PART II – AUDIT OBSERVATIONS AND RECOMMENDATIONS

1. The accuracy, existence, and completeness of the Property, Plant, and Equipment
(PPE) as of December 31, 2022 amounting to ₱202.587 million could not be
ascertained due to (a) incomplete submission of Report on the Physical Count of
Property, Plant, and Equipment (RPCPPE); (b) non-maintenance of PPE Ledger
Cards and Property Cards; (c) non-reconciliation of accounting and property
records; and (d) non-recording of the donated properties, thus making the PPE
account balance unreliable and doubtful.

Section 156 of COA Circular No. 92-386 provides that the Local Chief Executive (LCE)
shall require an annual physical inventory of all supplies or property of the local
government unit as of December 31 of each year, to be conducted by office or
department by a committee of three consisting of the representative of the LCE as
chairman and the General Services Officer (GSO), municipal or barangay treasurer, as
the case may be, and the supply accountable officer of the department or office
concerned as members. The inventory report shall be submitted to the LCE and copy
furnished the provincial, city, or municipal auditor concerned.

Moreover, the Handbook on Property and Supply Management System (PSMS)

provides that the Chiefs of agencies are required to take a physical inventory of all the
equipment and supplies of their respective offices at least once a year. At the end of
each quarter the Accounting and the Supply/Property Unit should reconcile their records.
All discrepancies between physical and book inventories must be investigated, cleaned
and reconciled immediately. If necessary, written explanation shall be required from
accountable and responsible persons. It also provides that the Report on the Physical
Count of Property, Plant and Equipment (RPCPPE) shall be prepared by the Inventory
Committee yearly and submitted to the auditor concerned not later than January 31 of
each year. It shows the balance of property and equipment per cards and per count and
shortage/overage, if any.

The New Government Accounting System (NGAS) Manual for LGUs Volume 2 Annexes
provide for the template and instructions in accomplishing the RPCPPE and other
reports and records relative thereto.

Corollary thereto, the Commission on Audit issued COA Circular No. 2020-006 dated
January 21, 2020 prescribing the Guidelines and Procedures in the Conduct of Physical
Count of Property, Plant and Equipment (PPE), Recognition of PPE Items Found at
Station, and Disposition for Non-existing/Missing PPE Items, for the One-Time
Cleansing of PPE Account Balances of Government Agencies to establish PPE
balances that are verifiable as to existence, condition and accountability.

Review of the Financial Statements (FS) as of December 31, 2022 showed that the book
balance of the PPE accounts totaled ₱202.587 million representing 43.1 percent of the
total assets of the Municipality, broken down as follows:

19
 PPE Account Amount
Land 2,448,053.08
Land Improvements 78,922.10
Infrastructure Assets 63,364,423.13
Buildings and Other Structures 185,400,053.41
Machinery and Equipment 65,782,426.41
Transportation Equipment 11,888,122.00
Furniture, Fixtures and Books 774,216.92
Construction in Progress 6,526,516.56
Other Property, Plant and Equipment 1,515,186.39
Total 337,777,920.00
Accumulated Depreciation (135,190,485.56)
Net Amount 202,587,434.44

Verification of the status of implementation of the prior year’s audit recommendations

revealed the following:

1. The RPCPPE for CY 2022 was not completely submitted despite management’s
commitment to submit it this year and for the succeeding years. According to the
General Services Officer (GSO), he conducted inventory-taking procedures per office
but he only submitted the report labeled Updated Inventory/Accounting of All Existing
Motor Vehicles (Appendix L) as of December 31, 2022 last February 7, 2023.

2. The sole report of inventory for motor vehicles submitted by the GSO did not tally
with the records of the Accounting Office as follows:

Recorded Cost of Transportation Equipment Per Notes to 11,888,122.00

FS
Total Acquisition Cost of Motor Vehicles per Report of GSO 45,934,497.00
Difference 34,046,375.00

The difference was mainly due to some construction and heavy equipment such as
dump trucks; backhoe loader; and road roller that were included in the GSO’s
inventory of motor vehicles but are recorded under machineries and equipment in the
accounting records.

3. Also upon checking the report submitted by the GSO, some properties are classified
as unserviceable but no report of Inventory and Inspection Report of Unserviceable
Property (IIRUP) was prepared and submitted as follows:

Year Acquisition
Property Acquired Cost Book Value Status/Condition
1. Dump Truck (Green)
Isuzu, SGF 875 2002 507,000.00 25,350.00 Unserviceable

2. Ambulance Foton, no Donated by No recorded

2012 Unserviceable
plate PCSO amount
3. Backhoe Loader, Case No record No record No record Unserviceable

20
 It was also observed that the following serviceable properties currently used by the
municipality remained unrecorded in the accounting records due to the lack of basis
for the amount as per inquiry with the Municipal Accountant:

Year Acquisition Book

Property Acquired Cost Value Remarks
1. Municipal Bus No record No Record No Record Donated by Ceres
2. Ambulance, 2022 No Record No Record Donated by DOH
Nissan NV 350

The appraisal or fair market values of the above properties donated should have
been used if the acquisition cost or carrying value from the donor is not available.
However, the municipality has no Appraisal Committee established to conduct the
same.

4. The Accounting Office prepared and submitted a report labeled Property Ledger
Card which is merely a list of Items per Inventory/Property Classification with
columns for Date, Amount, Depreciation, and Balance. Other data such as
Reference (Property Number), Detailed Description of the Equipment/Property (such
as plate numbers, serial numbers and engine/chassis number), Estimated Useful
Life, Rate of Depreciation, Improvements, and Unit Costs are not indicated.
(Appendix M)

5. Quarterly reconciliation of records of the Accounting and GSO was still not
performed as evidenced by the discrepancies noted in No. 2 discussion. The PPE
Ledger Cards and Property Cards that should have been the basis of reconciliation
were still not prepared by both offices despite management’s agreement to prior
year’s audit recommendations.

6. The Land Account has the same balance as last year and no adjustments were
made to effect previous years audit recommendations.

The non-conduct of a complete inventory of all properties of the LGU has been a
recurring observation. The reason for the non-submission of the RPCPPE, is that there
is no Inventory Committee established, despite management’s agreement in the prior
year’s audit recommendation to establish the same.

Incomplete submission of the RPCPPE, non-maintenance of PPE Ledger Cards,

incomplete preparation of Property Cards, and the non-recording of the value of donated
properties, resulted to the non-reconciliation of balances between the accounting and
property records, thus, making the PPE account balances in the financial statements
unreliable and doubtful.

The Inventory and Disposal Committee was established by virtue of Executive Order No.
2023-02-034 Series of 2023 dated February 14, 2023 to address the foregoing issues.

We issued AOM No. 2023-002 (2022) dated February 22, 2023 relative to this audit
finding.

21
 Recommendation

We recommended and the Management agreed that the Local Chief Executive
(LCE):

1. Establish the Inventory Committee to be composed of at least the GSO and the
head of offices, who will conduct a thorough physical count of all its
properties and prepare and submit the RPCPPE for all types of PPE;

2. The Municipal Accountant and the GSO maintain the required PPE Ledger
Cards and Property Cards respectively and reconcile their respective PPE
records;

3. Establish an Appraisal Committee to determine the fair market values of the

donated properties, if the acquisition cost or carrying values of such
properties are not available, to reflect the same in the financial statements with
the proper disclosure statements; and

4. The Municipality avail of the one-time cleansing of PPE accounts as provided

under Commission on Audit (COA) Circular No. 2020-006 to finally establish
PPE balances that are verifiable as to existence, condition, and accountability.

2. The validity and accuracy of the account balances of Due to NGAs and Due to
LGUs, as of December 31, 2022, amounting to ₱23.191 million and ₱6.866 million,
respectively is unreliable due to: (1) the non-submission of subsidiary ledgers and
other supporting schedules, contrary to the provisions of Section 72, Volume I of
the MNGAs for LGUs; (2) the non-submission of Status of Fund Transfers,
Memorandum of Agreement and other documents peculiar to the fund transfer,
contrary to COA Circular 94-013; and (3) erroneous entries made to record the
transactions pertaining to the utilization of fund transfers from other NGAs and
LGUs, contrary to COA Circular No. 2015-009.

Section 72, Volume I of the Manual on the New Government Accounting System for
Local Government Units (MNGAS for LGUs) provides that Post-closing Trial balances
shall be submitted not later than the fourteenth day of February after the end of the
calendar year and shall be supported with the Subsidiary Schedule of General Ledger
account balances.

Also, COA Circular No. 94-013 dated December 13, 1994 provides the following duties
and responsibilities of the Implementing Agencies (IA):

xxx

6.4 Within five (5) days after the end of each month, the Accountable Officer (AO) shall
prepare the Report of Checks Issued (RCI) and the Report of Disbursements (RD)
and shall submit them with all supporting vouchers/payrolls and documents to the
Accountant. These reports shall be approved by the Head of the Agency.

6.5 Within ten (10) days after receipt from the AO, the Accountant shall verify the
Reports, provide accounting entries, record and submit the duplicate copies of the
Reports with all the originals of vouchers/payrolls and all supporting documents to

22
 the IA Auditor. The Accountant shall ensure that only expenses for the project are
included in the Reports. He shall submit the original copy of the Reports to the
Source Agency (SA) (Attention: The SA Accountant). xxx

6.7 Return to the SA any unused balance and refund of disallowance upon completion of
the project.

xxx

Lastly, Annex B of COA Circular 2015-009 dated December 1, 2015 provides for the
description of the following accounts:

Account Title Due to National Government Agencies

Account 2-02-01-050
Number
Normal Balance Credit
Description This account is used to record the receipt of funds for delivery of
goods/services as authorized by law, fund transfers from NGAs for
implementation of specific programs or projects and other inter-
agency transactions. Debit this account for delivery of goods /
services, liquidation of funds received and settlement of liabilities.

Account Title Due to LGUs

Account 2-02-01-070
Number
Normal Balance Credit
Description This account is used to record the receipt of funds for delivery of
goods/services as authorized by law, fund transfers from LGUs for
the implementation of specific programs or projects, share in LGU
income and other inter-agency transactions. Debit this account for
delivery of goods/services, liquidation of funds received, receipt of
share in LGU income and settlement of liabilities.

Review of the recording of fund transfers from NGAs and LGUs, the disbursements of
funds for the implementation of specific programs or projects, and the utilization and
liquidation report thereof revealed the following:

1. The Fund Utilization Report, Memoranda of Agreement (MOAs), Status of

Program/Project Implementation of Fund Transfers from National Government
Agencies (NGAs) and Provinces/Cities (LGUs) as of December 31, 2022, and other
reports related to the fund transfers were not completely submitted to the audit team
contrary to COA Circular No. 94-013, precluding the audit team from verifying the
extent of the implementation, the proper utilization of funds transferred, and
compliance with prescribed guidelines.

