Audit Observations and Recommendations

PART II – AUDIT OBSERVATIONS AND
RECOMMENDATIONS
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DETAILED OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AND COMPLIANCE
Gender and Development (GAD)
1. LGU’s initiative to develop strategic gender-responsive activities that will

substantially address timely and relevant gender issues may be limited
since several Projects/Programs/Activities (PPAs) remained
unimplemented and 22.07% of the total GAD budget or ₱1,140,120.60 of
₱5,165,228.20 were unutilized. Moreover, GAD database containing gender
statistics and sex-disaggregated data was not maintained, as a result
gender equality and women empowerment were not fully realized contrary
to Executive Order (EO) No. 273, Philippine Commission on Women (PCW),
Department of the Interior and Local Government (DILG), Department of
Budget and Management (DBM), National Economic and Development
Authority (NEDA) Joint Memorandum Circular (JMC) No. 2013-001 and the
1987 Constitution.
EO No. 273 otherwise known as Philippine Plan for Gender- Responsive

Development (PPGD 1995 – 2025) mandated the implementation of gender and
development in accord with our constitutionally guaranteed human rights. It
envisions a society that promotes gender equality and women’s empowerment
as enunciated in the United Nations Fourth World Conference Platform for
Action. Moreover, Paragraph 1.1 of the said EO states:
“In view of the Plan’s long-term goal of fully integrating GAD concerns
into the whole development process, the mainstreaming of GAD in
various government agencies shall be the responsibility of the heads of
concerned agencies and their respective offices, with the assistance of
their Women in Development (WID)/GAD Focal Points, if any, to
ensure institutionalization thereof.”
On the other hand, Article II Section 14 of the 1987 Constitution provides:
“The State recognizes the role of women in nation-building, and shall

ensure the fundamental equality before the law of women and men.”
Moreover, Article XIII Section 14 of the same Constitution states:
“The State shall protect working women by providing safe and healthful
working conditions, taking into account their maternal functions, and
such facilities and opportunities that will enhance their welfare and
enable them to realize their full potential in the service of the nation.”
For CY 2017, the GAD appropriations and Obligation of the LGU is tabulated
below:
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Table I
GAD Appropriations and Utilization
As of December 31, 2017
Programs/Projects/ Actual Unexpended

Activities (PPAs) Appropriations Expenses Appropriation
CLIENT-FOCUSED
Construction of Breast
1 80,000.00 - 80,000.00
Feeding Corner
Orientation on Women’s right
2 100,000.00 92,429.00 7,571.00
and Technical Assistance
Organized and Strengthens
3 170,000.00 106,800.00 63,200.00
women’s organized
Conduct Counselling and
4 100,000.00 100,000.00 -
PES Sessions
Conduct Counselling
Involving Indigents Solo
5 100,000.00 100,000.00 -
Parents in Skills Training and
Livelihood Program
Procurement of Medicines
6 and Supplies for Indigent 232,528.20 134,783.20 97,745.00
Women and their Families
HIV/AIDS Testing, Ancillary

7 Expenses Incurred while on 200,000.00 84,998.00 115,002.00
Treatment
Enrollment of Women and
8 their Families to PhilHealth 1,700,000.00 1,700,000.00 -
Program
Provision of Support to
9 922,200.00 773,400.00 148,800.00
Health volunteers
Rehabilitation of Water
10 pumps, provision of bio-sand 200,000.00 - 200,000.00
filters
11 Conduct of Youth Congress 50,000.00 - 50,000.00
12 Children’s Voices 250,000.00 208,199.90 41,800.10
-
ORGANIZATIONAL-
FOCUSED -
Conduct Annual Physical
13 350,500.00 250,460.00 100,040.00
Exam and Laboratory Exam
Conduct Symposia and IEC
on Teenage Pregnancy,
14 70,000.00 69,320.00 680.00
Drug Addiction and
Pornography
Conduct Gender Sensitivity
15 350,000.00 350,000.00 -
Training for LGU’s
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Employees
Hiring of GAD Fulltime

140,000.00 37,720.00 102,280.00
Personnel
Establishment of GAD
16 Database/Procurement of 50,000.00 16,997.50 33,002.50
Supplies for GAD Activities
Attendance to GAD related
17 50,000.00 - 50,000.00
trainings
IEC Materials and
18 50,000.00 - 50,000.00
Distribution to 26 Barangays
Total 5,165,228.20 4,025,107.60 1,140,120.60
As can be gleaned from Table I above, the LGU earmarked a total of

₱5,165,228.20 for GAD activities and ₱4,025,107.60 were utilized. Nevertheless,
out of eighteen (18) PPAs, five (5) were not implemented and a total of
₱1,140,120.60 appropriation remained unutilized. This may indicates that the
GAD Fund was not optimally utilized and may signify that gender issues were not
substantially addressed depriving the intended beneficiaries of the benefits
therefrom contrary to the previously mentioned law and regulations.
Management’s full commitment is required to implement its GAD Plan and

Budget (GPB). Otherwise, the requirements for achieving the ultimate goals
envisioned for Gender and Development may not be satisfied.
Section 4.1.A-4(c) of PCW-DILG-DBM-NEDA JMC No. 2013-001 as amended by

JMC 2016-01 states that among others, the LGU GAD Focal Point System shall
perform the following function:
“Lead in setting up appropriate systems and mechanisms to ensure the

generation, processing, review, and updating of sex-disaggregated
data or GAD database to serve as basis in performance-based and
gender-responsive planning and budgeting.”
Verification of the GPB shows that the LGU managed to formulate both Client-
Focused and Organizational-Focused activities as enumerated in Table I above.
Nevertheless, sex-disaggregated data were not systematically generated and the
assessment of the gender-responsiveness of the said activities was found to be
inadequate. For effective planning and determining the cost to implement GAD
PPAs, GAD database must be institutionalized in all departments to view the
overall results of gender analysis and/or gender assessment using sex-
disaggregated data reflecting gender gaps/issues. The absence of sex-
disaggregated data or gender statistics can cast doubt on the appropriateness of
the identified PPAs in addressing priority gender issues. Moreover, the Audit
Team noted that LGU’s exposure to gender mainstreaming methodologies and
theoretical clarity on gender perception including the manner on how to integrate
gender equality into the different policies and programmed of the LGU were
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found to be rather limited. Accordingly, sustainable gender-responsive local
governance would have been provided had the LGU formulated and
implemented gender-sensitive PPAs.
Section 4.1.C.1(4) of the same JMC provides that in identifying GAD PPAs,
LGUs shall at all times give priority to those that will address emerging and/or
continuing issues and concerns on:
a) Provision of basic services and facilities to protect and fulfill women’s human
rights, including their right to protection from all forms of violence;
b) Women’s economic empowerment, including women’s participation in

economic governance;
c) Participation in local governance and decision-making; and
d) Other provisions of the MCW.
Post Audit of GAD transactions disclosed that the utilization includes travel
expenses and communication expenses (See Annex I). These expenses can be
construed to be more on administrative in nature and do not contribute directly to
the attainment of the intended objectives set out in the guidelines and can be
properly charged under the General Fund.
On the other hand, the prevailing practice of procuring medicines and giving it out
to selected beneficiaries is plausible however it should be funded out of LGUs
General Fund under the LGU’s health program. It does not support the
promotion of gender equality unless they are justified as clearly addressing a
specific gender issue. .
The recommended expenses among others that could best served as a

determinant factor in evaluating the efficiency and effectiveness of interventions
in addressing gender related issues and may be charged to the GAD budget
include the following:
a) Provision of livelihood training programs integrated with gender perspective for

women would-be entrepreneurs;
b) Establishment of women friendly spaces (WFS) in evacuation centers for

women in conflict-areas;
c) LGU’s programs that address women’s practical and strategic needs (e.g. day
care center, breastfeeding rooms; crisis and counseling room for abused
women and children; houses for trafficked women and children, gender-
responsive family planning program;
d) Conduct of parent/children workshop on pornographic and violent TV

programs;
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e) Payment of professional fees, honoraria and other services for gender experts
or gender specialists engaged by LGUs for GAD-related training and activities;
and
f) Expenses for development of a gender sensitive curriculum and gender-fair

instructional materials
Consequently, LGU’s commitment to effectively implement the 5% allocation for

GAD in accordance to the above mentioned laws and regulations to address
issues and concerns affecting gender was not fully realized.
We recommended that Management:
a. Initiate the creation and maintenance of GAD Database containing sex-

disaggregated data pursuant to PCW-DILG-DBM-NEDA JMC No. 2013-01;
b. Establish GAD agenda or identify priority gender issues using the results of
gender analysis and assessment provided by sex-disaggregated data as
basis for the formulation of PPAs to be included in the GAD Plan and
Budget;
c. Identify and include appropriate PPAs that address priority gender issues in
the GPB;
d. Identify specific gender indicators that would help keep track progress made
for purposes of consistency and sustainability of the identified GAD-focused
PPAs;
e. Determine efficiency and effectiveness of interventions in addressing gender

related issues and concerns taking into account the results of PPAs
evaluation in terms of benefits to target beneficiaries; and
f. Review the GBP to determine if the identified PPAs address the gender
issues and concerns of constituents and employees and accomplishment
reports to identify remaining gender issues that have not been dealt with.
The audit finding, referred to above, was earlier communicated to management

through Audit Observation Memorandum No. 2018-001 (2017) dated January 24,
2018.
Management Comments:
During the exit conference, the GAD Focal Person informed the Audit Team that
gathering and encoding of the GAD Database containing sex-disaggregated data
is on-going as of date. In addition, she added that the Management conducts a
yearly planning and budgeting to establish GAD Agenda using the result from the
data gathered. On the other hand, she informed the audit team that all 26
barangays had organized their women’s organization to facilitate proper
identification of priority PPAs in barangay level. Moreover, she added that as
soon as the Database will be completed, they will make use of the data to come
up with specific gender indicators that would help keep track the progress made.
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Lastly, they would strengthen their monitoring and evaluation for every PPAs
implemented.
Property, Plant and Equipment
2. The accuracy of Land Account with a total book value of ₱1,943,035.81 as of

