EXECUTIVE SUMMARY

A. INTRODUCTION

The Municipality of Bula belongs to the Fifth Congressional District of

Camarines Sur and is rated as a “Second Class” Municipality. Thirty-three (33)
barangays comprise the Municipality of Bula. It occupies a total land area of 19,040.70
hectares and a population of 69,430 based on 2015 census.

The Municipality of Bula is headed by Honorable Amelita A. Ibasco, the

Municipal Mayor, with legislative support from the Municipal Vice-Mayor Hon. Moises
P. Soreta and nine (9) Sangguniang Bayan members.

Audit Methodology and Scope of Audit

The Financial, Compliance and Value for Money (VFM) audits conducted
covered the accounts and operations of the Municipality of Bula for all funds for the
period from January 1 to December 31, 2018.

In addition to the actual examination of the accounts using a sampling scheme,

other various techniques were used such as observation, interview with the concerned
officials and employees and other auditing procedures considered necessary under the
circumstances.

The audit was focused on the different audit thrusts prescribed by the Local
Government Sector of the Commission on Audit.

B. FINANCIAL HIGHLIGHTS

B.1. Financial Position and Performance

In Philippine Peso % of
Particulars Increase/ Increase/
CY 2018 CY 2017
(Decrease) (Decrease)
Financial Position
Total Assets 480,283,095.92 411,039,289.68 69,243,806.24 17
Total Liabilities 189,904,386.51 182,210,786.30 7,693,600.21 4
Government Equity 290,378,709.41 228,828,503.38 61,550,206.03 27
Financial Performance
Total Income 176,886,281.98 170,732,249.03 6,154,032.95 4
Total Expenses 143,601,974.83 134,078,321.99 9,523,652.84 7
Net Surplus 33,284,307.15 36,653,927.04 (3,369,619.89) (9)

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 B.2. Sources and Application of Funds

In Philippine Peso % of
Particulars Increase/ Increase/
CY 2018 CY 2017
(Decrease) (Decrease)
General Fund
Allotments 179,422,119.00 172,782,075.15 6,640,043.85 4
Obligations 141,607,536.29 140,952,280.72 655,255.57 .46
Balance 37,814,582.71 31,829,794.43 5,984,788.28 16
Special Education Fund
Allotments 1,500,000.00 2,100,000.00 (600,000.00) (40)
Obligations 1,233,817.25 1,562,970.20 (329,152.95) (27)
Balance 266,182.75 537,029.80 (270,847.05) (102)

B.3. Major Program/Projects/Activities undertaken in CY 2018

Project/Program/Activity Actual Cost (₱)

Provision of Adequate Drainage and Sewerage System
3,988,173.31
(Poblacion) at Barangay Sagrada, Bula, Camarines Sur
Provision of Flood Control Structures at Barangays
Bagumbayan, Sagrada, San Roque Poblacion, and Ombao 8,434,254.25
Polpog, all of Bula, Camarines Sur
Repair/Rehabilitation and Maintenance of Identified Road
Sections at Barangays Fabrica, Pawili, San Isidro, San 554,270.79
Agustin and San Ramon, all of Bula, Camarines Sur
Construction of Gender Responsive Evacuation Center and
Command Center with Appropriate Gender Responsive
2,284,483.04
Facilities (Phase II) at MDRRM Site, Barangay Sagrada,
Bula, Camarines Sur
Preparation of Detailed Engineering Design (DED) and
Implementation of Potable Water System (Design and Build)
2,987,000.00
on the Enhancement of Level III Water System at Barangay
Kinalabasahan, Bula, Camarines Sur
Design and Build of the Implementation of Potable Water
Supply System: Source Development (for Level III) at 2,318,202.49
Barangay Sta. Elena, Bula, Camarines Sur
Design and Build of the Establishment of Level III Water
1,898,427.37
System at Barangay San Jose, Bula, Camarines Sur
Design and Build of the Establishment of Level II Water
1,677,847.08
System at Barangay Ombao Heights, Bula, Camarines Sur
Local Access Road at Barangay Fabrica, Bula, Camarines Sur 7,444,057.76
Clustered Project 2018-02: Construction of Sanitary Toilet
with Hygiene Facilities for Public Places and Expansion of 1,473,119.75
Sangguniang Bayan Office at Municipal Hall Compound

