee A. 5,600.00 326,518.55 332,118.55
Ereño, Francisco M. Jr. 80,092.09 80,092.09
Miranda, Gerardo P. 9,370.00 51,295.00 15,400.00 76,065.00
Rebadulla, Evelyn M 83,269.00 83,269.00
Turla, Allan T. 24,187.00 54,500.00 78,687.00
Turla, Alfonso L. 22,370.00 58,423.00 80,793.00
Total 14,970.00 424,370.55 15,400.00 276,284.09 731,024.64
In addition, several copies of liquidation reports for payrolls and traveling
expenses and other necessary supporting documents during the year in the total
amount of ₱9,574,481.44 were not submitted for audit. (Appendix F)
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The delay in the liquidation of cash advances is not only contrary to the above
cited provisions, but may also result in possible loss or misuse of government funds.
During the exit conference, the Municipal Treasurer explained that the
unliquidated advances for payroll was already liquidated in the 1st quarter of 2017.
The management also averred that it will take appropriate action to ensure that
concerned officials and employees will liquidate their outstanding cash advances.
We recommend that management stop the grant of additional cash
advances to officials and employees with previous balances and demand for the
immediate liquidation/settlement of their unliquidated cash advances through
the issuance of demand letters copy furnished the Audit Team. In case of non-
compliance, instruct the Accounting Office to withhold the salaries or any money
due them as provided in Item 5.9 of COA Circular No. 97-002. In addition,
require the Municipal Accountant the immediate submission of payrolls and
liquidation of travels.
20% Development Fund -
2. Out of the total appropriation of ₱8,458,979.80 for 20% Development Fund, only ₱4,658,761.21 or 55.07% was utilized during the year and portion of it
amounting to ₱1,310,667.16 was improperly utilized, in disregard to DILG-DBM
Joint Memorandum Circular No. 2011-1, thus continuously defeating the
purpose for which the fund was established and failed to attain the socio-
economic development and environmental management outcomes. Moreover,
disbursements lacked the required supporting documents contrary to Section
4(6) of PD 1445.
Section 287 of the Local Government Code of 1991 (RA 7160) provides
that every LGU shall appropriate its annual budget no less than 20% of its internal
revenue allotment (IRA) for development projects.
DILG-DBM Joint Memorandum Circular No. 2011-1 dated April 13, 2011
which provides the guidelines on the appropriation and utilization of the 20%
development fund states that: It is the responsibility of every Provincial Governor,
City and Municipal Mayor and Punong Barangay to ensure that the 20% of the
Internal Revenue Allotment (IRA) is optimally utilized to help achieve desirable
socio-economic development and environmental outcomes.
Section 3 thereof, provides that the 20% of the IRA intended for development
projects may be utilized for the following priority programs and projects:
Social Development - construction or rehabilitation of health centers, rural health
units or hospitals, and purchase of medical equipment; construction or rehabilitation
of local government-owned potable water supply system; establishment or
rehabilitation of Manpower Development Centers; construction or rehabilitation of
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evacuation centers; purchase or repair of area-wide calamity related alarm or warning
system; rehabilitation of cultural/historical sites; purchase or repair of appropriate
calamity-related rescue operations equipment such as inflatable boats, breathing
apparatus, extraction tools, safe line rescue ropes, fire extinguishers, chainsaws, two
(2) way handheld radios and the like; purchase and development of land for the
relocation of informal settlers and relocation of victims of calamities; construction or
rehabilitation of facilities such as multi-purpose hall intended to cater out-of-school
youths, women, senior citizens, minors, displaced families, indigenous people and
differently-abled persons; and installation and maintenance of street lighting system
except payment of electric bills.
Economic Development - construction or rehabilitation of communal irrigation or
water impounding system and purchase of post-harvest facilities such as farm or hand
tractor with trailer, thresher and mechanical driers; construction or rehabilitation of
local roads or bridges and purchase of appropriate engineering equipment such as
dump trucks, graders and pay loaders; capital expenditures related to the
implementation of livelihood or entrepreneurship/local economic development
projects; and amortization of loans used to finance development projects cited in this
Joint Circular, subject to the 20% debt service cap.
