Republic of the Philippines

COMMISSION ON AUDIT
Local Government Sector
Audit Group C, Team No. 22, Province of Zamboanga del Sur
Molave, Zamboanga del Sur

INDEPENDENT AUDITOR’S REPORT

We have audited the accompanying Condensed Balance Sheets of Barangay Lower

Dimalinao, Municipality of Molave, Province of Zamboanga del Sur, as of December 31, 2012,
2011 and 2010 and the related Condensed Statements of Income and Expenses and Cash Flows
for the years then ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on our audit.

Except as stated in the following paragraph, we conducted our audit in accordance with
laws, COA, and INTOSAI standards and applicable generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. Our audit includes examining on a test
basis, evidence supporting the amount and disclosures in the financial statements. Our audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statements presentation. We believe that our audit
provides reasonable basis for our opinion.

As discussed in the Findings and Recommendations, validity and accuracy of the Cash in
Bank account of P31,007.33 is doubtful since reconciling items of P5,623.00 is long outstanding
in the books; the existence, condition and accuracy of the Property, Plant and Equipment
accounts of P694,477.49 cannot be ascertained since physical inventory was not conducted even
though depreciation expense for subject Property, Plant and Equipment accounts were already
provided. Further, the Barangay exceeded the 55% PS limitations by P36,295.99 and did not fully
implement the projects/programs/activities under its 20% Local Development Fund and GAD
funds, depriving the barangay constituents of the benefits for which the funds are intended. The
inadequacy of its records did not permit us to apply alternative procedures to determine the
validity of these accounts.

In our opinion, except for the effects of any adjustments which might have been made on
the accounts briefly discussed in the preceding paragraph, or had existing records allowed us to
apply alternative procedures, the financial statements present fairly the financial position of
Barangay Lower Dimalinao, Municipality of Molave, Zamboanga del Sur, as of December 31,
2010, 2011 and 2012, and the results of operations for the years then ended, in accordance with
applicable laws and regulations and in conformity with the generally accepted state accounting
principles.

COMMISSION ON AUDIT
By:

MADELINE J. MAJESTRADO
State Auditor III
Audit Team Leader

May 31, 2013

1
 Republic of the Philippines
Region IX
Province of Zamboanga del Sur
Municipality of Molave

BARANGAY LOWER DIMALINAO

Statement of Management Responsibility for Financial Statements

The Management of Barangay Lower Dimalinao, Molave, Zamboanga del Sur is

responsible for all information and representation in the Balance Sheets as of December
31, 2010, 2011 and 2012 and the related Statements of Income and Expenses and
Statements of Cash Flows for the period then ended. The financial statements have been
prepared based on the certified registers and other reports prepared and submitted by the
Barangay Treasurer/Barangay Record Keeper.

In this regard management maintains a system of accounting and reporting which

provides for the necessary internal control to ensure that transactions are properly
authorized and recorded, assets are safeguarded against unauthorized use or disposition
and liabilities recognized.

MARTIN D. BLANCO, JR.

Municipal Accountant

CEFERINO U. APIAG, JR.

Punong Barangay

2
3
4
5
 NOTES TO FINANCIAL STATEMENTS

1. Agency Profile

Legal Basis of Creation

Barangay Lower Dimalinao is one of the twenty five (25) barangays comprising
the Municipality of Molave under the First Congressional District of the Province of
Zamboanga del Sur. Created long before the Subanen period, the Barangay officially
came into existence on June 14, 1949 by virtue of Republic Act 377.

It is a rural barangay approximately four (4) kms away from the Municipality,
with a population of 471 as of CY 2007 census, and with agriculture as the basic
source of livelihood of its constituents.

The following are the Officials and Employees of the Barangay as of December
31, 2012:

Hon. Ceferino U. Apiag, Jr. Punong Barangay

Hon. Rogelio A. Balaso Barangay Kagawad
Hon. Allan M. Molero Barangay Kagawad
Hon. Manuel O. Halasan, Jr. Barangay Kagawad
Hon. Sergio D. Cafe Barangay Kagawad
Hon. Vergilio P. Macahis Barangay Kagawad
Hon. Leoncio P. Cagoco Barangay Kagawad
Hon. Nelson L. Tejada Barangay Kagawad
Hon. Kathleen P. Vequiso Sanggunian Kabataan- Chairman
Bernadette O. Mira Secretary
Meriam M. Licayan Treasurer

2. Basis of Financial Statements Presentation

The financial statements were prepared in accordance with generally accepted

state accounting principles and standards.