December 31, 2017 remained unreliable due to unrecorded lands owned by
the LGU with undetermined value contrary to PAG14 of Philippine Public
Sector Accounting Standard (PPSAS).
Pag14 of PPSAS 17 provides:
“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 the 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.”
Shown hereunder is the list of lands owned by the LGU with its corresponding
market value.
Table II: List of Land owned as claimed by the LGU
NUMBER
Actual Use Kind Market Value
OF LOTS
2 Commercial land Commercial land 5,944,106.00
1 Agriculture Residential 7,651,200.00
1 Brgy Hall/School Site Residential 1,325,100.00
1 Cemetery Land 1,125,000.00
1 Health Center Site Land 245,437.50
1 Municipal Building Site Land 700,875.00
5 Road Road 2,828,625.00
3 Plaza Plaza 3,442,200.00
13 Provincial Road Provincial Road 7,864,875.00
12 Residential Residential 30,410,175.00
4 School Site Land 10,456,650.00
Total 71,994,243.50
As can be gleaned from Table II above, the market value of the land claimed as
properties of the LGU aggregated to ₱71,994,243.50 as reflected in its Revised
Tax Declaration of 2012 (See Annex J ). The 44 lots declared as owned by the
LGU were broken down as Commercial Land, Residential, Land for Municipal
Structures, and Provincial Road. Inquiry to the Assessor’s Office disclosed that
some lands identified were acquired through donation. Nonetheless, no Deeds of
Donation and other supporting documents were presented to the Audit Team,
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thus claims of ownership could not be validated. In addition, the remaining lands
were purchased by the LGU.
The total book value of land account per accounting records as of December 31,
2017 is presented at ₱1,943,035.81. As disclosed in the Notes to Financial
Statements, the LGU’s Property, Plant and Equipment are recorded at cost less
accumulated depreciation and impairment losses. In this regard, although the
PPSAS only mentioned the cost or fair value of the land as bases for recording in
the books, the material difference of the market value and the book value
amounting to ₱70,051,207.69, casted doubt as to the validity of the cost and the
existence of ownership of such properties.
In addition, in spite of the fact that the stated market value already includes the
appreciation rate applied for the past years, the Municipal Accountant had
acknowledged that there were indeed some unrecorded lands with undetermined
value and was not able to record the same due to insufficient information and
absence of documents to substantiate them for reflecting in the books.
Section 111, P.D. No. 1445 states that:
“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.”
Moreover, Section 47 (b), Chapter 3 of the GAAM, Volume III provides:
“The documentation of transactions and other significant events should

be timely, complete and accurate and should facilitate tracing of a
transaction or event from its occurrence in processing until completion
or recording in summary records.”
It was recommended that the LGU should create an Appraisal Committee led by
the Municipal Assessor to appraise the said properties to its current market value
for the Municipal Accountant to record the same in the books in lieu of its
unidentified acquisition costs. The reconciliation of the accounting records with
the actual land owned by the LGU is necessary to ascertain the validity,
existence and accuracy of such account shown in the Financial Statements. All
noted differences as a result of comparison of both records (Property and
Accounting) shall be summarized, cleared and settled immediately. Thus, the
latter should coordinate with the Appraisal Committee for proper identification of
unrecorded lands owned by and donated to the LGU. Consequently, Deeds of
Donation and other supporting documents for donated lands should be secured
and make the necessary disclosure in the Notes to Financial Statements.
Unserviceable/Obsolete properties with a book value of ₱21,659,257.68

were still included in the General Ledger under Other Property, Plant and
Equipment Account and appropriate disposal of such properties has not
yet been undertaken contrary to COA Circular No. 89-296 dated January 27,
1989, Section 79 of Presidential Decree (PD) 1445 and Article 435 of the
Implementing Rules and Regulations (IRR) of the Local Government Code
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of 1991 hence, would entail further deterioration and loss of additional
income that could have accrued to the LGU had they been disposed of.
Section 79 of PD 1445 states that:
“When government property has become unserviceable for any cause, or

is no longer needed, it shall, upon application of the officer accountable
therefore, be inspected by the head of the agency or his duly
authorized representative in the presence of the auditor concerned
and, if found to be valueless or unsalable, it may be destroyed in their
presence. If found to be valuable, it may be sold at public auction to
the highest bidder under the supervision of the proper committee on
award or similar body in the presence of the auditor concerned or other
duly authorized representative of the Commission .Xxxx”
Moreover, COA Circular No. 89-296 dated January 27, 1989 provides:
“The full and sole authority and responsibility for the divestment or
disposal of property and other assets owned by the national
government agencies or instrumentalities, local government units, and
government-owned and/or controlled corporations and their
subsidiaries shall be lodged in the heads of the departments, bureaus,
and offices of the national government, the local government units, and
the governing bodies or managing heads of government-owned or
controlled corporations and their subsidiaries conformably to their
respective corporate charters or articles of incorporation, who shall
constitute the appropriate committee or body to undertake the same.”
The Audit Team conducted an inspection on December 14, 2017 of the

unserviceable properties to validate its existence. However, the completeness of
such properties cannot be ascertained due to the non-submission of Inventory
and Inspection Report of Unserviceable Properties (IIRUP) by the LGU.
Moreover, the LGU was not able to substantiate its accuracy due to lack of
details and relevant information.
Ocular Inspection revealed that the unserviceable properties of the LGU include
heavy equipment and its spear parts that were dump in its motor pool. However,
there was no information relayed to the team as to its salvage value, year they
became unserviceable and the corresponding action taken by the management,
if any. As reflected in the Financial Position as of October 31, 2017, the total
book value of these properties constitutes 13.53% of the total assets. Moreover,
our inspection also revealed that most of these properties remained in their
offices occupying large spaces of working area. Shown below are some of the
pictures of unserviceable properties taken during the inspection.
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Several Unserviceable/Obsolete Properties of the LGU as of C.Y 2017
In this regard, Article 435 of the IRR of the Local Government Code of 1991
mandates that there shall be in every province, city, or municipality a Committee
on Awards for the disposal of unserviceable properties which shall exercise
exclusive jurisdiction in deciding the winning bids and questions of awards on the
disposal of supplies and properties except in the cases of procurement through
emergency purchase, or when the amortization is specifically vested by law in
another body. For the municipality, the Committee on Awards shall be composed
of the Local Chief Executive as Chairman, the Municipal Treasurer, the Municipal
Accountant, the Municipal Budget Officer, and the head of office or department of
whose supplies are being procured, as members. These properties should be
appraised by in-house or by an independent appraiser so that the government
shall receive fair compensation for such properties.
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Accordingly, the same COA Circular provides that the Commission as stipulated
by Article 444 of the IRR of Local Government Code, recognizes the following
modes of disposal/divestment of assets and properties of national government
agencies, local government units and government-owned or controlled
corporation and their subsidiaries, aside from other such modes as may be
provided for by law: (a) Public Bidding; (b) Negotiation; (c) Barter
It is to be noted that in all modes or instances of disposal of government property

or assets, the proceedings shall be undertaken by the appropriate authority in the
presence of the Auditor or the COA representative who shall act as a witness
thereto.
The unserviceable assets no longer contribute to the economic benefits to the

LGU unless disposed for consideration.
In view of the foregoing, we recommended that management:
For the Appraisal Committee:
1. Create an Appraisal Committee headed by the Municipal Assessor and

representatives from each department concerned;
2. Direct the Appraisal Committee to conduct the appraisal of the unserviceable
properties and submit the same to the designated disposal committee for
reference;
For the Committee on Awards:
3. Designate a Committee on Awards to facilitate the disposal of the

unserviceable properties;
4. The Committee on Awards shall effect the applicable mode of disposal, proper
documentation, adequate publicity and notification for Public Auction “As Is
Where Is” as soon as possible to avoid further deterioration of the properties;
5. Direct the Designated Property Custodian to immediately prepare Inventory
and Inspection Report for Unserviceable Properties (IIRUP) as well as the
corrected RPCPPE to be submitted to the Office of the Audit Team Leader
and furnish the same to the Municipal Accountant;
For the Municipal Accountant:
Direct the Municipal Accountant to:
6. Reconcile the accounting records against the corrected RPCPPE as to the

remaining existing properties of the LGU and reclassify those PPE that has
already reached its salvage value to “Other Asset” account; and
7. Draw journal entry vouchers to derecognize the unserviceable properties and
apply appropriate accounting procedures to effect adjustments in the books.
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2018.
The Management informed the Audit Team in our Exit Conference that the
Appraisal Committee will be created as soon as possible. For the legal
documents to support the ownership of the lands claimed by the LGU, the
Municipal Assessor said that she has already the documents in her office. On the
other hand, Management answered that the creation of Committee on Awards
will be made as soon as possible to facilitate the disposal of the unserviceable
properties. Moreover, the Property Custodian said that the RPCPPE will be
corrected after he made the IIRUP.
Cash Advances
3. Cash advances to Accountable Officers and Employees amounting to

₱419,884.74 as of December 31, 2017 remained unliquidated due to
Agency’s failure to strictly adhere to Section 89 of Presidential Decree No.
1445 and COA Circular No. 97-002 dated February 10, 1997, and resulted in
the overstatement of assets and failure to record expenses in the year of
incurrence and exposing government funds to risk of misapplication or
loss.
Pertinent Sections of Presidential Decree thus read:
“Sec.89. Limitations on Cash Advances – 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.
Likewise, pertinent Items of COA Circular No. 97-002 dated February 10, 1997
provides the guidelines for the grant, utilization and liquidation of cash advances
as follows:
“4.1.2 No additional cash advances shall be allowed to any official or

employee unless the previous cash advance given to him is first
settled or a proper accounting thereof is made.
4.1.3 A cash advance shall be reported on as soon as the purpose for

which it was given has been served.”
Item 5 of the same circular also provides:
“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
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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 and the instruction of other sanctions as
provided for under paragraphs 9.2 and 9.3 hereof.
5.8 All cash advances shall be fully liquidated at the end of each year.
Except for petty cash fund, the AO shall refund any unexpended
balance to the Cashier/Collecting Officer who will issue the
necessary official receipt.”
Table III Aging of Cash Advances
Current Past Due

