EXECUTIVE SUMMARY

A. Introduction

Agency Background

Tinglayan became a regular municipality by virtue of Executive Order No. 42, dated
June 25, 1963 signed by President Diosdado Macapagal. It is a fourth class municipality with
a total land area of 32,679.94 hectares comprising 20 barangays. The municipality is headed
by Honorable Mayor Sacrament S. Gumilab.

The LGU is envisioned to be “a progressive municipality and world class eco-tourism

center where people are physically, socially and economically secured, empowered,
culturally enhanced, united in God and living harmoniously with nature.

Audit Scope and Methodology

A comprehensive audit was conducted on the accounts and operations of the

Municipality for the year 2018. Our audit was focused on selected accounts and transactions
based on audit thrusts issued by higher authorities as well as other areas identified.

B. Financial Highlights

The comparative Financial Condition of the municipality for Calendar Years 2018
and 2017 are as follows:

Increase
Account CY 2018 CY 217 %
(Decrease)
Assets ₱129,639,984.32 ₱113,404,359.26 ₱16,235,625.06 14.3%
Liabilities ₱ 41,295,474.56 ₱ 36,919,994.89 ₱ 4,375,479.67 11.9%
Government Equity ₱ 88,344,509.76 ₱ 76,484,364.37 ₱11,860,145.39 15.5%

A comparative data of Actual Income Realized, Appropriations and Obligations for

the years 2018 and 2017 are shown below:

Increase
Account CY 2018 CY 217 %
(Decrease)
Gross Income ₱ 92,859,403.43 ₱104,492,108.71 ₱(11,632,705.28) 11.13%
Appropriation ₱101,941,730.98 ₱ 89,077,168.00 ₱ 12,864,562.98 14.44%
Obligation ₱ 79,656,274.81 ₱ 69,839,873.54 ₱ 9,816,401.27 14.06%

Tinglayan is still greatly dependent on the Internal Revenue Allotment which

comprises 98.43% of the total income. Other sources of funds include local taxes, service and
business income, shares, grants and donations and other income.
 C. Independent Auditor’s Report

We have rendered a unmodified opinion on the financial statements for Calendar

Year 2018.

D. Other Significant Observations and Recommendations

1 The recognition of at least 75% of the total road networks was not complied as of
December 31, 2018 due to the absence of Public Infrastructure Registry for local road
networks and Property Ledger Cards, incomplete inventory and the non-determination of
fair market value of said items, thus accuracy of the balance of Road Networks as of
December 31, 2018 could not be ascertained.

We have recommended that:

a. The Local Chief Executive create an Inventory and Appraisal Committee to conduct
inventory taking of all municipal road networks and provide their corresponding fair
market values as basis for recognition in the books of accounts; and

b. The Municipal Accountant and the Municipal Treasurer maintain subsidiary ledgers
and property ledger cards, respectively, of all local road networks starting from the
result of inventory taking by the Municipal Inventory Committee and the Appraisal
Committee which shall be regularly updated.

2 The lack of report on the utilization of the Local Disaster Risk Reduction Management
(LDRRM) Fund hampered the audit team to reconcile the difference of ₱397,350.82, thus
the accuracy of the balance of the Trust Liability-DRRM account amounting to
₱1,694,396.36 at year-end could not be ascertained.

We have recommended that the Municipal Accountant:

a. Identify reconciling items and effect necessary adjusting entries, if any, to correct the
discrepancies noted on the Trust Liability-DRRM account in the Statement of
Financial Position as of December 31, 2018 as compared with the disclosure
statement in the Notes to the Financial Statements; and

b. Prepare an Adjusting Journal entry to record the transfer of Trust Liability-DRRM

account from the General Fund to the Trust Fund and properly record all
unexpended/unobligated balance of QRF and the DRRMF-MOOE in the Trust Fund
as of year-end.

3 The unused balances of fund transfers received totaling ₱713,873.45 was not yet returned
to the source agencies despite the projects’ completion contrary to Section 4.9 of COA
 Circular No. 94-013 dated December 13, 1994, thus remained idle which could have been
used for other beneficial projects.

We have recommended that management request from the corresponding source agencies
for authority to utilize the unexpended trust fund balance if the same disposition was not
provided in the MOA/TA/MU, otherwise, return immediately said balances to the
concerned source agencies.

4 The municipality was not able to fast track the implementation of programs, projects and
activities registering only 32.06% utilization of its 20% Development Fund appropriated
for Fiscal Year 2018, thus the delay in the delivery of intended services to its
constituents.

We have recommended that management prioritize the implementation of projects,

programs and activities identified under the 20% Development Fund in accordance with
the Section 5.0 DILG-DBM Joint Memorandum Circular No. 2017-1 dated February 22,
2017.

5 Various contracts for the Construction of Municipal Development Center funded under
the 20% Development Fund and other sources totaling ₱18,970,540.33 were not fully
documented with appropriate drawings and As-built plans indicating the coverage of
individual contracts, posing risks on the possible duplication of previous completed
contracts.

We have recommended that the Municipal Engineering Office conduct single detailed
engineering for the construction of infrastructure projects that will result only to only a
single plan and drawing.

We further recommend that contracts awarded through staggered basis be supported with
proposed “As-built plans” detailing the scope of works to be undertaken within the single
plan and drawing established during the conduct of detailed engineering.

6 The municipality had no clear policy on the stockpiling and distribution of welfare goods,
as well as the lack of safe and secured storage thereof, resulting in unnecessary exposure
to loss, misuse or damage/spoilage.

We have recommended that the Local Chief Executive, as the Chairman of the Local
Disaster Risk Reduction Management Council:

a. establish clear policies/guidelines on the stockpiling and distribution of Welfare

Goods for Distribution considering the expiry dates of food items or medicines;

b. identify storage room which is secured and suitable for Welfare Goods for
Distribution carried at stock to prevent possible loss or damages and to ensure that the
same goods are readily available in their good condition in times of calamities; and
 c. ensure that welfare goods for distribution particularly the drugs and medicines
maintained at stock are be used for its intended purpose.

We have further recommend that the General Service Officer, in coordination with the
Local Disaster Risk Reduction Management Officer, regularly conduct physical
inventory on Welfare Goods for Distribution carried at stock to monitor their status or
condition for reporting to the Local Disaster Risk Reduction Management Council.

7 Property tax revenue targets were not satisfactorily attained, thus incurring a deficit of
₱138,534.54 for the year 2018, or a low collection performance of 30.73%.

We have recommended that the Municipal Treasurer enhance its collection strategies to
improve the LGU’s revenue generation performance in accordance with its Municipal
Revenue Code and other related ordinance.

E. Settlement of Suspensions and Disallowances

Suspensions Disallowances
Beginning Balance ₱ 940,069.52 ₱ 2,668,835.59
Add: Issuance during the year - -
TOTAL ₱ 940,069.52 ₱ 2,668,835.59
Less: Settlement during the year - -
Ending Balance ₱ 940,069.52 ₱ 2,668,835.59

F. Status of Implementation of Prior Years’ Audit Recommendations

Out of the 18 audit recommendations embodied in the CY 2017 Annual Audit Report, 5
were fully implemented, 7 were partially implemented, and 6 were not implemented.