09-Angadanan2020 Part2-Findings and Recomm

PART II
DETAILED FINDINGS AND RECOMMENDATIONS
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DETAILED FINDINGS AND RECOMMENDATIONS
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.
1.1 IPSAS 1 states that “Fair presentation” requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, revenue and expenses set
out in IPSASs. The application of IPSASs, with additional disclosures when
necessary, is presumed to result in financial statements that achieve a fair
presentation.
1.2 While Section 112 of Presidential Decree No. 1445 provides that:
“Each government agency shall record its financial transactions and

operations conformably with generally accepted accounting principles and in
accordance with pertinent laws and regulations.”
1.3 As at December 31, 2020, the Cash in Bank – Local Currency, Current Account
(CIB-LCCA) balance amounted to P52,396,381.49. Its breakdown are as follows:
Fund Amount
General Fund P24,771,544.15
Special Education Fund 162,748.17
Trust Fund 27,462,089.17
Total Cash in Bank- P52,396,381.49
LCCA
1.4 There were nine (9) current accounts and one (1) savings account maintained by
the LGU with Landbank of the Philippines – Alicia Branch as at December 31,
2020.
1.5 Also, as disclosed in the Notes to Financial Statements as at December 31, 2020,
another current account with Account No. 00-0-50101-541-3 was created and
being maintained with the Development Bank of the Philippines – Santiago City
Branch with a balance amounting to P358,490.70.
1.6 In ensuring that the accuracy, correctness and reliability of the Cash in Bank
account of the LGU at year-end, we have conducted an audit and review of
relevant reports and documents and results of audit are discussed as follows:
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 Budget reports and the accounting records for the 20% Development
Fund cannot be fully reconciled thus affecting the accuracy and
reliability of the Cash in Bank-LCCA.
LBP Bank Account No. 2992-1020-82 is a current account being maintained

by the LGU for the 20% Economic Development Fund. It holds all funds from
its current appropriation and continuing appropriation.
In this observation, we stress that balances for Continuing Appropriation are

being maintained by the Municipal Accountant in her Schedule of Continuing
Appropriation (SCA). The Budget Officer keeps records of the Current
Appropriation only as shown in the Statement of Appropriation, Allotment,
Obligation and Balances (SAAOB). The remaining balances of the 20% EDF
in the Current Appropriation are forwarded to the Accounting Office for
presentation in the latter’s Schedule.
Review of the 20% Development Fund of the LGU was made based on
balances reported in the Financial Statements, SCA and SAAOB and we noted
variances on the (a) current appropriation vs. actual IRA share, (b) total fund
source per budget reports vs books, (c) obligations on SCBAA & SAAOB vs
total disbursements, and (d) budget balances vs cash ending balances. See the
tables for the details and amounts of EDF as presented in budget reports and
in the accounting books.
Per Budget Reports

Appropriation
SCBAA & SAAOB, 12/31/2020
(Original)
Current Appropriation (Based from IRA) P 30,900,094.00
Continuing Appropriation, beg 14,745,681.14
Total Fund Source 0
Obligation (33,912,160.35)
Total Budget Balance - EDF P 11,733,614.79
Per Accounting Records

Financial Statements, 20% EDF Amount
Cash beginning P 10,873,309.17
IRA Share 30,823,672.60
Total Fund Source 0
Actual Disbursements (31,637,896.42)
Cash in Bank - EDF 12/31/2020 P 10,059,085.35
The comparison between the cited budget reports and FS was made because
the EDF is fixed on 20% IRA shares, hence these records must present if not
balanced amounts, but must be reconciled and be fully accounted. However,
as shown, both accounting and budget records cannot be fully reconciled.
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These variances casted doubts on the accuracy of the CIB-LCCA for 20%
Economic Development Fund. The Management, through the Municipal
Accountant explained that the variances shall be traced and reconciliation
shall be made.
 Treasurer’s Cashbook balances on Cash in Bank-LCCA vary by

P1,033,702.00 with the Accountant’s reported balances in the Financial
Statements.
In our examination of the Municipal Treasurer’s cashbook, we noted the

following bank account balances as at December 31, 2020 whose balances
differ from that reported in the financial statements of the Municipal
Accountant:
Amount per
Fund Amount per FS Variance
Cashbook
20% Economic P9,337,386.35 P10,059,085.35 P721,699.00
Development Fund
Trust Fund – Regular 9,494,610.67 9,806,613.67 312,003.00
Total P18,831,997.02 P19,865,699.02 P1,033,702.00
The difference of P721,699.00 between the cashbook and FS pertains to the

audit observation last year on unreconciled balances. While the amount of
P312,003.00, which was provided by the National Disaster Risk Reduction
and Management Council was not transferred to the Trust Fund Regular
account in 2020, thus overstating the CIB-LCCA in the General Fund Proper
and understating the CIB-LCCA in the Trust Fund Regular.
These were already traced at year-end and accounted in the Municipal

Accountant’s books but not yet reflected in the books of the Municipal
Treasurer.
 Unexpended balances of QRF and DRRMF-MOOE for the Current Year

2020 and the prior years’ balances amounting to P2,327,212.31 and
P237,827.90, respectively were not transferred to the Special Trust Fund
in the Trust Fund books, thus overstating the cash and trust liabilities in
the General Funds books.
 The CIB-LCCA - 5% CF was understated by P669,565.99 due to non-

transfer of funds from the other two General Funds bank accounts.
The LGU’s shares from IRA and collections from regular sources are
deposited separately in two different bank accounts. Another bank account is
being maintained for the 5% Calamity Funds. The practice of the LGU is to
transfer funds from these two bank accounts to the 5% Calamity Funds bank
account.
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In order to ensure that the LDRRMF account are sufficiently funded with
available cash, we reviewed the accuracy of amounts transferred from the two
GF bank accounts to the 5% Calamity Fund bank account.
Based on the verification of transactions, we noted that the amount of

P669,565.99 was not yet transferred to the 5% Calamity Fund bank account as
computed below.
Particulars Amount
CY 2020 Appropriation for Calamity Fund P 8,369,524.00
Total Amounts Transferred 7,699,958.01
Cash to be Transferred to 5% CF P 669,565.99
Account
This resulted in understatement of the CIB-LCCA for 5% Calamity Fund.
 Unexpended balances for the years 2012 to 2014 totaling P332,562.28

were not yet transferred to the General Fund bank account thereby
resulting in the misstatements of the GFP and Calamity Fund bank
accounts for the same amount.
In our review of the Transaction Listings of the CIB-LCCA-Calamity Fund,

we noted that there was no transfer of actual cash to the GF bank account for
the said amount. The non-transfer of these prior year reversions misstated the
CIB balances in the GFP and Calamity Fund bank accounts.
We referred this to the Municipal Accountant and she said that it shall be
transferred this 2021.
 The Cash in Bank-LCCA with DBP Bank Account No. 00-0-50101-541-3

amounting to P358,490.70 as at December 31, 2020 may be doubtful due
to incomplete reports on collections.
As at December 31, 2020, the CIB-LCCA with DBP amounted to

P358,490.70. The Municipality opened a new current account with DBP
Santiago City Branch last August 14, 2020. This holds the amounts attributed
from the Special Trust Fund-Sustainable Livelihood Program (STF-SLP) that
was previously accounted in the Trust Fund Regular Account with LBP Alicia
Branch. The collections by the Municipal Treasury Office started on June 5,
2018, however details were not yet completely provided for further
verification.
 Outstanding checks totaling P660,744.43 became stale as at December 31,

2020 and were not yet reverted back to the cash in bank balance.
In our analysis of the Bank Reconciliation Statements at year-end, we

identified and summarize in Annex E all the outstanding checks reported that
had become stale checks.
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The Municipal Accountant has reverted these stale checks only in January
2021, thereby misstating the Cash in Bank and Payable accounts in CY 2020.
 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 at year-end.
In the verification of any outstanding checks as at December 21, 2020, we

noted several unreleased checks totaling to P8,831,493.99.
Unreleased checks meant that these are still under the custody of the
Municipal Treasurer, hence not yet withdrawn from the LGU’s Bank
accounts. By substance of the transactions and cut-off assertions, these should
have been reverted back or restored back to reflect actual cash as at December
31, 2020.
1.7 Overall, with the aforementioned audit observations, the accuracy, correctness
and reliability of the Cash in Bank-Local Currency, Current Account of the
Municipality as at December 31, 2020 may be rendered doubtful and cash
balances as at year-end may be misstated.
1.8 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
1.9 Management Comment:
The Management, through the Municipal Accountant informed that the noted
discrepancies were adjusted in the ensuing year.
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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.
2.1 Government Accounting Manual for Local Government Units, Volume I,

provides the following pertinent rules:
Section 266. Physical Count of PPE. The LGU shall have a periodic physical
count of PPE, which should be done annually and reported on the Report on
the Physical Count of Property, Plant and Equipment as of December 31 of
each year. This shall be submitted to the Auditor concerned not later than
January 31 of the following year. Equipment found at station and losses
discovered during inventory taking shall be incorporated in the report
furnished the Accounting Office for proper accounting/recording.
Section 269. Accounting and Property Records to be maintained for PPE.

The Local Accountant shall maintain the subsidiary ledger cards for each
group of PPEs including work and other animals etc. The subsidiary ledger
cards are: Land and Land Improvements Ledger Cards for land and land
improvements; Local Road Network Ledger Card for road network; Other
Public Infrastructure Ledger Cards for the public infrastructures other than
the road network; Building and Structure Ledger Cards for buildings and
structures; Equipment Ledger Cards for the equipment, and Other Property
Ledger Cards, for the other property not provided with special ledger cards.
The ledger cards shall be kept to record promptly the acquisition, description,
custody, estimated useful life, depreciation, impairment loss, disposal and
other information about the asset. For check and balance, the General
Service Office and Supply Office/Unit shall likewise maintain the
equivalent Property Card (PC) for PPE to account for the receipt and
disposition of the same. The balance of the PPE general ledger accounts
should always reconcile with subsidiary ledger cards. They should also
reconcile with other property records like PAR.
2.2 Comparison of the total PPE General Ledger (GL) balance of ₱668,689,109.68
against the reported balance of ₱654,480,601.79 in the RPCPPE disclosed a
discrepancy of ₱14,208,507.89, as follows:
Per Accounting Per Physical

PPE Account Difference
Records Count
Other Land
P 4,804,784.00 P 0.00 P 4,804,784.00
Improvement
Road Networks 461,909,314.27 451,340,107.67 10,569,206.60
Buildings 44,431,217.09 43,897,248.25 533,968.84
Hospitals and health
31,583,968.13 33,463,688.67 (1,879,720.54)
Centers
Markets 2,555,162.73 0.00 2,555,162.73
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Per Accounting Per Physical
PPE Account Difference
Records Count
Other Structure 5,892,642.76 7,095,021.22 (1,202,378.46)
Office Equipment 6,041,495.44 9,354,219.95 (3,312,724.51)
ICT Equipment 5,969,095.43 6,093,813.48 (124,718.05)
Communication
1,184,816.43 271,675.00 913,141.43
Equipment
Construction and
15,117,000.00 11,593,000.00 3,524,000.00
Heavy Equipment
Disaster Response and
2,997,128.50 405,496.00 2,591,632.50
Rescue Equipment
Medical Equipment 7,628,199.43 7,002,798.52 625,400.91
Technical and
170,000.00 0.00 170,000.00
Scientific Equipment
Other Machinery and
7,764,138.90 10,903,998.27 (3,139,859.37)
Equipment
Motor Vehicles 17,826,029.00 20,371,029.00 (2,545,000.00)
Sports Equipment 0.00 166,810.00 (166,810.00)
Furniture and Fixtures 1,719,565.80 1,922,492.98 (202,927.18)
Books 81,720.00 99,743.00 (18,023.00)
CIP-Infrastructure
3,502,587.44 6,764,223.78 (3,261,636.34)
Assets
CIP-Building & Other
21,497,636.33 17,722,628.00 3,775,008.33
Structure
TOTAL P642,676,501.68 P628,467,993.79 P14,208,507.89
2.3 Review of relevant available documents as well as inquiries from both the
General Services Office and Accounting Office disclosed some of the causes of
the discrepancy, to wit:
 Late Submission of RPCPPE and Non-maintenance of PPE property

cards and ledger cards
Due to the delays in the submission of the Report on the Physical Count of
Property, Plant and Equipment (RPCPPE) and incomplete Property Cards and
Ledger Cards, the variances cannot be completely reconciled between the
reports and documents of both the General Service Office and the Accounting
Office.
 Misclassification of Accounts
Classification is one of management’s assertions which means that the

transactions and events should be recorded in the proper accounts.
Review of the available records but mainly from RPCPPE, the following
misclassification of some procurement of PPE items:
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RPCPPE Should be
Particulars Cost
Classification Classification
Other Land P 2,304,960.00
Perimeter Fence Other Structures
Improvement
Other Land 2,499,824.00
Fencing Other Structures
Improvement
Public Market Stalls Buildings Markets 777,600.00
Market Buildings Markets 1,777,562.73
Const. in 1,260,357.00
Const. in
Access Road going Progress -
Progress - Bldg
to Sanitary Landfill Infrastructure
& Other Structure
Assets
Const. in 478,425.00
Construction of Const. in
Progress -
Sanitary Progress - Bldg
Infrastructure
Landfill/MRF & Other Structure
Assets
Const. in 1,522,854.34
Const. in
Construction of 40 Progress -
Progress - Bldg
units Street Lights Infrastructure
& Other Structure
Assets
Technical and 150,000.00
Communication
CCTV Camera Scientific
Equipment
Equipment
Technical and 20,000.00
Communication
CCTV Camera Scientific
Equipment
Equipment
New Sinotruk H3 Motor Vehicles Construction and 1,898,000.00
Six Wheeler 4 X 2 Heavy Equipment
6M3 Dump Truck
2018 Foton Tornado Motor Vehicles Construction and 1,176,000.00
3.5C Mini Dump Heavy Equipment
Truck
RHU Building Motor Vehicles Buildings 2,004,112.29
Breast Feeding Hospital and 797,635.00
Buildings
Center Health Center
Breast Feeding Hospital and 61,600.00
Buildings
Center Health Center
TOTAL P 16,728,930.36
We also noted that the Sports Equipment amounting to ₱42,300.00 was

included and accounted in the Other Machinery and Equipment account.
 Small tangible items totalling P7,011,762.11 were reported under

RPCPPE but not accounted in the books.
Our audit also disclosed that there were purchases of small items which were
included in the RPCPPE but were not accounted in the books as summarized
below:
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Property Account Amount
Office Equipment ₱ 3,312,724.51
Information and Communication Technology
124,718.05
Equipment
Furniture and Fixtures 202,927.18
Sports Equipment 124,510.00
Medical Equipment 89,000.00
Books 18,023.00
Other Machinery and Equipment 3,139,859.37
TOTAL ₱ 7,011,762.11
This amount includes the following:
i. Small tangible items like monoblock/plastic chairs and tables,

rubber and safety shoes/boots, cooking and kitchen utensils,
signages, calculators, etc. were included in the RPCPPE instead of
classifying them as inventory and/or expense. Small and tangible
equipment should not form part of the PPE but should be duly
accounted for in a separate record;
ii. Tangible items which are in substance should form part of the
PPE:
PPE Account Items

Electric Fans and Coolers
Laminator Machines, coolers, filing
Office Equipment
cabinets
Water Dispenser and Boilers
Executive Tables and Chairs,
Furniture and Fixtures Office Tables and Chairs, Wooden
Cabinets, Sala sets and Dividers
Computer Monitors and Printers,
Information and Sound Systems, Computer
Communication Hardware (CPU, UPS & others),
Technology Equipment Cameras
Communication / Other Mobile Phones, Radios, Tents,
Machinery and Equipment / Spot/Flood Lights, Grass Cutter,
Disaster Response and Folding Beds, Pressurized Tanks
Rescue Equipment,
whichever is proper
Wheelchair
Nebulizer
Stethoscope & BP Apparatus
Oxygen Tank
Medical Equipment
Cabinets and Counters
Hospital Beds
Stretchers
Bassinets
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GAM for LGUs provides the following accounting treatment on small
intangible items:
 Section 183. Small Tangible Items. Small tangible items with estimated
service life of more than one year shall be accounted as inventories upon
purchase and recognize as an expense upon issuance to the end-user.”
 Section 184. Accountability over Small Tangible Items. Inventory