In the Entrance Conference conducted in January 12, 2023, the team discussed the
scope of the audit and provided the list of documents and reports to be submitted for
audit and among the list are the documents cited above. During fieldwork we also
requested for copies of the MOA and subsidiary ledgers but these were not
completely submitted.

23
2. In the review of the Statement of Financial Position as of December 31, 2022, the
Due to NGAs and Due to LGUs have the following balances:

Account Fund Ending Balance

General Fund ₱ 12,109,569.15
Due to NGAs SEF 47,987.25
Trust Fund 11,033,099.62
Sub-total 11081086.87
General Fund 2,504,885.99
Due to LGUs SEF 1,350,144.66
Trust Fund 3,010,588.79
Sub-total 29027793.18
Total ₱ 30,056,275.46

Subsidiary ledgers for each fund were not completely prepared and submitted to the
audit team for review and evaluation. The submitted soft copy do not contain
sufficient details and references for verification and it is also not complete as not all
accounts listed under the Due to NGAs and Due to LGUs were submitted.

3. Review of the Journal Entry Vouchers (JEV) Registry revealed that the following
entries were made to record the disbursements for projects funded by NGAs and
LGUs:

a. Construction of Farm to Market Road at Camambugan, Balasan

1st partial payment:

Account Title Debit Credit
Due to NGAs - DILG FY 2021 LGSF (FALGU) ₱ 5,953,969.97
Cash in Bank Local Currency ₱ 5,581,846.85
Due to BIR 372,123.12

Full payment:
Account Title Debit Credit
Due to NGAs - DILG FY 2021 LGSF (FALGU) ₱ 4,043,529.98
Cash in Bank Local Currency ₱ 3,790,809.36
Due to BIR 252,720.62

Transfer to GF books of the completed asset:

No entry made in TF and GF books as of December 31, 2022. No refund and

liquidation done in CY 2022 when project contract cost was fully paid in October
2022.

The Due to NGAs account was immediately debited for payments for the project cost
instead of the Construction-in-Progress Account, contrary to COA Circular 2015-009.
Also, no asset account was debited as of December 31, 2022, thus understating the
liabilities and asset account.

24
b. Construction of Multi-Purpose Building at Balanti-an Elementary School

Payment of 15% Mobilization:

Account Title Debit Credit
Construction in Progress – Buildings and ₱ 584,084.70
Other Structures
Cash in Bank Local Currency ₱ 584,084.70

First partial payment:

Account Title Debit Credit
Due to LGUs - Province ₱ 842,385.30
Cash in Bank Local Currency ₱ 608,454.90
Due to BIR 52,649.08
Construction in Progress – Buildings 181,281.32
and Other Structures

Second partial payment:

Account Title Debit Credit
Due to LGUs - Province ₱ 1,137,090.40
Cash in Bank Local Currency ₱ 895,527.94
Due to BIR 71,068.14
Construction in Progress – Buildings 170,494.32
and Other Structures

Third partial payment:

Account Title Debit Credit
Due to LGUs - Province ₱ 514,085.90
Cash in Bank Local Currency ₱ 412,656.75
Due to BIR 32,130.37
Construction in Progress – Buildings
69,298.78
and Other Structures

Fourth partial payment:

Account Title Debit Credit
Due to LGUs – Province ₱ 371,856.80
Cash in Bank Local Currency ₱ 288,338.21
Due to BIR 23,241.05
Construction in Progress – Buildings
60,277.54
and Other Structures

Full payment:
Account Title Debit Credit
Due to LGUs - Province ₱ 1,014,101.00
Cash in Bank Local Currency ₱ 847,986.94
Due to BIR 63,381.32
Construction in Progress – Buildings
102,732.74
and Other Structures

25
 Transfer to GF books of the completed asset

No entry made in TF and GF books as of December 31, 2022. No refund and

liquidation done in CY 2022 when project contract cost was fully paid in November
2022.

The Due to LGUs account was immediately debited for payments for the project cost
instead of the Construction-in-Progress (CIP) Account, contrary to COA Circular
2015-009. The debit to CIP account pertains to the advance payment to the
contractors for the mobilization of the project. This should have been debited instead
to Advances to Contractors Account. Also, no asset account was debited as of
December 31, 2022, thus understating the liabilities and asset account.

The non-submission of the above-mentioned documents, contrary to the provision of

Section 72 of the MNGAs for LGUs and COA Circular No. 94-013, precluded the Audit
Team from verifying the extent of the implementation, the proper utilization of funds
transferred, and compliance with prescribed guidelines. Moreover, erroneous booking of
transactions pertaining to the utilization of fund transfers from other NGAs and LGUs
rendered unreliable the validity and accuracy of the reported balances of Due to NGAs
and Due to LGUs as of December 31, 2022.

We issued AOM No. 2023-009 (2022) dated April 24, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive instruct
the Municipal Accountant to submit the following:

a) Status Report of the Fund Transfers of the Municipality as of December 31,

2022 and the Status of Implementation of Projects and other documentary
evidence; and

b) Subsidiary ledgers of the accounts under Due to NGAs and Due to LGUs as of
December 31, 2022.

We also recommended and management agreed that the Municipal Accountant

review the entries made pertaining to the implementation of projects whose funds
are sourced from fund transfers from other NGAs and LGUs and make the
necessary adjusting entries to reflect the true balance of the liability and asset
accounts.

Lastly, we recommended and management agreed that the Local Chief Executive
require the Municipal Accountant to ensure that the liquidation report of the fund
transfers with all the originals of vouchers/payrolls and supporting documents be
submitted to the Audit Team, as prescribed under COA Circular No. 94-013 dated
December 13, 1994.

26
3. Lapses in the accounting of RPT and SET resulted to discrepancy between the
reported balances of RPT/SET Receivables and the Certified List of RPT
Delinquencies as of December 31, 2022 in the amount of ₱14.477 million and
₱14.477 million for the RPT and SET Receivables, respectively contrary to the
NGAS Manual for LGUs, thus affecting the reliability and accuracy of the
Receivable accounts presented in the financial statements.

Section 20, Volume 1 of the NGAS Manual for LGUs provides that Real Property Tax
(RPT) Receivables/Special Education Tax (SET) Receivables shall be established at the
beginning of the year based on Real Property Tax Account Register
(RPTAR)/Taxpayer’s index card. At the beginning of the year, the Treasurer shall
furnish the Chief Accountant with a duly certified list showing the name of taxpayers and
the amount due and collectible for the year. Based on the list, the Chief Accountant
shall draw a Journal Entry Voucher (JEV) to record the debit to Real Property Tax
Receivable/Special Education Tax Receivable and crediting to Deferred Real Property
Tax Income/Deferred Special Education Tax Income.

The same Section provides that every end of the week, the Municipal Accountant shall
furnish the Provincial Accountant with a summary of the JEVs showing the breakdown of
the amounts Due to LGUs. Xxx At the end of the month, the Municipal Accountant shall
likewise prepare the Abstract of Real Property Tax to facilitate the distribution of real
property tax collection. A copy of the abstract shall be furnished the Provincial
Accountant, for purposes of reconciliation with the weekly summary of JEVs.

Review of the Municipality’s current practice in the accounting for RPT and SET
revealed the following:

1. The Certified List of all RPT Delinquencies was provided by the Municipal Treasurer
to the Municipal Accountant for the setting up of the RPT/SET Receivables at the
beginning of the year, however the Municipal Accountant was not able to set up
additional receivables at the beginning of the year since according to her the
receivables will greatly increase in amount and this could affect the target estimates.

2. The Municipal Treasurer also furnishes the Municipal Accountant the Abstract
showing the summary of RPT/SET collections weekly and on a monthly basis for
updating of the RPT/SET Receivable balances but no adjustments were made since
no additional RPT/SET Receivables were set up at the beginning of the year.

3. Review of financial records showed that entries were only made at the end of the
year to the RPT & SET Receivables, while during collection throughout the year the
RPT/SET accounts are directly credited for the Municipal share of the collection.

4. In effect, the certified List of all RPT Delinquencies prepared by the Municipal
Treasurer and Accounting Notes to FS balances as of December 31, 2022 and 2021
show the following variances on the RPT/SET Receivables:

2022
Per Certified List Per Notes to FS Variance
RPT Receivable 16,602,914.57 2,126,264.42 18729178.99
SET Receivable 16,602,891.95 2,126,264.47 18729156.42

27
 Totals 33205806.52 4252528.89 37458335.41

2021
Per Certified List Per Notes to FS Variance
RPT Receivable 9,446,063.71 5,852,631.86 3,593,431.85
SET Receivable 9,446,054.31 8,273,649.06 1,172,405.25
Totals 18892118.02 14126280.92 4765837.10
Change 24,187,440.53

This is also an audit observation in the previous year’s audit, however, there was an
increase of 507.5 percent or ₱24.187 million in the total variance during the year
compared to the previous year’s variance.

Variances may have occurred due to untimely recording of the transactions and the
amounts have significantly increased due to errors that have been overlooked. These
could have been promptly addressed and reconciled, had the transactions been
recorded weekly, pursuant to the NGAS Manual for LGUs. Variances found in the
records of the accounting office affect the reliability and accuracy of RPT/SET
Receivable accounts presented in the financial statements.

We issued AOM No. 2023-012 (2022) dated April 27, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive direct
the Municipal Accountant and the Municipal Treasurer to do the following:

1. Reconcile their records and make the appropriate adjustment to reflect the
correct balances of the RPT/SET receivables; and

2. Strictly comply with the procedures provided under the NGAS Manual for LGU
in the accounting of RPT/SET by preparing and submitting the summary of
collections on a weekly basis.

4. Acquisition and issuance of inventories are not properly accounted and the
Report on Physical Count of Inventories for the period was not prepared and
submitted contrary to COA Circular No. 2015-009 and the New Government
Accounting System (NGAS) Manual for Local Government Units (LGUs), thus
reported utilization of inventories in the total amount of ₱12.674 million is
unreliable.

COA Circular No. 2015-009 dated December 1, 2015 prescribes the revised chart of
accounts for Local Government Units.

Among others, Inventory Held for Consumption includes the following accounts:

Office Supplies Inventory. This account is used to record the cost or value of
purchased/acquired office supplies such as bond paper, ink, and small tangible items
like staple wire remover, puncher, stapler and other similar items for use in the

28
government operations. Credit this account for issuance to end-users, transfers or other
disposal.

