PantaoRagatMun2017 Audit Report

Republic of the Philippines
COMMISSION ON AUDIT
February 23, 2018 Office of the Supervising Auditor
Provincial Satellite Auditing Office
Del Carmen Avenue, Iligan City
TeleFax No. (063) 224-2484
Hon. Lacson M. Lantud

Municipal Mayor
Pantao-Ragat, Lanao del Norte
Dear Mayor Lantud,
We are pleased to transmit the report on the results of the audit on the accounts and
operations of the Municipality of Pantao-Ragat, Lanao Del Norte for the Calendar Year
ended December 31, 2017, pursuant to Section 43 of Presidential Decree No. 1445,
otherwise known as the Government Auditing Code of the Philippines, and in line with
the Commission’s effort towards informing management on how fiscal responsibility has
been discharged.
Our audit was conducted in accordance with Philippine Public Sector Standards on
Auditing, and we believe that it provides reasonable bases for the results of audit.
We rendered a disclaimer of opinion on the fairness presentation of the financial

statements for Calendar Year 2017 due to the deficiencies which have material
exceptions noted that would affect fair presentation of the financial position as well as the
financial performance of the Municipality during the year.
The significant observations and recommendations that need immediate action are as
follows:
1. The Cash in Bank account in the total amount of ₱ 4,263,336 in the book of
accounts is unreliable due to the failure of the Municipality to prepare and
submit Bank Reconciliation Statements of depository accounts violating
COA Circular No. 96-011 dated October 2, 1996.
We recommended the following:

a. The Municipal Accountant to prepare and submit promptly the bank
reconciliation statements monthly for all the funds of the Municipality and to
prepare the necessary adjusting entries for bank charges, interest income and
staled checks to bring back the cash in bank account in its corrected balance.
b. The Local Chief Executive and the Municipal Treasurer as signatories of the
bank accounts of the Municipality to authorize the Municipal Accountant to
enroll on e-access of their accounts so that bank statements could readily be
available at any time.
c. The Municipal Accountant to request from the Local Chief Executive
additional personnel in the Accounting Office to augment the workforce to
facilitate the timely recording and preparation of financial reports.
2. The municipality continues to maintain deposits with the Philippine National

Bank (PNB) which has ceased to be an Authorized Government Depository
Bank (AGDB) contrary to Section 311 of the Local Government Code of the
Philippines and Department Order No. 27-05 of the Department of Finance.
We have recommended to the Local Chief Executive the following:

a. Considering the presence of two Authorized Government Depository Banks
(AGDB) in the nearest area, direct the Municipal Treasurer to close the
existing PNB accounts and transfer said account to any of the two.
b. To strictly follow the DOF Memorandum Order for safety, security and
convenience of all the LGU.
3. Required financial reports and other monthly reports were not submitted
within the time frame contrary to existing COA regulations, thereby
adversely affecting timely audit action on the matter.
We have recommended the following:

a. Direct the Municipal Treasurer to submit all the required reports on time to
the Municipal Accountant, and the Municipal Accountant to submit to the
Audit Team on the prescribed time for immediate validation and verification.
b. Augment the workforce and personnel in the Accounting Office so that
required reports are submitted immediately.
4. Management’s submission of copies of perfected contracts or purchase

orders with the supporting documents within the prescribed period had not
been complied with contrary to COA Circular No 96-001 dated August 15,
1996 and COA Circular No. 2009-001 dated February 12, 2009, respectively
which may cause the transactions covered by the unsubmitted documents be
suspended in audit.
We recommended the BAC or BAC Secretariat to submit the contracts together

with the documentary requirements enumerated in the checklists for submission to
the COA Audit Team for the auditorial and legal review and ultimately to the
COA Technical Audit Services depending on the amount involved.
5. Reporting on the Information and Publicity on Programs/Projects/Activities

as provided in COA Circular No. 2013-004 dated January 31, 2013 is not
completely complied with, thereby bringing doubt on the adoption and
implementation of full disclosure policy of all transactions involving public
interest.
We recommended that the Local Chief Executive must be compliant to the
general guidelines, reporting and monitoring of the information and publicity on
Programs/Projects/Activities (PPAs) as imposed in COA Circular No. 2013-004
dated January 31, 2013. In line with this, the management shall:
a. Submit to the Audit Team the list of all on-going government

Programs/Projects/Activities (PPAs) and those that are to be implemented
during the year,
b. Inform this office within ten (10) days after the award of the infrastructure
project or before the start of the program/ activity that the appropriate
project signboards and/or public notices are already posted,
c. And submit to this Office the monthly monitoring report on PPAs.
6. The auto debit made by the Philippine National Bank amounting to

₱2,788,336 is doubtful due to non-submission of the documentary
requirements and without inspection of the delivered heavy equipment, thus,
originality and ownership of the dump truck and fire truck cannot be
ascertained and verified.

a. The Local Chief Executive should submit copies of the Memorandum of
Agreement (MOA) executed by the LGU and the bank and the Sangguniang
Bayan (SB) Resolution authorizing the granting of loan.
b. The Municipal Budget Officer should submit proof that payment of the loan
amortization was provided in the Approved Annual Budget.
c. The Municipal Officials specifically the Municipal Budget Officer, the
Municipal Accountant and the Municipal Treasurer who certifies the existence
of appropriation, the completeness of supporting documents and the
availability of funds should carefully examine the supporting documents
before payments will be effected to avoid accountability in the performance of
official duties.
7. The Management failed to submit the report on the sources and utilization of
Disaster Risk Reduction Management Fund required under Section 12 of RA
No. 10121 and COA Circular No. 2012-002, thereby, exposing the LDRRMF
to unauthorized used for administrative operational expenses and the funds
depleted.
We have recommended to the Local Chief Executive to allocate properly the 5%

calamity fund and submit the required report on or before the 15th day after the
end of each month through the LDRRMC and Local Development Council to the
COA Auditor of the LGU.
8. Management failed to prepare Special Education Fund Budget in violation to

Section 7 of Republic Act No. 5447 and incurred no amount for the SEF
projects, thus, the local school board failed to use the fund depriving the
beneficiaries.

a. The Local School Board to prepare a budget for Special Education Fund and
make deliberations in accordance with the guidelines.
b. The proceeds shall be allocated for the operation and maintenance of public
schools, construction and repair of school buildings, facilities and equipment,
educational research, purchase of books and periodicals, and sports
development as determined and approved by the local school board.
9. The Municipality failed to submit GAD Plan and its accomplishment report.
Likewise, GAD Committee was not created in violation of the provisions of
Republic Act No. 10352 and PCW-NEDA-DBM Joint Circular No. 2012-01,
thereby resulting to minimal attainment of the purpose of which the fund
was established and depriving the intended beneficiaries on the benefit of the
program.

a. The GAD Focal person should attend a seminar on Gender and Development
mainstreaming in order to familiarize the program.
b. To ensure that activities identified as GAD are in conformity with the
provisions under Philippine Commission on Women (PCW), NEDA and
DBM Joint Circular No. 12-01 that is to respect, protect and fulfill the rights
of woman at the socio-cultural, economic and political spheres.
c. The Local Chief Executive should create a GAD Committee so that the
program will be fully implemented.
The other audit findings together with the recommended courses of action which were
discussed by the Audit Group with concerned Management officials and staff during the
exit conference conducted on February 23, 2018 are discussed in detail in Part II of the
report.
We request that the recommended remedial measures be immediately implemented and

we will appreciate being informed of the action plan and status of implementation taken
thereon within sixty (60) days from receipt thereof using the Agency Action Plan and
Status of Implementation Form to be submitted to the Audit Group for validation.
We acknowledge the support and cooperation that you and your staff extended to the
Audit Team, thus facilitating the submission of the report.
Very truly yours,

By authority of the Chairman:
MARILOU C. MAMPAO
State Auditor IV
Acting Supervising Auditor
Copy Furnished :
1. The Regional Director

Department of Interior and Local Government
Regional Office No. X
Cagayan de Oro City

Bureau of Local Government Finance
Cagayan de Oro City

Commission On Audit
Regional Office No. X
Cagayan de Oro City
4. The Honorable Members of Sangguniang Bayan

Thru: The Secretary, Sangguniang Bayan
5. The Municipal Accountant

6. File – Supervising Auditor
7. File – Audit Team Leader
8. Soft copy – National Library
9. Soft copy – University of the Philippines Law Center
10. Soft copy – COA Commission Central Library
AAPSI Format

AGENCY ACTION PLAN and STATUS OF IMPLEMENTATION
Audit Observations and Recommendations
For the Calendar Year 2017
As of _________________

Agency Action Plan Reasons for

Partial/Delay/
Status of Action
Audit Audit Target of Non-
Ref Implementatio Taken/Action
Observations Recommendations Action Person/Dept. Implementatio implementati
n to be taken
Plan Responsible n Date on, if
applicable
From To

Agency sign-off:

Name and Position of Agency Officer Date

Note: Status of Implementation may either be (a) Fully Implemented, (b) Ongoing, © Not Implemented, (d) Partially Implemented, or (e) Delayed


COMMISSION ON AUDIT
Commonwealth Avenue
Quezon City
ANNUAL AUDIT REPORT
ON THE
MUNICIPALITY OF PANTAO-RAGAT
Province of Lanao del Norte
For the Period Ended December 31, 2017

EXECUTIVE SUMMARY
A. INTRODUCTION
The Municipality of Pantao-Ragat was created by virtue of Executive Order No.

409 Series of 1968 and classified as 5 th class municipality with twenty barangays. The
Municipality has a total population of 23,304 and aggregate land area of 12,430 hectares.
It is an agricultural community with corn, coconuts and root crops as major products with
twenty (20) component Barangays.
B. FINANCIAL HIGHLIGHTS
The municipality’s assets, liabilities and equity as of December 31, 2017 were
₱36,505,235, ₱ 6,417,277 and ₱ 30,087,958, respectively. These correspondingly
decreased by -1%, -26%, and an increased by 6% respectively, over that of last year.
The Auditee’s results of income and expenses amounted to ₱ 227,413, which

decreased by ₱ 1,651,418, compared with last year’s ₱1,878,831.
C. OPERATIONAL HIGHLIGHTS
In CY 2017, the Municipality of Pantao-Ragat generated total revenue of

₱84,989,267. These were all used as intended for the operation of the LGU`s
development and programs.
The municipality spent ₱ 47,082,326 on General Public Services, ₱4,804,918 on

Health, Nutrition and Population Control, ₱ 1,757,493 on Social Services and Social
Welfare, ₱ 1,493,615 on Economic Services, among others.
D. SCOPE OF THE AUDIT
The audit covered the accounts and operations of the Municipality for the period
January 1 to March 31, 2017 under General Fund only due to their failure to submit the
disbursement vouchers covering the period April 1, 2017 to December 31, 2017, and the
Financial Reports from January 1 to December 31, 2017. Thus, the audit team was not
able to audit and review the remaining unsubmitted accounts, the related financial reports
and financial statements.
Our audit was conducted in accordance with Philippine Public Sector Standards
on Auditing, and accordingly included such tests of the accounting records and other
related documents and evaluation of the design and operating effectiveness of the
controls and such other procedures, as necessary, in the audit.
E. INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL
STATEMENTS
The Audit Team rendered a disclaimer of opinion on the fairness of the

presentations of the financial statements of the Auditee as of December 31, 2017 because
of the significant limitation in our scope of audit due to management’s non submission of
several accounts with substantial amounts, non-keeping and maintenance of accounting
records and reports, and non-preparation and submission of required financial reports as
discussed in Part II of this report.
F. SIGNIFICANT FINDINGS AND RECOMMENDATIONS
submit Bank Reconciliation Statements of depository accounts.
We recommended the following:

reconciliation statements monthly for all the funds of the Municipality and to
prepare the necessary adjusting entries for bank charges, interest income and
staled checks to bring back the cash in bank account in its corrected balance.
b. The Local Chief Executive and the Municipal Treasurer as signatories of the
bank accounts of the Municipality to authorize the Municipal Accountant to
enroll on e-access of their accounts so that bank statements could readily be
available at any time.
additional personnel in the Accounting Office to augment the workforce to
facilitate the timely recording and preparation of financial reports.

Bank (AGDB).
We have recommended to the Local Chief Executive the following:

a. Considering the presence of two Authorized Government Depository Banks
(AGDB) in the nearest area, direct the Municipal Treasurer to close the
existing PNB accounts and transfer said account to any of the two.
within the time frame.
a. Direct the Municipal Treasurer to submit all the required reports on time to
the Municipal Accountant, and the Municipal Accountant to submit to the
Audit Team on the prescribed time for immediate validation and verification.

been complied.
We recommended the BAC or BAC Secretariat to submit the contracts together

with the documentary requirements enumerated in the checklists for submission to
the COA Audit Team for the auditorial and legal review and ultimately to the
COA Technical Audit Services depending on the amount involved.

is not completely complied with.