Balance Less than 31-90 91-365 days Over 1 Over 2 3 Years &
12/31/17 30 days days Year Years Above
419,884.74 90,700.00 54,757.50 192,576.60 25,163.32 592.32 56,095.00
100% 21.60% 13.04% 45.86% 5.99% 0.14% 13.36%
It is worth mentioning that the agency is strict in the grant of cash advances
whereby no new cash advances were allowed to any official or employee unless
the previous cash advance is first settled. Out of the total unliquidated cash
advances of ₱419,884.74, ₱274,427.24 or 65% remained in the books for 91
days and beyond as of December 31, 2017.
Consequently, failure to liquidate cash advances within the prescribed period

resulted in the overstatement of assets and failure to record expenses in the year
of incurrence.
Receivables/Cash Advances amounting to ₱52,505.00 which remained long

outstanding in the books were not acted upon to facilitate the proper write-
off/adjustment thereof contrary to COA Circular No. 2016-005 dated
December 19, 2016, affecting the fair presentation of accounts in the
Financial Statements due to inclusion of accounts of doubtful existence.
COA Circular No. 2016-005 dated December 19, 2016, states that:
“5.4 Dormant Receivable Accounts- accounts which balances remained

inactive or non-moving in the books of accounts for ten (10) years
or more and where settlement/collectability could no longer be
ascertained.
5.4 Dormant Unliquidated Cash Advances- advances granted to

disbursing officer, agency, officers and employees which remained
non-moving for ten (10) years or more and where
settlement/collectability could no longer be ascertained.
7.1 The accountant shall conduct regular and periodic verification,

analysis, and validation of the existence of the receivables,
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unliquidated cash advances, and fund transfers and determine the
concerned debtor, accountable officers (Regular and Special
Disbursing Officers, Collecting Officers, Cashers) and the source
and implementing government entities concerned.
7.4 Prepare aging of dormant receivables, unliquidated cash advances.

and fund transfers on a quarterly basis (Annexes 1-3) to support
the request for write-off, and indicate in the remarks column the
existence of the applicable conditions, as follows:
a. Absence of records or documents to validate/support the claim and/or

unreconciled reciprocal accounts
b. Death of the accountable officer/employee/debtor
c. Unknown whereabouts of the accountable officer/employee/debtor,

and that he/she could not be located despite diligent efforts to find
him/her
d. incapacity to pay or insolvency ·
e. Exhaustion of all possible remedies by the Management to collect the

receivables and to demand liquidation of cash advances and fund
transfers
f. No pending case in court involving the subject dormant accounts.
Audit revealed that some dormant or non-moving accounts remained in the

books for more than ten (10) years and the accountable officers are no longer in
the government service. They are either retired, deceased, transferred, as shown
in Annex K.
Table IV: Summary of Dormant Accounts Doubtful of Liquidation/Collectability
Year of Amount Accountable Officer Remarks

Granted
2007 ₱4,155.00 Leah Alba Deceased
2009 1,180.00 Remie Alavaren- No Longer in
P/INSP Service
2009 1,180.00 Renan Billones-PNP No Longer in
Service
2013 31,280.00 Symor Diaz- Vice Deceased
2016 14,710.00 Mayor Deceased
TOTAL ₱52,505.00
It can be gleaned from Table IV above that from the total of ₱52,505.00,
₱4,155.00 has been outstanding for more than 10 years from a deceased LGU
employee while a total of ₱2,360.00 granted in 2009 was due from Police
Officers who were no longer in service. The remaining amount of ₱45,990.00
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was granted in 2013 and 2016 to the former Vice Mayor who is already
deceased. The chance of collecting/liquidating the receivable/cash advances
from these accountable officers was remote thus needs immediate and proper
management action.
Moreover, COA Circular No. 2012-004 dated November 28, 2012 was issued as
a final notice and demand to all concerned accountable officers to settle and
liquidate all cash advances outstanding as of December 31, 2011, on or before
January 31, 2013. Therefore the unliquidated cash advances granted in 2009,
although was outstanding below 10 years, also needs immediate management
action.
Henceforth, when a cash advance is no longer needed or served its purpose, it

must be immediately refunded to avoid misapplication and/or eventual loss of
government funds.
We recommended to Management the following measures:
1. Require all accountable officers to immediately submit liquidation documents

for cash advances granted in prior and current year amounting to
₱419,884.74, as of December 31,2017, in compliance with Sections 89 and
102 of Presidential Decree No. 1445, and 97-002 dated February 5 and
10,1997;
2. An official/employee who is separated from the service caused by

reassignment/transfer/retirement/death, should not be given clearance unless
their outstanding cash advances are first settled;
3. Send out demand letter to those with unliquidated cash advances but were
already separated from service;
4. A request to the Commission Audit for write-off and/or adjustment for dormant
or non-moving account as prescribed in COA Circular Nos. 2016-005. The
request should be duly supported by the documents required in the said
Circular.

2018.
The Municipal Accountant states that the Unliquidated Cash Advances

amounting to ₱419,884.74 as of December 31, 2017 were liquidated in January
2018. For cash advances from the concerned personnel who were no longer in
service, demand letters will be sent. On the other hand, receivables from the late
Hon. Symor Diaz will be settled in conjunction with the terminal pay that his
family will receive.
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Road and Road Network
4. The LGU was not able to comply with the transition provision for the
recognition of 50% of Local Road and Road Network System as part of
LGU’s Property, Plant and Equipment (PPE) Account at the end of Calendar
Year (CY) 2017 contrary to COA Circular No. 2015-008 dated November 23,
2015 thus, affecting the fair presentation of the Infrastructure Assets
account in the Financial Statements.
Item I of COA Circular No. 2015-008 dated November 23, 2015 provides:
“With the adoption of the Philippine Public Sector Accounting Standards

(PPSAS), infrastructure assets which include road networks shall be
taken up as Property, Plant and Equipment.”
Moreover, Item IV.3 of the same Circular provides that the cost of a component
of a road network system shall be recognized as an asset when:
a) It is probable that the future economic benefits or services potential

associated with the item will flow to the LGU; and
b) The cost or fair value of the item can be measured reliably.
Furthermore, Item IX of the said Circular provides the transitory period to be

followed in the recognition of Local Road and Road Network System. It states:
“The complete recognition of the account Local Road Network in the

books of accounts shall be made within the period of four years, at the
following targets:
1. End of 2016 – 25%

2. End of 2017 – 50%
3. End of 2018 – 75%
4. End of 2019 – 100%
The Manual on the New Government Accounting System for Local Government
Units provides that public infrastructures which include road shall be recorded in
the Registry of Public Infrastructure (RPI) and disclosed in the Notes to Financial
Statements. In this regards, pursuant to the Circular, local roads accounts
recorded in the RPI shall be transferred to the books of accounts of the LGU
following the adoption of PPSAS.
However, it was mentioned in the previous AOM No. 2017-011 dated February
17, 2017 that the RPI and Construction in Progress Ledger Card (CIPLC) were
not maintained by the LGU which remains unimplemented. The Municipal
Accountant disclosed that records for the construction of roads are confined in
the Engineering Office. Likewise, the Municipal Accountant has limited
information regarding the Local Road owned by the LGU.
Accordingly, there is a need to update the accounting records to adhere to the

requirements laid down in the guidelines.
40
Result of the ocular inspection indicates that the LGU completed several road
concreting projects in CY 2016 in Barangay Tinigban, Pasugue, Quios and
Tincupon as shown below:
Barangay Tinigban Barangay Pasugue
Barangay Quios Barangay Tincupon

The LGU had implemented several road concreting projects even prior to the
application of the PPAS. As stated earlier, the transitory period of four years was
provided with corresponding target rate of recognition in the books of accounts.
This is to give enough time for the concerned personnel to gather, identify and
systematically recognized the assets in the Financial Statements. However, the
target rate of 50% recognition was not achieved as of December 31, 2017 since
no Local Roads were recorded in the Financial Statements.
In item III of the same Circular, Road Asset Components is defined as:
“Road Asset Components are the sub-components of a road which,

having different useful life span, need to be booked and depreciated
separately. They include: road lot, road pavement, drainage and slope
protection structures, and other miscellaneous structures.”
The components of the local roads should be properly segregated and its
corresponding costs should be recognized. Item IV.10 of the Circular mentioned
that an item of the road network system which qualifies for recognition as an
asset shall be measured at its cost. In case a road network component has no
available cost, the depreciated replacement cost shall be used.
For road network system implemented from the Trust Fund, the recognition in the
books of accounts should be supported by the following documents for: [1] By
Administrative Implementation: (a) Certificate of Completion from the Municipal
Engineer; [2] Straight Contract Implementation: (a) Request for Inspection by the
41
Contractor; (b) Statement of Work Accomplished from the Contractor; and (c)
Inspection Report and Acceptance of the Municipal Engineer.
The initial cost of road networks shall include all cost initially incurred in acquiring
the asset and other cost items necessary to bring the asset into use. On the
other hand, Depreciated Replacement Cost is defined in the Circular as the
present value of the remaining service potential of an asset.
After recognition, road networks shall be carried at cost less any accumulated
depreciation and any accumulated impairment losses. However, the Circular
states that the road lot component of the road network system shall not be
subject to depreciation while the remaining depreciable component shall be
depreciated separately following the straight line method of depreciation without
residual value. Accordingly, the Municipal Accountant shall compute for the
corresponding depreciation based on the estimated useful life of the local roads
identified by the Municipal Engineer.
As provided in the Circular, the Municipal Accountant should maintain separate

subsidiary ledgers for the road and its components to classify the depreciable
items for proper depreciation computation.
For reporting guidelines, the General Servicer Officer shall at the end of the
accounting period render a Report on Local Road Network of the LGU (See
Annex L for sample format) and the Municipal Accountant should make adequate
disclosure in the Notes to the Financial Statements as shown in Annex M. The
inventory committee shall prepare the Report on the Physical Count of the Road
Network System (See Annex N for sample format).
Item VII of the Circular provides the duties and the responsibilities of the
concerned agency personnel as shown below:
1) Local Accountant
a. Prepare the Journal Voucher (JV) to record the beginning balance of the
local road network and its components in the general ledger and the
Local Road Network Ledger Card, respectively (See sample in Annex O);
b. Support the JV with the RPI, working paper on the distribution of costs for
the road components, and working paper on the determination of the
depreciated replacement cost for road components with no available cost
per registry;
c. Keep and maintain subsidiary records for roads and road components for
every road network; and
d. Prepare a lapsing schedule for the computation of the depreciation for

each component at the end of the year.
2) General Services Officer
a. Maintain a Local Road Inventory and Road Map; and
42
b. Keep a complete Local Road Network Property Card for all roads and
its components. (Seen sample in Annex P).
3) Municipal Engineer
a) Provide the local accountant and the general services officer with the
complete description and cost segregation of road components for
road projects.
4) Local Chief Executive
a) Enjoin the department head’s compliance with the requirements of the

circular.
As the number or roads and road networks increases, there arises a need for
efficient management system in the concerned LGU. In this regards although
there are often difficulties in compiling comprehensive information on the
existence and valuation of the said assets, the concerned personnel should
maximize the transitory period to establish fair presentation of the account
Infrastructure Assets in the Financial Statements and make the associated
disclosure from the date of its first application.
In view of the foregoing, we recommended that Management:
1) Require the Municipal Accountant, Municipal Engineer and the General

Services Officer to comply to the Accounting and Reporting Procedures and
to their respective duties and responsibilities provided in Items V and VII of
COA Circular No. 2017-008 dated November 25, 2017, respectively;
2) Submit a duly accomplished copy of Annexes A to E to the Audit Team for

evaluation and verification;
3) Direct the Municipal Engineer to prepare specific estimated useful life for
each depreciable components of the Local Road Network based on LGU’s
experience on the life of its PPE, copy furnished the Audit Team;
4) Direct the Municipal Accountant to comply to the transitionary period of

recognizing the Local Road Network in the books of accounts, effect the
corresponding depreciation and make necessary disclosure in the Notes to
the Financial Statements; and
5) In the existing Inventory Committee, the inclusion of a representative from the

Engineering Department is recommended to facilitate identification and
evaluation of the technical aspect of the projects.

