PART II

DETAILED FINDINGS AND

RECOMMENDATIONS
 DETAILED FINDINGS AND RECOMMENDEDATIONS

Financial and Compliance Audit

1. The completeness, existence, accuracy and condition of the reported Property,

Plant and Equipment (PPE) with a carrying amount of P3,017,948.76 as at
December 31, 2022 are doubtful due to the continued non-conduct of physical
inventory of its PPE by the Inventory Committee headed by the Punong
Barangay as required under Section 124, Volume I of the MNGAS for LGUs
and Sections 7.1.18 and 7.1.19, Chapter VII of the Manual on the Financial
Management of Barangays.

1.1 Section 124, Volume I of the Manual on the New Government Accounting
System (MNGAS) for LGUs provides that:

Physical count of property, plant and equipment shall be made annually and
reported in the Report of the Physical Count of Property, Plant and Equipment
which shall be submitted to the Auditor concerned not later than January 31 of
each year.

1.2 Moreover, Sections 7.1.18 and 7.1.19, Chapter VII, of the Manual on the
Financial Management of Barangays provide the following:

The Barangay Treasurer (BT) shall act as the Property Officer of the barangay
and shall be responsible for the receipt, custody, issuance and physical
inventory of barangay property, except for the buildings and other physical
structures which shall be under the accountability and responsibility of the
Punong Barangay (PB)…

7.1.18 The barangay shall conduct an annual physical inventory of all

supplies, property and equipment of the barangay.

7.1.19 Report on the results of physical inventory of property/equipment shall

be reconciled with the accounting records.

1.3 Inquiry from the concerned barangay officials disclosed that they did not
conduct the required annual physical count of Property, Plant and Equipment
thus, the corresponding inventory report were not prepared and no basis for
reconciliation with accounting records. This is despite the consistent issuance of
audit observation by the Audit Team on the matter and prior years’
recommendations. Also, the BLGU did not constitute its inventory committee
that contributed to the non-conduct of physical count of PPEs.

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 1.4 The conduct of physical inventory of PPEs is an indispensable procedure to
ensure that adequate control is adapted in the safeguarding of assets and that the
integrity of property custodianship is ensured. The continued inability of the
concerned barangay officials to conduct physical inventory impairs the
Management’s assertion on the completeness, existence, accuracy and condition
of said barangay properties.

1.5 We recommended that Management strictly adhere to the pertinent

provisions of COA Circular No. 2015-011 dated December 1, 2015 and
cause the following:

a. create an inventory Committee to be headed by the Punong Barangay

or his authorized representative and the Barangay Treasurer as his
member, which shall conduct the inventory of all the PPE accounts of
the barangay at least once a year;

b. immediately conduct the physical count of barangay properties and

submit to the Office of the Auditor the Report on Inventory of Property
and Equipment (RIPE) as of December 31, 2022;

c. reconcile any discrepancies between the accounted barangay properties

with the subsidiary ledgers in order that the financial statements reflect
the more accurate value of existing barangay properties at hand as at
year-end; and

d. unserviceable properties of the barangay should be disposed or sold at

public auction, if any, subject to applicable rules and regulations, to
prevent further deterioration and obsolescence.

2. The completeness and existence of the balance of Inventories accounts of

P1,717,272.06 as at December 31, 2022 cannot be ascertained due to the non-
conduct of physical count on inventories by the Inventory Committee headed by
the Punong Barangay and non-submission of the Report on Inventory of
Supplies and Materials (RISM) as required under Section 6.2.3, Chapter VI of
the Manual on the Financial Management of Barangays.

2.1 Section 6.23, Chapter VI, of the Manual on the Financial Management of
Barangays provide the following:

Inventory taking and Reconciliation

a. The Inventory Committee headed by the PB or his authorized

representative and the BT as his member shall conduct a physical
count of all the supplies and inventory of the barangay at least once a
year.

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 b. The Inventory Committee, upon the completion of the physical count,
shall prepare three copies of Report on Inventory of Supplies and
Materials (RISM), as shown in Annex 31 and shall be approved by the
PB. The RISM shall be distributed as follows:

Original – to COA Auditor through C/M Accountant

Duplicate copy – to the C/M Accountant
Triplicate copy – to the BT

The RISM shall be the basis of the C/M Accountant for reconciling the
inventory accounts.

2.2 Inquiry from the concerned barangay officials disclosed that they did not
conduct the required annual physical count of Inventories thus, the
corresponding report was not prepared and no basis for reconciliation with
accounting records.

2.3 We recommended that the Inventory Committee headed by the Punong

Barangay immediately conduct physical count of the Inventories and
henceforth submit the required RISM to the Audit Team within the
prescribed deadline in strict adherence with Section 6.2.3, Chapter VI of the
Manual on the Financial Management of Barangays.

3. The validity, accuracy and existence of the reported balance of Construction in

Progress accounts in the amount of P2,026,273.60 as of December 31, 2022 could
not be established due to non-submission of Project Status Reports and non-
monitoring of the implementation of these projects.

