EXECUTIVE SUMMARY

INTRODUCTION

The Municipality of Morong, Bataan was originally known as “Bayandati”, believed to

be a settlement located in Nagbalayong. It was renamed as Morong by virtue of Republic
Act No. 1249. Morong lies in the north western part of Bataan about 52.5 kilometers of
Manila and accessible by land linking the town of Bagac, Balanga City and SBMA.
Morong is also accessible by air via Subic International Airport. It serves as an alternate
route airport to decongest NAIA. There are two tertiary ports, the Sabang and Mabayo
ports. Passengers and commodities can be serviced via water through motorized boats.

The Municipality is composed of five barangays namely Poblacion, Binaritan, Mabayo,

Nagbalayong and Sabang. The town proper is formed by Poblacion and part of Binaritan.
The total population is 26,171 as of 2010 NSO census. This comprises about 3.8% of the
total population of the province of Bataan, making it the second least populated among
the 12 municipalities and also the second largest municipality in terms of land area.

Agency Vision – “A peaceful environment with balanced development and equal

opportunities for citizens, where public and private sectors work together towards a
healthy, prosperous community.”

The audit included the examination of supporting documents of pre-selected accounts and
areas, employing audit procedures and techniques such as analysis of accounts and such
other procedures considered necessary. The audit was aimed to determine propriety of
financial transactions, compliance by the auditee to prescribed laws, rules and regulations
and accuracy of financial records and reports, as well as the fairness of the presentation of
the financial statements.

FINANCIAL HIGHLIGHTS

Increase
2016 2015
(Decrease)
Financial Condition
Assets ₱ 207,809,029.53 ₱ 169,900,288.31 ₱ 37,908,741.22
Liabilities 70,240,392.51 76,544,418.64 (6,304,026.13)
Government Equity ₱ 137,568,637.02 ₱ 93,355,869.67 ₱ 44,212,767.35
Results of Operations
Income ₱ 141,495,388.03 ₱ 127,919,581.52 ₱ 13,575,806.51
Expenses 91,992,739.25 83,096,394.84 8,896,344.41
Excess of Income over
Expenses ₱ 49,502,648.78 ₱ 44,823,186.68 ₱ 4,679,462.1

(i)
 Sources and
Applications of Funds
Allotments ₱ 158,631,282.08 ₱ 133,352,819.78 ₱ 25,278,462.3
Obligations 75,522,695.33 106,901,000.49 (31,378,305.16)
Balance ₱ 83,108,586.75 ₱ 26,451,819.29 ₱56,656,767.46

AUDITOR’S REPORT

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

statements of the Municipality of Morong, Bataan for the year ended December 31, 2016
due to deviations from prescribed procedures and non-compliance with rules and
regulations resulting in accounting deficiencies affecting the financial statements
enumerated as follows:

1. Owing to voluminous transactions and lack of personnel, updating of the certified

list of taxpayers with the corresponding amount due and collectible was only completed
at the end of the year (December 2016), hence the set-up of RPT/SET receivables at the
beginning of the year amounting to ₱9,090,901.21 for each account was still based on
estimates contrary to Section 20 of the Manual on the New Government Accounting
System (NGAS), Volume I and the disparity between the balances remained thus, the
account balances were doubtful. (Observation No. 1)

We commended the Municipal Treasurer’s Office for completing the update of the
certified list of taxpayers with corresponding amount due and collectible as of December
2016.

We recommended that Management (a) take advantage of the newly installed Property
Assessment and Tax Administration System (PATAS) and find ways of the possibility to
link the system with the Municipal Treasurer Office; (b) require the Municipal Treasurer
to submit to the Municipal Accountant the Certified List of Taxpayers as basis to take up
RPT/SET Receivables in the books; and (c) require the Municipal Accountant to maintain
the corresponding subsidiary ledgers (SL) that will monitor tax collections and
delinquencies in compliance with Section 20 of the Manual on the NGAS.

2. Due to non-creation of an inventory committee, partial completion of actual

physical count, unreconciled inventory report, and failure of the Municipal Treasurer and
Accountant to update the property cards and property, plant and equipment ledger cards,
respectively, the account balance of property, plant and equipment account with a net
book value of ₱115,248,808.12 could not be reconciled and ascertained contrary to
Sections 114 and 124 of the Manual on the NGAS for LGUs, Volume I, making the
account balances unreliable. (Observation No. 2)

We recommended that the Local Chief Executive (a) create an inventory committee to
conduct annual physical inventory of PPE and submit the RPCPPE to the Auditor not

(ii)
later than January 31 of each year; and (b) require the (i) Municipal Accountant to record
the necessary adjustments/corrections so as to come up with the correct figures and
maintain updated PPELC/RPLC; and (ii) Municipal Treasurer to maintain property cards
and reconcile the data therein with the inventory reports and the general ledger to validate
the reported balances.

SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

Summarized below are the other significant observations and the corresponding
recommendations:

1. Several deficiencies were noted in the budgeting and allocation of SEF contrary to
the provisions of Sections 100 and 272 of RA No. 7160, Deped-DBM-DILG Joint
Circulars No. 01, s. 1998 dated April 14, 1998, No. 01-A, March 14, 2000 and No. 01-B,
dated June 25, 2001 which consequently may hinder the attainment of SEF objectives and
compliance with the oversight authority. Moreover, the non-prioritization of the SEF
budget for the proposed projects, programs, and activities deprived the constituents of the
benefits that could have been derived therefrom. (Observation No. 3)

We recommended that Members of the Municipal Local School Board (a) prepare a SEF
budget in compliance with the legal and regulatory requirements and refrain from
accommodating expenditures for activities for which the DepEd has the direct mandate to
execute; (b) request for inputs from the Deped official/Schools Division Superintendent
in the prioritization of SEF projects and expenditures in accordance with the DepEd
criteria and with due regard to the provisions of laws, rules and regulations prescribing
the limitations on the use of the fund; and (c) maximize the utilization of SEF to attain its
objectives, monitor the implementation of the PPAs, and take appropriate actions such as
realignment or reprograming, if necessary.

2. Due to non-adherence with rules and regulations, lapses/deficiencies in the

allocation and utilization of the Local Disaster Risk Reduction Management Fund were
incurred in violation of Section 4(6) of PD No. 1445 and COA Circular No. 2012-002
dated September 12, 2012, affecting the validity, propriety and regularity of the
transactions. (Observation No. 4)

We recommended that Management (a) refrain from using DRRMF for

programs/projects/activities which are not directly related with disaster preparedness,
mitigation, response and rescue operations; (b) adhere to the accounting and reporting
guidelines of the LDRRMF to properly account for the expenses related thereto; and (c)
direct the OIC-MDRRMO to (i) prepare a certified monthly Report on the Utilization of
DRRMF and submit to COA on or before the 15th day after the end of each month; and
(ii) monitor and evaluate the utilization of LDRRMF based on the programs, projects and
activities listed in the LDRRMIP as incorporated in the annual investment plan to ensure
the full implementation of the pre-disaster preparedness programs. (Observation No. 4)

(iii)
3. Owing to the non-submission by the BUB focal person of the
assessment/evaluation report for every BUB project pursuant to Section 4.7.3 of DBM-
DILG-DSWD-NAPC Memorandum Circular No. 6, the grantor and the implementing
agency were not assured if the objectives identified in the BUB projects were met.
Moreover, because there was no established clear-cut policy on monitoring the
Sustainable Livelihood Program Assistance and the SEA Kaunlaran, collections from the
micro-finance were not recorded and deposited in the accounts of the Municipality, hence
may expose the said funds to risk of loss or misuse. (Observation No. 5)

We recommended and Management agreed that Management thru the (a) MSWD,
establish clear-cut policy on monitoring and implementation of SEA Kaunlaran project
and install proper control in recording and deposit of collections to avoid exposing the
funds to possible loss, misuse and misappropriation; and (b) BUB focal person submit
assessment/evaluation report for every BUB project in accordance with Section 4.7.3 of
DBM-DILG-DSWD-NAPC Memorandum Circular No. 6 to evaluate if the objectives in
the identified projects were met.

4. Due to monitoring and awareness of rules and regulations, Programs, Projects and
Activities (PPAs) were paid with complete documentary requirements for infrastructure
projects in accordance with COA Circular 2012-001 and 2009-001 and Department of
Labor and Employment Department Order (DO) No. 13 series of 1998, thus, the validity
of the paid claims were established. However, information on publicity on PPAs was not
complied by the agency pursuant to COA Circular 2013-004, consequently, notification
on the public on the full disclosure of the said PPAs was not made. (Observation No. 6)

We commended Management for the submission of the required documents for

infrastructure projects, ensuring that the Contractors have DOLE-approved CHSP before
the implementation of the infrastructure projects and requiring the Contractor to submit
material test results.

We also recommended that Management comply with COA Circular No. 2014-003
pertaining to Information and Publicity of Program/Projects/Activities of Government
Agencies so that policy on full disclosure is adopted.