Programs/Projects/Activities (PPAs) and those that are to be implemented
during the year,
b. Inform this office within ten (10) days after the award of the infrastructure
project or before the start of the program/ activity that the appropriate
project signboards and/or public notices are already posted,

requirements and without inspection of the delivered heavy equipment.

a. The Local Chief Executive should submit copies of the Memorandum of
Agreement (MOA) executed by the LGU and the bank and the Sangguniang
Bayan (SB) Resolution authorizing the granting of loan.
b. The Municipal Budget Officer should submit proof that payment of the loan
amortization was provided in the Approved Annual Budget.
Municipal Accountant and the Municipal Treasurer who certifies the existence
of appropriation, the completeness of supporting documents and the
availability of funds should carefully examine the supporting documents
before payments will be effected to avoid accountability in the performance of
official duties.
Disaster Risk Reduction Management Fund.
We have recommended to the Local Chief Executive to allocate properly the 5%

calamity fund and submit the required report on or before the 15th day after the
end of each month through the LDRRMC and Local Development Council to the
COA Auditor of the LGU.
8. Management failed to prepare Special Education Fund Budget.

a. The Local School Board to prepare a budget for Special Education Fund and
make deliberations in accordance with the guidelines.
b. The proceeds shall be allocated for the operation and maintenance of public
schools, construction and repair of school buildings, facilities and equipment,
educational research, purchase of books and periodicals, and sports
development as determined and approved by the local school board.
Likewise, GAD Committee was not created.

a. The GAD Focal person should attend a seminar on Gender and Development
mainstreaming in order to familiarize the program.
DBM Joint Circular No. 12-01 that is to respect, protect and fulfill the rights
of woman at the socio-cultural, economic and political spheres.
G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’

AUDIT RECOMMENDATIONS
Out of the (34) audit recommendations contained in the Annual Audit Report for
CY 2016, (0) were implemented, (9) were partially implemented while (25) were not
implemented.
The impact of management’s implementation on the audit recommendations serves as

preventive measures and gives improvement opportunities on their operations. Further,
some audit observations needs to be reiterated in this Annual Audit Report for CY 2017
due to materiality and relevance. The results of the validation of the implementation of
prior year’s recommendations are presented in Part III of this report.
TABLE OF CONTENTS
Page
Part I 1-29
Independent Auditor’s Report
Statement of Management Responsibility
Financial Statements
Notes to Financial Statements
Part II 30-47
Comments And Observations
 Compliance Audit
 20% Development Fund
 Local Disaster Risk Reduction and Management Fund
 Special Education Fund
 Compliance With Tax Laws
 Gender Development
 Statement Of Audit Suspension, Disallowances And Charges
Part III
Status of Implementation of Prior Years Audit Recommendations 48-68
Part IV 69-77
Annexes
A. 1. Statement of Financial Position - General Fund
2. Statement of Financial Position - Special Education Fund
3. Statement of Financial Position - Trust Fund
B. 1. Statement of Financial Performance – General Fund
2. Statement of Financial Performance – Special Education
Fund
C. 1. Statement of Cash Flows – General Fund
2. Statement of Cash Flows – Special Education Fund
3. Statement of Cash Flows – Trust Fund
D. Status of Appropriations, Allotments and Obligation (SAAOB)
COMMISSION ON AUDIT
OFFICE OF THE AUDIT TEAM LEADER
Audit Group F, Team 3, Lanao del Norte Province
“Part I – Financial Statements”
Municipality of Pantao-Ragat
INDEPENDENT AUDITOR’S REPORT
The Municipal Mayor

We have audited the accompanying combined financial statements of the Municipality of

Pantao-Ragat, Lanao del Norte which comprise the Statement of Financial Position as of
December 31, 2017 and the Statement of Financial Performance, Statement of Changes in
Net Assets / Equity, Statement of Comparative Budget and Actual and Statement of Cash
Flows for the year then ended and a summary of significant accounting policies and other
explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with the Philippine Public Sector Accounting Standards and for
such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatements, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our

audit. We conducted our audit in accordance with Philippine Public Sector Standards on
Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness on
the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
Because of the matter/s described in the Basis for Disclaimer of Opinion paragraph, we
were not able to obtain sufficient audit evidence to provide a basis for an audit opinion.
Basis for Disclaimer of Opinion
As are discussed in Part II of the Report, the municipality failed to submit disbursement
vouchers and its supporting documents for CY 2017, required financial reports and other
monthly reports, bank reconciliation statements, copies of perfected contracts and/or
purchase orders with all the supporting documents, and deficiencies noted in the audit.
Disclaimer Opinion
Because of the significance of the matter/s described in the Basis for Disclaimer of
Opinion paragraph, we have not been able to obtain sufficient appropriate evidence to
provide a basis for an audit opinion. Accordingly, we do not express an opinion on the
financial statements.
COMMISSION ON AUDIT
BY:
NAIDAH D. MAMACOTAO, CPA

State Auditor IV
Audit Team Leader
February 23, 2018

STATEMENT OF MANAGEMENT RESPONSIBILITY

FOR FINANCIAL STATEMENT
The management of the LGU - PANTAO-RAGAT, LANAO DEL NORTE is

responsible for all information and representations contained in the combined Statement
of Financial Position as of December 2017 and the related combined Statement of
Financial Performance, Statement of Cash Flows, Statement of Comparison of Budget
and Actual Amounts, Statement of Changes in Net Assets / Equity and the Notes to
Financial Statements for the year then ended. The financial statements have been
prepared in conformity with the Philippine Public Sector Accounting Standards and
generally accepted state accounting principles, and reflect amounts that are based on the
best estimates and informed judgment of management with an appropriate consideration
to materiality.
In this regards, management maintains a system of accounting and reporting

which provides for the necessary internal controls to ensure that transactions are properly
authorized and recorded; assets are safeguard against unauthorized use or disposition and
liabilities recognized.
BAGOBILANG P. DATU HON. LACSON M. LANTUD

Municipal Accountant Municipal Mayor
4
PROVINCE OF LANAO DEL NORTE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of December 31, 2017
(With Comparative Figures for CY 2016)
Notes CY 2017 CY 2016

ASSETS
Current Assets
Cash and Cash Equivalents (Note 4) ₱ 4,263,336 ₱ 4,850,299
Investments - -
Receivables (Note 5) 55,000 -
Inventories (Note 6) - -
Prepayments and Deferred Charges 102,513 -
Total Current Assets ₱ 4,420,849 ₱ 4,850,299
Non-Current Assets
Investments ₱ - ₱ -
Receivables - -
Investment Property - -
Property, Plant and Equipment ,net (Note 7) 32,084,386 32,084,386
Biological Assets - -
Intangible Assets - -
Total Non-Current Assets ₱ 32,084,386 ₱ 32,084,386
Total Assets ₱ 36,505,235 ₱ 36,934,685
LIABILITIES
Current Liabilities
Financial Liabilities (Note - -
8.1)
Inter-Agency Payables (Note 471,693 678,705
8.2)
Intra-Agency Payables (Note - -
8.3)
Trust Liabilities (Note - -
8.4)
Deferred Credits/Unearned Income - -
Total Current Liabilities ₱ 471,693 ₱ 678,705
Non-Current Liabilities
5
Financial Liabilities ₱ - ₱ 8,000,000
Deferred Credits/Unearned Income (Note 55,000 -
8.5)
Loans Payable (Note 5,890,584 -
8.6)
Provisions - -
Other Payables - -
Total Non-Current Liabilities ₱ 5,945,584 ₱ 8,000,000
Total Liabilities ₱ 6,417,277 ₱ 8,678,705
NET ASSETS/EQUITY
Government Equity 30,087,958 28,255,980
Total Liabilities and Net ₱ 36,505,235 ₱ 36,934,685

Assets/Equity
(See Accompanying Notes to Financial Statements)
6
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
For the Period ended December 31, 2017
Notes CY 2017 CY 2016

Revenue
Tax Revenue (Note 10) ₱ 914,941 ₱ 291,002
Share from Internal Revenue Collections (Note 10) 83,989,076 70,686,552
Other Share from National Taxes - -
Service and Business Income (Note 10) 85,250 -
Shares, Grants and Donations - -
Gains - -
Other Income - -
Total Revenue ₱ 84,989,267 ₱ 70,977,554
Less: Current Operating Expenses

Personnel Services (Note 11) ₱ 35,500,648 ₱ 27,333,879
Maintenance and Other Operating Expenses (Note 12) 47,599,046 41,764,844
Non-cash Expenses (Note 13) 1,596,002 -
Financial Expenses (Note 14) 66,157 -
Current Operating Expenses ₱ 84,761,853 ₱ 69,098,723
Surplus (Deficit) from Current Operation ₱ 227,413.00 ₱ 1,878,831

Add:
Transfers, Assistance and Subsidy From - -
Deduct:
Transfers, Assistance and Subsidy To - -
Surplus(Deficit) for the period ₱ 227,413 ₱ 1,878,831
7
CONSOLIDATED STATEMENT OF CASH FLOWS
CY 2017 CY 2016
Cash Flows from Operating Activities
Cash Inflows
Collection from taxpayers ₱ 1,000,191 ₱ 291,002
Share from Internal Revenue Allotment 83,989,076 70,686,552
Receipts from business/service income -
-
Interest Income -
-
Dividend Income -
-
Other Receipts 3,397,243 12,150,050
Total Cash Inflows ₱ 88,386,509 ₱ 83,127,604
Cash Outflows
Payment of expenses
Payments to suppliers and creditors ₱ 51,417,409 ₱ 50,820,324
Payments to employees 35,500,648 27,333,879
Interest Expense 66,157 209,950
Other Expenses 1,428,778 1,785,462
Total Cash Outflows ₱ 88,412,992 ₱ 80,149,614
(
Net Cash Flows from Operating Activities 26,483) ₱ 2,977,989
₱
Cash Flows from Investing Activities
Cash Inflows
Proceeds from Sale of Investment Property ₱ - ₱ -
Proceeds from Sale/Disposal of Property, Plant and - -
Equipment
Proceeds from Sale of Non-Current Investments - -
Collection of Principal on loans to other entities - -
Total Cash Inflows ₱ - ₱ -
Cash Outflows
Purchase/Construction of Investment Property ₱ - ₱ -
Purchase/Construction of Property, Plant and Equipment - -
Investment - -
Purchase of Bearer Biological Assets - -
Purchase of Intangible Assets - -
Grant of Loans - -
Total Cash Outflows ₱ - ₱
-
Net Cash Flows from Investing Activities ₱ - ₱
-
Cash Flows from Financing Activities
Cash Inflows
Proceeds from Issuance of Bonds ₱ - ₱ -
8
Proceeds from Loans - -
Total Cash Inflows ₱ - ₱
-
Cash Outflows
Payment of Long-Term Liabilities ₱ - ₱ 2,526,316
Retirement/Redemption of debt securities - -
Payment of loan amortization 210,526
-
Total Cash Outflows ₱ 210,526 ₱ 2,526,316
( (
Net Cash Flows from Financing Activities 210,526) 2,526,316)
₱ ₱
Total Cash Provided by Operating, Investing and (
586,964) ₱ 451,674
Financing Activities ₱
Add: Cash at the Beginning of the year 4,850,299 4,398,626
Cash Balance at the End of the Year ₱ 4,263,336 ₱ 4,850,299
9
STATEMENT OF CHANGES IN NET ASSETS / EQUITY
CY 2017 CY 2016
Accumulated Accumulated
Surpluses/(Deficits Surpluses/(Deficits
) )
Balance at January 1, 2017 ₱ 28,255,980 ₱ 25,381,228
Add (Deduct)
Adjustments to beginning balance 423,368 -
Change in Accounting Policy -
Prior Period Errors -
Restated Balance ₱ 28,679,348 ₱ 25,381,228
Add (Deduct) Changes in net
assets/equity during the year
Adjustment of net revenue recognized 1,181,197 995,921

directly in net assets/equity
Surplus (Deficit) for the period ₱ 227,413 ₱ 1,878,831
Total recognized revenue and expenses ₱ ₱
1,408,610 2,874,752
for the period
Balance at December 31, 2016 ₱ 30,087,958 ₱ 28,255,980
10
STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS
Budgeted Amounts Difference of

Difference
Particulars Notes Orginal and Actual Amounts
Final
Original Final Final Budget
Budget
Revenue
A. Local Sources
1. Tax Revenue
a. Tax Revenue-Property 350,000 480,609 (130,609) 480,609 -
b. Tax Revenue-Goods and Service
c. Other Local Taxes 55,000 98,777 (43,777) 98,777 -
Total Tax Revenue 405,000 579,386 (174,386) 579,386 -
2. Non-Tax Revenue
a. Service Income
b. Business Income 12,000 45,140 (33,140) 45,140 -
c. Other Income and Receipts 7,000 - 7,000 - -
d. Permit Fees 10,000 26,000 (16,000) 26,000 -
e. Miscellaneous Fees 24,324 59,250 (34,926) 59,250 -
Total Non-Tax Revenue 53,324 130,390 (77,066) 130,390 -
B. External Sources
1. Share from National Internal Revenue Taxes (IRA) 84,142,538 83,989,076 153,462 83,989,076 -
2. Share from GOCCs - - - - -
3. Other Shares from National Tax Collections - - - - -
a. Share from Ecozone
b. Share from EVAT
c. Share from National Wealth
d. Share from Tobacco Excise Tax
4. Other Receipts - - - - -
a. Grants and Donations
b. Other Subsidy Income
5. Inter-Local Transfer - - - - -
6. Capital/Investment receipts - - - - -
a. Sale of Capital Assets
b. Sale of Investments
c. Proceeds from Collections of Loans and Receivable
C. Receipts from Borrowings - - - - -
Total Revenues and Receipts 84,600,862 84,698,852 (97,990) 84,698,852 -
Expenditures
General Public Services
Public Personnel Services 28,909,783 28,909,783 - 28,909,783 -
Maintenance and Other Operating Expenses 16,035,806 16,035,806 - 16,035,806 -
Capital Outlay 500,000 500,000 - 500,000 -
Education
Public Personnel Services - - - - -
Maintenance and Other Operating Expenses - - - - -
Capital Outlay - - - - -
Health, Nutrition and Population Control
Maintenance and Other Operating Expenses 825,000 825,000 - 825,000 -
Labor and Employment
11
Housing and Community Development
Social Services and Social Welfare
Economic Services
Other Purposes:
Debt Service
Financial Expense
Gender and Development 4,207,127 4,207,127 - 4,207,127 -
Barangay Aid 20,000 20,000 - 20,000 -
Local Council for Protection of Children 839,891 839,891 - 839,891 -
HIV under GAD 100,500 100,500 - 100,500 -
LDRRMF
Capital Outlay
20% Development Fund
Capital Outlay
Share from National Wealth
Maintenance and Other Operating Expenses
Capital Outlay
Allocation for Senior Citizens and PWD
Maintenance and Other Operating Expenses 839,891 839,891 - 839,891 -
Capital Outlay
Others
Public Personnel Services
Maintenance and Other Operating Expenses
Capital Outlay
Continuing Appropriations (Capital Outlay)
Education
Health, Nutrition, and Population Control
Labor and Employment
Housing and Community Development
Social Services and Social Welfare
Economic Services
Total 84,599,498 84,599,498 - 84,599,498 -
Surplus (Deficit) for the period 1,364 99,355 (97,990) 99,355 -
12
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Period Ended December 31, 2017
Note 1 -
1.1 Profile
The municipality of Pantao Ragat was created by virtue of Executive Order

No. 409 series of 1968 and classified as 5th class. The Municipality has a total
population of 23,304 and aggregate land area of 12,430 hectare, it is an
agricultural community with corn, coconut, root crops as major products with
twenty (20) component Barangays.
1.2 Organizational Set-Up
The Elected Officials for CY 2016- 2019 were:
Mayor Lacson M. Lantud