3.1 Section 27 of International Public Sector Accounting Standards (IPSAS 1)

provides that, “Financial statements shall present fairly the financial position,
financial performance and cash flows of an entity. Fair presentation requires
the faithful representation of the effects of transactions, other events, and
conditions in accordance with the definitions and recognition criteria for assets,
liabilities, revenue, and expenses set out in IPSASs.”

3.2 Moreover, Section 111 of P.D. 1445 provides that the accounts of the agency
shall be kept in such details as necessary to meet the needs of the agency and at
the same time be adequate to furnish the information needed by the fiscal or
control agencies of the government.

3.3 In relation, Paragraph 14 of IPSAS 17 provides that the cost of an item of

property, plant and equipment shall be recognized as an asset if, and only if: (a)
It is probable that future economic benefits or service potential associated with
the item will flow to the entity; and (b) The cost or fair value of the item can be
measured reliably.

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3.4 Furthermore, COA Circular No. 2015-009 dated December 1, 2015 prescribes
the adoption of the Revised Chart of Accounts (RCP) for Local Government
Units. Page 45, Annex B of the Circular provides the use of the following
accounts:

Account Title Construction in Progress - Land Improvements

Account Code 1-07-10-010
Normal Balance Debit
Description This account is used to record the accumulated cost or
other appropriate value of land improvements still in the
process of construction or development. Credit this
account for reclassification to the appropriate Land
Improvement account upon completion.

Account Title Construction in Progress - Infrastructure Assets

Account Code 1-07-10-020
Normal Balance Debit
Description This account is used to record the accumulated cost or
other appropriate value of infrastructure assets which are
still in the process of construction or acquisition. Credit
this account for reclassification to the appropriate
Infrastructure Asset account upon completion.

Account Title Construction in Progress - Buildings and Other Structures

Account Code 1-07-10-030
Normal Balance Debit
Description This account is used to record the accumulated cost or
other appropriate value of buildings and other structures
which are still in the process of construction or
development. Credit this account for reclassification to the
appropriate Buildings and Other Structures account upon
completion.

3.5 Review of the detailed Statement of Financial Position for the year ended
December 31, 2022 disclosed that the Barangay reported Construction in
Progress - Infrastructure Assets and Construction in Progress- Buildings and
Other Structures amounting to P1,770,365.60 and P255,908.00, respectively. It
was noted however that the balances were reported not decreased for Land
Improvements, Infrastructure Assets and Buildings and Structures accounts,
thus no progress or status update was reported for the year. These amounts
could not be ascertained by the Audit Team because there were no readily
available documents or reports pertaining thereto such as Monthly Project
Status Report or Subsidiary Ledgers.

3.6 We recommended that Management, through the Municipal Accountant

and the Barangay Bookkeeper, immediately evaluate the details and status

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 of these projects and effect the necessary adjustments to come up with
more reliable information in the financial statements.
4. Current receivables balance of P45,858.74 have remained uncollected as at
December 31, 2022, thereby depriving the LGU of government moneys which
could have been otherwise used in its operations, contrary to Section 2 of P.D.
1445.

4.1 Section 2 of Presidential Decree (P.D.) 1445 provides that:

Declaration of Policy. It is the declared policy of the State that all resources of
the government shall be managed, expended or utilized in accordance with law
and regulations, and safeguarded against loss or wastage through illegal or
improper disposition, with a view to ensuring efficiency, economy and
effectiveness in the operations of government. The responsibility to take care
that such policy is faithfully adhered to rests directly with the chief or head of
the government agency concerned.

4.2 Relative to this, COA Circular No. 2016-005 dated December 19, 2016 was
issued to provide the Guidelines and Procedures on the Write-off of Dormant
Receivable Accounts, Unliquidated Cash Advances, and Fund Transfers.
Sections 8.2 and 8.3 of the said Circular provide that:

8.2 The Head of the government entity shall file the request for authority
to write-off dormant receivable accounts… to the COA Audit Team
Leader (ATL) and/or Supervising Auditor (SA). No filing fee is
required.

4.3 Review of the Notes to Financial Statements of the barangay disclosed the
following balances of current receivables as at December 31, 2022:

Account Title 2022

Receivables
Due from Local Government Units 4,653.67
Other Receivables
Other Receivables 41,205.07
Total 45,858.74

4.4 We recommended that Management prepare the necessary documents to

support the validity of its claim and require the collection of receivables
from the concerned agencies and individuals, otherwise initiate the filing of
request for the write off of dormant receivable accounts by securing the
necessary documents as per Section 8 of COA Circular No. 2016-005 dated
December 19, 2016.

5. Cash advances totaling P1,054,584.57 remained unliquidated at year-end

contrary to Section 89 of Presidential Decree (P.D.) No. 1445 and the guidelines

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in the granting, liquidation and utilization of cash advances set forth under
COA Circular No. 97-002 dated February 10, 1997.

