EXECUTIVE SUMMARY

Introduction

The Municipality of Plaridel was created by virtue of Republic Act (RA) No.
3493. The barrios of Siain, Ilosong, Concepcion, Duhat and Tanauan in the Municipality
of Atimonan, Province of Quezon were separated and constituted into a distinct and
independent municipality to be known as the Municipality of Plaridel. The Act further
decreed that the seat of government of the new Municipality shall be in the urban center
of the present barrio of Siain and that the first Mayor and Sangguniang Bayan members
of the new Municipality shall be appointed by the President with the consent of the
Commission on Appointments and shall hold office until their successors shall have been
elected in the next general elections for local officials and shall have qualified. President
Diosdado Macapagal signed the Act into a law on June 1962. It was based on House Bill
No. 822 introduced by Congressman Eladio A. Caliwara of the Second District of
Quezon and passed by both Houses of the Fifth Congress on its first regular session. The
inauguration of the independent and district Municipality of Plaridel took place on
October 27, 1962.

The local government mandates the promotion of autonomy to develop local

political units into self-reliant communities and make them more effective partners in the
attainment of national goal. The Municipality maintains three funds, namely: the General,
Special Education and Trust Funds. It operates a cemetery, market and slaughterhouses as
economic enterprises.

The Organizational Structure of the Municipality is as follows:

a. Key Officials
Municipal Mayor - Hon. Bernardo V. Tumagay
Vice Mayor - Hon. Robert I. Magbuhos
Members of the Sanggunian:
1. Hon. Wilfredo M. Magbuhos, Jr.
2. Hon. Francisco Joel S. Abuel, Jr.
3. Hon. Rolando V. Borja
4. Hon. Carlos L. Campomanes
5. Hon. Ronald M. Papag
6. Hon. Rico N. Alvarez
7. Hon. Ernesto B. Deseo
8. Hon. Serafin V. Valonzo
9. Hon. Victor B. Tumagay
Municipal Treasurer - Dulce N. Alvarez
Municipal Accountant - Orlando A. Zamora

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 b. No. of Personnel Complement
Permanent - 31
Casual - 5
Elective Officials - 11
Job Order - 9
Total 56

Financial Highlights

For Calendar Year (CY) 2016, the Municipality generated a total income of
₱46,834,921 from local taxes, permits and licenses, service and business income, share
from Internal Revenue Collections and other income. The total appropriations for the
year totaled to ₱50,093,901.00 of which ₱42,853,596.40 was expended.

The Municipality’s comparative financial condition and results of operations for

CY 2016 and CY 2015 are summarized below and shown in detail in the attached audited
financial statements:

Increase/
2016 2015 Decrease
Total Assets ₱ 66,221,599 ₱ 61,701,913 ₱ 4,519,686
Total Liabilities 20,979,451 20,907,660 71,791
Total Equity 45,242,148 40,794,253 4,447,895
Total Income 46,834,921 41,020,173 5,814,748
Total Expenses 39,602,897 39,132,072 470,825

Scope of the Audit

Financial and compliance audit was conducted on the accounts and operations of
the Municipality of Plaridel for CY 2016. The audit was conducted to ascertain the
propriety of financial transactions and compliance of the Municipality 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. The audit
consisted of review of operating procedures, interview of concerned government officials
and employees, verification, reconciliation and analysis of accounts and such other
procedures considered necessary.

Auditor’s Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements of the Municipality of Plaridel due to the following:

 The Municipality still failed to submit the Report on the Physical Count of
Property, Plant and Equipment (RPCPPE) and Report on the Physical Count of

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 Inventories (RPCI), contrary to Section 124 of the Manual on New Government
Accounting System (MNGAS), Volume I.

 Real Property Tax (RPT) and Special Education Tax (SET) Receivables were
not set-up at the beginning of the year, contrary to Section 20 of the MNGAS,
Volume I, resulting in the understatement of the Receivables and Liability
accounts. Moreover, the Municipal Treasurer did not implement an effective tax
campaign and enforce the available statutory tax remedies to collect taxes
resulting in the accumulation of delinquent real property taxes totaling to
₱2,264,652.90 as of December 31, 2016.

 Cash Advances totaling ₱316,167.00 remain unliquidated at year end in

violation of Section 89 of Presidential Decree (PD) No. 1445, Section 339 of
RA No. 7160 and Commission on Audit (COA) Circular No. 97-002, thus
affected accounts in the financial statements were not fairly presented.