5. Due to inadequate execution of development PPAs, the municipality’s

appropriation for the 20% Development Fund amounting to ₱21,307,106.44 was not fully
utilized during the year as emphasized in DBM-DILG Joint Memorandum Circular
(JMC) No. 2011-1 dated April 13, 2011, thus deprived the constituents of the benefits
that may be derived therefrom and resulted in not attaining the fund’s objectives.
(Observation No. 7)
We recommended that the Local Chief Executive (a) in coordination with Municipal
Development Council, optimize the utilization of the 20% development fund on PPAs
outlined under DBM-DILG Joint Memorandum Circular No. 2011-1 to achieve the
desired benefits in socio-economic development and environmental management
outcomes; (b) require the Municipal Accountant to maintain special accounts under
General Fund for development projects for proper accountability and control of the use

(iv)
the fund and to observe the proper classification of accounts; and (c) require the
Municipal Budget Officer to appropriate funds for projects covered under 20%
development fund in accordance with Section 3 of DILG-DBM JMC No. 2011-1.

6. Some requirements of Section 447 of RA No. 7160, the Local Government Code
of 1991, and directives from the Department of Transportation and Communications
(DOTC) and Department of the Interior and Local Government (DILG) relative thereto as
well as the local ordinances adopted and passed by the Sangguniang Bayan were only
partly complied as evidenced by the deficiencies noted in the operation of three-wheeled
public conveyances within the Municipality roads which conditions may (a) expose both
pedestrians and motorists to increased risk of accidents; and (b) obstruct the continuous
flow of traffic. (Observation No. 8)
We commended Management for complying with the provisions of Section 447 of RA
No. 7160, and directives from the Department of Transportation and Communications
(DOTC) and Department of the Interior and Local Government (DILG).

We also recommended and Management agreed that the Marhalls strictly monitor cases
of tricycles overloading, parking on roads, kolorums and other violations to prevent
undesirable outcomes as a result of unregulated operations thereof. We further
recommended that the SB revisit/review the enacted ordinances to include other
provisions relevant to operations of three-wheeled vehicles for hire.

7. The LGU’s partial compliance with Republic Act No. 9003, the Ecological Solid
Waste Management Act of 2000, may result in conditions which may be prejudicial to
the interest of its constituents on the aspect of public health and environmental hazards.
Hence, the total protection of the environment and general welfare of the constituents in
harmony with economic development may not be substantially attained. (Observation
No. 9)

We recommended that the Local Chief Executive (a) through the Solid Waste
Management Board, encourage active participation of barangay officials to support the
solid waste management program of the government by educating their respective
constituents on the proper segregation of reusable or recyclable materials from
compostable wastes; (b) through the Sangguniang Bayan (SB), adopt an ordinance
pertaining to policies and possible measures that will ensure full compliance by the
barangays on the provisions of RA No. 9003, especially on the operation of a Sanitary
Landfill; (c) take appropriate action to ensure that the existing MRF of the three
component barangays be fully functional; (d) provide necessary support in enjoining the
remaining barangays to establish their own MRF; and (e) put signage that the open
dumpsite is already closed and have the area secured from unauthorized persons.

8. Absence of GAD Database and monitoring and evaluation (M&E) team denied
the Municipality of relevant GAD information as bases for gender-responsive planning,
budgeting, programing and policy formulation as well as the assessment of the outcomes
of the GAD Programs if it has indeed addressed the specific gender issues pursuant to the

(v)
provisions of PCW-DILG-DBM-NEDA Joint Memorandum Circular No. 2013-01 or
Guidelines on the Localization of the Magna Carta of Women. (Observation No. 10)

We recommended and Management agreed that Management (a) create monitoring and
evaluation team that will determine if policies, structures, systems and mechanisms were
put in place to institutionalize the pursuit of gender equality and women’s empowerment;
(b) ensure that projects embodied in the GAD Plan and Budget do address specific gender
issues; (c) through the SB to formulate policies in advancing women’s status such as the
GAD Code and (d) through the GFPS, established the GAD database as basis for
planning, budgeting and policy formulation in accordance with the mandates of PCW-
DILG-DBM-NEDA Joint Memorandum Circular No. 2013-01 or Guidelines on the
Localization of the Magna Carta of Women.

SUMMARY OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES

As of December 31, 2016, the SASDC reflected a balance of ₱238,500.00 pertaining to

ND No. 14-001-200-(13) issued on June 27, 2014, disallowed in audit in view of the
unauthorized expenditures under the Special Education Fund given as incentive
allowances to personnel of various schools in the municipality.

The Appeal of the Municipal Mayor, et.al was received from the Regional Director on
February 3, 2015. Auditor's reply was submitted to the office of the Supervising Auditor
on April 28, 2015. No decision yet from the COA Regional Office No. III.

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ UNIMPLEMENTED

AUDIT RECOMMENDATIONS

Of the nine recommendations contained in our previous year’s audit report, two were
implemented, one was partially implemented and six were not implemented.

(vi)