5.1 Section 89 of PD No. 1445 provides the following:

Limitations of cash advance. No cash advance shall be given unless for a

legally authorized specific purpose. A cash advance shall be reported on and
liquidated as soon as the purpose for which it was given has been served. No
additional cash advance shall be allowed to any official or employee unless
the previous cash advance given to him is first settled or a proper accounting
thereof is made.

5.2 Moreover, pertinent provisions of COA Circular 97-002 dated February 10,
1997 provide the following guidelines in the granting, utilization and
liquidation of cash advances:

4.1.2 No additional cash advances shall be allowed to any official or

employee unless the previous cash advance given to him is first settled
or proper accounting thereof is made.

4.1.3 A cash advance shall be reported as soon as the purpose for which it
was given has been served.

5.1 The Accountable Officer shall liquidate his cash advance as follows:

5.1.1 Salaries, Wages, etc. – within 5 days after each fifteen (15)
day/end of the month pay period.

5.1.2 Petty Operating Expenses and Field Operating Expenses – within

twenty (20) days after the end of the year; subject to replenishment
as frequently as necessary during the year.

5.1.3 Official Travel – within sixty (60) days after return to the
Philippines in case of foreign travel or within thirty (30) days after
return to his permanent official station in the case of local travel,
as provided for in EO 248 and COA Circular No. 96-004.

Failure of the AO to liquidate his cash advance within the

prescribed period shall constitute a valid cause for the
withholding of his salary … (emphasis supplied)

5.7 When a cash advance is no longer needed or has not been used for a
period of two months, it must be returned or refunded immediately to the
Collecting Officer.

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 5.8. All cash advances shall be fully liquidated at the end of each year.
Except for petty cash fund, the Accountable Officer shall refund any
unexpended balance to the Cashier/Collecting Officer who will issue the
necessary official receipt. (emphasis supplied)

5.3 Review of the Notes to Financial Statements of the barangay disclosed

outstanding cash advances totaling P40,751.71 as at year-end hence, it can be
construed that Management has not strictly complied with the above-cited
regulation thereby exposing the limited funds of the Barangay to the risk of
misappropriation. Details are as follows:

Account Title 2022

Advances
Advances for Payroll 409,995.00
Advances for Officers and Employees 644,589.57
Total 1,054,584.57

5.4 We recommended that Management strictly observe the rules on proper

granting and liquidation of cash advances and henceforth require the full
liquidation of cash advances at the end of each year as set out in COA
Circular No. 97-002 dated February 10, 1997 and Section 89 of PD 1445.

6. Cash on hand balance of P91,897.38 remained undeposited at year-end contrary

to Section 4.1.12 of Manual on the Financial Management of Barangays, hence
government moneys were exposed to unnecessary risk of loss or misuse.

6.1 Section 4.1.12 of the Manual on the Financial Management of Barangays

provides that:

Collections accruing to the barangay shall be deposited intact daily. Where

travel time to the depository bank is more than one day, deposit shall be made
at least once a week or as soon as the collections reach P5,000.00.

6.2 While Section 27 of IPSAS 1 provides:

“Financial statements shall present fairly the financial position, financial

performance and cash flows of an entity. Fair presentation requires the faithful
representation of the effects of transactions, other events and conditions in
accordance with the definitions and recognition criteria for assets, liabilities,
revenue and expenses set out in IPSASs. The application of IPSASs, with
additional disclosures when necessary, is presumed to result in financial
statements that achieve a fair presentation”.

6.3 Similar provision of Section 111 of PD 1445 on keeping of accounts divulges:

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 “(1) The accounts of an agency shall be kept in such detail as is necessary to
meet the needs of the agency and at the same time be adequate to furnish the
information needed by fiscal or control agencies of the government.

(2) The highest standards of honesty, objectivity and consistency shall be

observed in the keeping of accounts to safeguard against inaccurate or
misleading information”.

6.4 Review of financial statements of the BLGU disclosed that Cash-Local

Treasury account balance totaling P91,897.38 remained undeposited at year end.
The above-cited Manual purports to protect the cash, the most liquid asset, from
potential risks of loss or misuse. Hence, the cash collections of the Barangay
must be deposited.

6.5 We recommended the Barangay Treasurer to deposit intact her collections

within the period set forth by regulation to amply protect the barangay cash
and to prevent the possible loss or misuse thereof in line with Section 27 of
IPSAS 1 and Section 111 of P.D. 1445.

7. No Land account is recorded in the books of the BLGU due to the absence of
proof of ownership of the land where various barangay infrastructures were
erected or constructed contrary to Section 2 of PD No. 1445, thereby exposing
the BLGU and its properties to risks associated with adverse legal claims in the
future.

7.1 Section 39(2) of PD No. 1445 provides that: “In the case of deeds to property
purchased by any government agency, the Commission shall require a
certificate of title entered in favor of the government or other evidence
satisfactory to it that the title is in the government”

7.2 Moreover, Section 2 of PD No 1445 states as follows - Declaration of Policy. It

is the declared policy of the State that all resources of the government shall be
managed, expended or utilized in accordance with law and regulations, and
safeguarded against loss or wastage through illegal or improper disposition, with
a view to ensuring efficiency, economy and effectiveness in the operations of
government. The responsibility to take care that such policy is faithfully
adhered to rests directly with the chief or head of the government agency
concerned.

