EXECUTIVE SUMMARY
A. Introduction
1. The Municipality of San Agustinis a fourth-class municipality in the province of
Surigao del Sur. It was created by virtue of Executive Order No. 27 on October 17,
1919. The Municipality is politically subdivided into 13 barangays. Presently, the
Municipal Government is run under the administration of Hon. Libertad O. Alameda.
2. The audit was conducted in accordance with applicable legal and regulatory
requirements, and the Philippine Public Sector Standards on Auditing. Those
standards require that we plan and perform the audit to obtain a reasonable basis for
our conclusions.
3. The audit covered the accounts and operations of the municipal government for
the year 2016 and was aimed at ascertaining the propriety of financial transactions,
Management’s compliance to prescribed rules and regulations and the fairness of the
presentation of the financial statements.
B. Financial Highlights
a) Comparative Financial Position and Results of Operations
Increase/
2016 2015
Particulars (Decrease)
Assets 186,987,139.42 168,611,676.54 18,375,462.88
Liabilities 85,926,653.38 77,097,321.06 8,829,332.32
Government Equity 101,060,486.04 91,514,355.48 9,546,130.56
Income 94,211,191.48 84,155,352.38 10,055,839.10
Operating Expenses 83,422,915.70 70,113,934.27 13,308,981.43
Subsidies/Grants 4,584,589.39 4,559,665.10 24,924.29
Net Income 6,203,686.39 9,481,753.01 (3,278,066.62)
b) Comparative Sources and Applications of Funds
Increase/
Particulars 2016 2015
Decrease
Appropriations 113,834,511.29 114,345,000.01 (510,488.72)
Allotment 113,834,511.29 114,345,000.01 (510,488.72)
Obligations 79,947,113.97 77,736,461.69 2,210,652.28
C. Audit Opinion
4. The Auditor rendered a qualified opinion on the fairness of presentation of the
financial statements of the Municipality of San Agustin for CY 2016 because of the
following reasons:
4.1 The Municipality failed to submit the required Report on the Physical Count
of Property, Plant and Equipment (RPCPPE) due to incomplete physical count of
its properties and inadequacy of records in the Treasury and Accounting Offices
thus, the auditor was precluded from ascertaining the validity, existence and
reliability of the reported Property Plant and Equipment (PPE) valued at P
94,070,826.79
D. Summary of Significant Observations and Recommendations
5. For the above-mentioned audit observation which have caused the issuance of a
qualified opinion, we recommendeded the following:
5.1 Require the Inventory Committee to finish the conduct of physical count of
Property, Plant and Equipment (PPE), reconcile the Accounting and Treasury
property records and immediately submit the Report of the Physical Count of
Property, Plant and Equipment (RPCPPE) to the Office of the Auditor.
6. The other significant audit observations and recommendations are as follows:
6.1 The GAD Plan and Budget is not used as basis in the preparation of the
GAD Accomplishment Report contrary to Section 4.C.8 of the PCW-DILG-
DBM-NEDA Joint Memorandum Circular NO. 2013 -01 thus hampering the
evaluation and assessment of the implementation of GAD activities.
We recommended that the GFPS use the GAD Plan and Budget in the formulation
of the GAD Accomplishment Report and to attach the documents required in
paragraph 5 of Section 4.C.8 of JMC 2013-01 to facilitate the monitoring and
evaluation of the GAD PPAs implemented during the year.
6.2 The LGU attributed some of its programs, projects and activities to the
GAD Plan and Budget without conducting a gender analysis using the HGDG tool
as required in Section C.4 of the PCW-DILG-DBM-NEDA Joint Memorandum
Circular No, 2013-01 thereby casting doubts on the attainment of the objectives of
the GAD PPAs included in the GAD AR.
We recommended that Management include in the GPB appropriations for the
attendance of its officials and employees to GAD trainings that will deepen their
understanding of the GAD Program and their roles on the mainstreaming of the
said program into local policy-making, planning, programming, budgeting,
implementation, monitoring and evaluation.
In case the LGU opts to attribute a portion or a whole of its budget to the
GAD Budget, we also recommended that Management conduct a training
program on the use of the HGDG in its GPB to assure the proper determination of
the amounts that may be attributed to the GAD Budget.