2018.
43
The Management informed the Audit Team that they will comply with the
recommendations in which the joint inventory of Local Road Network by
Engineering Department and Planning Department is on-going as of date and the
target date of completion will be the end of July. Moreover, Engineer Lugto will
be designated as representative from the Engineering Office in the existing
Inventory Committee. In addition, the Municipal Accountant will recognize the
Road and Road Network System as soon as he will have in her office the
information and documents needed for recording.
Senior Citizen and Person with Disability
5. The LGU earmarked a total of ₱1,185,130.32 for its 1% Senior Citizen and
Persons with Disabilities (PWDs) Fund of which 44.75% or ₱530,401.32
remained unutilized contrary to Department of Budget and Management
(DBM) and Department of Social Welfare and Development (DSWD) Joint
Circular No. 2003-01 dated April 28, 2003. Thus, service provided to Senior
Citizens and PWDs was not maximized.
Paragraph 5 of the DWSD-DILG Joint Circular No. 2003-01 dated April 28, 2003
states that:
“The head of the agency concerned shall be responsible for the

implementation of the programs/projects/activities/services for the older
persons and PWDs and the submission of the required reports as
herein required.”
Moreover, the same Joint Circular identified PPAs which will address the needs
of older persons and PWDs, such as, but not limited to: (1) Conduct of
Information, Education and Communication (IEC) Campaign/Advocacy; (2)
Human Resource Development and Capability Building for Older
Persons/Persons with Disabilities and implementers of PPAs; (3) Provision of
employment opportunities either in self, open or sheltered employment for older
persons and PWDs; (4) Policy development/ Legislation that seeks to promote
the rights, full participation and equality of older persons and PWDs in the
development process, etc.
For CY 2017, the 1% Senior Citizens and PWDs Fund appropriation and
expenses of the LGU is tabulated below:
44
Table VI
1% Senior Citizen and PWDs Fund Appropriations and Utilization
As of December 31, 2017

0.05% SENIOR CITIZEN FUND
Quarterly Meeting of 26
1 Barangays FSCAP 32,000.00 15,600.00 16,400.00
President
A.1 Transportation,
2 snacks and meals 15,000.00 2,950.00 12,050.00
3 Provincial Meeting 10,000.00 9,900.00 100.00

4 A.1. Regional Meeting 15,000.00 11,630.00 3,370.00
A.2. National 10,000.00 5,090.00 4,910.00
5
Conference
Senior Citizens’ Week
6 64,173.12 64,173.00 0.12
Celebration
A.1. Fare and Other
7 8,000.00 9,500.00 - 1,500.00
Incidental Expenses
Elderly Voices and
8 115,000.00 115,000.00 -
Christmas Celebration
Honorarium for the
9 FSCAP Panitan -
15,000.00 15,000.00
President
Honorarium for the
10 5,000.00
OSCA Head 60,000.00 55,000.00
Meeting and
11 Conferences at the 17,309.00
19,500.00 2,191.00
Barangay Level
Procurement of Common
12 2,349.70
Used Office supplies 46,349.70 44,000.00
Procurement of Office
13 38,750.00
Equipment 65,000.00 26,250.00
Procurement of 250 pax
14 -
T-shirt 41,500.00 41,500.00
Sub-Total 98,738.82
516,522.82 417,784.00
Continuing 2015
15 2,084.68 - 2,084.68
Total 100,823.50
518,607.50 417,784.00
45
0.05% PERSONS WITH DISABLITIES (PWDs) FUND
Provision of Physical
16 Aid/device to Needy 60,000.00 52,645.00 7,355.00
PWDs
Renovation/Improvement
17 120,000.00 - 120,000.00
of OPDA Office
Federation of PWDs
18 96,000.00 25,000.00 71,000.00
President
Procurement of Materials
19 20,000.00 - 20,000.00
and Office Supplies
Procurement of Office
20 50,000.00 44,200.00 5,800.00
Equipment and Furniture
Quarterly Provincial
21 4,160.00
Meetings 8,000.00 3,840.00
E.1. Regional Meetings
22 and conferences twice a 1,190.00
10,000.00 8,810.00
year
Provision of Meals
During Quarterly
23 522.82
Meetings of 26 PWDs 12,522.82 12,000.00
President
F.1. Transportation
24 Allowance during Fields 2,450.00
10,000.00 7,550.00
Visits
25 NDPR Week Celebration 17,100.00

50,000.00 32,900.00
Family Day/Hydro
26 30,000.00
Therapy 30,000.00 -
Christmas Party of
27 -
PWDs 50,000.00 50,000.00
Sub-Total 516,522.82 236,945.00 279,577.82
Capital Outlay-Cont.
2015 –Construction of
28 150,000.00
PWD’s Comfort Room at 150,000.00 -
the Park
Total 666,522.82 236,945.00 429,577.82
GRAND TOTAL 1,185,130.32 654,729.00 530,401.32

% 100.00% 55.25% 44.75%
46
As can be gleaned in Table VI above, the LGU appropriated a total amount of
₱1,185,130.32 for its Senior Citizen and PWDs activities. However, the obligation
incurred was only 55.25% or ₱654,729.00 leaving an unexpended balance of
₱530,401.32 comprising 44.75% of the total budget.
The LGU managed to identify issues and problems concerning the Senior
Citizens and PWDs and determined PPAs that can address the said matter
Nevertheless, it was not optimally utilized and may signify that the purpose for
which the budget was intended was not fully realized. Moreover, the definite
results of these projects were not clearly established and evaluated.
One of the objectives of allocating budget for senior citizens and PWDs is to give
them opportunity to be involved in nation building. In this regards, senior citizens
and PWDs centers in the LGU shall serve as venues for the delivery of integrated
and comprehensive social services to the concerned persons. They will act as
the primary offices to coordinate with and assist the LGU for the adoption of a
comprehensive plan on delinquency prevention, and to oversee its proper
implementation. Therefore, the focal persons of these offices play an important
role for the realization of the target objectives set out in the guidelines. Hence,
the LGU should put more effort in implementing the PPAs to maximize the
services and benefits for the beneficiaries.
As earlier stated, DWSD-DILG Joint Circular No. 2003-01 enumerates PPAs

which may be funded out of the 1% Senior Citizen and PWDs Fund. Those
samples of PPAs will provide necessary assistance to LGUs in carrying out a
more strategic planning in identifying and implementing the priority PPAs in their
jurisdiction. Accordingly, the LGU, through its designated Senior Citizen and
PWD focal persons, shall ensure that the PPAs are for the promotion and
protection of the welfare of the elderly and PWDs. Moreover, the scheduled time
for execution of each identified PPAs should be properly evaluated in the
planning phase.
Notwithstanding of the low implementation rate and the remaining unutilized

fund, the LGU is also encouraged to outsource funds or to engage in partnership
with private organizations, establishments, and entities that provide financial
assistance for the implementation of Senior Citizens and PWDs programs,
projects and activities. These private organizations can join the LGU in its effort
in providing the necessary services for the intended beneficiaries to explore
livelihood opportunities and other undertakings that shall enhance the health,
physical fitness and the economic and social well-being of Senior Citizens and
PWDs. Yet, the LGU should also see to it that it will provide strong commitment
to implement its proposed projects using the said fund and with the support of the
said organizations.
Management’s full commitment is required to implement its PPAs under the 1%

Senior Citizen and PWDs fund. Otherwise, the ultimate goals envisioned for in
the guidelines to protect their rights and give privileges for equal opportunities to
employment, education, health, auxiliary services, and civil exercise may not be
satisfied.
47
1. Require the MSWDO that during identification of PPAs for budgeting,

propose only those which are feasible and can be completed within the target
date of implementation, taking into consideration the priorities of the LGU
leadership;
2. See to it that PPAs being implemented are closely monitored and supervised
so that problems/issues that may arise shall be immediately addressed;
3. Include the end-result of the activities undertaken in the Accomplishment

Report; and

through Audit Observation Memorandum No. 2018-07 (2017) dated February 3,
2018.
The Management informed the Audit Team that they will strictly implement all the
recommendations laid down in the Audit Observation Memorandum for the 1%
Fund for Senior Citizens and PWDs.
B. VALUE FOR MONEY
Local Disaster Risk Reduction Management (LDRRM)
6. Formulation of a strategic plan for disaster prevention and mitigation in the

LGU should be prioritized to address the adverse impacts of flash floods
and other related disaster to areas most susceptible to flooding pursuant
to National Disaster Risk Reduction Management Council (NDRRMC),
Department of Budget and Management (DBM) and Department of the
Interior and Local Government (DILG) Joint Memorandum Circular No.
2013-1 dated March 25, 2013.
Item 5.0 of NDRRMC-DBM-DILG Joint Memorandum Circular No. 2013-1 dated

