01-BacarraIN2020 Audit Report

Republic of the Philippines
COMMISSION ON AUDIT
Office of the Supervising Auditor
Audit Group A-Province of Ilocos Norte
Provincial Capitol, Laoag City 2900
May 31, 2021

HON. FRITZIE ANNE KAYE DELA CRUZ-GAPASIN
Municipal Mayor
Bacarra, Ilocos Norte
Dear Mayor Gapasin:

We transmit herewith the report on the comprehensive audit on the accounts and
operations of the Municipal Government of Bacarra, Ilocos Norte for the year ended
December 31, 2020 in compliance with Section 2, Article IX-D of the Philippine
Constitution and pertinent sections of Presidential Decree No. 1445.
The audit was conducted to ascertain the propriety of financial transactions and
compliance with prescribed rules and regulations. It was also made to ascertain the
accuracy of financial records and reports, as well as the fairness of the presentation of the
financial statements. Likewise, a Value for Money Audit was conducted to assess or
determine whether the resources of the Municipality were utilized economically,
efficiently and effectively.
The report consists of four parts: Part I – Audited Financial Statements, Part II –
Audit Observations and Recommendations, Part III – Status of Prior Years’ Audit
Recommendations and Part IV – Annexes. The observations and recommendations were
discussed with the concerned Management officials and staff in an exit conference held
on May 25, 2021. Management’s comments are included in the report, where appropriate.
We rendered a qualified opinion on the fairness of presentation of the financial

statements for reasons stated in the Independent Auditor’s Report.
We request that the comments and observations and recommendations contained

in this report be fully addressed and we would appreciate being informed of the action
taken in this regard within sixty (60) days from receipt hereof, pursuant to Section 89 of
the General Provisions of Republic Act No. 11469, otherwise known as the General
Appropriations Act 2020 by accomplishing the Agency Action Plan and Status of
Implementation attached herewith.
We acknowledge the cooperation extended to the audit team by the officials and
staff of that Municipality.
Very truly yours,
MARIA TERESA M. TOLENTINO

OIC- Supervising Auditor
cc: The Director, DILG, Regional Office No. 1, City of San Fernando, La Union
The Director, BLGF, Regional Office No. 1, City of San Fernando, La Union
The Director, DBM, Regional Office No. 1, City of San Fernando, La Union
The Assistant Commissioner, LGS, COA, Quezon City
The Presiding Officer, Sangguniang Bayan, Bacarra, Province of Ilocos Norte
MUNICIPALITY OF BACARRA
Province of Ilocos Norte
AGENCY ACTION PLAN and STATUS of IMPLEMENTATION

Audit Observations and recommendations
For the Calendar Year 2020
As of _______________
Agency Action Plan

Reason for
Target Action
Status of Partial/Delay/Non-
Ref. Audit Audit Person/Dept. Implementation Taken/Action
Action Plan Implementation Implementation, if
Observations Recommendation Responsible Date to be taken
applicable
s
From To
Agency sign-off:
________________________________ _____________
Name and Position of Agency Officer Date
Note: Status of Implementation may either be (a) Fully Implemented, (b) Ongoing, (c) Not Implemented, (d) Partially Implemented, or (e) Delayed
COMMISSION ON AUDIT
Office of the Audit Team Leader
Audit Group A – R1 - Team 04
Provincial Capitol, Laoag City 2900
May 28, 2021
MS. MARIA TERESA M. TOLENTINO

OIC-Supervising Auditor
Commission on Audit
Audit Group A - Province of Ilocos Norte
Madam:
In compliance with Section 2, Article IX-D of the Philippine Constitution and

pertinent sections of Presidential Decree No. 1445, we conducted a financial and
compliance audit on the accounts and operations of the Municipality of Bacarra, Province
of Ilocos Norte for the year ended December 31, 2020.
The audit was conducted to ascertain the propriety of financial transactions and
compliance of the agency to prescribed laws, rules and regulations. It was also made to
ascertain the accuracy of financial records and reports as well as the fairness of the
presentation of the financial statements and whether these statements were prepared in
conformity with International Public Sector Accounting Standards (IPSAS). Likewise, a
Value for Money Audit was conducted to asses or determine whether resources of the
Municipality were utilized economically, efficiently and effectively.
The attached report consists of four parts: Part I – Audited Financial Statements,
Part II – Observations and Recommendations, Part III – Status of Prior Year’s Audit
Recommendations and Part IV – Annexes. The observations and recommendations were
discussed with the concerned management officials and staff in an exit conference held
on May 25, 2021. Management’s comments are included in the report, where appropriate.
We rendered a qualified opinion on the fairness of the presentation of the

financial statements for reasons stated in the Independent Auditor’s Report.
Our audit was conducted in accordance with International Standards of Supreme

Audit Institutions (ISSAIS) and we believe that it provides reasonable bases for the result
of audit.
Thank you.
Very truly yours,
ROWENA C. RAMOS
Audit Team Leader
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
ANNUAL AUDIT REPORT
on the
PROVINCE OF ILOCOS NORTE
For the Year Ended December 31, 2020

EXECUTIVE SUMMARY
A. INTRODUCTION
Bacarra, the third oldest town in Ilocos Norte was founded by the Augustinian
in 1570. It was recognized as a municipality by the Spanish Government in 1778 with
Manuel Paras as the first Town Executive. A third class municipality located in the
northwestern central part of the province and part of the first Congressional District.
It has a total land area of 7,104 hectares spread in 43 barangays, 18 are in the urban
and 25 are rural barangays.
The municipality is under the leadership of Honorable Fritzie Kaye Anne de la

Cruz-Gapasin assisted by the Honorable Vice Mayor Jose A. Pilar, Jr. and the
Sangguniang Bayan Members. The manpower complement is composed of 12
elective officials, 104 permanent employees, and 149 job order workers or a total of
265 as of December 31, 2020.
B. OPERATIONAL HIGHLIGHTS
In response to COVID-19 pandemic, the Municipal Government allotted a

total of ₱21,122,739.98 for the necessary programs, projects and activities (PPAs)
related to the COVID-19 virus prevention, treatment, repercussion and/or aftermath.
Details are as follows:
Source of Fund Beginning Utilization (₱) Ending

Balance (₱) Balance (₱)
DRRM Funds (30% QRF, 2,147,310.62 2,147,310.62 0.00
Unspent DRRMF)
DRRM Funds (70% MF 4,935,844.36 4,828,009.43 107,834.93
Unspent DRRMF
20% Development Fund 5,000,000.00 1,108,542.60 3,891,457.40
(Local Source)
Bayanihan Grant (National 9,039,585.00 9,024,276.00 15,309.00
Grant)
Total 21,122,739.98 17,108,138.65 4,014,601.33
For Calendar Year (CY) 2020, the Municipal Government’s major objective
was geared towards the excellent delivery of basic services to its constituents.
Below were among the significant completed infrastructure projects

implemented by the Municipal Government:
Name of Project Source of Fund Project Cost (₱)

Construction of Pulangi-Paninaan Farm 20% MDF 3,200,000.00
To Market Road
i
Construction of Flat Slab Bridge 20% MDF 1,000,000.00
Improvement Farm to Market Road @ 20% MDF 500,000.00
Purok Saranay, Brgy 23, Paninaan
Concreting of Road @ Brgy 27, Duripes RA 7171 546,000.00
Improvement of Evacuation Center LGSF-AM 1,800,000.00
Local Access Road LGSF-AM 9,800,000.00
Rehabilitation/Improvement
Construction of Comfort Room General Fund 1,000,000.00
Construction of Flood Control PCF 2,300,000.00
For 2020, the Municipality of Bacarra again received and attained numerous
Major Awards and Citations as follows:
a. 2020 National ADAC Performance Special Award (DILG)
 Drug Cleared Sustained Award

 Unaffected Drug-Maintained Award
b. 1st Runner Up Regional Validation for the Search for Model Bio-Intensive Garden
Gearing to Enhance Resources (Bigger) 2020
c. ARUBAYAN NI KA-LILY of Brgy. Calioet Libong Provincial Winner

Evaluation for the Search for Model Bio-Intensive Garden Gearing to Enhance
Resources (Bigger)
C. FINANCIAL HIGHLIGHTS
Comparative financial highlights of the Municipal Government of Bacarra for

the CYs 2020 and 2019 are as follows:
Increase/
Increase/
Accounts 2020 2019 (Decrease)
(Decrease)
%
Financial Position
Assets 339,886,233.10 323,735,931.00 16,150,302.10 4.98%
Liabilities 66,562,631.41 63,170,915.42 3,391,715.99 5.37%
Government Equity 273,323,601.69 260,565,015.58 12,758,586.11 4.90%
Increase/
Increase/
Accounts 2020 2019 Decrease
Decrease
%
Sources of Funds
Local Sources 36,828,836.86 36,551.960.00 276,876.86 0.76%
External Sources 108,475,022.00 116,718,396.11 (8,243,374.11) -7.06%
Total 145,303,858.86 153,270,356.11 (7,966,497.25) -5.20%
ii
Application of Increase/
Increase/
Funds 2020 2019 Decrease
Decrease
%
PS 56,925,417.41 62,322,922.30 (5,397,504.89) -8.66%
MOOE 80,580,874.31 75,602,255.13 4,978,619.18 6.58%
Financial Expenses 471,632.42 725,086.76 (253,454.34) -34.95%
Total 137,977,924.14 138,650,264.19 (672,340.05) -0.49%
D. SCOPE OF AUDIT
The audit covered the financial transactions and operations including various
PPAs of the Municipal Government funded by regular, special and supplemental
appropriations, trust funds and fund transfers from various agencies for the period
January 1 to December 31, 2020.
The audit was conducted to ascertain accuracy of financial records and

reports, as well as the fairness of the presentation of the financial statements and
whether these statements were prepared in conformity with International Public
Sector Accounting Standards (IPSAS). Likewise, it was made to ascertain whether
programs as envisioned were attained in economical, efficient and effective manner.
E. STATE AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS
A qualified opinion was rendered on the fairness of the presentation of the

financial statements of the Municipality of Bacarra, Ilocos Norte as at December 31,
2020 because the (a) account Local Road Networks totaling ₱157,187,483.76, which
represents 56.73% of the total Plant, Property and Equipment (PPE) were not
provided with depreciation of ₱26,803,078.49; (b) carrying amounts of Loans
Receivables, Other Receivables and Due from Local Government Units (LGUs)
totaling ₱2,783,880.00, ₱2,882,728.47 and ₱753,614.77, respectively, included
dormant accounts for more than 10 years, undocumented accounts, and unreconciled
balances; and (c) current and non-current portions of the Loans Receivable totaling
₱5,555,555.68 were all presented as non-current.
F. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND

RECOMMENDATIONS
We commend the Management for the favorable observations noted, to wit:
1. The Municipality has been thoroughly supervising and monitoring the quality of
work/job done by the 79 Contractuals employed in the Municipal Government in
which their services rendered is in line with the job description stipulated in their
Contract and is in accordance with the budgetary requirements.
iii
2. In support to disaster risk management activities required under RA No. 10121,
known as the Philippine Risk Reduction and Management Act of 2010, the
Municipality had exhausted the total current year appropriation of ₱7,157,702.05
due to the situation brought about by the COVID 19 pandemic.
3. The Municipal Government had fully implemented the PPAs funded from RA
No. 7171 that benefitted the farmers with a total appropriation of ₱18,758,475.00
where utilization was 99.976% or ₱18,754,068.20.
However, in addition to the observations that formed the bases for our
qualified opinion on the financial statements, there were other observations and
recommendations that need to be corrected and/or improved by the Management. All
audit observations and corresponding recommendations were discussed with
Management officials concerned in an exit conference on May 25, 2021 and are
presented in detail in Part II of this report. Management views and comments were
incorporated in the report where appropriate.
1. The Real Property Tax (RPT) Receivable and Special Education Tax (SET)
Receivable accounts amounting to ₱4,390,402.37 and ₱4,390,402.37,
respectively, could not be ascertained due to the non-submission of Certified List
of Taxpayers with the corresponding amount due for the year by the Municipal
Treasurer contrary to Section 20 of the Manual of the New Government
Accounting System (NGAS) for LGUs Volume I, casting doubts on the accuracy
and reliability of the accounts affecting the fair presentation of the financial
statement.
We recommended that Management instruct the Municipal Treasurer to prepare

and provide the Municipal Accountant a copy of list of taxpayers and the
corresponding amount due and collectible for the year as the basis of the latter in
recording/book up the RPT and SET Receivables Accounts.
2. The unserviceable and missing properties totaling ₱1,654,885.08 are still

recognized in the Physical Inventory Report submitted by the General Service
Officer (GSO) which is not in accordance with Paragraph 82 of IPSAS 17 and
Section 79 of PD No. 1445 and COA Circular No. 2020-006 dated January 31,
2020, thus, the existence of discrepancies between the accounting and property
records affecting the reliability and accuracy of the Property, Plant and Equipment
(PPE) account.
We recommend that Management instruct the GSO to prepare the Inventory and
Inspection Report of Unserviceable Properties (IIRUP) for those unserviceable
PPE items to be inspected and be sold through public auction if found valuable
and to conduct investigation for the non-existing/missing properties and submit
the results thereof to the Local Chief Executive for its final disposal.
iv
We further recommended that Management instruct the Municipal Accountant to
coordinate with the GSO to update their records to come up with reconciled
balances of PPE.
3. Payable Accounts totaling ₱7,529,412.72 included unliquidated obligations with a

total amount of ₱1,039,909.82 which has been outstanding for more than two
years and remained un-reverted, contrary to Section 98 of PD No. 1445 and
Section 3.2 of COA Circular No. 99-004 dated August 17, 1999, thus casting
doubts on the validity and propriety of the account balances.
We recommended that Management instruct the Municipal Accountant to analyze

the payable accounts to ensure the accuracy of the balances in the financial
statements and only record transactions/set up liability based on valid obligations
with complete evidences or documents, and to revert the balances of Accounts
Payable that have been outstanding for more than two years which are
undocumented and no longer valid to the Unappropriated Surplus pursuant to
COA Circular No. 99-004.
G. SUMMARY OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS
Of the 26 prior years’ recommendations, 21 were fully implemented and 5

were not acted upon during the year.
H. SUMMARY OF SUSPENSIONS, DISALLOWANCES AND CHARGES
Audit suspensions, disallowances and charges amounted to ₱71,892.97,

₱97,174.00 and ₱0.00 respectively, in which disallowances remained unsettled at the
end of the year. Details are as follows:
Balance, Issuances Settlement Balance,

31-Dec-19 31-Dec-20
Suspension - 490,984.89 419,091.92 71,892.97
Disallowance 103,354.00 4,850.00 11,030.00 97,174.00
Charge - - - -
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TABLE OF CONTENTS
Part I – Audited Financial Statements
 Independent Auditor’s Report 1

 Statement of Management Responsibility for Financial Statements 3
 Consolidated Statement of Financial Position 4
 Consolidated Statement of Financial Performance 5
 Statement of Changes in Net Assets/Equity 6
 Consolidated Detailed Statement of Cash Flows 7
 Statement of Comparison of Budget and Actual Amount 9
 Notes to Financial Statements 13
Part II – Audit Observations and Recommendations
A. Financial Audit 40
B. Compliance Audit 56
C. Other Areas 64
Part III – Status of Implementation of Prior Years’

Audit Recommendations 65
Part IV – Annexes
A. Summary of Uncorrected Misstatements 85

PART I
AUDITED FINANCIAL STATEMENTS
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
INDEPENDENT AUDITOR’S REPORT
Hon. Fritzie Kaye Anne De La Cruz Gapasin

Bacarra, Ilocos Norte
Opinion
We have audited the financial statements of the Municipality of Bacarra, Ilocos