 The Municipality did not submit to the Office of the Auditor the liquidation of
cash advances and other related reports totaling ₱2,650,457.50 for the period
January to December 2016, contrary to Section 7.2.1 (a) of COA Circular No.
2009-06, Section 6.05 of COA Circular 95-006 and Section 100 of PD No.
1445.

 The Municipality paid its municipal officials and employees Year-End Bonus
and Cash Gift amounting to ₱2,300,606.60 for CY 2016, in excess of the
Personal Services (PS) Limitation by ₱1,433,311.60 in violation of Section 325
of RA No. 7160.

For the exceptions cited above, the Auditor recommended the Municipal Mayor
of the following courses of action:

 Require the General Services Officer to submit the RPCPPE and RPCI pursuant
to the MNGAS Volume I using the form prescribed therein and the same must
be certified correct by the Inventory Committee and approved by the head of the
agency.

Also, we recommended that the Accounting Unit maintain Supplies Ledger

Cards/Stock Cards by stock number and Property, Plant and Equipment Ledger
Cards/Property Cards by category of property, plant and equipment,
respectively.

 Require the Municipal Treasurer to deposit immediately the balance of Cash in

Vault account amounting to ₱969,327.45. Henceforth, stop the practice of using
collections to defray operating expenses of the Municipality.

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 Require the Municipal Treasurer to:

 coordinate with the Municipal Assessor to provide the Assessment Roll in

order to come up with the certified list of RPT Receivables yearly;

 furnish the Municipal Accountant a duly certified list of taxpayers; and

 make representation with the Sangguniang Bayan to implement a real

property tax generation program which should include tax mapping,
complete and updated taxpayer records and strategies to improve tax
collection efficiency especially on delinquent accounts and apply the
remedies as provided under the provisions embodied in RA No. 7160.

 We strongly recommended the Municipal Mayor to:

 issue a Memorandum Order requiring all officials and employees to strictly

comply with the provisions of Section 389 of RA No. 7160, Section 89 of
PD No. 1445 and COA Circular No. 97-002;

 require the Municipal Accountant to issue demand letters to the Municipal

Officials and Employees with overdue cash advances for them to
immediately liquidate their cash advances. Implement withholding of
salaries, in case of failure to liquidate; and

 stop granting additional cash advances to officials and employees with

outstanding cash advances.

Also, we recommended to require the Municipal Accountant to exert effort in

monitoring the granting and liquidation of all cash advances.

 Require the Municipal Accountant and Municipal Treasurer to submit

immediately the liquidation of cash advances and other related reports in
conformity with the above-cited regulations.

 Require the refund of the excess in PS Limitation in the amount of

₱1,433,311.60. Henceforth, adhere strictly to the limitation stated on the
provisions of law and regulations cited above.

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Significant Observations and Recommendations

The following is the summary of the other significant audit observations and
recommendations in the audit of the Municipality for CY 2016:

1. Four parcels of land owned by the Municipality recorded at ₱2,460,900.00

remained untitled, contrary to Section 148 of COA Circular No. 92-386, thus
exposing the same to third party claims which may prove prejudicial to the
government in terms of costs of litigation.

We reiterated our recommendation that the Municipal Mayor require the

Municipal Treasurer to exhaust possible means and exert extra effort to
complete the titling of the five parcels of lots in the name of the Municipality
of Plaridel to protect the subject lots against third party claims.

2. The Municipality has no guidelines in the grant of prepaid load/cellular

allowance and use of internet with a total disbursements totaling
₱1,031,909.49 in CY 2016, hence it could not be determined whether or not
expenses were in accordance with the standards, contrary to Section 2 of PD
No. 1445. On the other hand, mobile allowance granted to regular and casual
employees in the total amount of ₱171,500.00 was found to be unnecessary as
defined in COA Circular No. 2012-003 dated October 29, 2012.

We recommended that the Municipal Mayor in coordination with the

Sangguniang Bayan, pass a Sangguniang Bayan Resolution authorizing the
grant of mobile cellular load allowance and internet connection taking into
consideration the following as control and monitoring measures:

 consider the use of post-paid plan offered by telecommunication networks

with monthly billing;

 utilize alternative modes of communication such as internet for long-

distance communication;

 consider communication network offering free calls between and among

networks; and

 adopt and implement control measures by limiting the grant to not lower
than the Division Chief rank and the amounts of entitlement and any excess
on the limits set for amounts shall be for the personal account of the user.

If cell cards shall be allowed, consider purchase in bulk by the General

Services Officer, following the required procurement procedures, and
distribute the same in accordance with the guidelines.

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 Require the refund of the amount of ₱500.00 granted to each regular/casual
employee on a monthly basis or in the total amount of ₱171,500.00 in CY
2016 which fall under the category of unnecessary expenditures under COA
Circular No. 2012-003 dated October 29, 2012.