March 25, 2013, thus read:
“Disaster Prevention – refers to the outright avoidance of adverse

impacts of hazards and related disasters. It expresses the concept and
intention to completely avoid potential adverse impacts through action
taken in advance such as construction of dams or embankments that
eliminate flood risks, land-use regulations that do not permit any
settlement in high-risk zones, and seismic engineering designs that
ensure the survival and function of a critical building in any likely
earthquake.
Disaster Mitigation – refers to measures that would lessen or limit the

adverse impacts of hazards and related disasters. Mitigation measures
encompass engineering techniques and hazard-resistant construction
as well as improved environmental policies and public awareness”
48
Table VII- Utilization of LDRRMF as of December 31, 2017
Utilized Unutilized
Particular Allocation
Amount % Amount %
CY 2017
QRF 1,549,568.46 - 0.00% 1,549,568.46 100.00%
PMF 3,615,659.74 2,125,928.46 58.80% 1,489,731.28 41.20%
Sub-total 5,165,228.20 2,125,928.46 3,039,299.74
Continuing CY 2016 2,419,573.22 0.00% 2,419,573.22 100.00%

Continuing CY 2015 1,258,949.04 0.00% 1,258,949.04
TOTAL 8,843,750.46 2,125,928.46 6,717,822.00
Realignment from Cotinuing
from CY 2014-2016 2,350,000.00 2,197,954.92 93.53% 152,045.08 6.47%
Sub-total 2,350,000.00 2,197,954.92 152,045.08
GRAND TOTAL 11,193,750.46 4,323,883.38 6,869,867.08
As gleaned in Table VII, the LGU’s total allocation for its LDRRMF for CY 2017
had reached to ₱8,843,750.46 plus the Realignment from Continuing of CY 2014-
2016 amounting to ₱2,350,000.00 making it a total of ₱11,193,750.46. It can be
observed that the utilization for the Prevention and Mitigation Fund (PMF) was
only 58.80% of its total allocation of ₱3,615,659.74 as of December 31, 2017.
The purpose of the PMF is expressed in the definition of disaster prevention and
mitigation stated earlier. The low implementation rate for PMF may signify that
the purpose for which it was intended was not fully achieved.
The LGU funded projects for disaster mitigation includes capability development
for LDRRMO personnel and MDRRM Council, de-silting of creeks and de-
clogging of canals and disaster preparedness or simulation drills. However, the
LGU could have delivered optimum benefits to the constituents intended in the
LDRRMF utilization guidelines had it maximized the implementation of the
various projects identified as priorities. Details regarding the PPAs for LDRRMF
are shown in Annex Q.
LGU-Panitan is a 3rd class municipality in the province of Capiz, Philippines.

According to the 2015 census, it has a population of 40,289 people. Even though
the whole Municipality is not susceptible to landslides, the 26 barangays
experience varying degrees of flooding.
In a field assessment conducted by a team of geologist from the Mines and

Geosciences Bureau (MGB) of the Department of Environment and Natural
Resources (DENR) on February 12-18, 2009, an excerpt from the results of the
geohazard assessment of barangays of the Municipality of Panitan, Capiz
Province is shown below:
Table VIII- Results of Flood Assessment of the Barangays with High Flood
Susceptibility
Barangay Name Remarks
Agbabadiang The whole barangay suffers from up to 15 days flooding

with high depth of >3m. Flash flood with low turbidity is
49
common.
Agkilo Very highly turbid flash flood is very common. Sheet
flooding with high depth of >1m, lasting for 3-5 days,
seasonally affects Sitio Kapanang, Catmon, and low-lying
part of the brgy proper. About 32 households and rice
fields are affected by the flooding, which is due to
overflow of Panay River and Danao Lake.
Agloway High flood depth seasonally occurs at the brgy road,
Sitios Kumanca and Riles due to run-offs from Maayon
and Pontevedra during continuous rains. Agloway Lake
overflows during rainfall.
Ambilay Low flood depth of <0.5m rarely occurs at the brgy
proper. High flood depth of >1m seasonally affects Sitios
Hacienda, Lagasa, Pilac, and Batwan and houses at the
brgy proper situated near Panay River. Highly turbid
flash flood is common.
Cadio Highly turbid flash flood commonly occurs. Sitios
Pampang, Ilawod, Nangka, Nasunugan and and the brgy
proper experience seasonally high flood depth of >1m.
Cala-an Sheet flooding with high depth of >1m seasonally affects
about 95% (200 households) of the barangay for a
duration of >1 week. Flash flood with low turbidity is very
common along Panay River. Develop an early warning
device/system.
Cogon Very highly turbid flash flood is very common. Sheet
flooding with high depth of >1m, lasting for a week,
seasonally affects Sitio Muyco, Muto, Ubos, Malubo and
Bato due to run-off from upland barangays and overflow
of Cogon Lake and creeks.
Conciencia Sheet flooding with high depth of >1m seasonally affects
Sitios Linab and Coburungan for a week duration due to
overflow of Panay River and Tincupan Creek.
Bahit High flood depth of >3m seasonally occurs affecting
about 15 houses at the bgry proper and are situated on
river banks of Panay. Flood lasts up to 10 days or more.
Flash flood with low turbidity is very common.
Intampilan Very highly turbid flash flood very commonly affects the
barangay. Sitios Dalhog and Sapid including rice fields
are seasonally flooded for 1-2 weeks with high depth of
>1m.
Pasugue Flash flood with low turbidity is very common. About 70%
of the barangay, including the brgy proper, Sitio Duna,
and Sitio Ilawod, suffers from sheet flooding with high
depth of >1m for approximately 1 week.
Tabuc Norte The whole barangay suffers from approximately 7 days
flooding with high depth of >1m. Flash flood with low
turbidity is common.
50
Tabuc Sur Very highly turbid flash flood is very common. Brgy.
Proper and Sitios Cabacol, Capulan and Nulaban are
affected seasonally with high flood depth of >1m. Bank
erosion of Nulaban Creek at Sitio Nulaban is active.
Flood control structure along Panay River is not
continuous thus worsening erosion and flooding on parts
of the barangay without the flood control.
Tincupon Flash flood with low turbidity rarely occurs. Sheet
flooding depth of <0.5m is rare at the brgy proper. Rice
fields are seasonally flooded with >1m depth.
Several barangays like Agbabadiang, Agkilo, Agloway, Cogon, Bahit, Intampilan

and Tabuc Sur are barangays with high to very high flood susceptibility and
where areas are likely to experience flood heights of 1.0 to 3.0 meters and/or
flood duration of more than 2 weeks. These areas are immediately flooded during
heavy rains of several hours.
On the other hand, the some barangays are low topographical landforms with
active river channels, abandoned river channels and with areas along river banks
which made them prone to flashfloods. Annex R-1 and R-2 shows the google
generated maps and the recommendations given by the MGB of DENR
regarding the above remarks for the corresponding barangay
It is worthy to mention that based on the foregoing findings of MGB, fourteen (14)
or 53.85 % out of 42 barangays in the Municipality are susceptible to flooding.
In the occurrence of flash floods in these coastal barangays, the schools are
customarily assigned as evacuation center/shelter of affected households.
The frequent occurrence of flash floods brought by moderate to heavy rains can
be associated to the absence of a well-structured drainage system that should
minimize if not fully eliminate the impact of flooding by safely carrying storm
water away from built-up areas into rivers and creeks.
Agriculture is considered the major backbone of the Municipality’s economy. The

community relies on the abundant supply of agricultural produce. During
typhoons, these economic resources are greatly affected resulting to loss of
income and capital especially for low-income families.
Recently, the Municipality was greatly affected by a tropical depression which

resulted to severe damage to local economy. Moreover, several roads were
declared impassable due to flooding.
Accordingly, there is a need for the LGU to broaden its scope of concerns during
the planning phase for its LDRRM giving more attention to the most susceptible
barangays greatly affected during typhoons. Moreover, they should also
formulate ideas on how to minimize the adverse effects of calamities to the
primary sources of income in the Municipality. Shown below are pictures taken
51
by the Municipality’s LDRRM team: (Photos taken from the LDRRM Panitan
Social Media Page)
The Audit Team commends the effort of the LGU particularly of the LDRRMC for
their outstanding performance for disaster reduction in their Municipality.
Moreover, the Audit Team compliments the initiative of the Management to
outsource fund even prior to our AOM as stated in their comments. On the other
hand, the Management should continue to give priority to flood susceptible
barangays in the formulation of strategic plan.
1. Consider the field assessment conducted by the Mines and Geosciences

Bureau of the Department of Environment and Natural Resources during the
planning phase to formulate a more strategic concept/solutions to address
the adverse impacts of disasters in the Municipality, particularly during
Typhoons that cause severe flooding;
2. Direct the Municipal Engineering and Municipal Planning and Development

Offices to take measures that would totally resolve the year round flash
flooding to low land barangays through the adoption of engineering
techniques and hazard-resistant such as the installation of a workable
drainage system/flood controls;
3. Maximize the utilization of the LDRRMF allocated for the implementation of

various projects, programs and activities identified as priorities particularly on
its Prevention and Mitigation aspects to limit or avoid potential adverse
impacts of hazard and related disasters.