7.3 Further, Section 148 of COA Circular No. 92-386 dated October 20 1992 states
that, “Every local chief executive shall be immediately responsible for the
proper and effective use and management of real estate owned or titled in the
name of the local government unit. He shall ensure that all real estate under his
responsibility are registered, under the Torrens Title System and safeguarded
from squatters, unlawful occupants or the like.”

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 7.4 Review of the financial reports disclosed that the Barangay does not account for
any Land in its Statement of Financial Position although several
structures/properties were already constructed and reported by the BLGU as this
was not yet covered by a certificate of title in the name of the barangay. Thus,
the legal ownership on the donated lot could not be ascertained which may
expose the property from adverse claims in the future.

7.5 We recommended that the Punong Barangay and the concerned barangay
officials facilitate the titling of land owned/used by the Barangay in
coordination with the concerned government agencies to secure
ownership/rights of the Barangay and include in the Annual Budget the cost
of processing the transfer of land title.

8. The balance of Other Payables accounts amounting to P12,680.00 as at

December 31, 2022 -, the composition of which was not disclosed in the Notes to
Financial Statements, has been outstanding in the books for more than two (2)
years and against which no actual claim was filed by the creditors inconsistent
with Section 27 of International Public Sector Accounting Standards (IPSAS)
No. 1 and Section 111 of P.D. No. 1445, thus the validity and existence of the
said account balances cannot be ascertained.

8.1 Section 27 of International Public Sector Accounting Standards (IPSAS 1)

provides that, “Financial statements shall present fairly the financial position,
financial performance and cash flows of an entity. Fair presentation requires
the faithful representation of the effects of transactions, other events, and
conditions in accordance with the definitions and recognition criteria for
assets, liabilities, revenue, and expenses set out in IPSASs.”

8.2 Moreover, Section 111 of P.D. 1445 provides that the accounts of the agency
shall be kept in such details as necessary to meet the needs of the agency and
at the same time be adequate to furnish the information needed by the fiscal or
control agencies of the government.

8.3 Furthermore, Section 98 of PD No. 1445 states that “The Commission, upon
notice to the head of the agency concerned, may revert to the unappropriated
surplus of the general fund of the national government, any unliquidated
balance of accounts payable in the books of the national government, which
has been outstanding for two years or more and against which no actual
claim, administrative or judicial, has been filed or which is not covered by
perfected contracts on record.

8.4 Section 114 of the same P.D. provides: “The government accounting system
shall be … with a general ledger in which all fina ncial transactions are
recorded. Subsidiary records shall be kept where necessary”.

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 8.5 Furthermore, review of the Notes to Financial Statements of the barangay
disclosed the following balance of Other Payables accounts as at December
31, 2022:

Account Title 2022

Other Payables
Other Payables 12,680.00
Total Other Payables 12,680.00

8.6 It must be noted that Other Payable is usually used in recording obligations
incurred during an entity’s operations that remain due and must be paid in the
short term.

8.7 Moreover, Pages 50 and 57, Annex B of COA Circular No. 2015-009 dated
December 1, 2015 or the Revised Chart of Accounts (RCA) for Local
Government Units provide the use of the following accounts:

Account Title Other Payables

Account Number 2-99-99-990
Normal Balance Credit
Description This account is used to record other liabilities not falling
under any of the specific payable accounts. Debit this
account for settlement of liabilities.

8.8 It must be noted that though a general ledger is maintained for Other Payables
account, a subsidiary ledger is not maintained which could have disclosed the
composition of the said account, hence its balance cannot be ascertained and
the composition of which was not disclosed in the Notes to Financial
Statements. The information in the subsidiary ledger could have substantiated
the account and could have been the basis for the reversion of the amount to
the Government Equity.

8.9 We recommended that Management require the Municipal Accountant to

exert efforts in identifying the particular transaction from which the
various payable accounts were recorded and send notice to the concerned
creditors together with the details and list of necessary requirements to
facilitate the payment of the amount due, otherwise, revert to the
Government Equity the unliquidated balance of payable amounting to
P12,680.00 in line with Section 98 of PD No. 1445. Lastly, we
recommended that a subsidiary ledger should be maintained which shall
substantiate the Other Payables account and could be a basis for reversion
to Government Equity, where applicable.

9. The Barangay did not maintain Registry of Trust Fund as required under
Section 1.2, Chapter I of the Manual on the Financial Management of
Barangays hence, trust liability accounts are not separately recognized in the
books of the barangay.

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 9.1 Section 1.2, Chapter I of the Manual on the Financial Management of Barangays
provides the following general policies to be observed in accounting for
barangay funds and property as follows:

1.2.6 Funds granted to barangays for specific purpose shall be recognized as

Special Trust Fund (STF).

1.2.7 Subsidies and grants for specific purpose shall be accounted for as
Trust Liability. Once conditions are met, the portion of the grant
corresponding to the expenditure incurred shall be recognized as
income and the expenditure as expense or asset as the case may be.