3. The Municipality paid per diems totaling ₱727,724.03 in excess of amounts

allowed under Executive Order (EO) No. 248 as amended, which set limits on
allowable travel expenses of government personnel, hence considered
irregular expenditures as defined under COA Circular No. 2012-003 dated
October 29, 2012. Likewise, travel expenses of ₱55,192.00 were granted to
President of different associations which are considered personal in nature,
contrary to Section 335 of the Local Government Code.

We recommended that the Municipal Mayor require the concerned Municipal

officials and employees to consider approval of travel order based on the
necessity or urgency of travel, to assign one or two personnel as Liaison
Officer who will be in charge for the submission/remittances/follow-ups,
alternately, and refrain from granting traveling expenses to the President of
different private associations. Moreover, refund the excess claims of per
diems.

4. Financial assistance granted under the Aid to Individual in Crisis Situation

(AICS) Program totaling ₱672,648.50, were made through reimbursement by
the Municipal Officials and Employees while amount which exceeds
₱3,000.00 were paid directly to the individuals, contrary to Department of
Social Welfare and Development (DSWD) Department Order (DO) No. 22,
Series of 1995, dated August 1, 1995, as amended by Administrative Order
(AO) No. 5, Series of 2008, thus casting doubt on the legality and validity of
the transaction.

We recommended that the Municipal Mayor require:

 the Municipal Social Welfare Officer to coordinate with the Municipal

Treasurer and Municipal Accountant that the payment of the assistance be
made through checks payable directly to the accredited government
drugstores and funeral parlor;

 the Municipal Budget Officer to monitor the amount of appropriation for

each item in the Annual Budget to determine whether the appropriation is
sufficient to incur an obligation to avoid incurrence of deficit/overdraft in
appropriation; and

 to refund the amount of ₱811,780.50 representing deficit in the

appropriation.
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5. Payments totaling ₱1,890,754.69 for office supplies, other maintenance and
operating expenses, and various equipment were made through reimbursement
method to the Municipal Officials and Employees instead of through the
procurement and disbursement procedures under Republic Act (RA) No.
9184, thereby exposing the funds to the personal discretion of the authorities
concerned and resulting in non-withholding and payment of taxes totaling
₱75,630.20 in violation of Section 2 (a) of Bureau of Internal Revenue (BIR)
Revenue Regulations No. 1-87.

We recommended that the Municipal Mayor:

 require the Municipal Treasurer to adhere strictly to the provision that all
payment should be made by check directly payable to the suppliers;

 instruct Municipal officials and employees to stop resorting to

procurement and disbursement through reimbursement basis;

 ensure that the proper procurement purchases are implemented by the

BAC; and

 refund the amount of ₱75,630.20 representing withholding tax not

withheld.

6. Claims for various expenditures totaling ₱1,942,574.10 were paid even

without complete documentation, contrary to Section 4(6) of Presidential
Decree (PD) 1445 and Section 38 of the Manual on the New Government
Accounting System, thus the regularity/legality/validity of the disbursements
could not be substantiated.

We recommended that the Municipal Mayor require the Municipal

Accountant to submit the lacking documents and always see to it that only
claims with complete and valid documentation are processed for payment.

7. Only ₱2,843,238.79 or 40% of the total appropriation of ₱8,154,740.00 for the

twenty percent (20%) Development Fund were utilized as of year-end and
₱1,458,867.53 were used for projects that were not included in the Annual
Investment Program, leaving a balance of ₱3,852,633.70, contrary to Section
5 of Joint Memorandum Circular No. 2011-1, dated April 13, 2011 of the
Department of the Interior and Local Government (DILG) and Department of
Budget and Management (DBM), thus depriving the intended beneficiaries of
the maximum benefits that could be derived therefrom.

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 We recommended that the Municipal Mayor implement the developmental
projects in accordance with Joint Memorandum Circular No. 2011-1.

We also recommended to coordinate with the Sangguniang Bayan for the

provision of funds in the General Fund for the expenses of ₱1,458,867.83 so
as not to deplete the funds for the 20% Development Fund, otherwise refund
the amount.

The above observations and recommendations contained in the report was

communicated to the Municipal Mayor and other key officials under various Audit
Observation Memoranda and discussed in the exit conference on December 22, 2017.
Management’s views and comments were considered in the report, where appropriate.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 13 prior year’s audit recommendations embodied in the CY 2015 Annual

Audit Report, six were fully implemented, two were partially implemented and five were
not implemented by the Municipality.

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