2018.
52
The Management gave their comments during the exit conference and said that
the field assessment of the Mines and Geosciences Bureau (MGB) of the DENR
is duly recognized up to the extent of their realistic applicability to the LGU’s
disaster risk reduction and management efforts.. Contrary to the assessment of
the MGB, this is the list of the barangays most susceptible to flooding based on
their long time experience and their own assessment:
1. Agbabadiang 11. Capagao

2. Agkilo 12. Tincupon
3. Ambilay 13. Intampilan
4. Cabugao 14. Quios
5. Tinigban 15. Pasugue
6. Bahit 16. Balatucan
7. Salocon 17. Calaan
8. Cabangahan 18. Tabuc Sur
9. Cadio 19. Tabuc Norte
10. Bangaan
Moreover, they mentioned that the viaduct at Barangay Agkilo and Balatucan is
already in the pipeline for implementation to facilitate access during flood
seasons. Furthermore, the Management added that due to the limited resources,
they were limited to desilting and de-clogging of drainage. According to them,
Outsourcing of funds like in DPWH for the Construction of Viaducts, River
Controls, and Panay River Basin Project was already indorsed by the
Sangguniang Bayan to the Provincial Development Council for prioritization.
Solid Waste and Management
7. LGU has not fully complied with the conditions laid down in pertinent
Sections of the Republic Act (RA) 9003 on the prohibition against the use
of open dumpsite for solid waste and proper management of controlled
dumps thereby increasing the risk of exposure to disease-producing
microorganism and other harmful contaminants that can endanger public
health and can contribute to environmental pollution.
Section 37 of RA 9003 delved on the Prohibition Against the Use of Open Dumps
for Solid Waste which provides:
“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 wastes, be allowed after the
effectivity of this Acts: Provided, That within three (3) years after the
effectivity of this Act, every LGU shall convert its open dumps into
controlled dumps, in accordance with the guidelines set in Sec. 41 of
this Act: Provided, further, That no controlled dumps shall be allowed
five (5) years following the effectivity of this Act.”
53
Accordingly, Section 39 of the same Act provides minimum considerations for the
establishment of Controlled Dumps, to wit:
(a) Regular inert cover;
(b) Surface water and peripheral site drainage control;
(c) Provision for aerobic and anaerobic decomposition;
(d) Restriction of waste deposition to small working areas;
(e) Fence, including provisions for litter control;
(f) Basic record-keeping;
(g) Provision of maintained access road;
(h) Controlled waste picking and trading;
(i) Post-closure site cover and vegetation; and
(j) Hydro geological siting.
CURRENT CONDITION OF THE DUMPSITE AT BRGY. INTAMPILAN,

PANITAN
Closer View of the Dumpsite Provision of Gate and Partial Fencing
180̊ View of the Dumpsite
54
The Audit Team conducted an inspection to the actual site and observed the
following as indicated by the pictures above:
1. The LGU has not converted its dumpsite into a controlled dump within the
given period pursuant to the above mentioned Section of RA 9003. This may
signify that the LGU lacks adequate planning of their Solid Waste
Management (SWM) System and of the overall land-use plan of the total area
of nine (9) hectares where the dumpsite is located. Accordingly, further
provision of the Act regarding controlled dumps is thereafter not complied
increasing significant public risk due to the presence of toxic chemicals and
hazardous wastes that could endanger life, property and the environment.
2. Observation revealed that there was no provision for inert cover as well as for
aerobic and anaerobic decomposition. Moreover, surface water and
peripheral site drainage control was also not instituted to manage leachate
flows and storm-water runoffs from the sites. On the other hand, hydro-
geological siting of the site shows that the movement of water is downward
since the dumpsite is located at the higher portion of the area but nothing has
come to our attention about the presence of any nearby surface waters within
the vicinity. Consequently, possible erosion can be a concern due to its
slanting land feature.
3. Provision for restriction of waste deposition to small working areas was

disregarded since there were no nearby small working areas within the
premises. However, the LGU must consider the possible occurrence of such
areas in the future.
4. For littering control, enclosure of the site was deficient due to the incomplete
fencing around the dumpsite allowing unauthorized entries of waste
merchants and stray animals which indicate less control for scavenging and
littering. On the other hand, access to the site is barely attainable although
roads were concreted from the main road with a short rough road
approaching the location of the dumpsite.
As can be seen in the 180̊ view of the dumpsite, there is the construction of the
43 CORE Shelters adjacent to the dumpsite intended for the relocation of
Yolanda victims which remained unoccupied. Moreover, next to the CORE
Shelters is the Housing Project of Gawad Kalinga (GK) where several residents
are presently dwelling. This is alarming because of the possible health hazards
the occupants can get from the dump site. Most importantly, it is contrary to
Section 48 (15) of RA 9003 that prohibits the construction of any establishment
within two hundred (200) meters from open dumps or controlled dumps, or
sanitary landfill. The whole dimension of the site is an exemplary setting for a
dumpsite if only proper management, maintenance and compliance for the 9
hectares were provided.
55
CURRENT CONDITION OF THE DUMPTRUCK
GeoCam View of the Dump Truck Side View of the Dump Truck
Front View of the Dump Truck Back View of the Dump Truck
For the vehicle used in the SWM operation, out of the three (3) dump trucks of
the LGU, only one (1) is for the SWM program doing the waste collection on the
designated areas and the others are intended as rescue vehicle and for the
construction projects of the LGU. Inspection shows that the vehicle for SWM is
currently unserviceable due to some damages affecting its running condition and
is currently kept in the Municipal Motor Pool. Meanwhile, they are currently using
the other dump truck for the wastes collection.
RECORD KEEPING
Rule VII Section 7 of the same R.A. provides that:
“Each LGU’s SWM plan shall include an implementable schedule which

shows that within five (5) years after the effectivity of the Act, the LGU
shall divert at least 25% of all solid waste from waste disposal facilities
through, re-use, recycling and composting activities and other resource
recovery activities. Xxxxxx”
This provision can be effectively achieved through maintenance of the minimum

disposal site records which the LGU failed to observe. Accordingly, we reiterate
the observation regarding the non-maintenance of basic records tracking the
56
quantity of garbage daily operation vis-a-vis condition/capacity of the dumpsite as
provided in Section 42 of R.A. 9003.
 On the compliance of Section 39 of R.A. 9003
a. Conduct proper planning regarding the conversion of the open dump site
into controlled dump site considering the available area in the above
mentioned nine hectares LGU owned land;
b. Consider other options to secure additional funding for SWM Programs,

either from within or from outside to compensate for the deficient SWM
fund in performing proper collection, transportation and handling of waste
prior to final disposal and to provide the necessary trainings and health
protection for the wastes collectors, to wit:
a) Personal protective equipment and paraphernalia such as, but not

limited to gloves, masks and safety boots, to protect them from the
hazards of handling solid wastes; and
b) Necessary training to the collectors and personnel to ensure that the

solid wastes are handled properly.
 Condition of MRF/Dump Site
c. Earmark funding for the provision of a temporary fencing of the dump site
while waiting for its conversion to a controlled dump site to avoid
unauthorized entries of individuals and animals;
 Current Condition of the Dump Truck
d. Initiate immediate action for the repair of the damaged dump truck to
prevent further deterioration of the vehicle.
 On record keeping:
e. Keep/maintain basic record on the operation of SWM required under

Section 42 of RA 9003 and keep track of the current condition of the
dumping site to promote proper monitoring of the program and to
facilitate compliance to Rule VII Section 7 of the same RA; and

2018.
During the Exit Conference, the Management stated that a 10-year Solid Waste
Management Plan has been prepared to address the garbage collection and
other related problems. Moreover, they said that programs have been prepared
57
to be submitted to any funding agency like EMB and other NGO’s who have
concern on Solid Waste. On the other hand, plans have been submitted to the
Office of the Mayor for the procurement of protective gears for garbage
collectors. They also added that trainings for the collectors will be implemented.
Moreover, procurement of solid waste management equipment and for fencing
has been bidded and procurement of brand new dump truck has been already
considered. Lastly, recording for solid waste management will be implemented.
Auditor’s Rejoinder:
The Management should expedite the construction of fence and repair of the
damaged dump truck to avoid further deterioration. The LGU should also make
appropriate actions to prevent the occurrence of health hazards to the nearby
residential area specifically households in the CORE Shelter and the GAWAD
Kalinga housing units.
20% Development Fund
8. LGU’s utilization of the 20% Development Fund (DF) was not maximized
since only 57.58% or ₱19,246,182.97 of the total appropriation of
₱33,424,465.91 was obligated for CY 2017 contrary to the Department of the
Interior and Local Government (DILG) and Department of Budget and
Management (DBM) Joint Memorandum Circular (JMC) No. 2017-1 dated
February 22, 2017. Thus, its constituents were deprived of vital services
and economic opportunities had the same been fully and properly
implemented.
A. Low Implementation Rate for 20% Development Fund Projects
DILG-DBM JMC No. 2017-1 dated February 22, 2017 states that:
“It is the responsibility of every local chief executive to ensure that the
20% DF is optimally utilized to help achieve the desirable socio-
economic development and environmental outcomes of the LGU.”
Moreover, the same Circular provides:
“The utilization of the 20% DF, whether willfully or through

negligence, for any purpose other than those expressly prescribed by
law or public policy shall be subject to the sanctions provided under
RA 7160 and other applicable laws.”
58
Table X: Summary of Appropriation and Utilization of 20% Development Fund
(DF) as of December 31, 2017
Bugetary
CY 2017 Obligated Balance
Allocation
Social Development 3,220,992.93 2,876,134.92 344,858.01
Economic Development 6,455,280.77 4,483,951.54 1,971,329.23
Environmental Development 13,518.00 13,518.00 -
Total Realignment in 2017 14,148,413.95 2,646,926.12 11,501,487.83
Sub-Total 23,838,205.65 10,020,530.58 13,817,675.07
Continuing from CY 2016 3,622,512.39 3,622,512.39 -
Total Realignment in 2016 5,500,000.00 5,500,000.00 -
Sub-Total 9,122,512.39 9,122,512.39 -
TOTAL 2017 32,960,718.04 19,143,042.97 13,817,675.07
Continuing from CY 2015 463,747.87 103,140.00 360,607.87
GRAND TOTAL 33,424,465.91 19,246,182.97 14,178,282.94
% 100% 57.58% 42.42%
As gleaned from Table X, the LGU’s total budgetary allocation for 20% DF in CY
2017 including continuing approprincluding continuing appropriation from CY
2015-2016 had reached to ₱33,424,465.91. Of this amount, 57.58% or
₱19,246,182.97 was obligated leaving a balance of ₱14,178,282.94. It can be
observed that a total of ₱14,148,413.95 or 59.38% of the budget for CY 2017 has
been realigned to other PPAs. From this amount, only ₱2,646,926.12 was
obligated leaving a balance of ₱11,501,487.83.
The new projects identified from the realignment include the Construction of Box
Culverts, Construction/Rehabilitation of Multipurpose Hall and Resource Center
and Spot Concreting of Local Road at Various Barangays. The LGU has
identified priority PPAs to be funded from the 20% DF however, the intended
benefits therefrom were not realized due to the slow implementation of these
PPAs. Non-implementation of PPAs even after realignment may signify that
adequate planning was not effectively carried out particularly on the
implementation time frame for each PPA. Consequently, funds allocated for
these PPAs would be more beneficial and worthwhile to the Municipality had the
same was implemented. Accordingly, the low implementation rate may indicate
that the effort of the LGU to promote economic growth and sustainable human
development was not fully materialized
The above mentioned Joint Circular enumerated PPAs that will provide
necessary assistance to LGUs in carrying out a more strategic planning in
identifying and implementing the applicable PPAs in their jurisdiction for the
attainment of desirable socio-economic development and environmental
management outcomes in the LGU, such as, but not limited to: (1) Construction
or rehabilitation of local government-owned potable water supply system; (2)
Capital Expenditures related to the implementation of livelihood or
entrepreneurship/local economic development projects; and (4) Other
environmental management projects that promote air and water quality, as well
as productivity of the coastal or freshwater habitat, agricultural land and forest
land, such as but not limited to, treatment of wastewater for conservation/re-use
purposes, and installation of air pollution control devices.
59
The Audit Team conducted an ocular inspection of the projects implemented
under the 20% DF and it is worthy to mention that the LGU managed to identify
priority PPAs which are timely and relevant like Construction of Footbridge
connecting Sitio Duna, Barangay Pasugue that will promote easy access for its
constituents and Municipal and Barangay Development Projects (See pictures
below).
Construction of Footbridge in Municipal and Barangay

