Republic of the Philippines

COMMISSION ON AUDIT
Audit Group E, LGS – Isabela Province II
Provincial Satellite Auditing Office
Ilagan City, Isabela

29 April 2021

Honorable JOELLE MATHEA S. PANGANIBAN

Municipal Mayor
Angadanan, Isabela

Dear Mayor Panganiban:

Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43

(2) of Presidential Decree No. 1445, otherwise known as the “Government Auditing
Code of the Philippines,” we are pleased to transmit the report of our Auditor on the
results of her audit of the accounts and operations of the Municipality of Angadanan,
Isabela, for the year ended December 31, 2020.

The audit was conducted to ascertain the reliability of financial reports and the
adequacy of the books of accounts in order to express an opinion on the fairness of
presentation of the Agency’s financial statements. On a test basis, it also included a
review on the propriety of disbursements and other financial transactions to determine
whether or not the transactions were made in accordance with existing laws, rules and
regulations.

Our audit was conducted in accordance with International Standards of Supreme

Audit Institutions (ISSAIs) and we believe that it provides reasonable bases for the
results of audit.

The report consists of four parts: Part I – Audited Financial Statements, Part II –
Observations and Recommendations, Part III – Status of Implementation of Prior Years’
Audit Recommendations and Part IV – Annexes. The details of the Observations are
discussed in the Observations and Recommendations portion. Management comments
obtained in writing were included in the report, where appropriate.

In her report, the Auditor issued a Qualified Opinion on the fairness of

presentation of the financial statements of the Municipality and enumerated the following
significant audit observations:

1. The accuracy and reliability of the Cash in Bank – Local Currency, Current
Account amounting to P52,396,381.49 as at December 31, 2020 cannot be fully
established due to (a) unreconciled balances and inconsistencies in the books, (b)
 creation of new bank account with incomplete details and basis, and (c)
unreverted stale checks at year-end, thereby the cash accounts may not be fairly
presented in the financial statements inconsistent with International Public Sector
Accounting Standards (IPSAS) 1 and Section 112 of Presidential Decree (PD) No.
1445.

We recommended the Management to ensure that:

a) Cash balances in the bank accounts of the LGU are properly accounted and
reconciled with the book balances;

b) Stale checks as well as unreleased checks are properly adjusted as at year-end;

c) All adjustments against the cash accounts shall be supported with proper
documents;

d) Reconciliation of reports and records between the Accounting, Budget and

Treasury Offices are undertaken regularly; and

e) Cash accounts are monitored consistently and should be presented fairly in

accordance with IPSAS 1 and other accounting rules and regulations.

2. Unreconciled variances between the books and the Report on Physical Count of
Property, Plant and Equipment (RPCPPE) amounting to ₱14,208,507.89 were
observed due to non-compliance with Sections 266 and 269 of the Government
Accounting Manual for Local Government Units, Volume I which cast doubts on
the existence, propriety and correctness of the affected PPE account balances
reported in the financial statements.

We recommended the Municipal Mayor to require both the Supply Office and the
Accounting Office to reconcile the results of the inventory count with the
accounting records, effect proper adjustments in their respective records and
reports and thereafter submit reconciled records and reports between both offices.

3. The two hundred seventy-two (272) unreleased commercial checks totaling

P8,831,493.99 as at December 31, 2020 were not restored to cash and liability
accounts inconsistent with Section 352 of the Government Accounting Manual
(GAM) for Local Government Units (LGUs), Volume I, thus, misstating the
affected accounts.

We recommended that the Municipal Mayor require:

a) The Municipal Treasurer to prepare a Schedule of Unreleased Commercial

Checks particularly at the end of the year and provide a copy to the
Accounting Office; and

b) The Municipal Accountant to prepare Journal Entry Voucher (JEV) for the
adjustments of the affected accounts at the end of the year and thereafter, for
 the ensuing year, another JV shall be drawn to reverse the previous entries
made and recognize the availability of the checks for release.
4. The accuracy, validity and fair presentation of the Real Property Tax (RPT) and
Special Education Tax (SET) Receivable accounts totaling ₱4,379,670.56 as at
December 31, 2020 cannot be fully established and may be misstated due to
incomplete basis and supporting documents for all the current and delinquent
accounts inconsistent with Section 246 of RA No. 7160 and Section 42, Volume I
of the Government Accounting Manual (GAM) for Local Government Units
(LGUs).