Drugs and Medicines Inventory. This account is used to record the cost of drugs and
medicines purchased/received for government operations. Credit this account for
issuance to end-users, transfers or other disposal.

Medical, Dental and Laboratory Supplies Inventory. This account is used to record the
cost of medical, dental and laboratory supplies purchased/received for government
operations. Credit this account for issuance to end-users, transfers, or other disposal.

Agricultural and Marine Supplies Inventory. This account is used to record the cost of
fertilizers, pesticides and other marine and agricultural supplies for use in government
operations. This includes supplies for aquaculture research, environment
protection/preservations and the like. Credit this account for issuance to end-users,
transfers, or other disposal.

Accountable Forms, Plates and Stickers. This account is used to record the cost of
accountable forms acquired for government operation. It includes accountable forms
with and without face value, such as official receipts, passports, tickets, stickers,
permit/license plates, LTO plates, and the like. Credit this account for issuance to end-
users, transfers, or other disposal.

Non-Accountable Forms Inventory. This account is used to record the cost of non-
accountable forms such as pre-printed application forms, tax returns forms, accounting
forms and the like. Credit this account for issuance to end-users, transfers, or other
disposal.

Other Supplies and Materials Inventory. This account is used to record the cost of
purchased/acquired inventories not falling under any of the specific supplies and
materials inventory accounts held for consumption. Credit this account for issuance,
transfers or other disposal.

Moreover, Section 56 of the NGAS Manual for LGUs provides that The Report on the
Physical Count of Inventories shall be used to report the physical count of supplies by
type of inventory as of a given date. It shows the balance of inventory items per cards
and per count and shortage/overage, if any.

Appendix 48 of the same Manual provides for the instruction and template on the
preparation of the Report on the Physical Count of Inventories (RPCI) e.g., Office
Supplies Inventory, Accountable Forms Inventory, Medical, Dental and Laboratory
Supplies Inventory, Food/Non-Food Supplies Inventory, etc. which are owned by the
LGU. This shall be prepared yearly every six months in four copies and shall be certified
correct by the Inventory Committee, attested by the representative of the Auditor
concerned and approved by the Head of the Agency. This shall be distributed as
follows:

Original copy - Accounting Unit

Duplicate copy - COA Auditor
Triplicate copy - Supply and Property Unit
Quadruplicate copy - Inventory Committee file

29
It shall be submitted to the Auditor concerned not later than July 31 and January 31 of
each year for the first and second semesters, respectively.
Review of the transactions and records of the Municipality pertaining to its inventories
disclosed the following:

1. Inventories Held for Consumption were utilized and recorded in its comparative
Financial Statements as follows:

2022 2021
Fuel, Oil and Lubricants Expenses 5,337,307.39 3,396,241.16
Food Supplies Expenses 2,614,029.00 1,175,672.09
Office Supplies Expenses 1,281,793.28 1,112,186.60
Drugs and Medicines Expenses 982,810.00 49,673.00
Accountable Forms Expenses 374,812.50 322,915.00
Medical, Dental, and Laboratory Supplies Expenses 0.00 264,000.00
Other Supplies and Materials Expenses 2,083,163.22 264,104.00
2083163.22 6586812.85

Review of the Journal Entry Voucher Registry showed that costs of office supplies,
medical supplies, and other supplies and materials, among others, purchased were
directly debited to their respective expense accounts instead of initially recording
them to their respective inventory accounts. A sample entry made is as follows:

Office Supplies Expenses Xxx

Cash in Bank-Local Currency, CA (GF-Estancia) Xxx
Due to BIR-1% (GF proper) Xxx
Due to BIR (1% GF Proper Bus. Tax-% tax) Xxx

This has been a long-established practice of the Municipality because according to

the Municipal Accountant, upon delivery of the inventories by the supplier, these
were immediately released to the end users who requested for the supplies and
materials.

Since there was no Inventory Account established, Ending Inventory for the above
supplies and materials were not accounted for at year-end, and the Report on the
Physical Count of Inventories for the period was not prepared and submitted.

2. Vaccines received by the Municipal Health Office (MHO) were not properly
accounted for:

a. Total vaccines received per Vaccine Arrival Reports and other documents
submitted showed the following:

Receipts Summary
Brand Vials Source
Astrazeneca 242 PHO
60 Ajuy RHU

30
 Receipts Summary
Brand Vials Source
Pfizer (violet cap) 1,366 PHO
20 DJMC BN
24 JCMDH
Pfizer (orange cap) 581 PHO
37 JCMDH
Moderna 339 PHO
Sinovac 440 PHO
Total 3,109

Stock cards were prepared by the RHU personnel for the receipt of COVID
vaccines but none for ancillary supplies. The cost of vaccines received were not
reflected in the books of the Municipality, which according to the Municipal
Accountant and the RHU personnel, no other documents were forwarded to them
from the source agency, showing the cost of the vaccines transferred.

b. Further, ending Inventory of vaccines (including quarantined vaccines - vaccines

that has gone beyond its shelf life after thawing), together with the ancillary
supplies, per MHO were not reflected in the books of accounts at year-end.
Below is the summary of the ending inventory:

Vials in Ending Vials Quarantined

Brand Inventory (shelf life lapsed)
Sinovac 15 0
Pfizer Purple (Adult) 24 27
Pfizer (orange cap) 26 0
Moderna 0 65
65 92

c. Lastly, no data of vaccines administered were submitted for verification as such

is not readily available according to the RHU personnel in charge. She has yet to
extract the data from the report they submitted to DOH via online. Thus, the data
submitted for ending inventory balances cannot be readily verified and validated.

Directly recording the inventories as expenses and not accounting for the ending
balances at year-end renders the expenses incurred for the period overstated and the
assets understated thus, the Financial Statements may not be fairly presented.

We issued AOM No. 2023-005 (2022) dated April 14, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive (LCE)
direct the following:

1. Municipal Accountant to record the purchases and issuance/utilization of

goods and supplies in its appropriate accounts in order to reflect the correct
balances at year-end;

31
 2. Inventory Committee to properly maintain inventory records for monitoring
and record-keeping purposes, conduct the semestral physical count on
inventories, and submit the same to the Office of the Auditor within the period
prescribed;

3. Municipal Health Officer to ensure that data for vaccines received and
administered are properly monitored and submitted to the Accounting Office
for recording.

5. Total Revenue reported in the Statement of Financial Performance, Statement of

Comparison of Budget and Actual Amounts and Statement of Receipts and
Expenditures from the Municipal Treasurer’s Office, as of December 31, 2022 have
discrepancies resulting from the non-reconciliation of the amount of revenue
recorded and in the absence of subsidiary records to easily identify and reconcile
differences, thus rendering the reported revenues in the financial statements
unreliable.

Item 3.4 of COA Circular No. 2016-004 dated September 30, 2016 prescribes the
presentation of Financial Statements which comprise the following:

1. Statement of Financial Position

2. Statement of Financial Performance
3. Statement of Changes in Net Assets/Equity
4. Cash Flow Statement
5. Comparison Statement of Budget and Actual Amounts
6. Notes to Financial Statements

Annex F of the Circular prescribes the format to be used in preparing the SCBAA.

In addition, Section 41(2) of PD No. 1445 states that:

“(2) To carry out the purposes of this section, the chief accountant or the
official in charge of keeping the accounts of a government agency shall
submit to the Commission year-end balances and such other supporting
or subsidiary statements as may be required by the Commission not later
than the fourteenth day of February…

The Financial Statements submitted by the Municipality last February 14, 2023 did not
include the Statement of Comparison of Budget and Actual Amounts (SCBAA). It was
only submitted upon demand on February 28, 2023. Presentation of the SCBAA will
enable the users of the financial statements to identify whether resources were obtained
and used in accordance with the approved budget. The SCBAA should also provide
explanations if the actual amount differs from the budgeted amount to assist the users of
the financial statements in understanding the reasons for the material departures from
the approved budget for which the local government unit (LGU) is held publicly
accountable.

Scrutiny and validation of the actual amounts in the submitted SCBAA revealed that
errors or discrepancies in the reported revenue accounts:

32
 Per Consolidated Per Statement Per MTO
Statement of of Comparison of Statement of
Financial Budget and Receipts and
Performance Actual Amounts Expenditures
Tax Revenue 15,343,639.24 11,117,969.60 15,243,823.70
Share from Internal
158,310,232.00 158,310,231.96 158,310,231.96
Revenue Collection
Other Share from
239,604.78 0.00 239,604.78
National Taxes
Service and Business
12,564,692.76 4,779,710.69 13,818,684.55
Income
Shares, Grants and
998,000.00 0.00 12,346,049.22
Donations
187,456,168.78 174,207,912.25 199,958,394.21
Difference from
0.00 13,248,256.53 (12,502,225.43)
reported in the FS

According to the Budget Officer the data in her SCBAA was derived from the report of
the MTO however as compared to the MTO’s report, the reported revenue in the SCBAA
does not reconcile. One source of discrepancy observed was that the SCBAA reported
revenue amounts do not include that of the SEF and LEE.

Further, upon review of the reported revenues from the offices of the Municipal
Accountant and the Municipal Treasurer, it was found that there are discrepancies noted
due to unreconciled records between the Accounting and Treasurer’s Offices. According
to both offices they regularly conduct reconciliation, however, there is no document to
support the same. The Accounting Office does not have subsidiary records for each
type of revenue item thus the discrepancy due to differences in the treatment of receipts
between the Accounting and Treasurer’s office cannot be readily reconciled.

Lastly, management commented that the discrepancies could have occurred due to
some technical issues with the Electronic Statement of Receipts and Expenditures
(ESRE) program used by the Municipal Treasurer’s Office, and that they will try their
best to address the issue.

We issued AOM No. 2023-011 (2022) dated April 27, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive direct
the Municipal Accountant and the Municipal Treasurer to prepare subsidiary
records duly counter-checked by each office to prove that reconciliation is
regularly done and to easily identify the source of error or discrepancies in the
reports.

We also recommended and management agreed that the Municipal Accountant

and Budget Officer closely coordinate in the preparation and submission of the
SCBAA to ensure accuracy and that it will be submitted on time together with the
other financial statements.

33
6. Delinquent Real Property Tax amounting to ₱33.206 million remained uncollected
as of December 31, 2022 and the Bureau of Local Government Finance (BLGF)
collection target was not achieved incurring a shortfall of ₱6.373 million or 46.2
percent contrary to pertinent provisions of Republic Act No. 7160, thus potential
revenues which could have been utilized for the development programs and
projects of the Municipality were not realized.