Barangay Pasugue Development Project
B. Prior Year Unobligated Balance of 20% Development Not Reverted to GF
Section 3.1 of COA Circular No. 89-302 dated December 29, 1989 provides:
“Unobligated balances of allotments for Current Operating

Expenditures (COE) as of December 31 of each year shall reverted to
the unappropriated surplus of the General Fund, while unobligated
balances of Capital Outlays (CO) shall be retained as Continuing
Appropriation and shall be made available for obligations until
December 31 of the subsequent year without the need for the
issuance of Confirmation Notice of Allotment Release (CNAR).”
Section 3.2 of COA Circular 89-302 dated December 29, 1989 provides:
“Balances of Capital Outlay retained as Continuing under 3.1 but

which were not utilized during the subsequent year shall be reverted
to the unappropriated surplus of the General Fund, in line with the
existing budgetary policy.”
60
Table XI: Summary of Continuing Appropriation from CY 2015 in 20% DF as of
December 31, 2017
CONTINUING 2015 Utilized Balance Realigned Balance

Budetary
Allocation
1. Community Development Assistance Fund 50,811.91 - 50,811.91 (50,811.91) -
2. Tourism Development Program(Counterpart Grassroots - - -
budget Progrsm 187,766.90 - 187,766.90 (187,766.90) -
3. Establishment of Barangay Owned MRF 260,000.00 - 260,000.00 (260,000.00) -
4. Counterpart to Core shelter Project 103,161.50 103,140.00 21.50 (21.50) -
5. Solar Power Generation 300,000.00 - 300,000.00 - 300,000.00 -
Sub-Total 901,740.31 103,140.00 798,600.31 (798,600.31) -
SUPPLEMENTAL # 1
6. Interest payment of heavyEquipment LOAN for the
year schedule 360,607.87 - 360,607.87 - 360,607.87
7. Ecological Solid Waste Management Program 444,639.50 - 444,639.50 - 444,639.50 -
Sub-Total 805,247.37 - 805,247.37 (444,639.50) 360,607.87
TOTAL 2015 1,706,987.68 103,140.00 1,603,847.68 (1,243,239.81) 360,607.87
Table XI disclosed that the total continuing appropriation for CY 2015 amounted
to ₱1,706,987.68. Of that amount ₱103,140.00 was obligated and
₱1,243,239.81 was realigned was realigned in CY 2016 leaving a balance of
₱360,607.87. Inquiry to the Municipal Accountant, from the total realigned
amount of ₱1,243,239.81, ₱498,600.31 is for the payment for accounts payable
incurred. Accordingly, the remaining realigned amount of ₱744,639.50 and the
balance of ₱360,607.87 should not be authorized for obligation and should be
reverted to the unappropriated surplus of the GF.
Management’s full commitment is required to implement identified PPAs under

the 20% DF. Otherwise, the requirements for achieving the ultimate goals
envisioned in the guidelines may not be satisfied. The non-implementation of
PPAs for the period of two (2) years was indicative of inefficient service. The
inadequate effort of the LGU to optimally implement its identified PPAs is
recurring from year to year. Moreover, the LGU could have delivered optimum
benefits to the constituents as intended in the 20% DF utilization guidelines had it
maximized the implementation of the various priorities developmental projects.
1) Evaluate the viability of identified priority PPAs during the planning phase and
monitor the implementation of such PPAs;
2) Maximize the utilization of the 20% Development Fund allocated for the
implementation of various projects, programs and activities identified as
61
priorities pursuant to DILG-DBM JMC No. 2017-1 dated February 22, 2017 to
help achieve desirable socio-economic development and environmental
outcomes and shall partake the nature of investment or capital expenditure;
and
3) Direct the Municipal Accountant to revert to unappropriated surplus of the GF,

the unobligated balance of continuing appropriation from CY 2015 as of
December 31, 2017 in accordance with the COA Circular No. 89-302 dated
December 29, 1989.

2018.
Management informed the Audit Team in our Exit Conference that they will be
revalidating the PPAs included in the 20% DF as to its viability. For the low
utilization rate of the 20% DF, Management noted the corresponding
recommendations for implementation. Moreover, the reversion of unobligated
balance from continuing appropriation of CY 2015 and 2016 will be for
implementation.
Fund Transfer
9. Necessary facilities to make the 43-unit CORE Shelter Project habitable

were not provided due to Management’s failure to infuse additional funding
to the budget which is contrary to the objective of the GPB, thus resulting
to non-occupancy by the intended beneficiary families.
The Grassroots Participatory Budgeting (GPB) aims to make the planning and
budgeting processes of both local and national government more participatory by
involving grassroots communities in the delivery of national services to poor
communities. On the Memorandum of Agreement (MOA) entered into by the
Municipality of Panitan, its Management accepted the responsibility.
Article II Section 2 of the said MOA provides the roles and responsibility of the
LGU, among others are:
1. The LGU should prepare a Municipal Implementation Plan (MIP) detailing the
specific activities to prepare full community proposals and indicating the
specific responsibilities and accountabilities of LGU and staff or eligible Civil
Society Organization’s (CSO) technical staff; and
2. Take full responsibility in proper disposition/disbursement of funds for the

implementation of its GPB projects in accordance with government
accounting and auditing rules and regulations.
The Core Shelter Project costing ₱3,000,000.00 was identified by the Local
Poverty Reduction Action Team (LPRAT) of the Municipality as one of priority
62
poverty reduction projects to be funded under the GPB or BUB with a counterpart
from the Municipality of Panitan equivalent to 15% or ₱450,000.00.
Corollary thereto, the CORE Shelter Assistance Program amounting to ₱3 Million

was transferred to the LGU as shown below:
Check Date Check No. Reference Fund Transferred Percent (%)

2/25/2015 503404 OR No. 6412287 2,100,000.00 70%
4/18/2016 539150 OR No. 70220712 900,000.00 30%
Total: ₱3,000,000.00 100%
The terms and conditions specified in the MOA states that upon seventy percent
(70%) physical accomplishment of the project as evidenced by a Physical
Accomplishment Report prepared by the Municipal Engineer approved by the
Municipal Mayor checked by DSWD Kalahi-CIDSS GPB Regional Engineer and
approved by Regional Community Infrastructure Specialist in cases of Infra
Projects, the second and last tranche of 30% will be transferred. However, the
total fund of ₱3,450,000.00 which includes the counterpart of the LGU was only
for the main structures of the CORE Shelter. Thus, additional funding is needed
for the construction of necessary facilities like septic tanks, comfort rooms and
potable water sources to make the housing units habitable.
The Audit Team inspected the said project on November 14, 2017 to validate the
extent of its implementation based on the purpose of providing CORE Shelter for
the families affected by Super-Typhoon Yolanda with the maximized participation
and drawn commitment of the beneficiaries. Pictures taken during inspection are
shown below.
SIDE VIEW OF THE CORE SHELTER PROVISION OF COMFORT ROOM
CONSTRUCTION OF SEPTIC TANK INSTALLATION OF ELECTRICAL

FACILITIES
63
The Program of Works indicates project duration of 90 Calendar Days or three
(3) months starting July 2015 with a target completion date on August 30, 2016.
However, during the actual inspection of the project, we observed that the
subject core shelter remains inhabitable notwithstanding of one (1) family who
already settled in first unit. The non-occupancy was due to the inadequate
facilities as mentioned above.
As of inspection date, there were four (4) septic tanks constructed together with
electricity and twenty (20) units comfort rooms for the first twenty (20) units. The
construction of the said amenities was funded from the 20% Development Fund
amounting to ₱500,000.00 in addition to the original budget. However it was still
insufficient to complete the construction of facilities as disclosed by the Municipal
Engineer.
As previously observed, Resolution No. 82 by the Sangguniang Bayan

authorized the utilization of Lot No. 843 consisting of two thousands (2,000)
square meters, more or less, located at Barangay Timpas and Intampilan,
Panitan, Capiz for the construction of the CORE Shelter Project. It was intended
for the twenty five (25) families with a cost of ₱120,000.00 each or a total of
₱3,000,000.00.
However, it was amended per Project Proposal of the Office of the Mayor that 43-
CORE Shelter Units will be implemented for 43 beneficiary families mostly
affected by Typhoon Yolanda with a total project cost of ₱3,450,000.00. Thus,
there had been a change in the planned size of a CORE shelter in order for the
43 units to be accommodated in the original 2,000 sq. m lot.
It has been four (4) years when the Super-typhoon Yolanda devastated the
Municipality. The LGU should expedite the full implementation of the CORE
Shelter that aims to enable the affected families to rebuild and restore their lives
which were disrupted by the Super-typhoon. Lastly, the LGU should also
continue to maximize the participation and commitment of the beneficiaries to
make the CORE Shelter durable and livable.
In view of the foregoing, we recommended that Management should provide

sufficient funding to complete the 43 units shelter.
10. Repayment scheme for Seed capitals totaling ₱4.5 Million under the DSWD
Self-Employment Assistance-Kaunlaran (SEA-K) was not complied within
the two-year maturity period as prescribed in Article X Item B of DSWD
Administrative Order (AO) No 2011-011 dated June 27,2011, depriving new
members to avail of the program.
The Self-Employment Assistance- Kaunlaran (SEA-K) Seed Capital Fund is a

