Annex B

INDEPENDENT AUDITOR’S REPORT

Hon. (Name)
Title (Municipal/City Mayor, Provincial Governor)
Local Government Unit

Qualified Opinion

We have audited the financial statements of Municipality of Tampakan, which comprise the statement of financial
position as at December 31, 2019, and the statement of financial performance, statement of changes in net
assets/equity, statement of cash flows and statement of comparison of budget and actual amounts for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, except for the effects of the matter described in the Basis of Qualified Opinion section of our report,
the accompanying financial statements present fairly in all material respects, the financial position of the
Municipality of Tampakan as at December 31, 2019, and its financial performance , its cash flows, and its
statement of comparison of budget and actual amounts for the year then ended in accordance with Philippine Public
Sector Accounting Standards (PPSAS).

Basis for Qualified Opinion

As discussed in Part II of this report:

1. The accuracy and validity of Cash in Bank – LCCA account balance in the Statement of Financial Position
totaling P150,804,077.45 could not be ascertained due to various reconciling items amounting to P6,747,750.84
which remained to be unrecorded or unadjusted in the books of accounts as of December 31, 2019, contrary to the
provisions of Section 112 of Presidential Decree No. 1445, COA Circular No. 96-011 and of the International
Public Sector Accounting Standards (IPSAS) 1.

2. Outstanding checks totaling P 13,857,362.39 as of December 31, 2019 include checks amounting to P
67,635.00 which had been stale for more than 6 months to 46 months contrary to Section 59 of the Manual on the
New Government Accounting System (MNGAS) for LGUs, Volume I, thus casting doubt on the accuracy,
propriety and reliability of the Cash in Bank and related accounts of the Municipality.

3. The accuracy and reliability of the Property, Plant and Equipment account amounting to P225,562,179.73
(net of depreciation) cannot be ascertained due to (a) incomplete conduct of physical inventory count and non-
reconciliation of the partial Report on the Physical Count of PPE (RPCPPE) with the accounting records resulting
to a discrepancy amounting to P166,909,707.53; (b) inclusion of unserviceable properties in the RPCPPE
amounting to P236,830.00; and (c) erroneous dropping of fully depreciated assets from the books of accounts
totaling P1,064,865.20 (net of depreciation).
4. Erroneous dropping of fully depreciated assets from the books of account amounting to P1,064,865.20 (net
of depreciation) without complying the procedural and documentary requirements pertaining to disposal of
properties.

5. Interest expense and interest payable amounting to P615,481.92 was understated due to non-observance of
accrual basis of accounting.

We conduct our audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the agency in accordance with the ethical
requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in
sufficient and appropriate to provide a basis for our qualified opinion.

Key Audit Matters

Except for the matter described in the Basis for Qualified Opinion section, we have determined that there are no
other key audit matters to communicate in our report.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance
with 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 misstatement, whether due to
fraud or error.

Those charged with governance are responsible for overseeing the LGUs financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not guarantee that an audit conducted in accordance with
ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.

COMMISSION ON AUDIT

By:

Authorized Signatory

Date