1.2.8 Unspent Local Disaster Risk Reduction and Management Fund

(LDRRMF) and the share of the Sangguniang Kabataan (SK) shall be
recorded as STF.

1.2.9 Registry of Special Trust Fund (RSTF) shall be maintained for each
STF.

9.2 As per existing records, the Municipal Accountant through the Barangay
Bookkeeper did not maintain Registry of Special Trust Fund such as those
enumerated above. Consequently, prompt verification of the transactions cannot
be conveniently made and trust liability accounts are not separately recognized
in the books of the barangay.
9.3 We recommended that the Barangay Treasurer and the Municipal
Accountant create and maintain Registry of Special Trust Fund on the
unspent budgetary items of 5% Calamity Fund and other trust fund
accounts as required under the Manual on the Financial Management of
Barangays and properly recognize the balances as Trust Liabilities in the
books of the barangay.
10. The Barangay did not submit the monthly Report on Sources and Utilization of
BDRRMF which is not in accordance with Section 5.1.5 of COA Circular No.
2012-002 dated September 12, 2012 thus, monthly monitoring of transactions
undertaken was not attained.

10.1 Section 5.1.5 of COA Circular No. 2012-002 provides that, “A Report on
Sources and Utilization of DRRMF using the format in Annex B shall be
prepared and certified correct by the Local Accountant. The Local Disaster
Risk Reduction and Management Officer (LDRRMO) shall submit the report
on or before the 15th day after the end of each month through the LDRRMC
and Local Development Council (LDC) to the COA auditor of the LGU.”
10.2 Review of the accounts of the barangay disclosed that the BLGU failed to
submit monthly Report on the Sources and Utilization of the BDRRMF. This
required report serves as a monitoring tool on the charges against the
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 BDRRMF thus, the non-submission of which precluded monthly review of the
utilization of the fund.
10.3 In the case of the Barangay, the Report on Sources and Utilization of DRRMF
shall be prepared by the Barangay Treasurer and certified correct by the
Punong Barangay. Such report shall be submitted by the designated LDRRMO
which is usually the Punong Barangay or any other official duly designated
thereto, on or before the 15th day after the end of each month to the COA
Auditor of the Barangay.
10.4 We recommended that Management require all concerned officials to
comply with the monthly submission of Report on Sources and Utilization
of DRRMF using the format prescribed under COA Circular No. 2012-
002.
11. The BLGU did not accomplish the required Agency Action Plan and Status of
Implementation (AAPSI) contrary to Section 91 of the General Provisions of
Republic Act No. 11518, otherwise known as the General Appropriations Act
for FY 2021, hence precluded the auditor in its timely review, monitoring, and
evaluation of actions taken by Management on previous years’ audit findings
and recommendations.
11.1 Section 91 of the General Provisions of Republic Act No. 11518, otherwise
known as the General Appropriation Act of 2021, provides that:
Report on Commission on Audit Findings and Recommendations. Within
sixty (60) days from receipt of the COA Annual Audit Report, agencies
concerned shall submit to the COA, either in printed form or by way of
electronic document, a status report on the actions taken on said audit findings
and recommendations using the prescribed form under COA Memorandum No.
2014-002 dated March 18, 2014. They shall likewise furnish the DBM, the
Speaker of the House of Representatives, the President of the Senate of the
Philippines, the House Committee on Appropriations and the Senate Committee
on Finance, either in printed form or by way of electronic document, a copy of
said reports.

11.2 Monitoring on the submission of reports disclosed that the Barangay still has not
submitted the accomplished Agency Action Plan and Status of Implementation
(AAPSI) hence, the status of compliance on Management’s actions on the prior
years’ audit findings and recommendations were not properly reported and
evaluated.
11.3 We recommended that the BLGU strictly comply with Section 91 of the
General Provisions of Republic Act No. 11518, otherwise known as the
General Appropriations Act of 2021, on the submission of AAPSI to
facilitate timely validation of the actions taken by the BLGU on COA audit
findings and recommendations.

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12. The unexpended balance of the BLGU’s Local Disaster Risk Reduction
Management Fund (LDRRMF) as at year – end was not recognized as Trust-
Liability as well as the details of the unutilized fund were not disclosed in the
Notes to the Financial Statements contrary to Section 5.1.16 of COA Circular
No. 2012 – 12 dated September 12, 2012, thus rendering incomplete and
insubstantial information in the financial reports.

12.1 Section 5.1.10 of COA Circular No. 2012 – 12 states that –

All unexpended/unobligated balance of the QRF and the DRRMF-MOOE shall

be transferred to the Special Trust Fund under the account “Trust Liability-
DRRM” (Code 438) in the Trust Fund books.

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.