Norte, which comprise the Statement of Financial Position as at December 31, 2019,
and the Statement of Financial Performance, Statement of Changes in Net
Assets/Equity, Statement of Cash Flows and Statement of Comparison of Budget and
Actual Amounts for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion, except for the effects of the matter described in the Bases of Qualified
Opinion section of our report, the accompanying financial statements present fairly,
in all material respects, the financial position of the Municipal Government of
Bacarra as at December 31, 2020, and its financial performance, its cash flows, and
its comparison of budget and actual amounts for the year then ended in accordance
with IPSASs.
Bases for Qualified Opinion
The (a) non-provision of depreciation of ₱26,803,078.49 to the Local Road Networks

totaling ₱157,187,483.76, which represents 56.73% of the total PPE; (b) the existence
of dormant accounts for more than 10 years, undocumented accounts, and
unreconciled balances of the Loans Receivables, Other Receivables and Due from
Local Government Units accounts totaling ₱2,783,880.00, ₱2,882,728.47 and
₱753,614.77, respectively; and (c) presentation of the current portion of the Loans
Receivable of ₱2,777,777.84 as non-current, affected the fair presentation of the
financial statements.
We conducted our audit in accordance with International Standards of Supreme Audit

Institutions (ISSAIs). Our responsibilities under those standards are further described
in the Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report. We are independent of the agency in accordance with the ethical
requirements that are relevant to our audit of the financial statements, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our qualified opinion.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with IPSASs, and for such internal control as management
determines is necessary to enable the preparation of the financial statements that are
free from material misstatement, whether due to fraud or error.
Those charged with governance are responsible for overseeing the LGU’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not guarantee that an audit conducted in accordance
with ISSAIs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
COMMISSION ON AUDIT
By:
ROWENA C. RAMOS
Audit Team Leader
May 27, 2021

ILOCOS NORTE
STATEMENT OF MANAGEMENT RESPONSIBILITY

FOR FINANCIAL STATEMENTS
The management of the Municipality of Bacarra, Ilocos Norte is responsible for

all information and representation contained in the Statement of Financial Position as of
December 31, 2020 and the related Statement of Financial Performance, Statement of
Cash Flows, Changes in Net Assets/Equity and Statement of Comparison of Budget and
Actual Amounts for the period then ended. The financial statements have been prepared
in conformity with International Public Sector Accounting Standards and reflect amounts
that are based on best estimates and informed judgment of management with an
appropriate consideration of materiality.
In this regard, management maintains a system of accounting and reporting which

provides for the necessary internal controls to ensure that transactions are properly
authorized and recorded, assets are safeguarded against unauthorized use or disposition
and liabilities recognized.
LYDIA A. MANN
Municipal Accountant
FRITZIE ANN KAYE DELA CRUZ-GAPASIN

Mayor
NOTES TO FINANCIAL STATEMENTS
1 - Profile
Bacarra, the third oldest town in Ilocos Norte was founded by the Augustinian in
1570. It was recognized as a municipality by the Spanish Government in 1778 with
Manuel Paras as the first Town Executive. It is a third-class agricultural town located
in the northwestern central part of the province and part of the first Congressional
District. The municipality has a total land area of 7,104 hectares spread in forty-three
(43) barangays, 18 are in the urban and 25 are rural barangays.
The municipality’s paradigm was shifted to focus on livelihood and enterprise

development in order for the less privileged sections of society to be detached from
the bondage of poverty. All development programs are anchored with national
strategic plan in order to attain sustainable development.
It envisioned to prioritize programs, projects and activities that will boost the socio-
economic status of the people and the community among which are Integrated
Livelihood Program, Accelerated Agricultural and Fishery Development,
Comprehensive and Integrated Delivery of Social Services, Moral Recovery,
Technical-Vocational Trainings, Infrastructure Development and Maintenance of
Farm to Market Roads, Repair & Rehabilitation of the Market and Irrigation
Facilities.
2 - Consolidation
The financial statements of the LGU have been prepared in accordance with and
comply with the IPSAS. The consolidated financial statements are presented in
Philippine Peso, unless otherwise stated, which is the functional and reporting
currency of the LGU.
The LGU maintains GF, Special Education Fund (SEF), and Trust Fund (TF).
3 - Summary of significant accounting policies
3.1 Basis of accounting
The financial statements are prepared on an accrual basis in accordance

with the IPSASs.
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3.2 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees and fines
The LGU recognizes revenues from taxes and fines when the event occurs
and the asset recognition criteria are met. To the extent that there is a
related condition attached that would give rise to a liability to repay the
amount, liability is recognized instead of revenue. Other non-exchange
revenues are recognized when it is improbable that the future economic
benefit or service potential associated with the asset will flow to the entity
and the fair value of the asset can be measured reliably.
Transfers from other government entities
Revenues from non-exchange transactions with other government entities

are measured at fair value and recognized on obtaining control of the asset
(cash, goods, services and property) if the transfer is free from conditions
and it is probable that the economic benefits or service potential related to
the asset will flow to the LGU and can be measured reliably.
Revenue from exchange transactions
Rendering of services
The LGU recognizes revenue from rendering of services by reference to

the stage of completion when the outcome of the transaction can be
estimated reliably.
3.3 Property, plant and equipment
All property, plant and equipment are stated at cost less accumulated
depreciation. Cost includes expenditure that is directly attributable to the
acquisition of the items. When significant parts of property, plant and
equipment are required to be replaced at intervals, the LGU recognizes
such parts as individual assets with specific useful lives and depreciates
them accordingly. Likewise, when a major inspection is performed, its
cost is recognized in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All other repair and
maintenance costs are recognized in surplus or deficit as incurred. Where
an asset is acquired in a non-exchange transaction for nil or nominal
consideration the asset is initially measured at its fair value.
14
Depreciation on assets is charged on a straight-line basis over the useful
life of the asset. It is charged at rates calculated to allocate cost or
valuation of the asset less any estimated residual value over its remaining
useful life:
Public Infrastructures were not previously recognized in the books. The

LGU availed of the 5-year transitional provision for the recognition of the
IPSASs, the LGU did not recognize the Public Infrastructure in the books
of accounts. For the year 2016, Road Networks that were
acquired/constructed for years 2015 and 2016 were recognized. Road
Networks for the succeeding years were recorded in the books on the year
they were constructed, at cost and no depreciation were recognized yet.
3.4 Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are classified as financial assets at cost through surplus or

deficit, loans and receivables, held-to-maturity investments or available-
for-sale financial assets, as appropriate. The LGU determines the
classification of its financial assets at initial recognition.
The LGU’s financial assets include: cash and short-term deposits; loans
and other receivables.
Subsequent measurement
The subsequent measurement of financial assets depends on their

classification.
Loans and receivables
Loans and other receivables are those granted to private individuals in line
with the Municipality’s Integrated Livelihood Program purposely to
augment the income of the less privileged sections of the local
government.
Derecognition
The LGU derecognizes a financial asset or, where applicable, a part of a

financial asset or part of a group of similar financial assets when:
a) The rights to receive cash flows from the asset have expired or is waived;
15
b) The LGU has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows
in full without material delay to a third party; and either: (a) the
LGU has transferred substantially all the risks and rewards of the
asset; or (b) the LGU has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 are classified as

financial liabilities at cost through surplus or deficit or loans and
borrowings, as appropriate. The LGU determines the classification of its
financial liabilities at initial recognition.
All financial liabilities are recognized initially at cost.
The LGU Group’s financial liabilities include accounts and other

payables, loans and borrowings that rise from the routinely activities of the
municipality and mainly to improve the delivery of basic services.
Subsequent measurement
The measurement of financial liabilities depends on their classification.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are

subsequently measured at amortized cost using the effective interest
method. Gains and losses are recognized in surplus or deficit when the
liabilities are derecognized as well as through the effective interest method
amortization process.
Derecognition
A financial liability is derecognized when the obligation under the liability

is discharged or cancelled or expires.
3.5 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash in banks.
16
3.6 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy

retrospectively. The effects of changes in accounting policy are applied
prospectively if retrospective application is impractical.
The LGU recognizes the effects of changes in accounting estimates

prospectively by including in surplus or deficit.
3.7 Related parties
The LGU regards a related party as a person or an entity with the ability to
exert control individually or jointly, or to exercise significant influence
over the LGU, or vice versa. Members of key management are regarded as
related parties and comprise the Governor, Mayors, Vice-Governors and
Vice-Mayors, Sanggunian Members, Committee Officials and Members,
Accountants, Treasurers, Budget Officers, General Services and all Chiefs
of Departments/Divisions.
3.8 Budget information
The annual budget is prepared on the modified cash basis, that is, all
planned costs and income are presented in a single statement to determine
the needs of the LGU. As a result of the adoption of the Modified cash
basis for budgeting purposes, there are basis, timing or entity differences
that would require reconciliation between the actual comparable amounts
and the amounts presented as a separate additional financial statement in
the statement of comparison of budget and actual amounts. Explanatory
comments are provided in the notes to the annual financial statements;
first, the reasons for overall growth or decline in the budget are stated,
followed by details of overspending or under spending on line items.
3.9 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, management

has made judgments, which have the most significant effect on the
amounts recognized in the consolidated financial statements.
4 - Cash and Cash Equivalents
17
This account is broken down as follows:
2020 2019
Cash Local Treasury 1,031,169.23 1,629,531.73
Petty Cash Fund 110,992.00 50,000.00
Cash in Bank- Local Currency, Current 75,930,848.50 90,068,498.26
Account
TOTAL 77,073,009.73 91,748,029.99
Cash Local Treasury represents collections from December 29 to

December 31, 2020, which includes Real Property Tax collections, and
other receipts from all funds. These receipts were not deposited at the end
of the year because of the series of banking holidays. Hence, they were
deposited on the next banking days of the following month.
Cash in Bank – Local Currency, Current Account consists of deposits

at LBP and Veterans Bank earning interest based on the prevailing bank
deposit rates.
5 - Receivables
2020 2019
Loans and Receivable
Accounts
Accounts Receivable 11,382.35 11,382.35
Real Property Tax Receivable 4,390,402.37 3,505,733.17
Special Education Tax Receivable 4,390,402.37 3,505,733.17
Loans Receivable - Others 2,783,880.00 3,218,980.00
Inter-Agency Receivables
Due from NGAs 350,000.00 350,000.00
Due from Local Government Units 753,614.77 314,100.27
Due from Officers and Employees - -
Intra-Agency Receivables
Due from Other Funds 1,147,002.35 1,885,023.35
Advances
Advances for Operating Expenses 267,901.00 6,000.00
Advances to Officers and 2,235.93 613,849.93
Employees
Other Receivables
Receivables- 33,714.00 74,894.00
Disallowances/Charges
Other Receivables 2,882,728.47 1,511,399.10
Total 17,013,263.61 14,997,095.34
a.) Accounts Receivable of P11,382.35 is a result of the overpayment of account
to Bacarra Highway Lumber of P10,000.00, VMG Gasoline Station of P1,034.00,
18
different payees of P98.00, and the overpayment of wages of Helen Pascua
amounting to P250.35.
b.) Loans Receivable – Others of P2,783,880.00 represents capital assistance

granted to individuals or group of individuals charged against the General Fund.
c.) Due from NGAs represents subsistence granted to BNCHS in the amount of
P225,000.00 and to CNHS amounting to P125,000.00. Due from LGUs represents
1997 balance of Trust Fund due to LGU-Bacarra amounting to P37,614.00, Cash in
Provincial Treasury representing the un-reconciled items with the books of the
province amounting to P276,486.27 and the provincial counterpart for the initial
expenses of the General Revision of Property Assessments amounting to P
439,514.50.
d.) Due from Other Funds under the General Fund consists of remittances of
withholding taxes of the SEF and TF accounts through EFPS in the amount of
P1,143,002.35. Due from Other Fund under the Trust Fund represents Trust Fund
SEAP Collection entered in the General Fund books of accounts of P4,000.00.
e.) Advances for Operating Expenses in the amount of P 267,901.00 represents

1)Unliquidated balance of cash advance for the COVID 19 relief operation in the
amount of P266,400.00, 2)Unclaimed prizes during the Fiesta Virtual celebration in
the amount of P1,500.00 and 3)Difference between the cash advance for wages of
laborers and its liquidation for P1.00.
f.) Advances for Officers and Employees consists of the excess of cash advance
granted for travelling expenses and allowances amounting to P2,235.93 and was
refunded and receipted on January 2021.
g.) Receivables-Disallowance/Charges represents unsettled disallowances under

the General Fund amounting to P21,714.00 and P12,000.00 under the Trust Fund.
h.) Other Receivables of P2,882,728.47 represents the following:
Self-Employment Assistance 860,443.94

Cash Shortage of Alexander Acacio 336,409.06
Cash Advances of deceased Mayor Philip Velasco 261,846.40
Balance of Mobilization fee 782,513.91
PNPL 514,260.00
Back pay Cert of Indebtedness-Prior to CY 1998 balance 10.46
KKK Loans 27,900.00
Uncollected Fishery Rentals-Atty. Celestino Aguinaldo 43,000.00
Seed Capital of KADIWA 8,003.70
Swine Dispersal Loan 30,470.00
1st quarter IRA for DOH-devolved employees 17,871.00
TOTALS 2,882,728.47
6 – Inventories
19
2020 2019
Inventory Held for Consumption
Accountable Forms, Plates and 79,330.58 228,002.82
T O Stickers
TAL 79,330.58 228,002.82
7 – Prepayments and Deferred Charges
2020 2019
Prepayments
Other Prepayments 135,600.00 135,600.00
Deferred Charges
Discount on Advance Payments 2,128,945.52 1,833,169.66
Total 2,264,545.52 1,968,769.66
20
8 - Property, Plant and Equipment
Property, Plant and January 1, Transfers/ December 31, Transfers/ As of December 31,
Additions Additions Disposals
Equipment 2019 Adjustments 2019 Adjustments 2020
Land

Land 16,814,283.24 (3,832,240.00) 12,982,043.24 287,000.00 13,269,043.24
Land Improvements

Land Improvements 656,902.57 656,902.57 656,902.57
Infrastructure Projects
Road Networks 109,584,252.1 25,134,180.49 134,718,432.65 22,469,051.11 157,187,483.76
6
Other Infrastructure 1,199,438.6
Assets 5 1,199,438.65 (1,199,438.65) -
Buildings and other Structures

Buildings 1,306,631.25 1,306,631.25 1,306,631.25
Hospitals and Health 3,289,590.0
Centers 0
3,289,590.00 2,579,810.65 5,869,400.65
Markets 33,732,770.87 33,732,770.87 33,732,770.87
Slaughterhouses 993,521.6 993,521.66 993,521.66
6
Other Structures 4,598,520.11 4,598,520.11 2,794,832.69 7,393,352.80
Machinery and Equipment
Machinery 20,150.00 20,150.00 20,150.00
Office Equipment 871,936.1 (196,011.95) 675,924.15 (543,849.15) 132,075.00
Information and 4,787,838.060 (409,850.25) 4,377,987.81 (909,926.60) 3,468,061.21
Communication
Technology
Equipment
Marine and Fishery - - 498,500.00 498,500.00
Equipment
Communications 1,726,865.00 (212,730.00) 1,514,135.00 (873,780.00) 640,355.00
Equipment
Construction and 31,439,255.48 430,000.00 31,869,255.48 (23,099,632.05) 8,769,623.43
Heavy Equipment
21
Property, Plant and January 1, Transfers/ December 31, Transfers/ As of December 31,
Additions Additions Disposals
Equipment 2019 Adjustments 2019 Adjustments 2020
Disaster Response 9,648,000.92 (617,585.00) 9,030,415.92 (224,500.00) 8,805,915.92
and Rescue
Equipment
Military, Police and 961,882.9 (53,727.00) 908,155.96 908,155.96
Security Equipment 6
Medical Equipment 2,308,524.0 6,121,758.30 8,430,282.30 56,740.00 8,487,022.30
Other Machinery And 2,039,005.00 (36,595.00) 2,002,410.00 69,400.00 2,071,810.00