3. Summary of Significant Accounting Policies

3.1 Plant, property and equipment are arrived at historical cost. The cost of Public
Infrastructure, such as roads, bridges and other infrastructure for general public
use, are not carried in the books.

3.2 Real property taxes are accounted following the accrual method of accounting.

3.3 Fundamental errors of prior year’s operations are corrected using the prior year’s
adjustment account while errors affecting the current year’s operation are effected
to the current year’s accounts.

6
4. Cash and other Cash Accounts

This account is broken down as follows:

2012 2011 2010

Cash in Vault P 100.00 P 100.00 P 100.00
Payroll Fund 39.00
Cash in Bank-LCCA 30,868.33 6,969.76 6,585.62
Total P 31,007.33 P 7,069.76 P 6,685.62

1. Receivable Accounts

This account is broken down as follows:

2012 2011 2010

Due from LGUs P 8,532.34 P 4,594.08 P 35,058.02
Other Receivables 981.31 981.31 981.31
Total P 9,513.65 P 5,575.39 P 36,039.33

6. Property, Plant and Equipment

This account is broken down as follows:

2012 2011 2010

Land P 57,500.00 P 57,500.00 P 57,500.00
Land Improvements 90,749.23 97,194.82 103,640.41
Office Buildings 154,445.27 162,519.65 170,594.03
Other Structures 100,978.56 113,260.72 125,542.88
Office and Equipment 29,950.00 33,100.00 36,250.00
Communication
Equipment 103,041.83 104,970.40 89,970.40
Hospital Equipment 250.00 250.00 250.00
Artesian Wells, 124,047.60 124,047.60 124,047.60
Reservoirs, Pumping
Stations and Conduits
Total P 734,998.47 P 739,003.34 P 784,035.27

Further, Other Assets account of P33,515.00 remain dormant for the past three
years.

7. Current Liabilities

This account is broken down as follows:

2012 2011 2010

7
 Due to BIR (P P (P 3,497.40)
760.81)

8. Government Equity

This account is broken down as follows:

2012 2011 2010

Government Equity, P 739,003.34 P 787,532.67 P 840,998.65
beginning
Add/Less:
Current Operations (3,244.06) (45,031.93) (53,455.98)
Prior Years Adjustments 3,497.40
Transfers to Registry
Government Equity, P 735,759.28 P 739,003.34 P 787,532.67
End

9. Income

The following are the income accounts:

2012 2011 2010

Community Tax P 3,522.57
P 1,892.25 P 5,283.63
Real Property Tax 4,009.77 4,430.28 1,885.40
Internal Revenue
Allotment 692,885.00 732,399.00 680,591.00
Clearance and
Certification Fees 5,350.00 4,500.00 2,520.00
Miscellaneous Income 4,130.00
TOTAL INCOME P 709,897.34 P 743,221.53 P 690,280.03

Further, the Barangay received Subsidy from LGU of P1,000.00 each for CY
2012 and 2011 and Subsidy from National Government Agency of P19,000.00 in CY
2010.

10. Expenses

The following are the expense accounts:

2012 2011 2010

Clothing/Uniform P P 10,000.00 P 8,500.00
Allowance
Honoraria 374,400.00 382,800.00 331,800.00
Cash Gift 27,500.00 65,000.00
Year-end bonuses /
Other Benefits 34,409.00
8
PHILHEALTH 27,000.00 27,300.00 28,950.00
Contributions
Terminal Leave Benefits 25,000.00 33,938.21 31,409.00
Total Personal Services P 426,400.00 P 81,538.21 P 500,068.00
Travelling Expenses- P 57,005.00 P 95,448.00 P 79,035.27
Local
Training Expenses 20,300.00 38,400.00 453.00
Office Supplies 4,995.80 5,629.80 3,306.43
Expenses
Food Supplies Expenses 2,379.00
Drugs and Medicines 4,984.20
Expense
Gasoline, Oil, and
Lubricants Expense 90.00
Electricity Expenses 1,043.32 2,627.58 870.98
Membership Dues &
Contribution to
Organization 5,840.00 3,810.97 5,119.00
Auditing Services 4,700.00 2,200.00 14,000.00
Repairs and
Maintenance-Office 27,000.00 55,267.50 5,600.00
Bldg
Repairs and
Maintenance- School 5,000.00
Buildings
Repairs and
Maintenance- Hospitals 27,555.00
and Health Center
Repairs and
Maintenance-Roads, 35,900.00
High. And Bridges 10,000.00
Repairs and
Maintenance- Irrigation, 29,990.50
Canals
Fidelity Bond Premiums 4,866.00 4,995.07
Depreciation-Land
Improvement 6,445.59 6,445.59 3,786.09
Depreciation-Office 8,074.38 8,074.38 2,824.18
Bldgs.
Depreciation-Other
Structures 12,282.16 12,282.16 12,282.16
Depreciation- Office
Equipment 3,150.00 3,150.00 3,150.00
Depreciation-
Communication 1,928.57 7,785.90
Equipment
9
Other Maintenance &
Operating Expenses 87,651.08 64,400.00 46,000.00
Total MOOE P 287,741.40 P 307,715.25 P 252,668.01
Donations 10,000.00
TOTAL Operating
Expenses P 714,141.40 P 789,253.46 P 762,736.01