DSWD Sustainable Livelihood Program (SLP), with the platform to enhance the
socio-economic skills of poor families through the organization of community-
based associations for entrepreneurial development. Stated in Section 11 of the
Constitution of SEA-K Association provides that all members of the association
should be legitimate Senior Citizens within the community. Moreover, target
beneficiaries of the program were 300 NHTS-PR of the 26 barangays and the
130 Senior Citizens of the municipality.
64
Item X(b) of DSWD Administrative Order No 2011-011 dated June 27, 2011
provides the two modes of revolving fund recovery for Self Employment-
Kaunlaran Associations (SKAs) to their respective association and SKA to the
DSWD:
1. SKA members to its Association – During the SKA weekly meetings, each
member shall rollback the agreed amortization within one (1) year to the
association through their group chairman. The group chairman shall in turn
remit the rollback of the members to the SKA Treasurer for onward deposit to
the SKA account. Xxx.
2. SKA to DSWD – Every month, the SKA shall deposit its monthly rollback to
the DSWD Revolving and Settlement Fund Account through inter-branch
deposit scheme. In each instance, the SKA shall ensure that their rollback
payments are fully authenticated and that they have proof of these payments
through an authenticated bank deposit slip. Xxx.
The term of rollback schedule from the members to the SKA shall be based on
the production cycles and profitability of each individual projects as shown in the
feasibility study but in no case should it be more than two years. However, the
seed capital assistance extended to the SKA shall be returned to DSWD within a
maximum period of 24 months exclusive of a one (1) month grace period.
However, the status of repayment of capital cannot be ascertained due to the

non-submission of copy of the Report of Amortization to the Audit Team. As a
result, it casted doubt as to the compliance of the two-year period rollback
schedule pursuant to the above mentioned Administrative Order.
On the other hand, proper monitoring and assessment of the project operation
spearheaded by the Office of the Municipal Social Welfare and Development
cannot be evaluated due to inadequate documentation. Moreover, the Audit
Team cannot assess the project sustainability due to the non-submission of the
Monthly Financial Reports.
As a whole, the project provided support to the beneficiaries by enhancing their

entrepreneurial skills and improved their level of well-being. However, new
members were deprived to avail the program due to the non-compliance to the
repayment scheme by the SKA.
1. Require the Municipal Social Welfare and Development Officer and/or her
field implementor to monitor the operations of the SKAs in line with the
implementation of GPB Projects as well as the utilization of the fund;
2. Require the SKA president to furnish the MSWD field implementer the
Monthly Financial Report and Report of Amortizations of SKA members to
monitor /ensure compliance of rollback requirement, copy furnish the Audit
Team and the Municipal Accountant; and
65
3. Direct the Municipal Accountant and MSWD field implementor to coordinate
with the SKAs Officers for the latter to account for the non-settlement of seed
capital to LGU.
11. Non-remittance of unexpended/unutilized balances of transfer of funds

from several National Government Agencies to the LGU, contrary to COA
Circular No. 94-013 dated December 13, 1994 may result to misapplication
of funds and affect management’s financial and compliance in the
implementation of project.
Pertinent Items of COA Circular No. 94-013 dated December 13, 1994 thus read:
“4.9 The IA shall return to the SA any unused balance upon completion of the
project.
6.7 Return to the SA any unused balance and refund of disallowance upon
completion of the project.”
Table XII below, the unutilized balance of Fund Transfer from NGAs has totaled
to ₱1,441,870.35 from the total amount transfer equal to ₱16,602,832.50. These
funds transfers come from several NGAs like the Department of Social Welfare
and Development (DSWD), Department of Health (DOH) and Department of the
Interior and Local Government (DILG). These projects were all completed as of
year ending 2017:
Table XII: Utilization of Fund Transfer from NGAs
Project Name Source Agency Reciept Disbursement Balance Date Started Date End
Cash for Building Livelihood
Association(CBLA) DSWD-BuB 2016 6,102,832.50 5,794,885.00 307,947.50 2016 2017
Renovation of Cultural Center as Women
Crisis Center DSWD-BuB 2015 2,000,000.00 1,970,197.10 29,802.90 6/16/2016 9/30/2016
Skill Training Hilot, T-shirt Products, Etc DSWD-BuB 2016 3,000,000.00 2,080,592.50 919,407.50 3/13/2017 3/14/2017
Barangay Health Station (Brgy. Cogon) DOH-BuB 2017 500,000.00 473,269.00 26,731.00 04/01/2017 5/31/2017
Plaza Lighting DILG-PCF/LGSF 2016 1,000,000.00 948,560.00 51,440.00 10/16/2016 12/15/2016
Agloway Water Supply DILG-PCF/LGSF 2016 1,000,000.00 920,627.55 79,372.45 05/01/2017 8/31/2017
Barangay Street Lighting DILG-PCF/LGSF 2015 1,000,000.00 998,040.00 1,960.00 03/01/2017 4/16/2017
Upgrade Evacuation Center DILG-PCF/LGSF 2015 1,500,000.00 1,498,191.00 1,809.00 06/01/2016 10/30/2016
Purchase of Rescue Equipment DILG-BuB/DRR 500,000.00 476,600.00 23,400.00 09/10/2015 2/29/2016
Total 16,602,832.50 15,160,962.15 1,441,870.35
However, audit disclosed that these balances remained idle in the trust accounts
and were not returned to the source agencies despite the completion of the
project for which the fund has been given. This may result to improper disposition
of unspent balances of fund transfer.
66
Direct the Municipal Accountant to immediately refund any unused balances of

fund recorded under “Due to NGAs by issuance of check in the name of the
concerned agencies.

2018.
Management informed the Audit Team that funding for the completion of the
necessary facilities will be provided. For the repayment scheme of the SEA-K
Projects, the MSWDO will give schedule on the roll back of payments by the
SEA-K beneficiaries. Moreover, they will conduct meeting to SEA-K beneficiaries
for their moral obligation in the settlement of their account. On the non-remittance
of unexpended balance of funds transfer from NGA to LGU, the Municipal
Accountant will review the concerned accounts and make proper adjustments
thereafter.
C. OTHERS MATTERS
We have audited the audit areas identified in the COA Local Government Sector
Unnumbered Memoranda dated October 12, 2017 for Calendar Years 2017.
However, the Audit Team did not have sufficient and competent evidence on the
audit area of services rendered by Casuals, Job Orders and Contractuals to
warrant the inclusion of audit observation in this report.
D. COMPLIANCE WITH TAX LAWS
The LGU has withheld the required taxes from personnel compensation and
suppliers/contractors during the year. Remittances of the withheld amounts were
made to the Bureau of Internal Revenue.
E. SUMMARY OF SUSPENSION, DISALLOWANCES AND CHARGES
The status of audit suspensions, disallowances and charges of the LGU as of

December 31, 2016 is summarized as follows:
Balance Accumulated Settlement Balance

1-1-16 during the during the Ending
Year Year 12-31-16
Suspensions ₱ 8,785,295.91 ₱ 0.00 ₱ 8,345,393.58 ₱ 439,902.33
Disallowances 6,620.00 0.00 6,620.00 0.00
Charges 0.00 0.00 0.00 0.00
67

Audit Observations and Recommendations

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PART II – AUDIT OBSERVATIONS AND

A. FINANCIAL AND COMPLIANCE

Gender and Development (GAD)

1. LGU’s initiative to develop strategic gender-responsive activities that will

EO No. 273 otherwise known as Philippine Plan for Gender- Responsive

On the other hand, Article II Section 14 of the 1987 Constitution provides:

“The State recognizes the role of women in nation-building, and shall

Moreover, Article XIII Section 14 of the same Constitution states:

Programs/Projects/ Actual Unexpended

HIV/AIDS Testing, Ancillary

Hiring of GAD Fulltime

As can be gleaned from Table I above, the LGU earmarked a total of

Management’s full commitment is required to implement its GAD Plan and

Section 4.1.A-4(c) of PCW-DILG-DBM-NEDA JMC No. 2013-001 as amended by

“Lead in setting up appropriate systems and mechanisms to ensure the

b) Women’s economic empowerment, including women’s participation in

c) Participation in local governance and decision-making; and

d) Other provisions of the MCW.

The recommended expenses among others that could best served as a

a) Provision of livelihood training programs integrated with gender perspective for

b) Establishment of women friendly spaces (WFS) in evacuation centers for

d) Conduct of parent/children workshop on pornographic and violent TV

f) Expenses for development of a gender sensitive curriculum and gender-fair

Consequently, LGU’s commitment to effectively implement the 5% allocation for

We recommended that Management:

a. Initiate the creation and maintenance of GAD Database containing sex-

e. Determine efficiency and effectiveness of interventions in addressing gender

The audit finding, referred to above, was earlier communicated to management

Property, Plant and Equipment

2. The accuracy of Land Account with a total book value of ₱1,943,035.81 as of

Pag14 of PPSAS 17 provides:

“The cost of an item of property, plant and equipment shall be

a. It is probable that the future economic benefits or service potential

b. The cost or fair value of the item can be measured reliably.”

Table II: List of Land owned as claimed by the LGU

Section 111, P.D. No. 1445 states that:

“The accounts of an agency shall be kept in such detail as is necessary

Moreover, Section 47 (b), Chapter 3 of the GAAM, Volume III provides:

“The documentation of transactions and other significant events should

Unserviceable/Obsolete properties with a book value of ₱21,659,257.68

Section 79 of PD 1445 states that:

“When government property has become unserviceable for any cause, or

The Audit Team conducted an inspection on December 14, 2017 of the

It is to be noted that in all modes or instances of disposal of government property

The unserviceable assets no longer contribute to the economic benefits to the

In view of the foregoing, we recommended that management:

For the Appraisal Committee:

1. Create an Appraisal Committee headed by the Municipal Assessor and

3. Designate a Committee on Awards to facilitate the disposal of the

For the Municipal Accountant:

Direct the Municipal Accountant to:

6. Reconcile the accounting records against the corrected RPCPPE as to the

3. Cash advances to Accountable Officers and Employees amounting to

Pertinent Sections of Presidential Decree thus read:

“Sec.89. Limitations on Cash Advances – No cash advance shall be

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

4.1.3 A cash advance shall be reported on as soon as the purpose for

Item 5 of the same circular also provides:

Failure of the AO to liquidate his cash advance within the

Table III Aging of Cash Advances

Current Past Due

Consequently, failure to liquidate cash advances within the prescribed period