Equipment 0

Transportation Equipment
Motor Vehicles 6,977,123.65 (91,584.00) 6,885,539.65 387,900.00 7,273,439.65

Other Transportation 3,298,200.0 3,298,200.00 2,435,000.00 5,733,200.00
Equipment 0

Furniture, Fixtures and Books
5,072,996.4 (1,323,031.51) 3,749,964.95 (271,568.04) 3,478,396.91
Furniture and Fixtures
Books 14,775.006 (14,775.00) -
Construction in - - 5,463,548.01 5,463,548.01
Progress-
Infrastructure Assets
Other Property, Plant and Equipment
511,235.3 (39,090.00) 472,145.30 472,145.30
Other Property, Plant
and Equipment 0
Total 241,853,698.44 31,685,938.79 (6,827,219.71) 266,712,417.52 37,041,782.46 (25,427,187.80) (1,695,506.69) 276,631,505.49
22
SCHEDULE OF DEPRECIATION
2020
December 31, 2019 2020 December 31, 2020

Particulars Accumulated Depreciation Related Accum. Transfers/ Accumulated
Net Book Value Net Book Value
Depreciation Expense Deprn. -Disposal Adjustments Depreciation
Land
Land - 12,982,043.24 - - - 13,269,043.24
Land Improvements
Land Improvements - 656,902.57 - - - 656,902.57
Infrastructure Asset
Road Networks - 134,718,432.65 - - - 157,187,483.76
Other Infrastructure Assets - 1,199,438.65 - - - -
Buildings and Other Structures
Buildings (24,210.65) 1,282,420.60 - - (24,210.65) 1,282,420.60
Hospitals and Health Centers (587,698.88) 2,701,891.12 (250,430.81) - (838,129.69) 5,031,270.96
Markets (5,780,331.27) 27,952,439.60 (972,446.41) - (6,752,777.68) 26,979,993.19
Slaughterhouse (915,068.59) 78,453.07 (53,330.71) - (968,399.30) 25,122.36
Other Structures (548,617.41) 4,049,902.70 (169,890.71) - (718,508.12) 6,674,844.68
Machinery - 20,150.00 - - - 20,150.00
Office Equipment (159,474.20) 516,449.95 - 124,859.54 - (34,614.66) 97,460.34
ICT Equipment (2,827,390.30) 1,550,597.51 (391,523.97) 1,576,545.75 - (1,642,368.52) 1,825,692.69
Marine & Fishery Equipment - - (3,946.46) - (3,946.46) 494,553.54
23
December 31, 2019 2020 December 31, 2020
Particulars Accumulated Depreciation Related Accum. Transfers/ Accumulated
Depreciation Expense Deprn. -Disposal Adjustments Depreciation
Communication Equipment (823,629.29) 690,505.71 (4,046.59) 400,707.90 - (426,967.98) 213,387.02
Construction and Heavy Equipment (24,562,082.41) 7,307,173.07 (522,500.00) 21,230,208.74 - (3,854,373.67) 4,915,249.76
Disaster Response & Rescue (5,842,287.80) 3,188,128.12 (790,215.53) - (6,632,503.33) 2,173,412.59

Equipment
Military, Police and Security (775,221.04) 132,934.92 - - (775,221.04) 132,934.92
Equipment
Medical Equipment (1,323,405.54) 7,106,876.76 (807,133.22) - (2,130,538.76) 6,356,483.54
Other Machineries & Equipment (644,050.22) 1,358,359.78 (173,016.53) - (817,066.75) 1,254,743.25
Motor Vehicles (2,720,775.81) 4,164,763.84 (425,488.44) 284,850.00 (2,861,414.25) 4,412,025.40
Other Transportation Equipment (2,234,650.90) 1,063,549.10 (473,160.98) - (2,707,811.88) 3,025,388.12
Furnitures, Fixtures and Books
Furniture & Fixtures (1,807,807.80) 1,942,157.15 (251,756.55) 421,029.56 - (1,638,534.79) 1,839,862.12
Books - - - - - -
Construction in Progress
CIP - Infra. Assets - - - - - 5,463,548.01
Other PPE (341,682.22) 130,463.08 (6,352.08) - (348,034.30) 124,111.00
Total 51,918,384.33) 214,794,033.19 (5,295,238.99) 23,753,351.49 284,850.00 (33,175,421.83) 243,456,083.66
24
2019
Particulars January 1, 2019 2019 December 31, 2019
Accumulated Depreciation Transfers/ Accumulated

Depreciation Expense Adjustments Depreciation
Land
Land 16,814,283.24 - - - 12,982,043.24
Land Improvements
Land Improvements - 656,902.57 - - - 656,902.57
Infrastructure Asset
Road Networks - 109,584,252.16 - - - 134,718,432.65
Other Infrastructure Assets - 1,199,438.65 - - - 1,199,438.65
Buildings and Other Structures
Buildings (24,210.65) 1,282,420.60 - - (24,210.65) 1,282,420.60
Hospitals and Health Centers (432,187.58) 2,857,402.42 (155,511.30) - (587,698.88) 2,701,891.12
Markets (4,807,884.86) 28,924,886.01 (972,446.41) - (5,780,331.27) 27,952,439.60
Slaughterhouse (861,737.88) 131,783.78 (53,330.71) - (915,068.59) 78,453.07
Other Structures (402,583.64) 4,195,936.47 (146,033.77) - (548,617.41) 4,049,902.70
Machinery - 20,150.00 - - - 20,150.00
Office Equipment (178,624.92) 693,311.18 (91,304.83) 110,455.55 (159,474.20) 516,449.95
ICT Equipment (2,921,069.66) 1,866,768.40 (190,913.40) 284,592.76 (2,827,390.30) 1,550,597.51
Marine & Fishery Equipment - - - - - -
Communication Equipment (819,582.70) 907,282.30 (103,138.90) 99,092.31 (823,629.29) 690,505.71
Construction & Heavy Equipment (24,039,582.41) 7,399,673.07 (522,500.00) - (24,562,082.41) 7,307,173.07
Disaster Response & Rescue Equipment (4,805,419.56) 4,842,581.36 (1,324,547.10) 287,678.86 (5,842,287.80) 3,188,128.12
Military, Police and Security Equipment (753,004.11) 208,878.85 (47,243.64) 25,026.71 (775,221.04) 132,934.92
Medical Equipment (922,273.75) 1,386,250.25 (401,131.79) - (1,323,405.54) 7,106,876.76
25
Particulars January 1, 2019 2019 December 31, 2019
Accumulated Depreciation Transfers/ Accumulated

Depreciation Expense Adjustments Depreciation
Other Machineries & Equipment (458,192.64) 1,580,812.36 (202,904.00) 17,046.42 (644,050.22) 1,358,359.78
Motor Vehicles (2,200,783.68) 4,776,339.97 (519,992.13) - (2,720,775.81) 4,164,763.84
Other Transportation Equipment (1,992,814.92) 1,305,385.08 (241,835.98) - (2,234,650.90) 1,063,549.10
Furnitures, Fixtures and Books
Furniture & Fixtures (2,165,938.25) 2,907,058.21 (294,508.63) 652,639.08 (1,807,807.80) 1,942,157.15
Books - 14,775.00 - - - -
Construction in Progress
CIP - Infra. Assets - - - -
Other PPE (364,486.18) 146,749.12 (12,244.79) 35,048.75 (341,682.22) 130,463.08
Total (48,150,377.39) 193,703,321.05 (5,279,587.38) 1,511,580.44 51,918,384.33) 214,794,033.19
The decrease in the PPE accounts was the result of the sale of unserviceable items.
26
9 – Liabilities
2020 2019
Financial Liabilities
Accounts Payable 7,529,412.752 5,261,764.70
Due to Officers and Employees ,219.3455555
52,219.34 79,898.14
Total Payables 7,581,632.06 5,341,662.84
Bills/Bonds/Loans Payable
Loans Payable-Domestic 5,555,555.687 8,483,333.44
Total Financial Liabilities 13,137,187.74 13,824,996.28
Total Inter-Agency Payables

2020 2019
Due to BIR 1,257,191.32 1,096,046.61
Due to GSIS 58,993.16 58,994.85
Due to PAG - IBIG 11,079.84 10,779.84
Due to PHILHEALTH 1,542.68 1,542.68
Due to NGAs 1,960,122.36 15,684,170.06
Due to LGUs 10,231,912.75 3,763,199.19
Total Inter-Agency Payables 23,520,842.11 20,614,733.23
The first four accounts represent the amount deducted from the salaries of
officials and employees and were remitted to the respective government
agencies immediately on the month following the month for which these were
deducted. While the remaining accounts represents balances of funds received
by the LGU for specific purposes.
2020 2019
Intra-Agency Payables
Due to Other Funds 1,147,002.35 1,885,023.35
Total Intra-Agency Payables 1,147,002.35 1,885,023.35
Trust Liabilities
Trust Liabilities - Disaster Risk
Reduction Management Fund 2,227,466.94 4,678,466.94
Guaranty/Security Deposits Payable 178,939.82 132,602.82
Total Trust Liabilities 2,406,406.76 4,811,069.76
2020 2019
27
Deferred Credits/Unearned Income
Deferred Real Property Tax 4,390,402.37 3,505,733.17
Deferred Special Education Tax 4,390,402.37 3,505,733.17
Other Deferred Credits 11,489,011.42 10,014,132.22
Total Deferred Credits
Unearned Income 20,269,816.16 17,025,598.56
Other Payables 6,081,376.29 5,009,494.24

Total Other Payables 6,081,376.29 5,009,494.24
10 – Tax Revenue
2020 2019
Tax Revenue
Tax Revenue - Individual and
Corporation
Community Tax 1,011,123.74 945,705.83
Tax Revenue - Property
Real Property Tax - Basic 3,506,931.57 3,288,810.08
Discount on Real Property Tax - Basic (432,357.20) (412,403.17)
Special Education Tax 4,383,664.47 4,111,012.60
Discount on Special Education Tax (540,446.51) (515,503.98)
Tax Revenue-Goods and Services
Business Tax 9,762,607.68 9,615,522.08
Tax on Sand, Gravel and Other Quarry 126,780.00 37,800.00
Tax Revenue - Fines and Penalties
Tax Revenue-Fines and Penalties-
Taxes on Goods and Services 276,125.99 255,266.76
Sub - Total 18,094,429.74 17,326,210.20
Share from National Taxes

Share Internal Revenue Collection 108,475,022.00 96,499,310.00
Other Share from National Taxes

Share from Expanded Value Added
Tax - 260,611.11
Share from Tobacco Excise Tax - 18,758,475.00
Total 126,569,451.74 132,844,606.31
11 – Service and Business Income
28
2020 2019
Service, Business and Other Income
Service Income
Permit Fees 2,835,409.26 2,563,304.04
Clearance and Certificate Fees 3,283,095.33 2,821,543.27
Inspection Fees 86,831.25 134,551.40
Occupation Fees 350,600.00 347,600.00
Fees for Sealing and Licensing
of Weights and Measures 140,731.50 231,427.00
Fines and Penalties-Service Income 888,429.11 546,734.02
Business Income
Rent/Lease Income 2,549,309.65 3,309,498.23
Parking Fees 195,360.00 396,610.00
Receipt from Market 2,805,056.00 3,350,430.00
Operations
Slaughterhouse Operation 1,838,928.25 1,632,768.50
Receipt from Cemetery 406,720.00 397,090.00
Operations
Garbage Fees 235,450.00 223,095.00
Hospital Fees 1,299,265.00 1,199,470.00
Fines and Penalties-Business 20,022.98 34,698.69
Income
Total 16,935,208.33 17,188,820.15
12 – Other Income
2020 2019
Other Income
Interest Income 44,191.29 29,014.35
Miscellaneous Income 1,755,007.50 2,007,915.30
Total 1,799,198.79 2,036,929.65
13 – Share, Grants and Donations
29
2020 2019
Grants and Donation
Grants and Donations in Cash - 1,200,000.00
Grants and Donations in Kind - -
Total - 1,200,000.00
14 – Employee Costs
2020 2019
Employee Costs
Personnel Services
Salaries and Wages - Regular 35,123,649.37 34,542,665.68
Other Compensation
Personal Economic Relief Allowance 2,782,873.11 2,721,211.98
Representation Allowance 1,717,226.32 1,617,466.66
Transportation Allowance 1,960,217.49 1,538,266.66
Clothing/Uniform Allowance 678,000.00 642,000.00
Subsistence Allowance 235,236.42 207,715.15
Productivity Incentive Allowance 580,000.00 1,109,000.00
Overtime Pay - 13,813.10
Year-End Bonus 5,828,864.00 5,889,595.40
Cash Gift 585,000.00 562,000.00
Other Bonuses and Allowances 780,400.00 -
Hazard Pay 698,125.00 -
Personnel Benefit Contribution
Retirement and Life Insurance Premiums 3,872,775.09 4,140,334.87
Pag-IBIG Contribution 702,494.40 690,055.82
PHILHEALTH Contribution 484,524.52 364,048.72
Employees Compensation Insurance 136,651.94 133,984.25
Premiums
Other Personnel Benefit
Terminal Leave Benefits 759,379.75 8,150,764.01
Total 56,925,417.41 62,322,922.30
15 – Maintenance and Other Operating Expenses
30
2020 2019
31
Maintenance and Other Operating
Expenses
Traveling Expenses
Traveling Expenses - Local 536,171.90 1,028,033.45
Training and Scholarship Expenses
Training Expenses 183,129.00 403,150.00
Scholarship/Grants/Expenses 3,494,489.00 3,238,500.00
Supplies and Material Expenses
Office Supplies Expense 3,524,778.40 1,721,364.75
Accountable Forms Expense - 21,351.10
Animal/Zoological Expenses 196,810.00 -
Welfare Goods for Distribution Expense 12,108,360.96 -
Drugs and Medicines Expenses 2,413,944.00 1,729,143.00
Medical, Dental and Laboratory
Supplies Expenses 3,401,369.00 3,518,856.67
Fuel, Oil and Lubricants Expenses 1,449,104.14 1,525,484.89
Agricultural and Marine Supplies
Expenses - 899,000.00
Textbooks and Instructional Materials 316,350.00 219,520.00
Expenses
Chemical & Filtering Supplies Expenses 235,872.00 -
Other Supplies and Material Expenses 994,391.50 568,824.78
Utility Expenses
Water Expenses 289,923.61 419,325.72
Electricity Expenses 3,228,651.52 3,001,326.27
Communication Expenses
Postage and Courier Services 3,215.00 6,080.00
Telephone Expenses 873,420.30 496,707.86
Internet Subscription Expenses 50,367.00 17,236.99
Total 33,300,347.33 18,813,905.48
16 – Contracted Services
2020 2019
32
Contracted Services
Professional Services
Legal Services 33,730.00 -
Auditing Services - -
Other Professional Services 36,000.00 -
General Services
Other General Services - -
Environmental/Sanitary Services - 116,025.00
Total 69,730.00 116,025.00
17 – Repairs and Maintenance
2020 2019
Repairs and Maintenance-
Investment Property - -
Infrastructure Assets 52,744.00 6,672,748.44
Repairs and Maintenance-Buildings
and Other Structure 913,878.45 2,373,213.44
Machinery and Equipment 591,947.40 1,822,754.00
Transportation Equipment 406,914.87 199,114.60
Furniture and Fixtures 66,480.00 31,600.00
Other Property, Plant & Equipment - 2,256,480.01
Total 2,031,964.72 13,355,910.49
18 – Transfers and Subsidy
2020 2019
Transfers and Subsidy
Transfers
Transfer of Unspent Current Year
DRRM
Funds to the Trust Fund - 1,359,690.33
Transfers from General Fund as Project Equity
Subsidy
Subsidy to NGAs 5,347,045.37 417,708.01
Subsidy to LGUs 92,687.00 14,780,230.00
33
Total 5,439,732.37 16,557,628.34
19 – Taxes, Insurance Premiums and Other Fees
2020 2019
Taxes, Insurance Premiums
and Other Fees
Taxes, Duties and Licenses 16,399.61 29,065.43
Fidelity Bond Premiums 72,150.00 93,515.00
Insurance Expenses 146,406.54 178,381.30
Total 234,956.15 300,961.73
20 – Other Maintenance and Operating Expenses
2020 2019
Other Maintenance and
Operating Expenses
Printing and Publication Expenses 860.00 179.00
Transportation and Delivery Expenses - 1,990.00
Membership Dues and 138,343.03 107,000.00
Contributions to Organizations
Donations 24,101,095.47 10,598,752.15
Other Maintenance and 19,598,824.00 19,030,694.27
Operating Expenses
Total 43,839,122.50 29,738,615.42
21 – Financial Expenses
2020 2019
Financial Expenses
Interest Expenses 471,632.42 725,086.76
Total 471,632.42 725,086.76
22 – Non-cash Expenses
2020 2019
34
Non-Cash Expenses
Depreciation-Buildings and Other Structure 1,446,098.64 1,327,322.19
Depreciation-Machinery and Equipment 2,692,382.30 2,883,683.66
Depreciation-Transportation Equipment 898,649.42 761,828.11
Depreciation-Furniture, Fixtures and Books 251,756.55 294,508.63
Depreciation-Other Property, Plant and 6,352.08 12,244.79
Equipment
Total 5,295,238.99 5,279,587.38
23 – Government Equity
General Fund Special Total

