EXECUTIVE SUMMARY

Introduction

The Municipality of Indang is centrally located in the Province of Cavite. It is bounded on the
north by the Municipality of Naic and Trece Martires City, on the south by Municipality of
Mendez and Tagaytay City, on the west by Municipalities of Alfonso and Maragondon, and
on the east by the Municipailty of Amadeo. It has a total land area of 8,920 hectares and is
comprise of 36 barangays.

Audit Objectives

The audit was conducted to ascertain the fairness of the presentation of the financial
statements and compliance of the Municipality to laws, rules and regulations as well as the
economical, efficient and effective utilization of resources.

Scope of Audit

Financial and compliance were conducted on the accounts and operations of the
Municipality of Indang, Cavite for Calendar Year (CY) 2019.

Financial Highlights

For CY 2019, the Municipality generated a total income of P221,930,238.35 from local
taxes, permits and licenses, service and business income, internal revenue allotment and
subsidies from national government. Out of the total appropriation of P242,284,072.40 the
total funds utilized for the year amounted to P205,771,925.22, leaving an unexpended
appropriation of P36,512,147.18.

The total assets, liabilities, government equity, income and expenses for CY 2019 compared
with that of the preceding year are as follows:

Increase/
2019 2018
(Decrease)
Total Assets P 412,530,539.33 P 389,119,330.33 P 23,411,209.00
Total Liabilities 140,623,026.98 133,765,152.04 6,857,874.94
Total Equity 271,907,512.35 255,354,178.29 16,553,334.06
Total Income 220,609,271.10 203,401,734.49 17,207,536.61
Total Expenses 196,647,379.72 172,023,815.80 24,623,563.92
Personal Services 77,799,793.52 67,834,084.98 9,965,708.54
MOOE 118,847,586.20 104,189,730.82 14,657,855.38
Transfers and Subsidy
from/to (net) (7,273,547.54) 11,676,618.96 (18,950,166.50)
Net Profit/(Loss) 16,688,343.84 43,054,537.65 (26,366,193.81)

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Audit Opinion on the Financial Statements

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

statements of the Municipality due to the following observations:

1. The reliability of Inventory accounts totaling P5,247,802.36 as of December 31, 2019

could not be ascertained due to the inability of the Municipality’s Inventory Committee to
conduct inventory taking and submit the Report on the Physical Count of Inventories,
contrary to Section 124 of the Manual on the New Government Accounting System
(MNGAS) for Local Government Units (LGUs).

2. The use of account Due to Officers and Employees (2-01-01-020) for incurrence of
liability amounting to P1,399,493.60 to person no longer connected/employed with the
Municipality is not in conformity with COA Circular No. 2015-009, thus, overstating the
said account and understating the Other Payable (2-99-99-990) account by the same
amount.

3. The amount set-up as Due to Other Fund for the unexpended balances of the Quick
Response Fund (QRF) and Mitigation-MOOE portions of the Local Disaster Risk
Reduction Management Fund (LDRRMF) in CY 2019 should have been P6,353,658.30
instead of P6,066,326.64, thus resulting in the understatement of the account by
P287,331.66.

4. The unexpended balance of CY 2013 LDRRMF amounting to P92,655.00 which was

transferred to special trust fund was not reverted back to the general fund despite the
lapse of five years contrary to Section 21 of Republic Act No. 10121 and COA Circular
No. 2012-002, hence depriving the Municipality of additional funds for other social
services.

For the deficiencies cited above, we recommended that the Municipal Mayor direct:

1. The Municipal Accountant to use the appropriate account in accounting for payables and
make the necessary adjustment in the books of accounts in conformity with the Revised
Chart of Accounts for LGUs.

2. The Municipal Accountant to make the necessary adjustments to correct the balance of
the Due to Other Funds and other affected accounts both in the General Fund and Trust
Fund books of accounts.

3. The Inventory Committee to conduct physical count of all inventory items and prepare
and submit the corresponding Report of the Physical Count of Inventories to the Office
of the Auditor within the prescribed period.

4. The Municipal Accountant to revert back to the general fund the unexpended balance of
CY 2013 LDRRMF amounting to P92,655.00 to be made available for other social
services, in conformity with Sections 21 and 5.1.13 of RA No. 10121 and COA Circular
No. 2012-002, respectively.

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Significant Audit Observations and Recommendations

The other significant observations and recommendations in the audit of the Municipality for
the year 2019 are as follows:

1. Out of the total appropriation of P38,049,763.50 for the 20 per cent Development Fund
in Calendar Year 2019, only P23,285,478.08 or 54.10 per cent were utilized due to
inadequate planning, contrary to Section 5.0 of the Department of the Interior and Local
Government (DILG) and Department of Budget and Management (DBM) Joint
Memorandum Circular No. 2017-1, thus the desirable socio-economic development and
environmental management outcomes were not fully attained by the Municipality.

We recommended that the Municipal Mayor direct the:

a. Municipal Planning and Development Coordinator and Municipal Engineer to confirm

with the RHU Head the priority projects of her office, otherwise propose the
realignment of the budget to other more urgent and important development projects,
subject to the concurrence of the Sangguniang Bayan and the Municipality’s
compliance with other laws, rules and regulations on realignment;

b. Municipal Planning and Development Coordinator to make sure that prior

consultation and coordination with other government agencies are thoroughly
conducted, specifically involving projects which require the approval of and/or
submission of documents such as Sangguniang Barangay Resolutions and Program
of Works from Barangays who are beneficiaries of municipal aids and clearances
from the DENR, among others, before including the projects in the Annual
Investment Plan (AIP); and

c. Municipal Engineer to ensure that all preliminary studies and other technical activities
that will establish the feasibility of the projects such as survey, site inspection/
investigation and/or preparation of preliminary detailed engineering are completely
conducted before including the projects in the AIP.