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 Project/Program/Activity Actual Cost (₱)
Clustered Project 2018-01: Construction of Market Building
(one Stall) and Completion of Fruit Stand Building (Phase II) 832,858.40
at Bula Public Market
Design and Build on the Enhancement of Level II Water
1,984,000.00
System at Barangay Ombao Heights, Bula, Camarines Sur
Repair/Rehabilitation and Maintenance of Identified Road
Sections at Barangays Bagoladio, Inoyonan, Itangon and La 727,878.47
Victoria, all of Bula, Camarines Sur
Construction/Provision of Ten (10) units Waiting Shed at
Barangays Fabrica, Causip, Santo Domingo, San Miguel and 489,460.52
Kinalabasahan, all of Bula, Camarines Sur
Construction/Concreting of Core Local Roads and other
Structures (Phase I) Barangays Caorasan, Casugad, Inoyonan,
4,986,443.03
Itangon, Lubgan, Panoypoyan, San Francisco, San Roque
Poblacion and Taisan, all of Bula, Camarines Sur
Construction/Concreting of Core Local Roads and other
Structures (Phase II) at Barangays Bagoladio, Balaogan,
Casugad, Fabrica, Inoyonan, La Purisima, Palsong, San 4,958,800.18
Francisco, San Miguel and Santa Elena, all of Bula,
Camarines Sur
Repair/Rehabilitation and Maintenance of Municipal Roads
and Ancillaries at Barangays La Victoria, Kinalabasahan, and 1,691,528.46
Taisan, all of Bula, Camarines Sur
Continuation of Three Storey Building (Phase V) at LGU
803,549.67
Bula Compound
Total 49,534,354.57

Post-audit of financial transaction was made on a test basis; however, time

constraint deterred validation and verification as to conformance to specifications and as
to the existence of some of the projects.

C. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the Municipality of Bula, Camarines Sur for CY 2018 because
property and accounting records had a variance of ₱30.21 million valued at gross book
value. The discrepancy could not be reconciled due to the absence of updated PPE
records and reports. The inadequacy of records did not permit us to apply alternative
procedures to determine the accuracy, reliability and existence of these PPE balances.

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D. SUMMARY OF SIGNIFICANT OBSERVATIONS AND
RECOMMENDATIONS

For the exception cited, we recommended that Management instruct the Inventory
Committee to include all properties in physical count and submit an updated and properly
accomplished RPCPPE with all the needed information. Also, direct the Municipal
Accountant to maintain complete and updated PPE ledger cards to support GL account
balances and the GSO to keep corresponding property cards for each category of PPE for
control purposes. These records should contain adequate details/description of the
properties such as model, serial number, location, cost and other information necessary to
facilitate identification. Moreover, require both the Accounting Division and Property
Section to exert all efforts to reconcile their records on a regular basis so that
discrepancies thereon are immediately corrected.

The Audit Team has communicated the observations and recommendations with
the Management through the issuance of Audit Observation Memorandum (AOM) and
discussed them with the concerned officials and employees during the exit conference
conducted on April 15, 2019 in which the latter’s comments were incorporated in the
report, where appropriate. The following are the significant observations together with
the corresponding recommendations:

1. Disbursements totaling ₱234,146.75 for the Basic Incident Command System

Training conducted by the Local Government Unit (LGU) of Bula, Camarines
Sur, were not in accordance with Republic Act (R.A.) No. 9184 otherwise known
as the Government Procurement Reform Act.

We recommended that Management ensure that in all other projects and activities
to be pursued by the LGU, the law and rules on procurement be strictly observed.

2. The Municipality was not able to fully implement 4 projects budgeted at ₱24.407
million representing 80 per cent of the total number of priority development
projects under the 20% Development Fund (DF) for CY 2018. Also, expenditure
amounting to ₱554,270.79 charged against 20% DF was not among the items
included in the Appropriation Ordinance for Fiscal Year 2018, thus, the
transaction is deemed unauthorized.

We recommended that Management ensure: (a) the full implementation of the

20% development fund embodied in the Annual Investment Plan of the
Municipality in compliance with Paragraph 5.0 of DILG and DBM Joint Circular
No. 2011-1; and (b) that only programs and projects listed in the Annual
Investment Plan and Appropriation Ordinance be utilized under the 20%
Development Fund.

3. Funds transfers from National Government Agencies (NGAs) totaling ₱37.082

million granted one year ago or earlier years remained unimplemented as of
December 31, 2018, while a balance of ₱5.666 million remain unliquidated

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 despite its completion of the project thereby, overstating the liability account’s
balance by the same amount.

We recommended that Management: (a) fully utilize the funds granted by the
national agencies to effectively and timely extend to the constituents the benefits
of the agency’s projects; and (b) ensure that the specific terms and conditions of
the Memorandum of Agreements are strictly adhered to particularly the agreed
duration of projects.

E. SUMMARY OF AUDIT SUSPENSIONS, DISALLOWANCES AND

CHARGES

Balances as of CY 2018 Balances as of

Particulars
01/01/2018 Issued Settled 12/31/2018
Notice of Suspension ₱ 7,589,660.60 ₱ 22,352,141.73 ₱ 0.00 ₱ 29,941,802.33
Notice of
100,048.00 0.00 0.00 100,048.00
Disallowance
Notice of Charge 0.00 0.00 0.00 0.00
Total ₱ 7,689,708.60 ₱ 22,352,141.73 ₱ 0.00 ₱ 30,041,850.33

F. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Out of the seven audit recommendations embodied in the previous Annual Audit
Report, one was fully implemented, five were partially implemented and one was not
implemented as of December 31, 2018.