EXECUTIVE SUMMARY

A. Introduction
The Municipality of Villasis was a mere barrio of Malasiqui before it became a
municipality. According to popular lore, Villasis used to be known as Pandoyocan or
a place whose residents engaged in the amusing search and gathering of bees’ honey.
On June 22, 1804, a royal decree was published mandating the reconstitution of
Pandoyocan and was amended on March 2, 1807 to finally name the town Villasis in
honor of the former Governor Jose Maria Aguilar, one whose family name was
Villasis, who issued the decree of 1804. Villasis is a first class municipality with 21
barangays and has a total land area of 7,780.12 hectares and a total population of
59,111 based on 2010 census.

The audit covered the operations of the Municipality of Villasis, Pangasinan for the
calendar year 2018. The types of audit employed consist of financial and compliance
audit to ascertain the fairness of presentation of the financial statements of the
Municipality in adherence to the Philippine Public Sector Accounting Standards and
to check agency’s compliance with existing laws, rules and regulations. Likewise, a
Value for Money Audit was conducted on selected areas to ascertain whether
management had attained its goals and objectives in an economical, efficient and
effective manner.

The audit included analysis of accounts, review of transactions, test of compliance

with existing laws, rules and regulations, review of operating procedures, inspection
of programs and projects, interview of officials and employees and such other
procedures considered necessary under the circumstances.

The audit focus and audit thrust areas for the local government sector provided in the
unnumbered Memorandum dated July 9, 2018 of Assistant Commissioner Rizalina Q.
Mutia and specific audit instructions contained in unnumbered Memorandum dated
July 20, 2018 of Regional Director Michael R. Bacani were observed and looked into
in addition to the thrust areas identified in the audit team’s risk assessment.

For the calendar year 2018, the local government unit has reported the following as
major accomplishments:

Name of Project Project Cost Status

1. Construction of Farm to Market Road
at Riparip Road (Asinan) at Brgy. P 2,479,260.00 Completed
Unzad
2. Concreting of Farm to Market Road at
Interior Road, Brgy. Barangobong 1,989,513.56 Completed

3. Concreting of Farm to Market Road at

1,493,877.19 Completed
De Guzman Road, Brgy Piaz
 4. Rehabilitation of Capulaan Road at Completed
2,285,000.73
Brgy. Capulaan
5. Concreting of Farm to Market Road at
3,994,355.31 Completed
Brgy. La Paz
6. Concreting of Farm to Market Road at
2,419,732.50 Completed
Sitio Lepanto, Brgy. Capulaan
7. Concreting of Farm to Market Road at
2,274,970.94 Completed
Tuvera Loop Road, Brgy. Unzad
8. Construction of Evacuation Center
4,282,817.50 Completed
Phase II, Brgy. Unzad
7. Construction of New Municipal Health
7,453,023.60 Completed
Office
8. Construction of Water Fountain
upgradable to Musical Dancing 3,990,748.88 Completed
Fountain
Total P 32,663,300.21

B. Highlights of Financial Information

Presented below are the financial position, sources of funds, appropriations and
obligations of the local government unit during the calendar year 2018 as compared
with the figures of the previous year:
Increase
Particulars 2018 2017 %
(Decrease)
Assets 663,621,906.89 538,811,378.31 124,810,528.58 23.16%
Liabilities 86,235,852.19 54,296,040.48 31,939,811.71 58.83%
Government
577,386,054.70 484,515,337.83 92,870,716.87 19.17%
Equity
Income 189,002,459.70 190,779,704.66 (1,777,244.96) .93%
Expenses 181,184,927.64 174,812,469.60 6,372,458.04 3.65%
Appropriations 242,406,298.53 220,382,995.81 22,023,302.72 9.99%
Obligations 206,765,774.32 187,784,765.29 18,981,009.03 10.11%

C. Auditor’s Opinion on the Financial Statements

The Auditor rendered an unqualified opinion on the fairness of presentation of the
financial statements.

D. Summary of Significant Observations and Recommendations

During the year, the Municipality of Villasis, Pangasinan received the 2018 Seal of
Good Local Governance (SGLG) or “Pagkilala sa Katapatan at Kahusayan ng
Pamahalaang Lokal” given by the Department of Interior and Local Government last
 November, 2018. Other national awards given this year include the National Anti-
Drug Abuse Council Performance Award, Seal of Child-Friendly Local Governance
by the Council for Welfare of Children, Outstanding Tech4ED Center Emerging
Category, Most Diligent Public Library and 3rd Placer on the Search for the Best
Success Stories of Luzon Clusters. Regional and Provincial awards were also
received such as Most Outstanding Sangguniang Bayan in the Province of
Pangasinan, Most Functional Municipal Action Team for 4Ps operation, Gawad
Kalasag, Top Performing Public Employment Service Office (PESO) in the
implementation of SPES (5th District), Top Performing LGU Environmental
Sanitation Program and 100% Zero Open Defecation Certified Barangays.

On the other hand, we also observed some deficiencies affecting the operation of the
agency and discussed in detail below.