10
 PART II

FINDINGS AND RECOMMENDATIONS

11
 Audit of accounts, transactions and procedures of Barangay Lower Dimalinao,
Municipality of Molave, Province of Zamboanga del Sur for the Calendar Years 2010,
2011, and 2012 showed the following observations, which may affect the fair
presentation of accounts in the Barangays’ financial statements if not corrected and/or
adjusted:

Financial and Compliance

1. The correctness and validity of Cash in Bank account totaling to P30,868.33

cannot be ascertained since reconciling items of P5,623.00 were outstanding
in the books rendering the correctness of the Cash In Bank account
doubtful.

Definition of terms in Chapter VI, Trainee’s Manual on Local Government

Accounting states that:

“Reconciliation from the accounting point of view is the process of

bringing into agreement two separate but related set of books.

Bank Reconciliation Statement is a statement which brings into

agreement the cash balance per books of the agency and cash balance per
bank statement issued by the bank.”

Further, it also states:

“… differences between the balances shown in the bank statement

and those in the LGUs books may not necessarily be caused by
irregularities but by items which need to be adjusted, …

Xxx

The adjustments are necessary to bring the cash in bank to its

correct balance.”

. Verification of bank reconciliation statements showed the following reconciling

items that are long outstanding and/or not adjusted/recorded in the books creating doubts
on the correctness and accuracy of the cash in bank balance as of December 31, 2012:

Bank Debit Memo (480.00)

Bank Credit Memo 6,103.00
Net Amount 5,623.00
======

12
Recommendation

Make a representation with the Municipal Accountant for the accounting

personnel in-charge in the books of the barangay to exert extra effort to look into the
status of the reconciling items, both in the book and bank accounts and prepare the
necessary analysis so as to have a correct basis for the correction and/or adjustment of
accounts.

Management Comment

Recommendation will be implemented as required.

2. The existence, condition and validity of the Property, Plant and Equipment
totaling to P694,477.49 cannot be ascertained due to the failure of the
barangay to conduct physical inventory of properties as required under the
pertinent provisions of the Systems and Procedures Manual on the
Management of Barangay Funds and Property.

Pertinent provisions of the Systems and Procedures Manual on the Management

of Barangay Funds and property provides that-

“a. A physical inventory of all barangay property shall be conducted at

least once a year and the result on the physical inventory shall be
reported in the Report on the Physical Count of Property, Plant and
Equipment (RPCPPE);

b. A Committee headed by the PB or his authorized representative shall

conduct the physical count of PPE owned by the barangay;

c. The report, approved by the PB, shall be submitted to the BRK and the
City/Municipal Accountant for reconciliation with the recorded PPE;

d. Any unrecorded PPE shall be booked up at appraised cost; and

e. Any unaccounted PPE shall be verified and in case of loss, the AO

shall be held accountable.”