Custodian Slip shall be issued to end-user of small tangible items to
establish accountability over them.
However, for monitoring, control and accountability, an Inventory Custodian

Slip (ICS) shall be prepared upon issuance of small tangible items covered by
approved Requisition and Issue Slip (RIS).
These items may be expensed upon compliance with the above requirements.
 Several properties which were included in the physical count but were
not accounted in the books.
Completeness is also one of the management’s assertions which means that all
transactions and events that should have been recorded must all be accounted.
The following were found in station but not recorded in the books of accounts:
Property Account Date Acquired Amount

Base Radio 2015 ₱ 44,000.00
CCTV Camera 2014 150,000.00
Triage Tent 2020 108,000.00
Modular Tents 2020 192,000.00
Folding Bed 120 Kilos 2020 49,500.00
TOTAL ₱ 543,500.00
 For all other accounts, the causes and nature of differences in the
balances were not yet established by both Offices.
2.4 While both Offices maintain their own records and ensure that their records are
updated, however, as the audit yearly cite unreconciled variances between them
and which may increase overtime if not acted upon, proper and timely
reconciliation must be made mandatory, not only necessary.
2.5 The relevance and purpose of reconciliation must be emphasized for this shall
ensure that all the properties identified in the physical count be properly
accounted in the books and any variances may be adjusted accordingly.
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2.6 In the absence of such reconciliation, the variances will still remain unresolved
and will certainly increase, thereby causing doubts on the existence, propriety and
correctness of the balance of Property, Plant and Equipment as at December 31,
2020. Further, considering the inconsistencies noted in audit, the PPE accounts in
the financial statements may not fairly present the actual existence and condition
of all the properties of the LGU.
2.7 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.
Both the Accounting and GSO are regularly reconciling the PPE accounts. Those
items below the capitalization threshold are no longer carried in the books.
However, noted variances will be verified and adjusted accordingly.
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.
3.1 Fair presentation of the financial statements requires the faithful representation of
the effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, revenue and expenses set
out in International Public Sector Accounting Standards (IPSAS).
3.2 A fair presentation also requires an entity to present information, including

accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information.
3.3 To achieve fair presentation of the cash and liabilities accounts, Section 352 of
GAM for LGU required the proper adjustment of unreleased commercial checks
stating that:
“Adjustments for Unreleased Commercial Checks. A Schedule of Unreleased

Commercial Checks per fund shall be prepared by the Local Treasurer for
submission to the Accounting Division/Unit. All unreleased checks at the end of
the year shall be reverted back to the cash accounts. A JV per fund shall be
prepared to recognize the restoration of the cash equivalent to the unreleased
checks and the recognition of the appropriate liability/payable account. The
accounting entry for the restoration of the unreleased check to the cash account
shall be a debit to “Cash in Bank, Local Currency Current” account with credit
to the appropriate liability account. There shall be no physical cancellation of the
checks. The JV supporting such restoration shall form part of the supporting
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document to the financial statements to be submitted to COA at year end. At the
start of the ensuing year, another JV shall be drawn to reverse the previous entry
made and recognize the availability of the checks for release.”
3.4 As at December 31, 2020, the Municipal Treasurer prepared the Schedule of
Unreleased Checks totaling P615,602.52 and the details are as follows:
Check Check
Payee Particulars Amount
Date Number
12/31/2020 555232 Diwata Grace Bausa Honorarium P 3,000.00
01/07/2020 604177 Roxas City Financial Assistance 50,000.00
02/03/2020 604185 Silang, Cavite Financial Assistance 50,000.00
Financial Assistance
12/01/2020 672629 Lilia Clemente 2,000.00
(AICS)
12/22/2020 693614 Josie Leobrera 5,000.00
(AICS)
Terminal Leave
12/29/2020 693626 Lina Cristobal 433,788.77
Benefits
12/31/2020 693703 Barangay Duroc Financial Assistance 30,000.00
12/31/2020 693705 Barangay Malasin Financial Assistance 30,000.00
12/04/2020 672745 Barangay Lourdes Share from CTC 6,813.75
12/31/2020 693766 Florida Pudol 5,000.00
(AICS)
Total P 615,602.52
3.5 But review of Report on Checks Issued, we noted that there were checks drawn
and dated December 29, 2020 totaling P1,236,750.03 and dated December 31,
2020 totaling P6,979,141.44. Upon verification thru interview of the Municipal
Treasurer, these checks were unreleased as at year-end. See Annex F for more
details.
3.6 Unreleased checks meant that these are still under the custody of the Municipal
Treasurer, hence not yet withdrawn from the LGU’s Bank accounts. By substance
of the transactions and cut-off assertions, these should have been reverted back or
restored back to reflect actual cash as at December 31, 2020.
3.7 Per review of general ledgers and journal entry vouchers, these checks totalling
P8,831,493.99 were not adjusted to their appropriate accounts at year-end due to
non-submission of Schedule of Unreleased Commercial Checks to the Accounting
Office. These checks have understated the cash account and liability accounts at
year-end.
3.8 We identified the following accounts which were misstated as at December 31,
2020 due to the related unreleased checks. The adjusting entries recommended for
these at year-end should be:
Accounts Debit Credit

Cash in Bank, Local Currency Current P 8,831,493.99
Accounts Payable P 2,472,379.64
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Accounts Debit Credit
Due to BIR 1,608,252.01
Due to GOCCs 38,709.53
Due to GSIS 618,732.18
Due to LGUs 466,993.81
Due to NGAs 13,741.00
Due to Officers and
Employees 2,012,679.96
Due to Other Funds 1,033,702.00
Due to PhilHealth 83,405.24
Due to Pag-ibig 195,898.62
Other Payables 287,000.00
Total P 8,831,493.99 P 8,831,493.99
3.9 Nonetheless, these unreleased checks should be monitored and reported

continuously in case these shall remain unreleased.
3.10 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.
The management agreed and committed to implement the audit recommendations.
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).
4.1 Section 246 of RA No. 7160 specifies that Date of Accrual of Tax where:
“The real property tax for any year shall accrue on the first (1st) day of
January and from that date it shall constitute a lien on the property which
shall be superior to any other lien, mortgage, or encumbrance of any kind
whatsoever, and shall be extinguished only upon the payment of the
delinquent tax.”
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4.2 In addition, Section 42, Volume I of the Government Accounting Manual for
LGUs deals with the basis of recording Real Property Tax/Special Education Tax.
It states that:
“Section 42. Basis of Recording Real Property Tax/Special Education Tax.

Real Property Tax Receivable/Special Education Tax Receivable shall be
established at the beginning of the year based on Real Property Tax Account
Register/Taxpayer’s Index Card. At the beginning of the year, the Treasurer
shall officially furnish the Chief Accountant list showing the name of
taxpayers and the amount due and collectible for the current year. Based on
the list, the Local Accountant shall draw a Journal voucher (JV) to record
Real Property Tax Receivable/Special Education Tax Receivable and the
corresponding income accounts.
4.3 Also, in order to properly establish the RPT/SET balances, it is required that the
Real Property Tax Account Register/Taxpayer’s Index Cards (RPTAR/TIC) must
be prepared and updated as these facilitate the preparation of the Treasurer’s
certified list of taxpayers and the corresponding amount due and collectible for
the year. While the duly certified list of taxpayers is vital for proper setting up of
RPT and SET Receivables at the beginning of the year, as required under the RA
7160 and Manual.
4.4 During the conduct of our audit walkthrough, we inquired about the above-
mentioned documents as well as the procedures how RPT and SET receivable
transactions are being reflected in the financial reports and observed the following
present setup in the LGU.
4.5 Firstly, in the review of the financial records, we noted that the balances of RPT
and SET Receivables at the end of CYs 2020 and 2019 were reported as follow:
Account December 31, 2020 December 31, 2019

RPT Receivable ₱ 2,189,835.28 ₱ 2,799,432.43
SET Receivable 2,189,835.28 2,799,432.43
Total ₱ 4,379,670.56 ₱ 5,598,864.86
4.6 The Certified List of Taxpayers and Taxes Due was inquired however, it was
known that the Municipal Treasurer did not submit such List to the Municipal
Accountant as her basis in setting up the amount of Real Property Tax/Special
Education Tax Due and Collectible at the start of the year.
4.7 The reported balances of RPT/SET were initially based on the Report on Real
Property Assessment submitted by the Assessor’s Office where the following
balances of RPT/SET are provided at the end of the year 2019:
Particulars BASIC SEF Total

Total Collectibles as of
P5,510,739.00 P5,510,739.00 P11,021,478.00
December 31, 2019
Actual Collections as of 2,609,765.87 2,609,765.87 5,219,531.74
44
December 31, 2019
Uncollected as of December
P2,900,973.13 P2,900,973.13 P5,801,946.26
31, 2019
4.8 These balances are carried forward at the beginning of CY 2020. The Municipal
Accountant used this as basis in adjusting the RPT/SET balances in her records.
The RPT/SET balances were thereby adjusted in order to be reconciled with the
amounts computed by the Treasurer and the Assessor’s Office. The adjustment at
the beginning of CY 2020 were computed as follow:
Particulars BASIC SEF Total

Balance per MTO and MAO P2,900,973.13 P2,900,973.13 P5,801,946.26
Balance per books 2,799,432.43 2,799,432.43 5,598,864.86
Amount of Adjustment P 101,540.70 P 101,540.70 P 203,081.40
4.9 As can be shown, the balances set up at the beginning of the year were not
compliant with the rules. This process indicates that the amount of collectibles
due for the current year as well as those of prior years’ was not properly
accounted at the beginning of the year. Moreover, it was noted that tax collections
pertaining to the current year were outright credited to respective income accounts
of RPT and SET. This indicates that the RPT/SET accounts do not represent all
taxes that are due and demandable, which should supposedly include all
delinquent and current accounts.
4.10 It was explained that this present set-up was adopted in order to prevent abnormal
and negative balances in the books.
4.11 We also inquired if there are other subsidiary ledgers or records that will show the
details of delinquent accounts and those accounts that are collectible for the
current year. However, it was explained that they shall still look at the system and
separately encode for such.
4.12 It must be emphasized that the RPT/SET accounts are accumulated balances of
prior years’ uncollected taxes and present year’s due and demandable taxes.
However, as discussed in the foregoing paragraphs, the concerned offices cannot
provide a concrete report that shall establish that the reported balances of
RPT/SET are accurate balances of delinquent accounts and current year tax
collectibles.
4.13 The above practice and procedures in the setting up and subsequent recognition of
receivables were not fully compliant with the existing rules and regulations,
thereby may affect the accuracy, validity and completeness of receivable
accounts.
4.14 This is a reiteration of our prior years’ audit observation wherein it was
emphasized that the Certified List and RPTAR must be prepared and submitted to
the Municipal Accountant in order that accurate balances of the RPT/SET will be
established properly at the beginning of the year. However, the same has not been
45
provided, hence the Municipal Accountant cannot also record/account the proper
and accurate balances in the books.
4.15 The present procedures and controls adopted by the management are well noted
and acknowledged, however, it bears stressing that the preparation of the Certified
list showing the name of taxpayers and the amount due and collectible yearly and
RPTAR/TIC are so crucial, so must be compulsory. The amounts recorded in the
RPT/SET Receivables should not be adjusted for the sole basis of reconciled
balances only. The concerned offices should ensure that the reported balances of
RPT/SET should include all current receivables and delinquent accounts.
4.16 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.
The Management required the Municipal Treasurer to submit a certified list of

taxpayers and amounts due and collectible to the Accounting Office as basis to
set-up the correct RPT/SET receivables and ensure that all due and demandable
taxes including delinquent accounts are properly reported.
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.
5.1 The following rules and regulations were highlighted relative to our audit of the
account Trust Liabilities – DRRMF (2-04-01-020):
 COA Circular No. 2012-002 dated September 12, 2012
 Item 5.1.10 “All unexpended/unobligated balance of the QRF and the

DRRMF-MOOE shall be transferred to the Special Trust Fund
46
under the account “Trust Liability-DRRM” (Code 438) in the Trust
Fund books.”
 Item 5.1.12 “The account Trust Liability – DRRM in the Trust Fund
books shall be used to record transfers of the agency’s unutilized
QRF and DRRMF-MOOE of the previous years, receipts of
NDRRMF, DRRMF from other LGUs and other sources.”
 Government Accounting Manual for Local Government Units
 Section 130 of same Manual, Unexpended Balance of DRRMF other

than those appropriated for capital outlays shall be transferred to the
Trust Fund and recognized as Trust Liabilities - DRRMF.
5.2 As at December 31, 2020, the Trust Liabilities-DRRMF amounted to

P3,165,040.21 which was also disclosed in the Notes to Financial Statements with
the following details:
Particulars Amount
Current Year Appropriation
Quick Response Fund P 752,573.70
Mitigation Fund
MOOE 1,572,138.61
Capital Outlay 602,500.00
Special Trust Fund (CY 2015 to CY 2019) 237,827.90
Total Trust Liabilities–DRRMF as at 12/31/2020 P 3,165,040.21
5.3 In the review of records and documents, we observed that the unexpended
balances of the CY 2020 Quick Response Fund and DRRMF-MOOE totaling
P2,327,212.31 were not yet transferred to the Special Trust Fund under the
account Trust Liabilities-DRRMF in the Trust Fund books.
5.4 In addition, the unexpended balances of years 2015 to 2019 in the amount of
P237,827.90 were also not transferred in the Trust Fund books.
5.5 Further, the List of Cash Donations also showed receipt of funds aggregating to
P634,460.90 from various individuals (P322,457.90) and from NDRRMC
(P312,003.00). These amounts were also unexpended and recorded in the Account
Due to LGUs instead of the Trust Liability – DRRM account.
5.6 The non-transfer of these unexpended balances resulted in the misstatements of

the above-mentioned accounts hence affecting its fair presentation in the financial
statements. It must be emphasized that it is crucial especially at this time of
pandemic that the LDRRMF should be properly funded and must be fully
accounted in the books.
5.7 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
47
the funding requirements and disclosure of LDRRMF under COA Circular
No. 2012-002 and GAM for LGUs.
The unexpended balances and other receipts were already transferred/reclassified

as Special Trust Fund Trust Liabilities-DRRMF in the Trust Fund books in
January, 2021.
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.
6.1 COA Circular No. 2016-005 dated December 19, 2016 was issued to prescribe the
guidelines and procedures in reconciling and cleaning the books of accounts of
NGAs, LGUs and GOCCs of dormant receivable accounts, unliquidated cash
advances, and fund transfers for fair presentation of accounts in the FSs. Dormant
accounts in the said Circular are defined as inactive or non-moving accounts for
ten (10) years.
6.2 The audit of receivable accounts revealed that several accounts totaling
P2,779,665.23 (Annex G) remained dormant for at least three years in the books.
Prior years’ audit observation memoranda had been issued against the
management inquiring the addresses of the listed debtors, so that demand for
settlement can be made and funds can be recovered. We recommended that
management to exert efforts to locate these persons and demand settlement,
however to no avail, the management failed to implement said recommendation.
6.3 As stated in the guidelines, we provide the following conditions that the
management should establish and validate in order that proper consideration in
audit may be rendered:
Existing Condition Certified Relevant Documents

1 Unknown whereabouts of the Certificate of no residence in the
accountable barangay of the municipality/city
officer/employee/debtor and that of last known address
he/she could not be located
despite efforts to find him/her Proof of exhaustion of all remedies
to collect and demand to liquidate
2 Death of the accountable Death Certificate issued by the
officer/employee/debtor Philippine Statistics Authority
(formerly National Statistics
Office)
3 Insolvency Proof of exhaustion of all remedies

to collect and demand to liquidate
48
Existing Condition Certified Relevant Documents
Proof of Insolvency
Certification from the Department

of Trade and Industry that the
debtor is no longer active
4 Absence of records or documents Certification by the responsible

to validate/support the claim officials of the entity to the effect
and/or unreconciled reciprocal that there are no
accounts records/documents available to
validate claim (sworn and
subscribed)
Other justification, like in the case

of request for write-off due to loss
of documents, the circumstances
of the loss should be stated in the
letter request
5 Unliquidated Fund Transfers Reconciliation with the Source