12.2 Section 5.1.16 of the same COA Circular states that –

The amount and details of the unexpended balance of the LDRRMF shall be
discussed in the Notes to the Financial Statements. (xxx) (underscoring
supplied)

12.3 Review of the financial statements and other pertinent reports submitted by the
BLGU disclosed that the balance of LDRRMF was not recognized in as
Special Trust Fund and the related disclosure was not presented in the Notes to
the Financial Statements which is not in consonance with Section 5.1.10 and
5.1.16 of COA Circular No. 2012 – 12 dated September 12, 2012. The said
Circular requires not only the amount but also the details of the unexpended
balance of the LDRRMF in the manner provided and prescribed in the pro –
forma of the Notes to the Financial Statements.

12.4 The non-recognition of the unexpended balance of the DRRM Fund to a

Special Trust Fund and the non – disclosure in the Notes to Financial
Statements during the year renders incomplete and insubstantial information in
the financial reports of the LGU.

12.5 We recommended that management adequately record in the books the

unexpended balance of the DRRM Fund as Special Trust Fund and
disclose in the Notes to Financial Statements the details of the unexpended
balance.

13. Timely submission of barangay accounts and other pertinent records was not
strictly adhered to contrary to Section 12.5, Chapter 12 of the Manual on the

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 Financial Management of Barangays, thus causing delay in the audit and
verification of financial transactions by the Audit Team.

13.1Section 12.5, Chapter 12 of the Manual on Financial Management for Barangays

provides the following rules on the rendition of accounts:

12.5.1 The PB and BT shall be responsible for the timely submission of the
reports and accounts to the C/M Accountant. Observance to the
provision of Article 218 of the Revised Penal Code which states that
“Any public officer, whether in the service or separated there from by
resignation or any other cause, who is required by law or regulations to
render account to the Insular Auditor,* or to a Provincial Auditor and
who fails to do so for a period of two months after such account shall be
rendered shall be punished by prison correccional in its minimum
period, or by a fine ranging from 200 to 6,000, or both”. (*now
Commission on Audit)

12.5.2 The BT shall submit the RCDs, LR, ORs/DVs/Payrolls and Monthly
RAAF to the C/M Accountant on or before the 5th day of the succeeding
month.

12.5.3 The C/M Accountant shall submit to the COA Auditor concerned the
collections and disbursements accounts of each month on or before the
10th working day of the succeeding month.

13.2 Monitoring of submission of barangay accounts disclosed that disbursements

vouchers were not submitted on time despite our prior years’ issuance of similar
audit findings, contrary to the above-cited regulations. Demand letter is to be
issued pending the formal Demand Letter issued by the Accountant which will
be considered in the possible disallowance of the transactions not yet submitted.

13.3 The non-submission of disbursement vouchers within the prescribed period

precludes the conduct of timely review and audit thereof.

13.4 We recommended that the Barangay Treasurer submit all barangay

accounts and other pertinent records to the Barangay Bookkeeper for
recording and the Office of the Auditor for review and evaluation within
the period prescribed under the Manual on Financial Management for
Barangays to enable timely and more effective review of the Barangay’s
financial transactions and evaluation of its operations.

14. Disbursements charged against the 20% Development Fund, 5% LDRRMF and
5% Gender and Development and could not be readily evaluated due to
incomplete submission of needed documents.

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 14.1 Section 106 of the Local Government Code provides that each Local
Government Unit shall have a comprehensive Multi-Sectoral development plan
to be initiated by its development council and approved by its Sanggunian.

14.2 In the case of the barangay, the Barangay Development Council shall be
headed by the Punong Barangay, the Sangguniang Barangay, where the SK
Chairman serve as an ex-officio member, NGO representative operating in the
barangay, and a representative of the Congressman as members.

14.3 Review of submitted accounts disclosed that the barangay have disbursements
that could be attributed to 20% development fund, 5% GAD fund, and 5%
LDRRMF.

14.4 Projects under the 20% Development Fund, 5% LDRRMF and 5% GAD Fund,
however, could not be readily evaluated due to the incomplete submission of
the needed documents, as follows:

a. Annual barangay budget;

b. Annual Investment Plan;
c. Registries to show if expenses still fall within the allowed amount and if
these are in-line as programmed in the Annual Investment Plan;
d. Accomplishment Report pertaining to 20% Development Plan and 5%
LDRRMF;
e. GAD Plan and GAD Accomplishment Report.

14.5 We recommended that the Punong Barangay, as the Chief Executive of

the BLGU, enforce the implementation of all projects and activities that
were approved by the Barangay Development Council and assure that
these are in line with the rules and regulations set forth for the said
programs. Further, we required the Barangay to furnish all needed
reports (Budgets, AIP, PPMP and others) to the Office of the Audit Team
Leader for appropriate review and evaluation.
15. Construction materials procured by the BLGU amounting to P782,272.60 were
directly recorded as debit to various Construction in Progress, Due to LGUs, and
Repairs accounts despite absence of supporting documents that would establish
that the materials were already issued to the project and the project was
already on-going contrary to Section 4(6) of PD 1445.

15.1 Section 4(6) of PD 1445, otherwise known as the State Audit Code of the
Philippines, provides that, “Claims against government funds shall be
supported with complete documentation.”