Section 247 of Republic Act (RA) No. 7160, otherwise known as the Local Government
Code of 1991, states that the collection of real property tax with interest thereon and
related expenses, and the enforcement of the remedies … shall be the responsibility of
the city/municipal treasurer concerned.

Sections 256 to 260 of the same Act provide for the following remedies for the collection
of Real Property Tax:

a. The local government unit concerned may avail of the remedies by administrative
action thru levy on real property or by judicial action;

b. The real property subject to such tax may be levied upon through issuance of a
warrant on or before, or simultaneously with the institution of the civil action for the
collection of the delinquent tax;

c. Within thirty (30) days after service of warrant of levy, the local treasurer shall
proceed to publicly advertise for sale or auction of the property or a usable portion to
satisfy the tax delinquency and expenses for sale.

Review of the Certified List of All Real Property Tax Delinquencies submitted by the
Municipal Treasurer showed that Real Property Tax amounting to ₱33.206 million
remained uncollected as of December 31, 2022 broken down as follows:

Tax Penalty Total

Basic ₱10,656,392.47 ₱5,946,522.10 0
SEF 10,656,391.96 5,946,499.99 16602891.95
Total 10656391.96 5946499.99 16602891.95

On the other hand, based on the Notes to the Financial Statements collections made by
the Municipality for the year are as follows:

CY 2022 CY 2021
Real Property Tax Basic 3,651,237.22 3,213,752.99
Less: Discount on RPT 242,185.79 296,931.23
Sub-Total 3893423.01 3510684.22
Special Education Tax 4,513,965.73 4,065,647.58
Less: Discount on SET 388,617.50 442,591.12
Sub-Total 12689429.25 11529607.14
Total 7,534,399.66 6,539,878.22

Differences in Reported Receipts by Accounting and Treasurer’s Office were the subject
of a separate audit observation.

34
Based on the Income Budget/Estimated Receipts for CY 2022, the Municipality has
exceeded its target by ₱0.544 million or 7.9 percent:

Amount %
LGU Estimated Receipts 6,870,000.00 100.00
Actual RPT Collections per MTO 7,414,109.22 107.92
Difference 14284109.22 7.92

Per inquiry with the Municipal Treasurer, notices of delinquency were served to the
taxpayers annually. She added that out of the more than 130 properties subject for
auction, only one remained and was eventually sold during a public auction conducted
last November 28, 2022. Others entered into compromise agreement and made partial
payments. Thus, we commend the management for their efforts in the collection of taxes
and properly managing the delinquent accounts.

However, evaluation of the collection efficiency of the Municipality based on the Local
Revenue Performance Targets for Fiscal Year 2022 set by the Provincial Treasurer’s
Office and BLGF showed that the former achieved only 53.8 percent of its
estimate/target collection i.e., it significantly fell short by ₱6.373 million or 46.2 percent of
its estimate/target collection.

Amount %
Local Revenue Performance Target 13,786,925.54 100.00
Actual RPT Collections per MTO 7,414,109.22 53.78
Difference 6,372,816.32 46.22

According to the Municipal Treasurer, some lots with delinquent taxes are still under
dispute and some are those covered by the Comprehensive Agrarian Reform Program
(CARP) and for eventual issuance of certificates of land ownership award (CLOA). Also,
some records were not updated.

Despite its efforts to increase its collection efficiency, the Municipality however
significantly fell short of its collection estimate/target by ₱6.373 million or 46.2 percent.
Thus, potential revenues which could have been utilized for the development programs
and projects of the Municipality were not realized.
We issued AOM No. 2023-012 (2022) dated April 27, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive direct
the following:

1. Municipal Treasurer to enforce collection of the delinquent real property taxes

by conducting more aggressive tax campaigns and by strictly implementing
the remedies provided in Sections 256 to 260 of R.A. No. 7160; and

2. Municipal Treasurer, in coordination with the Municipal Assessor, to conduct

ocular inspection on lands with outdated records, inquire on the status with
the current possessor if any, and require them to submit documents to correct
and update the records.

35
7. Unreleased checks, stale checks, and cancelled checks totaling ₱5.431 million
were included in the Report of Checks Issued, treated as bank reconciling items in
the Bank Reconciliation Statements, and not reverted back to the Cash in Bank
account, contrary to Section 112 of Presidential Decree (PD) No. 1445 and
Sections 42, 43 and 59 of the New Government Accounting System (NGAS)
Manual for Local Government Units (LGUs), thus understating the Cash in Bank
and the corresponding Payable accounts at year-end.

Section 112 of PD No. 1445 provides that, “Each government agency shall record its
financial transactions and operations conformably with generally accepted accounting
principles and in accordance with pertinent laws and regulation.”

Corollary thereto, Section 43, Chapter 3 – Accounting System of the NGAS Manual for
LGUs provides the accounting policy in reporting of checks issued which states that,
“The checks released to the claimants shall be reported in the Report of Checks
Issued prepared per fund by the Municipal Treasurer. The report shall be submitted to
the Accountant for preparation of Journal Entry Voucher based on individual checks
issued and recording in the Check Disbursements Journal.” (emphasis supplied)

Section 42 of the same Manual also states that “For purposes of releasing checks, the
Treasurer shall maintain a Check Register where all checks issued shall be recorded
chronologically and where the claimants shall be required to acknowledge receipt
thereof.”

On the other hand, Section 59 of the NGAS Manual for LGUs further provides the
following:

“Spoiled and Stale Checks – Checks may be cancelled when they become
spoiled or stale. Xxx

It is stale, if it has been outstanding for over six months from date of issue or
as prescribed by the depository bank. At least one month before a check
becomes stale, the Treasurer shall send a written notice to the payee of the
existence of the check.

A spoiled or stale check shall be marked cancelled on its face and reported
as follows:

1. Xxx

2. For stale checks which have been unclaimed and thus, the original DV
and supporting documents are still with the Treasurer, the cancelled
check shall be presented in the RCI after the last check issued for the
period indicated in the report. The original DV and supporting documents
shall be returned to the Accountant who shall prepare a JEV to record the
transaction as Accounts Payable. xxx”

Review of the Bank Reconciliation Statements, Check Registers, and Report of Checks
Issued for the various funds of the Municipality of Balasan revealed the following:

36
1. A total of 163 checks amounting to ₱5.962 million (Details in Appendix N), were
reported as outstanding checks and treated as bank reconciling items for the end of
year cash in bank balances in the Municipality’s books.

Verification of the Check Registers revealed that out of the total amount, ₱5.239
million of the outstanding checks were reported in the RCI prepared by the Office of
the Municipal Treasurer. These checks were not reverted back to the Cash in Bank
account by the Office of the Municipal Accountant, notwithstanding that these were
not yet released to the claimants contrary to Section 43 of the NGAS Manual for
LGUs.

According to the Municipal Accountant, it has been the management’s practice that
checks issued on the last working day of the year were outrightly reported as
outstanding checks regardless of whether or not these checks were released to the
claimants. Also, the Office of the Municipal Treasurer does not prepare and provide
a copy of the list of the unreleased checks to the Office of the Municipal Accountant
nor place notations on the RCI for checks that are still unreleased or unclaimed at
year-end.

2. The Check Registers were not properly and completely accomplished as proven by
the absence of the signatures of some of the claimants or their representatives and
the absence of the date the checks were released/claimed contrary to Section 42 of
the NGAS Manual for LGUs.

3. Long outstanding checks, including cancelled, ranging from 183 to 2,165 days
(Details in Appendix O) totaling ₱192,143.00 as follows were still recorded as
reconciling items in the Bank Reconciliation Statement submitted by the Office of the
Municipal Accountant.

Amount
Stale Checks 153,678.53
Cancelled Checks 38,464.47
Total 192,143.00

According to the Municipal Accountant, these may have been overlooked by them,
and necessary adjustments will be made accordingly. Also, according to the
Municipal Treasurer, they have not sent out letters to payees of outstanding checks
prior to the checks becoming stale. Hence, these checks were left unmonitored and
were just carried out as outstanding checks.

The non-reversion of the unreleased checks, stale, and cancelled checks aggregating to
₱5.431 million contrary to the aforementioned accounting policies resulted to the
understatement of the Cash in Bank account and the corresponding Payable accounts,
thus it does not accurately reflect the actual account balances of the Municipality at the
end of the year.

We issued AOM No. 2023-004 (2022) dated March 22, 2023 relative to this audit finding.

37
 Recommendation

We recommended and management agreed that the Local Chief Executive direct:

1. The Municipal Treasurer to:

a. Ensure accuracy and completeness in the preparation of the Check

Register and Report of Checks Issued for each fund in accordance with
Sections 42 and 43 of Chapter 3 of the NGAS Manual for LGUs;

b. Prepare and provide a copy of the list of unreleased checks to the

Municipal Accountant at the end of the year; and

c. Monitor long outstanding checks, and send out notices to the payee of the
existence of the check at least one month before the check becomes stale.

2. The Municipal Accountant to:

a. Make the necessary adjustments for unreleased checks at year-end, to

restore the Cash in Bank and corresponding Payable accounts in the
Financial Statements; and

b. Ensure that only valid checks issued and released are reported as
reconciling items in the Bank Reconciliation Statements.

8. The Municipality’s expenditures for Fuel Consumption totaling ₱5.337 million were
not effectively controlled and monitored due to the following: (a) Driver’s Trip
Tickets were not properly accomplished; and (b) Monthly Report of Fuel
Consumption and Monthly Report of Official Travels were not submitted to the
COA Office contrary to the Manual on Audit for Fuel Consumption of Government
Motor Vehicles prescribed in COA Circular No. 77-61, hence the reasonableness
and validity of fuel consumed were not ascertained.

COA Circular No. 77-61 prescribes the use of the “Manual on Audit for Fuel
Consumption of Government Motor Vehicles” in order to minimize wasteful, excessive
and unnecessary expenditures for fuel consumption of government vehicles.

Item B(2) of the Manual states that the use of government motor vehicles should be
controlled through properly accomplished and duly approved Driver’s Trip Tickets
(DTTs) which should be serially numbered, a summary of which shall be made at the
end of the month in a Monthly Report of Official Travels.

Item B(3) of the same Manual states that the Monthly Report of Fuel Consumption of
government motor transportation shall be submitted to the Auditor for verification
purposes to determine the reasonableness of fuel consumed during the period.