6.3 The CY 2016 LDRRMFIP did not include programs, projects and
activities to be funded by the previous years’ unexpended balances of the DRRM
Fund amounting to ₱2,654,249.58 contrary to Section 5.1.2 of COA Circular No.
2012-002 dated September 12, 2012 which may result to the amount being used
in the implementation of projects and activities that are not among those
prioritized by the Local Disaster Risk Reduction Management Council.
.
We recommended that Management direct the designated MDRRMO
Designated to include in the LDRRMFIP the listing of projects and activities
funded by the unspent amounts of the DRRM Fund of the previous years pursuant
to Section 5.1.2 of COA Circular No. 2012-002 to ensure that the funds are used
in the implementation of projects and activities prioritized by the LDRRMC
6.4 The amount of ₱70,300.00 spent for the attendance of local officials
/employees to the National Cave Congress is deemed unnecessary due to the
inapplicability of the learning derived from the attendance to the said congress to
the local situation and resulted to the depletion of the MDRRM Fund by the same
amount thereby affecting the implementation of disaster-related projects and
activities.
We recommended that Management thoroughly study the applicability of the
topics up for discussion in gatherings/conventions to the local situation before
sending representatives to preclude the incurrence of unnecessary expenses as
defined under COA Circular No. 2012-003 and to avoid the depletion of the
affected fund/s.
6.5 In spite of years of implementation, the LGU is still maintaining an open
dump sites for its solid waste contrary to Item No. 1 of Memorandum Circular
No. 2009-168 dated October 27, 2009 of the Department of Interior and Local
Government (DILG) thereby affecting the effective and efficient provision of
solid waste disposal system to its constituents.
For the deficiency noted, we recommended that the Municipal Solid Waste
Management Board:
1. Prepare the 10-year Solid Waste Management Plan containing, but not
limited to, the components listed in Section 17 of Republic Act No. 9003
in coordination with the various sectors within the locality;
2. Conduct regular monitoring on the implementation of the Solid Waste
Management Program for the early resolution of the problems, issues and
concerns encountered during its implementation; and
3. Conduct information and educational campaign at the barangay level with
emphasis on their responsibility on solid waste segregation.
6.6 The delayed submission of the accounts ranging from 9 to 387 days
violated Section of COA Circular No. 2009-006 dated September 15, 2009 and
precluded us from conducting a timely review on the validity, propriety, legality
and regularity of the transactions of the local government unit.
.
We recommended that Management direct the Municipal Accountant to
strictly follow the time frame on the submission of the accounts stipulated in the
above-mentioned Section to enable our Office to communicate immediately to
Management deficiencies noted, if any, in the review and examination of the
accounts.
6.7 Insufficient documentation on the Lakbay Aral traveling expenses
amounting to P269,990.00 and the inability of the LGU to adopt the Capability
Development Agenda casted doubts on the validity, propriety, regularity and
legality of the claims resulted to the suspension/disallowance of the same in audit.
We recommended that Management direct the Municipal Accountant to
carefully review and ascertain the completeness of the documents supporting
claims against public funds to avoid suspensions and disallowances in audit. We
also recommendedManagement to formulate and adopt the CAPDEV Agenda to
guide it in determining the interventions it needs to introduce leading to the
improvement of the quality of services rendered by its personnel to its
constituents.
6.8 Job orders were allowed to attend trainings contrary to existing civil
service rules and regulations which resulted to the LGU incurring pecuniary loss
in terms of training expenses spent that were not compensated through improved
performance in the delivery of basic services to its constituents
We recommended that Management stop the practice of sending its job
orders to attend trainings and seminars primarily because of the absence of
employer-employee relationship between these workers and the LGU to preclude
the incurrence of pecuniary loss caused by the incurrence of training expense of
which the knowledge learned was not translated into improved efficiency on the
delivery of basic services to its constituents.
6.9 Due to improper planning on the formulation of the CY 2016 budget on
the operation of the Ecological Solid Waste and Eco-Park, P1,169,000.00 of the
twenty percent (20%) Local Development Fund was utilized to support the
implementation of the said program which is operated by the LGU as one (1) of
its economic enterprise.
.