Education
Fund
Continuing 11,486,215.77 569,694.16 12,055,909.93
Property, Plant and
Equipment 237,992,535.65 - 237,992,535.65
Receivables 10,394,070.99 459,904.77 10,853,975.76
Inventories 79,330.58 - 79,330.58
Prepayments and Deferred
Charges 1,200,072.76 1,064,472.76 2,264,545.52
Retained Operating
Surplus 9,787,245.12 290,059.13 10,077,304.25
Total 270,939,470.87 2,384,130.82 273,323,601.69
24 – Notes to Cash Flow Statement
A) Cash and Cash Equivalent
Special
Education
General Fund Fund Trust Fund Total
Cash on hand 50,077,970.22 8,874,796.41 18,120,243.10 77,073,009.73
and balances
with banks
50,077,970.22 8,874,796.41 18,120,243.10 77,073,009.73
B) Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)
General Fund SEF Trust Fund Total

Surplus/(Deficit) 22,039,257.52 (1,995,039.55 - 20,044,217.97
35
)
Non-cash
transactions
Depreciation 5,295,238.99 - - 5,295,238.99
Grants, Transfers (14,413,669.61) - - (14,413,669.61)
and Subsidy from
Trust Fund
Increase in 3,486,232.10 1,847,151.62 - 5,333,383.72
payables
Losses on Sale of 1,104,753.61 1,104,753.61
PPE
Increase in (5,912,313.66) 1,233,100.71 7,832,535.42) (4,679,212.95)
current assets
Increase in (1,759,438.03) (884,669.20) 627,938.96 (2,016,168.27)
receivables
Net Cash from 9,840,060.92 200,543.58 (7,204,596.46) 10,668,543.46
Operating
Activities
36
25 - RECONCILIATION BETWEEN ACTUAL AMOUNTS ON A COMPARABLE BASIS AS PRESENTED IN THIS
STATEMENT AND IN THE STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED DECEMBER 31,
2020
Maintenance
and Other
Personal Operating Financial
Income Services Expenses Expenses Capital Outlay
Comparison Statement of 145,303,858 56,925,417 59,281,389. 3,499,385.9
Budget and Actual .86 .41 16 9 50,314,948.34
Entity Differences
Basis Differences: 23,453,254.61 - 11,839,724.97 (3,027,753.57) (50,314,948.34)
Income not considered 23,453,254.61 - - - -
budgetary items
Non-cash income
Gain on Sale of
Assets
Transfers, Assistance 23,453,254.61
and Subsidy From
Receipts not considered
as income - - - - -
Sale of capital assets
Borrowings
Budgetary items not (3,027,753.5
considered as expenses - - - 7) (50,314,948.34)
Debt Service (Loan (3,027,753.57)
Amortization,
36
Maintenance
and Other
Retirement of Debt
Instruments)
Interest Expenses
capitalized
Capital Expenditures (50,314,948.34)
Expenses not 11,839,724.
considered budgetary - - 97 - -
Non-cash expenses - - 6,399,992.60 - -
5,295,238.9
Depreciation 9
Impairment Loss
Amortization -
Intangible assets
Non-Operating 1,104,753.61
Losses
Transfers, Assistance 5,439,732.37
and Subsidy To
Timing Differences: - - 20,194,731.54 - -
Prepayments charged to
current appropriations
Unconsumed
Inventories charged to
current appropriations
Consumed Inventories 20,194,731.54
37
Maintenance
and Other
and deferred charges
charged to prior period
appropriations
Other Reconciling Items - - - - -
(Pertains to accounts
recognized under Trust
Fund)
Per Statement of 168,757,113.47 56,925,417.41 91,315,845.67 471,632.42 -
Financial Performance
38
26 - Local Disaster Risk Reduction Management Fund (LDRRMF)
The LDRRMF represents the amount set aside by the LGU to support its disaster risk
management activities pursuant to RA No. 10121 otherwise known as the “Philippine
Disaster Risk Reduction and Management Act of 2010.” The amount available and utilized
during the year totaled P 10,205,359.91 and P 7,157,702.05, respectively, broken down as
follows:
Amount
Particulars Available Utilized Balance
Current Year Appropriation

Quick Response Fund (QRF) 2,147,310.62 2,147,310.62 -
Mitigation Fund (MF)
MOOE 3,210,391.43 3,210,391.43 -
Capital Outlay 1,800,000.00 1,800,000.00 -
Sub-total 7,157,702.05 7,157,702.05 -
Continuing Appropriation 820,190.92 - 820,190.92
Special Trust Fund
CY 2018 867,776.61 - 867,776.61
CY 2019 1,359,690.33 - 1,359,690.33
Sub-total 2,227,466.94 - 2,227,466.94
Total 10,205,359.91 7,157,702.05 3,047,657.86
The current year appropriation in the amount of 7,157,702.05 was exhausted due
to the situation brought about by the COVID 19 pandemic.
39
PART II
AUDIT OBSERVATIONS AND
RECOMMENDATIONS
AUDIT OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AUDIT
Non-provision of depreciation for the Local Road Network
1. The Local Road Networks totaling ₱157,187,483.76 which represents 56.73% of

the total PPE were not provided with depreciation of ₱26,803,078.49, which is
not in conformity with Paragraph 29 of IPSAS I, Paragraph 59 of IPSAS 17, and
Article IV of COA Circular No. 2015-008, resulting in the overstatement of the
PPE and Government Equity accounts with an understatement of the Expense
account, thus affecting the fair presentation of the financial statements.
Paragraph 29 of IPSAS I states that:
A fair presentation of financial statement also requires an entity to

present information including accounting policies in a manner that
provides relevant, reliable, comparable and understandable
information.
Paragraph 59 of IPSAS 17 states that:
Each part of an item of property, plant and equipment with a cost

that is significant in relation to the total cost of the item shall be
depreciated separately.
In the adoption of the IPSAS, infrastructure assets which include road

networks shall be taken up as PPE. The annual consumption of their service potential
and loss of value through depreciation and impairment shall also be recognized.
Article IV of COA Circular No. 2015-008 dated November 23, 2015 covers
the accounting guidelines for local road and road network system on initial
recognition, subsequent measurement and derecognition to ensure that all roads are
properly valued and recorded, and also the transitory provisions for the transfer of the
local roads accounts from the Registry of Public Infrastructures to the books of
accounts of the LGU responsible for the management of these roads. This circular
provides the following accounting policies and reporting procedures to wit:
a. Public Infrastructures specifically Road Networks System which shall

form part and be recorded in the books as Property, Plant and Equipment.
40
b. Public Infrastructures include among others like a) road lot, b) road
pavement, c) drainage and d) slope protection structures and other
miscellaneous structures.
c. The cost of a component of a road network system shall be recognized as

an asset when it is probable that the future economic benefits or service
potential associated with the item will flow to the LGU and the cost or fair
value of the item can be measured reliably.”
d. After recognition, road networks shall be carried at its cost less any
accumulated depreciation and any accumulated impairment losses.
e. Each depreciable component of the road network shall be depreciated

separately following the straight line method of depreciation.
f. No residual value shall be provided for the depreciable components of the

road network system.
g. Depreciate the carrying amount of existing roads and its components to

reflect the asset in its used condition and shall serve as the basis for
recording in the general ledger.
h. Determine the life of the local roads within the range prescribed by COA
taking into consideration the following factors: a) design, b) users and c)
volume of users.
i. Compute separately the depreciation for the road components taking into
consideration the following factors: a) initial cost and b) useful life.
j. Maintain separate subsidiary ledgers for the road and its components
namely; a) road lot, b) road pavement, c) drainage and slope protection
structures and d) other miscellaneous structures.
k. Provide complete description of the road and its components in the

subsidiary ledger and reconcile with the Local Road Inventory and Road
Map to ensure completeness.
As per Schedule of the Road Networks, this account represents the

following:
Account Title Nature of Components Year Total Amount

Constructed (₱)
Roads Network Farm to Market Roads, 13,083,630.82
Concrete Pavement, Stone 2015
Masonry, Rehabilitation of
Farm to Market Road
41
Road Network Construction of Flat Slab 33,221,856.47
Bridge, Concreting of FMR, 2016
Improvement of FMR
Road Network Concreting of Local Access 28,876,788.79
Road, Concreting and 2017
Improvement of FMR
Road Network Concreting/Improvement of 34,401,976.08
FMR, Concreting of Sanitary 2018
Landfill
Road Network Repair/Improvement of Flat 25,134,180.49
Bridge, FMR, Local Access 2019
Road
Road Network Construction of FMR, 22,469,051.11
Improvement of FMR, 2020
Concreting of Roads
Total 157,187,484.76
Review and analysis of the financial statements revealed that Local Road
Networks with a total amount of ₱157,187,483.76, which represents 56.73% of the
total PPE were recorded in their carrying cost without the provision of depreciation.
However, it was disclosed in the Notes to Financial Statements that the

Municipal Government did not recognized the Public Infrastructure in the books of
accounts in the previous years. Road Networks that were acquired/constructed for
years 2015 and 2016 were only then recognized in the books at cost from the start in
the implementation of IPSAS. Depreciation of an asset begins when it is available for
use and depreciation of an asset ceases when the asset is derecognized. The total
accumulated depreciation that should have been deducted from the road networks was
₱26,803,078.49.
Road Networks qualify for recognition as assets because they have probable
future economic benefits and service potentials that could be derived in the operations
of the Municipality for public purpose. After the recognition of the Road Networks as
asset, this item of PPE shall be carried at its cost less accumulated depreciation.
As a result, road networks which were not provided with accumulated

depreciation overstated the PPE account and understated the Expense account.
Correspondingly, the Government Equity account was also overstated thereby
affecting the fair presentation of the financial statement.
We recommended that Management instruct the Municipal Accountant

to provide depreciation for the Local Road Networks following the straight line
method pursuant to Paragraph 59 of IPSAS 17 and the accounting guidelines
and procedures set under COA Circular No. 2015-008.
42
Further, we recommended that Management instruct the Municipal
Accountant to coordinate with the General Services Officer (GSO) to maintain
separate subsidiary ledgers for the roads with complete description and classify
every component to establish accuracy and correctness in the provision of
depreciation.
Management committed that the Engineering Office will provide the

necessary Report of the Local Road Network as the basis of the Municipal
Accountant to compute and record the depreciation as this has been agreed upon
during the previous Exit Conference. Since no report has been prepared and
submitted, the Municipal Accountant was unable to record the depreciation, however,
she was already instructed to record the depreciation of the Local Road Networks to
comply with the findings. The Municipal Engineer was also directed to prepare the
said report.
The Audit Team accepted the explanations and justifications. We required

Management for the provision of depreciation for the Local Road Networks to ensure
that the account is properly valued to have a fair presentation in the financial
statement.
Dormant and undocumented receivables
2. The carrying amounts of Loans Receivables, Other Receivables and Due from
LGUs totaling ₱2,783,880.00, ₱2,882,728.47 and ₱753,614.77, respectively,
include dormant accounts for more than 10 years, undocumented accounts, and
unreconciled accounts, contrary to Paragraphs 27 and 29 of IPSAS 1, Section
11(1) of COA Circular No. 97-001 dated February 5, 1997, and Section 6.1 of
COA Circular No. 2006-005 dated December 19, 2016, casting doubts on the
reliability and accuracy of these receivable accounts.
Paragraphs 27 and 29 of IPSAS 1 states:
Faithful 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.

information.
43
COA Circular 2016-005 dated December 19, 2016 requires that:
6.1 All government entities shall conduct regular monitoring and

analysis of receivable accounts to ensure that these are
collected when these become due and demandable. xxx
Section 11(1) of COA Circular No. 97-001 provides that:
Dormant Account refer to individual or group of Accounts which

balances remained non-moving for more than five (5) years.
Aging Schedules of Loans Receivables, Other Receivables and Due from

LGUs as of December 31, 2020 are summarized below:
Account Nature of CY 2010 CY 2011- CY 2015- CY 2018- CY 2020 Total

Title Account and Prior 2014 2017 2019
Years
Loans Capital 2,257,830.00 25,000.00 352,350.00 148,700.00 2,783,880.00
Receivable Assistance
(SEAP)
Other Various 2,368,468.47 514,260.00 2,882,728.47
Receivables programs/cash
advances
/shortages
Due from Unreconciled 37,614.00 276,486.27 439,514.50 753,614.77
LGU Cash Treasury
TOTAL 4,663,912.47 815,746.27 352,350.00 148,700.00 439,514.50 6,420,223.24
Percentage 72.64% 12.70% 5.49% 2.32% 6.85% 100%
Review and analysis on the Notes to Financial Statements and Schedules of

Receivables revealed the following:
A. Loans Receivables totaling ₱2,783,880.00
 Comparative analysis showed that Loan Receivables from 2019 to

2020 decreased by ₱435,100 or 13.51%, with details as follows:
Loans Receivable Increase % Increase

Balance As of (Decrease) (Decrease)
12/31/2020 12/31/2019
2,783,880.00 3,218,980.00 (435,100.00) (13.51%)
 The decrease is due to the collection of ₱435,100.00 or 13.51% during

the current year, in which collections had increased by 60.00% as
compared with the collections in 2019 of ₱271,900.00. This manifests
that collection of these receivables becomes more realizable. However,
collection efficiency is still below par which was only 15.63% of the
total loans receivables.
44
B. Other Receivables totaling ₱2,882,728.47
Breakdown of Other Receivables is as follows:
Nature of Account Year Granted Status of A/O Amount (₱)

SEAP 1992 – 2007 Collections on going 860,443,94
Cash Shortage 1994 Deceased 336,409.06
Cash Advances 2004 – 2006 Deceased 261,846.40
Mobilization fees 2020 782,513.91
PNPL 2015 & 2017 Collections on going 514,260.00
Back pay Prior to 1998 unknown 10.46
KKK Loans 1982 - 1983 unknown 27,900.00
Rentals for fishery 1981 unknown 43,000.00
KADIWA 1981 unknown 8,003.70
Swine Dispersal Loan 1982 unknown 30,470.00
IRA for DOH 1st quarter 1993 unknown 17,871.00
Total 2,882,728.47
Analysis of the details disclosed the following:
 Self-Employment Assistance granted to farmers in CY 1992-2007 with

a balance of ₱860,443.94 remained unsettled/uncollected. Only
₱4,000.00 has been settled this year.
 An amount of ₱336,409.06 which is due from the former Municipal