Added to that, Item B(7) of the Manual provides that no disbursement voucher for fuel
consumption of government vehicles shall be allowed in audit unless duly supported by
properly accomplished and approved serially numbered driver’s trip tickets, and that the
government vehicles involved are plainly marked “For Official Use Only” and bear

38
government plates only with the exception of security vehicles exempt from using
government plates.

Audit of the Municipality’s fuel expenses totaling ₱5.337 million for CY 2022 (Details in
Appendix P) disclosed that the vehicle’s plate number, places to be visited/inspected,
fuel balances and consumption as well as the distance travelled per trip were not
completely indicated in the DTTs; and the passenger(s) did not affix their signatures in
the DTTs. This has been an audit observation since CY 2016 Annual Audit Report.

Review of the supporting documents such as Charge Invoices also revealed that the
plate number of the vehicle being fueled is also not indicated and only the description of
the vehicle such as bus, backhoe, rescue vehicle, ambulance, dump truck, and
responder is written on the Charge Invoices. It was also observed that only one DTT is
attached per charge invoice, when the vehicle was gassed up to almost full tank capacity
(i.e. 40 to 100 liters per transaction see details in Appendix Q), thus for the other trips
made there were no DTTs attached.

Furthermore, the Municipality did not submit the required Monthly Report of Official
Travels and Monthly Report of Fuel Consumption to COA Office for verification as
prescribed in the Manual on Audit for Fuel Consumption of Government Motor Vehicles
despite the management’s agreement to the recommendations to a similar audit
observation included in the CY 2019 Annual Audit Report.

Per inquiry with the Municipal Accountant, the above noted observations were the
results of the Municipality’s long-established practice. The practice of not strictly
accomplishing the data required to be indicated in the DTTs and the non-submission of
monthly reports related to fuel consumption resulted to difficulty in ascertaining whether
fuel, oil and lubricants were provided only for government vehicles on official travel and
none were used for unauthorized travels or by private vehicles.

We issued AOM No. 2023-003 (2022) dated March 22, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive direct
the concerned officials to do the following:

a) Prepare Driver Trip Tickets (DTTs) for every official travel/trip made using
government vehicles and attach it as supporting documents to the payment for
the fuel, oil and lubricants purchased;

b) Official/employee assigned to control and approve the DTTs to see to it that all
data needed such as the vehicle’s plate number, place(s) to be
visited/inspected, fuel balances and consumption, and distance travelled, for
every trip made, are completely accomplished;

c) Designated drivers to request their passenger(s) to affix their signatures in the

approved DTTs after every trip; and

d) Prepare and submit to the COA Office duly accomplished Monthly Report of
Official Travels and Monthly Report of Fuel Consumption.

39
9. The Municipality on the monitoring and utilization of its Local Disaster Risk
Reduction and Management Fund (LDRRMF) for CY 2022: (a) did not prepare and
maintain separate registries resulting to difficulty in monitoring the balances of
the fund; and (b) did not transfer to the Special Trust Fund (STF), the unexpended
balance of the LDRRMF for CYs 2018 to 2022 thereby, understating the total
liabilities and overstating government equity in the financial statements and
exposes funds to possible misuse, contrary to pertinent provisions of COA
Circular No. 2012-002

Pertinent provisions of COA Circular No. 2012-002 dated September 12, 2012 on the
accounting and reporting guidelines for the LDRRMF states that:

“5.1.4 Separate Registries for Appropriations, Allotments and Obligations

(RAAO) shall be maintained for the LDRRMF as follows:

5.1.4.1 RAAO – for QRF

5.1.4.2 RAAO – for MOOE
5.1.4.3 RAAO – for CO
xxx

5.1.10 All unexpended/unobligated balance of the QRF and the DRRM-

MOOE shall be transferred to the Special Trust Fund under the
account "Trust Liability-DRRM"(Code 438) in the Trust Fund books.

5.1.11 All unexpended/unobligated balance of the LDRRMF for CO shall be

made continuing in the General Fund books until the projects funded
therefore are completed and any savings shall be available for use in
the disaster risk reduction and management activities as provided in
the LDRRMFIP.

5.1.12 The account Trust Liability-DRRM in the Trust Fund books shall be
used to record transfers of the agency’s unutilized QRF and the
DRRMF-MOOE of the previous years xxx. Subsidiary ledgers shall be
maintained for transfers of agency’s unutilized DRRMF to the special
trust fund by year of transfer xxx.

5.1.13 The unutilized balance of the LDRRMF shall be available for use in the
disaster risk reduction and management activities as provided in the
LDRRMFIP within the next five years. Any unutilized amount after five
years shall be reverted back to the unappropriated surplus of the
General Fund and shall be made available for other social services
after subsequent enactment by the local sanggunian. Xxx”

Based on the Report in Utilization of the DRRMF as of December 31, 2022, the balance
of the Special Trust Fund should have been ₱15.272 million as shown below, however
the reported balance of the Trust Fund Liability – DRRMF in the Statement of Financial
Position of the Municipality is only ₱41,010.52, thus the Liabilities Account is
understated by ₱15.231 million. However, this amount is not yet final due to
unavailability of registries to validate this amount.

40
 Continuing Appropriation – Mitigation Fund 3,476,854.49
Previous Year’s Appropriation transferred to STF – 5,494,774.40
QRF & MF*
Total Previous Year’s Unexpended LDRRMF (A) 8971628.89
*The Year to which this pertains to is not indicated in
the report
Current Year Appropriation:
Quick Response Fund 2,617,270.05
Mitigation Fund 6,106,963.44
Total Current Year Appropriation 8,724,233.49
Total Utilization CY 2022 2.424,330.23
Unexpended CY 2022 LDRRMF (B) 6,299,903.26

Should be Reported Trust Fund Liability** (A + B) 15,271,532.15

Reported Trust Fund Liability – DRRMF 41,010.52
Difference 15,230,521.63
**Final amount subject for adjustment for appropriations for Capital Outlay

In the Notes to FS there is an additional disclosure as follows:

“In the continuing appropriation, part of ₱144.206 million intended for

MDRRMF, QRF and MOOE amounting to ₱2.617 million and ₱3.076 million
respectively to be transferred to Trust Fund.”

Amount
Particulars Available Utilized Balance
Current Year Appropriation:
Quick Response Fund 2,617,270.05 0.00 2,617,270.05
(QRF) 2022
Mitigation Fund (MF) MOOE 5,500,339.86 2,424,330.23 3,076,009.63
2022
Capital Outlay 6,101,397.98 0.00 6,101,397.98
Total 14,219,007.8 2,424,330.23 11,794,677.66
9

Continuing Appropriation:
Special Trust Fund
CY 2021 3,476,854.49 0.00 3,476,854.49
Total 3,476,854.49 0.00 3,476,854.49

No registries and subsidiary ledgers related to LDRRMF were submitted for verification,
thus the amounts as disclosed cannot be readily verified. According to the Municipal
Accountant she only maintains a record of the unexpended LDRRMF and it is lumped
per year. However, the disclosure in the Notes to FS do not provide the unexpended
amounts per calendar year but only labeled as STF CY 2021 which according to the
Municipal Accountant, all prior years unexpended LDRRMF were exhausted during the
COVID-19 Pandemic.

41
 The failure to maintain separate registries for the LDRRMF and to properly monitor and
account movements in the Fund resulted to inaccurate computations and recordings
which rendered doubtful the correctness and reliability of the reported balances.
Also, the failure to transfer fully the reported unexpended balances of the LDRRMF to
the STF resulted to the understatement of the total liabilities and overstatement of the
government equity in the financial statements. Likewise, funds are exposed to possible
misapplication and could likely be used for purposes other than disaster risk reduction
and management related programs and projects.

The same deficiency was noted in the previous year’s audit and was communicated to
the management, yet recommendations remained not implemented.

We issued AOM No. 2023-006 (2022) dated April 14, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Municipal Budget Officer

maintain separate registries for the LDRRMF to properly monitor its utilization and
any other movements therein, and to facilitate the efficient determination of the
balances of the LDRRM Fund for current and prior years.

We also recommended and management agreed that the Municipal Budget Officer
and the Municipal Accountant conduct periodic reconciliation of the balances of
the LDRRMF to ensure the correctness and reliability of reports submitted.

We further recommended and management agreed that the Municipal Accountant

should transfer intact the unexpended balance of the LDRRMF to the Special Trust
Fund and to henceforth strictly observe the pertinent provisions of COA Circular
No. 2012-002 so as to avoid misuse of the fund.

10. Non-allowable expenses incurred in Calendar Year 2022 were charged against the
Local Disaster Risk Reduction Management Fund (LDRRMF) contrary to Sections
4.3 and 4.4 of NDRRMC-DILG-DBM-CSC JMC No. 2014-1, thus depleted the
available resources for implementation of DRRM Activities and defeated the
purpose for which the fund was established.

Section 4.3 of the NDRRMC-DILG-DBM-CSC JMC No. 2014-1 mentioned that the
budgetary requirements for personal services, MOOE, and capital outlay of the
LDRRMO shall be sourced from the General Fund of the LGU, subject to Section 76 of
RA No. 7160.

Section 4.4 of the same JMC provides that the other maintenance and other operating
expenditures, and capital outlay requirements of the LDRRMO in the implementation of
DRRM programs shall be charged to the LDRRMF subject to the provisions of the
NDRRMC-DBM-DILG JMC No. 2013-1 and COA Circular No. 2012-002.

The following audit observations were noted during the review of the submitted
documents and verification with the Management:

1. The Audit Team requested a list of disbursements charged against the appropriation
of the 5% MDRRMF from the Municipal Budget Officer and disbursement vouchers

42
 from the Office of the Municipal Accountant. As per examination of the submitted
documents, there are still expenses in carrying out the administrative activities of the
MDRRM Office and non-allowable disbursements, that were charged under the
LDRRMF.

Also, upon checking the Approved CY 2022 Annual Investment Program of the
Municipality, there are items in the AIP that should have been part of the budget for
MOOE of the MDRRM Office and not to be considered as Project/Program/Activity
under Disaster Prevention and Mitigation, and Disaster Preparedness.

Expenses that can be charged under the LDRRM Fund are those directly related to
the implementation of the disaster risk reduction and management
projects/programs/ activities as discussed in NDRRMC-DBM-DILG JMC No. 2013-1
and COA Circular No. 2012-002.