Vice-Mayor Mohammad Daud Nabil D. Lantud
SB Members Ramla L. Solaiman
Faisal G. Didaagun
Bajhonaid R. Mangoranda
Linog R. Mangoranda
Acmad P. Magomnang
Canapi M. Didaagun
ABC President Mothalib N. Didaagun
FSK President Masiding R. Dibangkitun
The appointed department heads/ key officials of the municipality were:
ICO-Municipal Treasurer Abdullah Lomangcolob

Municipal Administrator Nasser Angot
Municipal Planning & Development Coordinator Camilo P. Magomnang
– Designate
Municipal Engineer Kimal G. Dimaampao
Municipal Social Welfare Development Officer - Maimona M. Minalang
Designate
Municipal Accountant Bagobilang P. Datu
Municipal Assessor Abdullah Lomangcolob
Municipal Civil Registrar Maimona Minalang
Municipal Agriculturist – OIC Mohammad D. Sarip
13
Municipal Budget Officer Dalomabe Macabanding
Municipal Health Officer Myra M. Gumama
Note 2 - The Consolidated Statement of Financial Position as of December 31, 2017 and
the related Financial Performance, Statement of Cash Flows, Changes in net
assets / equity and Comparison of budget and actual amounts for the period
then ended and a summary of significant accounting policies and other
explanatory information, has been prepared in accordance with applicable
laws, rules and regulations and in conformity with the Generally Accepted
State Accounting Principles and Standards.
The Financial Statements are the consolidation of the General Fund, Special
Education Fund & Trust Fund.
The consolidated financial statements are presented in pesos, which is the

functional and reporting currency of the LGU and all values are rounded to
nearest thousand (P000). The accounting policies have been applied starting
the year 2015.
Notes to Financial Statements are presented in the nearest peso.
Note 3 - Summary of significant accounting policies
3.1 Basis of accounting
The consolidated financial statements are prepared on an accrual basis in

accordance with the Philippine Public Sector Accounting Standards
(PPSAS).
3.2 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees and fines
The LGU recognizes revenues from taxes and fines when the event occurs
and the asset recognition criteria are met. To the extent that there is a
related condition attached that would give rise to a liability to repay the
amount, liability is recognized instead of revenue. Other non-exchange
revenues are recognized when it is improbable that the future economic
benefit or service potential associated with the asset will flow to the entity
and the fair value of the asset can be measured reliably.
Transfers from other government entities
14
Revenues from non-exchange transactions with other government entities
are measured at fair value and recognized on obtaining control of the asset
(cash, goods, services and property) if the transfer is free from conditions
and it is probable that the economic benefits or service potential related to
the asset will flow to the LGU and can be measured reliably.
The LGU availed of the 5 – year transitional provision for the recognition
of Tax Revenue- Real Property and Special Education Tax. For the first
year, there will be no change in policy for the recognition of the
aforementioned tax revenue.
Revenue from exchange transactions
Rendering of services
The LGU recognizes revenue from rendering of services by reference to

the stage of completion when the outcome of the transaction can be
estimated reliably. The stage of completion is measured by reference to
labor hours incurred to date as a percentage of total estimated labor hours.
Where the contract outcome cannot be measured reliably, revenue is

recognized only to the extent that the expenses incurred.
Interest income
Interest income is accrued using the effective yield method. The effective
yield discounts estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount. The method applies
this yield to the principal outstanding to determine interest income each
period.
3.3 Property, plant and equipment
All property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items. When significant parts
of property, plant and equipment are required to be replaced at intervals,
the LGU recognizes such parts as individual assets with specific useful
lives and depreciates them accordingly. Likewise, when a major
inspection is performed, its cost is recognized in the carrying amount of
the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognized in surplus
or deficit as incurred. Where an asset is acquired in a non-exchange
transaction for nil or nominal consideration the asset is initially measured
at its fair value.
15
Depreciation on assets is charged on a straight-line basis over the useful
life of the asset.
Depreciation is charged at rates calculated to allocate cost or valuation of

the asset less any estimated residual value over its remaining useful life:
PROPERTY, PLANT & EQUIPMENT USEFUL YRS

Land Improvement 10
Electrification Power & Energy Structure 10
Office Buildings 20
School Buildings 20
Hospital & Health Center 20
Markets and Slaughterhouses 20
Other Structures 20
Office Equipment 5
Furniture & Fixtures 10
IT Equipment & Software 5
Library Books 5
Machineries 10
Communication Equipment 10
Construction & Heavy Equipment 10
Disaster Response and Rescue Equipment 7
Medical Dental & Laboratory Equipment 10
Military & Police Equipment 10
Other Machineries & Equipment 10
Motor Vehicles 7
Other Transportation Equipment 10
Public Infrastructures were not previously recognized in the books. The

LGU availed of the 5-year transitional provision for the recognition of the
Public Infrastructure. For the first year of implementation of the PPSAS,
the LGU will not recognize the Public Infrastructure in the books of
accounts.
3.4 Impairment of non-financial assets
Impairment of cash-generating assets
At each reporting date, the LGU assesses whether there is an indication

that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the LGU estimates the asset’s
recoverable amount. An asset’s recoverable amount is the higher of an
asset’s or cash-generating unit’s fair value less costs to sell and its value in
16
use and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other
assets or groups of assets.
Where the carrying amount of an asset or the cash-generating unit (CGU)

exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using a
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. In determining fair value less
costs to sell, recent market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate valuation model is
used.
Impairment losses of continuing operations, including impairment on

inventories, are recognized in the statement of financial performance in
those expense categories consistent with the nature of the impaired asset.
For assets, an assessment is made at each reporting date as to whether

there is any indication that previously recognized impairment losses may
no longer exist or may have decreased. If such indication exists, the LGU
estimates the asset’s or cash-generating unit’s recoverable amount. A
previously recognized impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset’s recoverable
amount since the last impairment loss was recognized. The reversal is
limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognized
for the asset in prior years. Such reversal is recognized in surplus or
deficit.
Impairment of non-cash-generating assets
The LGU assesses at each reporting date whether there is an indication

that a non-cash-generating asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the LGU
estimates the asset’s recoverable service amount. An asset’s recoverable
service amount is the higher of the non-cash generating asset’s fair value
less costs to sell and its value in use.
Where the carrying amount of an asset exceeds its recoverable service

amount, the asset is considered impaired and is written down to its
recoverable service amount.
In assessing value in use, the LGU has adopted the depreciation
replacement cost approach. Under this approach, the present value of the
remaining service potential of an asset is determined as the depreciated
17
replacement cost of the asset. The depreciated replacement cost is
measured as the reproduction or replacement cost of the asset, whichever
is lower, less accumulated depreciation calculated on the basis of such
cost, to reflect the already consumed or expired service potential of the
asset. In determining fair value less costs to sell, the price of the assets in a
binding agreement in an arm's length transaction, adjusted for incremental
costs that would be directly attributed to the disposal of the asset is used.
If there is no binding agreement, but the asset is traded on an active
market, fair value less cost to sell is the asset's market price less cost of
disposal. If there is no binding sale agreement or active market for an
asset, the LGU determines fair value less cost to sell based on the best
available information.
For each asset, an assessment is made at each reporting date as to whether

there is any indication that previously recognized impairment losses may
no longer exist or may have decreased. If such indication exists, the Group
estimates the asset's recoverable service amount. A previously recognized
impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset’s recoverable service amount
since the last impairment loss was recognized. The reversal is limited so
that the carrying amount of the asset does not exceed its recoverable
service amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognized
for the asset in prior years. Such reversal is recognized in surplus or
deficit.
3.5 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank,
deposits on call and highly liquid investments with an original maturity of
three months or less, which are readily convertible to known amounts of
cash and are subject to insignificant risk of changes in value. For the
purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits as defined above, net
of outstanding bank overdrafts.
3.6 Inventories
Inventory is measured at cost upon initial recognition. To the extent that

inventory was received through non-exchange transactions (for no cost or
for a nominal cost), the cost of the inventory is its fair value at the date of
acquisition.
Costs incurred in bringing each product to its present location and

conditions are accounted for, as follows:
18
a) Raw materials: purchase cost using the weighted average cost
method; and
b) Finished goods and work in progress: cost of direct materials and

labor and a proportion of manufacturing overheads based on the
normal operating capacity, but excluding borrowing costs.
After initial recognition, inventory is measured at the lower of cost and net
realizable value. However, to the extent that a class of inventory is
distributed or deployed at no charge or for a nominal charge, that class of
inventory is measured at the lower of cost and current replacement cost.
Net realizable value is the estimated selling price in the ordinary course of
operations, less the estimated costs of completion and the estimated costs
necessary to make the sale, exchange, or distribution. Inventories are
recognized as an expense when deployed for utilization or consumption in
the ordinary course of operations of the LGU.
3.7 Provisions
Provisions are recognized when the LGU has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits or service potential will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Where the LGU expects some or all of a provision to be reimbursed, for

example, under an insurance contract, the reimbursement is recognized as
a separate asset only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the statement of

financial performance net of any reimbursement.
Rehabilitation liability
Rehabilitation costs are provided at the present value of expected costs to

settle the obligation using estimated cash flows and are recognized as part
of the cost of that particular asset. The cash flows are discounted at a
current rate that reflects the risks specific to the rehabilitation liability. The
unwinding of the discount is expensed as incurred and recognized in the
statement of financial performance as a finance cost. The estimated future
costs of decommissioning are reviewed annually and adjusted as
appropriate. Changes in the estimated future costs or in the discount rate
applied are added to or deducted from the cost of the asset.
Contingent liabilities
19
The LGU does not recognize a contingent liability, but discloses details of
any contingencies in the notes to the financial statements, unless the
possibility of an outflow of resources embodying economic benefits or
service potential is remote.
Contingent assets
The Group does not recognize a contingent asset, but discloses details of a
possible asset whose existence is contingent on the occurrence or non-
occurrence of one or more uncertain future events not wholly within the
control of the LGU in the notes to the financial statements. Contingent
assets are assessed continually to ensure that developments are
appropriately reflected in the financial statements. If it has become
virtually certain that an inflow of economic benefits or service potential
will arise and the asset’s value can be measured reliably, the asset and the
related revenue are recognized in the financial statements of the period in
which the change occurs.
3.8 Nature and purpose of reserves
The LGU creates and maintains reserves in terms of specific requirements

such as Local disaster risks reduction management fund reserves.
3.9 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy

retrospectively. The effects of changes in accounting policy are applied
prospectively if retrospective application is impractical.
The LGU recognizes the effects of changes in accounting estimates

prospectively by including in surplus or deficit.
3.10 Foreign currency transactions
Transactions in foreign currencies are initially accounted for at the ruling

rate of exchange on the date of the transaction. Trade creditors or debtors
denominated in foreign currency are reported at the statement of financial
position reporting date by applying the exchange rate on that date.
Exchange differences arising from the settlement of creditors, or from the
reporting of creditors at rates different from those at which they were
initially recorded during the period, are recognized as income or expenses
in the period in which they arise.
3.11 Borrowing costs
20
Borrowing costs are capitalized against qualifying assets as part of
property, plant and equipment. Such borrowing costs are capitalized over
the period during which the asset is being acquired or constructed and
borrowings have been incurred. Capitalization ceases when construction
of the asset is complete. Further, borrowing costs are charged to the
statement of financial performance.
3.12 Related parties
The LGU regards a related party as a person or an entity with the ability to
exert control individually or jointly, or to exercise significant influence
over the LGU, or vice versa. Members of key management are regarded as
related parties and comprise the Governor, Mayors, Vice-Governors and
Vice-Mayors, Sanggunian Members, Committee Officials and Members,
Accountants, Treasurers, Budget Officers, General Services and all Chiefs
of Departments/Divisions.
3.13 Budget information
The annual budget is prepared on the modified cash basis, that is, all
planned costs and income are presented in a single statement to determine
the needs of the LGU. As a result of the adoption of the Modified cash
basis for budgeting purposes, there are basis, timing or entity differences
that would require reconciliation between the actual comparable amounts
and the amounts presented as a separate additional financial statement in
the statement of comparison of budget and actual amounts. Explanatory
comments are provided in the notes to the annual financial statements;
first, the reasons for overall growth or decline in the budget are stated,
followed by details of overspending or underspending on line items.
3.14 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, management

has made judgments, which have the most significant effect on the
amounts recognized in the consolidated financial statements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
21
liabilities within the next financial year, are described below. The LGU
based its assumptions and estimates on parameters available when the
consolidated financial statements were prepared. However, existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control of the
LGU. Such changes are reflected in the assumptions when they occur.
Useful lives and residual values
The useful lives and residual values of assets are assessed using the
following indicators to inform potential future use and value from
disposal:
a) The condition of the asset based on the assessment of experts
employed by the LGU;
b) The nature of the asset, its susceptibility and adaptability to
changes in technology and processes;
c) The nature of the processes in which the asset is deployed; and
d) Changes in the market in relation to the asset.
Impairment of non-financial assets – cash-generating assets
The recoverable amounts of cash-generating units and individual assets

have been determined based on the higher of value-in-use calculations and
fair values less costs to sell. These calculations require the use of estimates
and assumptions. It is reasonably possible that the assumptions may
change, which may then impact management’s estimations and require a
material adjustment to the carrying value of tangible assets.
The LGU reviews and tests the carrying value of assets when events or
changes in circumstances suggest that the carrying amount may not be
recoverable. Cash-generating assets are grouped at the lowest level for
which identifiable cash flows are largely independent of cash flows of
other assets and liabilities. If there are indications that impairment may
have occurred, estimates of expected future cash flows are prepared for
each group of assets. Expected future cash flows used to determine the
value in use of tangible assets are inherently uncertain and could
materially change over time.
Impairment of non-financial assets – non- cash generating assets
The LGU reviews and tests the carrying value of non-cash-generating

assets when events or changes in circumstances suggest that there may be
a reduction in the future service potential that can reasonably be expected
22
to be derived from the asset. Where indicators of possible impairment are
present, the LGU undertakes impairment tests, which require the
determination of the fair value of the asset and its recoverable service
amount. The estimation of these inputs into the calculation relies on the
use estimates and assumptions.
Any subsequent changes to the factors supporting these estimates and

assumptions may have an impact on the reported carrying amount of the
related asset.
Provisions
Provisions were raised and management determined an estimate based on

the information available. Provisions are measured at the management's
best estimate of the expenditure required to settle the obligation at the
reporting date, and are discounted to present value where the effect is
material.
Note 4. Cash and Cash Equivalents
ACCOUNT COD GF SEF TF CONSO