Treasurer for cash shortages in CY 1994 remained
unsettled/uncollected for already more than 25 years. The accountable
person is already deceased.
 Cash advances granted to the former Mayor of Municipality of Bacarra

for the period CY 2004-2006 with a total amount of ₱261,846.40
remained unsettled for more than 15 years. The accountable officer is
already deceased.
 Certified Seeds for Plant Now Pay Later granted to farmers in CY

2014 with a balance of ₱514,260.00 remained unsettled/uncollected
for already six years.
 KKK Loan balance of ₱27,900.00 remained uncollected/unsettled for

already 40 years. Various recipients are unknown.
 An amount of ₱43,000.00 regarding rentals of fishery in CY 1981

remained unsettled/collected for already more 35 years. The
accountable person could no longer be found.
45
 The remaining balance of Seed Capital for Kadiwa of ₱8,003.70
remained uncollected. Collection is remote because the borrowers are
already unknown.
 Piglet Dispersal Loan granted to constituents in CY 1982 with a

balance of ₱30,470.00 remained unsettled/uncollected for already
more than 30 years. The beneficiaries of this program are unknown
and could no longer be found.
 Due from the Department of Health amounting to ₱17,871.00 in 1993

remained uncollected. No available records or documents to support
this account.
C. Due from Local Government Units totaling ₱753,614.77
 This represents the un-reconciled items with the books in the

Provincial Treasury amounting to ₱276,486.27 and the provincial
counterpart for the initial expenses of the General Revision of Property
Assessments amounting to ₱439,514.50
 This also represents the 1997 balance of Trust Fund due to LGU-
Bacarra amounting to ₱37,614.00
 Out of the total amount, ₱314,100.27 or 41.67% were unreconciled

and dormant for almost 10 years.
Further evaluation on the aforementioned data disclosed that 72.64% or

₱4,663,912.47 are dormant accounts aged more than 10 years. Most of the borrowers
are already delinquent in which some are unknown or could no longer be found,
others are deceased and some have no capacity to pay, hence settlement could not be
ascertained thus collections are remote.
It is the responsibility of Management through the Municipal Accountant and

concerned Officers to conduct a regular monitoring and analysis of receivable
accounts to ensure that these will be collected and be recovered in order that the
Municipality will have additional funds for use in its operations.
For those long outstanding accounts, the procedures set forth in COA Circular
No. 2016-005 serve as guide for management in the proper treatment thereof, that is,
to submit requests for write-off to the Commission on Audit.
These dormant receivable accounts which remained in the books for more
than 10 years if not duly written-off affects the accuracy and reliability of the
receivable accounts in the financial statements.
46
We recommended that Management instruct the Municipal Accountant and
responsible officers to:
a. Immediately seek legal remedies to settle/collect the long overdue

receivables particularly the SEAP;
b. Continue monitoring and visiting those delinquent borrowers and issue

Demand Letters to ensure the recovery and realization of the receivables;
c. Immediately determine and evaluate those borrowers who are deceased

and unknown/missing in accordance with COA Circular No. 2016-005
and prepare requests for write-off if collections are already remote; and
d. Make an immediate representation and reconciliation of the un-

reconciled items with the Provincial Treasury.
Management commented that the borrowers/recipients funded under SEAP

are not existing anymore. Sometime in 2014, the Municipality made an effort in
assessing the recipients. The Sangguniang Bayan passed an Ordinance for the request
of condonation of a certain amount and forwarded to the Commission on Audit.
However, the request made was not in accordance with the COA procedures, hence
the balance remained. Management, however, will conduct further monitoring to
validate those that are beyond collectible to request for write-off pursuant to COA
Circular No. 2016-005.
Management also contacted the families of the subject deceased persons to

process their claims but these families lost their interests when they found out that
there were obligations to be settled.
For the dormant accounts, the concerned officers and employees were
instructed to follow the procedures for their proper treatment as majority were just
forwarded balances for more than 25 years.
The Audit Team required Management to conduct further monitoring and

evaluation of the account and if collections are already remote, follow the procedures
set forth in COA Circular No. 2016-005 and submit the request for write-off to the
COA.
Non-classification of current and non-current portions of the Loans Payable account
47
3. The carrying amount of Loans Payable account amounting to ₱5,555,555.68 was
not properly presented due to the non-classification of current and non-current
portions in the Statement of Financial Position, which is not in accordance with
Paragraphs 29 and 80 of IPSAS 1, thus affecting the fair presentation of the
financial statement.

information.
A liability shall be classified as current when it is expected to be

settled in the entity’s normal operating cycle, or it is due to be
settled within twelve months after the reporting date.
All other liabilities shall be classified as non-current.
The Municipality had an outstanding loans payable to Land Bank of the

Philippines amounting ₱5,555,555.68 as of December 31, 2020, which is due for two
years. The purpose of this loan was for the construction of the New Public Market
Building and Food Terminal (Bagsakan Center).
However, review of the financial statements showed that the liability amount
of ₱5,555,555.68 was classified as current only. Inquiry from the Municipal
Accountant disclosed that only ₱2,777,777.84 is due to be settled within twelve
months after the reporting date. The remaining balance of ₱2,777,777.84 is due in the
succeeding year. Therefore, the account Loans Payable is composed of a current
liability and a non-current liability.
As a result, the non-recognition of the non-current portion of the Loans

Payable affected the fair presentation of the financial statements.
We recommended and Management agreed to direct the Municipal

Accountant to present the current and non-current portions of the liability as
separate classifications on the face of the Statement of Financial Position in
accordance with Paragraph 80 of IPSAS 1.
Non-preparation and submission of Certified List of Taxpayers
48
4. The RPT Receivable and SET Receivable accounts amounting to ₱4,390,402.37
and ₱4,390,402.37, respectively, could not be ascertained due to the non-
submission of Certified List of Taxpayers with the corresponding amount due
for the year by the Municipal Treasurer, contrary to Section 20 of the Manual of
the NGAS for LGUs Volume I, casting doubts on the accuracy and reliability of
the accounts affecting the fair presentation of the financial statement.
Section 20 of the Manual on NGAS for LGUs Volume I provides that:
Real Property Tax Receivables/Special Education Tax Receivables

shall be established at the beginning of the year based on Real
Property Tax Account/Taxpayer’s index card. At the beginning of the
year, the Treasurer shall furnish the Chief Accountant of a duly
certified list showing the name of taxpayers and the amount due and
collectible for the year. Based on the list, the Chief Accountant shall
draw a Journal Entry Voucher (JEV) to record the debit to Real
Property Tax Receivable/Special Education Tax Receivables and
crediting to Deferred Real Property Tax Income/Deferred Special
Education Tax Income.
Inquiry from the Municipal Accountant revealed that the Municipal Treasurer
did not provide her the Certified List of Taxpayers and the amount due and collectible
from prior years which should be her basis to record and set up in the books the RPT
and SET Receivables accounts.
The Municipal Accountant also revealed that her basis in recording and
setting up the estimated RPT and SET Receivables for the current year was from the
Real Property Tax Assessment provided by the Municipal Assessors’ Office.
Further verification also revealed that it is the Office of the Assessor that
prepared the tax assessment of every individual taxpayer for the year and submitted it
to the Municipal Treasurer. The latter then recorded it in the Tax Registry Account
Record. It is the responsibility of the Municipal Treasurer to collect taxes based on
the tax assessment prepared and submitted by the Municipal Assessors’ Office.
Hence, the Municipal Treasurer should prepare the Certified List of Taxpayers and
the amount due and collectible for the prior years and current year and submits the
same to the Municipal Accountant as the basis of the latter to record the RPT and
SET Receivables pursuant to Section 20 of NGAS for LGUs Volume I.
The absence of the Certified List of Taxpayers hindered the verification of the
accuracy and reliability of the RPT/SET Receivables, thus the completeness of the
account balances as presented in the financial statements cannot be fully ascertained.
We recommended that Management instruct the Municipal Treasurer to

prepare and provide the Municipal Accountant a copy of list of taxpayers and
49
the corresponding amount due and collectible for the year as the basis of the
latter in recording/book up the RPT and SET Receivables Accounts.
Management commented that the Municipal Treasurer was already instructed

to prepare the Certified List of Taxpayers with the corresponding amount due and
will be adjusted and basis in recording the RPT and SET Receivables for 2021.
The Audit Team accepted the explanations/justifications. We required the

Municipal Treasurer to prepare the Certified List of Taxpayers as the basis of the
Municipal Accountant to record the RPT and SET Receivables for a fair presentation
of the accounts in the financial statements.
Inclusion of unserviceable and missing properties in the Physical Inventory Report
5. The unserviceable and missing properties totaling ₱1,654,885.08 were still

recognized in the Physical Inventory Report submitted by the GSO, which is not
in accordance with Paragraph 82 of IPSAS 17, Section 79 of PD No. 1445 and
COA Circular No. 2020-006 dated January 31, 2020, thus the existence of
discrepancies between the accounting and property records affecting the
reliability and accuracy of the PPE account.
The carrying amount of an item of property, plant and equipment

shall be derecognized:
 On disposal
 When no future benefits or service potential is expected
from its use or disposal.
Section 79 of PD No. 1445 states that – “When government property has

become unserviceable for any cause, or no longer needed, it shall upon application of
the officer accountable therefore, be inspected by the head of the agency or duly
authorized representative in the presence of the auditor concerned and if found
valuable, it may be sold at public auction to the highest bidder. xxx”
The existence of enormous amounts of discrepancies in PPE account balances

of government agencies has become a perennial issue and cause the non-
establishment of the accuracy of the PPE balances presented in the financial
statements.
Review and evaluation of the Physical Inventory Report submitted by the

GSO showed a total of ₱1,654,885.08 that are unserviceable and/or missing
properties. This amount is composed of the following items:
50
PPE Item Amount (₱)
Information and Communication Technology Equipment 580,340.08
Furniture and Fixtures 141,603.00
Other Machinery Equipment 495,002.00
Other Plant Property and Equipment 266,940.00
Communication Equipment 171,000.00
Total 1,654,885.08
These unserviceable properties were still included in the said report which are
no longer capable of providing the entity with future economic benefits or service
potential, hence fully depreciated and ready for final disposal.
All unserviceable properties shall be reported in the IIRUP to be inspected by

the Agency Head or duly authorized representative with the presence of the Auditor
and if found valuable, it may be sold at public auction to the highest bidder pursuant
to Section 79 of PD No. 1445. After which, the Municipal Accountant shall drop
from the books those unserviceable PPE items that were sold/disposed.
Moreover, COA Circular No. 2020-006 prescribes 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.
For the non-existing/missing PPEs, the Property Unit shall:
a. Verify if the items were already disposed with supporting IIRUP or

transferred/donated to other government agencies with supporting
Property Transfer Report (PTR); and
b. Submit to the Accounting Unit the original copies of the IIRUP and
PTRs for disposed and transferred PPE items, for recording/dropping
in the books of accounts.
If there are non-existing/missing PPEs for which accountability could not be

established despite diligent efforts, the following procedures shall be followed:
a. The Head of the Agency shall cause the conduct of an investigation to

determine the last known location/office where the missing PPE items
were issued/installed, person accountable, circumstances of the loss
and the person responsible for the loss;
b. If accountability/responsibility over the missing item was pinpointed

after investigation, demand shall be made from the accountable
personnel to produce the item or pay the depreciated replacement cost;
51
c. The Accounting Unit shall be furnished the certified copy of the
investigation report and demand letter to be used as basis to recognize
loss of PPE items and to set up the corresponding receivables from the
concerned accountable officer/personnel; and
d. If accountability/responsibility over the missing PPE could not be

pinpointed after investigation, authority for derecognition thereof from
the books of accounts may be requested from the COA, in accordance
with Paragraph 8 of this Circular. Pending the grant of authority by the
COA, the said PPEs shall remain in the books of account.
The existence of unserviceable and missing PPE in the books of account and
physical inventory report created discrepancies between the records of Accounting
and Property Units affecting the accuracy and reliability of PPE account in the
We recommended that Management instruct the GSO to prepare the

IIRUP for those unserviceable PPE items to be inspected and be sold through
public auction if found valuable and to conduct investigation for the non-
existing/missing properties and submit the results thereof to the Local Chief
Executive for its final disposal
We further recommended that Management instruct the Municipal

Accountant to coordinate with the GSO to update their records to come up with
reconciled balances of PPE.
Management commented that the GSO is still in the process of consolidating

the remaining unserviceable properties after which the IIRUP will be prepared. The
Accountable Officers were also instructed to comply with the audit findings to fairly
present the account in the financial statement.
The Audit Team accepted the explanations and justifications. However, we

stressed that the GSO conduct inspection of all the unserviceable properties and
investigation on the causes of the missing properties to determine the liability of
accountable officers.
Non-reversion of outstanding Accounts Payable
6. Payable Accounts totaling ₱7,529,412.72 included unliquidated obligations with

a total amount of ₱1,039,909.82 which has been outstanding for more than two
years and remained un-reverted, contrary to Section 98 of PD No. 1445 and
Section 3.2 of COA Circular No. 99-004 dated August 17, 1999, thus casting
doubts on the validity and propriety of the account balances.
52
Section 98 of PD No. 1445 provides for the reversion of unliquidated balances
of accounts payable which states that “the Commission, upon notice to the head of the
agency concerned, may revert to the unappropriated surplus of the general fund, any
unliquidated balance of accounts payable in the books, which has been outstanding
for two years or more and against which no actual claim, administrative or judicial,
has been filed or which is not covered by perfected contract on records.”
Section 3.2 of COA Circular No. 99-004 dated August 17, 1999, also provides
that:
Unliquidated obligations which has been outstanding for two years

or more and against which no actual claims, administrative or
judicial has been filed or which is not covered by perfected
contracts on record should be reverted to the Cumulative Results of
Operations Unappropriated.
Review and analysis on the Schedules of Accounts Payable, revealed that

there are claims or obligations of the Municipality that remained outstanding for more
than two years as summarized below:
CY 2016
Name of Creditor Fund and PY CY 2017 CY 2018 Total
Source (₱) (₱) (₱) (₱)
N. Corpuz Ent. Inc. GF 170,000.00 3,015.50 6,392.50 179,408.00
New JOM Auto Parts GF 24,280.00 24,280.00
Alems HB GF 47,089.00 51,462.00 98,551.00
Comglassco Aguila GF 7,450.00 7,450.00
Mun. Officials & Empl. GF 294,986.92 294,986.92
Agreda Motor Works GF 193,480.00 193,480.00
Quibix Internet Cafe GF 7,644.00 7,644.00
Lydia Gowns & Dress Shop TF 99,400.00 99,400.00
Alem’s Hollow blocks SEF 19,896.90 19,896.90
Laborers et al. SEF 13,900.00 93,200.00 107,100.00
Mun. Officers & Employees TF 7,713.00 7,713.00
TOTAL 357,998.90 450,308.42 231,602.50 1,039,909.82
Accounts Payable refers to valid and legal obligations/commitments of

government agencies for which goods/services/projects have been
delivered/rendered/completed and accepted.
However, inquiry from the Municipal Accountant disclosed that the above
claims were not covered by sufficient evidence and/or proper documentation to
establish the validity of the payables, thus, the release of the claims to the concerned
creditors for payment was withheld. The above cited Section 3.2 of COA Circular
No. 99-004 clearly defines that unliquidated obligations which remain outstanding for
53
more than two years requires the reversion of the account to the unappropriated
surplus.
Setting-up expenses with no sufficient evidences/documents to support the

transaction is not also valid, thus, the regularity and validity of the supposed expenses
that were recorded/booked up as Accounts Payable could not also be ascertained.
Furthermore, Section 40, Book VI, 1987 Administrative Code provides:
No obligation shall be certified to accounts payable unless the obligation is

funded on a valid claim that is properly supported by sufficient evidence and
unless there is proper authority for its incurrence. Any certification for a
non-existent or fictitious obligation and/or creditor shall be considered void.
The certifying official shall be dismissed from service without prejudice to
criminal prosecution under the provision of the Revised Penal Code. Any
payment made under such certification shall be illegal and every official
authorizing or making such payment, or taking part therein or receiving such
payment, shall be jointly liable.
We recommended that Management instruct the Municipal Accountant

to analyze the payable accounts to ensure the accuracy of the balances in the
financial statements and only record transactions/set up liability based on valid
obligations with complete evidences or documents, and to revert the balances of
Accounts Payable that have been outstanding for more than two years which are
undocumented and no longer valid to the Unappropriated Surplus pursuant to
COA Circular No. 99-004.
Management commented that the Municipal Accountant was further directed

to make thorough analysis of the account and coordinate with the accountable officers
who are directly involved in the transactions taken as Accounts Payable.
The Audit Team required Management through the Municipal Accountant to

adjust and revert the Accounts Payable to the Unappropriated Surplus after a
thorough analysis of the account has been taken.
Unexpired portion of Other Prepayment account remained outstanding
7. The carrying amount of the Other Prepayments account of ₱135,600.00

remained outstanding for more than three years due to non-adjustment of the
unexpired portion, contrary to Paragraph 29 of IPSAS 1, resulting in the
overstatement of the Asset account and understatement of the Expense account,
affecting the fair presentation of the financial statements.
54
information.
Analysis of the accounts in the Notes to Financial Statement disclosed that