Environmental Management – reforestation and urban greening; construction or
rehabilitation of sanitary landfills, material recovery facilities and purchase of
garbage trucks and related equipment; implementation of flood and erosion control
projects such as rehabilitation and construction of drainage systems, de-silting of
rivers, de-clogging of canals; and other environmental management projects that
promote air and water quality, as well as productivity of the coastal or freshwater
habitat, agricultural land and forest land.
The same circular further enumerates the following items that are not related
to and/or connected with the implementation of development projects, programs and
activities shall not be paid out of the 20% development fund:
Administrative expenses such as cash gifts, bonuses, food allowance, medical assistance, uniforms, supplies, meetings, communication, water
and light, petroleum products and the like;
Salaries, wages or overtime pay; Travelling expenses, whether domestic or foreign; Registration or participation fees in training, seminars, conferences or
conventions;
Construction, repair or refinishing of administrative offices; Purchase of administrative offices furniture, fixtures, equipment or
appliances;
Purchase, maintenance or repair of motor vehicles or motorcycles.
Section 4(6) of PD 1445 states that claims against government funds shall be
supported with complete documentation.
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25
During the year, the LGU received its share of Internal Revenue Allotment
(IRA) from the national government in the amount of ₱42,371,000.00. The Annual
Budget for the calendar year showed a total appropriation of ₱8,458,979.80 for
priority development projects under the 20% development fund. However, the Annual
Investment Plan (AIP) contained thirty-eight (38) development priority programs and
projects which were programmed for implementation for the current year totaling
only to ₱8,051,987.78 or 19% of its IRA.
While there were several programs and projects that were in line with the
policies and guidelines set forth by the said circular during the year, we still noted
some deficiencies such as:
a. Projects/programs/activities funded out of the 20% development fund in the total amount of ₱1,766,089.80 did not conform to the development
priority projects and programs for social development, economic
development and environmental management nor did it partake the nature
of investment or capital expenditures. (Appendix G)
b. The municipality implemented only ten (10) eligible programs and projects in the total amount of ₱3,348,094.05 or 53.26% out of the total
appropriations of ₱6,285,897.98 for 16 projects.
c. Copies of approved contracts and purchase orders of infrastructure projects and procured goods and services were not submitted within five
(5) days from their execution/issuance which precluded the audit team
from conducting the timely review of contracts and POs and actual
inspection on deliveries. (COA Circular No. 2009-001)
d. Some paid disbursement vouchers lacked the necessary supporting documents such as but not limited to Program of Works, Detailed
Engineering Estimates, Plans/Specifications, Pre-Post Inspection Reports
and documentary photos for construction/repair of projects/buildings;
Approved Activity Budget for sports fest activities and bloodletting
program; and list of recipients for the distribution of vegetable seeds and
boxing uniforms.
As a result, it defeated the purpose for which the fund was created and failed
to attain the desired socio-economic development and management outcome.
In our exit conference, management informed the audit team that those
programs/projects/activities that were not implemented in CY 2016 were
implemented in the ensuing year as continuing appropriations. They further explained
that those programs that were not in conformity with the guidelines set forth under the
above-mentioned DILG-DBM Joint Circular were charged to 20% development fund
due to insufficient funds of the MOOE.
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26
In view of the foregoing, we recommend that management :
a. Give priority to the development projects and programs that partake the nature of investment or capital expenditures.
b. Utilize the fund in conformity with the guidelines set forth by the DILG-DBM Joint Memorandum Circular No. 2011-1;
c. Copies of approved contracts and purchase orders of infrastructure projects and procured goods and services should be submitted within five (5) days
from their execution/issuance;
d. Paid vouchers should be supported with the necessary documentary requirements to ensure the legality and propriety of the transactions.
Local Disaster Risk Reduction and Management Fund –
3. The accounting and reporting guidelines on the planning and utilization of CY 2016 LDRRMF were not complied with, contrary to pertinent provisions of
COA Circulars No. 2012-002 and 2014-002, while payments totaling ₱518,889.05
lacked the required supporting documents as mandated in COA Circular No.
2012-001 dated June 14, 2012, thus, casted doubts on the regularity of such
expenditures. Moreover, ineligible expenses were charged to the LDRRMF and
the utilization report contained inaccurate data.