S E
Cash in
Bank-Local
Currency- ₱761,804 ₱ 290,414 ₱ 3,211,118 ₱ 4,263,336
Current
Account
Cash in banks earns interest based on the prevailing bank deposit rates.
Short-term deposits are made for varying periods, depending on the
immediate cash requirements of the LGU and earn interest at the
respective short-term deposit rate.
Note 5 - Receivables
Transfers from other government agencies represent those funds received

for specific projects undertaken by the LGU for specific purpose. These
funds were received on the basis of the project budgets submitted.
Accordingly, the LGU is contractually bound to spend these funds only in
connection with the projects. Furthermore, the contracts stipulate that the
funds received for the project may only be applied to the costs incurred for
the project, as and when the phases of the project are certified as complete.
The conditions remaining therefore represent phases of the projects that
are yet to be certified as complete. Returned of the unspent portion of the
fund is subject to the conditions stated in the respective Memorandum of
Agreements executed between the LGU and the proponent government
agencies.
23
SEF Fund Code Amount
Special Education Tax Receivable ₱ 55,000
Note 6 - Inventories
No other inventory items were retained and kept in the stockroom. All
were distributed to the end-users for the calendar year 2017.
Note 7 - Property, Plant and Equipment
The transfer and adjustment column relates to reclassifications between

the different classes of assets and also to other categories of assets
including inventory and intangible assets.
PPE Code GF TF SEF CONSOLIDATED

Land Improvements,
Aquaculture 107-02- 8 60 682,00
Structures 010 2,000 0,000 0
107-04- 6 50 564,00
Building
010 1,387 2,613 1
Hospital and Health 107-04- 72 722,00
Center 030 2,000 0
Construction & Heavy 107-05- 28,00 28,000,00
Equipment 080 0,000 0
107-07- 99 999,95
Furniture and Fixtures
010 9,956 6
CIP- Infrastructures 107-10- 16,64 16,649,23
Assets 020 9,231 1
Other Property, Plant 107-99- 1,36 1,369,29
& Equipment 990 9,293 3
47,883, 1,102
TOTAL 867 ,613 48,986,481
The LGU measured the residual value of all items of property, plant and
equipment, but does not expect a residual value of these assets, because
these will be utilized for their entire economic lives and do not have a
significant scrap value. During the current financial year, the LGU
reviewed the estimated useful lives and residual values of property, plant
and equipment, where appropriate.
CARRYING ACCUMULATED BOOK

PPE
AMOUNT DEPRECIATION VALUE
Land Improvements, Aquaculture Structures 682,000 - 682,000
Building 564,001 63,536 682,000500
500,465
500,465
24
Hospital and Health Center 722,000 718,310 3,690
Construction & Heavy Equipment 28,000,000 13,760,000 3,690
14,240,000
Furniture and Fixtures 999,956 990,956 14,240,00014
9,000
CIP- Infrastructures Assets 16,649,231 - 9,000
16,649,231
Other Property, Plant & Equipment 1,369,293 1,369,293 16,649,2311,-
TOTAL 48,986,481 16,902,095 32,084,38-
6
Note 8 – Liabilities
8.1 Trade Payables
Trade payables are non-interest bearing and are normally settled on 60-
days terms. Other payables are non-interest bearing and have an average
term of six months. Interest payable is normally settled quarterly
throughout the financial year.
8.2 Inter-Agency Payables
ACCOUNTS CODE GF TF SEF CONSOLIDATED

Due to BIR 202-01-010 ₱ 120,546 ₱ 120,546
Due to GSIS 202-01-020 321,196 321,196
Due to Pag-ibig 202-01-030 17,801 17,801
Due to Phil-health 202-01-040 12,150 12,150
TOTAL ₱ 471,693 ₱ 471,693
The four accounts represents the amount deducted from the salaries of
officials and employees and is remitted to the respective government
agencies immediately on the month following the month for which these
were deducted.
8.3 Intra-Agency Payables
none
8.4 Trust Liabilities
none
8.5 Deferred Credits
The ₱ 55,000 pertains to Deferred Special Education Tax.

8.6 Long-term Payables
It had a loan balance of ₱ 5,890,584 at PNB.
Note 9 - Provisions
25
Annual leave accrues to employees on a monthly basis pursuant to Civil
Service Rules and Regulations. The provision is an estimate of the amount
due to officials and employees as at the financial year-end, based on the
value of statutory and non-statutory leave. The provision was calculated
based on the leave entitlement due to LGU personnel at year end.
Performance bonuses
Performance bonuses accrue to officials and personnel on an annual basis

subject to the achievement of predetermined performance standards
indicated in the Performance Commitment and Review Form. The
provision is an estimate of the amount due to staff in the service of the
LGU at the reporting date. Since the performance assessment process was
not yet complete as at reporting date, the provision is based on the
quarterly performance assessments and the availability of budget for
bonuses.
The carrying value of these provisions increases as the salary of officials

and employees of the LGU increases through merit increases, salary
increases and promotions.
Note 10 – Revenue
ACCOUNTS CODE GF SEF CONSOLIDATE

D
Business Tax ₱ ₱
401-03-030 ₱ 45,140
45,140 -
Community Tax 401-01-050 98,777 - 98,777
Real Property Tax - Basic 401-02-040 480,609 - 480,609
Special Education Tax 401-02-050 - 290,414 290,414.36
Tax Revenue- Fines &
401-05-020 - - -
Penalties- Property Taxes
Share from Internal
401-06-010 83,989,076 - 83,989,076
Revenue Collections (IRA)
Permit Fees 402-01-010 26,000 - 26,000
Registration Fees 402-01-020 8,800 - 8,800
Clearance/Certification
402-01-040 50,450 - 50,450
Fees
TOTAL ₱
₱ 84,698,852 ₱ 84,989,267
290,414
Note 11 – Personnel Services
ACCOUNTS CODE GF TF SEF CONSOLIDATE
26
D
Salaries & Wages - Regular 501-01-
₱19,169,129 ₱ 19,169,129
010
Salaries & Wages - 501-01-
020 3,000,000 3,000,000
Casual/Contractual
Personal Economic Relief 501-02-
010 1,338,000 1,338,000
Allowance (PERA)
Representation Allowance (RA) 501-02-
020
1,533,000 1,533,000
Transportation Allowance (TA) 501-02-
1,533,000 1,533,000
030
Clothing/ Uniform Allowance 501-02-
040
186,000 186,000
Year End Bonus 501-02-
3,194,854 3,194,854
140
Cash Gift 501-02-
150
310,000 310,000
Retirement & Life Insurance 501-03-
010 2,300,297 2,300,297
Premiums
Subsistence, Laundry Allowance 501-02-
050
72,000 72,000
Hazard Benefits 501-02-
83,986 83,986
110
Janitorial Services 501-02-
020
360,000 360,000
Security Services 374,250 374,250
Vacation & Leave 249,025 249,025
Terminal Leave 800,000 800,000
PAG-IBIG Contributions 501-03-
383,384 383,384
020
Phil Health Contributions 501-03-
030
421,733 421,733
Employees Compensation 501-03-
040 191,990 191,990
Insurance Premiums
Other Personnel Benefits 501-04-
990
- -
TOTAL ₱35,500,648 ₱ 35,500,648
Note 12 – Maintenance and Other Operating Expenses
ACCOUNTS CODE GF TF SEF CONSOLIDATED

Traveling Expenses- 502-01-
₱ 3,700,000 ₱ 3,700,000
Local 010
Training & Seminars 502-02-
010
2,280,000 2,280,000
Expenses
Office Supplies 502-03-
685,000 685,000
Expense 010
Accountable Forms 502-03-
75,000 75,000
020
Drugs and Medicines 502-03-
500,000 500,000
Expenses 070
Fuel, Oil and Lubricants 502-03-
090
1,750,000 1,750,000
Expenses
Electricity Expenses 502-04-
020
500,000 500,000
Telephone Expenses 502-05- 922,348 922,348
27
020
Internet Subscription 502-05-
030
75,000 75,000
Expenses
Office Equipment
550,000 550,000
Expenses
Intelligence Expense 502-10-
210,000 210,000
020
Extraordinary and 502-10-
200,000 200,000
Miscellaneous Expenses 030
Membership Dues &
215,000 215,000
Contribution
Awards & Indemnities 250,000 250,000
Printing & Binding 50,000 50,000
Representation
1,030,000 1,030,000
expenses
Auditing Services 502-11-
- -
020
Consutancy Services 700,000 700,000
Confidential Expenses 100,000 100,000
Repair & Maintenance-
502-13-
Buildings & Other 040
540,000 540,000
Structures
502-13-
Machinery & 050
410,000 410,000
Equipment
502-13-
Transportation 060
700,000 700,000
Equipment
Repair & Maintenance- 502-13-
400,000 400,000
Furnitures & Fixtures 070
Repairs & Maint.- 502-13-
Infrastructure Assets 030 - -
Fidelity Bond 502-16-
020
45,000 45,000
Premiums
Other Maintenance & 502-99-
31,049,342 162,356 31,211,698
Operating Expenses 990
Agricultural & Marine 502-03-
100
500,000. 500,000
Supplies Expense
TOTAL ₱47,436,690 ₱162,356 ₱ 47,599,046
Note 13 – Non-cash Expenses
CONSOLIDATE
ACCOUNTS CODE GF TF SEF
D
Depreciation- Buildings and Other 505-01-
Structures 040 ₱ - ₱ -
Depreciation- Machinery and 505-01-
1,440,000 1,440,000
Equipment 050
Depreciation-Furniture, Fixtures & 505-01-
156,002 156,002
Books 070
Depreciation- Other Property, Plant 505-01-
& Equipment 990 - -
TOTAL ₱1,596,002 ₱ 1,596,002
28
Note 14 – Financial Expenses
ACCOUNTS CODE GF TF SEF CONSOLIDATE

D
Interest Expense 503-01-
₱66.157 ₱66,157
020
Note 15 - LDRRMF
15.1 The LDRMF represents the amount set aside by the LGU to
support its disaster risk management activities pursuant to R.A.
No. 10121 otherwise known as the “Philippines Disaster Risk
Reduction and Management Act of 2010.” Receipt and Utilization
of Disaster Risk Reduction and Management (DRRM) Funds for
the year 2017 are shown below:
Amount
Particulars
Available Utilized Balance
Current Year
Quick ₱1,262,138 ₱1,262,138 -
Mitigation
MOOE 2,944,989 2,944,989 -
Capital
Total 4,207,127 4,207,127 -
Continuing
Special Trust
CY 2014 - - -
CY 2015 676 - 676
CY 2016 - - -
29
“Part II – Comments and Observations”
30
A. COMPLIANCE AUDIT
No BRS prepared and submitted
submit Bank Reconciliation Statements of depository accounts violating
COA Circular No. 96-011 dated October 2, 1996.
COA Circular No. 96-011 dated October 2, 1996 provides the policy guidelines
on the preparation and submission of the Bank Reconciliation Statement (BRS) for
Depository Accounts. It requires that the Local Accountants shall within ten (10) days
from receipt of the Bank Statements including debit/credit memos (DM/CM), paid
checks, etc., furnished by the depository banks within five (5) days after the end of each
month, to reconcile the same with the General Ledger (GL) and prepare the Bank
Reconciliation in five copies. The BRS including the paid checks, original copies of
debit/credit memos, shall be submitted to the Auditor concerned for verification within
ten (10) days for receipt after the end of each month.
However, the agency did not prepare and submit the monthly bank reconciliation
statements for CY 2017, for all funds: General Fund, Special Education Fund and Trust
Fund within the prescribed period, thus the correctness and reliability of Cash in Bank,
Local Currency account totaling ₱4,263,336 cannot be ascertained.
Moreover, the Municipal Accountant failed to get promptly the Bank Statements,
paid checks, Debit / Credit Memos, Advices, which are needed in the preparation of the
monthly bank reconciliation statements.
The failure of the preparation and submission of BRS within the prescribed period
do not conform to the purpose of the BRS wherein it brings into agreement the cash
balance per book and the cash balance per bank. The Bank Statement therein shows the
cash balance per bank at the beginning of the month, the deposits acknowledged, the
checks paid, other charges and credits and the cash balance per bank at the end of the
month.
The above mentioned deficiencies rendered the accuracy of the Cash in Bank
balance unreliable.
We recommended and the management agreed:

reconciliation statements monthly for all the funds of the Municipality
and to prepare the necessary adjusting entries for bank charges, interest
income and staled checks to bring back the cash in bank account in its
corrected balance.
31
b. The Local Chief Executive and the Municipal Treasurer as signatories of
the bank accounts of the Municipality to authorize the Municipal
Accountant to enroll on e-access of their accounts so that bank
statements could readily be available at any time.
additional personnel in the Accounting Office to augment the workforce
to facilitate the timely recording and preparation of financial reports.
Bank account maintained in a private bank

Bank (AGDB) contrary to Section 311 of the Local Government Code of the
Philippines and Department Order No. 27-05 of the Department of Finance.
Section 311 of the Local Government Code of the Philippines provides that:
“Local treasurer shall maintain depository accounts in the name of their respective
local government units with banks, preferably government- owned, located in or nearest
to their respective areas of jurisdiction.”
Department Order No. 27-05 of the Department of Finance (DOF) specifically

provides that:
“All Provincial, City and Municipal Treasurer, x x x, shall deposit their funds
and maintain depository accounts with:
a. Land Bank of the Philippines, and

b. Development Bank of the Philippines
By way of exception and subject to prior approval of DOF, Provincial, City and
Municipal Treasurers xxx, may likewise deposit their funds and maintain depository
account with banks where government has shares of stocks or which are allowed by law
to be government depository banks:
a. Philippine National Bank- granted with the authority to accept government

deposits from October 10, 2003 up to May 03, 2007 x x x.
Memorandum Circular No. 03-2006 of the Bureau of Local Government