We recommended that Management direct the Local Finance Committee
to formulate the ESWM budget based on the actual needs of the program and to
use financial data provided by its past years’ operations to preclude transfers of
funds with no corresponding appropriation. We also recommended that the Local
Development Council prioritize the funding of developmental projects that are not
operated as economic enterprise by the LGU. Furthermore, we recommended that
Management direct the Municipal Accountant and the Municipal Treasurer not to
process transfers of funds that are not supported with appropriation.
6.10 Several disbursements amounting to P 88,000.00 in the form of monthly
honorarium of school clerk and utility workers, the furniture for the use of an
empowered National High School which has its own appropriation, and supplies
and materials for the District Office were charged to Special Education Fund in
violation to Section 272 Chapter 7 of RA 7160 and Joint Circular No 1 series of
1998 of DECS, DBM and DILG.
We recommended to stop the use of SEF for purposes other than those
allowed under the provisions of Section 272 of RA 7160 and DECS, DBM and
DILG Joint Memorandum Circular No 1. Moreover, we recommended that the
Local School Board prepare an updated budget for the Special Education Fund in
the next year in accordance with the provisions of the new DILG-DEPED-DBM
Joint Circular No 1 series of 2017 so that funds will be spent for the purpose it is
intended.
6.11 Transfer of Funds to the League of Municipalities of the Philippines and
other federations (CASAMA-LAHDZ & MaCaSALTaBayaMi) amounting to P
300,000.00 were not supported with Memorandum of Agreement, valid official
receipt and were recorded as outright expense in violation of COA Circular No.
2012-001 thereby exposing the funds to the risk of misappropriation.
We recommended that Management:
1. Direct the Municipal Accountant to prepare the adjusting entry
reclassifying the amount of P 300,000.00 from the account
“Subsidy-Others” to “Other Receivables”;
2. Direct the Municipal Accountant to require at all times the
Memorandum of Agreement before processing transactions
covering fund transfers to Leagues and Federations to facilitate
monitoring on the utilization of the amounts involved;
3. Direct the Municipal Treasurer to require the Leagues/Federations
to issue the authorized official receipt in acknowledging receipt of
the amount transferred to them;
4. Require the Leagues/Federations to submit the liquidation reports
on amounts received by them; and
5. Direct the Municipal Accountant not to process transfer of funds to
the Leagues/Federations that has unliquidated cash advances.
6.12 The Management failed to allocate one percent of the Internal Revenue
Allotment for strengthening and implementations of the Programs, Projects and
Activities of the Local Council for the Protection of Children Program contrary to
Section 15 of RA 9344.
We recommended the Local Chief Executive and other concerned officials
to appropriate in the LGUs Annual Budget one percent of its Internal Revenue
Allotment as required by RA 9344.
6.13 The formulation of the CY 2016 Annual Budget of the LGU that is not in
consonance with the provisions of Section 305 (g, h and j) of Republic Act No.
7160 resulted to the allocation of P 1.0 million for the conduct of the Kalumonan
Festival thereby depriving other offices/PPAs of much needed fiscal support for
their operation.
We recommended that management minimize the appropriation on
celebrations to what is really necessary to enable it to formulate sound financial
plans with the end view of achieving its goals and objectives.
6.14 Insufficient documentation on the meals and snacks served during the
Kalumonan Festival in the amount of P 69,050.00 precluded the audit team from
ascertaining the validity, propriety, regularity and legality of the said amount and
is contrary to Section 4(6) Presidential Decree No 1445.
We recommended that management direct the Municipal Accountant to
thoroughly scrutinize the documents supporting the claims charged to LGU funds
to ensure their completeness to avoid suspensions and/or disallowances in audit.
E. Summary of total Suspensions, Disallowances, and Charges
7. Audit suspensions and disallowances amounting to P0.00 and
P2,720,787.69,respectively as of December 31, 2016.
F. Compliance With Tax Laws
8. The Municipality has complied with tax laws by withholding 100 percent of the
income taxes from their monthly payrolls and remitting the same to the Bureau of
Internal Revenue (BIR) within the period prescribed by regulation. Moreover, value-
added taxes (VAT) from goods and services procured were, likewise, withheld and
remitted to the BIR regularly.
G. Statement on the quantity/number of recommendedations implemented, partially
implemented and not implemented for the previous year.
9. Monitoring of the implementation of ten (10) recommendedations contained
in CY 2015 Annual Audit Report revealed that seven (7) were fully implemented, two
(2) were partially implemented and one (1) wasnot implemented.