For the past three years, the barangay officials failed to conduct the required
physical inventory of the following barangay’s assets totaling to P694,477.49 as of
December 31, 2012, causing unreconciled records between the barangay and the
accounting and an unrealistic financial statements considering that the existence,
condition and accuracy of the property, plant and equipment cannot be ascertained:

Name of Property, Plant and Equipment Amount

Land P 57,500.00
Land Improvements 90,749.23

13
 Office Buildings 154,445.27
Other Structures 100,978.56
Office Equipment 29,950.00
Communication Equipment 103,041.83
Firefighting Equipment and Accessories 250.00
Artesian Wells, Reservoirs, Pumping Stations and 124,047.60
Conduits
Other Assets 33,515.00
Total P 694,477.49

Recommendation

Require the conduct of an annual physical count of the properties of the barangay.
A committee shall be created for that purpose. Upon completion of the physical inventory
taking, the required Report on the Physical Count of Property, Plant and Equipment shall
be prepared and submitted to the Municipal Accountant for reconciliation with
accounting records. Any difference noted in the process shall be recorded and/or
accounted for to come up with a realistic financial statement.

Management Comment

Recommendation will be implemented as required. Physical inventory will be

conducted in coordination with the Municipal Accountant to facilitate reconciliation with
accounting records.

3. Legality, validity and propriety of reimbursements of P10,664.95 are

doubtful since vouchers paid lacks the necessary supporting documents as
required under Section 4 of Presidential Decree No 1445.

The fundamental principles governing the financial and operations of any

government agency as stated in Section 4 of PD 1445 provide, among others, that:

“(2) Claims against government funds shall be supported with complete

documentation.”

Post-audit of CY 2012transactions showed that payments and reimbursements for

various petty expenses were paid without the necessary supporting documents as required
under existing rules and regulations rendering the legality, validity and propriety of such
transactions doubtful.

JEV/DV Check Date Particulars Amount Amount

No. No. Suspended
12-03-07 548228 3/20/2012 Meriam M. Licayan, 2,000.00 2,000.00
Cash Advance for
General Assembly

14
 Expenses, 3/24/2012
(with Liquidation
Report)
12-04- 548234 4/13/2012 Romeo G. Baluma – 50 1,500.00 1,500.00
013 pcs PPE Stickers
12-08- 548260 8/16/2012 MMLicayan - 3,495.80 3,495.80
040 Reimbursement of
various expenses
12-09- 548265 9/20/2012 - do - 681.15 681.15
045
12-10- 548271 10/12/201 - do - 988.00 988.00
051 2
12-10- 548273 10/22/201 Meriam M. Licayan, 2,000.00 2,000.00
053 2 Cash Advance for
General Assembly
Expenses, 10/29/2012
(with Liquidation
Report)
Total 10,664.95 10,664.95

The deficiencies noted in the supporting documents include the following:

1. There were no Purchase Request and Inspection and Acceptance Report for
subject procurements; and

2. Paid disbursement vouchers and their supporting documents were not stamped
“PAID” in violation of COA Circular No. 92-389 dated November 3, 1992.

The absence of documentary evidence supporting claims exposes government

funds to misuse, loss or wastage and may subject such voucher to possible suspension
and/or disallowance in audit. This is a reiteration of prior years’ audit observation and
compliance from management is yet to be seen.

Recommendation

Require the submission of supporting documents and/or compliance of

requirements as indicated in respective voucher/payroll to facilitate proper disposition of
subject transaction documents and that vouchers and payrolls onwards be duly processed
and approved before they will be paid to facilitate proper recording in the books of
accounts and avoid possible suspension and/or disallowance in audit.

Strictly comply with the provisions of COA Circular No. 2012-001 dated June 14,
2012 which prescribes the revised guidelines and documentary requirements for common
government transactions.

15
Management Comment

Recommendation will be implemented as required.

On the Utilization of 20% Local Development Fund

4. The Barangay implemented P75,823.50 out of the programmed P138,577.00

or only 54.72% of the projects/programs/activities under its 20% Local
Development Fund depriving the barangay constituents of the benefits for
which the fund is intended.

DILG-DBM Joint Memorandum Circular No. 2011-1 dated April 11, 2011
amending DILG-DBM Joint Memorandum Circular No. 1 dated September 20, 2005
provide guidelines on the appropriation and utilization of no less than twenty percent
(20%) of the Internal Revenue Allotment (IRA) for development projects to enhance
transparency and accountability of local government units in undertaking development
projects and include projects in addressing and responding to natural and manmade
disasters and calamities.