Finance (BLGF) provides that:
b. A certification from the LGU concerned on the absence of any

government- owned depository bank located in or nearest its area of
jurisdiction.”
32
Interview of the Municipal Treasurer revealed that the municipality has deposits
with the Philippine National Bank. As noted in the abovementioned provision, the PNB is
no longer considered as a government depository bank as of date. It ceased to be one
when it was privatized as provided in its revised charter or Section 6 of Executive Order
No.90 s. 1986.
Moreover, the DOF issued department orders specifying the AGDB in accordance
with the provisions of Circular No. 110 s. 1996 of the Bangko Sentral ng Pilipinas(BSP).
In this order, the DOF granted PNB the authority to accept deposits from October 10,
2003 up to May 3, 2007 only. After said date, PNB ceased to be an AGDB. The said BSP
Circular, however, accepts exception when a private bank may still accept government
deposits. The BLGF, in turn, issued the requirements in opening depository accounts for
LGUs with banks other than AGDBs and in case of failure to comply with the
requirements; the LGU cannot then be allowed to deposit their funds or monies in a bank
other than those authorized by law.
One of the requirements in the BLGF Memorandum Circular No. 03-2006 is the
absence of any government owned depository bank located in or nearest its area of
jurisdiction. As noted, the Land Bank of the Philippines, Iligan Branch is nearer than the
Philippine National Bank, Iligan City branch from the territory of the municipality.
Hence, the municipality should have transferred its deposits with PNB when it became a
private bank. The presence of LBP excludes PNB from being a depository bank.
We have recommended to the Local Chief Executive and the management

agreed the following:
a. Considering the presence of two Authorized Government Depository
Banks (AGDB) in the nearest area, direct the Municipal Treasurer to
close the existing PNB accounts and transfer said account to any of the
two.
Non-submission of reports
within the time frame contrary to existing COA regulations, thereby
adversely affecting timely audit action on the matter.
Section 122 of the Presidential Decree (PD) 1445 states that the agency head,
chief accountant, cashiers/disbursing officers, and other responsible officials to submit
monthly reports of their transactions and such other reports for the exercise of its
functions pursuant to regulations of the Commission to the auditor concerned who shall
conduct the necessary examination and audit within thirty days from receipt thereof.
The Chief Accountant has to turn-over the Report of Collections/Disbursements,

Journal Vouchers, Reports of Checks Issued, Trial Balance, Supporting Schedules, Bank
33
Reconciliation Statements and other reports to the Auditor for audit and final custody
after the same had been submitted by the accountable officer to the Chief Accountant for
recording in the books of accounts in accordance with the existing regulations, as
follows:
Reports to be Submitted Date of Submission Basis of Authority

Report of Collections
Report of Checks issued w/in 10 days of the COA Circ.#95-006
Report of Disbursements succeeding month dated 5/18/95
Liquidation Reports
COA Circ.#81-156
Journal Vouchers -do-
dated 1/19/81
COA Circ.#88-192A
Preliminary Trial Balance -do
dated 11/02/88
w/in 15 days of the COA Circ.#92-125A
Bank Reconciliation Statement
month dated 3/04/92
Report of Accountable Forms
Any day w/in the
without Money Value Section 68 of NGAS
month
Records showed that the monthly reports were not submitted within the time
frame, as shown below by the following schedule:
# of days/months
Particular Period Date Submitted
delayed
Report of January 2017 11 months
Disbursements February 2017 10 months
March 2017 9 months
April 2017 8 months
May 2017 7 months
June 2017 6 months
July 2017 Not submitted as 5 months
August 2017 of December 31, 4 months
September 2017 2017 3 months
October 2017 2 months
November 2017 1 month
December 2017
Journal Vouchers January 2017 11 months
February 2017 10 months
March 2017 9 months
April 2017 8 months
May 2017 7 months
June 2017 6 months
34
December 2017
Bank January 2017 11 months
Reconciliation February 2017 10 months
Statement March 2017 9 months
April 2017 8 months
May 2017 7 months
June 2017 6 months
December 2017
Report of January 2017 11 months
Accountable February 2017 10 months
Forms without March 2017 9 months
Money Value April 2017 8 months
May 2017 7 months
June 2017 6 months
December 2017
The cause of the delayed submission of these reports was due to limited personnel
in the Accounting Division and due to voluminous workload in that Office.
The untimely submission of the required reports and financial statements hindered
the Team’s verification of the entries done in the accounting journals/books of original
entry, thereby, cast doubts on the validity, proprietary and accuracy of the balances of the
accounts reflected in the financial statements.
Moreover, the delayed preparation/submission of financial reports may

diminished the value and usefulness of the information derived thereat purposely to aid
management in formulating policies and making decisions.

a. Direct the Municipal Treasurer to submit all the required reports on time
to the Municipal Accountant, and the Municipal Accountant to submit to
the Audit Team on the prescribed time for immediate validation and
verification.
35
Copies of contracts and POs not furnished to COA Office

been complied with contrary to COA Circular No 96-001 dated August 15,
1996 and COA Circular No. 2009-001 dated February 12, 2009, respectively
which may cause the transactions covered by the unsubmitted documents be
suspended in audit.
Section A.1 and A.3 of COA Circular No. 96- 010 dated August 15, 1996,
respectively which provides the guidelines in the preparation and submission of purchase
orders relative to the procurement of supplies and equipment, prescribes among others,
that:
A. Date of submission of the copy of the purchase order (PO)
1. A copy of any letter of purchase order, irrespective of amount, and all

supporting documents thereto, shall be submitted to the unit or agency
Auditor concerned within five (5) days from issuance. The auditor
concerned shall, within five (5) days following the receipt thereof, inform
management in writing of any defect and/or deficiencies found in audit
(COA Circular No. 76-34 dated July 15, 1976).
3. Copy of P.O. must be legible in all respects, and shall be submitted to the
Office of the COA Auditor of the agency concerned.
Likewise, COA Circular No. 2009-001 dated February 12, 2009 was issued to
reiterate the submission of copy of government contracts, purchase orders and their
supporting documents to the Commission on Audit, its rationale was mentioned in
Section 1.1 and 1.2, respectively as follows:
1.1 Under Commission on Audit Circular Nos. 76-34 and 87-278, the audited
agencies are required to furnish the Auditor with a copy of perfected contracts and
purchase orders within five (5) working days upon approval together with the supporting
documents for review. To facilitate the review and evaluation process, particularly on the
technical aspects, COA Memorandum No. 91-704 was issued and was later restated and
updated by COA Memorandum No. 2005-027, defining the documentary and information
requirements, and providing therein the checklists for all types of technical evaluation
covered by the memorandum.
It has been observed that management’s submission of copies of perfected

contracts and supporting documents within the prescribed period had not been complied
with and is, at times, lacking in basic supporting documents. In view of these
36
circumstances and the irregularities discovered in government contracts, it has become
imperative to reiterate the submission of the requirements to implement a systematic and
effective review process with a view of generating timely and relevant audit results.
This existing practice precluded the Audit Team in conducting timely auditorial
reviews of perfected contracts and/or purchase orders (POs) entered into by this
Municipality and to immediately inform the agency officials concerned for any defects
and deficiencies discovered within the contracts/POs.
The BAC or BAC Secretariat to submit the contracts together with the
documentary requirements enumerated in the checklists for submission to the COA
Audit Team for the auditorial and legal review and ultimately to the COA Technical
Audit Services depending on the amount involved.
No submission of Reports on PPAs

as provided in COA Circular No. 2013-004 dated January 31, 2013 is not
completely complied with, thereby bringing doubt on the adoption and
implementation of full disclosure policy of all transactions involving public
interest.
COA Circular No. 2013-004 dated January 31, 2013 provides that:
“At the beginning of the year, all government agencies shall provide their
respective assigned Supervising Auditor (SA) and Audit Team Leader (ATL) with a list
of all on- going government projects/ programs/ activities (PPA) and those that are to be
implemented during the year. The list shall include the project name; implementing unit;
office or division if it is not the agency as a whole; brief description of the PPA;
contractor or supplier, if any; mode of procurement; funding source; cost or approved
budget; project duration including start and completion dates; and location. Other
information on the PPA may be requested by the SA or ATL anytime for audit purposes.”
“ Notification to the public and other forms of announcement and/ or publicity

for or otherwise relating to the PPA shall be made at the least possible cost, taking into
account that the nature of and purposes of such notification, announcement and/or
publicity, is to inform the public of the essential features/ elements of the PPA.”
Accordingly, all government agencies, or the implementing unit, office or

division as the case may be, shall notify the public of their PPA through the posting of
relevant information detailed on Item 2.1 on signboards, blackboard, whiteboards,
posters, tarpaulins, streamers, electronic boards or similar materials (collectively,
“Signboard”) not exceeding 3 feet by 2 feet, in conspicuous places within the agency
37
premises, and in the venue where the PPA is located or carried out. This requirement
applies to all government PPAs, regardless of amount or source of funds.”
“The head of the agency shall inform its SA and ATL within ten (10) days after
the award of the infrastructure project or before the start of the program / activity that the
appropriate project signboards and or public notices are already posted, and the SA and
ATL shall validate the same.”
“Based on the data sourced from the monthly monitoring report prepared by the
agency and verified by the Technical Audit Specialist of this Commission, the Project
Status should be maintained as current as possible and updated.”
In our review of the reports of the municipal government, we have observed the
following deficiencies:
 The municipal government failed to furnish this Office with the list of all on-
going government Programs/Projects/Activities (PPAs) and those that are to
be implemented during the year.
 The municipal government failed to inform this Office within ten (10) days
after the award of the infrastructure project or before the start of the program/
activity that the appropriate project signboards and/or public notices are
already posted.
 The municipal government overlooked the submission to this Office of the

monthly monitoring report on PPAs.
The enumerated shortcomings of the municipal government are in violation to the

general guidelines, reporting and monitoring on the information and publicity on
Programs/Projects/Activities (PPAs) of COA Circular No. 2013-004. Thereby, these
resulted to the poor monitoring of the project status of PPAs and bring doubts on the
adoption and implementation of full disclosure policy of all transactions involving public
interest.
Management Comment:
The Municipal Engineer failed to submit the required reports for the CY
2017 due to heavy workload. He committed to comply with the recommendations.
Recommendations:

38
Programs/Projects/Activities (PPAs) and those that are to be
implemented during the year,
b. Inform this office within ten (10) days after the award of the
infrastructure project or before the start of the program/ activity that
the appropriate project signboards and/or public notices are already
posted,
Previous loan documents were not yet submitted

requirements and without inspection of the delivered heavy equipment, thus,
originality and ownership of the dump truck and fire truck cannot be
ascertained and verified.
Chapter VI, Audit of Government Expenditures provides that, “The third Major
allotment account is capital outlay. As defined earlier, Capital Outlay refers to
appropriation for items the benefits from which extend beyond the fiscal year.
Legal and Administrative Requirements, - The following statutory and

administrative requirements or documents shall be observed or submitted before the loan
is granted.
1) The law, ordinance or resolution authorizing the granting of loan shall specify
the kind of loan to be granted, the paying capacity of the borrowers, the amount of loan
allowable, the rates of interest, the kind and value of collateral to be offered as security,
the mode of payment or amortization, the remedies provided in case of default, and all
the pertinent documents to support the application for loan.”
For year under review, we disclosed that the auditee incurred a loan for two (2)
units of Dump truck amounting to ₱12M. As part of the valid authority, the audit team
had required the ICO Municipal Treasurer to submit or furnish the auditor’s office a
machine copy of Memorandum of Agreement (MOA) executed by LGU management
and the Bank to properly affirm the authenticity/genuineness of the amount of loan
granted and its supporting documents. Upon review in the Annual Budget of the
Municipality, there was no appropriation for the loan payment, thus, the said payments
are illegal.
In the review of the monthly bank statements of the Municipality in Calendar

Year 2015, it appeared that a monthly payment/amortization had taken effect, thus the
previous Audit Team had issued Notice of Suspensions No. 2015-001 dated December
28, 2015. The basis of the issuance of the Notice of Suspension was the monthly bank
statements.
39
Details are shown below:
However, the Audit Team was not able to continuously issue notice of suspension
for auto debit made by the Philippine National Bank because the Municipality did not
furnish the Audit Team with monthly bank reconciliation statements from January 1 to
December 31, 2017. Likewise, the Municipality failed to inform the Audit Team on the
delivered Heavy Equipment, thus, anent with the non-submission of required legal
document, the audit team had never inspected, evaluated the correctness/accuracy and
authentication of subject heavy equipment purchased.
In the absence of these supporting documents, the financial transactions covering

payment is deemed illegal.
This is a prior year’s audit finding and recommendation and reiterated in this
report due to its importance and materiality and for management to take immediate and
serious remedial action.
a. The Local Chief Executive should submit copies of the Memorandum

of Agreement (MOA) executed by the LGU and the bank and the
Sangguniang Bayan (SB) Resolution authorizing the granting of loan.
b. The Municipal Budget Officer should submit proof that payment of
the loan amortization was provided in the Approved Annual Budget.
Municipal Accountant and the Municipal Treasurer who certifies the
existence of appropriation, the completeness of supporting documents
and the availability of funds should carefully examine the supporting
documents before payments will be effected to avoid accountability in
the performance of official duties.
40
20% DEVELOPMENT FUND
No significant findings were noted during the audit period. Management had been
reminded to submit government projects quarterly. These include funds from other
government agencies and the 20% development fund.
LOCAL DISASTER RISK REDUCTION MANAGEMENT FUND (LDRRMF)
LDRRMF depleted
Disaster Risk Reduction Management Fund required under Section 12 of RA
No. 10121 and COA Circular No. 2012-002, thereby, exposing the LDRRMF
to unauthorized used for administrative operational expenses and the funds
depleted.
Republic Act No. 10121, known as the Philippine Disaster Risk Reduction and
Management Act requires that the unexpended LDRRMF shall accrue to a special trust
fund solely for the purpose of supporting disaster risk reduction and management
activities of the LDRRMC’s within the next five (5) years.
COA Circular No. 2012-002 dated September 12, 2012 requires that a report on
sources and utilization of DRRMF shall be prepared and certified correct by the Local
Accountant. The Local Disaster Risk Reduction Management Officer (LDRRMO) shall
submit the report on or before the 15 th day after the end of each month through the
LDRRMC and Local Development Council to the COA Auditor of the LGU.
In CY 2017, the Municipal Accountant failed to prepare and submit to the COA
Office within the prescribed time the required monthly report on the sources and
utilization of Disaster Risk Reduction Management Fund.
However, Report on Sources and Utilization of DRRMF as of December 31, 2017

was submitted to the COA Office only on February 23, 2018. It showed that the fund-
20% quick response fund and the 70% preparedness - has been depleted, leaving no
balance as of the year-end, as shown in the table below:
41
Amount
Particulars
Available Utilized Balance
Current Year
Quick ₱1,262,138 ₱1,262,138 -
Mitigation
MOOE 2,944,989 2,944,989 -
Capital
Total 4,207,127 4,207,127 -
Continuing
Special Trust
CY 2014 - - -
CY 2015 676 - 676
CY 2016 - - -
Further, we observed that exhausting the LDRRMF has been the practice of the
Municipality since CY 2014, thereby, exposing the LDRRMF to unauthorized use for
administrative operational expenses.
This is a prior year’s audit finding and recommendation and reiterated in this
report due to its importance and materiality and for management to take immediate and
serious remedial action.
We have recommended to the Local Chief Executive to allocate properly the

