EXECUTIVE SUMMARY

The Municipality of Tudela is located between the northeastern town of Cebu and
Southwestern part of Leyte. It has a total population of 11,149 and estimated
households of 2,810. It is a 5th class Municipality with eleven (11) barangays. As
of December 31, 2017, it has a personnel complement of:

Nature of Appointment to Office Quantity

Elective Officials 11
Permanent Positions 36
Casuals 10
Job Orders 116

Like other local government units, the Municipality enjoys total independence in
planning, directing and managing its own administrative, fiscal and development
affairs in conformity with the national government’s thrust for sustainable social
and economic growth as provided under the Local Government Code of 1991 or
R.A 7160. It relied on the Internal Revenue Allotment (IRA) as its major source of
income.

FINANCIAL HIGHLIGHTS

Comparative analysis of the Statement of Financial Position showed increases in

Assets and Equity, while a decrease in Liabilities. On the other hand, the
Statement of Financial Performance showed remarkable increases in Gross
Income, Total Expenses and Surplus.

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The municipality’s appropriation for CY 2017 is P53,938,885.87 which is higher
by P3,418,620.73 or 6.8% compared to last year’s P50,520,265.14. Total
expenditures during the year amounted to P56,218,137.85 which is higher by
P12,694,874.16 or 29.17% as compared with previous year’s total expenses
totaling P43,523,263.69, as shown below:

2017 2016
General Fund 44,389,686.43 40,958,053.11
Special Education Fund 477,248.87 225,792.00
Trust Fund 11,351,202.55 2,339,418.58
Total 56,218,137.85 43,523,263.69

In the Trust Fund books, total expenses recorded for CY 2017 are significantly
higher than CY 2016.

SCOPE OF AUDIT

An audit was conducted on the accounts and operations of the Municipality of

Tudela for the calendar year ended December 31, 2017. The audit was made to
ascertain the regularity of disbursements, the reliability of financial reports and
the adequacy of accounting reports.

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AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The auditor rendered a qualified opinion on the financial statements as the

physical inventory of the Property, Plant and Equipment during the year was not
completed (as discussed in Part III). Based on available records and schedules,
other alternative audit procedures were applied to ascertain the existence of the
PPE in the total amount of P65,773,549.71, but for lack of material time, the
Audit Team was unable to validate the existence of PPE. Also, the agency failed
to maintain the subsidiary ledgers / cards per item of the PPE. Further,
transactions from January 2009 to June 2010 remained unrecorded due to the
non-submission of transaction documents as basis for recording in the books.
These unrecorded transactions based on the bank statements consisted of the
following:

Period
Particulars Jan. to Dec. 2009 Jan. to June 2010 Totals
Deposits 29,367,678.56 15,106,981.61 44,474,660.17
Cleared Checks 30,734,289.07 15,455,366.13 46,189,655.20

SUMMARY OF SIGNIFICANT AUDIT FINDINGS AND RECOMMENDATIONS

1. The Annual Investment Plan and the municipal budget for 20% percent
development fund includes appropriations totaling P2,887,884.53 for
programs and projects which do not conform to the guidelines set under
DILG-DBM Joint Memorandum Circular (JMC) No. 2017-1 dated February
22, 2017. Out of which, actual disbursements of P1,693,352.05 were
made thus, considered irregular.

We recommend that the municipality ensure that appropriations and

utilization for 20% development fund be intended for priority projects and
programs which are capital in nature in accordance with the provisions of
DILG-DBM Joint Memorandum Circular No. 2017-1.

2. The LGU lacks a final disposal facility for residual wastes contrary to the
Implementing Rules and Regulations of Republic Act 9003 otherwise
known as Philippine Ecological Solid Waste Management Act of 2000.

We recommend that the municipality secure a final disposal site allowed

by regulatory agencies, so that residual wastes are disposed in a proper
location to protect the constituents and environment from potentially
harmful elements and to comply with the provisions of RA 9003.

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3. Some elective officials were not deducted with the required personal
monthly contributions to GSIS, which is in violation to Section 2 of the
Implementing Rules and Regulations of Republic Act No. 8291, otherwise
known as the Government Service Insurance System Act of 1997.

We recommend that the Municipal Mayor ensure that the concerned

elective officials comply with the rules and regulations of the GSIS
particularly on the compulsory membership and personal monthly
contributions to be deducted from their fixed monthly salary.

4. The LGU did not comply with the standardized Philippine Bidding
Documents for the procurement of infrastructure projects as the
Instructions to Bidders (ITB), General Conditions of Contract (GCC) and
Specific Conditions of Contract (SCC) were not part of the bidding
documents issued to prospective bidders.

We recommend that the Bids and Awards Committee (BAC) ensure that
the all the provisions of the Philippine Bidding Documents are complied,
such that all required bidding documents are issued to the bidders in the
conduct of procurement of infrastructure projects.

5. Non-posting of the required performance security by the winning bidder for

the procurement of infrastructure projects of the municipality, in violation to
the provisions of the Implementing Rules and Regulations (IRR) of
Republic Act 9184.

We recommend that the LGU submit justification on the following:

1. Why the requirement of the posting of performance security was

not imposed on the procurement of infrastructure projects.
2. Why the award of the contract was not annulled and bid security
forfeited after failure of posting of performance bond.

6. The Municipality awarded the contract for the procurement of waterworks

supplies to a bidder whose price quotation was not the lowest calculated
and responsive quotation and without necessary recommendation by the
Bids and Awards Committee (BAC), in violation of the 2016 Revised
Implementing Rules and Regulations of Republic Act No. 9184 otherwise
known as Government Procurement Reform Act and deemed
disadvantageous to the municipal government.

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 We recommend that BAC follow the procedures in the proper conduct of
negotiated procurement in compliance with the IRR of RA 9184, and
exercise proper diligence especially on selection of supplier with the
lowest calculated and responsive quotation.

7. The municipality did not allocate 1% of the Internal Revenue Allotment as

annual budget for the implementation of programs, projects and activities
of the Local Council for the Protection of Children, which is in violation to
Republic Act 9344, otherwise known as the Juvenile Justice and Welfare
Act of 2006.

We recommend that the LGU provide the required separate budget for the
LCPC equivalent to 1% of the IRA to guarantee implementation and
strengthening of the programs, projects and activities for the protection of
children.

8. The municipality incurred total expenditures of P3,048,781.47 for Personal

Services (PS) which exceeded the 55% PS Limitation in violation of
Section 325(a) of RA 7160.

We recommend that henceforth, the concerned municipal officials adhere

strictly to the provisions of RA 7160 in the computation to avoid excess
expenditures for Personal Services.

Unsettled Disallowances/Charges/Suspension

Notice of Disallowance (ND) in the total amount of P1,026,214.24 and Notice of

Suspension (NS) amounting to P1,772,118.40 remained unsettled as of
December 31, 2017. There are no NDs issued during the year, while NS issued
amounted to P555,390.00 during the first quarter of 2017 but was settled in the
following quarter. There was no Notice of Charge issued during the year.

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Out of last year’s thirty nine (39) recommendations, sixteen (16) were fully
implemented, six (6) were partially implemented and the remaining seventeen
(17) were not implemented.