Item 5.1.2 of COA Circular 2012-002 dated September 12, 2012 provides
that a Local Disaster Risk Reduction and Management Fund Investment Plan
(LDRRMFIP) for the DRRM program shall be prepared annually. It shall present the
30% allocation for QRF in lump sum and the 70% allocation for disaster mitigation,
prevention and preparedness with details as to projects and activities to be funded.
The LDRRMFIP shall also include under separate caption, the list of projects and
activities charged to the unexpended LDRRMF of previous years.
Item 5.1.5 of the same Circular provides that a Report on Sources and
Utilization of DRRMF shall be prepared and certified correct by the Local
Accountant. The Local Disaster Risk Reduction and Management Officer
(LDRRMO) shall submit the report on or before the 15th day of the end of each month
through the LDRRMC and Local Development Council (LDC) to the COA auditor of
the LGU.
Item V (B) of COA Circular No. 2014-002 dated April 15, 2014 provides
the reporting guidelines on in-kind donations which states that: The Donee-Agency
shall prepare monthly reports on the receipt and distribution/utilization/issuance of in-
kind donations. Separate reports shall be prepared for relief goods and PPE based on
the Registry of Donated Relief Goods for DRRM and Property Cards, respectively.
The reports shall be submitted to the Office of the Civil Defense (OCD), copy
furnished the COA Auditor, on or before the 10th day of the ensuing month until all
donations are fully consumed/utilized.
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COA Circular No. 2012-001 dated June 14, 2012 prescribed the
documentary requirements for common government transactions, to wit:
1.2.1 Liquidation of Payroll Fund for salaries, wages, allowances, honoraria and other similar expenses
Report of Disbursements certified correct by the accountable officer
Approved payroll/vouchers duly acknowledged/signed by the payee/s
Approved Daily Time Record (DTR) or Certificate of Service In case of payment of personnel under the “job order” status,
duly verified/accepted accomplishment report
Approved contracts
1.1.4.1 Traveling allowances (Local Travel)
Office Order/Travel Order approved in accordance with Section 3 of EO No. 298
Duly Approved itinerary of travel Certification from the accountant that the previous cash
advance has been liquidated and accounted for in the books
1.2.3 Field/Activity Current Operating Expenses
Report of Disbursements Approved purchase request Bills, receipts, sales invoices Canvass from at least three suppliers for purchases involving
₱1,000 and above
Summary/Abstract of canvass Such other supporting documents that may be required
depending on the nature of expenses
2.2 Implementation and liquidation of funds (goods) released List of beneficiaries with their signatures signifying their
acceptance/acknowledgment of the
project/funds/goods/services received
6.2 Telephone/Communication Services
Statement of Account/Bill Invoice/Official Receipt or machine validated statement of
account
Certification by the Agency Head or his authorized representative that all calls are official calls
In the review and evaluation of the agency’s compliance with COA Circulars
No. 2012-002 and 2014-002 on the accounting and reporting guidelines of Local
Disaster Risk Reduction and Management Fund (LDRRMF), we noted that:
1. The prepared LDRRMFIP did not indicate the functional classification, funding source under 30% allocation for QRF and the 70% mitigating
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fund. It did not also include the list of projects and activities charged to the
unexpended LDRRMF of previous years.
2. The LDRRMO failed to submit the Monthly Report on Sources and Utilization of DRRMF on or before the 15th day after the end of each
month.