5% calamity fund and submit the required report on or before the 15th day after
the end of each month through the LDRRMC and Local Development Council to
the COA Auditor of the LGU.
SOLID WASTE MANAGEMENT / ENVIRONMENT COMPLIANCE
Due to flock of the evacuees / Internally Displaced Persons (IDPs) affected by

Marawi City siege, the Municipality is having difficulty in fully implementing solid
waste management specifically the segregation of waste, among others.
SPECIAL EDUCATION FUND
Unestablished Special Education Funds
8. Management failed to prepare Special Education Fund Budget in violation to

Section 7 of Republic Act No. 5447 and incurred no amount for the SEF
projects, thus, the local school board failed to use the fund depriving the
beneficiaries.
Section 7 of Republic Act No. 5447 provides that each school board shall prepare
not later than August 15 each year the budget of receipts and expenditures for the ensuing
fiscal year to carry out the purpose of this Act.
42
The annual school board budget shall give priority to the following:
a. Construction, repair, and maintenance of school buildings and other facilities of

public elementary and secondary schools;
b. Establishment and maintenance of extension classes where necessary; and
c. Sports activities at the division, district, municipal, and barangay levels.
Likewise, Section 5 of DEPED, DBM, and DILG Joint Circular No. 1 dated
January 19, 2017 provides that:
5.0 Planning and Budgeting for the SEF
5.1 The LSB shall formulate a three-year program indicating strategic

prioritization policies in the allocation of the SEF to schools taking into
consideration equitable sharing, priority needs and such factors as enrollment
ratio, distance of the schools, performance, drop-out rate, and location of
schools, as well as the goals and objectives of the LGU’s Comprehensive
Development Plan (CPD), and the expenditures, programs, projects and
activities in the LGU’s Local Development Investment Program (LDIP) prior
to the formulation and preparation of its Annual Budget for the incoming
year. It is understood that the DepEd representative to the LSB shall be
responsible for coordinating municipal/city school plans with that of the
province and ensuring that the School Improvement Plan (SIP) and the
Division Education Development Plan (DEDP) are formulated
collaboratively with the stakeholders in the community.
5.2 The LSB in each province, city, or municipality shall be responsible for the
preparation and approval of the annual budgetary requirements of the public
schools based on the DepEd-approved SIP and EEDP in the implementation
of ECCD Program, kindergarten, elementary and secondary, formal and non-
formal education programs, chargeable to their respective SEFs.
5.2.1 All expenditure items to be included in the SEF Budget shall be

among those provided under Section 4.0 hereof and contained in
the approved SIP and EDDP.
5.2.2 The SEF Budget shall be presented by program, activity and

project (P/A/P), by allotment class and per school using SEF
Budget Preparation Form No. 1 (Annex A)
5.3 The LSB shall consider the following in the preparation of the SEF Budget:
5.3.1 Recommendation of the DepEd PSDS and SDS as well as the

priorities indicated in the SIPs and DEDDPs vis-à-vis the
information from the DepEd Regional Office (RO) on the
43
allocation of each school from the National Budget for the current
year and the ensuing year as contained in the National Expenditure
Program:
5.3.2 The report of the school heads on the state of education at the start
of evey school year, which will provide an annual progress report
on the SIP and cover, among others, the basic education
performance indicators and audited financial reports of his/her
school, including funds it received during the previous school year
from national, local, and community-based sources, as well as the
disposition of these funds; and
5.3.3 The relevant expenditures, P/A/Ps of the current LDIP and Annual
Investment Program of the LGU.
5.4 The approval of the SEF Budget shall be through an LSB Resolution, signed
by the Chair and Co-Chair and majority of all its members, pursuant to
Section 100 (b) of RA No. 7160.
In CY 2017, the municipality generated special education tax revenue of ₱290,414

and no expenditures were incurred. This is due to the failure of the Local School Board
headed by the Local Chief Executive as the Chairman to prepare Annual Special
Education Fund Budget, thus, the local school board failed to use the fund depriving the
beneficiaries.
This is a prior year’s audit finding and reiterated in this report due to its
importance and materiality and for management to take immediate and serious remedial
action.
a. The Local School Board to prepare a budget for Special Education Fund
and make deliberations in accordance with the guidelines.
b. The proceeds shall be allocated for the operation and maintenance of
public schools, construction and repair of school buildings, facilities and
equipment, educational research, purchase of books and periodicals, and
sports development as determined and approved by the local school
board.
B. COMPLIANCE WITH TAX LAWS
The Management as a withholding agent of the Bureau of Internal Revenue

partially complied with BIR Regulations on withholding of taxes. They remitted the due
amount of value added and expanded withholding tax for the supplies and materials,
equipment and services it procured and taxes withheld on compensation for Calendar
Year 2017.
44
C. GENDER AND DEVELOPMENT AUDIT
No GAD Committee
Likewise, GAD Committee was not created in violation of the provisions of
Republic Act No. 10352 and PCW-NEDA-DBM Joint Circular No. 2012-01,
thereby resulting to minimal attainment of the purpose of which the fund
was established and depriving the intended beneficiaries on the benefit of the
program.
Section 1.0 of the PCW, NEDA and DBM Joint Circular No. 2012-01 prescribes
the guidelines and procedures for the formulation, development, submission,
implementation, monitoring and evaluation including accounting of results of agency
annual GAD plans and budgets (GPBs) and GAD accomplishment reports (AR).
Likewise, it provides the mechanics for the development of programs, activities and
projects (PAPs) to respect, protect and fulfill the rights of woman at the socio-cultural,
economic and political spheres.
Executive Order No. 273 mandates agencies to incorporate and reflect GAD
concerns in their agency performance commitment contracts, annual budget proposals
and works, and financial plans.
Verification also disclosed that the GPB for CY 2017 was not submitted to the
Philippine Commission on Women (PCW) for review and endorsement to DBM prior to
submission of the Municipality Government’s budget proposal in violation of Section
Nos. 8.2 and 8.7 of PCW-NEDA-DBM Joint Circular No. 2012-01 states that the agency
GAD Focal Point shall prepare the annual GAD plans and budgets for review and
endorsement prior to the submission of the agency budget proposal. Agencies shall
submit to the DBM their PCW-endorsed annual GPB along with the annual GAD
Accomplishment Report for the previous year in accordance with the budget call.
The GAD committee will be created with the following composition:
CHAIR: Local Chief Executive (LCE)
MEMBERS:
1. Heads of LGU departments and other offices relevant to Gender
Mainstreaming;
2. Chairs of the following Sanggunian Committees:
a. Women, Children and Family
b. Appropriations
3. Representative/s from the following groups:
a. PNP Women’s Desk;
b. Indigenous Peoples (IPs) (where existent)
c. Persons with Disabilities (PWDs)
45
d. Women’s Organization or recognized NGO
e. Private Sector
f. Academe
4. President of the Liga ng mga Barangay;
5. Sangguniang Kabataan (SK) Federation President
With these deficiencies, it is apparent that the Local Government unit has yet to
fully institutionalize the implementation of the GAD as mandated which could affect the
timely provision of benefits to its intended beneficiaries.
It was noted during the audit that there was no official creation of GAD
committee and that the MSWD was only designated as the only one GAD focal person
and committee.
This is a prior year’s audit finding and is hereby reiterated due to materiality of
the amount that will affect the decision of the user of the financial statement.
Management Comment:
The management committed to exert more efforts to comply with the audit
recommendations.

a. The GAD Focal person should attend a seminar on Gender and
Development mainstreaming in order to familiarize the program.
DBM Joint Circular No. 12-01 that is to respect, protect and fulfill the
rights of woman at the socio-cultural, economic and political spheres.
D. STATEMENT OF AUDIT SUSPENSION, DISALLOWANCES AND

CHARGES
Beginning This Period Settlement Ending

Balance (January 1 – for the Balance
(As of January 1, December 31, Year (As of
2017) 2017) December 31,
2017)
Notice of Suspension ₱2,788,335.72 ₱ 0.00 ₱ 0.00 ₱2,788,335.72
Notice of Disallowance 0.00 0.00 0.00 0.00
Notice of Charge 0.00 0.00 0.00 0.00
Total ₱2,788,335.72 ₱ 0.00 ₱ 0.00 ₱2,788,335.72
46
In CY 2017, no Notice of Suspension, Disallowance and/Charges was issued to
the management, but the management is on the process of complying with the
requirements on the Notice of Suspension issued by the previous team.
The Audit Team was not able to conduct post-audit due to non-submission of the
disbursement vouchers and other financial reports.
47
Part III – Status of Implementation of Prior Years’ Audit
Recommendations
48
AUDITOR’S
MAANGEMENT
OBSERVATION REF. VALIDATION
ACTION
RESULTS
1. Disbursement Vouchers and its AAR
supporting documents covering 2016 Partially submitted Not Implemented
the period from January to accounts
December 2016 were not #1 The management
submitted within the prescribed (January to March still failed to submit
period, contrary to COA Circular 2017 DVs) disbursements
No. 95-006, thus, preventing the vouchers and other
conduct of timely audit. required reports
within the prescribed
We have recommended the period.
following:
a. The Local chief Executive
should require the Municipal
Accountant to submit the
required monthly reports such
as disbursement vouchers
together with the supporting
documents to facilitate timely
audit of transactions.
b. The Municipal Treasurer in
coordination with the
Municipal Accountant should
stop payment of disbursement
vouchers if documentation
were incomplete.
c. If funds are available, the
Local chief Executive should
hire additional employees to
do the work or require the
Municipal Accountant to
render overtime to ensure
timely submission of the
required reports and
documents.
d. For fund transfer from DILG,
DSWD, DA and other various
national agencies, to secure
liquidation reports
immediately from the
Municipal Accountant with
complete supporting
documents to avoid
unliquidated fund transfer
49
which exposes the funds to
misappropriation and losses.
2. The correctness and reliability of AAR No action Not Implemented
the Cash in Bank, Local Currency 2016
in the amount of P4,851,000.00 No BRS submitted to
remained to be unverified due to #2 the COA Office
the failure of the agency to
prepare and submit monthly bank
reconciliation statements contrary
to Section74 of PD 1445 and
COA Circular No. 96-11.
We have recommended the

following:
a. The Municipal Accountant to
get the monthly bank
statements promptly and
regularly.
b. The Municipal Accountant to
prepare and submit Bank
Reconciliation Statements of
all bank accounts to the Office
of the Audit Team Leader,
Commission On Audit.
c. The Municipal Treasurer to
reconcile his cashbooks entries
with that from the accounting
records at least quarterly.
3. Approval of disbursement AAR
vouchers appropriated for the 2016 No action Not Implemented
operation of the sanggunian shall
be approved by the municipal #3
vice mayor, pursuant to Section
39 of COA Circular No. 92-382.
We have recommended to the

municipal vice mayor to apply for
the fidelity bond, approved the
disbursement vouchers for the
appropriation of the sanggunian
and shall be allowed to
countersigned in the check drawn.
4. Seven (7) Plantilla positions AAR
50
remained vacant, thus, regular 2016 Instructed the
delivery of services of the HRMO to publish Partially Implemented
Municipality is not attained at its #4 the vacant positions.
maximum contrary to Section 443 Four (4) positions
of Republic Act 7160. remained vacant

following:
a. The Local Chief Executive
should fill up the vacant
positions and should provide
appropriation for a more
effective administration of
those offices and to deliver the
basic services needed by the
constituents.
b. The Budget Officer should
allocate budget for those
vacant position to protect the
collapsing of plantilla
positions.
c. The Head of the Personnel
should publish the vacancy
and if there will be no
qualified applicant,
recommend to the Local Chief
Executive for a temporary
appointment of those willing
and available applicant for the
position giving priority to
residents of the Municipality.
d. For the position of Municipal
Accountant, hire a Certified
Public Accountant to occupy
the mandatory position so that
strong internal control will be
installed in the system of the
LGU.
51
5. Registries of funds / AAR
appropriations / allotments and 2016 No action Not Implemented
obligations / utilization for each
fund were not maintained by the #5
Municipal Budget Office, in
contrary to Item No. 2 of COA
Circular No. 2005-001 dated Feb.
28, 2005.

following:
a. The Municipal Budget Officer
should maintain the required
registries of funds /
appropriations / allotments and
obligations and utilization in
order to avoid juggling of
funds and for internal control
purposes. Also, to facilitate the
realization of the programs /
projects / activities embodied
in the Approved Annual
Budget.
b. Strict adherence to the
provision of laws, rules and
regulations. Attend to the
seminar involving budgeting
purposes. Request the COA
Audit Team Leader to orient
on the preparation of registries
per NGAS.
6. Money value equivalent to the AAR No action
earned leave credits of LGU 2016 Not Implemented
personnel were not recorded in
the books of accounts #6
disregarding COA Circular No.
2015-009 which prescribes the
Revised Chart of accounts for
local government units.

Human Resource Officer
furnishing the Accounting office
with a copy of Schedule of
Earned Leave Credits for all LGU
personnel with money value as
52
basis by the Accounting Office to
record the leave accruals.
Meantime, that budget was not
yet provided, just disclosed it in
the Notes to Financial Statements.
7. The municipal treasurer failed to AAR No action
prepare and submit consolidated 2016 Not Implemented
monthly reports of accountability
for accountable forms with and #7
without money value. Thus,
accurate balances could not
immediately establish.

ICO-Municipal Treasurer to
adhere strictly with the regulation
to ensure effective performance
on the task assigned and submit
monthly report of collections and
report of accountable forms and
turnover the used accountable
forms. And used and issued
accountable forms in sequence.
8. The Municipal Treasurer failed to AAR
deposit intact and daily all 2016 No action Not Implemented
collections of the Municipality,
contrary to Section 69 of PD #8
1445, 109 and Section 28, COA
Circular No. 92-382. Thus,
exposing government revenues to
possible misappropriation.