2. Request for Quotations (RFQs) for various infrastructure projects with an aggregate
gross amount of P2,121,635.62 charged against the 20 per cent Development Fund
purchased through Small Value Procurement were not posted in the Philippine
Government Electronic Procurement System (PhilGEPS) website, website of the
Municipality, and at the conspicuous place reserved for this purpose in the premises of
the Municipality, contrary to the 2016 Revised Implementing Rules and Regulations of
the Republic Act No. 9184, thus wide dissemination of the procurement to obtain the
most advantageous price was not achieved. Moreover, the BAC did not require
suppliers/contractors to submit the prescribed documents for alternative mode of
procurement, thus casting doubt on the eligibilities and qualifications of the latter.

We recommended that the Municipal Mayor, as the Head of the Procuring Entity (HoPe),
require the Bids and Awards Committee to:

a. post in the PhilGEPS website, website of the Municipality, and at the conspicuous
place reserved for this purpose in the premises of the Municipality for a period of
three (3) calendar days the RFQs for goods/infrastructure projects costing more than

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 P50,000.00 whenever Small Value Procurement is resorted to as the Alternative
Method of Procurement;

b. require the suppliers/contractors to submission all documentary requirements for the

alternative mode of procurement and indicate in the RFQ at what stage of the
procurement process these requirements must be submitted, that is, on the
submission of offer/s, evaluation offer/s, before issuance of Notice of Award or prior
to payment;

c. ensure that the RFQs contain all the necessary information such as the complete
specifications of the items to be purchased, ABC for the item, and the exact
addresses of the suppliers before they are served to suppliers/ contractors;

d. authorize any member of the BAC instead of the designated supply/purchasing

officer to prepare and send the RFQs to prospective suppliers; and

e. ensure that the Abstract of Quotations/Canvass is supported with a recommendation

to the Municipal Mayor of the award of contract in favor of the supplier or contractor
with the Single or Lowest Calculated and Responsive Quotation.

3. The validity of the Contract of Services for hauling and disposal of solid waste materials
of the Municipality and the propriety and reasonableness of the monthly billings and
payment therefor totaling P5,339,700.00 could not be ascertained due to inadequate
information and supporting documents, contrary to Section 4(6) of Presidential Decree
(PD) No. 1445 and Commission on Audit (COA) No. 2012-1.

We recommended that the Municipal Mayor direct the:

a. Bids and Awards Committee (BAC), MENRO, Municipal Accountant and/or other
concerned officials to take the necessary legal procedures to correct or remedy the
defects noted in the Contract of Services for hauling and disposal of solid waste
materials with RC Bella Waste Management and Disposal Services to enable the
COA Audit Team to conduct auditorial review and request the technical evaluation of
the contract, otherwise relevant transactions will be suspended in audit;

b. MENRO to indicate the actual volume of garbage hauled in the Acknowledgment

Receipt issued by the Service Provider with the corresponding rate, otherwise the
transactions will be suspended in audit;

c. MENRO to adopt controls whereby the contractor’s performance and compliance

with the terms and obligations of the contract are monitored, such as, but not limited
to, formally appointing or assigning competent employees to oversee and document
the garbage collection and validate or certify as to the correctness of the Statement
of Accounts submitted by the Contractor;

d. MENRO to require the assigned personnel to prepare a Record of

Attendance/Service of the Contractor indicating the date, driver’s name, type of
vehicle, plate number, time in, time out, and signature of driver and Certified Correct
by the MENRO to provide assurance of dates of disposal and hauling services; and

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 e. MENRO, Municipal Accountant and other Municipal Officials concerned to submit to
the Audit Team the following: i) justification on the discrepancies between the
trucks/equipment actually used and those listed in the bidding documents, ii) detailed
breakdown of the Approved Budget for the Contract (ABC) and the contract amount,
iii) complete monthly Record of Service/Entry of the hauling and disposal activities
from February 7 to November 29, 2019, and iv) Accomplishment Reports by the
Service Provider duly accepted by the MENRO, for further evaluation and to avoid
suspension of the subject transactions in audit.

4. Various disbursements charged against the Special Education Fund (SEF) totaling
P1,731,776.95 were not supported with complete documentation and/or adequate
information, contrary to Section 4(6) of the Presidential Decree No. 1445, thus validity,
legality and propriety of the transactions cannot be established.

We recommended that the Municipal Mayor instruct the Municipal Accountant to

coordinate with concerned school officials/municipal personnel to submit to the Audit
Team the lacking supporting documents noted in audit and henceforth, ensure that all
claims against government funds are supported with complete documentation, to avoid
suspension/disallowance in audit.

Summary of Total Suspensions, Disallowances and Charges

As of December 31, 2019 no Notice of Suspension, Notice of Disallowance and/or Notice of

Charge was issued to the Municipality. Deficiencies noted in audit were immediately
complied/settled by the concerned officials and employees.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 27 audit recommendations embodied in CY 2018 Annual Audit Report, 18 were fully
implemented, six were partially implemented and the remaining three were not implemented
by the Municipality.