2. The following are some of the expenses deemed not appropriate to be charged
under the LDRRMF based on the documents submitted:

a) Payment for labor and materials in the installation of the internet connection of
the MDRRM Office:

Date Check No Particulars Gross Amount

09/06/22 88971 Materials for the provision of internet 4,251.00
connectivity to the MDRRM office
10/13/22 89280 Labor Wiring & Installation of Internet 1,400.00
Connection MDRRMO
Total 5651.00

b) Payment for internet connection used by the MDRRM Office:

Date Check No Particulars Gross Amount

5/24/22 61157 Internet Subscription January to March 3,866.38
2022
12/21/22 89670 Internet Subscription April to October 20,185.00
2022
Total 24051.38

c) Payment for various materials used for the maintenance of the emergency
vehicles and trucks of the LGU:

Date Check No Particulars Gross Amount

3/12/22 60894 Various Materials for the maintenance of 19,398.00
the emergency vehicles and trucks of
LGU
Total 19398.00

d) Payment for the Allowance of Responders:

Date Check No Particulars Gross Amount

8/2/22 61548 Responder Allowance Municipal Fiesta 27,500.00

43
 10/13/22 89281 Responder Allowance Educational 6,000.00
Assistance Release
12/29/22 89774 BERT Responders Allowance Sanag 9,000.00
Festival
12/29/22 89775 BERT Responders Allowance Undas 6,750.00
Total 49250.00

3. Not all of the DVs submitted for expenses charged under the LDRRMF have
complete supporting documents. A total of 32 DVs amounting to ₱1.162 million as
shown in Appendix R have lacking supporting documents.

Section 4 (6) of PD No. 1445 explicitly states that claims against government funds
shall be supported with complete documentation.

4. Disbursements for venue rentals, hotel accommodation of resource persons,

tarpaulins training materials and other supplies amounting to ₱214,650.25 were
made through direct purchase and reimbursement contrary to Section 10 of RA No.
9184 which provides that all procurement shall be done through competitive public
bidding, except as provided in Article XVI of the Act. (Details in Appendix S)

There is no emergency or imminent threat to life or property when these items were
procured and the activities to which these were used were already scheduled in
advance thus these should have undergone proper procurement procedures, and
reimbursement and direct purchase should have not been resorted to.

Non-compliance with the pertinent provisions of the abovementioned JMC and other
related laws, rules and regulations mentioned; non-submission of all the documents for
expenses charged under the LDRRMF; incomplete supporting documents; and improper
charges against the said fund renders the legality, validity and propriety of its utilization
doubtful.

Moreover, payments for the MOOE of the MDRRMO out of the LDRRMF defeated the
purpose for which the fund was created.

We issued AOM No. 2023-006 (2022) dated April 14, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive direct
the:

1. MDRRM Officer and Other Persons Responsible to:

a) Ensure that expenses that are administrative in nature shall be charged

against the appropriations for the MDRRM Office and use the fund
prudently;

b) Avoid charging non-allowable expenses against the LDRRM Fund in order

to avoid audit suspensions/disallowances; and

44
 c) Discontinue the use of reimbursement or direct purchase in procuring
supplies and services for the program and activities of the MDRRMO.

2. Municipal Accountant, Municipal Budget Officer and MDRRMO to reconcile

their respective records relative to the disbursements charged under the
LDRRMF; and

3. Municipal Accountant to double check completeness and propriety of

supporting documents before payment to avoid audit
suspensions/disallowances.

11. The Municipality does not fully comply with the rules and regulations provided in
Republic Act (RA) No. 9003 also known as the Ecological Solid Waste
Management Act of 2000 by still maintaining and operating an open dumpsite,
thus exposing the nearby community to risk of increased health issues; and the
Municipality is deprived of additional funds for Solid Waste Management projects
and programs due to the non-enforcement of its Anti-Littering Ordinance.

Section 16 of RA No. 9003 or the “Ecological Solid Waste Management Act of 2000”
provides the following:

Local Government Solid Waste Management Plans. – The province, city or municipality,
through its local solid waste management boards, shall prepare its respective 10-year
solid waste management plans consistent with the National Solid Waste Management
Framework: Provided, That the waste management plan shall be for the re-use,
recycling and composting of wastes generated in their respective jurisdictions: Provided,
further, that the solid waste management plan of the LGU shall ensure the efficient
management of solid waste generated within its jurisdiction. The plan shall place primary
emphasis on implementation of all feasible reuse, recycling, and composting programs
while identifying the amount of landfill and transformation capacity that will be needed for
solid waste which cannot be re-used, recycled, or composted. The plan shall contain all
the components provided in Section 17 of this Act and a timetable for the implementation
of the solid waste management program in accordance with the National Framework and
pursuant to the provisions of this Act: Provided, finally, that it shall be reviewed and
updated every year by the provincial, city or municipal solid waste management board.

For LGUs which have considered solid waste management alternatives to comply with
Section 37 of this Act, but are unable to utilize such alternatives, a timetable or schedule
of compliance specifying the remedial measures and eventual compliance shall be
included in the plan.

All local government solid waste management plans shall be subjected to the approval
of the Commission. The plan shall be consistent with the national framework and in
accordance with the provisions of this Act and of the policies set by the Commission:…”

Section 37. Prohibition Against the Use of Open Dumps for Solid Waste. -- No open
dumps shall be established and operated, nor any practice or disposal of solid waste by
any person, including LGUs, which constitutes the use of open dumps for solid waste,
be allowed after the effectivity of this Act: Provided, That within three (3) years after the
effectivity of this Act, every LGU shall convert its open dumps into controlled dumps, in

45
accordance with the guidelines set in Section 41 of this Act: Provided, further, That no
controlled dumps shall be allowed five (5) years following effectivity of this Act.
Our review of the SWM-related activities of the Municipality in accordance with RA 9003
revealed the following:

1. The LGU has organized its Local Solid Waste Management Board by virtue of
Executive Order No. 2022-01-003, series of 2022 in accordance with Section 12 of
RA No. 9003.

2. The submitted 10-year SWM Plan of the Municipality was approved by the NSWMC
in its Resolution No. 381-A, series of 2023 dated January 31, 2023 pursuant to
Section 16 which states that all local government solid waste management plans
shall be subjected to the approval of the Commission. Thus, the Municipality is
entitled to the SWM Fund for the implementation of the projects, programs, and
activities (PPAs) embodied in its plan in accordance with Sections 45-4 and 46.

3. Per inquiry with the MENRO, and as verified by our observation, the LGU conducts
scheduled collection of garbage in the nearby barangays, residential and commercial
establishments at assigned pick-up points.

4. Biodegradable wastes especially those from the market are collected and further
sorted at the LGU SWM Eco Park and are processed into compost using the
biodegradable rotary composter, natural composting or vermi-composting method.
These are further used as fertilizer at the LGU Nursery, in the landscaping of the
Municipal Hall premises, and also made available to anybody who may request the
same since it is given for free at the moment.

5. Currently, the Controlled Dump Facility is closed to the public after it was voluntarily
closed in 2019 for rehabilitation. However, the residual wastes collected are starting
to pile up at the Residual Containment Area and the LGU is forced to dump some
residuals in the open dumpsite again, while the contract with the Sanitary Landfill in
Passi City was put on hold due to some issues with the contract, which is contrary to
Section 37 of the Act.

6. The Municipality also purchased a Thermal Decomposition Equipment (Pyrolysis) for

the treatment and elimination of special waste amounting to ₱13.440 million last July
2022 but the said equipment was not yet in use. According to the Municipal Engineer
the LGU had yet to finish the SWM Machinery Shed where the decomposition
equipment will be housed to efficiently process the residual and special wastes once
it is operational.

7. The minimum requirements for the operation of a controlled dumpsite as stated in

Section 39 of the Act were not fully observed such as: the access road leading to
the SWM Eco Park where the MRF and RCA is situated is not fully concreted and
maintained and it is difficult to access during rainy days; the required peripheral
canals and ditches were not constructed to divert run offs and prevent wastes from
going into contact with water; and perimeter fence were not maintained to fully
prevent unauthorized access of scavengers or entry of animals in the dump site,
among others.

46
8. Lastly, the LGU has approved Ordinance No. 2019-006 dated September 26, 2019
entitled “Anti Littering Ordinance of the Municipality of Balasan”, however, the
penalties imposed thereon where not strictly enforced due to the lack of manpower
or Task Force to carry out the apprehensions of violators, as confirmed from our
inquiry with the Municipal Environment and Natural Resources Officer (MENRO),
thereby depriving the Municipality of the funds that could have been used for its
SWM projects and programs.

The LGUs compliance with the provisions of RA No. 9003 through efficient solid waste
storage, collection, hauling, processing, and disposal, provides a healthful ecology and
protection to its environment. In addition, with the approval its 10-Year Solid Waste
Management Program by the National Solid Waste Management Commission, the LGU
is entitled to grants for the purpose of developing their technical capacities toward
actively participating in the program for effective and sustainable solid waste
management. Thus, we commend the LGU in its efforts toward achieving a sustainable
garbage management system.

The, LGU however is reminded to strictly implement and abide by its SWM plan and the
provisions of the Act in order to avoid administrative sanctions stated in Section 50;
sustain its solid waste management system in the long run; and not disqualify itself from
being entitled to the grants from the national government.

The Municipal Environment and Natural Resources Officer (MENRO) replied that they
will pursue the Memorandum of Agreement (MOA) with the Passi City Integrated Waste
Management Facility, a joint venture project of Passi City, Iloilo and Basic Environmental
System and Technologies, Inc., to address the disposal problem of residual wastes in
the Municipality. He added, that the Thermal Decomposition Equipment (Pyrolysis) will
start operating as soon as it is issued an Environmental Compliance Certificate (ECC) by
the Environmental Management Bureau (EMB), for the treatment and elimination of
special waste from the RHU, Hospital and Private Clinics. Further, the LGU have to
allocate fund for the construction of canal, concreting of road and perimeter fence to
prevent unauthorized access/entry of scavengers or animals in the area (LGU SWM Eco
Park). Lastly, the LGU will hire SWM enforcers to strictly carry out the apprehensions of
violators of Ordinance No. 2019-006 or the “Anti-Littering Ordinance of the Municipality
of Balasan” and impose fines and penalties stated thereon. The LGU will also hire
additional manpower for the operation of the LGU SWM Eco Park.

We issued AOM No. 2023-007 (2022) dated April 20, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive:

1. Direct the full implementation of the provisions of RA No. 9003, together with
the members of the SWM Board, in order to avoid administrative sanctions
stated in Section 50 of the Act;

2. Establish the SWM Task Force or appoint personnel to impose the fees, fines
and penalties due to the LGU as embodied in Ordinance No. 2019-006 dated
September 26, 2019 entitled “Anti Littering Ordinance of the Municipality of
Balasan”, and as provided in Section 47 and 49 of the Act; and

47
 3. Continue its effort in providing a sustainable solid waste management system
in the municipality.