Municipal Treasurer to closely
monitor the deposit of collections
to prevent possible loss or
misappropriation of government
monies by accountable officers.
53
9. Municipality’s expenditures were AAR No action
paid out of the cash advance of 2016 Not Implemented
the Disbursing Officer designate,
in violation to provisions of COA #9
Circular No. 97-002.

following:
a. The Municipal Treasurer
should stop the practice of
using cash advance in paying
operating expenses.
b. Expenditures on cash advances
should be based on the
purpose of the cash advance
such as but not limited to
salaries and wages.
c. For advances on travel, it
should be supported with
approved itinerary of travel
and authority to travel.
d. Instead, establish Petty Cash
Fund for petty expenditures.
10.The auto debit made by the AAR
Philippine National Bank 2016 No action Not Implemented
amounting to ₱2, 788,335.72 is
doubtful due to non-submission # 10
of the documentary requirements
and without inspection of the
delivered heavy equipments,
thus, originality and ownership of
the dump truck and fire truck
cannot be ascertained and
verified.

following:
should submit copies of the
Memorandum of Agreement
(MOA) executed by the LGU
and the bank and the
Sangguniang Bayan (SB)
Resolution authorizing the
granting of loan.
b. The Municipal Budget Officer
54
should submit proof that
payment of the loan
amortization was provided in
the Approved Annual Budget.
c. The Municipal Officials
specifically the Municipal
Budget Officer, the Municipal
Accountant and the Municipal
Treasurer who certifies the
existence of appropriation, the
completeness of supporting
documents and the availability
of funds should carefully
examine the supporting
documents before payments
will be effected to avoid
accountability in the
performance of official duties.
11.The Local Government Unit AAR
failed to establish collectible Real 2016 The Municipal Partially Implemented
Property Tax and Special Accountant to
Education Fund share for the CY # 11 establish the Real
2016 due to the failure of the Property Tax and
management to develop a Special Education
comprehensive program to Fund share
intensify tax collection in
violation of Section 345 of R.A.
7160.

following:
a. The Committee on Local
Finance of the Municipality
should give emphasis on the
collection of delinquent real
property taxes by applying the
administrative remedies
against delinquent taxpayers as
provided for under Section 345
of Republic Act 7160.
b. The Local Chief Executive
should hire additional
employees to augment the
Office of the Municipal
Assessor, otherwise, require
the concerned employees to
55
render overtime in order to
prepare and submit the
estimated real property tax
collectibles of the
Municipality.
12.Non-maintenance of Subsidiary AAR No action
Ledgers (SL) for inventory 2016 Not Implemented
accounts contrary to Section 12
of the MNGAS Volume II. # 12
We have recommended that the

Supply Officer to submit the
Report of Supplies and Materials
Issued (RSMI) to the accounting
division; maintain SLs for the
inventory accounts; and to strictly
comply with the provision of
Section 12 of MNGAS, Volume
II and Section 114 of PD 1445.
13.The reliability and validity of the AAR No action
Property, Plant and Equipment 2016 Not Implemented
account balance of ₱47,
417,087.76 as of December 31, # 13
2016 cannot be ascertained due to
the failure of the auditee to
conduct periodic physical
inventory taking, in violation of
COA Circulars and New
Government Accounting System,
Volume I.

following:
should create an appraisal /
inventory committee to
conduct an actual physical
inventory taking of all
properties, plant and
equipment headed by the
General Services Officer to be
witness by any representative
of the Commission On Audit.
b. The General Service Officer
should maintain stock cards of
each property, plant and
56
equipment bearing property
number while the Municipal
Accountant should maintain a
subsidiary ledger card on each
equipment.
c. Identify unserviceable
properties and prepare an
Inspection and Inventory
Report for disposal.
d. The Municipal Accountant
should prepare necessary
adjustments on the
deficiencies noted in the
course of inventory taking and
make reconciliation with
inventory report, stock cards
and subsidiary ledgers.
e. The Municipal Administrator
should update the list of
properties that need to be
insured and submit the list to
the GSIS.
f. Provide budget for the
insurance premium of
properties identified to be
insured especially building to
protect the interest of the
government.
14. The desired purpose / AAR No action

objective of supplemental feeding 2016 Not Implemented
program by the Department of
Social Welfare and Development # 14
(DSWD) may not be attained due
to absence of individual chart of
beneficiaries of the program to
ensure the improvement of the
nutritional status of the child.
We have recommended the in-

charge of the program, the
MSWD to prepare an individual
chart of the child in order to
properly monitor the nutritional
status of the child and likewise
submit the accomplishment
57
report.
15.The Municipality failed to submit AAR
GAD Plan and its 2016 GAD Committee Partially Implemented
accomplishment report. Likewise, was created, and
GAD Committee was not created # 15 Maimona M. 2017 GAD
in violation of the provisions of Minalang was Accomplishment
Republic Act No. 10352 and designated as the Report was not
PCW-NEDA-DBM Joint Circular Chairman, GAD submitted to the COA
No. 2012-01, thereby resulting to Focal Point System Office.
minimal attainment of the
purpose of which the fund was
established and depriving the
intended beneficiaries on the
benefit of the program.

following:
a. The GAD Focal person should
attend a seminar on Gender
and Development
mainstreaming in order to
familiarize the program.
b. To ensure that activities
identified as GAD are in
conformity with the provisions
under Philippine Commission
on Women (PCW), NEDA and
DBM Joint Circular No. 12-01
that is to respect, protect and
fulfill the rights of woman at
the socio-cultural, economic
and political spheres.
c. The Local Chief Executive
should create a GAD
Committee so that the program
will be fully implemented.
16.The Management failed to AAR The Municipality
transfer the Local Disaster Risk 2016 allocated 5% of Partially Implemented
Reduction and Management Fund IRA for Calamity
(LDRRMF) required under # 16 Fund. No report on the
Section 12 of RA No. 10121, sources and utilization
thereby, exposing the LDRRMF of LDRRMF was
to unauthorized used for submitted on or
administrative operational before the 15th day
expenses and the funds depleted. after the end of each
month to the COA
58
We have recommended to the Office.
Local Chief Executive to allocate
properly the 5% calamity fund
and transfer the amount to a
separate account purposely for
the 5% calamity fund.
17.Solid waste management plan of AAR No action
the municipality were not 2016 Not Implemented
submitted as mandated under RA
9003. # 17

management for executive action:
a. Creation of the Municipal
Solid Waste Management
Board in accordance with the
provision of law;
b. The plan should be reviewed
and updated as required by law
to ensure its sustainability,
relevance and effectiveness;
c. Campaigns should be
collaborated with the barangay
officials concerned; and
d. Continued and stricter
implementation of waste
segregation, and thorough
collection of waste based on
set schedules.
18.Management failed to prepare AAR No action
Special Education Fund Budget 2016 Not Implemented
in violation to Section 7 of
Republic Act No. 5447 and # 18 No SEF Budget along
incurred no amount for the SEF with the disbursement
projects, thus, the local school vouchers and all its
board failed to use the fund supporting documents
depriving the beneficiaries. for CY 2017
transactions were
We have recommended the submitted to the COA
following: Office.
a. The Local School Board to
prepare a budget for Special
Education Fund and make
deliberations in accordance
with the guidelines.
b. The proceeds shall be
59
allocated for the operation and
maintenance of public schools,
construction and repair of
school buildings, facilities and
equipment, educational
research, purchase of books
and periodicals, and sports
development as determined
and approved by the local
school board.
19.Purchase of Municipal Disaster AAR No action
Rescue Dump Truck in the 2016 Not Implemented
amount of P1,419,642.86 were
procured inconsistent with the # 19
prescribed rules and regulations
of RA 9184 hence, the desired
purpose and objectives of
ensuring the most advantageous
price in favor to the government
was not attained.

following:
a. The Bids and Awards
Committee (BAC) Secretariat
should submit the complete
documents, including the
contract or memorandum of
agreement, considering that
the fund is a Bottom Up
Budgeting (BUB) Fund.
b. Likewise, the Bids and
Awards Committee should
submit a justification why
public bidding was not
conducted in this particular
transaction when Section 10 of
Republic Act 9184 provides
that all procurement shall be
done through competitive
bidding, except as provided in
Rule XVI of the IRR.
c. That all contracts for the
procurement of goods should
be subjected to public bidding
to ensure that the most
60
advantageous price is obtained
from qualified bidder.
20.The Municipal Treasurer failed to 2015 It was agreed that at Partially Implemented
deposit daily contrary to Section AAR the end of the
69 of PD 1445, 109 and Section #1 month the The management
28, COA Circular No. 92-382 collections should failed to deposit intact
which requires its remittance be remitted on the the monthly
st
daily and intact, thus, exposing 1 day of the collections.
government revenues to possible succeeding month
misappropriation. due to distance.

Municipal Treasurer and
Municipal Accountant to closely
monitor the deposit of collections
to prevent possible loss or
misappropriation of government
monies by accountable officers.
And prepared a schedule travel
plan for the use of the motor
vehicle.
21.The revenue collectors failed to 2015 No action Not Implemented.
prepare and submit consolidated AAR
monthly reports of accountability #4 Reiterated in this
for accountable forms with and CY 2017 AAR.
without money value and
forms to the liquidating officer
for her to review and submission.
Thus, accurate balances could not
immediately establish.

Municipal Treasurer to require all
revenue collectors to adhere
strictly with the regulation to
ensure effective performance on
the task assigned and submit
monthly report of collections and
report of accountable forms and
forms. And used and issued
accountable forms in sequence.
61
22.The correctness and reliability of 2015 No action Partially Implemented
the Cash in Bank, Local Currency AAR
cannot be verified and #5 Reiterated in this
ascertained due to the failure of CY 2017 AAR.
the agency to prepare and submit
monthly bank reconciliation
statements of all funds for CY
2015, contrary to Section74 of
PD 1445 and COA Circular No.
96-11.

Municipal Accountant to get the
monthly bank statements from the
depository banks or enroll the
bank accounts to online access in
order to prepare and submit Bank
Reconciliation Statements
monthly in adherence to Section
74 of PD 1445 and COA Circular
No. 96-11.
23.Municipality’s expenditures in 2015 No action Not Implemented.
the total amount of AAR
₱58,311,138.69 were paid out of #6
the cash advance of the
Disbursing Officer designate, in
violation to provisions of COA
Circular No. 97-002.

Municipal Treasurer to stop the
practice of using cash advance in
paying operating expenses or
claims of municipal officials and
employees. Limit cash advances
to salaries or wages and travel
expenses.
62
24.The Local Government Unit 2015 No action Partially
failed to establish collectible Real AAR Implemented.
Property Tax and Special #7
Education Fund for the CY 2015
due to the failure of the
management to develop a
comprehensive program to
intensify tax collection.

management should give
emphasis on the collection of the
delinquent real property taxes by
applying the administrative
remedies against delinquent
taxpayers as provided for under
the Local Government Code.
We have further recommended to

management to fill up the vacant
position of municipal assessor in
order to prepare and submit the
estimated real property tax
collectibles.
25.Non-maintenance of Subsidiary 2015 No action Not Implemented.
Ledgers (SL) for inventory AAR
accounts contrary to Section 12 #8
of the MNGAS Volume II.
We have recommended that the

Supply Officer to submit the
Report of Supplies and Materials
Issued (RSMI) to the accounting
division; maintain SLs for the
inventory accounts; and to strictly
comply with the provision of
Section 12 of MNGAS, Volume
II and Section 114 of PD 1445.
26.The reliability and validity of the 2015 No action Not Implemented.
Property, Plant and Equipment AAR
account balance of P0 as of #9
December 31, 2015 cannot be
ascertained due to the failure of
the auditee to conduct periodic
physical inventory taking, in
violation of COA Circulars and
63
New Government Accounting
System, Volume I.

Management to create an
appraisal / inventory committee
to conduct actual physical
inventory taking of all properties,
plant and equipment. Also
instruct the Municipal Accountant
to make necessary adjustments on
the records deficiencies noted in
the course of inventory taking and
in the reconciliation of the
inventory report with the
subsidiary ledgers. After physical
count and report of PPE’s are
completed, prepare and maintain
a subsidiary ledger card each
equipment account and should
bear a Property Number. The
municipal accountant is to
provide residual value in
computing the depreciation.
We have also recommended to

the Administrative Officer to
update the list of properties that
needs to be insured and submit
the same to GSIS. This will
guarantee that all properties are
adequately covered by insurance
in order to protect the interest of
the government. For lost /
damaged properties without
covering insurance, liability
therefore should devolve upon the
parties responsible.
64
27.The LGU applied a long term 2015 No action Not Implemented.
loan for two (2) units of dump AAR
truck amounting to P12M from #10
the Philippine National Bank
without submitting the
documentary requirements and
without inspection of the
delivered heavy equipment, thus,
originality and ownership of the
dump truck and fire truck cannot
be ascertained and verified.

head of the procuring entity to
submit the required documents.
We also recommend that the
agency officials, particularly the
budget officer, accountant, and
treasurer who certifies to the
existence of appropriation, the
completeness of supporting
documents and the availability of
funds respectively to carefully
examine all the supporting
documents before payment will
be effected to avoid
accountability in the performance
of official duties and functions.

the Municipal Budget Officer to
submit proof that the payment of
the loan amortization is provided
in the Approved Annual Budget.
28.Delayed submission of the 2015 Submitted. Not Implemented
disbursement vouchers and its AAR
supporting documents covering #11 The current year
the period January to December disbursements were
2015 ranging from 24 to 268 submitted beyond the
days, contrary to COA Circular prescribed period.
No. 95-006, thus, preventing the
conduct of timely audit.
We have recommended to
management to hire additional
employee assigned in the office
65
of the municipal treasurer and
accountant, otherwise, require the
concerned employee to render
overtime to ensure timely
submission of the required reports
and documents.
29.Preparation and submission of 2015 No action Not Implemented
monthly trial balances were AAR
found delayed contrary to #12 Since the delay is due
provisions of Section 70 of to non-submission of
NGAS Manual, thus precluding the dv, the
the management and the auditor management to stop
to determine/monitor the paying disbursement
agency’s financial condition in a vouchers with
given period. incomplete supporting
documents.
We have recommended to
management to hire additional Reiterated in this
employee assigned in the office CY 2017 AAR.
of the municipal accountant,
otherwise, require the concerned
employee to render overtime in
order to prepare and submit
monthly trial balances on time for
proper monitoring and timely
decision making of the
management.
30.Management failed to prepare 2015 No action Not Implemented.
SEF Budget in violation to AAR
Section 7 of RA No. 5447 and #13 Reiterated in this
incurred no amount for the SEF CY 2017 AAR.
projects, thus, the local school
board failed to use the fund
depriving the beneficiaries.