Agency and Certification by the
Chief Accountants and approved
by the Heads of the Source
Agencies, that the fund was
utilized for the purpose
Certification from the recipient

that the project was partially or
fully implemented supported by
pictures of the implemented
projects
6.4 Upon compliance with the above-process, the Head of Office may file a written
request to the Resident Auditor and/or Supervising Auditor for those accounts not
exceeding P100,000.00 and those amounting more than P100,000.00 shall be
forwarded to the Office of the Regional Director, COA Regional Office No. II,
Tuguegarao City. As part of the written request, the Municipal Accountant should
also prepare and certify the Annexes 1-3 of the said Circular and duly approved
by the Municipal Mayor.
6.5 The Municipal Accountant had submitted a written request for authority to write-
off accounts totaling P701,816.84. There were nine (9) accounts amounting to
P372,447.09 which were supported with PSA Death Certificates, hence these are
recommended for write-off. However, all the other accounts are returned for some
lacking documents.
49
6.6 Considering that the age of the receivables is below ten (10) years and in the
absence of proper and complete documents required in the Circular, the Municipal
Accountant may just recognize impairment loss in the books pursuant to IPSAS.
6.7 The foregoing observations are recommended for further compliance by the
Management with the purpose of achieving fair presentation of the accounts
involved, Accounts Other Receivables and Inter-Agency Receivables.
6.8 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.
Allowance for impairment has been recognized in the books since CY 2018.
Nevertheless, Management shall continue to exert effort to revalidate the
existence of the receivables and take appropriate action as recommended.
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.
7.1 Section 124 of PD 1445 provides that:
“It shall be the direct responsibility of the agency head to install, implement and
monitor a sound system of internal control.”
7.2 In addition, under Section 447(a) of RA 7160, the Sangguniang Bayan, as the
legislative body of the municipality, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the municipality and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the
corporate powers of the municipality as provided for under Section 22 of this
Code, and shall:
(2) (i) Approve the annual and supplemental budgets of the municipal
government and appropriate funds for specific programs, projects,
services and activities of the municipality, or for other purposes not
contrary to law, in order to promote the general welfare of the
municipality and its inhabitants;
(5) Approve ordinances which shall ensure the efficient and effective
delivery of the basic services and facilities as provided for under Section
17 of this Code, and in addition to said services and facilities, shall:
50
(xiv) Provide for the care of paupers, the aged, the sick, persons of
unsound mind, disabled persons, abandoned minors, juvenile
delinquents, drug dependents, abused children and other needy and
disadvantaged persons, particularly children and youth below
eighteen (18) years of age and, subject to availability of funds,
establish and provide for the operation of centers and facilities for
said needy and disadvantaged persons;
7.3 While under Section 483 (b) of RA 7160, the social welfare and development
officer shall take charge of the office on social welfare and development services
and shall:
(3) (i) Identify the basic needs of the needy, the disadvantaged and the
impoverished and develop and implement appropriate measures to
alleviate their problems and improve their living conditions;
(5) Recommend to the sanggunian and advise the governor or mayor, as

the case may be, on all other matters related to social welfare and
development services which will improve the livelihood and living
conditions of the inhabitants;
7.4 As allowed under RA 7160, the LGU may provide assistance for the general
welfare of its constituents subject to the passage of legislative enactment and
availability of appropriation.
7.5 For CY 2020, the Annual Budget disclosed a total of P7,142,000.00 appropriated
for donations only, hence the LGU has committed these funds for the purpose of
providing aids/assistance to other levels of government/individuals/institutions.
(Definition of Donation in Chart of Accounts, GAM for LGUs)
7.6 Moreover, under the Budget of the Office of the Municipal Social Welfare and
Development, it has committed for CY 2020, that it shall:
 Formulate and implement social welfare measures, plans and strategies.

 Be in the frontline service delivery, particularly those which have to do
with immediate relief during and assistance in the after math of mandate
and natural disasters and calamities.
 Improve response time to social welfare issues and concerns.
 Increase in enrollees in Day Care Centers
 Increase in the number of individuals assessed and given AICS assistance
 100% Senior Citizens given Social Pension
 100% PWD given Financial Assistance
7.7 As of December 31, 2020, the total donations amounted to P4,971,251.59. Out of
these, audit of disbursement vouchers identified that there were individual
donations for burial and financial assistance. The amounts and details of
donations were evaluated and we noted the following observations:
51
 The amounts given to beneficiaries ranged between P1,000.00 to P65,711.59
and the amounts varied without available basis thereof for evaluation of the
reasonableness of the amounts. The following tables summarized some
identified samples of varying amounts amongst claimants. See Annex H for
details.
Burial Assistance
Check
No.
F.V. Carbonel Funeral Burial Assistance (Eusebia
644986 2,000.00
Parlor Cristobal)
F.V. Carbonel Funeral Burial Assistance
645140 3,000.00
Parlor (Elizabeth Managuelod)
F.V. Carbonel Funeral Burial Assistance (Rolly
671122 3,500.00
Parlor Oliva)
Daysha Peña Hardware Materials (Burial
672191 4,176.00
And Electrical Supply Assistance)
F.V. Carbonel Funeral Burial Assistance (Nicanor
671118 5,000.00
Parlor Valdez)
F.V. Carbonel Funeral Payment of burial
672927 5,500.00
Parlol assistance
F.V. Carbonel Funeral Burial Assistance (Camilo
644982 6,000.00
Parlor Balacanao)
F.V. Carbonel Funeral Payment of burial
672928 6,500.00
Parlol assistance
F.V. Carbonel Funeral Burial Assistance (Erlinda
644981 7,000.00
Parlor Tadeo)
F.V. Carbonel Funeral Burial Assistance (Anthony
672349 10,000.00
Parlor Borromeo)
F.V. Carbonel Funeral Burial Assistance (Leonides
646571 12,000.00
Parlor Corpuz)
F.V. Carbonel Funeral Burial Assistance (Roberto
646527 15,000.00
Parlor Acosta)
646209 Roland Managuelod Burial Assistance 20,000.00
F.V. Carbonel Funeral
672152 Burial Assistance 22,000.00
Parlor
F.V. Carbonel Funeral Burial Assistance (Mariano
671054 23,000.00
Parlor Carabbacan)
672211 24,500.00
Parlor (Rosemarie Ruano)
646566 25,000.00
Parlor (Carmelita Silverio)
F.V. Carbonel Funeral Burial Assistance (Elderson
672099 48,025.00
Parlor Albano)
F.V. Carbonel Funeral Burial Assistance (Angelito
646279 55,000.00
Parlor Managuelod)
Check
No.
645168 Dona Mae Dela Cruz Financial Assistance 1,000.00
52
Check
No.
645110 Rey Mitra Financial Assistance 1,500.00
644835 Dona Mae Dela Cruz Financial Assistacne 1,756.00
644959 Myrna G. De Vera 2,000.00
(Lowegene M. Aligagay)
644969 Raquilin Sison Financial Assistacne 2,500.00
644961 Myrna G. De Vera Financial Assistance 3,000.00
672923 Alma Villanueva Financial assistance 3,500.00
671705 Elsie Joyce Faustino Financial Assistance 4,500.00
671135 Belinda M. Vispo (Perlita Gorospe - Brgy. 4,503.00
Lomboy)
671551 Belinda M. Vispo 4,920.00
(Teody Martinez)
645556 Marie Joy A. Alviar Financial Assistance 5,000.00
Dolriech Malenab
672019 Financial Assistance 8,400.00
Patnaan
Financial Assistance (Rodel
671552 Belinda M. Vispo 8,900.00
Paguyo)
645033 Myrna G. De Vera 9,500.00
(Birthday Celebrants)
671321 Diosdado S. Siquian Financial Assistance 10,000.00
645969 Ruzielle M. Battad Financial Assistance 15,000.00
646227 Myrna G. De Vera (Birthday Celebrants, 16,000.00
March-May 2020)
Financial Assistance (Ma.
645404 Myrna G. De Vera 20,000.00
Cristina Mañalac)
Daysha Peña Hardware
672163 Financial Assistance 34,560.00
And Electrical Supply
Financial Assistance (Street
645550 Myrna G. De Vera 50,500.00
Dancers)
645078 Maricel Salih Financial Assistance 65,711.59
 For the financial assistance, some payees were not the actual beneficiaries of
the grants and/or who were not legally authorized to transact and receive the
grant on behalf of the recipient, hence casting doubts whether the actual
beneficiaries received the amounts given by the LGU.
 For the burial assistance, all were direct payments to funeral parlor and
construction supplier except for one.
53
 Some amounts given were based on the private hospital billing. Some were
given amounts equivalent to the billed amount and some were portion of the
billing only. The billings cannot be verified or validated if unpaid as the
billing was not directly paid in the name of the hospitals.
 Some assistance to LGU employees were higher when compared with the
amounts provided to indigent beneficiaries. The highest grant to the employee
amounted to P65,711.59.
7.8 Other underlying considerations beyond the submitted documents cannot be fully
established as reasonable and fair because the social condition of one recipient
differs to another but the amounts given may not correspond to their actual needs
and social conditions.
7.9 Review of the supporting documents included generally the Certificate of

Eligibility, Social case of study, Prescription, Clinical Abstract, Certificate of
Indigency, ID, Hospital Bills/Statement of Account and other medical forms,
Barangay Certification, Death Certificate, Letter Request, Promissory Notes.
7.10 Moreover, as discussed in the preceding paragraphs, there were direct payments
made to claimants for various donations, while these reimbursements become an
audit issue why direct payments cannot be made as well, thereby the method of
payments of donations vary from one claim to another.
7.11 Overall, the LGU ensured that the evaluation of the eligibilities and social
condition of the recipients/beneficiaries are supported with sufficient documents.
However, the reasonableness of the amounts cannot be established as there are
inconsistencies in the grant, in the equitable basis of the amounts, authority of
claimants and method of payments.
7.12 We noted there are existing DSWD Circulars for Aids to Individuals in Crisis
(AICS) and these provide specific guidelines for the grant of assistance like
burial, medical, cash assistance and others which are similar to the nature of
donations provided by the LGU. The management may refer to these issuances as
a guide to establish the regularity and reasonableness of their donations.
7.13 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.
The Management explained that they are guided by DSWD Memorandum

Circular Nos. 11, series of 2019, as amended by MC No. 24, series of 2020. Some
of the noted samples were reimbursements of LGU officials for the actual
beneficiaries.
54
7.15 Auditor’s Rejoinder:
The Management should still establish its own guidelines and procedures for the
grant and payment of assistance to its constituents-in-crisis, prioritizing those
indigents, persons with disabilities.
8. Accounting and reporting guidelines for the Local Disaster Risk Reduction
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.
8.1 The following rules and regulations were highlighted relative to the audit of the
LDRRM Funds and utilization thereof:
 COA Circular No. 2012-002 dated September 12, 2012
 Item 5.1.2 A LDRRMFIP (LDRRMF Investment Plan) for the DRRM

program shall be prepared annually. It shall present the 30% allocation for
QRF in lump-sum and the allocation for disaster mitigation, prevention
and preparedness with details as to projects and activities to be funded.
The LDRRMFIP shall also include under a separate caption, the list
of projects and activities charged to the unexpended LDRRMF of
previous years.
 Item 5.1.9 Small items purchased for disaster response and rescue
activities, which do not qualify under the equipment classification, shall be
recorded as Inventories under the appropriate account.
 Item 5.1.10 “All unexpended/unobligated balance of the QRF and the

DRRMF-MOOE shall be transferred to the Special Trust Fund under
the account “Trust Liability-DRRM” (Code 438) in the Trust Fund
books.”
 Item 5.1.12 “The account Trust Liability – DRRM in the Trust Fund
books shall be used to record transfers of the agency’s unutilized QRF
and DRRMF-MOOE of the previous years, receipts of NDRRMF,
DRRMF from other LGUs and other sources.”
 Government Accounting Manual for LGUs
 Section 54. Transfers, Assistance and Subsidy. Transfers represent

receipts of the LGU counterpart or equity share, the unspent
appropriations for Disaster Risk Reduction and Mitigation Fund,
transfers from national government agencies and other local government
units.”
55
 Section 130. Unexpended Balance of DRRMF other than those
appropriated for capital outlays shall be transferred to the Trust Fund
and recognized as Trust Liabilities - DRRMF.
 Section 134. Recognition of Expenditures. Upon incurrence of

expenditures, the appropriate expense or asset account shall be recognized.
 Republic Act No. 10121
 Section 21 Xxx Not less than five percent (5%) of the estimated revenue
from regular sources shall be set aside as the LDRRMF to support
disaster risk management activities such as, but not limited to, pre-
disaster preparedness programs including training, purchasing life-saving
rescue equipment, supplies and medicines, for post-disaster activities, and
for the payment of premiums on calamity insurance.
8.2 For CY 2020, the following amounts were accounted under LDRRM Funds of
LGU Angadanan:
Particulars Amount
Estimated Revenue from Regular Sources P167,390,472.00
Multiply by: 5%
Minimum Appropriation 8,369,523.60
CY 2020 Current Appropriation 8,369,524.00
CY 2015-2019 Unexpended Balances 4,211,027.90
Total LDRRM Funds P00
8.3 Firstly, we have undertaken evaluation of implementation of projects, programs

and activities embodied in the Investment Plan of the LGU and we noted
commendable efforts by management with regards to the utilization of LDRRM
Funds for its disaster preparedness and response efforts to contain the spread of
COVID-19 and provided basic services to the affected population.
8.4 However, in the review of LDRRMF transactions and reports, we observed the
following areas which the management may need to look into not only in
compliance of the rules and regulations but to ensure that the LDRRM Funds are
fully accounted and reported:
Planning and Budgeting
 The LDRRMFIP does not include under a separate caption, the list of
projects and activities charged to the prior years’ unexpended LDRRMF,
hence the management has no defined plans for the use of the prior years’
unexpended balances in support of any pre-disaster preparedness, post-
disaster activities, disaster response, relief and recovery programs.
Accounting and Recording
56
 Non-transfer of P2,327,212.31 unexpended total balance of QRF and
DRRMF-MOOE for the Current Year 2020 and the unexpended prior
years’ balances amounting to P237,827.90 to the Special Trust Fund in
the Trust Fund books which has understated the TL-DRRMF and CIB-
LCCA accounts in the Trust Fund books.
As per verification of books and bank accounts, we noted that the remaining
balances of QRF and DRRMF-MOOE amounting to P2,327,212.31 as well as
the unexpended balances for the years 2015 to 2019 amounting to
P237,827.90 were not yet transferred in the Trust Fund thus understating the
TL-DRRMF and CIB-LCCA accounts in the Trust Fund books.
 The actual cash reported in the separate bank account for the LDRRMF
was understated by P669,565.99.
The LGU maintains two different bank accounts where the shares from IRA
and collections from regular sources are deposited separately. Another bank
account is being maintained for the 5% Calamity Funds. The practice of the
LGU is to transfer funds from these two bank accounts to the 5% Calamity
Funds bank account.
Based on the verification of transactions, we noted that the amount of

P669,565.99 was not yet transferred to the separate bank account for the 5%
Calamity Fund as computed below.
Particulars Amount
CY 2020 Appropriation for Calamity Fund P 8,369,524.00
Total Amounts Transferred 7,699,958.01
Cash to be Transferred to 5% CF P 669,565.99
Account
The cash for LDRRMF are commingled with the unappropriated funds of the
LGU and not properly accounted. The Municipal Treasurer committed to
transfer the amount in CY 2021.
 Unexpended balances for the years 2012 to 2014 totaling P332,562.28

were not yet transferred to the General Fund bank account thereby
resulting in the misstatements of the GFP and Calamity Fund bank
accounts for the same amount.
In compliance by Management of our previous year’s audit observation, they

were able to revert the unexpended balances from years 2012 to 2014
amounting to P332,562.28 to the unappropriated surplus of the General Fund.
However, in our review of the Transaction Listings of the CIB-LCCA,
Calamity Fund, there was no actual transfer of cash for the same amount to
the GF bank account. As a result, the cash in bank balances of both the GF
and the CF accounts were misstated as at year-end.
57
We referred this to the Municipal Accountant and she said that it shall be
transferred this 2021.
 Receipts from other sources totaling P634,460.90 were accounted in the

Due to LGUs account instead that it should be recorded under the Trust
Liabilities-DRRMF. These were also not disclosed in the Notes to
Financial Statements.
We have inquired from the Municipal Treasurer regarding receipts from other
sources. She provided us List of Cash Donations aggregating to P634,460.90
from various individuals (P322,457.90) and from NDRRMC (P312,003.00).
These amounts were unexpended and remained intact in the Trust Fund
Regular Account and recorded in the Account Due to LGUs.
The above receipts should be accounted as Trust Liabilities-DRRMF in the