3. In-kind donations/relief goods received from other agencies, for the victims of Typhoon Nona in the Municipality could not be verified due to
failure to submit reports on receipt and issuance by the MSWDO and
Property Supply Unit, such as but not limited to the following documents:
Registry of Donated Relief Goods for DRRM for each kind of relief goods
Issuance Form for in-kind donations Reports on the receipt and distributions/utilization/issuance of in-kind
donations
Pictures/documents on warehousing/storage and distribution of donated relief goods
4. Post audit of disbursement vouchers and other documents pertaining to the expenditures charged to the LDRRMF for CY 2016 also showed the
following observations:
a. The LDRRMFIP showed a total appropriation of ₱2,174,744.95 for seventeen (17) identified projects/programs/activities. However, only
eleven (11) projects/programs/activities were implemented during the
year (Appendix H). These included expenditures that were ineligible in
the total amount of ₱99,124.47 as summarized below:
Particulars Amount
Diesel and fuel 26,584.47
Job Order wages 67,100.00
Registration fee (NORSAMBOL) 2,400.00
Curtains 3,040.00
Total 99,124.47
b. Disbursements for payment of relief goods, hauling costs, job order wages, communication expenses and traveling expenses in the total
amount of ₱518,889.05 lacked the necessary supporting documents as
presented in the table:
Particulars Amount Lacking supporting documents
Relief goods 296,990.81 Declaration of State of Calamity, distribution
list; DV and SDs of ck. no. 1368801
IT Equipment 37,108.90 No Acknowledgment Receipt of Equipment
CA for hauling of housing
materials 80,000.00 Liquidation reports not submitted
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Job Order wages 67,100.00 Job Contracts, DTRs, Accomplishment
Reports
Communication expenses 15,269.34
Certification by the Agency Head/authorized
representative that all calls made are official
calls
Cash advances for travels 22,420.00 Liquidation reports not submitted per ck.
nos. 1367867 and 1368018
Total 518,889.05
c. Variance was noted in the review of the submitted Fund Utilization Report against the post audit of disbursement vouchers. (Appendix I)
This observation was also discussed in the previous years’ audit reports which
apparently signify that management did not comply with our recommendation and an
indication of blatant disregard of existing regulations pertaining to the accounting and
utilization of the LDRRM Fund.
In the exit conference, management stated that the in-kind
donations/assistance received from other national agencies were properly accounted
for but were not reported. With regards to the improper charging of ineligible
expenditures, the Municipal Budget Officer explained that she only used the
LDRRMF Investment Plan as her guide, unaware that it contained ineligible
programs and activities.
We recommend that management adhere with the pertinent provisions of
COA Circulars No. 2012-002 and 2014-002 on the accounting and reporting of
LDRRMF and COA Circular No. 2012-001 on the proper documentation of
transactions. Likewise, the Accountant should rectify the deficiencies noted on
the variance per LDRRMF utilization report and per audit and to submit the
disbursement vouchers/liquidation reports and the lacking supporting
documents.
Procurement –
4. Publication of procurements in the PhilGEPS website was not undertaken by the LGU while, procurements thru reimbursements, shopping and negotiated
procurement amounting to ₱497,785.98, ₱1,444,862.39 and ₱2,325,708.75,
respectively, were made notwithstanding the failure to comply with the
conditions for resorting to alternative modes of procurement contrary to the
provisions of the Implementing Rules and Regulations of RA 9184.
Section 8.3 of the IRR of RA 9184 provides that all Procuring Entities are
mandated to fully use the PhilGEPS in accordance with the policies, rules,
regulations, and procedures adopted by the GPPB and embodied in this IRR. In this
connection, all Procuring Entities shall register with the PhilGEPS and shall
undertake measures to ensure their access to an on-line network to facilitate the open,
speedy and efficient on-line transmission, conveyance and use of electronic data
messages or electronic documents.
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Section 10 mandates that all procurement shall be done though competitive
public bidding, except as provided in Rule XVI which provides for the specific
highly exceptional cases under which procurement may be done through various
alternative modes.
Sections 13.1 and 13.3 states that, in order to enhance the transparency of the
process, the BAC shall, during the eligibility checking, shortlisting, pre-bid
conference, preliminary examination of bids, bid evaluation, and post-qualification,
invite, in addition to the representative of the COA, at least two (2) observers, who
shall not have the right to vote, to sit in its proceedings. Observers shall be invited at
least five (5) calendar days before the date of the procurement stage/activity.