1. Receivables for Real Property Tax (RPT) and Special Education Tax (SET)
established at the beginning of the year were based on the report prepared by the
Assessor’s Office instead of the report prepared by Municipal Treasury Office. This
means of setting-up the receivable for RPT and SET is not in conformity with Section
20, Volume I, of the Manual on the New Government Accounting System thus,
casting doubts on the correctness of the accounts’ year-end balances amounting to
P2,673,274.15 and P2,673,274.15, respectively.

We have recommended that the Municipal Treasurer in coordination with the

Municipal Assessor prepare and furnish the Municipal Accountant a duly certified list
of taxpayers showing the names and the amount due and collectible based on
RPTAR/Taxpayer’s index card or computer generated report to provide an accurate
and reliable basis in the setting-up of receivables for real property taxes and special
education taxes at the beginning of the year for fair presentation of the accounts in the
financial statements.

2. The local government unit did not demand from contractors the refund of
mobilization funds amounting P826,839.30 despite the cancellation of the
implementation of projects pertaining thereto. The foregoing might give an
impression that sans letter of project commencement, mobilization fund was released
contrary to COA Circular 2012-001 requiring the same. As it is, Section 88 of
Presidential Decree No.1445 prohibiting advance payment for government contracts
was also disregarded. It would also appear that payment of mobilization has no legal
basis hence irregular and would therefore be subject to disallowance in compliance
with COA Circular 2012-003 dated October 29,2012.

We have reiterated our previous years’ audit recommendation that management

exhaust all possible means to enforce the recovery of the advance payment amounting
to P826,839.30 from the contractor otherwise this will be disallowed in audit.
3. Out of the P15,000,000.00 cash advances to be used in buying wet palays from
farmers-constituents, the amount of P2,436,000.00 remained unliquidated contrary to
the provisions of COA Circular No. 97-002 dated February 10, 1997. As it is, the
timely audit to establish the validity and propriety of the transactions were not
facilitated.

We have recommended that the management comply with the existing laws, rules and
regulations pertaining to granting and liquidation of cash advances. Further, we
recommend that the Local Chief Executive require the concerned employees to
submit immediately the Liquidation Report and supporting documents covering the
utilization of the cash advances amounting to P2, 436,000.00 in compliance with the
provisions of COA Circular 97-002. It is emphasized herein that non-
compliant/violations of the set provisions would entail corresponding sanctions
against the responsible officials/employees.

4. Expenses amounting to P231,000.00 which are not among those allowed to be

charged against the Special Education Fund (SEF) were paid out of the fund contrary
to Section 272 of Republic Act No. 7160 and Item 4.0 of the Joint Circular No. 01,
series of 2017 of Department of Education (DepEd), Department of Budget and
Management (DBM) and Department of Interior and Local Government (DILG)
hence could be subjected to disallowance. This also in effect jeopardized the
implementation of more important projects which are supposed to be a priority as per
the aforementioned guidelines.

We have recommended that the Local School Board (LSB) strictly comply with the
provisions of Republic Act No. 7160 and the DepED-DBM-DILG Joint Circulars in
the preparation of SEF Annual Budget. It is imperative that the LSB be prudent in the
utilization of the LSB so as not to jeopardize the very purpose for which it was
created/allocated.

It was further recommended and worthy of its emphasis that issues or conflicts arising
from its implementation and cases not covered by the provisions shall be submitted to
the DepED for resolution and in consultation with the municipal government.
Likewise, the municipal government should stop the practice of charging non-related
expenses to SEF which are considered irregular expenditure therefore subject to
disallowance.

5. The Municipality disbursed P858,400.00 on Year-end Incentives of teachers and non-

teaching personnel charged against Special Education Fund (SEF) which are not
enumerated under item 4.0 of the DepEd, DBM and DILG Joint Circular No. 1, s.
2017, dated January 19, 2017 “Revised Guidelines on the Use of the Special
Education Fund (SEF)”. Hence, as the disbursements are not authorized this could be
disallowed in compliance with COA Circular 2012-003 dated October 29, 2012
preventing irregular expenditure.
 We have recommended that the LGU strictly comply with the DepEd, DBM and
DILG Joint Circular No. 1, s/ 2017, dated January 19, 2017 “Revised Guidelines on
the Use of the Special Education Fund (SEF) in order not to jeopardize
implementation of programs and projects. This will also prevent disallowance of
transactions pertaining thereto.

The above audit observations and recommendations contained in the report were
discussed with municipal officials and employees through the issuance of Audit
Observation Memorandum and during the exit conference held on March 26, 2019.
Management views and reactions were reflected in the report where appropriate.

Other audit observations and its corresponding remedial measures are discussed in
detail in Part II of this report.

E. Summary of Total Suspensions, Disallowances and Charges as of

Year-End

For the Calendar Year 2018, the local government unit has no unsettled audit
suspension, disallowance and charges.

F. Status of Implementation of Prior Year’s Audit Recommendations

Out of the 27 audit recommendations contained in the CY 2017 Annual Audit Report,
nine (9) were fully implemented, three (3) were partially implemented and fifteen
(15) were not implemented as of year-end.