Trust Fund books and not in the account “Due to LGUs”.
These resulted in the overstatement of the Due to LGUs account and

understatement of the Trust Liabilities-DRRMF for the same amount, both in
the Trust Fund books. The Municipal Accountant committed to reclassifying
the affected accounts in CY 2021.
 Charges against the prior years’ unexpended balances were directly

accounted in the Trust Liability – LDRRM account, instead of recording
proper asset or expense upon occurrence of the transactions, thereby
misstating the latter.
Utilization
 Some disbursements for Fuel, Oil and Lubricants charged against the
Quick Response Fund were used “for emergency purposes” but without
specifying the specific destination and other circumstances to consider
such emergency.
In our review of the disbursements on fuel consumption of the LGU that were
charged to Quick Response Fund, we noted that the purpose for payments of
fuel were only described with the generic purpose as “for emergency
purposes” without specific further other details such as the destination or the
nature of such emergency or name of the persons to be served in such
emergency.
Propriety of the disbursements may be rendered doubtful. For other

transactions, the management however have specified purposes like used for
picking up of rice and medical supplies, bringing home stranded residents,
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picking up of goods for mobile palengke, COVID 19 monitoring, garbage
collection, picking up SAP cheque, and the like.
Inventory Reporting
 Summary/List of Donations Received, Distributed and Balances together

with its supporting documents were not yet available to date thus cast
doubts on the accuracy, existence and reliability of the Inventory account
at year-end.
The reports on receipt, issuance and balances of inventories were not yet
available, which in the absence of these documents can render the balances of
Inventory accounts at year-end doubtful and may be misstated.
8.5 These audit observations may affect the accuracy and overall presentation of
LDRRM Funds in the financial statements, wherein several noted accounts were
misstated by the above-inconsistencies and non-compliance in the accounting and
reporting guidelines.
8.6 In addition, at this time of pandemic, it is crucial that the LDRRMF should be
properly funded and must be fully accounted by the management.
8.7 We recommend 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.
8.8 Management Comments:
The unexpended balances and other receipts were already transferred/reclassified

as Special Trust Fund Trust Liabilities –DRRMF in the Trust Fund Books in the
ensuing year. Likewise, a list of donations received shall be submitted to your
good office. The unexpended funds were not included in the Plan as these shall be
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used when necessary and needed, upon proper deliberation and approval of the
Council and the Municipal Mayor.
The other recommendations are noted and for compliance.
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.
9.1 DSWD MC No. 13 series of 2015 sets the “Guidelines on the Provision of Seed
Capital Fund Through the Sustainable Livelihood Program”. The primary
objective of the grant is to organize community-based, credit and savings facility,
and be provided with the necessary assistance to operate as such.
9.2 Seed Capital Fund refers to the capacity building grant provided to eligible
program participants under the Microenterprise Development track of SLP; the
grant is intended for the setting up of a credit and savings facility xxx to be
returned to the SLP Association within a specified period of time xxx. (Item 3.6
of same MC)
9.3 Furthermore, it also provides the following:
5.4 Seed Capital Recovery. While the nature of the Seed Capital Fund
released by the DSWD to the members of the Sustainable Livelihood Program
(SLP) Association is recorded as a grant in its books, the SLP Association
treats the amount as a loan availed of by its members.
5.4.1 Members to the SLP Association. For the recovery of Seed Capital
Fund released to its members, the SLP Association should put in place a
system of collection and management of funds which details on the (a)
frequency (i.e. weekly, or based on the regularity of cash flow from the
established enterprise), (b) savings mobilization (equity capital and related
funds build up), (c) terms of repayment (e.g. maximum of two years) and
provision of re-loan, and (d) incentives and penalties for
responsible/delinquent borrowers.
5.4.2 SLP Association to DSWD. While it is understood that the grant

disbursed by DSWD to the individual eligible participants should be returned
to the SLP Association, the SLP Association need not return it to the DSWD.
9.4 Sangguniang Bayan Resolution No. 2015-12 dated May 18, 2015 approves the
List of Anti-Poverty Reduction Projects of the Municipality and authorizes as
well the LCE to enter into a Memorandum of Agreement with all BuB
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participating agents. On the list is the Sustainable Livelihood Program categorized
into (a) Micro Enterprise Development Track and (b) Microfinancing (Bigasan ng
Bayan). These are to be sourced from the Department of Social Welfare and
Development. On December 7, 2015, the LGU entered into a Memorandum of
Agreement with DSWD Field Office No. 02.
9.5 We gathered the following from the Municipal Treasurer regarding the receipts of
fund for SLP on December 12, 2016:
Official Receipt No. Amount

7042398 P 650,000.00
7042399 1,000,000.00
Total P 1,650,000.00
9.6 The setting up and opening of a group account shall be considered as a milestone
on Group Formation. (Item 5.1 of MC 13) Per inquiry with Management,
members failed to open a bank account thus collections of the repayments of SLP
was executed by then Municipal Social Welfare and Development Officer
(MSWDO). On June 5, 2018, the Municipal Treasurer took charge of collecting
the repayments until to date.
9.7 It is noteworthy that relative to our audit of the Cash in Bank-LCCA of the
Municipality, we noted a newly opened current account on August 14, 2020 with
Development Bank of the Philippines – Santiago City branch. It serves as the
depository account of collections of repayments of Sustainable Livelihood
Program (SLP) from beneficiaries.
9.8 This setup of collection of the Agency is inconsistent with Item 5.4.2 of MC No.
13 wherein we reiterate that it requires:
 The SLP Association should put in place a system of collection and

management of funds
 The grant disbursed by DSWD to the individual eligible participants should
be returned to the SLP Association, the SLP Association need not return it to
the DSWD
9.9 With the foregoing we noted that LGU has no written authority to collect such
repayments under the said Program.
9.10 We stress once more the primary objective of the grant i.e. to organize a
community-based credit and savings facilities that financial institutions may tap
as wholesale credit providers or conduits for lending to the areas that are yet to be
covered by formal financial institutions. Item 5.3.3 further states that “The
Association has a responsibility to ensure regularity of the repayment of
members.” Thus, it is imperative that the Seed Capital Fund recovery must
transpire within the SLP Association so that its objective will materialize. With
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the intervention of the LGU, it defeated such primary objective and has also led
us to conclude that their authority to collect was questionable.
9.11 We also have identified several issuances pertaining to the SLP, the latest is
DSWD Memorandum Circular No. 22, series of 2019 – “Comprehensive
Guidelines on the Implementation of the Sustainable Livelihood Program”. The
management should take into this issuance which revised the previous basis of the
LGU.
9.12 The management should submit Fund Utilization Report on the amounts received
for the SLP Program and strictly comply on the guidelines on the utilization of the
remaining SLP funds especially the amounts which remained deposited under the
Account No. 00-0-50101-541-3 in the DBP Santiago Branch.
9.13 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 Municipal Treasurer committed to comply with the audit recommendations.
10. Minimum standards and qualifications of staffs in the Municipal Disaster

Risk Reduction Management Office (MDRRMO) were not met inconsistent
with Republic Act No. 10121 and NDRRMC-DILG-DBM-CSC Joint
Memorandum Circular No. 2014-1 dated April 4, 2014, hence composition
and structure of the Office may not be fully capacitated to carry out their
duties for administration and training, research and planning and operations
and warning.
10.1 Republic Act No. 10121 mandates the establishment of LDRRMOs in provinces,
cities, and municipalities, and BDRRMCs in barangays. This is emphasized under
Section 12(b):
“The LDRRMO shall be under the office of the governor, city or municipal
mayor, and the punong barangay in case of BDRRMC. The LDRRMOs shall
be initially organized and composed of DRRMO to be assisted by three
(3) staff responsible for: (1) administration and training; (2) research and
planning; and (3) operations and warning. The LDRRMOs and the
BDRRMCs shall organize, train and directly supervise the local emergency
response teams and the accredited community disaster volunteers (ACDVs)
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10.2 In addition, the NDRRMC-DILG-DBM-CSC Joint Memorandum Circular No.
2014-1 dated April 4, 2014 provides the following:
 Item 3.0 To prescribe the policies and guidelines for the establishment of an
LDRRMO in every province, city and municipality, and a BDRRMC in every
barangay, and the creation of at least four (4) statutory DRRM positions in
every province, city, and municipality, namely: one (1) Local DRRM Officer
and three (3) DRRM Staff.
 Item 4.2 The provincial, city or municipal DRRM Officer, and the three (3)
staff responsible for administration and training, research and planning, and
operations and warning are considered mandatory positions.
 Item 6.1 The Local DRRM Office series of position titles with their
corresponding minimum qualification standards and salary grades shall be
used in the classification of the technical staff positions for the LDRRMO.
(Career Service Professional or Sub-Professional / 1st or 2nd Level
Eligibility)
10.3 Composition of the created MDRRM Office as appearing on the Plantilla of LGU
Regular Personnel for FY 2020 consists of:
Positions on MDRRM Office in FY 2020 Plantilla

Position Title SG Remarks
Local Disaster Risk Reduction Officer III 18 Occupied
Local Disaster Risk Reduction Assistant 8 Occupied
Local Disaster Risk Reduction Assistant 8 Vacant
10.4 Three (3) DRRM positions were created per Plantilla of LGU Personnel for
FY 2020 but only two (2) positions were occupied.
10.5 Based from the above table, only two (2) positions were currently occupied
leaving one (1) vacant position. Moreover, one mandatory position was not
created in the Plantilla.
10.6 Further examination and review of the actual composition and structure of the
MDRRMO of LGU Angadanan for CY 2020 revealed that at present, the Office
consisted of LDRRM Officer III, one (1) LDRRM Assistant and two (2)
Administrative Aide I who are hired as Job Orders.
10.7 The two hired job orders were designated “Research & Planning Officer”
and “Administrative & Training Officer”, however their designation was not
made in writing.
10.8 There should be specific and written designation for these personnel not only for
formality but also to establish their areas of technical expertise and accountability.
In the absence of such written designation, they may be disqualified from
occupying the said positions in the LDRRM Office.
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10.9 While the LGU is allowed to augment the staff of LDRRMO, it is however more
compliant with the law if the mandatory positions is prioritized to be occupied by
qualified persons.
10.10 The establishment of “fully functioning, adequately staffed and financially-

capable DRRM Offices” is crucial and mandatory as this Office seeks to achieve
the goal of preparedness i.e. “to establish and strengthen capacities of
communities to anticipate, cope and recover from the negative impacts of
emergency occurrences.” (Item 6.3, Volume I, National Disaster Preparedness
Plan of 2015-2028).
10.11 This Office shall also be responsible for setting direction, development,
implementation and coordination of disaster risk management programs within
their jurisdiction.
10.12 With the vital role of the MDRRM Office, the management should not only
ensure that capital and operating expenditures are provided, but the organizational
structure of the MDRRM Office should be manned by qualified, eligible and
experienced personnel.
10.13 We recommended the Management to:
a) Create one (1) additional mandatory position and prioritize the pooling
and recruitment of competent and eligible applicants who shall occupy all
the vacant mandatory positions under the MDRRM Office; and
b) Strictly observe the minimum standards and qualifications for the

mandatory positions as cited on the aforementioned rules and
regulations.
The management acknowledge the observation and shall ensure compliance with
the audit recommendation.
11. The Agency did not establish an Inventory Committee which shall be
composed of members whose time and efforts shall be exclusively rendered
for the purpose of completing a comprehensive physical count as prescribed
in COA Circular No. 2020-006 dated January 31, 2020.
11.1 COA Circular No. 2020-006 dated January 31, 2020 was issued to prescribe the
guidelines and procedures on inventory taking, recognition of those found at
station and disposition for non-existing/missing PPE items for the one-time
cleansing of PPE accounts of government agencies to establish PPE balances that
are verifiable as to existence, condition and accountability.
11.2 We summarized the relevant Sections of COA Circular No. 2020-006 in order for
the management to prioritize undertaking the procedures laid out in the Circular:
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5.2 The Head of Agency shall create an Inventory Committee composed of
adequate number of members to be able to complete the inventory in three
months or less. The Inventory Committee shall have at least one member each
from the Accounting and Property Division/Units of the Agency.
5.3 The members of the Inventory Committee shall be temporarily relieved of

all their regular duties to devote their full time in the conduct of the physical
inventory taking until the same is completed.
5.4 The entire inventory taking shall be witnessed by the Commission on

Audit (COA) Auditor. The Audit Team Leader and/or any of his/her audit
team members may be assigned for the purpose.
5.5 The Head of the Agency may also require a representative from the
Agency’s Internal Audit Service/Unit to witness inventory taking.
11.3 The present Inventory Committee is composed of LGU officials and employees
who are performing their regular duties and responsibilities and at the same time
being designated as members of said Committee.
11.4 Now that the Circular requires full devotion of official time of the Committee
members exclusively for the purpose of conducting and completing a
comprehensive physical count of PPEs, the composition of the Committee should
be re-evaluated and designation of members be made in accordance with the new
guidelines. This Committee shall ensure that the new guidelines on physical count
are accomplished within three months or less. They shall ensure that the One-time
Cleansing of PPE account balances are properly undertaken.
11.5 We recommended that the Municipal Mayor designate members of the

Inventory Committee who shall fully devote their time and exclusively
perform roles set forth in the new Guidelines. Their designation shall be
effective for the period prescribed and only for the purpose of achieving a
one-time cleansing of PPE account balances.
Management shall ensure compliance with the recommendation.
12. The Inventory Committee did not prepare and submit a Physical Inventory
Plan and the Supply and Accounting Office did not also prepare reconciled
reports in order for the Inventory Committee to strategize and complete the
inventory taking.
12.1 The following Sections provides the documentary requirements in relation to the
general guidelines and preliminary activities prior to the conduct of inventory
taking by the Committee.
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5.9 In connection with the Property Division/Unit, the Inventory Committee
shall plan and strategize on how to conduct and complete the physical
inventory within the prescribed period. It shall prepare a Physical Inventory
Plan (PIP) containing at least the specific assignment/duties of the Committee
Members, the cut-off date and a schedule specifying the dates and locations of
the inventory taking activities from start up to the targeted completion of the
physical inventory.
5.10 The PIP shall be approved by the Head of Agency.
5.11 The Inventory Committee shall submit the approved PIP to the COA
Team at least ten (10) calendar days before the scheduled start of inventory
taking activities.
5.12 Property records shall be updated based on the results of the physical
inventory and reconciled with accounting records to come up with the
reconciled balances of PPE accounts to be considered as the correct balance
of the agency’s PPEs.
6.1.1 The Property Unit shall obtain the latest Report on Physical Count of
PPE (RPCPPE)/Physical Inventory Report.
In the absence of the latest RPCPPE/Physical Inventory Report or if the same

is determined to be undependable/unreliable, a standard form (Annex A) on
the list of existing PPE shall be filled up by each office and submitted to the
Property Unit for verification prior the conduct of the actual inventory by the
Inventory Committee.
6.1.2 The Accounting Unit shall update its record of

acquisition/disposal/transfer of PPEs in the PPE Ledger Cards (PPELCs)
and ensure that the total balance of PPELCs tally with the balances of
controlling PPE accounts in the General Ledger.
6.1.3 The Property and Accounting Units shall compare the latest Report on
the RPCPPE/Inventory Report with the PPELCs.
6.1.4 The Property Unit shall prepare a list of PPE Items which are recorded
in the PPELCs but not included in the RPCPPE/Physical Inventory Report as
well as PPE items which are included in the RPCPPE but not recorded in the
PPELCs.
6.1.5 Both the Lists and the latest RPCPPE/Physical Inventory Report shall
be submitted to the Inventory Committee. These documents shall be
considered as inventory working papers and shall be used by the Inventory
Committee as basis in preparing the PIP.
12.2 The GSO was able to submit a Report on Physical Count of PPE/Physical
Inventory Report as at December 31, 2020 while the Accounting Office provided
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for Subsidiary Ledgers of each PPE. PPE Ledger Cards (PPELC) and Property
Cards were not available/updated. However, we noted inconsistencies in their
reports, hence the Annex A of the Circular must be accomplished. When both
their records are available, this shall be used by the Inventory Committee as basis
for the PIP.
12.3 The PIP is a new required document and no prescribed sample is provided, hence
the form and content may be made by the Agency, however the required details
and timeframe must be strictly incorporated in the PIP. This document is crucial
in the process of carrying out the physical inventory taking of PPE.
12.4 We recommended that the Inventory Committee prepare and submit the PIP
and all the concerned offices update their records in order for the latter to
strategically plan the inventory taking activities in accordance with the new
guidelines.
13. The conduct of inventory taking was not undertaken in accordance with the
new Guidelines that should result in a comprehensive report which present
all PPEs found at station, its condition and those non-existing/missing items.
13.1 According to the Circular, the conduct of the inventory taking activities shall be
executed in accordance with the approved PIP. In case of deviations in the
activities or procedures, the Head of the Inventory Committee shall keep a record
of the alternative procedures undertaken and the reasons for the deviation from
PIP.
13.2 The physical count shall be recorded/documented daily in a standard Inventory