15.2 Moreover, Page 17, Annex B of COA Circular No. 2015-009 dated December
1, 2015 provides that Construction Materials Inventory is credited only
whenever these are issued to projects, transferred, or for other disposal

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 contrary to an ordinary office supply which is credited whenever issued to the
end-user.

15.3 It shall be noted that construction materials must be treated differently from
ordinary office supplies since they are either converted into a new asset,
improve or extend the life of the asset in which they are utilized.

15.4 Audit disclosed the following Barangay transactions:

Reference
Gross Net
Check Payee Particulars Account Used in Recording
Date Amount Amount
No.
Bensons 74k
Construction Materials- st lights Other Supplies & Materials
744532 03/15/22 Supply pk1 39,517.00 37,400.02 Inventory
Bensons 74k Materials-
Construction concreting of FMR
744533 03/15/22 Supply pk3 35,640.00 33,730.71 Due to LGUs
New Masagana Materials-
Construction concreting of FMR
744596 07/05/22 Supply Trading pk2 48,760.00 46,147.86 CIP -Infrastructure Assets
New Masagana Materials-
Construction concreting of FMR
961505 07/26/22 Supply Trading pk1 48,760.00 46,147.86 CIP -Infrastructure Assets
New Masagana Materials-
Construction concreting of FMR
961506 07/26/22 Supply Trading pk4 48,760.00 46,147.86 CIP -Infrastructure Assets
New Masagana Materials-
Construction concreting of FMR
961513 08/08/22 Supply Trading pk3 48,760.00 46,147.86 CIP -Infrastructure Assets
New Masagana Materials-
Construction rehabilitation of Repairs & Maint-Infrastructure
961530 09/27/22 Supply Trading brgy Plaza pk3 25,795.00 24,413.13 Assets
New Masagana Materials-
824246 03/22/21 Const Supply rehabilitation of st Repairs & Maint-Infrastructure
14,755.00 13,964.55
Trading lights Assets
Besnons 74K Materials-
744410 08/16/21 Construction concreting of FMR
34,345.00 32,505.09
Supply pk1 CIP -Infrastructure Assets
Besnons 74K Materials-
744415 08/19/21 Construction concreting of FMR
24,460.00 23,149.64
Supply pk1 CIP -Infrastructure Assets
Besnons 74K Materials-
744416 08/19/21 Construction concreting of FMR
24,460.00 23,149.64
Supply pk2 CIP -Infrastructure Assets
Besnons 74K Materials-
744417 08/19/21 Construction concreting of FMR
24,460.00 23,149.64
Supply pk4 CIP -Infrastructure Assets
Noah's Arc & Materials- CIP -Buildings & Other
744420 08/23/21
Metal Works fabrication of MRF 33,520.00 32,849.60 Structures
Besnons 74K Materials-
744423 08/23/21 Construction concreting of FMR
11,660.00 11,035.36
Supply pk2 CIP -Infrastructure Assets

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 Reference
Gross Net
Check Payee Particulars Account Used in Recording
Date Amount Amount
No.
Besnons 74K Materials-
744449 10/01/21 Construction concreting of FMR
32,500.00 30,758.93
Supply pk5 phase1 CIP -Infrastructure Assets
Besnons 74K Materials-
744451 10/01/21 Construction concreting of FMR
28,050.00 26,547.32
Supply pk5 phase II CIP -Infrastructure Assets
Besnons 74K Materials-
744452 10/01/21 Construction concreting of FMR
45,550.00 43,109.82
Supply pk4 CIP -Infrastructure Assets
Besnons 74K Materials-
744474 12/01/21 Construction concreting of FMR
70,840.20 67,045.19
Supply pk2 CIP -Infrastructure Assets
Besnons 74K Materials-
744475 12/01/21 Construction concreting of FMR
70,840.20 67,045.19
Supply pk3 CIP -Infrastructure Assets
Besnons 74K Materials-
744476 12/01/21 Construction concreting of FMR
70,840.20 67,045.19
Supply pk5 CIP -Infrastructure Assets
741,490.4
      Total 782,272.60 6  

15.5 We recommended that Management henceforth ensure completeness of

documents and submit the following documents:

1. Request and Issuance Slips;

2. Accomplishment Report for the completed project;
3. Program of Work;
4. Annual Procurement Plan;
5. Photographs of the implemented project (before, during and after
implementation);
6. Inspection Report; and
7. Certificate of Completion issued by the Punong Barangay.

15.6 Also, we recommended that the Municipal Accountant record purchase of

construction materials as Construction Materials Inventory and recognize
the appropriate Construction in Progress account, Repairs and Maintenance
account only when these are actually issued to projects and the foregoing
enumerated documents are submitted, in line with Section 4(6) of PD 1445.

16. The issuance of supplies and materials to the end-users aggregating to

P323,170.02 were not properly documented through preparation of Requisition
and Issuance Slips (RISs) and photographs contrary to Item 6.1.11, Chapter VI
of the Manual on Financial Management for Barangays and Section 4(6) of PD
No. 1445.