We recommended that the Municipal Mayor require:

a) The Municipal Treasurer to furnish the Municipal Accountant with certified

list of taxpayers with stated amount due and collectibles which would be the
basis of the latter to set-up RPT/SET receivables at the beginning of the
accounting period;

b) Both the Municipal Treasurer and the Municipal Accountant ensure that all
due and demandable taxes be accounted properly in their own records and any
delinquent accounts be continuously reported in the books unless
subsequently settled; and

c) The concerned officials adhere strictly to the above-stated law and rules.

5. The unexpended/unobligated balances and other receipts for Local Disaster Risk
Reduction and Management Funds (LDRRMF) totaling P3,197,001.11 were not
transferred to the Special Trust Fund under the account “Trust Liability-DRRM”
in the Trust Fund books inconsistent with COA Circular No. 2012-002 dated
September 12, 2012 and Government Accounting Manual (GAM) for Local
Government Units (LGUs), thus misstating the financial statements.

We recommended that management cause the transfer of the

unexpended/unobligated balances totaling P3,197,001.11 to the Special Trust
Fund under the account “Trust Liability-DRRM” and strictly comply with the
funding requirements and disclosure of LDRRMF under COA Circular No. 2012-
002 and GAM for LGUs.

6. Long outstanding receivables amounting to P2,779,665.23 should be validated

and verified by the Agency in accordance with COA Circular No. 2016-005 dated
December 19, 2016 in order to establish its existence and validity and to achieve
fair presentation of the affected accounts in the Financial Statements.

We recommended the Management to undertake the above-procedures and

validate the existence of the receivables before filing a written request for
authority to write-off the accounts in compliance with COA Circular No. 2016-
005 dated December 19, 2016.
7. Reasonableness of the amounts of burial, financial assistance and other donations
amounting to P4,971,251.59 cannot be fully established in the absence of specific
guidelines and procedures for the grant inconsistent with Section 124 of
Presidential Decree (PD) No. 1445, Sections 447 and 483 of RA No. 7160.

We recommended that the Management, through the Municipal Social Welfare

and Development Officer and the Sangguniang Bayan formulate their own
specific guidelines and procedures for the grant and payment of a fair, just and
equitable amount of donations with full deliberation on the social and living
conditions of recipients.

8. Accounting and reporting guidelines for the Local Disaster Risk Reduction and
Management Funds (LDRRMF) amounting to P12,580,551.90 were not
consistently complied by the management, which affected the accuracy, reliability
and fair presentation of LDRRMF accounts in the financial statements.

We recommended the Management of the following courses of action:

a) The unexpended balances of LDRRMF as well as the other receipts of funds

should be transferred and established as Special Trust Funds in the Trust
Liabilities-DRRMF in the Trust Fund books;

b) Proper adjustments both in the books be made to reflect the accurate balances
of the LDRRMF as at December 31, 2020;

c) Gather and submit for proper evaluation in audit the summary/list of

donations received and distributed with complete documents; and

d) All concerned officials comply with the aforementioned laws, rules and
regulations.

9. Collection of repayments under Sustainable Livelihood Program (SLP) was not

undertaken in accordance with DSWD Memorandum Circular No. 13, series of
2015 and as revised by DSWD Memorandum Circular No. 22, series of 2019,
thus the objective of establishing a community-based credit and savings facility
may not be optimally attained, hence depriving intended recipients of its
immediate benefits.