Count Form (ICF). Separate ICF shall be used for each PPE sub-major account
group. All PPE items counted shall be tagged with the new property stickers
containing the following:
 Description of the property

 Model Number
 Serial Number
 Acquisition Date/Cost
 Person Accountable
 Space for the validation/signature of the Inventory Committee
13.3 The Inventory Committee shall clearly state in the ICF the condition of the PPEs,
such as in good condition, needing repair, unserviceable, obsolete, no longer
needed, not used since purchase, etc.
13.4 In the course of the inventory taking, if there are any PPEs found but not included
in the Inventory of the Supply Office, these should be described as “Found at
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Station” and if there PPE items which are included only in the records of the
Accounting Office, these shall be described as “Non-existing/Missing”.
13.5 Upon completion of the physical count, the Inventory Committee shall prepare the
RPCPPE prescribed in the LGU GAM. This report shall be prepared in four
copies to be distributed to the COA Auditor, Accounting Unit, Property/Supply
Unit and Inventory Committee.
13.6 Thereafter, the Property Unit and Accounting Unit shall undertake collaborative
procedures to ensure that all PPEs in the RPCPPE are duly recorded in their
respective records (Property Cards and PPE Ledger Cards).
13.7 All these procedures are laid in the Circular and are comprehensively discussed
thereat.
13.8 At present, the physical count was undertaken by each Office and the Inventory of
PPE for each Office was submitted. However, the details and relevant reports
prescribed in the Circular are not yet adopted by the Management. Moreover, all
the properties found at station and those which may be non-existing/missing items
were not specifically identified in the submitted reports.
13.9 The relevance of this comprehensive inventory taking will assist the management
in achieving the One-time cleaning of PPE account balances. Moreover, the report
that may be rendered will establish the existence and condition of all the PPEs.
Lastly, if there may be any identified non-existing/missing items, these may
already be resolved in the same Guidelines.
13.10 We recommended that the Municipal Mayor enjoin the Inventory

Committee and all concerned offices to:
a) Undertake the inventory taking in accordance with the procedures set in

the new Guidelines; and
b) Reconcile and update their records and reports accordingly.
14. Family profiling of Social Amelioration Program (SAP) beneficiaries was not
summarized completely with the relevant details in the prescribed matrix,
which may cast doubts as to the eligibilities of some beneficiaries and which
may also result in duplication of benefits.
14.1 DSWD Memorandum Circular No. 09, series 2020 dated April 9, 2020 provides
the Omnibus Guidelines in the Implementation of the Emergency Subsidy
Program (ESP) of the Department of Social Welfare and Development and which
serves to harmonize Memorandum Circular Nos. 04, 06 and 07, series of 2020.
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14.2 Under Part IV of the said MC, the following terms were defined:
E. Family – for purpose of these guidelines, it shall refer to a social unit

generally composed of a father, mother, and/or children, including all
individuals who live under the authority of another, and includes the domestic
workers of the family; Provided, that a solo parent who has custody of his/her
children is considered as family. For the purpose of these guidelines and only
for the implementation of the Social Amelioration Program, the terms
“household” referred to in RA 11469 shall be defined as “family”.
F. Head of the Family – for purposes of these guidelines, it shall refer to the
member of a family who is responsible in the proper consumption of the ESP
H. Social Amelioration Card (SAC) – a barcoded form with series numbers,

distributed at the Barangay level, that captures the family profile which will
be the mechanism to monitor the provision of the social amelioration
programs of the government and the DSWD.
14.3 Also, Part VI-B of the same MC specified the following families shall be
excluded from receiving the ESP under these Guidelines if any of its member/s
is/are:
 Elected and Appointed government official/s (i.e. permanent, contractual,

casual, coterminous) or personnel contracted (under Memorandum of
Agreement; Cost of Service, Job Order and other similar arrangement/s) in
any National Government Agency (NGA), Government-Owned and
Controlled Corporation, Local Government Unit and GOCCs with original
charter;
 Employees in the private sector, or those in the informal economy,
including those who are employees of GOCCs without original charters,
regardless of the existence of employee-employer relationship, and
regardless of the fact that they are receiving salary or wage;
 Retired individuals who are receiving pension; and
 Families with independent financial capacity consistent with the intent of
RA 11469 to provide ESP only to low income families
14.4 In accordance with RA 11469, the ESP shall be implemented through Social
Amelioration Programs of the DSWD which shall provide subsidy amounting to a
minimum of Five thousand (P5,000.00) to a maximum of Eight thousand
(P8,000.00) to “low-income” households or those in subsistence economy or
workers in the informal economy.
14.5 Further stated under Part V that the following proposed subsidy for Region II was
based on the proportion of the minimum wage rates, with inclusion of the rate of
ESP of the families identified under 4Ps and non-4Ps:
Region Daily Subsidy Amount Per Subsidy Amount
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Minimum Per month (For
month (For Non-4Ps)
wage 4Ps)
II P370.00 P5,500.00 P4,150.00
14.6 Per records, LGU Angadanan received a total subsidy of P37,130,500.00. The
subsidy was disbursed in the name of Ms. Myrna G. De Vera, the Municipal
Treasurer with the following details:
Date Check No. DV No. Particulars Amount

04/13/202 553738 2020-04- To withdrawal of Social P 37,130,500.00
0 034 Amelioration Program
14.7 In the review of the submitted documents, we noted that only the payrolls (where
each recipient received P5,500.00) were available for review, hence we inquired
from the Municipal Social Welfare and Development Officer (MSDWO) for other
supporting documents as follows:
 Duly signed MOA

 Master list from the barangay, reviewed by the MSWDO and duly noted by
LCE
 Accomplished SAC Forms
 Photocopy of ID with specimen signature of the beneficiaries or in lieu,
Punong Barangay Certificate
 Photo of the beneficiary during actual receipt
 Certificate of Payment duly signed by the authorized official of the LGU.
14.8 To date, the MSWDO submitted the following reports and documents:
 MOA (unsigned by DSWD FO2) including the Project Proposal, Sangguniang

Bayan Resolution No. 2020-25 and Affidavit of Undertakings (photo only
sent thru email)
 Photo of the beneficiary during actual receipt (soft copy thru CD)
 A List/Matrix of Beneficiaries (soft copy thru email) with the following
information on family profiling:
 Name of the Beneficiary and household members;
 Classification whether Head of Household (HH)or Relationship to the
HH;
 Age
 Gender
 Work
 Sector
 Condition (Health)
 Barangay Code
 Address
 ID presented
 Monthly Income
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 Contact Number
 Work Address
 Beneficiary of UCT (Unconditional Cash Transfer)
 Beneficiary of 4Ps
 Indigenous People
 Other Benefits
 Date of Registration
 Name of Punong Barangay
 Name of MSWDO
14.9 We reviewed the payrolls and list/matrix (soft copies) of family profiling of
beneficiaries of all 59 barangays of LGU Angadanan and we have noted the
following deficiencies and incomplete information:
 Actual receipt of cash assistance as written in the payrolls were made by

persons other than the Head of the Family, instead the receipt was “Signed
for”, with thumbmarks or made by other members of the households. The
actual receipts were not supported with proper authorization.
 Unique Barcodes were not assigned to some heads of the families and/or the
members of the households, thereby, indicating that the required SAC forms
may not be given to or accomplished by the qualified recipients. In the
absence of the barcodes in the matrix, the relationship of some members to
head of households and their eligibilities cannot be fully established.
 Some recipients were not labeled as Head of Households or the relationship
of some members to the Head of Households were not encoded. Some HH
columns were filled out in blanks. Without identifying the relationship, the
composition of the family may not be known and may not be compliant with
the rules.
 Some recipients were without information on IDs or Barangay Certification.
 The work and monthly income of some Head of Households and/or
members were not provided or disclosed in the matrix, thereby the actual or
present employment and/or independent financial capacity may not have
been considered in the assessment/evaluation of the eligibility of recipients.
 Some recipients have work and earned monthly income ranging P3,000.00
to P15,000.00. Others have indicated their work but no amount of income
was specified. The amount of income is relevant in the evaluation of
financial capacity of the recipient and/or whether they are earning quite
more than the minimum wage rate. Their work is also important in
considering whether the recipient may have claimed or availed of benefits
from other agencies like DOLE, DA, OWWA and other agencies. Without
such relevant information, the rules on “no duplication of SAP benefits”
may not be ensured and complied with.
 As regards the nature of work, we analyzed and classified the recipients as
to how the columns for “Trabaho”, “ID”, “Income”, and “No. of
Dependent” were filled and we noted that some recipients belong to the
“Exclusions from ESP” in Part VI-B of the MC, which may result to their
disqualification:
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No. of Puno No. of Members
Exclusions from ESP
ng Pamilya of Household
Elected and Appointed Government Officials 1 1
Employees in the private sector 377 152
Retired individuals receiving pensions 48 1
Families with independent financial capacity
(income more than the Monthly Min. Wage 49 2
Rate)
No work or blank 1,321 8,039
 As shown above, many recipients and household members have not

provided any information about their work which may also lead to the
possibility that they may actually belong to any of the above-listed
exclusions presented in paragraph g. Had their works were properly filled-
out and disclosed and they found to belong to any of the exclusions, they
should be disqualified outright.
 There were also34 Puno ng Pamilya who were without any dependents but
received P5,500.00. SAP benefits should be given to qualified families with
dependents and not based on individual claims.
 The members were evaluated whether they are children or under the
authority of the head of households, like SCs, PWDs, IPs and we noted that
some members were grandchildren, siblings, unmarried partner, niece,
nephews, in laws and the like. Presented are their profiles:
Profiles Unqualified Members

Unqualified dependent, with work, without sector 162
Unqualified dependent, with work, with sector 23
Unqualified dependent without work, with sector
47
(SC,PWD, Solo Parent)
Unqualified dependent, without work, without sector 102
No Classification as member (Blank HH) 848
 Moreover, 29 heads of households who received P5,500.00 were also
included as members of other households. Similarly, 89 members of
households were included again as members of another household. These
may result in duplication of benefits.
 The following head of households were assigned with two barcodes and
received P11,000.00.
Barcode
Last Name Tirahan Remarks
s
With different birthday
2476 CARABBACAN, BUENAVISTA and members of family
7906 VICENTE V. VICTORY but same signature in
the payroll
Same members and
3800 CORPUZ, CENTRO 2
same signature in the
6802 ALADIN G. PISSAY
payroll
72
 The portion in the matrix where the recipients and/or members should
disclose any receipt of other benefits or financial assistance were not
properly accomplished. Some were noted as beneficiaries of UCTs or 4Ps,
where their benefits should have been reduced with the amount already
received from said sources. SAP serves to augment their needs and not as a
duplication of their benefits. Also, the portion of other benefits were left
blank, which may also cast doubts as to whether the management have
properly ascertained any duplication of benefits.
 Members of the family were not the usual composition of a family unit – 1)
parents and children and/or vulnerable sectors – SCs, PWD, IPs or 2) solo
parents with child/children. The table below shows the usual composition of
a family unit and where households are not within the definition in the MC.
Head of Household
Members
Husband Wife Siblings Grandparents(spouse) Grandchildren Others
Husband x Yes No No No No
Wife Yes x No No No No
Children Yes Yes No Yes No No
Siblings No No x No No No
Grandparents (parents of Husband/Wife) Yes, if Vulnerable sector No Yes No No
Grandchildren No No No Yes, if no known or living parents No No
Others-Pinsan, Aunt, Uncle, Etc. No No No No No No
14.10 With the foregoing lapses, the eligibilities and family profiling of some
beneficiaries were not properly evaluated and reviewed by the Barangay, the
MSWDO and other LGU personnel concerned in the identification of qualified
families or households.
14.11 The management should ensure that the families who received SAP benefits 1)
have met all the eligibility requirements and that 2) no duplication of benefits,
otherwise, refunds may be enforced and/or management may be held accountable.
14.12 We recommended that the Municipal Mayor require the MSWDO to update
the List/Matrix, complete the relevant information and submit the reviewed
list/matrix in order to eliminate doubts on the eligibilities of the beneficiaries.
Moreover, looking forward, the updated List/Matrix shall serve to provide
the Management a more accurate report on the eligibilities of families in
consideration of any emergency financial assistance that may still be
provided in the future.
The Municipal Social Welfare and Development Officer (MSWDO) committed to

submit the reviewed/updated list of Social Amelioration Card (SAC) summary.
15. Prices paid on several essential goods were relatively exorbitant than the
prices established by regulatory agencies, hence incurrence of disbursements
which may be disadvantageous to the government.
73
15.1 Presidential Proclamation No. 922, s. 2020 was issued declaring a state of public
health emergency throughout the Philippines due to the Coronavirus Disease 2019
(COVID-19). Thus, Republic Act No. 11469 or the “Bayanihan to Heal as One
Act” was enacted declaring a state of national emergency over the entire country
to control the spread of the disease.
15.2 By virtue of the above Proclamation and pursuant to Section 6(1) of Republic Act
No. 7581 as amended by RA 10623 (otherwise known as the Price Act), prices of
basic necessities in the entire country “shall automatically be frozen at their
prevailing prices or placed under automatic price control”. (DA-DTI-DOH JMC
No. 2020-01 dtd March 18, 2020)
15.3 Further, Memorandum Circular No. 77 s. 2020 dated March 17, 2020 issued by
the Executive Secretary by authority of the President of the Republic of the
Philippines directed the Department of Health (DOH), Department of Agriculture
(DA), Department of Trade and Industry (DTI) to undertake continuous
monitoring and review of the prices of basic commodities within their respective
jurisdiction, and enact such price control measures pursuant to Section 6 of RA
7581, as amended.
15.4 GPPB Circular No. 01-2020 dated April 6, 2020 on Guidelines for Emergency
Procurement also provides that:
“Item 5. Price Negotiation. PEs shall negotiate for the most advantageous price
to the government based on: (a) existing price data of the agency, the
Department of Trade and Industry or other relevant agencies or (b) preliminary
market scanning done by the agency showing prevailing market prices and
practice.”
15.5 In our examination of the Disbursement Vouchers, Purchase Orders, Delivery

Receipts/Official Receipts and other supporting documents, we noted various
procurement of Essential Emergency Medicines and selected Medical Devices,
Agricultural Commodities and other basic necessities with costs higher than or
exceeding the prices set by the regulatory agencies.
15.6 It is noteworthy that price freeze was implemented due to the on-going global
concern on the spread of Coronavirus Disease (COVID-19), hence compliance of
the Agency on established guidelines on price freeze was reviewed.
Department of Health (DOH)
15.7 The DOH ordered a price freeze on various Essential Emergency Medicines in the
entire country through the following Circulars/Memoranda. We only identified
and selected the items which were relevant in the audit of procured items of the
LGU and presented these in the Table 1. We compared these prices against the
actual disbursements of the LGU for the same items.
DOH Price Freeze
74
Circular / Subject Face Earlope 70% Cover all
Memorandum Shield Sterile Isopropyl (Hazmat)
Mask Alcohol
(gal)
DC No. 2020- Reiteration of the Price Not on Not on the Not on the Not on the
0038 dtd Freeze of Essential the list list list list
2/5/2020 Emergency Medicines
due to the 2019 nCoV
Health Event
******* *******
DC No. 2020- Reiteration of the Price
0133 dtd Freeze of Essential
3/12/2020 Emergency Medicines
and Medical Devices due
to the COVID-19 Health
Event
DC 2020-0157 Reiteration of the Price Not on Not on the Up to 500 210.00
dtd 3/24/2020 Freeze Essential the list list ml only
Emergency Medicines
and Medical Devices due
to the COVID-19 Health
Event
DC No. 2020- -do- Not on Not on the 520.00 1,200.00
0186 dtd the list list
4/15/2020
DM No. 2020- SRPs for Emergency Not on Not on the 607.00 1,200.00
0250 dtd Essential Medicines and the list list
5/24/2020 Medical Devices due to
the COVID-19 Health
Event ********* ******
****** ********
DM No. 2020- Amendment to DM No. 607.00 1,200.00
0250A dtd 2020-0250 dtd May 24,
6/2/2020 2020
DM No. 2020- Updated SRPs for 26.00- Not on the 607.00 1,200.00
0345 dtd Emergency Essential 50.00 list
8/10/2020 Medicines and Medical
Devices due to the
COVID-19 Health Event
DM No. 2020- Amendment to DM No. P26.00 Not on the Not on the Not on the
0345-A dtd 2020-0345 dated August to 50.00 list list list
8/14/2020 10, 2020 entitled
“Updated Suggested
Retail Price (SRPs) for
Emergency Essential
Medicines and Medical
Devices due to the
Coronavirus Disease
2019 (COVID-19) Health
Event”
DM No. 2020- Department P26.00 Sterile, 3- 607.00 1,200.00
0413 dtd Memorandum entitled to 50.00 ply, ear
9/9/2020 “Updated Suggested loop
Retail Price (SRPs) for
Emergency Essential 25.00
Medicines and Medical
Devices due to the
75
Circular / Subject Face Earlope 70% Cover all
Memorandum Shield Sterile Isopropyl (Hazmat)
Mask Alcohol
(gal)
Coronavirus Disease
2019 (COVID-19) Health
Event”
15.8 We present in the next table the following items purchased by the LGU wherein
we noted that the unit prices were relatively higher than the prices set by the
DOH.
P.O Items Unit Price Price Overpric Qty Total