Other Prepayment of ₱135,600.00 remained unadjusted even before CY 2018 making
it outstanding for more than three years. Details of the account follows:
Name of Creditor Nature of Accounts Aged Amount(₱)

Mariano Marcos Memorial Balance of the fund Aug. 2017 85,600.00
Hospital and Medical deposited for the Point of
Center (MMMH and MC) Care Program of PHIC for
the Indigents
Laoag City Government Amount deposited for the Dec. 2016 50,000.00
Point of Care Program of
PHIC for the Indigents
Total 135,600.00
Interview with the Municipal Accountant revealed that the implementation of

these programs already ended, therefore the care program could no longer be availed
by the people/constituents.
However, review of the account disclosed that the amount of ₱135,600.00

remained in the books of account. This is the remaining balance of the prepayments
for the deposits made to the hospital and the city government for the beneficiaries
under the Point of Care Program of PHIC, which were not adjusted in the books,
thereby overstating the Asset account and understating the Expense account.
We recommended that Management through the Municipal Accountant to:
a. Make a representation relative to the prepayments made to determine if

the amounts have already been expended considering the length of time
that has lapsed and prepare a Journal Entry Voucher (JEV) to adjust the
unexpired portion of the Other Prepayments account that were not used,
if any; and
b. Coordinate with the City Government of Laoag and the MMMH and MC
regarding the remaining balances of the deposits to be refunded and to be
receipted by the Local Government Unit, if any.
Management commented that they have already coordinated and

communicated with the agencies. The City Government is now in the process of
refunding the unexpired amount deposited. Management is still awaiting the response
of MMMH and MC.
55
The Audit Team accepted the explanations/justification. However, we
required Management to follow up the response or action of the MMMH and MC in
order that the unexpired portion be refunded immediately and to be receipted and
deposited to the general account.
B. COMPLIANCE AUDIT
Improper/Absence of required dates in documents
8. The validity period on the delivery of 2 units Patrol Boats costing ₱498,500.00
could not be ascertained due to the absence of dates in the supporting
documents and connotes concealment in the actual delivery of goods to
circumvent the provision of liquidated damages, contrary to Section 68 of the
IRR of RA No. 9184, thus affecting the efficiency and effectiveness of the
procurement process and an indication of weak internal control system.
Section 68 of the IRR of RA 9184 provides:
All contracts executed in accordance with the Act and this IRR shall
contain a provision on liquidated damages which shall be payable by the
contractor in case of breach thereof. For the procurement of Goods,
Infrastructure Projects and Consulting Services, the amount of the
liquidated damages shall be at least equal to one-tenth of one percent
(0.001) of the cost of the unperformed portion for every day of delay.
Once the cumulative amount of liquidated damages reaches ten percent
(10%) of the amount of the contract, the Procuring Entity may rescind
or terminate the contract, without prejudice to other courses of action
and remedies available under the circumstances.
Internal control has been defined as the plan of organization and all the
coordinate methods and measures adopted within an organization to safeguard its
assets, check the accuracy and reliability of its accounting data, promote operational
efficiency and encourage adherence to prescribed managerial policies.
Review on the supporting documents for the payment of two units Patrol
Boats under Check No. 1235181 dated December 29, 2020 costing ₱498,500.00
revealed that some of the attached supporting documents were undated as follows:
Prescribed Forms Unaccomplished data

1 Purchase Order No date of receipt by the Supplier
2 Delivery Receipt (DR) Date of receipts when the items were received
by management
3 Notice of Award Date to acknowledge the receipt by the
winning bidder
56
4 Notice to Proceed Date receive by the winning bidder
From the above deficiencies, the auditor could not determine the timetable of
the procurement activities from the awarding of the procurement of goods up to the
time of the delivery, due to the absence of dates in the above mentioned documents,
thus the effectiveness and efficiency of the procurement process could not be
established.
Dates in certain documents are required and necessary which may serve as
acknowledgement for the issuance of documents and the receipt of goods at a given
time. Also, this would indicate the exact period the goods or items were delivered,
received, inspected, and accepted. The purpose of which is to evaluate and assess
that the time table in the procurement activities was followed and it is in accordance
with the term and conditions stipulated in the contract.
Further review on the documents revealed the following:
Prescribed Forms Dated Prepared By:

Purchase Request 9/21/2020
Purchase Order (PO) 10/29/2020
Contract 10/28/2020 Management
Notice of Award 10/27/2020
Notice to Proceed 10/29/2020
Inspection & Acceptance Report 11/12/2020
Delivery Receipt 12/18/2020
Sales Invoice 12/18/2020 Supplier/Bidder
Certification of Warranty 12/21/2020
Analysis of the above data disclosed that the PO was dated October 29, 2020
and the delivery period is within 15 days. Further, a penalty of 1/10 of 1% for every
day of delay shall be imposed in case the supplier fails to deliver within the specified
delivery period. In the absence of date to acknowledge the receipt of the PO by the
supplier, it is deemed received on the date of the PO.
The date of inspection and acceptance of the delivered goods by Management

is November 12, 2020 which is inconsistent with the date of Delivery Receipt dated
December 18, 2020, thus the date of inspection of the items were undertaken prior to
the delivery of the goods. This manifests that the Inspection Team conformed on the
delivery period within 15 days from the date of PO.
After a thorough evaluation and verification of the documents, the supplier

committed a delay of 50 days as shown below:
57
Date of Purchase Order October 29, 2020
Date of Delivery Receipt December 18, 2020
Number of days delayed 50 days
Therefore, the liquidated damages totaled ₱24,925.00 computed as follows:
₱498,500.00 x 1/10 of 1% x 50 days = P24,925.00
The foregoing resulted from the absence of dates in the prescribed forms that
signified or connoted concealment in the actual delivery of the goods to circumvent
the provision for liquidated damages, inclining the supplier to fail to deliver the goods
within the delivery period stipulated in the contract.
We recommended and Management agreed to strictly observe the

execution of contract by the contractor in the delivery of goods in case there is a
delay pursuant to Section 68 of the IRR of RA No. 9184. Likewise, we
recommended and Management also agreed to instruct the officers and
employees responsible in every procurement activity to be vigilant in
accomplishing the prescribed forms completely specifically on the dates portion
to ascertain the authenticity of the transactions and to promote operational
efficiency and effectiveness of the Municipality.
Lastly, we recommended and Management agreed to instruct the

Municipal Accountant to demand payment for the Liquidated Damages of
₱24,925.00 from the contractor to be receipted by the Municipal Treasurer.
Tampered/altered amounts in some supporting documents
9. The propriety, regularity and accuracy in the payment of Pakyaw Labor for the
Painting and Maintenance of Public Plaza amounting to ₱84,046.00 could not be
ascertained due to the occurrence of altered figures or amounts of labor costs in
the documents, thus rendering the transaction doubtful that affected the validity
and legitimacy of the expenditures and an indication of a weak internal control
system.
Internal control has been defined as the plan of organization and all the
coordinate methods and measures adopted within an organization to safeguard its
assets, check the accuracy and reliability of its accounting data, promote operational
efficiency and encourage adherence to prescribed managerial policies.
Examination and review of the Disbursement Voucher (DV) for the payment
of Pakyaw Labor for the painting and maintenance of Public Plaza under Check No.
1396395 dated March 12, 2020 amounting to ₱84,046.00 revealed that the labor costs
were tampered or altered in the supporting documents.
58
The listed program of works/activities implemented in this project with the
corresponding Budget Cost were as follows:
a. Fabrication of Letter Standee with Base ₱46,368.00

b. Painting Works 39,872.00
c. Electrical Works 1,176.00
₱87,416.00
========
However, audit of the supporting documents attached in the DV showed that

labor costs in each items of activities of the following were tampered or altered:
1. Approved Budget for the Contract

2. Invitation to Pakyaw Groups
3. Abstract of Bids as Read
4. Request for Quotation (3 Bonafide Bidders)
5. Abstract of Bid as Calculated
6. Pakyaw Agreement
Under the Attorneys of the Philippines, Article 169, forgery may be

committed in any of the following means:
1. xxx
2. By erasing, substituting, counterfeiting or altering by any means the
figures, letters or words or signs contained therein.
Therefore, the action of committing alterations, erasures or substituting any

figures or words to such documents establish forgery.
The labor costs that were tampered in the above mentioned documents
established confusion and misperception in the changes and modification of the labor
cost in the specific item of work/activity that was undertaken.
Further, examination of the documents also revealed that the price quotations
submitted by the three bonafide bidders were tampered/altered in a typewritten figure
and simultaneously, the Abstract of Bid as Calculated and Abstract of Bids as Read.
These were indications that changes of labor costing were deliberately done.
As a rule, if there are corrections, changes or modifications committed in a

certain document whether in figures, letters or words, it is required and necessary that
initials or countersignatures should be reflected beside the changes/corrections to
signify the legality or authenticity of the changes therefrom.
The foregoing observations are reasonable grounds to believe that there is a

misrepresentation or falsification on the documents presented.
59
Our analysis disclosed that tampering or alterations of amounts or figures in
the documents without the corresponding initials or countersignature was tantamount
to falsification or fabrication, thus, the validity and propriety of the transaction is
doubtful. This course of action did not present an effective or efficient internal control
system which weakened the system and operations of management.
We recommended and Management agreed to instruct the Municipal

Accountant to properly review all supporting documents as to their propriety,
regularity and accuracy specifically on the correctness of amounts. Likewise, we
recommended and Management agreed to direct all heads of end-user
departments to stop the practice of making erasures, alterations or tampering of
amounts in the documents as these are considered forgery.
Delayed issuance of Notices to Proceed
10. Issuance of Notices to Proceed (NTPs) in the implementation of various

infrastructure projects totaling ₱6,428,576.36 were delayed for more than 30
days from the date of Contract due to the delay in the approval and issuance of
Certificate of Approved Construction Safety and Health Program (CSHP) from
the Department of Labor and Employment (DOLE) contrary to Annex “C” of
the Revised IRR of RA No. 9184, thus exposing the government to the risk of
delay in the project completion and substandard quality of work, which defeats
the timeframe and purpose in the implementation of infrastructure projects for
public purpose.
Annex “C” of the IRR of RA No. 9184 recommended earliest possible time
and maximum period allowed for the Procurement of Infrastructure Projects as
follows:
Minimum CDs Operational Maximum Conditions/

Procurement Activity Recommended Timeline CDs allowed Remarks
for Activity for Activity
Pre Procurement Conference 1 Day 0 Whenever
necessary
Advertisement/Posting of ITB 7 CDs Day 1-7 7 CDs Start of
Availability
of Bidding
Documents
Pre-Bid Conference 1 CD Day 8 Whenever
necessary
Deadline of Submission & Last Day of
Receipt of Bids/Bid Opening 1 CD Day 20 50 CDs Availability
of Bidding
Documents
Bid Evaluation 1 CD Day 21 7 CDs
Post Qualification 2 CDs Day 22 to 23 45 CDs The bidder
must submit
all Post
60
Qualification
Requirements
within 5 CDs
from receipt
of notice as
bidder with
LCB in
accordance
with Sec.
34.2
Approval of 1 CD Day 24 15 CDs
Resolution/Issuance of Notice
of Award
Contract Preparation and 1 CD Day 25 10 CDs
Signing
Issuance of Notice to Proceed 1 CD Day 26 7 CDs
As presented above, the bidder is given 5 days to submit all the qualification
requirements from the receipt of notice as the winning bidder with Lowest Calculated
Bid during the Post Qualification (PQ). Hence, it is expected that the bidder complies
with all the necessary PQ requirements before issuance of the Notice of Award and
award of the Contract.
The signing of contract between the Municipality and the contractor would
signify that the later would perform the program of works for the infrastructure
projects satisfactorily within the construction period set for the project completion.
Also, it is embodied in the contract that the contractor submit all the qualification
requirements. After the signing of the contract, NTP will be issued within a minimum
of 1 CD to a maximum of 7 CDs pursuant to Annex “C” of IRR of RA No. 9184.
Upon review of the documents for the payment of various infrastructure

projects, it revealed that the NTPs were only issued upon the approval of the CHSPs
by the DOLE wherein there was delay in the approval and issuance of the said
documents. Also, noted in the Contract Agreement, it mentioned conditionally that
NTP shall only be issued upon the submission of the Certificate of Approved CSHP
which is contrary to Annex “C’ of the IRR of RA No. 9184.
Relatively, the Municipality of Bacarra implemented 12 infrastructure projects

totaling ₱6,428,576.36 with two Bidders with the Lowest Calculated Bid, to wit:
Name of Numbe Total Date of No. of

Contractor r of Approved NOA Date of Days
Projects Contracts (₱) NTP Delayed
Althea Construction 6 3,492,280.29 7/27/2020 9/10/202 45 days
0
Remar Construction 6 2,936,296.07 6/23/2020 8/18/202 55 days
0
Total 6,428,576.36
61
The Occupational Safety and Health Standards was formulated in compliance
with the constitutional mandate to safeguard the worker’s social and economic well-being
as well as their physical safety and health conditions and promoting and maintaining a
safe and conducive working environment.
Section 3 - Issuances of CSHP of AO No. 152 s. 2011 states that:
3.1 Certificate of Approval shall be issued on a per project basis

for an application intended for newly awarded construction
projects or on-going projects.
3.2 The Contractor shall be responsible for submitting a