We recommended that the Municipal Mayor require both the Municipal Social
Welfare and Development Officer and the Municipal Treasurer to:

a) Submit Fund Utilization Report showing how the funds were utilized; and

b) Comply strictly with the specific guidelines on the grant, implementation and
any repayments required under DSWD Memorandum Circular No. 22, series
of 2019.
 The other findings and recommendations, as well as the status of prior year’s
audit findings and recommendations are presented in Parts II and III of the report.
We request the implementation of the recommendations contained in the report
and we will appreciate being informed of the action(s) taken thereon by submitting the
duly accomplished attached Agency Action Plan and Status of Implementation (AAPSI)
form, within sixty (60) days from receipt hereof consistent with Section 89 of Republic
Act No. 11465, otherwise known as the General Appropriations Act of 2020.

We acknowledge the cooperation extended to the Audit Team by the Officials and
Staff of that Municipality, thus facilitating the conduct of audit and submission of this
report.

Very truly yours,

For the Commission on Audit:

MENJORIE MARK O. DICLAS

State Auditor V
Supervising Auditor

Cc: The Director, DILG, Regional Office No. II, Tuguegarao City
The Director, BLGF, Regional Office No. II, Tuguegarao City
The Director, DBM, Regional Office No. II, Tuguegarao City
The Secretary, Sangguniang Bayan, Municipality of Angadanan, Isabela
 The National Library (soft copy)
UP Law Center (soft copy)
COA Commission Central Library (soft copy)

Municipality of Angadanan
AGENCY ACTION PLAN and STATUS OF IMPLEMENTATION
Audit Observations and Recommendations
For the Calendar Year 2020
As of ___________

Ref Audit Audit Agency Action Plan Status of Reason for Action
Observa Recom Action Person/Dept. Target Implemen- Partial/Delay/Non Taken/Act
-tions menda- Plan Responsible Implementati tation -Implementation, ion to be
tions on Date if applicable taken
From To

Agency sign-off:

______________________________ ___________
Name and Position of Agency Officer Date

Note: Status of Implementation may either be (a) Fully Implemented, (b) On-going, (c)
Not Implemented, (d) Partially Implemented, or (e) Delayed
 Republic of the Philippines
COMMISSION ON AUDIT
Audit Group E, LGS – Isabela Province II
Satellite Auditing Office
Ilagan City, Isabela

29 April 2021

Honorable DIOSDADO S. SIQUIAN

Municipal Vice Mayor and Presiding Officer
Sangguniang Bayan
Angadanan, Isabela

Dear Vice Mayor Siquian:

Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43

(2) of Presidential Decree No. 1445, otherwise known as the “Government Auditing
Code of the Philippines,” we are pleased to transmit the report of our Auditor on the
results of her audit of the accounts and operations of the Municipality of Angadanan,
Isabela, for the year ended December 31, 2020.

The audit was conducted to ascertain the reliability of financial reports and the
adequacy of the books of accounts in order to express an opinion on the fairness of
presentation of the Agency’s financial statements. On a test basis, it also included a
review on the propriety of disbursements and other financial transactions to determine
whether or not the transactions were made in accordance with existing laws, rules and
regulations.

Our audit was conducted in accordance with International Standards of Supreme

Audit Institutions (ISSAIs) and we believe that it provides reasonable bases for the
results of audit.

The report consists of four parts: Part I – Audited Financial Statements, Part II –
Observations and Recommendations, Part III – Status of Implementation of Prior Years’
Audit Recommendations and Part IV – Annexes. The details of the Observations are
discussed in the Observations and Recommendations portion. Management comments
obtained in writing were included in the report, where appropriate.

In her report, the Auditor issued a Qualified Opinion on the fairness of

presentation of the financial statements of the Municipality and enumerated the following
significant audit observations:

1. The accuracy and reliability of the Cash in Bank – Local Currency, Current
Account amounting to P52,396,381.49 as at December 31, 2020 cannot be fully
 established due to (a) unreconciled balances and inconsistencies in the books, (b)
creation of new bank account with incomplete details and basis, and (c)
unreverted stale checks at year-end, thereby the cash accounts may not be fairly
presented in the financial statements inconsistent with International Public Sector
Accounting Standards (IPSAS) 1 and Section 112 of Presidential Decree (PD) No.
1445.

