EXECUTIVE SUMMARY

Introduction

The Municipality of Maydolong is a fourth (4th) class municipality in the Province

of Eastern Samar. It is located in the southern part of the province and is one of the towns
located along the national road. It has twenty (20) barangays, seven (7) of which are within
the town proper. It was declared as a municipality in 1952 under Republic Act No. 609.

The municipality is headed by the Honorable Mayor Godofredo T. Garado, who is

supported by Vice Mayor Louie Borja and the eleven members of the Sangguniang Bayan.

An audit was conducted on the accounts of the Municipality covering the period
January 1 to December 31, 2022. The audit was aimed to ascertain the propriety and
validity of disbursements and receipts, and to obtain reasonable assurance about whether
the financial statements are free from material misstatements. The audit consisted of post-
audit of transactions, review of operating procedures, interview with concerned municipal
officials and employees, verification and analysis of accounts, and such other procedures
considered necessary under the circumstances. An audit also includes evaluating estimates
made by management, as well as evaluating the overall presentation of the financial
statements.

Financial Highlights

The Municipality’s total assets, liabilities, equity, income and expenses for current
and previous year as follows:

Increase/(Decrease)
Particulars 2022 2021
Amount Percent
Assets ₱474,857,514.86 ₱344,698,112.98 130,159,401.88 38%
Liabilities 67,212,540.88 42,660,254.84 24,552,286.04 58%
Equity 407,644,973.98 302,037,858.14 105,607,115.84 35%
Income 212,888,275.22 158,199,089.10 54,689,186.12 35%
Expenses 145,417,841.47 112,200,735.44 33,217,106.03 30%

Its appropriation, allotment and obligation for calendar year 2022 as compared with
CY 2021, including the funds received from the national government agencies and other
LGUs were as follows:

Increase (Decrease)
Particulars 2022 2021
Amount Percent
Appropriations, Allotments, Obligations
 Increase (Decrease)
Particulars 2022 2021
Amount Percent
Appropriations ₱209,709,191.94 ₱153,938,588.75 55,770,603.19 36%
Allotments 213,413,638.01 155,438,588.75 57,975,049.26 37%
Obligations 166,628,708.18 123,296,497.02 43,332,211.16 35%
Funds Received from Other Agencies
NGAs 26,270,525.00 6,652,349.63 19,618,175.37 295%
LGUs - - - -

Expenditure

Expenditures incurred out of current appropriation amounted to ₱165,928,708.18

while those of last year amounted to ₱122,696,497.02 showing a significant increase of
₱43,232,211.16 or 35.24% as follows:

Function/Program/ Increase (Decrease)

2022 2021
Projects Amount %
Personal Services 81,829,280.32 64,207,984.60 17,621,295.72 27.44%
MOOE 64,829,264.99 43,404,102.94 21,425,162.05 49.36%
Capital Outlay 19,270,162.87 15,084,409.48 4,185,753.39 27.75%
Financial Expenses 0.00 0.00 0.00 0.00%
Total 165,928,708.18 122,696,497.02 43,232,211.16 35.24%

Independent Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the combined financial statements of

the Municipality of Maydolong, Eastern Samar, for the year ended December 31, 2022 due
to the exceptions as stated in the Independent Auditor’s Report and as discussed in Part II
of the report.

Summary of Significant Observations and Recommendations

1. The existence and valuation of PPE with a total carrying value of ₱326,056,483.55 were
not ascertained due to the: a) non-conduct of the physical count of PPE; b) non-
compliance to COA Circular No. 2020-006 for the One-Time Cleansing of PPE; and c)
non-provision of depreciation for various PPE accounts aggregating ₱239,796,182.82,
contrary to IPSAS 1, Sections 114 and 124 of the Manual on the New Government
Accounting System (MNGAS) for LGUs, Volume I and COA Circular No. 2020-006.

We recommended that the Local Chief Executive:

a) create an Inventory Committee to conduct the physical inventory of

properties for the One-Time Cleansing of PPE;
 b) direct the Municipal Accountant and General Services Officer to i)
prepare and update PPELCs and Property Cards, respectively; and
ii) reconcile both records; and

c) require the Municipal Accountant to provide depreciation for the

listed PPE since they were ready for use, and moving forward, always
provide depreciation of assets.

2. Failure of the Accounting Unit to prepare and submit the monthly Bank Reconciliation
Statements for all funds due to delayed reports from the Treasury Unit, contrary to
Section 74 of P.D. No. 1445, COA Circular 96-011 and COA Circular 95-006, resulted
in an unreconciled difference between the book and bank balance totaling
₱9,269,935.63, thus, affected the fair presentation of the accounts in the financial
statements.

We recommended that the Local Chief Executive require the Municipal

Accountant to regularly prepare the required monthly bank reconciliation
statements for all the funds and bank accounts of the LGU to ensure the accuracy
and reliability of the reported balances. Also, enjoin the Municipal Treasurer to
come up with a strategy for the timely completion of their financial reports for
submission to the Accounting Unit to sustain the required timely preparation of
BRS and correction of the Cash account.

3. The Municipal Accounting Office did not establish at the beginning of the year the Real
Property Tax Receivables and Special Education Tax Receivables, contrary to Section
246 of the Local Government Code and Sections 19 and 20 of the New Government
Accounting System (NGAS) Manual Volume I for Local Government Units (LGUs),
thus the reported balances of said receivable and the deferred income of the Municipality
in the Financial Statements amounting to P65,000.00 and P0.00, respectively, is
unreliable.

We recommended that the:

a) Municipal Treasurer furnish the Municipal Accountant, at the

beginning of each year, a duly certified list of taxpayers and the amount
due and collectible for the year based on the Real Property Tax
Account Register (PRTAR) or Taxpayer’s Index Card; and

b) Municipal Accountant set-up the Real Property Tax Receivables and

Special Education Tax Receivables based on the list submitted by the
Municipal Treasurer, in compliance with the modified accrual method
of accounting for income from real property taxes, in accordance with
the NGAS Manual Volume I for LGUs.
4. The reported balance of the Loans Payable account totaling ₱12,369,703.77 was not
presented in the current and non-current portion of the loans, and relevant information
of the account was insufficiently presented in the Notes to Financial Statements,
contrary to the requirements in paragraphs 75 and 127 of the International Public Sector
Accounting Standard (IPSAS) No. 1, and of Section 80.4, Volume 1 of NGAS Manual
for Local, thus, users were deprived of valuable information that facilitates decision-
making.

We recommended that the Municipal Accountant fairly presents the current and
non-current portion of its Loans Payable account and to provide sufficient
information in the Notes to give additional value to the financial statements of the
LGU for relevant decision-making of its users and other readers.

5. The Accounts Payable account was understated by ₱951,847.62 due to failure in

recording goods received and services rendered on account, inconsistent with Annex B
of COA Circular 2015-009, and the International Public Sector Accounting Standard-1,
thus, affecting the fair presentation of the account.

We recommended that the Municipal Accountant recognize purchases of goods

already delivered or services rendered on account as Accounts Payable to
maintain reliability and fair presentation of the account.

Statement of Audit Suspensions, Disallowances and Charges

As at December 31, 2022, the Municipality has unsettled suspensions,

disallowances and charges amounting to ₱13,959,835.27; ₱1,916,390.00; and ₱0.00,
respectively.

Status of Implementation of Prior Years’ Unimplemented Audit Recommendations

Of the twenty-six (26) audit recommendations contained in the 2021 Annual Audit
Report, twelve (12) or 46.15% were fully implemented and the other fourteen (14) or
53.85% were not acted upon by the management.