. Date Paid Freeze e Purchased Overpayment
(Max)
3/18/2020 Face 290.00 P26.00 to P240 100 pcs 24,000.00
4/30/2020 Shield 100.00 50.00 P50 300 pcs 15,000.00
7/20/2020 110.00 P60 10 pcs 600.00
8/13/2020 110.00 8 pcs 480.00
3/18/2020 Isopropyl 630.00 607.00 23.00 100 gal 2,300.00
alcohol
70%
7/20/2020 70% 700.00 607.00 93.00 150 gal 13,950.00
Isopropyl
4/30/2020 Ear lope 25.50 25.00 0.50 100 boxes / 2,500.00
sterile 5,000 pcs
mask
3/18/2020 Hazmat 1,250.00 1,200.00 50.00 8 pcs 400.00
suit
3/18/2020 Hazmat 1,250.00 1,200.00 50.00 11 pcs 550.00
suit
TOTAL P0.00
15.9 In addition, a contract was entered into on April 27, 2020 for payment of 7-in-1
Personal Protective Equipment under Check No. 645792 amounting to
P444,821.43. But in our comparison of the package of the PPE bought with
similar individual items on the existing DOH DC No. 2020-0186 dated April 15,
2020, a total overpayment of P87,340.00 was derived as shown below:
Comparison of Prices
Item Bought Unit Price Similar Item per Unit
Paid DOH DC Price/DOH
Hazmat P2,136.50/pc Cover all gown P 1,200.00
(Hazmat)
Goggles Safety goggles 180.00
Face shield Face shield 26-50
Gloves Sterile gloves per 21.00
pair
Shoe cover Shoe cover 10.50
Face mask Face mask 28.00
Hair cap Surgical cap 250.00
P 2,136.50 P 1,739.50
Overpayment 397.00
76
Item Bought Unit Price Similar Item per Unit
Paid DOH DC Price/DOH
Qty Purchased 220 pcs
Total Overpayment P87,340.00
15.10 On the above observations, the price freeze used was based on all the issuances in
CY 2020 in order to have a more objective comparison. As can be gleaned in the
table above, the prices of the procured items were relatively higher that the
prevailing price freeze within the year.
15.11 Essential medical supplies/devices are identified as basic necessities especially in

this time of pandemic, therefore, it is an innate responsibility of LGU to be
prudent in the procurement of these necessities, ensuring that the prices are the
most advantageous and economical for the government. Had the price freeze been
considered in the procurement, it could have redounded to procurement of greater
quantities and would have been served/given to more constituents.
Department of Trade & Industry (DTI)
15.12 Basing also on the price freeze of basic necessities issued by the Department of
Trade and Industry in the Province of Isabela and per Suggested Price Bulletin as
of September 30, 2019 applicable nationwide, we noted some purchases with
prices higher than the prices set by the DTI and these are shown in the table
below:
DTI Price Freeze vs LGU Price Paid

Unit
Item Purchased DTI Price Overpriced
Price
Payless noodles (72s x 860 box) 7.11 6.53 0.58
Noodles (72s x 1112 bxs) 9.35 6.53-7.77 1.58
Sardines (100s x 800 bxs) 19.98 15.15-17.81 2.17
Meat Loaf 150g (48s x 317 bxs) 30.00 16.50-18.30 11.70
Great Taste Coffee 25 g (48s x 10 bxs) 20.63 17.83-18.88 1.75
Mega Sardines 18.00 17.81 0.19
Argentina Corned Beef 60.00 32.00-37.00 23.00
Coffee 25 g (48s x 628 bxs) 20.50 17.83-19.59 0.91
Noodles (72s x 56 bxs) 9.38 6.53-7.77 1.61
15.13 Clearly as shown, the prices paid by the LGU were relatively higher than the
recommended prices by the DTI, also disadvantageous to the government.
15.14 We also noted the following inconsistencies in the procurement undertaken by

LGU.
15.15 The following items were procured without specifications in the contracts or POs,
thereby casting doubts as to the reasonableness of prices paid and quality of the
items delivered:
Item Qty
77
Face Mask 234 boxes
Evaporated Milk 15,226 cans
Corned Beef 20 cans
Salt 36 packs & 18kg
Bottled Water 25 boxes
Coffee 557 dozens
Coffee 3-in-1 334 boxes
Mineral Water 173 boxes
Rice 75,002.50 kg
Ascorbic Acid 560 boxes
15.16 Inspection of Purchase Orders showed that there were no specifications of the
procured items based on relevant characteristics, functionality and/or performance
requirements contrary to Section 18 of IRR of RA 9184.
Section 18. Reference to brands. “Specifications for the procurement of Goods

shall be based on relevant characteristics, functionality and/or performance
requirements. Reference to brand names shall not be allowed except for items or
parts that are compatible with the existing fleet or equipment of the same make
and brand, and to maintain the performance, functionality and useful life of the
equipment.”
15.17 The procured items such as rice, protective suits, alcohol, etc. have different
variants available in the market and prices as well depends on the quality or
variants of these products. The failure of the LGU to specify in the POs what
specifications that must be delivered by the suppliers cast doubts as to the quality
of the products and reasonableness of the prices. Without such transparency in the
contracts, the prices may not be fully compliant with the prices freeze set by the
regulatory agencies.
15.18 The LGU should have complied with Section 2 of the Revised Implementing
Rules and Regulations (IRR) of Republic Act No. 9184 which provides that:
“The provisions of this IRR are in line with the commitment of the GoP to
promote good governance and its effort to adhere to the principles of
transparency, accountability, equity, efficiency, and economy in its procurement
process. Xxx”
15.19 We searched on the definition of the term Economy and we quote that it means
“thrifty and efficient use” of material resources and frugality in expenditures.
15.20 With the observed inconsistencies in the prices and quality of procured items, the
LGU has not fully adhere with the principle on economy in its procurement
process, thereby incurrence of excess prices which were disadvantageous to the
government.
15.21 The Management should have negotiated for the most advantageous price to the
-government based on: (a) existing price data of the agency, the Department of
78
Trade and Industry or other relevant agencies or (b) preliminary market
scanning done by the agency showing prevailing market prices and practice.”
15.22 We recommended Management to:
a) Exercise prudence in procurement of essential goods to ensure that prices

of procured items are not disadvantageous to the government;
b) Safeguard public funds from economic costs and losses brought by

payment of exorbitant or excessive prices inconsistent to regulated or
prevailing market prices; and
c) Ensure that the price freeze established by regulatory agencies is

complied and applied in its procurement.
The Management, in its three-page Letter Reply dated April 16, 2021 contends
that the purchases were made before the issuance of the Price Freeze
Circulars/Memoranda and that due to the scarcity of supply in the market and
with the urgent necessity in obtaining the needs and requirements of frontliners
and constituents, hence the LGU needed to outsource outside their Municipality
and the Region. They further explained that they procured from the suppliers
which were able to provide immediate needed items. The management believed
that the most utmost prudent efforts were exerted in the noted procurement not
only to expedite the process but also to provide the immediate response warranted
by the circumstances. Time is of the essence. Undue delay in the delivery of
commodities and services during this difficult times will surely bring
immeasurable damage to the frontliners and constituents which run counter to our
solemn duty and obligation of providing timely and appropriate service to our
people.
The Price Freeze was issued in compliance with the RA No. 7581 or the Price Act
which was enforced to stabilize the prices of basic necessities and prime
commodities against undue price increases during emergency situations and like
occasions. The prices therewith are established based on the prevailing prices
determined by the regulatory agencies at that time. Consequently on that
perspective and reliance, the audit team believes that the prices used in audit are
proper and applicable. The audit team has evaluated as well the prices even before
the Price Freeze was issued and we see no material difference in the prices, hence
the team pursued to issue this audit observation to ensure that the procurement of
the LGU is well-guided by the prevailing prices especially at this time of
Calamity caused by the COVID-19 pandemic. The important considerations laid
out by the Management are noted, however, the prevailing prices as well as the
Price Freeze should be relatively be comparable with the prices of their future
procurement of basic commodities and other essentials.
79
16. Proper classification of liability and expense accounts was not compliant with
IPSAS 1 and 29 and Government Accounting Manual (GAM) for Local
Government Units (LGUs), which may result in misstatements of the affected
accounts, hence fair presentation in the financial statements was not
achieved.
16.1 Paragraph 109 of IPSAS 1 - Presentation of Financial Statements provides that:
109. An entity shall present, either on the face of the statement of financial
performance or in the notes, an analysis of expenses using a classification
based on either the nature of expenses or their function within the entity,
whichever provides information that is reliable and more relevant.
16.2 Further, paragraph 13 of IPSAS 29-Financial Instruments: Presentation provides

that:
13. The issuer of a financial instrument shall classify the instrument, or its
component parts, on initial recognition as a financial liability, a financial
asset or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial liability, a
financial asset and an equity instrument.
16.3 Furthermore, Section 322 of Volume I of GAM for LGU state that:
Section 322. Fair Presentation and Compliance with IPSAS. Financial

statements shall present fairly the financial position, financial performance
and cash flows of an entity. Fair presentation requires the faithful
representation of the effects of transactions, other events, and conditions in
accordance with the definitions and recognition criteria for assets, liabilities,
revenue, and expenses set out in IPSASs. The application of IPSASs, with
additional disclosures when necessary, is presumed to result in financial
statements that achieve a fair presentation. An entity whose financial
statements comply with IPSASs shall make an explicit and unreserved
statement of such compliance in the notes. Financial statements shall not be
described as complying with IPSASs unless they comply with all the
requirements of IPSASs. Inappropriate accounting policies are not rectified
either by disclosure of the accounting policies used, or by notes or
explanatory material.”
16.4 Review of journal entry vouchers revealed that the following transactions were
not classified in their proper accounts. We evaluated the transactions and the
proper classification should be as follows:
Nature of Actual Classification Proper Classification

Transactions/
Items Account Description Account Description
procured/Paid
ASSET/EXPENSE
80
Transactions/ Account Description Account Description
Items Acquisition/Purchased
This account is used to
record the cost of
accountable forms
acquired for
government operation.
This account is It includes accountable
used to record forms with and without
the cost or Accountable
face value, such as
value of office Forms, Plates
official receipts,
supplies such and Stickers
passports, tickets,
as bond paper, stickers, permit/license
Cost of plates ink, and small plates, LTO plates, and
and stickers for Office tangible items the like. Credit this
the Tricycle Supplies like staple account for issuance to
Permits and Expenses wire remover, endusers, transfers, or
Business Permits puncher, other disposal.
stapler and Issuance/Used
other similar
items issued to This account is used to
end-users for record the cost of
government accountable forms with
operations. Accountable or without money value
Forms such as official receipts,
Expenses passports, tickets,
permit/license plates,
LTO plates, and the
like, issued to end-users.
Acquisition/Purchased
This account is record cost of
used to record purchased/acquired
the cost or inventories not falling
value of office Other under any of the
supplies such Supplies and specific supplies and
Purchase of the
as bond paper, Materials materials inventory
following:
ink, and small Inventory accounts held for
a. Kitchen
Office tangible items consumption. Credit this
utensils
Supplies like staple account for issuance,
b. External Hard
Expenses wire remover, transfers or other
Drive
puncher, disposal.
c. Power Supply
stapler and Issuance/Used
d. Table Signage
other similar This account is used to
items issued to record the cost of
end-users for Other
inventories issued to
government Supplies and
end-users not otherwise
operations. Materials
classified under the
Expenses
specific inventory
expense accounts.
Procurement of Office This account is Acquisition/Purchased
81
Items This account is used to
record the cost of non-
accountable forms such
used to record as
the cost or Non- pre-printed application
value of office Accountable forms, tax returns
supplies such Forms forms, accounting forms
as bond paper, Inventory and the like. Credit this
Senior Citizen
ink, and small account for issuance to
identification
tangible items end-users, transfers, or
card and various
Supplies like staple other
forms of
Expenses wire remover, disposal.
Philippine
puncher, Issuance/Used
Statistics
stapler and This account is used to
Authority
other similar record the cost of non-
items issued to accountable forms such
Non-
end-users for as pre-printed
Accountable
government application forms, tax
Forms
operations. returns forms,
Expenses
accounting forms and
the like, issued to end-
users.
record the cost of drugs
and medicines
This account is Drugs and purchased/received for
used to record Medicines government operations.
the costs of Inventory Credit this account for
Medical, medical, issuance to end-users,
Dental and dental and transfers or other
Purchase of disposal.
Laboratory laboratory
Medicines
Supplies supplies issued
Issuance/Used
Expenses to end-users
for
government This account is used to
operations. Drugs and record the costs of drugs
Medicines and medicines issued to
Expenses end-users for
government operations.
Purchase of Agricultur This account is Acquisition/Purchased
82
record the cost of food,
medicines, veterinary
and
other maintenance
needs of animals for
used to record use/consumption of
the cost of Animal/ government parks, zoos,
fertilizers, Zoological wildlife sanctuaries and
pesticides and Supplies botanical gardens. This
other marine Inventory also includes supplies
and for zoological
agricultural researches,
supplies issued preservations and the
al and in government like. Credit this account
Food Supplies Marine operations/proj for issuance to end-
for Animals Supplies ects. This users, transfers or other
Expenses includes disposal.
supplies issued Issuance/Used
for This account is used to
aquaculture record the costs of food,
researches, medicines, veterinary
environment and other maintenance
protection/ needs of animals issued
Animal/
preservations for use in government
Zoological
and the like. parks, zoos, wildlife
Supplies
sanctuaries and
Expenses
botanical gardens. This
also includes supplies
issued for zoological
researches and
preservations.
This account is
used to record
Payment of the costs of
Member scholarships This account is used to
Scholarshi
Accidental granted by the record the amount of
p Grants/
Assistant Benefit government to Donations aids/assistance to other
Expenses
(MAAB)- individuals in levels of government/
Insurance Plan of the pursuit of individuals/institutions.
students further
learning, study
or Research.
This account is This account is used to
used to record record the additional
Awards
the amount compensation to
Cash given to and
given in Longevity Pay government officials
Loyalty Rewards
recognition of and employees based on
Awardees Expenses
any civic years of service
or professional rendered to the
achievement government.
83
record other authorized
Cash Incentive to
Other bonuses and allowances
employees in
Bonuses and to government
Celebration of
Allowances officials/employees not
Civil Service
falling under any of the
Anniversary
specific other
and of rewards compensation accounts.
to informers
for the receipt
of reliable
record cost of
information
purchased/acquired
leading to
inventories not falling
successful
Other under any of the
arrest/capture
Supplies and specific supplies and
of fugitives,
Materials materials inventory
seizure/
Inventory accounts held for
confiscation of
consumption. Credit this
Items given to smuggled
account for issuance,
employees in goods, or
transfers or other
Celebration of collection of
disposal.
Civil Service unpaid
Issuance/Used
Anniversary taxes/surcharg
es/ This account is used to
fines/penalties. record the cost of
Other end-users not otherwise
Supplies and classified under the
Materials specific inventory
Expenses expense accounts.
record the cost of non-
accountable forms such
as pre-printed
This account is Non-
application forms, tax
used to record Accountable
returns forms,
the cost of Forms
inventories Inventory
the like. Credit this
Other issued to end-
account for issuance to
Supplies users not
Printed Forms - end-users, transfers, or
and otherwise
DSWD other disposal.
Materials classified
Expenses under the Issuance/Used
specific This account is used to
inventory record the cost of non-
expense accountable forms such
Non-
accounts. as pre-printed
Accountable
application forms, tax
Forms
returns forms,
Expenses
the like, issued to end-
users.
84
Items This account is
used to record
the cost of
repairs and
record the cost of
maintenance
services
Repairs on office
contracted/undertaken
and buildings;
Termites by administration for
Maintenan school Environment/
extermination the upkeep and
ce – buildings; Sanitary
and siphoning of sanitation of the public
Buildings hospitals and Services
septic tank places. This includes the
and Other health centers;
cost of clean and green
Structures markets;
program, garbage and
slaughterhouse
hospital waste
s; hotels and
collection and disposal.
dormitories;
and other
structures.
Cable, This account is used to
Satellite, record the cost of using
Cable Expenses Telegraph and cable/
Radio satellite/telegram/radio
Expenses services.
Financial, used to record record the amount of
Medical and expenses not Donations aids/assistance to other
Burial Assistance Other falling under levels of government/
Maintenan any of the individuals/institutions.
ce and specific This account is used to
Operating maintenance record the costs incurred
Expenses and other for advertisement, such
operating as expenses to (a)
expense promote and market
Advertising Advertising
accounts. products and services;
Expenses Expenses
and (b) publish
invitations to bid and
other authorized
government
advertisements.
Purchase of This account is used to
Waste bins, This account is record cost of
rubber mats, used to record purchased/acquired
kitchen utensils, expenses not inventories not falling
sprayer, tolda, Other falling under under any of the
seedling bags, Maintenan any of the Other
specific supplies and
storage drawer, ce and specific Supplies and
materials inventory
tape, garbage Operating maintenance Materials
accounts held for
bag, dry seal, Expenses and other Inventory
wireless router, operating account for issuance,
rubber stamp, expense transfers or other
durabox, rubber accounts. disposal.
stamp
Issuance/Used
85
record the cost of
Other inventories issued to
Supplies and end-users not otherwise
Materials classified under the
Expenses specific inventory
expense accounts.