The following schedule shows that only P75,823.50 or only 54.72% out of the
programmed P138,577.00 was implemented during the year, depriving the barangay
constituents the desirable socio-economic development and environmental outcomes for
which the 20% of the IRA is intended for:

Particulars Amount
Available Utilized Balance
Projects for Implementation:
1. Improvement of Multi-Purpose P 37,800.00 P 37,000.00 P 800.00
Hall
2. Installation of Street Light in 46,777.00 46,777.00
Spillway
3. Rehabilitation of 3 Purok 9,000.00 8,833.00 167.00
Center
4. Rehabilitation of Drainage 20,000.00 19,990.50 9.50
Canal
5. Maintenance of Barangay Road 25,000.00 10,000.00 15,000.00
Subtotal P 138,577.00 P 75,823.50 P 62,753.50
Percentage of Implementation 54.72%

Recommendation

It is required that all projects funded out of the 20% Local Development Fund
should be implemented to so that the purpose of contributing to the attainment of

16
desirable socio-economic development and environmental outcomes of the barangay will
be attained.
The guidelines as provided under DILG-DBM Joint Memorandum Circular No.
2011-1 dated April 11, 2011 amending DILG-DBM Joint Memorandum Circular No. 1
dated September 20, 2005 should be followed.

Management Comment

Recommendation will be implemented as required.

On the Implementation of the SK Fund

5. The Sangguniang Kabataan implemented P66,180.00 out of the programmed

P72,000.00or 92% of the projects/programs/activities under its fund giving
the barangay youths the benefits for which the fund is intended.

Section 329 of the Local Government Code of 1991 partly provides:

“x xx. Ten percent (10%) of the general fund of the barangay shall
be set aside for the sangguniang kabataan.”

Records showed that P66,180 out of the programmed P72,000.00or only 92% of
the projects/programs/activities under the Sangguniang Kabataan fund was implemented
giving the barangay youths the benefits for which the fund is intended:

Particulars Amount
Available Utilized Balance
2012 Current Appropriations
Travel and Seminar 6,200.00
Youth Camp 20,000.00
20% SK Fund 1,440.00
Registration Fee 1,000.00
Feast Celebration 26,040.00
Araw ng SK 11,500.00
Total P72,000.00 P66,180.00 P5,820.00
Percentage of Implementation 92%

Implementing the projects as programmed annually gaved the members of the

Sangguniang Kabataan the benefits the law is intended for, that is, providing funds to be
used for programs designed to enhance the social, political, economic, cultural,
intellectual, moral, spiritual, and physical development of the youth.

Recommendation

The Barangay should continue implementing the projects appropriated out of the
10% SK Funds intended for the welfare of the young inhabitants of the barangay so as to

17
train the future leaders of the Barangay and fulfill the mandate of the Philippine
Constitution to “inculcate in the youth patriotism and nationalism, and encourage their
involvement in public and civic affairs.” (Section 13, Article 11, 1987 Constitution)

Management Comment

Recommendation will be implemented as required.

On the Implementation of Gender and Development (GAD) Program

6. The Barangay implemented P45,833.00, which is only 74.76% of its GAD budget
of P61,300.00 depriving its barangay officials and its constituents the benefits for
which the program is intended.

The Barangay complied with the Revised Gender and Development Code of the
Philippines implementing the mandatory appropriation of 5% of the Barangay’s annual
total budget appropriation for the implementation of the GAD activities, pursuant to
Republic Act No. 7192 and DILG-DBM-NCRFW Joint Circular No. 2012-01.

However, only P45,833.00 or 74.76% was implemented out of its budgeted

amount of P61,300.00, defeating the purpose for which the GAD Program is intended,
which is, gender-responsive governance, protection and fulfillment of women’s human
rights and promotion of women’s economic empowerment; and depriving the barangay
officials and its constituents the benefits which could have been derived therefrom:

Barangay’s 5% of Actual % of Actual GAD % to

Total Barangay’s GAD GAD Budget to Expenditures Actual
Appropriation Total Budget Barangay’s GAD
Appropriations Total Budget
Appropriations

P 756,339.25 P 37,816.96 P61,300.00 162.10% P 45,833.00 74.76%

Recommendation

Require the proper implementation of the Gender and Development (GAD)

program of the Barangay so as to ensure the implementation of the Magna Carta of
Women as embodied in RA 9710 and achieve its guiding principle of affirming “the role
of women in nation building and ensures the substantive equality of women and men.”

Management Comment

Recommendation will be implemented as required.

18
Compliance on 55% PS Limitation

7. Expenditures for Personal Services exceeded the 55% limitations for

Personal Services by P36,295.99 in violation of Section 331 (b) of R.A. 7160
otherwise known as the “Local Government Code of 1991.”