Comprehensive Construction Safety and Health Program
suited for the specific project covering the activities/scope
of work of all its contractors/sub-contractors.
However, the reckoning date to start the project should not be based on the
DOLE’s approval for the issuance of CSHP and this does not prevent the
Municipality to issue the NTP though the document is vital in the implementation of
the project.
Pending the approval of the CSHP, the contractor is obliged to submit initially
his application of CSHP duly acknowledged by the DOLE which suffice or in lieu of
the pending approval and issuance of the CSHP, so as not to prevent the BAC for the
issuance of the NTP and not to jeopardize the contractor in the completion of the
project within the given construction period. This is well supported by GPPB
Resolution No. 28-2014 which recognizes the administrative issuances of DPWH and
DOLE, allowing the DPWH to have preliminary authority to approve the CSHP of
the winning bidder pending the approval/concurrence by DOLE so as not to delay the
issuance of NTP. The same recognition shall be given to similar arrangements by
other agencies with DOLE.
The delay in the issuance of NTPs and the awarding of multiple projects to the
same contractor with the same implementation period exposed the government to the
risks of delay in project completion and substandard quality of work, which defeats
the timeframe and purpose in the implementation of infrastructure projects for public
purpose.
We recommended that Management through the BAC to require the

winning bidders to submit the approved CHSPs duly received/acknowledged by
the DOLE as evidence of the pending approval of their CSHPs, so as not to
prevent Management for the issuance of the NTP.
In case the contractors will not comply on the submission of the said
documents after the infrastructure projects were satisfactorily completed, this
would cause Management to hold the payment of their billings.
62
Further, we recommended that Management require the BAC and TWG
to carefully scrutinize the sufficiency of the Contractor’s manpower and
equipment on all projects to be awarded and not on an individual project
especially in cases where only one bidder bids in several projects, which have the
same or overlapping implementation period to avoid slippage/delay and
substandard quality of work.
Management commented that the BAC of the Municipality relied solely in the
approval of DOLE, though the GPBB allows the DPWH to have preliminary
authority to approve the CSHP of the winning bidder and the BAC believed that the
Municipality doesn’t have the same arrangement with DOLE, without the same
capacity building mechanism of DPWH and the authority to approve CSHP.
GPBB maintained the current provision of Section 37.2.3 of the IRR of RA

No. 9184 which includes CSHP approved by DOLE as part of contract documents.
The BAC presumed that the CSHP approved by DOLE is the one needed to perfect
the contract and not the received application of the winning bidder. Without the
Approved CSHP, the contract is left incomplete, thus the delay of issuance of the
NTP.
In addition, Memorandum of Agreement or any Department Order of the

DPWH, when issued within their department, such issuances are not being
transmitted to the level of the LGUs in the making of such policies and guidelines
intended for infrastructure projects. Thus, the DILG and DPWH should come up into
agreement that there shall be one scheme and strategy to come up into the formulation
of the process.
However, it was assured by Management that they will come up with

solutions to avoid the repetition or occurrence of this kind of situation. The BAC
shall adopt the recommendations made by the Audit Team.
The Audit Team required the BAC to be pro-active and be more resourceful to
whatever resolutions issued by the GPPB and/or Department Orders issued by the
DPWH to that effect in such a way that the BAC adopt, be familiarized and updated
of new laws, rules, policies and orders through the access of the agencies’ websites.
In this way, there is no reason that the Municipality is unaware/uninformed of such
orders or any resolutions, rulings particularly in the procurement of infrastructure
projects.
It is clearly stated that the DPWH only acted as preliminary authority to

approve the CSHP pending the approval of the document by the DOLE, so as not to
delay and jeopardize the start or implementation of the infrastructure project.
63
C. OTHER AREAS
GENDER AND DEVELOPMENT

Gender and Development fund was not fully utilized
11. Utilization of the Gender and Development (GAD) Fund amounting to

₱32,686,627.20 for CY 2020 was only 63.50% or ₱20,755,824.06, thus benefits
and desirable outcomes from the PPAs under the fund were not fully attained
and delivered to the constituents.
GAD planning and budgeting shall be observed annually and incorporated in

all programming and budgeting exercises of agencies. The GAD activities in the
GAD plan and budget must be included in the agency budget proposal in accordance
with the budget call. Agencies shall ensure that the cost of implementing the GAD
activities is part of their approved budget. At least 5% of the total agency budget
appropriation as authorized under the Municipality’s Annual Appropriation
Ordinance, shall correspond to activities supporting GAD.
For CY 2020, the Municipality’s GAD Fund was ₱32,686,627.20. Of this

amount, only 63.50% or ₱20,755,824.06 was utilized leaving a balance of
₱11,930,803.14. Had the Municipality fully implemented the PPAs under the fund,
the desired benefits and outcomes should have been fully attained and delivered to
the constituents.
We recommended and Management agreed to instruct the GAD Focal

Person to coordinate with all department heads responsible for the
implementation of GAD PPAs to come up with strategic plans for the timely,
efficient and effective implementation of these GAD PPAs in order to attain and
deliver desirable benefits and outcomes to the beneficiaries.
64
PART III
STATUS OF IMPLEMENTATION OF PRIOR
YEARS’ AUDIT RECOMMENDATIONS
STATUS OF IMPLEMENTATION OF PRIOR YEARS’
AUDIT RECOMMENDATIONS
Of the 26 prior years’ recommendations, 21 were fully implemented and 5

were not implemented during the year.
Result of
Observation and Actions Taken by
Ref. Auditor’s
Recommendation Management
Validation
The validity and accuracy of the AAR 2019
account PPE totaling Page 30
₱273,828,193.99 as of
December 31, 2019 could not be
fully accounted and reconciled
with the Report of the Physical
Count of PPE (RPCPPE) due to
the non-inclusion of some PPE
accounts resulting in a
difference of ₱200,537,536.34,
which is not in accordance with
Section 124 Volume I of the
Manual on the NGAS for LGUs,
and Section C.3 of Chapter V of
the Manual on Property
Custodianship, thus, affecting
the fair presentation of the
financial statement.
We recommended that The GSO prepared Implemented

Management to prepare and and submitted the
submit Report on Physical Physical Inventory The GSO has
Count of PPE for the current Report submitted the
year 2019 to determine the Physical
actual physical count and The GSO already Inventory
condition of PPE at a given date prepared IIRUP Report and
including those unreconciled and those items made
balances and those properties were sold out and reconciliation
which were not be included in has been dropped with the
the report; prepare/maintain and from the books. Municipal
update Property Cards and the Accountant.
PPE Ledger Cards by the Consolidation of Copy of the
Property Officer and Accountant other unserviceable IIRUP was also
to facilitate reconciliation of the properties is still furnished to the
PPE Account; and direct the on going. Audit Team.
Property Custodian to identify
those unserviceable properties
65
Result of
Ref. Auditor’s
Validation
already subjected for disposal,
then prepare the Inventory and
Inspection Report of
Unserviceable Property which
serves as basis by the
Accountant to derecognize the
unserviceable properties carried
in the PPE Account.
The Loans Receivable Account AAR 2019

and Other Receivables Account Page 33
amounting to ₱3,218,980.00 and
₱1,511,399.10 respectively as of
December 31, 2019 remained
uncollected for several years due
to lack of monitoring and
inefficient collection efforts by
the concerned officials and
employees, thus, denying the
LGU the recovery of additional
funds for use in its operations,
because of the massive existence
of dormant accounts affecting
the reliability and accuracy of
the receivable account.
We recommended that Monitoring and Not

Management exhaust all efforts collection is still on Implemented
to collect the receivables, issue going.
Demand Letters and make Reiterated under
frequent visits to the delinquent Finding No. 2 of
borrowers, establish other legal this AAR.
measures for the recovery of
uncollected past due receivable
accounts and direct the
Municipal Agriculturist to
conduct a regular monitoring
and evaluation in the
implementation of the assistance
program and to make a periodic
report.
66
Result of
Ref. Auditor’s
Validation
Advances to Officers and AAR 2019
Employees of ₱613,849.93 as of Page 36
December 31, 2019, aged 91-
365 days and over remained
unliquidated which is not in
accordance to Section 89 of PD
No. 1445 and COA Circular
Nos. 97-002, and 2012-004
dated February 10, 1997 and
November 28, 2012,
respectively.
We recommended that Cash advances Implemented

Management require all officers granted to the
and employees concerned to concerned officers Verification of
account and settle cash advances and employees records showed
immediately after carrying out were already substantial
the purpose for which these settled. compliance.
were granted in conformity with
COA Circular No. 97-002 dated Management also
February 10, 1997; Section 89 required previous
of PD 1445; immediately issue cash advances to be
demand letters to those settled first before
employees and to the members the grant of
of the family of those who additional cash
already passed away and no advance/s and
longer in the service with accountable
unsettled/ unliquidated cash officers were
advances; and refrain from required to refund
granting additional cash the balances of
advances to officers and their cash advances.
employees with existing cash
advances unless the previous
cash advances are first settled
and cause the refund of any
unused/unspent/unutilized cash
advances and/or no longer
needed to the collecting officer
to be receipted and shall be
deposited to the authorized
government depository bank.
67
Result of
Ref. Auditor’s
Validation
The account balances of Office AAR 2019
Supplies Inventory, Drugs and Page 39
Medicines Inventory, Medical,
Dental and Laboratory Supplies
Inventory, and Construction
Materials Inventory were
misleading due to failure of the
agency to adjust the inventory to
proper expense account upon
utilization or distribution of the
affected inventory contrary to
the provision of IPSAS 12 –
Inventories and Section 121
NGAS for LGUs, thereby
misstating the Inventory, the
related Expense Account, and
the Government Equity
Account.
Entries were based Implemented
We recommended that the only on Requisition
General Service Officer prepare and Issue Slips and Used inventories
a Summary of Supplies and not on SSMI, the were already
Materials Issued (SSMI) GSO was further adjusted/
together with the Requisition instructed to recorded as
and Issue Slips and submit the prepare the SSMI expenses.
same to the Chief Accountant as and submit to the However, no
her basis to prepare a JEV to Accounting Office. SSMI was
record the appropriate expense prepared, thus
account and compute the cost of we required the
supplies issued and ending GSO to prepare
inventory the SSMI and
submit the same
Further, we recommended that to the
the Chief Accountant make the Accounting
necessary adjustment to the Office as basis
inventory account and reflect the to prepare a JEV
appropriate expense account for in recording the
the inventories that were already appropriate
used or distributed based on the expense
Summary of Supplies and account.
Materials Issued.
68
Result of
Ref. Auditor’s
Validation
Payment of Office Supplies, AAR 2019
Construction Materials, Drugs, Page 41
Medical Supplies and Other
Supply Materials totaling
₱2,391,319.00 for the period
January-November 2019 were
recognized and recorded directly
into an Expense Account
contrary to International Public
Sector Accounting Standards
(IPSAS) 12 – Inventories,
resulting in the understatement
of Inventory Account and
overstatement of Expense
Account by the same amount.
We recommended that the The Municipal Implemented

Municipal Accountant should Accountant already
first recognize/set up the complied with the Review of
procured office supplies and recommendation purchases on
materials, drugs and medicines, where goods goods and
and construction materials as purchased were related records
Inventory and record as Expense first recorded as showed
only upon the issuance and/or inventories. substantial
withdrawal of office supplies compliance.
from stock as supported by the
RIS prepared by the Supply
Custodian.
69
Result of
Ref. Auditor’s
Validation
Outstanding accounts payables AAR 2019
under the General Fund totaling Page 44
₱786,620.81 as of December 31,
2019 are already more than two
years and remain unadjusted in
the books contrary to Section 98
of PD No. 1445 and Section 3.2
of COA Circular No. 99-004
dated August 17, 1999, thus,
overstating the balances of
Accounts Payable which
affected the fair presentation of
the account in the financial
statements.
We recommended that Some Payable Implemented

Management revert all Accounts that
outstanding balances of lacked evidences of Review of the
Accounts Payable for more than claim were already schedules of
two years to Unappropriated reverted. accounts
Surplus pursuant to the payable showed
aforementioned COA Circular. compliance.
Further, Management should However, some
instruct the Municipal still remained in
Accountant to analyze the the books for
payable accounts to ensure the more than two
accuracy of the balances in the years. An
financial statements and record updated
transactions/set up liability observation was
based on valid obligations with presented under
complete evidences or Finding No. 6 of
documents. this AAR.
Some disbursment vouchers paid AAR 2019

by the Municipality were not Page 46
completley supported with the
70
Result of
Ref. Auditor’s
Validation
required documents in violation
of Section 4 of PD No. 1445 and
COA Circular No. 2012-001
dated June 14, 2012, thereby
casting doubts as to the validity
and propriety of the transaction,
to wit:
A. Payment of Retention Fees of

Contractors for the completed
infrastructure projects.
B. Claims for Terminal Leave

Benefits totaling to
₱5,627,310.04.
We recommended that the Succeeding Implemented

Human Resource Management payments of
Officer adhere to the Omnibus Retention Fees and Post audit of
Rules on Leave and COA Terminal Leave disbursement
Circular No. 2012-001 in the Benefits were paid vouchers and
processing of the transactions with complete review of related
and submit immediately the supporting records showed
lacking/deficient documents. It documents. substantial
is further recommended that the compliance.
accountant review the
correctness and completeness of
all supporting documents
pursuant to COA Circular No.
2012-001 before subjecting
disbursement vouchers for
payment to avoid suspensions or
disallowances in audit.
Issued disbursement checks in AAR 2019

prior years with a total amount Page 49
of ₱48,196.81 were not yet
presented to the bank for
payment and remained
outstanding for over six (6)
months up to more than two-
years which is not in accordance
with Section 97 of PD No. 1445
71
Result of
Ref. Auditor’s
Validation
and Section 59 of New
Government Accounting System
for LGUs, resulting in the
understatement of assets and
overstatement of expenses thus,
affecting the fair presentation of
the financial statement.

Municipal Accountant make the Accountant already
necessary adjustment of made the necessary Review of bank
expenditures that remained adjustments. reconciliations
outstanding for almost two years submitted to the
to Surplus Adjustment pursuant Audit Team
to Section 97 of PD No. 1445. showed
compliance to
Further, we recommended that the
Management cancel the stale recommendation
checks and if it requires /s,
replacement, a new check may
be issued upon submission of
the stale check by the payee and
chargeable to the current general
fund.
The Municipal AAR 2019

Treasurer/Municipal Accountant Page 50
did not submit the Report of
Checks Issued and Report of
Cash Disbursement to the Office
of the Auditor contrary to
Section 43 and Section 46 of the
Manual on the New Government
Accounting System of Local
Government Units (NGAS).
We recommended that
Management through the The Municipal Implemented
Municipal Accountant and Treasurer already
Municipal Treasurer submit the submitted the The required
required Report of Checks Report of Checks reports were
Issued and Report of Issued and Report already
Disbursement for every month of Cash submitted to the
72
Result of
Ref. Auditor’s
Validation
pursuant to Section 43 and Disbursement to Audit Team.
Section 46 of NGAS for LGUs. the Office of the
Auditor
The use of Biometric AAR 2019
Attendance Recording System is Page 51
not strictly observed and
imposed by the Municipality
contrary to Civil Service
Commission (CSC) law, rules
and regulations, thus,
transparency and accountability
on the work performances and
services rendered by the LGUs
personnel are affected.
We recommended that
Management strictly impose Biometric Not
fairly and consistently the use of Attendance Implemented
Biometric Attendance Recording Recording System
System to all LGUs personnel has been put on The Audit Team
whether its status is regular, hold to avoid the is flexible and
temporary, casual or job orders. spread of virus in considerate in
this time of this time of
The non-submission of the said pandemic. pandemic.
document to support the However, when
payment of their salaries would the situation will
compel the auditor to issue return to normal
Notice of Suspension. condition,
implementation
of the
recommendation
will be enforced.
The Municipality did not use the AAR 2019

Procurement Service (PS) and Page 52
the Philippine Government
Electronic Procurement System
in procuring common-use
supplies which is in violation of
Administrative Order (AO) No.
17 and Section 53.5 of RA No.
9184, thus defeating the
opportunity not to undergo
73
Result of
Ref. Auditor’s
Validation
public bidding.
We recommended that Management Implemented