Section 52 defines Shopping as a method of procurement of goods whereby
the Procuring Entity simply requests for the submission of price quotations for readily
available off-the-shelf goods or ordinary/regular equipment to be procured directly
from suppliers of known qualifications and shall be employed in any of the following
cases:
Where there is unforeseen contingency requiring immediate purchase:
Provided, however, that the amount shall not exceed the thresholds
prescribed in Annex H of this IRR. (not exceeding ₱100,000.00 for a 5th
class municipality)
Procurement of ordinary or regular office supplies and equipment not
available in the Procurement Service involving an amount not exceeding
the thresholds prescribed in Annex “H” of this IRR. (not exceeding
₱100,000.00 for a 5th class municipality)
Section 53 defines Negotiated Procurement as a method of procurement of
goods, infrastructure projects and consulting services, whereby the Procuring Entity
directly negotiates a contract with a technically, legally and financially capable
supplier, contractor or consultant in any of the following cases:
Two Failed Biddings Emergency cases Take-over of contracts Adjacent or Contiguous Agency-to-Agency Scientific, Scholarly or Artistic Work, Exclusive Technology and Media
Service
Highly Technical Consultants Defense Cooperation Agreement Small Value Procurement Lease of Real Property NGO Participation Community Participation United Nations Agencies
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During the year, the LGU has entered various contracts for infrastructure
projects, purchase of medicines, construction materials, medical supplies and
equipment and pakyaw labor. However, review of pertinent documents and post audit
of the foregoing transactions revealed that the municipality did not fully use the
PhilGEPS website in posting their Invitation to Bid (ITB). Posting of the ITB was
made thru the advertisement in the newspaper/tabloid. Likewise, COA was not
invited in all stages of procurement process.
Further, the LGU resorted to alternative modes of procurement such as
shopping and negotiated procurement for purchase of goods, services and in the
implementation of infrastructure projects. However, the BAC Resolution
recommending the alternative mode of procurement did not include sufficient
justification and lacked the conditions required in the IRR. In addition, procurement
of goods on reimbursement basis in the total amount of ₱497,785.98 were made,
which deprived the government from taxes that could have been derived therein.
Hereunder are the procurements made using the alternative modes:
Particulars
Alternative Mode of
Procurement Thru
Reimbursements (Net Amount)
Shopping Negotiated
Procurement
Goods
Office supplies 115,523.04
Food supplies 200,542.54 60,957.00
Drugs and Medicines 393,336.62
Fuel, oil and lubricants 89,067.98
Equipment 154,741.07 8,975.03
Other various expenses 223,262.93
Services
Lease of backhoe 123,500.00
Infrastructure projects/programs
General Fund
FMR (Right-of-Way) 1,399,834.50
Land (Evacuation Center) 645,000.00
Construction of 1 classroom (Guindaulan NHS) 96,331.23 20,000.00
Construction of pathway at Brgy. Salhag 104,798.04 37,166.25
Construction of pathway at Brgy. Jamoog 104,389.18 38,800.00
Reconstruction of Legislative Building 67,322.31 27,408.00
Repair of Municipal Hall 177,151.40 34,000.00
Trust Fund
Mudcrab Production-materials (BuB project) 146,250.00
Total 1,444,862.39 2,325,708.75 497,785.98
During our exit conference, management acknowledged the audit team’s audit
recommendation and promised to comply to promote economy and efficiency in the
procurement as envisioned in the Revised Implementing Rules and Regulations (IRR)
of RA 9184. The BAC Chairperson further assured to submit the complete necessary
documents.
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We recommend that management publish all their procurements in the
PhilGEPS website. Generally, public bidding should be used for all procurement
and all alternative modes of procurement be resorted to only if the conditions
which allows the use of such alternative method were met pursuant to the
Implementing Rules and Regulations of Republic Act 9184. Moreover, stop the
practice of procurement thru reimbursements.
Submission of Contract Documents –
5. Copies of contracts/purchase orders were not submitted within five (5) working days while, delivery documents were not furnished within 24-hours from
acceptance, contrary to COA Circulars No. 2009-001 and 002. Moreover,
payment for the purchase of lot for road right-of-way and evacuation center was
not supported with proper documentations in violation of COA Circular No.
2012-001 dated June 14, 2012 casting doubt on the propriety and legality of the
procurement.
Pertinent Sections of COA Circular No. 2009-001 dated February 12, 2009
relative to the submission of contracts/purchase orders are as follows:
a. Section 3.1.1 - Within five (5) working days from the execution of a contract by the government or any of its subdivisions, agencies or
instrumentalities, including government-owned or controlled corporations
and their subsidiaries, a copy of said contract and each of the documents
forming part thereof by reference or incorporation shall be furnished the
Auditor of the agency concerned.
b. Section 3.2 - A copy of any purchase order irrespective of amount and each and every supporting document shall, within five (5) working days
from issuance thereof, be submitted to the Auditor concerned.