16.1 Section 4(6) of PD No. 1445 requires that: “Claims against government funds
shall be supported with complete documentation.”

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 16.2 In connection, Item 6.1.11, Chapter VI of the Manual on Financial
Management for Barangays provides that, “Issuance of supplies shall be
supported by an approved Requisition and Issue Slip (RIS) as shown in Annex
20. At the end of the month, the BT shall submit a Summary of Supplies and
Materials Issued (SSMI) - Annex 32 supported by the RIS to the C/M
Accountant as basis for recording the expense account.”
16.3 Audit of disbursement vouchers disclosed that the BLGU procured and issued
various supplies and materials aggregating to P323,170.02 for CYs 2021-2022.
However, the issuances were not properly supported with Requisition and
Issuance Slips (RISs) and photographs, thus proper accounting was not
facilitated.
16.4 We recommended that Management henceforth prepare and submit the
Requisition and Issuance Slips (RISs), attach photographs of all supplies
and materials delivered, and ensure completeness of supporting
documents pursuant to Section 4(6) of PD No. 1445 and Item 6.1.10,
Chapter VI of the Manual on Financial Management for Barangays.
17. Thirty-six (36) cancelled checks were not attached in the submitted Report of
Checks Issued (RCI), contrary to Section 59, Chapter 3 of the LGU- New
Government Accounting System (NGAS), Volume I.

17.1 Section 59 of NGAS Volume I prescribes that:

Sec. 59. Spoiled and Stale Checks. – Checks may be cancelled when they
become spoiled or stale. A check is considered spoil when, it is torn,
mutilated, defaced or with erasures/errors affecting the genuineness of any
material information contained therein.

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. For spoiled checks which are immediately cancelled and for which the
Report of Checks Issued (RCI) has not yet been prepared, the cancelled
check shall be attached to the RCI and reported chronologically with the
other checks issued and the word “Cancelled” shall be indicated on the
report.

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

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 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.

3. For checks which became spoiled or stale in the hands of the payee and
which require replacement, a new check may be issued upon submission
of the spoiled or stale check to the Treasurer. A certified copy of the DV
shall be requested from the Auditor for presentation to the
Administrator/Local Chief Executive who shall countersign the check.
The cancelled check shall be reported and attached to the RCI prepared
at the period of cancellation. The replacement check shall also be
reported chronologically in the RCI.

17.2 Verification of the submitted RCIs showed that the cancelled checks were not
attached in the said report. Details as to the count are as follows:

Year Check Number Quantity

824242, 824243, 824250, 824263, 824273, 824287,
2021 744428, 744450, 744460, 744466, 744467, 744473, 13
744509
744518, 744519, 744520, 744521, 744522, 744523,
744524, 744525, 744539, 744552, 744556, 744565,
2022 23
744569, 744574, 744585, 744587, 744598, 961515,
961517, 961518, 961546, 961549, 961550
Total 36

17.3 We recommended that the Barangay Treasurer immediately submit to

the Audit Team the 27 cancelled checks for validation and henceforth
ensure that all the cancelled checks are attached to the RCI and DVs.

18. Disbursement vouchers and its supporting documents were not stamped
“PAID” upon payment, contrary to Section 2.Q of COA Circular No. 92-389
dated November 3, 1992, hence exposing the corresponding documents for
possible reuse.

18.1 Section 2.Q of COA Circular No. 92-389 dated November 3, 1992 provides that,
“Paid vouchers including its supporting documents shall be perforated and
conspicuously stamped “PAID” by the Cashier.”
18.2 Review of disbursement vouchers (DVs) of the barangay as well as inspection of
its supporting documents disclosed that these were not stamped “PAID” by the
Barangay Treasurer after the payment was made.
18.3 The non-stamping of documents or non-marking of checks and supporting
documents immediately after it was paid provides a way of reusing the same,
thereby posing the possibility of double payment.
18.4 We recommended that the Barangay Treasurer henceforth stamp “PAID”
all payrolls, DVs and its supporting documents after payment is made to
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 prevent the possible re-use of the same on similar future transactions in line
with COA Circular No. 92-389 dated November 3, 1992.
19. The accounting entries portion of the Disbursement Vouchers (DVs) which shall
serve as the basis for recording transaction in the books of accounts were not
supplied by the Municipal Accountant thus, the proper recording of
transactions cannot be readily verified.

19.1 Annex 12 of the Manual on the Financial Management of Barangays prescribes

the format and instructions in accomplishing the Disbursement Voucher (DV).
Box D of the DV requires that the Municipal Accountant shall prepare the
necessary accounting entries for the particular transaction. Columns for
account title, account code and the debited and credited amounts shall be filled
up by the accountant.

19.2 Audit of the submitted Disbursement Vouchers disclosed that the Municipal
Accountant has not complied with the above regulation thus, the proper
recording of transactions cannot be readily verified.

19.3 We recommended that the Municipal Accountant accomplish Box D of the

Disbursement Vouchers in compliance with Annex 12 of the Manual on
the Financial Management of Barangays to monitor the proper recording
of transactions.

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