Management to submit annually submitted the APP-
APP-CSE to PS-DBM within CSE to PS-DBM Verification on
the prescribed deadline, thus and those stock not all procurements
helping PS-DBM in delivering available, PS made for
more efficiently the Certificate of Non common use
requirements of the Availability of supplies showed
Municipality; submit/attach a PS stocks was issued substantial
Certificate of Non-Availability by PS-DBM compliance.
of stocks if goods were purchase The Audit Team
from a private dealer. Non enjoined
submission of the document Management to
would compel the auditor to continue its
disallow the transaction pursuant practice of
to paragraph 4.9 of DBM filling the
Circular 2013-14; and adhere agency
with the provision of Section procurement
53.5 of IRR of RA 9184 and request to the
continue its practice of filing the PS-DBM as a
agency procurement request to modest
the PS-DBM as a modest contribution to
contribution to achieve good achieve good
governance. governance.
Awarding of multiple contracts AAR 2019

totaling ₱11,850,000.00 to the Page 56
same contractor resulted in the
overlapping of the projects’
implementation period as well as
overlapping of key personnel
and equipment pledged to the
contracts, thus, exposing the
government to risks of delay in
project completion/
implementation and/or
substandard quality of work.
We recommended that the BAC Post Qualifications Implemented

and TWG carefully scrutinize were conducted
the sufficiency of the before the awarding Multiple
74
Result of
Ref. Auditor’s
Validation
Contractor’s manpower and of projects to contracts with
equipment on all projects to be efficiently simultaneous
awarded and not on an scrutinize the implementation
individual project only capability of the were still
especially in cases where only contractors in the awarded to a
one bidder bid in several implementation of single
projects which have the same or the projects through contractor,
overlapping implementation multiple projects however, BAC
period. were undertaken by ensured that the
a sole contractor. contractor has
Further, we recommended that the capacity to
management invite more implement all
qualified bidders to participate these projects in
in the public bidding to accordance with
undertake a more competitive the approved
procurement activity which will contracts,
result in a more acceptable
implementation of infrastructure
projects.
The provision of Liquidated AAR 2019

Damages amounting to Page 58
₱26,895.41 for the procurement
of thirteen (13) projectors was
not imposed by Management
contrary to Section 68 of the
IRR of RA No. 9184, thus the
validity and accuracy of the
transaction is doubtful.
We recommended that Management is Implemented

Management strictly observe the now vigilant for the
execution of contract by the execution of the Review of
contractor in the delivery of contracts contract
goods in case there is a delay agreement. implementation
pursuant to Section 68 of the showed
IRR of RA No. 9184. substantial
compliance.
Further, we recommended that Notice of
management collect the Disallowance
Liquidated Damages of was issued
₱26,895.41 from the contractor under ND
and issue an official receipt in No.20-005 dated
75
Result of
Ref. Auditor’s
Validation
acknowledgement thereof. June 4, 2020
The computations of the AAR 2019

Approved Budget for the Page 60
Contract (ABC) on various
infrastructure projects prepared
by the Municipal Engineer were
not in accordance with the
provisions of the Department
Order No. 197, series of 2016, of
the Department of Public Works
and Highways (DPWH), thus,
increasing the amount of ABC
approximately by ₱26,402.00.
We recommended that The Municipal Implemented

Management direct the Engineer already
Municipal Engineer to strictly complied with the Review of
comply with the guidelines in guidelines set forth infrastructure
the preparation of the ABC for by the DPWH in projects
all succeeding infrastructure the succeeding including the
projects of the municipality as implementation of ABCs showed
prescribed by the DPWH. infrastructure substantial
Further, we recommended that projects. The compliance.
the Municipal Engineer stop the amount of
practice of allocating an OCM ₱26,402.00 has also
mark up to non-civil works been collected and
specifically to health and safety. deposited to the
The OCM mark up on OSHP in municipality’s
every project implemented is not account.
allowed in audit, hence the
auditor may issue Notice of
Disallowances in the subject
matter in the future.
Purchase of sleeping bed AAR 2019

mattress and relief goods during Page 62
calamities amounting to
₱98,000.00 and ₱86,315.00
respectively were classified as
Other Miscellaneous and
Operating Expenses (OMOE)
which is contrary to Local
76
Result of
Ref. Auditor’s
Validation
Government Chart of Accounts,
Volume III, resulting in the
misstatement of expenses, thus,
affecting the fair presentation of

Municipal Accountant record the Accountant already
transaction into the appropriate recorded Analysis of
expense account in accordance transactions into financial
with the fund and purpose to the appropriate statements
present fairly the financial expense account showed
statements. compliance to
the
recommendation
The validity and regularity on AAR 2019
the payment of construction Page 64
materials amounting to
₱425,479.66 for the repair and
improvement of fence and stage
of schools could not be
ascertained due to the absence of
the necessary supporting
documents which is not in
accordance with the Revised
Implementing Rules and
Regulation of RA No. 9184, thus
rendering the transaction
doubtful.
We recommended that The documents Implemented

Management submit the APP to mentioned in the
ensure that such procurement of audit observation Subject
construction materials for the were all on file. transactions of
implementation of the projects Rest assured, the observation
were consistent with the duly succeeding were already
approved budget. Further, we transactions of the submitted with
recommended that Management same nature will be the required
submit the print-out copies of submitted to COA. supporting
the NOA and NTP posted in the documents to
PhilGEPS to establish the audit team.
transparency and information in
the conduct of procurement
77
Result of
Ref. Auditor’s
Validation
process.
Excise Tax as appropriated AAR 2019
under RA No. 7171 and RA No. Page 66
8240 costing ₱18,758,475.00
were not utilized in which the
desirable projects or programs
planned by the Municipality
were not implemented, thus,
defeating the purpose of the
program it was created.
Likewise, it deprived the
intended beneficiaries of the
benefits that would be delivered
therefrom.
We recommended that Implemented in the Implemented

Management create and promote 1st quarter of 2020.
projects and programs that may The fund was Projects under
support the needs of the tobacco received in the last RA No. 7171
farmers to generate week of November were already
higher/sizeable income in which 2019. implemented
these farmers are the center of that supported
the Virginia Tobacco Industry. and benefited
Initiate a sound financial plan in the needs of the
the utilization of funds in order tobacco farmers.
to ensure that the needs and
aspirations of the people
especially the tobacco farmers
are attained. Monitor the
immediate implementation of
the projects so that the benefits
due to the tobacco farmers and
constituents of the municipality
are delivered.
The reconciliation between the AAR 2018 The conduct of

accounting and property records Page 29 Physical Inventory
as required in Section 124 of Taking was already
NGAS Manual for LGUs was done.
not undertaken for the balances Reconciliation
of PPE accounts amounting to between
₱241,853,698.44 which resulted accounting and
in the net difference of property records is
78
Result of
Ref. Auditor’s
Validation
₱44,198.14 between the done periodically
balances of the books and the
balances appearing on the
Report on the Physical Count of
Property, Plant and Equipment
(RPCPPE) rendering the
financial statements unreliable.
We recommended and Implemented

Management agreed to instruct
the Inventory Committee to Report of
conduct the inventory taking Physical
ahead of the deadline of Inventory was
submission of the RPCPPE to submitted at the
give ample time for the end of the year
reconciliation of balances with for further
the accounting records to evaluation and
ascertain the accuracy of the validation.
balances in the financial
statements.
79
Result of
Ref. Auditor’s
Validation
Local Road Networks account AAR 2018
amounting to P109,584,252.16 Page 29
was not provided with any
depreciation which is not in
conformity with Paragraph 59 of
PPSAS 17, thus, resulting to
misstatement of PPE, expense
and Government Equity
accounts.
We recommended that the As agreed during Not

Municipal Accountant provide the Exit Implemented
depreciation on recognized Road Conference,
Networks accounts following the depreciation will be Reiterated under
straight line method. recorded on the Finding No. 1 of
basis of the Report this AAR.
of the Local Road
Network to be
provided by the
Engineering Office.
But there was no
report submitted by
the Engineering
Office yet.
Government lots used for AAR 2018
various school sites were still Page 30
listed and carried in the books of
the Municipality in the total
amount of ₱3,833,240.00 which
is not in accordance with IPSAS
17 on Property, Plant and
Equipment which affects the fair
presentation of the financial
statements.
We recommended that The documents Implemented

Management enter into a necessary for the
Memorandum of Agreement Donation of the Lots used and
with the Department of said lots were occupied by the
Education to transfer ownership already prepared schools were
of the lots where schools are and was forwarded properly turned
situated in accordance with to the DepEd for over to DepEd
PPSAS 17 for fair presentation their review. with
80
Result of
Ref. Auditor’s
Validation
of financial statements. Certification of
Acceptance of
the School
Principals.
Unserviceable properties of the AAR 2018
Municipality amounting to Page 31
₱2,771,883.45 were still carried
in the books of accounts and
inventory report, thus
overstating the Property, Plant
and Equipment account.
We recommended that Inventory and Implemented

management instruct the GSO- inspection of
Designate to prepare the Unserviceable Unserviceable
Inventory and Inspection Report properties were properties ready
for Unserviceable Properties already conducted for disposal
(IIRUP) for inspection and by the team. The were inspected
appraisal. After which, the disposed items by a Technical
proper disposal will be were drop from the Audit Specialist
determined and the books of accounts. from the
corresponding value shall be Regional Office.
dropped from the books in order
to reflect the correct value of
Property, Plant and Equipment
in the financial statements.
One dump truck with acquisition AAR 2018

cost of ₱580,000.00 and two Page 32
donated ambulances were not
yet recorded in the books which
is not in accordance with Section
63 of PD No. 1445, understating
the Plant, Property and
Equipment Account in the
Require the Municipal Records were Implemented

Accountant to record the 1 unit reviewed for the
dump truck costing Dump Truck A copy of the
₱580,000.00, appraised value of costing ₱580,000 Deed of
Nissan Urvan and KIA and made Donation was
ambulance in accordance with adjustment and furnished to the
81
Result of
Ref. Auditor’s
Validation
Section 63 of PD No. 1445 to have been recorded Audit Team.
present fairly the balances of as of August 31,
PPE in the financial statements. 2019.
Copy of the Deed
of Donation was
submitted to the
COA.
One unit Bulldozer and one unit AAR 2018

dump truck with book value of Page 33
₱160,000.00 and ₱50,000.00,
respectively, were not accounted
at the time of inspection of
heavy equipment and the
accountable officers were not
properly charged for the missing
equipment thus may result to
loss of government properties.
We recommended that Records were Not

Management endeavor to locate reviewed for the Implemented
documents pertaining to the two dump truck costing
heavy equipment. Conduct an ₱150,000 and We required
investigation to determine the adjustment has Management to
officers and employees been made and was follow the
accountable at the date of loss recorded in the procedures set
for the unaccounted heavy books as of August forth under
equipment and hold them liable 31, 2019. The COA Circular
as per Section 73 of PD No. Bulldozer was not NO. 2020-006
1445. in the custody of re: Non-existing
the Municipality and missing
since the properties for
administration of the retrieval
the then Mayor and/or dropping
Leonardo Velasco of the one unit
and was reported in Bulldozer.
an Annual Audit
Report
Two units dump truck donated AAR 2018
by the Technical Education and Page 33
Skills Development Authority
(TESDA) sometime in 2001 was
not recorded in the books of the
82
Result of
Ref. Auditor’s
Validation
Municipality which is not in
accordance with Section 63 of
PD No. 1445, thus, government
assets are not safeguarded from
possible loss or deterioration and
assets are understated by the Not
appraised value of the Implemented
equipment.
There is no
We recommended that Documents for the showing of
Management prepare the two dump trucks compliance to
Inventory and Inspection Report had not been the audit
of Unserviceable Properties for located, however, recommendation
the 2 units dump truck as the the PESO officer s yet.
project proponent and inform the had been further
TESDA Regional Office of the asked to coordinate
status of the units for their with TESDA for
proper disposal in as much as the possible
the units are now beyond repair. reproduction of the
Management is reminded for the needed documents.
proper recording of donations
received in the future to protect
the best interest of the
Municipality and safeguard
government assets from loss or
deterioration.
Subsidy to Bacarra Dance AAR 2018

Parade 2018 participants totaling Page 40
₱200,000.00 were not properly
liquidated and supported with
receipts nor an accounting of the
expenditures were submitted
thus, the expenditure was not
adequately supported as required
in Section 4(6) of PD No. 1445.
We recommended that As agreed during Implemented

Management grant cash the exit conference,
advances only to properly bond the suggested new Cash Advances
organic employees of the system of releasing for specific
Municipality. Further, require the Subsidy was purpose were
the concerned persons to submit strongly followed only granted to
83
Result of
Ref. Auditor’s
Validation
the liquidation of the cash Bonded officials
advances granted them. and employees.
Funds allotted for the AAR 2018
implementation of Corn- Page 41
Livestock Integration and
Trading Enterprise subprojects
as of December 31, 2018
amounting to ₱675,000.00 was
not fully utilized by
Management due to time
constraints in the distribution of
farm inputs resulting to fewer
applicants/recipient for the
second cycle of the corn planting
season.
We recommended that the Management Implemented

Municipal Agriculture Officer complied with the
continue to monitor the audit Evaluated and
implementation of the subproject recommendations. assessed
by the Proponent Group. Advise beneficiaries/
them to formulate a realistic and recipients for the
attainable work plan to ensure implementation
subprojects and activities are of the program
ready for implementation upon or projects and it
the onset of the cropping season showed
so that more recipients could substantial
benefit from the fund. compliance.
84
PART IV
ANNEXES

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Republic of the Philippines

May 31, 2021

Dear Mayor Gapasin:

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

We request that the comments and observations and recommendations contained

Very truly yours,

MARIA TERESA M. TOLENTINO

AGENCY ACTION PLAN and STATUS of IMPLEMENTATION

Agency Action Plan

May 28, 2021

MS. MARIA TERESA M. TOLENTINO

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

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

Our audit was conducted in accordance with International Standards of Supreme

Very truly yours,

ANNUAL AUDIT REPORT

For the Year Ended December 31, 2020

The municipality is under the leadership of Honorable Fritzie Kaye Anne de la

In response to COVID-19 pandemic, the Municipal Government allotted a

Source of Fund Beginning Utilization (₱) Ending

Below were among the significant completed infrastructure projects

Name of Project Source of Fund Project Cost (₱)

a. 2020 National ADAC Performance Special Award (DILG)

 Drug Cleared Sustained Award

c. ARUBAYAN NI KA-LILY of Brgy. Calioet Libong Provincial Winner

Comparative financial highlights of the Municipal Government of Bacarra for

The audit was conducted to ascertain accuracy of financial records and

E. STATE AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

A qualified opinion was rendered on the fairness of the presentation of the

F. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND

We commend the Management for the favorable observations noted, to wit:

We recommended that Management instruct the Municipal Treasurer to prepare

2. The unserviceable and missing properties totaling ₱1,654,885.08 are still

3. Payable Accounts totaling ₱7,529,412.72 included unliquidated obligations with a

We recommended that Management instruct the Municipal Accountant to analyze

G. SUMMARY OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

Of the 26 prior years’ recommendations, 21 were fully implemented and 5

H. SUMMARY OF SUSPENSIONS, DISALLOWANCES AND CHARGES

Audit suspensions, disallowances and charges amounted to ₱71,892.97,

Balance, Issuances Settlement Balance,

Part I – Audited Financial Statements

 Independent Auditor’s Report 1

Part II – Audit Observations and Recommendations

Part III – Status of Implementation of Prior Years’

A. Summary of Uncorrected Misstatements 85

INDEPENDENT AUDITOR’S REPORT

Hon. Fritzie Kaye Anne De La Cruz Gapasin

We have audited the financial statements of the Municipality of Bacarra, Ilocos

Bases for Qualified Opinion

The (a) non-provision of depreciation of ₱26,803,078.49 to the Local Road Networks

We conducted our audit in accordance with International Standards of Supreme Audit

Auditor’s Responsibilities for the Audit of the Financial Statements

May 27, 2021

STATEMENT OF MANAGEMENT RESPONSIBILITY

The management of the Municipality of Bacarra, Ilocos Norte is responsible for

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

FRITZIE ANN KAYE DELA CRUZ-GAPASIN

The municipality’s paradigm was shifted to focus on livelihood and enterprise

3 - Summary of significant accounting policies