record the costs of fuel,
oil and lubricants issued
for use of government
Fuel, Oil and
vehicles and other
Fuel Expenses Lubricants
equipment in
Expenses
connection with
government
operations/projects.

record the cost of
repairs and maintenance
on office equipment;
ICT equipment ;
agricultural and forestry
equipment; marine and
fishery equipment;
airport equipment;
communication
Repairs and
equipment; construction
Repairs of Maintenance
and heavy equipment;
machinery and – Machinery
fire fighting equipment
equipment and
and accessories ;
Equipment
military, police and
security equipment;
medical equipment;
printing equipment;
sports equipment;
technical and scientific
equipment; and other
machinery and
equipment.

Repairs and record the cost of
Repairs of Maintenance repairs and maintenance
Transportation – on motor vehicles; train;
Vehicles Transportation aircraft; watercraft; and
Equipment other transportation
equipment.
record the expenses
Purchase of Representatio
incurred for official
tokens n Expenses
meetings/conferences
/entertainments.
86
Meals and record the monthly
Snacks during commutable
meetings representation
allowance granted to the
Representatio
Meals and authorized officials and
n Allowance
Snacks (coffee, employees in the actual
creamer, sugar, performance of their
biscuits, etc.) of respective functions,
Offices such as hosting official
meetings.
record the cost of
medical, dental and
Medical,
laboratory supplies
Dental and
purchased/received for
Laboratory
Supplies
Credit this account for
Inventory
issuance to end-users,
Medical Supplies This account is
transfers, or other
used to record
disposal.
expenses not
Issuance/Used
Other falling under
Maintenan any of the This account is used to
Medical,
ce and specific record the costs of
Dental and
Operating maintenance medical, dental and
Laboratory
Expenses and other laboratory supplies
Supplies
operating issued to end-users for
Expenses
expense government operations.
accounts. Acquisition/Purchased
record the cost of food,
and
other maintenance
needs of animals for
use/consumption of
government parks, zoos,
Animal/
Purchased of wildlife sanctuaries and
Zoological
food supplies of botanical gardens. This
Supplies
animals also includes supplies
Inventory
for zoological
researches,
preservations and the
like. Credit this account
for issuance to end-
users, transfers or other
disposal.
Issuance/Used
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record the costs of food,
and other maintenance
needs of animals issued
Animal/ for use in government
Zoological parks, zoos, wildlife
Supplies sanctuaries and
Expenses botanical gardens. This
also includes supplies
issued for zoological
researches and
preservations.
Payment of
photocopies/ This account is used to
xerox, book record the costs of
binds and Printing and printing and binding of
printing of Publication manuscripts/
tarpaulins Expenses documents, forms,
manuals, brochures,
pamphlets, and the like.
record the cost of
fertilizers, pesticides
and other marine and
This account is agricultural supplies for
used to record use in government
expenses not Agricultural
operations. This
Other falling under and Marine
includes supplies for
Maintenan any of the Supplies
aquaculture researches,
ce and specific Inventory
environment
Operating maintenance protection/preservations
Expenses and other and the like. Credit this
operating account for issuance to
Purchase of expense end-users, transfers, or
hybrid seeds accounts. other disposal.
Issuance/Used
record the cost of
fertilizers, pesticides
and other marine and
agricultural supplies
Agricultural
issued in government
and Marine
Supplies
This includes supplies
Expenses
issued for aquaculture
researches, environment
protection/preservations
and the like.
88
record the amount of
premiums paid by the
Insurance Insurance
agency for the insurable
Expenses Expenses
risks of government
property.

record the cost incurred
in the conduct of
cadastral, structural,
Cost of Survey
topographical, statistical
Surveying Expenses
and other type of
surveys conducted by
government agencies.

Internet Internet
record the cost of using
Subscription Subscription
internet services in
Expenses Expenses
record the cost of
accountable forms
acquired for
government operation.
It includes accountable
forms with and without
Accountable face value, such as
This account is Forms, Plates official receipts,
used to record and Stickers passports, tickets,
expenses not stickers, permit/license
Reimbursement Other falling under plates, LTO plates, and
of checkbooks Maintenan any of the the like. Credit this
and cost of ce and specific account for issuance to
Traffic Citation Operating maintenance endusers, transfers, or
Ticket for PNP Expenses and other other disposal.
operating
expense Issuance/Used
accounts. This account is used to
record the cost of
accountable forms with
or without money value
Accountable
such as official receipts,
Forms
passports, tickets,
Expenses
permit/license plates,
LTO plates, and the
like, issued to end-users.
89
record the cost incurred
in the purchase or
construction or fair
value, if acquired
through donation or
transfers without cost of
installations for
Installation of Power Supply generation and
transformer Systems distribution of
electricity such as
power stations, electric
transformers and other
power and energy
supply facilities for
public use or for income
generating purposes.

Registration of record the amount of
vehicles to Land Taxes, Duties taxes, duties, licenses
Transportation and Licenses and other fees due to
Offices regulatory agencies.

record the cost of other
professional services
contracted by the
agency not otherwise
classified under any of
the specific professional
services accounts. This
includes honoraria paid
Professional
by local government
services-
Other units (LGUs) to national
Preparation of
Professional government personnel
business plan and
Services (judges, prosecutors,
Psychological
public elementary and
Assessment
high school teachers and
other national
government personnel)
assigned in LGUs. This
also includes other
operating expenses
granted to national
government agencies
stationed in the LGU.
Rental Expenses Other
used to record record rental of land,
of Equipment, Maintenan
expenses not Rent buildings, facilities,
Machinery and ce and
falling under Expenses equipment, vehicles,
Transportation Operating
any of the machineries, and the
Vehicles Expenses
specific like.
90
record the cost of
transporting
goods/merchandise sold
Labor of loading
Transportation in the course of business
and unloading of
and Delivery operations. This
different
Expenses includes the cost of
materials
moving agency’s own
people and property
from one station to
another.
record the amount of
Reimbursement Fidelity Bond premiums paid by the
of fidelity bond Premiums agency for the fidelity
bonds of accountable
officers.
contracted by the
maintenance the specific professional
and other services accounts.
operating This includes honoraria
expense paid by local
accounts. government units
Other
Honoraria of (LGUs) to national
Professional
NGAs employees government personnel
Services
(judges, prosecutors,
other national
also includes other
operating expenses
granted to national
government agencies
record the costs incurred
in the
movement/transport of
Traveling
Travelling government officers and
Expenses -
Expenses employees within the
Local
country. This includes
transportation, travel per
diems, ferriage, and all
other related expenses.
91
record the amount paid
Linggo ng
Prizes to winners of
Kabataan Prizes
competitive and
promotional activities.
record the cost of
Postage and
delivery/transmission of
Postal Fee Courier
official messages, mails,
Service
documents, records and
the like.
record the cost of
transmitting messages
Telephone Telephone thru telephone lines
Expenses Expenses (mobile or landlines),
faxes, telex and the like
whether prepaid or
postpaid.
This account is
record the amount paid
used to record
for expenses incidental
expenses not
to the performance of
Other falling under
official functions, such
Maintenan any of the Extraordinary
Entertainment as: meetings and
ce and specific and
Expenses paid to conferences, public
Operating maintenance Miscellaneous
band/artists relations, educational,
Expenses and other Expenses
cultural and athletic
operating
activities, membership
expense
fees in government
accounts.
organizations, etc.

Membership record membership
Dues and fees/dues/ contributions
Annual Dues to
Contributions to recognized/
LMP
to authorized professional
Organizations organizations.

This account is record the cost or value
used to record of office supplies such
the amount of as bond paper, ink, and
aids/assistance Office small tangible items like
Office supplies
Donations to other levels Supplies staple wire remover,
of BFP, PNP
of Expenses puncher, stapler and
government/ other similar items
individuals/ issued to end-users for
institutions. government operations.
92
Items with
Equipment
cost greater than
Appropriate
P15,000.00
Equipment
(Equipment for
Account
NGAs)
record cost of
purchased/acquired
Materials materials inventory
Purchase of
Inventory accounts held for
equipment with
cost less than
account for issuance,
P15,000.00 for
transfers or other
national agencies
disposal.
within the
compounds of Issuance/Used
LGU
record the cost of
Other
Supplies and
end-users not otherwise
Materials
classified under the
Expenses
specific inventory
expense accounts.

Repairs and record the cost of
Repair and
Maintenance repairs and maintenance
Maintenance of
– on motor vehicles; train;
PNP Patrol
This account is Transportation aircraft; watercraft; and
Vehicle
used to record Equipment other transportation
the amount of equipment.
aids/ This account is used to
Donations assistance to record the monthly
Monthly
other levels of commutable
Travelling
government/ transportation allowance
Expense/
individuals/ Travelling granted to the
Allowance of
institutions. Allowance authorized officials and
employees/office
employees in the actual
rs of Municipal
performance of their
Trial Court
respective functions.
93
contracted by the
the specific professional
services accounts. This
includes honoraria paid
by local government
Other units (LGUs) to national
Honoraria of
Professional government personnel
NGAs employees
Services (judges, prosecutors,
other national
also includes other
operating expenses
granted to national
government agencies
record the costs of fuel,
oil and lubricants issued
Fuel Expenses of Fuel, Oil and for use of government
PNP and BFP Lubricants vehicles and other
Vehicles Expenses equipment in
connection with
government
record cost of
purchased/acquired
Materials for Materials materials inventory
checkpoint Inventory accounts held for
barricades, consumption. Credit this
butane, sprayer account for issuance,
Materials for transfers or other
checkpoint disposal.
barricades, Issuance/Used
butane, sprayer This account is used to
record the cost of
Other inventories issued to
Supplies and end-users not otherwise
Materials classified under the
Expenses specific inventory
expense accounts.
Purchase of Donations This account is Acquisition/Purchased
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record the cost of
textbooks and
instructional materials
Textbooks including flipcharts,
and video clips/slides, and
Instructional the like,
Materials for purchased/received for
Distribution distribution. Credit this
account for issuance to
end-users, transfers or
textbooks issued
write-down.
to schools
Issuance/Used
record the cost of books
Textbooks and instructional
and materials distributed to
Instructional public schools including
Materials flipcharts, video
Expenses clips/slides, and the like.
used to record
the amount of
aids/ Acquisition/Purchased
assistance to This account is used to
other levels of record the cost of
government/ medical, dental and
individuals/ Medical, laboratory supplies
institutions. Dental and purchased/received for
Laboratory government operations.
Supplies Credit this account for
Inventory issuance to end-users,
Purchase of
transfers, or other
Medical Supplies
disposal.
Issuance/Used
Medical,
record the costs of
Dental and
medical, dental and
Laboratory
laboratory supplies
Supplies
issued to end-users for
Expenses
Honoraria of record the cost of other
Barangay Health general services
Worker and Other General contracted by the
Barangay Services agency not otherwise
Nutrition classified under any of
Scholars the specific general
services accounts.
LIABILITIES
Unremitted SSS Accounts This account is Due to This account is used to
Contribution and Payable used to record GOCCs record the receipt of: a)
LBP loans receipt of funds for delivery of
goods or goods/services as
95
Items authorized by law; b)
fund transfers from the
GOCCs for the
implementation of
specific programs or
projects; c) NG-
managed fund; d)
escrow accounts; e)
collateral deposits for
services on the account of GOCCs/
account in the GFIs; and f) other inter-
normal course agency transactions
of trade and except those pertaining
business to GSIS, PhilHealth and
operation. Pag-IBIG. Debit this
Debit this account for delivery of
account for goods/services,
payment or liquidation/release of
settlement of funds received and
liabilities. settlement of liabilities.
record incurrence of
liability to officers and
Unpaid PEI and
Due to employees for salaries,
Travelling
Officers and benefits and other
Allowance of
Employees emoluments. Debit this
employees
account for settlement
or payment to officers
and employees.
16.5 According to the Municipal Accountant with regard to the expenses, some of the
transactions were patterned on the accounts used in the obligation request which
originated from the expense accounts appropriated in the Annual Budget. Also,
regarding on the unpaid salaries, claims of employees and unremitted loans and
contribution, she lodged in the accounts payable for the convenience of
monitoring a single schedule.
16.6 We also interviewed the Municipal Budget Officer and disclosed that the expense
accounts in the budget originated from the proposals of department heads who
have knowledge of their programs, projects and activities. Accordingly, he always
reminded the department heads that their expenditure should be aligned with the
LGU’s Chart of Accounts. Further, he disclosed that the honorarium of officers of
national agencies were incorporated already in the 2021 Annual Budget as “Other
Professional Services”.
16.7 All expenses and liabilities should be properly accounted for in their proper
account titles depending on the nature and purpose of the transactions. Also, the
expenditures that may be needed by the management should be evaluated in the
preparation of the Annual Budget to ensure availability of appropriation.
96
16.8 The misclassification of the accounts affects the fair presentation of the affected
accounts in the financial statements.
16.9 We recommended that the expenditures be accounted in the budget and

accounting reports in the appropriate financial accounts in compliance with
Revised Chart of Accounts and ensure strict compliance with IPSAS and
GAM for LGUs.
The Management, through the Municipal Budget Officer explained that every
year all the departments were reiterated to submit their budget proposals in
accordance with the COA Chart of Accounts, however the use and proper
interpretation of the accounts may not have been fully understood yet and re-
orientation may be needed. In as much as the CY 2021 Annual Budget had
already been approved and being currently implemented, the account titles as
explicitly embodied therein could not just be modified anymore. It can also be
noted that the accounts used in the said ordinance are just few and limited and not
all the recommended accounts are emphatically included in detail.
Understandably, the immediate compliance on all the recommendations may not
be instituted at once. Rest assured, however that any subsequent supplemental
budgets to be enacted by the Municipality this year maybe used to rectify some of
the noted deficiencies as indicated in the AOM. Expectedly, we hope to be able to
positively consider all the recommendations related thereto as we prepared our
annual budget for the ensuing year particularly addressing, among others, the
improper use of the “Other MOOE” expense account being irrationally overused
as a “Catch-all account”.
17. Official Receipts (ORs) and other accountable forms were not issued in strict
numerical sequence and pertinent details were not filled out legibly and
properly inconsistent with Section 68 of PD 1445 and Section 59(F) of the
Local Treasury Operations Manual which may affect reliability over the
documents and cast doubts on the accuracy of the collections.
17.1 Section 68 of PD 1445 provides the manner of Issuance of Official receipt