12. Only eight projects or 22.1 percent in the total amount of ₱20.861 million were
implemented in CY 2022 out of the 38 priority development projects, under the
20% Development Fund (DF) with a total appropriation of ₱94.527 million, thus the
municipality’s constituents were not able to fully enjoy the services that they
could have availed had these projects been implemented and completed timely.

Item 3.2.2 of the DBM-DOF-DILG JMC No. 1 dated November 4, 2020 states that the
development projects that may be included under the 20% DF shall be those that are
necessary, appropriate or incidental to efficient and effective local governance, and
those which are essential to the promotion of the general welfare of the people.

Likewise, Item 3.2.3 provides that the LGUs shall ensure that the development projects
to be funded out of the 20% DF are well-planned and procurement-and-implementation-
ready.

Further, Item 4.0 of the same JMC emphasized that the responsibility and accountability
in ensuring that the development projects funded under the 20% DF comply with the
guidelines under this JMC and optimally contribute to the attainment of desirable socio-
economic targets and outcomes of the LGU shall rest upon the local chief executive and
other officials concerned.

In CY 2022, the Municipality appropriated ₱31.662 million in 20% DF for the

implementation of 17 projects:

Development Projects for CY 2022 Appropriation

1. Rehabilitation of Municipal and Barangay Roads 3,000,000.00
2. Municipal Environment Management Projects 4,000,000.00
3. ARC Equity 500,000.00
4. Poverty Alleviation Programs/Projects and Activities 500,000.00
5. Construction and Development of Terminal Market Building
Phase VIII 500,000.00
6. Construction of Municipal Wide Water System 3,000,000.00
7. Agricultural Productivity Development and Support Structures 2,435,894.80
8. Local Economic Development 2,000,000.00
9. Socialized Housing Project 500,000.00
10. Assistance to Municipalities 1,000,000.00
11. Lot Acquisition for Dumpsite, MRF Development Municipal Wide 500,000.00
12. Development of Public Cemetery 200,000.00
13. Development of Municipal Wide Drainage System 3,000,000.00
14. Development of Municipal Wide Green Initiatives 4,000,000.00
15. Lot Acquisition for By Pass Road 2,000,000.00
16. Pandemic Augmentation 4,026,151.60
17. Rehabilitation of Muscovado Mill (Simburyo) 500,000.00
Total 31662046.40

48
Review of the Statement of Appropriation, Allotments, Obligation and Balances (SAOB)
and disbursement vouchers revealed that only three of these projects were implemented
as follows:

Development Projects Appropriation Obligated Balance

1. Municipal Environment
Projects 4,000,000.00 1,600,966.00 5600966.00
2. Agricultural Productivity
Development and Support
Structures 2,435,894.80 1,812,873.08 4248767.88
3. Development of Municipal
Wide Green Initiatives 4,000,000.00 3,721,518.77 7721518.77
Total 10435894.80 7135357.85 17571252.65

The following are the 20% DF projects with continuing appropriations from prior years
that remained unimplemented by the Municipality based on the SAOB as of December
31, 2022:

Continuing
Unimplemented Development Projects
Appropriations
1. Socialized Housing Project 4,507,000.00
2. Rehabilitation of Municipal & Barangay Roads 3,526.71
3. Construction and Development of Terminal Building 2,305,072.98
4. Lawis/Pani-an FMR 1,538,900.00
5. Bottoms up Budgeting BUB 3,197,343.49
6. Barangay Development ARC 885,495.75
7. Lot Acquisition of Dumpsite/MRF Development 200,000.00
8. Salin Tubig Project Counterpart 272,810.20
9. Poverty Alleviation Program/Project 4,180,000.00
10. Agricultural Productivity Development 706,723.68
11. Development of Public Cemetery 3,616,805.00
12. Post Harvest Facility (ARC) Equity 50,000.00
13. Lot Acquisition for By Pass Road 15,000,000.00
14. Municipal Wide Water System 2,868,596.00
15. Assistance to Disadvantage Municipalities (ADM) 400,000.00
16. Rehabilitation of Muscovado Mill (Simburyo) 500,000.00
Total 40232273.81

While the following are the continuing 20% DF projects that were implemented but have
unobligated balances remaining as of December 31, 2022:

Development Projects Continuing

Implemented in CY 2022 Appropriation Obligated Balance
1. Municipal Environment 9,161,208.17 3,972,456.00 13133664.17
Management
2. Local Economic 6,208,639.34 4,391,384.61 10600023.95
Development
3. Municipal Wide Drainage 1,269,570.78 1,195,532.54 2465103.32
System

49
 Development Projects Continuing
Implemented in CY 2022 Appropriation Obligated Balance
4. Pandemic Augmentation 3,000,000.00 2,735,998.00 5735998.00
5. Municipal Wide Green 2,993,155.06 1,430,707.88 4423862.94
Initiatives
Total 22632573.35 13726079.03 36358652.38

Summary of Continuing Appropriations:

Continuing
Appropriation Obligated Balance
Development Projects Not 0 0.00 0
Implemented in CY 2022
Development Projects 0 0 0
Implemented in CY 2022
Total 0 0 0

For CY 2022 the Municipality is set to implement 21 projects with total continuing
appropriations of ₱62.865 million. Only five projects were obligated in CY 2022, thus
leaving a total of unutilized balance of ₱49.139 million in the continuing appropriations.

Summary of Implementation of Development Projects:

Appropriation Obligated Balance

CY 2022 31,662,046.40 7,135,357.85 24,526,688.55
Continuing 62,864,847.16 7135357.85 24526688.55
Total 94526893.56 14270715.7 49053377.1

Only 22.1 percent or ₱20.861 million out of the ₱94.526 million appropriated for
Development Projects were implemented in CY 2022.

We inquired with the management on the low implementation rate of the development
projects. According to the MPDC he is only in charge of the planning and development
of programs and projects but the implementation is not within his jurisdiction but is the
concern of the implementing offices. According to the Municipal Engineer, they were
only in charge of the administration and implementation of infrastructure development
and public works project of the LGU as instructed to them by the office of the LCE.
According to the Municipal Accountant some programs and projects were included in the
AIP for accumulation of funds for future implementation.

As with our previous years’ audit observation, we emphasize that projects must be well-
planned and procurement-and-implementation ready, and by that, the projects in the
Annual Investment Plan must be specific, realistic and attainable and not stated in
general terms as what is being practiced. Programs/Projects such as Poverty Alleviation
Program, BUB, and Assistance to Disadvantaged Municipality have been idle in the
continuing appropriations for several years, thus funds for other development projects
had been tied up to these unimplementable projects. This can be addressed through
proper planning and coordination among members of the Municipal Planning and
Development Council and other LGU officials and stakeholders.

50
 In addition, for proper monitoring of the utilization of the 20% development fund,
subsidiary ledgers for each project and registries must be maintained by the Municipal
Accountant and Budget Officer respectively. At present, these were not being prepared
completely and religiously, thus creating delays or difficulty in identifying available funds
for specific development projects.

The 20% DF is that part of the municipal budget that is being plowed back to its
constituents in the form of development projects for their benefit. In not implementing
these projects, the constituents are denied their share in the budget and are prevented
from enjoying the services that they could have derived therefrom had these projects
been timely implemented and completed.

We issued AOM No. 2023-008 (2022) dated April 20, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive

together with the Municipal Planning and Development Coordinator (MPDC) and
other responsible Officials and Employees:

a) Ensure that all programs, projects and activities to be funded under the 20%
DF are well-planned and procurement-and-implementation-ready by including
only specifically identified projects in the Annual Investment Plan that can be
readily implemented in the current year or the ensuing year;

b) Re-visit the previous years’ 20% DF Annual Investment Plan, identify and
check the programs and projects that remained unimplemented as of CY 2022
if it is still doable and necessary or needs to be re-appropriated; and

c) Exert effort to ensure the implementation of development projects as identified

in the AIP to maximize the utilization of the 20% DF, thereby enhancing the
delivery of services to the Municipality’s constituents.

We also recommended and management agreed that the Municipal Accountant

and Municipal Budget Officer to maintain subsidiary ledgers and registries
respectively to monitor charges made to the 20% DF on a per program/project
basis for easy reconciliation and monitoring of records related to the fund.

13. Payment made for the grant of Gratuity Pay of Job Order Workers of the
Municipality of Balasan in the total amount of ₱0.518 million for CY 2022 was
without the required supplemental budget enacted by the local sanggunian as
required under Section 5 of Administrative Order No. 03 dated December 23, 2022
issued by the Office of the President, rendering the disbursement of funds
irregular.

Section 5 of Administrative Order No. 03 dated December 23, 2022 issued by the Office
of the President provides the following:

Grant of Gratuity Pay in Local Government Units (LGUs). LGUs are enjoined to adopt in
their respective offices the grant of Gratuity Pay to workers whose services are engaged

51
through COS and JO, utilizing appropriate and available funding sources from their
respective local government funds.

The corresponding supplemental budget for the purpose shall be enacted by the local
sanggunian concerned within FY 2022.

Section 8 of DBM Budget Circular No. 2022-5 dated December 28, 2022 reiterated the
above stated provisions.

Also, Section 4 of PD No. 1445 provides the following fundamental principles in the
financial transactions and operations of the government:

1. No money shall be paid out of any public treasury of depository except in pursuance
of an appropriation law or other specific statutory authority. Xxx

The Disbursement Voucher submitted with the following details is not supported by an
appropriation ordinance from the Sangguniang Bayan of the Municipality of Balasan:

Check No Date Particulars Amount

89730 12/27/2022 Cash Advance as payment for Gratuity Pay ₱ 518,000.00
to Contract of Service and Job Order
Workers for CY 2022 of 106 laborers

The above disbursement is not supported by a copy of the appropriation ordinance

enacting the supplemental budget for the source of funds utilized for the payment of
gratuity pay to COS and JOs of the Municipality.

According to the Municipal Budget Officer, due to the practice of the former president of
issuing orders at the last days of the year granting additional incentives to government
employees including the COS and JO workers, she already considered it in the
preparation of the annual budget. Scrutiny of the Approved Budget revealed that there
is zero appropriation for Gratuity Pay and the Statement of Appropriation, Allotments,
Obligations and Balances for the Maintenance and Other Operating Expenses under the
Mayor’s Office revealed that the disbursement for the gratuity pay was charged under
Other General Services (Hazard pay of Job hire/Contract of Service).

Payment of Gratuity Pay to Job Order Workers without appropriation is contrary to the
fundamental principles in the financial transactions and operations of the government
thus considered irregular.