We recommended the Management to ensure that:

a) Cash balances in the bank accounts of the LGU are properly accounted and
reconciled with the book balances;

b) Stale checks as well as unreleased checks are properly adjusted as at year-end;

c) All adjustments against the cash accounts shall be supported with proper
documents;

d) Reconciliation of reports and records between the Accounting, Budget and

Treasury Offices are undertaken regularly; and

e) Cash accounts are monitored consistently and should be presented fairly in

accordance with IPSAS 1 and other accounting rules and regulations.

2. Unreconciled variances between the books and the Report on Physical Count of
Property, Plant and Equipment (RPCPPE) amounting to ₱14,208,507.89 were
observed due to non-compliance with Sections 266 and 269 of the Government
Accounting Manual for Local Government Units, Volume I which cast doubts on
the existence, propriety and correctness of the affected PPE account balances
reported in the financial statements.

We recommended the Municipal Mayor to require both the Supply Office and the
Accounting Office to reconcile the results of the inventory count with the
accounting records, effect proper adjustments in their respective records and
reports and thereafter submit reconciled records and reports between both offices.

3. The two hundred seventy-two (272) unreleased commercial checks totaling

P8,831,493.99 as at December 31, 2020 were not restored to cash and liability
accounts inconsistent with Section 352 of the Government Accounting Manual
(GAM) for Local Government Units (LGUs), Volume I, thus, misstating the
affected accounts.

We recommended that the Municipal Mayor require:

a) The Municipal Treasurer to prepare a Schedule of Unreleased Commercial

Checks particularly at the end of the year and provide a copy to the
Accounting Office; and
 b) The Municipal Accountant to prepare Journal Entry Voucher (JEV) for the
adjustments of the affected accounts at the end of the year and thereafter, for
the ensuing year, another JV shall be drawn to reverse the previous entries
made and recognize the availability of the checks for release.

4. The accuracy, validity and fair presentation of the Real Property Tax (RPT) and
Special Education Tax (SET) Receivable accounts totaling ₱4,379,670.56 as at
December 31, 2020 cannot be fully established and may be misstated due to
incomplete basis and supporting documents for all the current and delinquent
accounts inconsistent with Section 246 of RA No. 7160 and Section 42, Volume I
of the Government Accounting Manual (GAM) for Local Government Units
(LGUs).

We recommended that the Municipal Mayor require:

a) The Municipal Treasurer to furnish the Municipal Accountant with certified

list of taxpayers with stated amount due and collectibles which would be the
basis of the latter to set-up RPT/SET receivables at the beginning of the
accounting period;

b) Both the Municipal Treasurer and the Municipal Accountant ensure that all
due and demandable taxes be accounted properly in their own records and any
delinquent accounts be continuously reported in the books unless
subsequently settled; and

c) The concerned officials adhere strictly to the above-stated law and rules.

5. The unexpended/unobligated balances and other receipts for Local Disaster Risk
Reduction and Management Funds (LDRRMF) totaling P3,197,001.11 were not
transferred to the Special Trust Fund under the account “Trust Liability-DRRM”
in the Trust Fund books inconsistent with COA Circular No. 2012-002 dated
September 12, 2012 and Government Accounting Manual (GAM) for Local
Government Units (LGUs), thus misstating the financial statements.

We recommended that management cause the transfer of the

unexpended/unobligated balances totaling P3,197,001.11 to the Special Trust
Fund under the account “Trust Liability-DRRM” and strictly comply with the
funding requirements and disclosure of LDRRMF under COA Circular No. 2012-
002 and GAM for LGUs.

6. Long outstanding receivables amounting to P2,779,665.23 should be validated

and verified by the Agency in accordance with COA Circular No. 2016-005 dated
December 19, 2016 in order to establish its existence and validity and to achieve
fair presentation of the affected accounts in the Financial Statements.

We recommended the Management to undertake the above-procedures and

validate the existence of the receivables before filing a written request for
 authority to write-off the accounts in compliance with COA Circular No. 2016-
005 dated December 19, 2016.