requiring that:
1. No payment of any nature shall be received by a collecting officer without

immediately issuing an official receipt in acknowledgment thereof. The
receipt may be in the form of postage, internal revenue or documentary
stamps and the like, or officially numbered receipts, subject to proper
custody, accountability, and audit.
17.2 Also, Section 59(F) of the Local Treasury Operations Manual states that:
Preparation of official receipts. – Pre-numbered official receipts shall be

issued in strict numerical sequence.
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In preparing official receipts, all copies of each official receipt shall be exact
copies or carbon reproductions in all respects of the original.
If payment has been tendered in money order or check, the official receipt
shall be prepared with the date, number, and the amount of such money
order, or check together with the purpose for which the payment has been
received. The address of the payor shall also be indicated on the official
receipt to facilitate communication with him if necessary.
17.3 In our review of the accountable forms, we noted that some forms were not issued
in strict numerical sequence and were not filled up properly. The collectors are
simultaneously issuing ORs or other accountable forms from two booklets/stubs.
We also observed that the nature and amount of collections were not clearly and
legibly written, thereby the words or numbers in the duplicate copies cannot be
easily read or understood. Further, the amount paid in words in some accountable
forms does not tally with the amount written in figures which casts doubts on the
accuracy of the amount of collections. We also noted that some duplicate copies
showed erasures or re-written words or amounts without any countersign by the
accountable officer or the Municipal Treasurer.
17.4 These inconsistencies had been observed and the accountable officers should be
warned of implications of any changes or tamper on the accountable forms
without authority. The accountable officer should avoid erasures or any tamper, or
otherwise the altered or spoiled forms may be cancelled with the three copies
intact and submitted to the Resident Auditor.
17.5 We recommended that all accountable officers ensure that the pre-numbered
accountable forms are issued in strict numerical sequence and Municipal
Treasurer should verify the collections made by all collectors and require
that all the required details in the accountable forms be completed legibly.
All accountable officers should also submit duplicate copies of all
accountable forms as exact copies or carbon reproductions in all respects of
the original.
98
The Municipal Treasurer explained that two (2) Official Receipt (OR) booklets
were being used by accountable officer for those collections which were not
computed by the Real Property Tax (RPT) system. Likewise, Documentary Stamp
Taxes (DST) were summarized and remitted directly to the BIR. Moreso,
instructions were already given to her staff regarding proper presentation and
filling of ORs.
18. The fidelity bond of four (4) collecting officers may be insufficient to cover
for their actual collections/accountabilities which is not in accordance with
Section 305[f] of the Local Government Code of 1991 and Section 5.1 of
Treasury Circular No. 02-2009, consequently where government funds may
be exposed to risks of possible loss or in the event of defalcations and
shortages, these may not be adequately indemnified.
18.1 Section 305[f] of Local Government Code of 1991 provides:
“Every officer of the local government unit whose duties permit or require the
possession or custody of local funds shall be properly bonded, and such
officer shall be accountable and responsible for said funds and for the
safekeeping thereof in conformity with the provisions of law.”
18.2 Further, Section 5.1 of Treasury Circular No. 02-2009 states that:
“The amount of bond shall be based on the total accountability (cash,

property and accountable forms) of the accountable public officer as
determined by the Head of Agency. Provided, the individual maximum
accountability of each accountable public officer shall not exceed One
Hundred Million pesos (P100M). However, the Head of the Agency may
assign to other public officer the excess accountability for which a separate
Fidelity Bond shall be secured.”
18.3 Our review of the collections of the Agency revealed that the following
Accountable Officers handle collections which are more than the amount of
collections covered by their existing bond as shown in the table:
Average Maximum
Position/ Existing Bond
Remitted Amount of
Designation Coverage
Collections Actual Collection
RCC III – P9,001.00 to
52,492.32 535,552.91
Collector P12,000.00
RCC II – P9,001.00 to
38,170.84 339,988.94
RCC II – P9,001.00 to
27,654.08 209,043.00
RCC II – P9,001.00 to
22,610.44 86,661.00
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18.4 The existing bond of the Collectors amounted to P9,000.00 which was only
sufficient for accountabilities in the bracket of P9,001.00 to P12,000.00.
However, we observed that there were instances that the actual collections of the
collectors exceeded the amounts covered by their existing bond. This may
indicate that their existing bond may be inadequate to cover their accountabilities
and insure their actual collections in the event of any loss.
18.5 It is emphasized that inappropriate or insufficient bond may expose the LGU to
improper indemnification in cases of defalcations and shortages as cited in
Section 4.8 of BTr TC No. 02-2009:
“The fidelity fund shall be available for the purpose of replacing defalcations,
shortages, unrelieved losses in the accounts of bonded public officers, for the
payment of fees and costs incident to civil proceedings brought against them to
recover sums paid on their account from said fund.”
18.6 We recommended that the Municipal Mayor require the Municipal

Treasurer to re-assess the present bond coverage of all the accountable
officers and determine if there is a need to increase the same in order to
ensure that all accountable officers are properly and adequately bonded in
accordance with the Public Bonding Law.
The Municipal Treasurer explained that the increase in the fidelity bond of the
Accountable Officers shall be presented to the Bureau of the Treasury (BTr) for
their evaluation.
19. Several disbursements were not supported with complete documentary

requirements contrary to Section 347 of Republic Act No. 7160, Sections 4(6)
of Presidential Decree (PD) No. 1445 and COA Circular No. 2012-001 dated
June 14, 2012 thus their validity and propriety may be doubtful.
19.1 Section 347 of RA No. 7160 on the Rendition of Accounts states that:
“Local treasurers, accountants and other local accountable officers shall

render their accounts within such time, in such form, style, and content and
under such regulations as the COA may prescribe.”
19.2 It was provided as well under Section 4 (6) of PD No. 1445 that:
“Claims against government funds shall be supported with complete

documentation.”
100
19.3 In addition, COA Circular No. 2012-001 dated June 14, 2012 prescribes the
revised documentary requirements for common government transactions.
19.4 Results of our audit on the following transactions of the LGU for CY 2020
disclosed that the related disbursements are supported with documents in partial
compliance with the documentary requirements as enumerated in COA Circular
No. 2012-001:
 Granting and Liquidation of Cash Advances

 Fund Transfers
 Subsistence & Laundry Allowances
 Hazard Pay
 Honoraria
 Procurement of goods and services
 For Infrastructures and other construction-related activities
 Traveling Expenses (cash advance or reimbursement basis)
 Donations
 Welfare Expenses
 Medical, Dental and Laboratory Supplies Expenses
 Drugs and Medicine Expenses
 Terminal Leave Benefits
 Rent Expenses
 Other General Services
 Repairs and Maintenance
19.5 We compared the submitted documents of the sampled transactions with the list
of required basic documentary requirements, however we observed some lacking
documents. As a control, the management may list the required documents in the
face of the vouchers in order that the concerned offices ensure completeness of
documents before actual payments.
19.6 We remind the Management to comply with the basic documentary requirements
laid out in COA Circular No. 2012-001 dated June 14, 2012. These documents
must be submitted consistently together with the disbursement vouchers to ensure
that the claims against government funds are proper, valid and in accordance with
laws and rules.
19.7 We recommended that Management ensure that prior to payments of claims,

all Disbursement Vouchers must be adequately supported with proper
documents in compliance with Republic Act No. 7160, Presidential Decree
No. 1445 and COA Circular No. 2012-001.
19.8 Management Comments:
The management explained that DVs would not be processed if not supported
with the necessary documents to prove the legality and validity of the
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transactions. However, some of these paid vouchers might lack some required
documents but some of those supporting papers already submitted could justify
what has been claimed. Henceforth, as instructed, the Accounting Office shall be
guided with the cited COA Circular.
20. The government compulsory contributions of the Municipality of Angadanan

to Home Development Mutual Fund (Pag-IBIG) for CY 2020 was found to be
excessive, inconsistent with Section 46 of RA 11465 or the General
Appropriations Act for CY 2020 and Section 7 of RA 9679.
20.1 Section 46 of the General Provisions of RA 11465 provides that:
“xx Any proposed increased in government and employee compulsory

contributions may only be implemented after consultation by the agency
concerned with the DBM in order that the budgetary implications of such
proposal be duly considered. The implementation of any increase in government
and employee compulsory contribution, after said consultation, shall be made
effective only upon inclusion thereof in an appropriation law.”
20.2 Rule VI, Section 1 of the Implementing Rules and Regulations (IRR) of the
Republic Act 9679, otherwise known as the HDMF/PAG-IBIG Fund Law,
provides that:
“Section 1. Rate of contributions. Covered employees and employers shall

contribute to the Fund based on the monthly compensation of covered employees
as follows:
a. Employees earning not more than One Thousand Five Hundred Pesos
(P1,500.00) per month – one percent (1%);
b. Employees earning more than One Thousand Five Hundred Pesos
(P1,500.00) per month – two percent (2%);
c. All employers – two percent (2%) of the monthly compensation of all
covered employee.
The maximum monthly compensation to be used in computing employee and
employer contributions shall not be more than Five Thousand Pesos (P5,000.00):
Provided, that this maximum may be fixed from the time to time by the Board of
Trustees through rules and regulations adopted by it, taking into consideration
actuarial calculations and rates of benefits.
A member may, however, be allowed to contribute more than what is required

herein should he or she desires.”
20.3 In addition, the same IRR suggests that:
“A member may contribute more than what is required herein, whereas the
employer shall only be mandated to contribute what is required in accordance
with the Rules hereof, unless said employer agrees to match the employee’s
increased contributions.”
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20.4 Audit of monthly remittances of government share per accounting ledgers and
examination of payrolls revealed that the management allowed payment of
government share of two (2) percent based on the monthly basic pay of its
employees/officials.
20.5 However, RA 9679 explicitly provides that the maximum monthly compensation
to be used in computing employer contributions shall not be more than
₱5,000.00, hence the government share should only be P100.00 for each
employee/official.
20.6 The management contends that they did not err in matching their employee’s
increased contributions of 2% as payments of the said contributions were covered
under their CY 2020 Approved Budget.
20.7 The Annual Budget does not automatically authorize the increase in government
share, as RA 11465 or the GAA for FY 2020 required that there must be proper
consultation with the DBM before inclusion of such increase in the appropriation
law.
20.8 It must be emphasized that other additional compensation not specified or

determined by the Department of Budget and Management are already deemed
included in the standard salary rates they prescribed (Sec 12, RA 6758).
20.9 Without such consultation with the DBM, the excessive LGU share in HDMF
contributions for its employees is tantamount to an indirect additional
compensation, which is contrary with the above-stated laws.
20.10 The excessive payment of the government counterpart is a loss on the part of the
government, as this will accrue on the benefit of the employees and subsequently
form part of their accumulated contributions.
20.11 We recommended that the Management submit legal basis for the increase in
the Pag-IBIG government compulsory contribution that which requires the
proper consultation and approval of DBM as required under RA 11465 and
RA 9679. The management should strictly observe the maximum limit of
PAG-IBIG government compulsory contribution at P100.00 per month per
official/employee unless the LGU consults with and secures approval of
DBM.
The Municipal Budget Officer justified by quoting from RA 9679 that “the
employer agrees to match the member’s increased contribution”, hence a clear
indication of the exception to the rule and that the maximum employer’s
contribution of P100.00 could be further increased, provided that the conditions
therein are properly observed. Section 46 of RA 11465 was also contended that
LGUs were not mentioned therein. They however, do not outrightly jump to the
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conclusion that the LGUs are impliedly excluded. Following on the principle of
“presumption of regularity”, they believed that they have acted in good faith, as
they have been doing this for so long and it was never raised as a question by the
reviewing authorities ever since. They, humbly submit that the Appropriation
Ordinance, by itself may not be sufficient legal basis as there are other special
laws to be considered relative thereto. The management intends to submit other
legal basis pertaining to the issue at hand and is more than willing to comply.
While the LGUs are not specifically cited in RA 11465, it does not mean an
outright authority of the LGU to grant payment of government share beyond the
P100.00. We emphasize the specific provision of Section 12 of RA 6758 and
highlight that:
“Consolidation of Allowances and Compensation. – All allowances,

except for representation and transportation allowances; clothing and
laundry allowances; subsistence allowance of marine officers and crew
on board government vessels and hospital personnel; hazard pay;
allowances of foreign service personnel stationed abroad; and such other
additional compensation not otherwise specified herein as may be
determined by the DBM, shall be deemed included in the standardized
salary rates herein prescribed. Such other additional compensation,
whether in cash or in kind, being received by incumbents only as of July 1,
1989 not integrated into the standardized salary rates shall continue to be
authorized.
Considering that the excess government share was not specifically cited and
allowed in this Section and the LGU was not able yet to confirm that such excess
is determined properly by DBM as additional compensation, hence the excess was
questioned in audit for lack of specific legal basis. The LGU must be able to
establish compliance with this Section in order that the excess government share
be allowed.
In addition, while RA No. 9679 allows increase in employer share, the LGU has
no absolute authority to grant such increase in view that compensation and other
allowances are subject to DBM rules as well.
104

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PART II

DETAILED FINDINGS AND RECOMMENDATIONS

“Each government agency shall record its financial transactions and

LBP Bank Account No. 2992-1020-82 is a current account being maintained

In this observation, we stress that balances for Continuing Appropriation are

Per Budget Reports

Per Accounting Records

 Treasurer’s Cashbook balances on Cash in Bank-LCCA vary by

In our examination of the Municipal Treasurer’s cashbook, we noted the

The difference of P721,699.00 between the cashbook and FS pertains to the

These were already traced at year-end and accounted in the Municipal

 Unexpended balances of QRF and DRRMF-MOOE for the Current Year

 The CIB-LCCA - 5% CF was understated by P669,565.99 due to non-

Based on the verification of transactions, we noted that the amount of

This resulted in understatement of the CIB-LCCA for 5% Calamity Fund.

 Unexpended balances for the years 2012 to 2014 totaling P332,562.28

In our review of the Transaction Listings of the CIB-LCCA-Calamity Fund,

 The Cash in Bank-LCCA with DBP Bank Account No. 00-0-50101-541-3

As at December 31, 2020, the CIB-LCCA with DBP amounted to

 Outstanding checks totaling P660,744.43 became stale as at December 31,

In our analysis of the Bank Reconciliation Statements at year-end, we

 Two hundred seventy-two (272) unreleased commercial checks totaling

In the verification of any outstanding checks as at December 21, 2020, we

1.8 We recommended the Management to ensure that:

b) Stale checks as well as unreleased checks are properly adjusted as at

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

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

1.9 Management Comment:

2.1 Government Accounting Manual for Local Government Units, Volume I,

Section 269. Accounting and Property Records to be maintained for PPE.

Per Accounting Per Physical

 Late Submission of RPCPPE and Non-maintenance of PPE property

Classification is one of management’s assertions which means that the

We also noted that the Sports Equipment amounting to ₱42,300.00 was

 Small tangible items totalling P7,011,762.11 were reported under

This amount includes the following:

i. Small tangible items like monoblock/plastic chairs and tables,

PPE Account Items

 Section 184. Accountability over Small Tangible Items. Inventory

However, for monitoring, control and accountability, an Inventory Custodian

Property Account Date Acquired Amount

2.8 Management Comment:

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

3.2 A fair presentation also requires an entity to present information, including

“Adjustments for Unreleased Commercial Checks. A Schedule of Unreleased

Accounts Debit Credit

3.9 Nonetheless, these unreleased checks should be monitored and reported

3.10 We recommended that the Municipal Mayor require:

a) The Municipal Treasurer to prepare a Schedule of Unreleased

b) The Municipal Accountant to prepare Journal Entry Voucher (JEV) for

3.11 Management Comment:

The management agreed and committed to implement the audit recommendations.

“Section 42. Basis of Recording Real Property Tax/Special Education Tax.

Account December 31, 2020 December 31, 2019

Particulars BASIC SEF Total

Particulars BASIC SEF Total

4.16 We recommended that the Municipal Mayor require: