EXECUTIVE SUMMARY

A. Introduction

The Municipality of New Bataan, which was once a barangay of Compostela,

was created as a Municipality under Republic Act No. 1456 dated June 18, 1968. It is
situated 15 kilometers from Compostela, its mother municipality. It is composed of
16 barangays. New Bataan has a total land area of 55,315 hectares. Out of this figure
30,792 hectares or 45.37 percent is timberland, 16,374 hectares or 24.11% is forest
reserve, 5,438.0671 or .93 percent is unclassified public forest and 15,265.9329
hectares or 20.50 percent is alienable and disposable.

The Municipality is headed by its Local Chief Executive, Hon. Lorenzo L.

Balbin, Jr. the duly elected Municipal Mayor, while Hon. Margarito T. Rafols, the
duly elected Vice-Mayor, sits as the presiding Officer of the legislative branch of the
municipality which is composed of eight (8) elected municipal councilors and three
(3) ex-officio council members.

The Municipality’s general organizational structure is in accordance with the

provisions of Republic Act No. 7160 and the related circulars and memoranda from
the different line agencies of the national government.

B. Financial Highlights

The Municipality’s financial status as of December 31, 2012 was as follows:

Increase/ Percen-
Account 2012 2011
(Decrease) tage
Assets P 158,202,547.93 P 149,542,444.78 P 8,660,103.15 5.8%
Liabilities P 68,264,340.66 P 57,818,410.94 P 10,427,929.72 18%
Government Equity P 89,956,207.27 P 91,724,033.84 P (1,767,826.57) (1.9%)

For calendar year 2012, the Municipality of New Bataan generated total
revenues of P109,678,817.24. Of this amount, P96,894,286.00 or 88.3% represents
Internal Revenue Allotment (IRA).

The LGU generated local taxes totaled P4,405,291.59 or 4% which is

composed of amusement taxes, business taxes, community taxes, real property taxes,
special education taxes, tax on sand and gravel and other quarry products, fines and
penalties-local taxes.

While business income, permits and licenses and service income were
P4,663,791.40, P1,702,473.33, P503,280.77 and accounted as 4.2%, 1.6%, and 0.5%,
respectively. Other Income of P1,509,694.15 or 1.4% consists of interest and
miscellaneous income.
 Total Revenue
Permits &
Generated For The CY 2012
Licenses Service Income
2% 1%
Other Income
Business Income
1%
4%
IRA
Local Taxes
Local Taxes
4%
Business Income
Permits and Licenses
Service Income
Other Income

IRA
88%

Approved Annual and Supplemental Budgets of the Municipal Government

for CY 2012 showed that of the total P126,123,984.76 available funds, the
management appropriated the largest portion of its budget for Maintenance and Other
Operating Expenses (MOOE), which totaled P61,720,587.81 or 49% of the total
budget.

The Municipality believes that human resources are vital for the achievement
of its vision, mission and goals, as it appropriated a total amount of P49,753,145.99
or 39% for the basic salaries, allowances and benefits of its officials and employees.

The remaining budget went to Capital Outlay (CO) with an aggregate amount
of P14,650,250.96 or 12%. This figure translates the development direction of the
municipality that was geared towards attaining its thrust during the year by
prioritizing tangible development projects and improvements of government
facilities.

Approved Annual Budgets for CY 2012

70,000,000.00 61,720,587.81
60,000,000.00 49,753,145.99 58,394,287.73
50,000,000.00
49,427,290.85
40,000,000.00
Appropriations
30,000,000.00
16,368,766.31
20,000,000.00 Obligations
6,172,661.75
10,000,000.00 - -
-
Personal MOOE Capital Financial
Sevices Outlay Expenses

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 Shown below is tabulated information on the Current Legislative
Appropriations (CLA) for PSs, MOOEs, FEs and COs, with corresponding
obligations.
Current Legislative Appropriations and Obligations
Appropriations Obligations

Personal Services P 49,753,145.99 P 49,427,290.85

Maintenance and Other
Operating Expenses 61,720,578.81 58,394,287.73
Capital Outlay 12,931,735.61 5,399,295.42
TOTAL P 124,405,460.41 P
113,220,874.00

On the other hand, during the year 2012, Management implemented

P773,366.33 out of its continuing appropriations of P1,718,515.35 as carried over
from CY 2011, leaving a balance of P945,149.02.

Continuing Appropriations/Allotments
Appropriations Obligations
Maintenance and Other P - P -
Operating Expenses
Capital Outlay 1,718,515.35 773,366.33
TOTAL P 1,718,515.35 P 773,366.33

C. Operational Highlights

For CY 2012, the major concerns of the municipality are the following:

1. Infrastructure development
2. Poverty alleviation
3. Environmental protection
4. Cooperative development
5. General Public Services and Administration

To effectively address the immediate needs of the people by way of proper

administration and efficient governance, the municipality’s programs, projects and
activities were designed and implemented during the year to promote and heighten
the social, moral, cultural and environmental consciousness of its constituents, such
as:

1. In CY 2012; Completion of the Fencing of Municipal Government Site

2. Construction/improvement of Farm to Market Roads and Bridges;
3. Construction of Manpower Development Center;
4. Waterworks System;
5. Construction/Improvement of Health Centers;
6. Construction/Improvement of Day Care Centers;

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 7. Provision of drugs, medicines and medical supplies; and
8. Implementation of Literacy program
9. Construction of Multi-Purpose Building in different Barangays

The implementation of the development initiatives of the Local Chief

Executive were carried out thru efficient and effective governance that have been
substantially facilitated and correspondingly completed thru budgetary interventions
to enhance the operations of the Municipality of New Bataan.

D. Scope of Audit

A financial and compliance audit was conducted on the accounts and

operations of the Municipality of New Bataan, Province of Compostela Valley for the
year ended December 31, 2012, to ascertain the propriety of financial transactions and
operations and compliance of the agency to prescribed rules and regulations. It was
also made to ascertain the accuracy of the financial records and reports as well as the
fairness of the presentation of the financial statements.

E. Auditor’s Report

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

year-end financial statements of the Municipality of New Bataan due to the
unreliability on the correctness and existence of Gasoline, Oil and Lubricants
Inventory and Property, Plant and Equipment accounts of P3,598,867.61 and
P83,074,776.47, respectively. Due to the insufficiency of the Agency’s records, we
were unable to apply adequate alternative audit procedures to determine the valuation
and validity of the account.

F. Observations and Recommendations

Presented and discussed below are the significant audit observations revealed
in the course of audit with the corresponding recommendations offered as remedial
measures thereon. These were all discussed with Agency Officials and employees and
their comments and/or justifications are incorporated in the report where appropriate.
These are as follows:

1. Fund transfers amounting to P800,000.00 were treated as outright expenses

instead of receivables subject for liquidation, contrary to the guidelines
under COA Circular No. 2007-001 dated October 25, 2007.

Reclassify as receivables (Due from NGOs/POs) fund transfers to

NGOs/POs in order to properly account the funds of the government pursuant to

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 COA Circular No. 2007-001 dated October 25, 2007 and COA Circular 2012-001
dated June 14, 2012.

The Municipal Accountant should observe proper recording of the

transactions in the municipality in order to present fairly the financial statement.

2. Gasoline, Oil and Lubricants Inventory of ₱3,598,867.61 proved doubtful

due to the non-coordination of the municipal offices/departments and the
General Services Office in the preparation and submission of fuel/oil
consumption reports for the proper adjustments of fuel expenses, resulting in
the over and under statement of the asset and expense accounts respectively
of the municipality.

Direct all respective heads of offices to prepare and submit monthly fuel
consumption reports to the General Services Office for the proper preparation of
Summary of Supplies and Materials Issued and submit the same to the Accountant
for the proper recognition of the gasoline expenses in accordance with the
provision of Sec. 121 of the Manual on the New Government Accounting System,
Volume I.

3. Transactions included under account Other Maintenance and Operating

Expenses (969) amounting to P3,951,782.86 were not charged to their proper
account classifications, resulting in the misstatement of the accounts in the
financial statements, contrary to COA Circular No. 2004-008 dated
September 20, 2004.

Require the Municipal Budget Officer and the Municipal Accountant to

closely coordinate with each other in the proper classification of expenses.
Expense classification shall be consistent starting in the budget preparation up to
the accounting of obligations to fairly present the accounts in the financial
statements.

Further require the Municipal Accountant to prepare the necessary

adjusting entry to properly account and classify items to its specific account titles.
Refrain from using other maintenance and other operating expenses account if
the expense can be classified to a specific account.

G. Status of Implementation of Prior’s Audit Recommendation

Out of the three (3) recommendations in last year’s Annual Audit Report,
there was no recommendations implemented by the LGU, they still did what was
practice in the LGU.