7. Reasonableness of the amounts of burial, financial assistance and other donations

amounting to P4,971,251.59 cannot be fully established in the absence of specific
guidelines and procedures for the grant inconsistent with Section 124 of
Presidential Decree (PD) No. 1445, Sections 447 and 483 of RA No. 7160.

We recommended that the Management, through the Municipal Social Welfare

and Development Officer and the Sangguniang Bayan formulate their own
specific guidelines and procedures for the grant and payment of a fair, just and
equitable amount of donations with full deliberation on the social and living
conditions of recipients.

8. Accounting and reporting guidelines for the Local Disaster Risk Reduction and
Management Funds (LDRRMF) amounting to P12,580,551.90 were not
consistently complied by the management, which affected the accuracy, reliability
and fair presentation of LDRRMF accounts in the financial statements.

We recommended the Management of the following courses of action:

a) The unexpended balances of LDRRMF as well as the other receipts of funds

should be transferred and established as Special Trust Funds in the Trust
Liabilities-DRRMF in the Trust Fund books;

b) Proper adjustments both in the books be made to reflect the accurate balances
of the LDRRMF as at December 31, 2020;

c) Gather and submit for proper evaluation in audit the summary/list of

donations received and distributed with complete documents; and

d) All concerned officials comply with the aforementioned laws, rules and
regulations.

9. Collection of repayments under Sustainable Livelihood Program (SLP) was not

undertaken in accordance with DSWD Memorandum Circular No. 13, series of
2015 and as revised by DSWD Memorandum Circular No. 22, series of 2019,
thus the objective of establishing a community-based credit and savings facility
may not be optimally attained, hence depriving intended recipients of its
immediate benefits.

We recommended that the Municipal Mayor require both the Municipal Social
Welfare and Development Officer and the Municipal Treasurer to:

a) Submit Fund Utilization Report showing how the funds were utilized; and
 b) Comply strictly with the specific guidelines on the grant, implementation and
any repayments required under DSWD Memorandum Circular No. 22, series
of 2019.

The other findings and observations, as well as the status of implementation of

our prior year’s audit recommendations, are discussed in Parts II and III of the report.

In our transmittal-letter of even date, we requested the Municipal Mayor to

implement the recommendations contained in the report and to inform this Office of the
action(s) taken thereon by submitting the duly accomplished attached Agency Action
Plan and Status of Implementation (AAPSI) form, within sixty (60) days from receipt
hereof consistent Section 89 of Republic Act No. 11465, otherwise known as the General
Appropriations Act of 2020. We will appreciate any action(s) you may take towards the
implementation of the audit recommendations.

We acknowledge the cooperation extended to the Audit Team by the Officials and
Staff of that Municipality, thus facilitating the conduct of audit and submission of this
report.

Very truly yours,

For the Commission on Audit:

MENJORIE MARK O. DICLAS

State Auditor V
Supervising Auditor

Cc: The Director, DILG, Regional Office No. II, Tuguegarao City
The Director, BLGF, Regional Office No. II, Tuguegarao City
The Director, DBM, Regional Office No. II, Tuguegarao City
The National Library (soft copy)
UP Law Center (soft copy)
COA Commission Central Library (soft copy)
 Republic of the Philippines
COMMISSION ON AUDIT
Audit Group LGS E, Isabela Province II
Audit Team No. R02- 03
Municipalities of Angadanan, Echague, and San Guillermo,

28 April 2021

MR. MENJORIE MARK O. DICLAS

OIC-Supervising Auditor
LGS-E, Isabela II
PSAO Ilagan City
Province of Isabela

Sir:

In compliance with Section 2, Article IX-D of the Philippine Constitution and

pertinent sections of Presidential Decree No. 1445, we conducted a financial and
compliance, and value for money audits on the accounts and operations of the
Municipality of Angadanan, Isabela for the year ended December 31, 2020.

The audit was conducted to ascertain the fairness of presentation of the financial
statements, the propriety of financial transactions and compliance of the agency to
prescribed rules and regulations. It was also made to determine the extent of
implementation of prior years’ audit recommendations.