While, Section 6.9 of COA Circular No. 2009-002 dated May 18, 2009
provides the duties of the agency officials concerned, one of which is quoted, thus:
“Furnish the auditor copies of delivery documents within twenty-four (24) hours after
acceptance of deliveries of goods and services.”
Section 13.1 of COA Circular No. 2012-001 dated June 14, 2012 enumerates
the documentary requirements for the acquisition of Road Right-of-Way (ROW)/Real
Property (Land) common to both Negotiated Purchase and Payment by Court
Decision which included:
Project parcellary survey plan showing that said lot and structures are within the boundaries of the right-of-way;
Structural Mapping Plan of the lot affected; Certification by the Implementing Agency that the claim is not within the
original ROW of a converted local road;
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Certification by the Implementing Agency that there is no previous pending claim and previous payment on subject property;
Environmental Clearance Certificate (ECC) as required under Section 8 of RA No. 8974;
Copy of latest master list of Project-Affected-Persons (PAP) approved by the Agency’s authorized representative; and
In case of death of claimant or owner, judicial settlement duly advertised in a newspaper of general circulation
Additional documentary requirements for:
a. Negotiated Purchase: Independent Appraisal Report/Regional Committee Resolution
indicating the valuation of the land. Valuations should be based on the
provisions of RA No. 8974;
Applicable BIR zonal valuation; Certified photocopy of Authorized/agency Resolution to Purchase
Land or Land Rights indicating the approved/established valuations or
BIR zonal valuations;
Deed of Absolute Sale registered with the Register of Deeds where the land is located; and
Certified photocopy of Tax Clearance from Assessor’s Office where the land is located
- Certificate Authorizing Registration (CAR) - Capital Gains Tax (CGT) - Transfer Tax
b. If registered land: If whole lot is acquired, Transfer Certificate of Title (TCT) Certificate
of Land Ownership Award/ Original Certificate of Title/ Emancipation
Patent (CLOA/OCT/EP) certified as true copy by the Register of
Deeds and Tax Declaration (TD) certified as true copy by the
Assessor’s Office in the name of the Procuring Entity or previous
owner depending on the provisions of the sale; and
If portion of lot is acquired, certified true copy of TCT and TD in the name of the Procuring Entity or previous owner with annotation of the
sale
c. If unregistered land: Certified photocopy of TD in the name of the procuring entity or
previous owner with annotation of sale;
Notarized Affidavit of Ownership; Certification from the City/Municipal Treasurer that the claimant is the
sole entity paying the taxes for the property for the past 5 years;
Notarized joint affidavit of two adjoining landowners or Barangay/Local Officials concerned attesting to the ownership of land;
Such other documents deem necessary for the auditorial review and in the technical evaluation thereof; and
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If claim for payment or amount of sale exceeds ₱50,000 (EO No. 1035), certified photocopy of Claimant’s Surety/Indemnity Bond
issued by any Insurance Company duly accredited by the Insurance
Commission
Copies of contracts/purchase orders were not submitted within the prescribed
five (5) working days. Likewise, the audit team was not furnished with delivery
documents within twenty-four (24) hours from acceptance of deliveries of goods and
services.
Moreover, disbursements covering the payments for the acquisition of road
right-of-way for the construction of Farm to Market Road project and final payment
of the purchased land used for evacuation center in the total amount of ₱1,399,834.50
and ₱645,000.00, respectively lacked the necessary supporting documents such as but
not limited to the following: (Section 13.1 of COA Circular 2012-001)
Project parcellary survey plan showing that said lot and structures are within the boundaries of the right-of-way;
Structural Mapping Plan of the lot affected; Certification by the Implementing Agency that the claim is not within the
original ROW of a converted local road;
Certification by the Implementing Agency that there is no previous pending claim and previous payment on subject property;
Environmental Clearance Certificate (ECC) as required under Section 8 of RA No. 8974;
Copy of latest master list of Project-Affected-Persons (PAP) approved by the Agency’s authorized representative; and
In case of death of claimant or owner, judicial settlement duly advertised in a newspaper of general circulation
The foregoing circumstances showed that the validity and propriety of the
transactions were doubtful.
During the exit conference, the BAC Chairperson vowed to comp