We issued AOM No. 2023-010 (2022) dated April 24, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive,

Municipal Budget Officer and other concerned officials to submit to the office of
the auditor the Appropriation Ordinance enacting the supplemental budget for the
grant of Gratuity Pay to the Contract of Service and Job Order workers of the
Municipality for CY 2022 or cause the refund of the payment granted without
appropriation, otherwise Notices of Suspension/Disallowance may be issued.

52
14. Utilization of GAD Fund was not maximized, and several disbursements charged
against the Gender and Development Fund were not compliant with pertinent
provisions of PCW-DILG-DBM- NEDA JMC No. 2016-01, PD No. 1445 and COA
Circular No. 2012-001, thus may create doubt on the propriety, validity and legality
of the payments made; and hindered the Municipal Government in achieving its
aim in becoming a gender sensitive agency.

Pertinent provisions of Section 36 of RA No. 9710 (Magna Carta for Women) -

Implementing Rules and Regulations (MCW-IRR) provides that, the cost of implementing
GAD programs shall be the local government unit’s GAD budget which shall be at least
five percent (5%) of its total budget appropriations.

Pursuant to Section 37A.1c of the MCW-IRR, the GAD budget may be allocated using
any or a combination of the following:

1. As a separate GAD fund to support GAD-focused PAPs;

2. As fund to support integrating gender perspective in major programs and projects
(gender mainstreaming); and
3. As counterpart fund to support gender-responsive Official Development Assistance
(ODA)-funded projects.

Item 3.0 of the PCW-DILG-DBM-NEDA JMC No. 2016-01 prescribes that if the LGU
intends to attribute a portion or the whole budget of major programs during the GAD
planning and budgeting phase, it shall subject the program to gender analysis using the
Harmonized Gender and Development Guidelines (HGDG) tool using the appropriate
design checklist (HGDG Boxes 9-15, 18-23), the funding facilities checklist (HGDG Box
F1) or the generic checklist (HGDG Box 7a). The result will determine how much of the
budget of the program will be attributed to GAD.

Item 7.0 of the same Circular provides that, the preparation of GAD AR requires the
agency to administer again the HGDG test using the Project Implementation and
Management, and Monitoring and Evaluation (PIMME) checklist (HGDG Boxes 16 and
17) or the Facility Implementation, Management, and Monitoring and Evaluation
(FIMME) checklist (HGDG Box F2) to determine the extent of gender-responsiveness
that the targeted HGDG score has attained. This score will be the basis for determining
actual expenditures that can be attributed to the GAD budget.

The Circular also prescribes the use of the revised GPB and GAD AR forms for LGUs
and requires the annual GAD AR to be accompanied by the following: (1) brief summary
of the reported program or project; (2) copies of reported policy issuances; (3) results of
HGDG tests, if any; and (4) actions taken by the agency on the COA audit findings and
recommendations, if any.

Audit disclosed that the Municipality’s GAD Fund for CY 2022 totaled to ₱8.744 million
which is equivalent to 6.8 percent of the estimated annual budget of ₱128.196 million
per the DILG endorsed GPB. However, computation of the fund based on the approved
annual budget of ₱172.791 million, determined the percentage at 5.1 percent.
Breakdown of the budgeted expenditures are as follows:

Amount %

53
 Total GAD Budget (per DILG endorsed GPB = 5.1
percent of ₱172.791 million approved annual budget) 8,744,190.00 100

Breakdown:
1. Client-focused programs/projects 4,810,000.00 55.01
2. Organization-focused programs/projects 1,235,000.00 14.12
3. Attributed programs/projects 2,699,190.00 30.87

Moreover, various programs which aimed to address client-focused and organization-

focused gender issues were not fully implemented during the year showing only
46.6 percent and 53.7 percent completion rates. The reason/s for the non-
implementation of most of the programs and activities was not sufficiently discussed in
the GAD AR as shown below:

GAD PPAs Total GAD Actual % Utilized Remarks on

Budget per Expenditure Variance
GAD AR
(a) (b) (b/a)
For Client-Focused 4,810,000.00 2,241,778.85 46.61 Reasons for
Gender Issues the non-
For Organization- 1,235,000.00 662,810.00 53.67 implementatio
Focused Gender Issues n of the PPAs
For Attributed 2,699,190.00 1,674,500.00 62.04 were not
Programs discussed in
Total Amount Utilized/ the
Utilization Rate variance/rema
8744190.00 4579088.85 52.37
(Overall) rks column of
the GAD AR.

The GAD AR is also not accompanied by the following: (1) brief summary of the reported
program or project; (2) copies of reported policy issuances; (3) results of HGDG tests, if
any; and (4) actions taken by the agency on the COA audit findings and
recommendations, if any, contrary to PCW-DILG-DBM-NEDA JMC No. 2016-01. During
the course of fieldwork, the MSWDO/GAD Focal Person is on indefinite leave due to
medical reasons, thus these documents were not submitted upon request.

Meanwhile verification of the submitted list of expenses by the Municipal Budget Officer
and audit of the Disbursement Vouchers (DVs) and supporting documents revealed that
some were not completely supported with documents required by COA Circular No.
2012-001 (Appendix T). As a result, immediate evaluation if indeed the expenses were
proper charges against the GAD Fund and the activities being conducted really
addresses gender issues, were not done. Among these are copies of the office order;
program with the flow of activities, schedule and topic outline; and the resource persons
profile for activities funded. Also, the HGDG checklists and PIMME checklists were not
submitted for those programs/activities attributed to GAD.

Section 4 (6) of PD No. 1445 states that claims against government funds shall be
supported with complete documentation. xxx

Non-compliance with the provisions of PCW-DILG-DBM- NEDA JMC No. 2016-01, PD

No. 1445 and COA Circular No. 2012-01 may create doubt on the propriety, validity and

54
 legality of the payments made. Also, unimplemented programs, activities and projects
appropriated under the GAD fund, hindered the Municipal Government in achieving its
aim in becoming a gender sensitive agency and deprived its constituents of enjoying the
benefits had these projects been timely implemented.

We issued AOM No. 2023-013 (2022) dated May 4, 2023 relative to this audit finding.

Recommendation

We recommended and management agreed that the Local Chief Executive direct:

1) The persons responsible to comply with the provisions of PCW-DILG-DBM-

NEDA JMC No. 2016-01 especially on addressing the client and organization
focused gender issues;

2) The MSWDO and Budget Officer to observe proper charging of expenses

against the GAD Fund;

3) The MSWDO to submit the GAD Accomplishment Report in the proper form
required complete with the required attachments including the HGDG Tool or
PIMME Checklist to support the attributed cost of the Municipal Government’s
regular Projects/Program/Activities to GAD; and

4) The Municipal Accountant to ensure that the supporting documents are

complete before payment and transmittal to the Office of the Auditor.

STATUS OF SUSPENSIONS, DISALLOWANCES AND CHARGES

Statement of Audit Suspensions, Disallowances and Charges (SASDC) showed a balance

of ₱4.442 million, broken down as follows:

Balance,
Balance,
Suspensions Disallowances Charges Settlements Dec. 31,
Jan. 1, 2022
2022
Suspension 152,057.00 0.00 0.00 0.00 0.00 152,057.00
Disallowances 4,290,300.00 0.00 0.00 0.00 0.00 4,290,300.00
Charges 0.00 0.00 0.00 0.00 0.00 0.00
Total 4,442,357.00 0.00 0.00 0.00 0.00 4,442,357.00

Disallowances comprise mostly of the PEI granted in CYs 2013 and 2014. The Commission
proper issued Notice of Finality of Decision and COA Order of Execution relative to the said
disallowances. The Audit Team evaluated the payments of Personal Services (PS) of the
Municipality in CYs 2013 and 2014 and found to be non-compliant with the PS Cap
limitation. Supplemental NDs were prepared and issued.

COMPLIANCE ON THE DILG SEAL OF GOOD FINANCIAL HOUSEKEEPING AND FULL

DISCLOSURE POLICY OF LOCAL BUDGET AND FINANCES, BIDS AND PUBLIC
OFFERINGS

55
The Municipality was issued a qualified opinion for CYs 2019, 2020 and 2021 Annual Audit
Reports.

COMPLIANCE WITH MANDATORY REMITTANCES (GSIS, PHIC and HDMF)

The Municipality has no outstanding balance due to GSIS, PHIC and HDMF as of December
31, 2022.

COMPLIANCE WITH TAX LAWS

The Municipality has no outstanding balance due to BIR as of December 31, 2022.

COMPLIANCE WITH CREDIT FINANCING POLICY

The Municipality has no outstanding loan as of December 31, 2022.

COMPLETED INFRASTRUCTURE PROJECTS OF THE MUNICIPALITY AS OF

DECEMBER 31, 2022

Project Contract Amount

Construction of Multi-Purpose Building - Balantian Elementary 3,893,898.00
School, Balantian, Balasan, Iloilo (PDAF – IPG)
Construction of Municipal Drainage Phase I – Poblacion Norte, 4,984,980.33
Mamhut Sur (DILG FALGU)
Concreting of Farm to Market Road – Camambugan to Aranjuez 9,997,499.95
(DILG FALGU)
Construction of Drainage System Phase II – Poblacion Norte 1,789,078.24

AWARDS AND RECOGNITIONS RECEIVED BY THE MUNICIPALITY

The Municipal Government of Balasan received the following awards in CY 2022:

1. 2022 Good Financial Housekeeping award by the Department of the Interior and Local
Government (DILG).

2. 2022 Anti-Drug Abuse Council Performance Awardee by the DILG Region VI.

3. Sixth Most Outstanding Municipality in the collection of Annual Fixed Tax for Delivery
Trucks and Vans in the entire Province of Iloilo for CY 2021 awarded by the Iloilo
Provincial Government.

56
4. Top two in the accurate and timely submission of eSRE Reports among all the 117
Municipal Treasury Offices in Region VI for CY 2021 awarded by the Bureau of Local
Government Finance (BLGF) Regional Office VI.

5. Top three among all the 4th-6th Class Municipalities in Region VI, based on the Highest
Locally Sourced Revenue in Business Tax and Other Taxes, 2021 Collection, awarded
by the BLGF Regional Office VI.

6. Certificate of Commendation for having attained a collection efficiency rating of 133.02

percent exceeding the annual target set by the Bureau of Local Government Finance for
Fiscal Year 2021, based on the collection efficiency in four locally sourced revenues
(Real Property Tax, Business Tax & Other Taxes, Fees & Charges, Economic
Enterprise) awarded by the BLGF Regional Office VI.

57