The result of our audit are embodied in the attached report consisting of four
parts, Part I – Audited Financial Statements, Part II - Detailed Finding and
Recommendations, Part III – Status of Implementation of Prior Years Audit
Recommendations and Part IV - Annexes. The observations and recommendations were
communicated to the management through the Audit Observation Memorandum (AOM).
Their comments are included in the report where appropriate.

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

statements of the Municipality of Angadanan, Isabela as of December 31, 2020 except for
the following:

1. The accuracy and reliability of the Cash in Bank – Local Currency, Current
Account amounting to P52,396,381.49 as at December 31, 2020 cannot be fully
established due to (a) unreconciled balances and inconsistencies in the books, (b)
creation of new bank account with incomplete details and basis, and (c)
unreverted stale checks at year-end, thereby the cash accounts may not be fairly
presented in the financial statements inconsistent with International Public Sector
Accounting Standards (IPSAS) 1 and Section 112 of Presidential Decree (PD) No.
1445.
2. Unreconciled variances between the books and the Report on Physical Count of
Property, Plant and Equipment (RPCPPE) amounting to ₱14,208,507.89 were
observed due to non-compliance with Sections 266 and 269 of the Government
Accounting Manual for Local Government Units, Volume I which cast doubts on
the existence, propriety and correctness of the affected PPE account balances
reported in the financial statements.

3. The two hundred seventy-two (272) unreleased commercial checks totaling

P8,831,493.99 as at December 31, 2020 were not restored to cash and liability
accounts inconsistent with Section 352 of the Government Accounting Manual
(GAM) for Local Government Units (LGUs), Volume I, thus, misstating the
affected accounts.

4. The accuracy, validity and fair presentation of the Real Property Tax (RPT) and
Special Education Tax (SET) Receivable accounts totaling ₱4,379,670.56 as at
December 31, 2020 cannot be fully established and may be misstated due to
incomplete basis and supporting documents for all the current and delinquent
accounts inconsistent with Section 246 of RA No. 7160 and Section 42, Volume I
of the Government Accounting Manual (GAM) for Local Government Units
(LGUs).

5. The unexpended/unobligated balances and other receipts for Local Disaster Risk
Reduction and Management Funds (LDRRMF) totaling P3,197,001.11 were not
transferred to the Special Trust Fund under the account “Trust Liability-DRRM”
in the Trust Fund books inconsistent with COA Circular No. 2012-002 dated
September 12, 2012 and Government Accounting Manual (GAM) for Local
Government Units (LGUs), thus misstating the financial statements.

6. Long outstanding receivables amounting to P2,779,665.23 should be validated

and verified by the Agency in accordance with COA Circular No. 2016-005 dated
December 19, 2016 in order to establish its existence and validity and to achieve
fair presentation of the affected accounts in the Financial Statements.

7. Reasonableness of the amounts of burial, financial assistance and other donations

amounting to P4,971,251.59 cannot be fully established in the absence of specific
guidelines and procedures for the grant inconsistent with Section 124 of
Presidential Decree (PD) No. 1445, Sections 447 and 483 of RA No. 7160.

8. Accounting and reporting guidelines for the Local Disaster Risk Reduction and
Management Funds (LDRRMF) amounting to P12,580,551.90 were not
consistently complied by the management, which affected the accuracy, reliability
and fair presentation of LDRRMF accounts in the financial statements.

9. Collection of repayments under Sustainable Livelihood Program (SLP) was not

undertaken in accordance with DSWD Memorandum Circular No. 13, series of
2015 and as revised by DSWD Memorandum Circular No. 22, series of 2019,
thus the objective of establishing a community-based credit and savings facility
 may not be optimally attained, hence depriving intended recipients of its
immediate benefits.

Our audit was conducted in accordance with the International Standards of

Supreme Audit Institutions (ISSAIs) and we believe that the audit evidence we have
obtained provide a reasonable basis for our opinion.

Very truly yours,

NOELLE CHARMAINE P.
BANAUAG
OIC-Audit Team Leader