Local School Board to prepare
and submit Annual SEF Budget.
And the proceeds shall be
allocated for the operation and
maintenance of public schools,
construction and repair of school
buildings, facilities and
equipment, educational research,
purchase of books and
periodicals, and sports
66
development as determined and
approved by the local school
board.
31.Implementation of the four (4) 2015 Some projects were Partially
projects under the 20% AAR bidded. Implemented.
Development fund in the total #14
amount of P3,384,177.00 were by
administration instead of
contracts as provided in the
provision of RA 9184; thus,
government funds were not
properly safeguarded.

Bids and Award Committee to
comply the guidelines under RA
9184 in to arrive at an efficient
and effective project
implementation. Correct all the
deficiencies noted for adequate
management operation for the
interest of a good governance.
32.The Management failed to 2015 Open new account. Partially Implemented
transfer the Local Disaster Risk AAR
Reduction and Management Fund #15 Fully expended.
(LDRRMF) required under
Section 12 of RA No. 10121,
thereby, exposing the LDRRMF
to unauthorized used for
administrative operational
expenses.

Management to strictly comply
the creation of special trust fund
for the unexpended LDRRMF.

the Municipal Treasurer to open a
trust fund account to transfer the
unexpended LDRRMF.
67
33.The desired purpose / objective of 2015 No action Not Implemented.
supplemental feeding program AAR
may not be attained due to the #16 .
absence of individual ledger of
the beneficiaries to ensure the
improvement of the nutritional
status of the child.

MSWD to prepare individual
chart of the child in order to
properly monitor the nutritional
status of the child.

the MSWD to submit the
accomplishment report.
34.No GAD committee created, no 2015 No action Not Implemented.

Gender and Development plan AAR
and accomplishment report were #17 Reiterated in this
submitted by the agency in CY 2017 AAR.
violation of the provisions of
Republic Act No. 10352 and
PCW-NEDA-DBM Joint Circular
No. 2012-01, thereby resulting to
minimal attainment of the
purpose for which the fund was
established and depriving the
intended beneficiaries on the
benefit of the program.

Municipal Mayor to appoint a
GAD Focal person and to ensure
that activities identified as GAD
are in conformity with the
provisions under Philippine
Commission on Women (PCW),
NEDA and DBM Joint Circular
No. 12-01 that is to respect,
protect and fulfill the rights of
woman at the socio-cultural,
economic and political spheres.
68
PART IV APPENDICES
69
Appendix A
STATEMENT OF FINANCIAL POSITION
2017
ASSETS GF TF SEF CONSOLIDATED
Current Assets
Cash and Cash Equivalents (Note 4) 761,804 3,211,118 290,414 4,263,336
Investments -
Receivables (Note 5) 55,000 55,000
Inventories (Note 6) -
Prepayments and Deferred Charges 102,514 102,514
Total Current Assets 761,804 3,211,118 447,928 4,420,849
Non-Current Assets
Investments
Receivables
Investment Property
Property, Plant and Equipment ,net (Note 7) 30,981,772 1,102,613 32,084,386
Biological Assets
Intangible Assets
Total Non-Current Assets 30,981,772 1,102,613 - 32,084,386
Total Assets 31,743,576 4,313,731 447,928 36,505,235
LIABILITIES
Current Liabilities
Financial Liabilities (Note 8.1)
Inter-Agency Payables (Note 8.2) 471,693 - 471,693
Intra-Agency Payables (Note 8.3)
Trust Liabilities (Note 8.4)
Deferred Credits/Unearned Income (Note 8.5) - -
Total Current Liabilities 471,693 - - 471,693
Non-Current Liabilities
Financial Liabilities (Note 8.6)
Deferred Credits/Unearned Income 55,000 55,000
Loans Payable 5,890,584 5,890,584
Provisions
Other Payables
Total Non-Current Liabilities 5,890,584 - 55,000 5,945,584
Total Liabilities 6,362,277 - 55,000 6,417,277
70
NET ASSETS/EQUITY
Government Equity 25,381,299 4,313,731 392,928 30,087,958
Total Liabilities and Net Assets/Equity 31,743,576 4,313,731 447,928 36,505,235
(SGD.) Bagobilang P. Datu

Municipal Accountant
71
Appendix B
STATEMENT OF FINANCIAL PERFORMANCE
Notes 2017
Revenue GF TF SEF CONSOLIDATED
Tax Revenue (Note 10) 624,526 290,414 914,941
Share from Internal Revenue Collections (Note 10) 83,989,076 83,989,076
Other Share from National Taxes - -
Service and Business Income (Note 10) 85,250 85,250
Shares, Grants and Donations
Gains
Other Income
Total Revenue 84,698,852 - 290,414 84,989,267
Less: Current Operating Expenses

Personnel Services (Note 11) 35,500,648 35,500,648
Maintenance and Other Operating Expenses (Note 12) 47,436,690 162,356 47,599,046
Non-cash Expenses (Note 13) 1,596,002 1,596,002
Financial Expenses (Note 14) 66,157 66,157
Current Operating Expenses 84,599,498 162,356 84,761,854
Surplus (Deficit) from Current Operation 99,355 128,058 227,413

Add:
Transfers, Assistance and Subsidy - - -
Deduct:
Transfers, Assistance and Subsidy To
Surplus(Deficit) for the period 99,355 - 128,058 227,413

72
Appendix C
STATEMENT OF CASH FLOWS
Cash Flows from Operating

GF TF SEF CONSOLIDATED
Activities
Cash Inflows
Collection from taxpayers ₱ 709,776 ₱ - ₱290,414 ₱ 1,000,191
Share from Internal Revenue
83,989,076 - - 83,989,076
Allotment
Receipts from
- - - -
business/service income
Interest Income - - - -
Dividend Income - - - -
Other Receipts - 3,337,400 59,843 3,397,243
Total Cash Inflows 84,698,852 3,337,400 350,257 88,386,509
Cash Outflows
Payment of expenses
Payments to suppliers and
49,098,850 2,156,203 162,356 51,417,409
creditors
Payments to employees 35,500,648 - - 35,500,648
Transfer of DRRM to Trust
349,955 - - -
Fund
Interest Expense 66,157 - - 66,157
Other Expenses 1,428,778 - - 1,428,778
Total Cash Outflows 86,444,388 2,156,203 162,356 88,412,992
Net Cash Flows from
(1,745,535) 1,181,197 187,901 (26,483)
Operating Activities
Cash Flows from Investing
Activities
Cash Inflows
Proceeds from Sale of
- - - -
Investment Property
Proceeds from Sale/Disposal
- - - -
of Property, Plant and
Equipment
Proceeds from Sale of Non-
- - - -
Current Investments
Collection of Principal on
- - - -
loans to other entities
Total Cash Inflows - - - -
Cash Outflows
73
Purchase/Construction of
- - - -
Investment Property
Purchase/Construction of
Property, Plant and - - - -
Equipment
Investment - - - -
Purchase of Bearer Biological
- - - -
Assets
Purchase of Intangible Assets - - - -
Grant of Loans
Total Cash Outflows - - - -
Net Cash Flows from
- - - -
Investing Activities
Cash Flows from Financing
Activities
Cash Inflows
Proceeds from Issuance of
- - - -
Bonds
Proceeds from Loans - - - -
Total Cash Inflows - - - -
Cash Outflows
Payment of Long-Term
- - - -
Liabilities
Retirement/Redemption of
- - - -
debt securities
Payment of loan amortization 210,526 - - 210,526
Total Cash Outflows 210,526 - - 210,526
Net Cash Flows from
(210,526) - - (210,526)
Financing Activities
Total Cash Provided by
Operating, Investing and (1,956,062) 1,181,197 187,901 (646,806)
Financing Activities
Add: Cash at the Beginning
2,717,865 2,029,920 102,514 4,850,299
of the year
Cash Balance at the End of
₱ 761,804 ₱3,211,118 ₱290,414 ₱4,263,336
the Year

74
Appendix D
STATUS OF APPROPRIATIONS, ALLOTMENTS AND
OBLIGATIONS
Function/Program/Project/Activity Appropriation Allotment Obligation Balances

Executive Services (Mayor)
General Administration
Personal Services ₱ 5,982,058 ₱ 5,982,058 ₱ 5,982,058 ₱ -
MOOE 7,640,000 7,640,000 7,640,000 -
Capital Outlay 500,000 500,000 500,000 -
Sub-total 14,122,058 14,122,058 14,122,058 -
Sangguniang Bayan-Lesgislation
Personal Services 10,424,226 10,424,226 10,424,226 -
MOOE 3,470,000 3,470,000 3,470,000 -
Capital Outlay - - - -
Sub-total 13,894,226 13,894,226 13,894,226 -
Administrative Services (Administrator)

Personal Services 872,029 872,029 872,029 -
MOOE 455,000 455,000 455,000 -
Sub-total 1,327,029 1,327,029 1,327,029 -
Planning & Development Coordination

MOOE 950,000 950,000 950,000 -
Sub-total 2,000,954 2,000,954 2,000,954 -
Civil Registry (Civil Registrar)

MOOE 425,000 425,000 425,000 -
Sub-total 1,532,575 1,532,575 1,532,575 -
Budgeting Services (Budget Officer)

Personal Services 1,478,313. 1,478,313. 1,478,313. -
MOOE 485,984 485,984 485,984 -
Sub-total 1,964,297 1,964,297 1,964,297 -
75
Accounting Services (Accountant)
MOOE 235,000 235,000 235,000 -
Sub-total 1,309,661 1,309,661 1,309,661 -
Treasury Services (Treasurer)

MOOE 2,159,822 2,159,822 2,159,822 -
Sub-total 8,052,573 8,052,573 8,052,573 -
Assessment of Real Property (Assessor)

MOOE 215,000 215,000 215,000 -
Sub-total 1,242,216 1,242,216 1,242,216 -
Health Services (Health Officer)

MOOE 825,000 825,000 825,000 -
Sub-total 3,562,486 3,562,486 3,562,486 -
Social Welfare Services

MOOE 1,065,000 1,065,000 1,065,000 -
Sub-total 2,093,988 2,093,988 2,093,988 -
Economic Services
Agricultural Services (Agriculturist)
MOOE 2,425,000 2,425,000 2,425,000 -
Sub-total 4,416,054 4,416,054 4,416,054 -
Engineering Services
Personal Services 833,337 833,337 833,337 -
MOOE 1,205,000 1,205,000 1,205,000 -
Sub-total 2,038,337 2,038,337 2,038,337 -
Other Purposes
76
20% Development Funds 16,828,508 16,828,508 16,828,508 -
5% Gender and Development 4,207,127 4,207,127 4,207,127 -
5% MDRRM 4,207,127 4,207,127 4,207,127 -
1% LCPC 839,891 839,891 839,891 -
1% OSCA 839,891 839,891 839,891 -
Aid to BDF 20,000 20,000 20,000 -
HIV under GAD 100,500 100,500 100,500 -
Sub-total 27,043,044 27,043,044 27,043,044 -
GRAND TOTAL 84,599,498 84,599,498 84,599,498 -

77

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Republic of the Philippines

Hon. Lacson M. Lantud

Dear Mayor Lantud,

We rendered a disclaimer of opinion on the fairness presentation of the financial

We recommended the following:

2. The municipality continues to maintain deposits with the Philippine National

We have recommended to the Local Chief Executive the following:

We have recommended the following:

4. Management’s submission of copies of perfected contracts or purchase

We recommended the BAC or BAC Secretariat to submit the contracts together

5. Reporting on the Information and Publicity on Programs/Projects/Activities

a. Submit to the Audit Team the list of all on-going government

6. The auto debit made by the Philippine National Bank amounting to

We have recommended the following:

We have recommended to the Local Chief Executive to allocate properly the 5%

8. Management failed to prepare Special Education Fund Budget in violation to

We have recommended the following:

We have recommended the following:

We request that the recommended remedial measures be immediately implemented and

Very truly yours,

1. The Regional Director

2. The Regional Director

3. The Regional Director

4. The Honorable Members of Sangguniang Bayan

5. The Municipal Accountant

6. File – Supervising Auditor

7. File – Audit Team Leader

8. Soft copy – National Library

9. Soft copy – University of the Philippines Law Center

10. Soft copy – COA Commission Central Library

Agency Action Plan Reasons for

Republic of the Philippines

ANNUAL AUDIT REPORT

For the Period Ended December 31, 2017

The Municipality of Pantao-Ragat was created by virtue of Executive Order No.

The Auditee’s results of income and expenses amounted to ₱ 227,413, which

In CY 2017, the Municipality of Pantao-Ragat generated total revenue of

The municipality spent ₱ 47,082,326 on General Public Services, ₱4,804,918 on

D. SCOPE OF THE AUDIT

The Audit Team rendered a disclaimer of opinion on the fairness of the

F. SIGNIFICANT FINDINGS AND RECOMMENDATIONS

We recommended the following:

2. The municipality continues to maintain deposits with the Philippine National

We have recommended to the Local Chief Executive the following:

4. Management’s submission of copies of perfected contracts or purchase

We recommended the BAC or BAC Secretariat to submit the contracts together

5. Reporting on the Information and Publicity on Programs/Projects/Activities

We recommended that the Local Chief Executive must be compliant to the

a. Submit to the Audit Team the list of all on-going government

6. The auto debit made by the Philippine National Bank amounting to

We have recommended the following:

We have recommended to the Local Chief Executive to allocate properly the 5%

8. Management failed to prepare Special Education Fund Budget.

We have recommended the following:

We have recommended the following:

G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’

The impact of management’s implementation on the audit recommendations serves as

INDEPENDENT AUDITOR’S REPORT

The Municipal Mayor

We have audited the accompanying combined financial statements of the Municipality of

Management’s Responsibility for the Financial Statements

Our responsibility is to express an opinion on these financial statements based on our