Section 331 (b) provides that:

“xxx The total annual appropriation for Personal Services of a

barangay for one (1) year, shall not exceed 55% of the total of the local
income actually realized from local sources during the next preceding
fiscal year. Xxx”

Review and audit of financial statements and transactions of the barangay

disclosed that expenses incurred for personal services in CY 2012 amounted to
P426,400.00, which exceeded the Personal Services limitation by P36,295.99 as shown
in the computation below:
Actual income for 2010 P 709,280.03
Budgetary Limitation x 55%
Amount of Allowable PS P 390,104.01
CY 2012 Expenses for Personal Services 426,400.00
Allowable (Excess)PS Expense (P 36,295.99)

The PS limitation is provided to ensure that LGUs shall have a balance budget
and reasonable amounts/funds are allocated to the delivery of basic services and
development projects.

Since the PS limitation is already exceeded, the Barangay can no longer incur
additional PS costs like adoption of higher salary schedule, hiring of additional personnel,
creation of new positions, etc.

Recommendation

Require the strict compliance of the budgetary limitations as provided for under
Sec. 331(b) of R.A. 7160. The Barangay Chairman and the Barangay Treasurer, in
coordination with the Municipal Accountant should institute a strong internal control
over the barangay transactions to ensure that the Barangay shall have a balance budget
and that funds are allocated to the delivery of basic services and development projects.

Management Comment

Recommendation will be implemented as required.

19
Compliance With Tax Laws

The Barangay complied with the requirements of law on withholding of tax under
Executive Order No. 651 as implemented by BIR Revenue Regulation No. 1-87 dated
April 2, 1987 for income taxes and BIR Revenue Regulation No. 10-93 dated June 16,
1993 for Value Added Tax (VAT), as shown in the balances below:

2010 2011 2012

Beginning Balance (P 3,818.18) (P 3,497.40) P 0.00
Add: Taxes withheld during the year 4,049.00 8,612.49 1,322.93
Subtotal 230.82 5,115.09 1,322.93
Less: Taxes remitted during the year 3,728.22 5,115.09 2,083.74
Ending Balance (P 3,497.40) P 0.00 (P 760.81)

On the Implementation of the Local Disaster Risk Reduction Management Fund

(LDRRMF)

The LDRRMF represents the amount set aside by the LGU to support its disaster
risk management activities pursuant to RA No. 10121 otherwise known as the
“Philippine Disaster Risk Reduction and management Act of 2010.” The amount
available and utilized during the year totaled P34,642.75and P7,200.00, respectively,
broken down as follows:

Particulars Amount
Available Utilized Balance
Current Year Appropriation
Quick Response Fund (QRF) P P P
Mitigation Fund (MF)
MOOE 7,200.00
Capital Outlay
Total P 34,642.75 P 7,200.00 P 27,442.75
Continuing Appropriation
Special Trust Fund
Total P 34,642.75 P 7,200.00 P 27,442.75

20
 PART III

STATUS OF IMPLEMENTATION OF PRIOR

YEARS’ AUDIT RECOMMENDATIONS

21
 Out of the seven (7) audit recommendations contained in our CY 2010 Annual
Audit Report for Barangays, which pertains to the transactions of the Barangay for CY
2007, 2008 and 2009, five (5) were implemented, one (1) was partially implemented and
one (1) remained unimplemented, as shown below:

Audit Finding Recommendation Ref. Manage Status of Reason for

ment Implementa- Partial/Non
Action tion Implemen-
tation
1. The The Municipal AAR Implemented
Municipal Accountant should 2009
Accountant failed to reconcile monthly Page
prepare monthly the bank balances 15
Bank Reconciliation with the Cash in
Statement of the Bank balances of
Barangay the books of the
Depository account barangays and
contrary to should prepare
Paragraph 3.2 and monthly the bank
3.4 of COA Circular reconciliation
No. 96-011 dated statements.
October 2, 1996, Reconciling items
casting doubt on the should be recorded
validity of the Cash immediately.
in Bank account.
2. The existence, The AAR Not The
condition and Punong Barangay 2009 Implemented barangay
accuracy of the shall require an Page still needs
reported Property, annual physical 16 (Reiterated assistance
Plant and Equipment count of the as Finding in the
totaling P686,527.65 properties of the No. 3 in this actual
as of December 31, barangay. A report) conduct of
2008 cannot be committee shall be physical
ascertained due to created for the inventory
the failure of the purpose. Upon taking
barangay to conduct completion of the
physical inventory physical inventory
of properties as taking, the
required under the required Report on
pertinent provisions the Physical Count
of the Systems and of Property, Plant
Procedures Manual and Equipment
on the Management shall be prepared
of Barangay Funds and submitted to
and Property. the Municipal
Accountant for

22
 reconciliation with
accounting
records. Any
difference noted in
the process shall
be recorded and/or
accounted for to
come up with a
realistic financial
statement.
3. Additional cash Require the AAR Implemented
gifts and mid-year Municipal Budget 2009
bonus were given to Officer to strictly Page
the barangay review the 17
officials for the year, supplemental
though expenses for budgets of the
Personal Services barangays and to
exceeded the 55% return to the
limitation in Punong Barangays
violation to for revision and
paragraph d, Article adjustment if the
423 of the budget failed to
Implementing Rules observe the
and Regulations of budgetary
the Local limitations. Stop
government code of the granting of
1991 (RA 7160). additional cash
Thus, may result to gifts and mid-year
possible suspension bonus if the
and/or disallowance amount already
in the post-audit of exceeds the 55%
accounts. PS limitation.
Moreover, the
barangay treasurer
should strictly
limit
disbursements to
what is legally
earmarked and
funded.
4. Travel expenses Stop paying AAR Implemented
were incurred in transactions 2009
excess of without approved Page
appropriations due appropriations as 18
to the frequent and mandated under
excessive travels Section 4 of

23
made by the Presidential
barangay officials Decree No. 1445
which violates to avoid
Section 4 of disallowance in the
Presidential Decree post-audit of
N0o. 1445 and COA accounts. Further,
Circular No. 85-55 avoid frequent and
A, thus may result to unnecessary
suspension or travels so that
disallowance in tangible projects
post-audit of may be
accounts. implemented and
that they will have
more time in
attending to the
needs of the
constituents.
5. The Barangay Direct the CY Implemented
Record Keeper Barangay Record 2009
failed to prepare and Keeper to prepare ARB
submit Registry of the Registry of Page
Appropriations and Appropriations 19
Commitments and Commitments
(RAC) as required as required under
under Volume I of the Manual on the
the Systems and Management of
Procedures Manual Barangay Funds
on the Management and Property. At
of Barangay Funds year end, the BRK
and Property, thus shall certify
resulted to a correctness of the
negative net income entries in the
at the end of the year Registries and
due to uncontrolled shall prepare the
expenditures. Status of
Appropriations,
Commitments and
Balances (SACB)
for Current
Legislative
Appropriations
and Continuing
Appropriations
based on the RACs
for the five funds.
6. Legality, validity Require the CY Partially There were

24
and propriety of Barangay 2009 Implemented still
transactions are Treasurer to ARB reimburse
doubtful since there review all the Page ments for
were vouchers and transactions and 20 petty
payrolls paid attached the expenses
without the necessary that were
necessary supporting supporting paid with
documents and duly documents in the incomplete
certified by vouchers and documenta
Barangay Officials payrolls to make tion (with
as required under the transactions Finding
Section 4 of valid, legal and No. 3 in
Presidential Decree proper to avoid this report)
No. 1445. possible
suspensions and/or
disallowances in
audit.
7. Submission of Require the 2009 Implemented
trial balances, Barangay ARB
Financial Statements Treasurer to Page
and paid transactions submit all 21
for the period ended vouchers, paid
December 31, 2007 payrolls and
were not made on supporting papers
time as prescribed in to the Municipal
Page 42 and 52 of Accountant within
the Accounting fifteen (15) days
System Manual for after the
the Barangay, completion of the
depriving the users transactions for
of the reports for recording in the
immediate review books of accounts’
and corrections of
erroneous The Municipal
transactions. Accountant shall
record the
transactions in the
General Journal
and post to the
General/Subsidiary
Ledgers for the
given period and
submit to COA
Auditor within ten
days from date of
receipt of such

25
transactions.

The Municipal
Accountant shall
prepare and submit
monthly trial
balances within 30
days after the close
of each month and
the Year End Pre
and Post-closing
trial balances
together with the
financial
statements on or
before February 14
of each year.

26