EXECUTIVE SUMMARY

A. Introduction
The Municipality of Ibajay, Aklan, a third class municipality, is bounded in the north by Sibuyan
Sea; South by Municipality of Madalag; East by Municipalities of Tangalan and Makato and
West by Municipality of Nabas and Province of Antique. Ibajay, rated as third class
municipality with thirty five (35) barangays, with an estimated population of 43,433 and an
average of 8,445 households is relatively a progressive farming and fishing community.

A financial and compliance audit was conducted on the accounts and operations of the
Municipality of Ibajay for CY 2018. The audit consisted of review of operating procedures,
inspection of the Municipal’s programs and projects on a test basis, interviews of concerned
government officials and employees, verification, reconciliation and analysis of accounts, and
such other procedures considered necessary under the circumstances.

B. Financial Highlights

B.1. Comparative Financial Position

The Municipality’s assets, liabilities and government equity as of December 31, 2018 were
P380.498 million, P83.233 million and P297.275 million, respectively. Assets and
Government Equity increased by 10.99 percent and 23.73 percent, respectively while
Liabilities decreased by 18.86 percent over that of last year’s.

2018 2017 Inc.(Dec.) Percent

Assets P 380,498,217.56 P 342,827,569.80 37,670,647.76 10.99%
Liabilities 83,223,329.97 102,561,376.43 (19,338,046.46) -18.86%
Government Equity 297,274,887.59 240,266,193.37 57,008,694.22 23.73%

B.2.Comparative Results of Operations

For the year 2018, the Municipality collected P148.296 million which is 7.91 percent more
than that of last year’s income of P137.430 million. Such collection is higher than the estimated
income of P134.521 million by P13.775 million or 10.24 percent.

Revenue: 2018 2017 Inc.(Dec.) Percent

General Fund P 146,710,914.67 P 135,841,315.75 P10,869,598.92 8.00%
Special Educ. Fund 1,585,454.71 1,589,033.25 (3,578.54) -0.23%
Total P 148,296,369.38 P 137,430,349.00 P10,866,020.38 7.91%

During the year, the municipality’s total expenditures is P115.324 million which is 17.10
percent higher than of last year’s.

Expenses: 2018 2017 Inc.(Dec.) Percent

General Fund P113,397,827.13 P96,878,308.34 P16,519,518.79 17.05%
Special Educ. Fund 1,926,727.98 1,603,485.26 323,242.72 20.16%
Total P 115,324,555.11 P 98,481,793.60 P16,842,761.51 17.10%

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B.3. Comparative Presentation of Appropriations/Allotments/Obligations
For Calendar Year 2018, the municipality had a total appropriations of P156.968 million of
which P130.760 million was obligated leaving an unexpended balance of P26.208 million.
Expenditure Class Appropriation Obligations Unexpended
Balance
Personal Services
P 57,859,370.82 P55,950,865.91 P 1,908,504.91
Maintenance and Other
Operating Expenses 69,975,455.61 56,883,365.91 13,092,089.70
Financial Expenses 2,618,761.90 2,412,458.52 206,303.38
Capital Outlay 26,514,646.02 15,513,640.41 11,001,005.61
Total P 156,968,234.35 P130,760,330.75 P 26,207,903.60

C. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the financial statements as of December 31, 2018
since the management was not able to conduct a complete physical inventory of PPE and
submit a complete and adequately accomplished Report on Physical Count of Property, Plant
and Equipment (RPCPPE); and was not able to remit and account as revenue the collections
amounting to P3.114 million and more, had resulted to understatement of assets and income
accounts.

D. SIGNIFICANT FINDINGS AND RECOMMENDATIONS

1. The Municipal Treasurer’s Office did not strictly follow the Receipts, Collections and
Deposits process as well as the handling of accountable forms required under Sections
30, 32, 35, 41, 50 and 51 of the Manual on NGAS for LGUs, Volume 1, thus, weaken the
internal control over cash and accountable forms management, which resulted to the
following deficiencies:

a. Collections were not deposited intact and within the prescribed period with the
authorized depositories, leaving an undeposited amount of P1.555 million contrary to
the provision of Section 69(4) of P.D. 1445 and Section 32 of the National Government
Accounting System (NGAS) Manual for LGUs, Volume 1, hence exposing government
funds to risk of loss or improper use and deprived the Municipality of the opportunity
to finance projects and interest income that may derived therefrom.

b. The record book used in recording receipts and issuances of the accountable forms to
all accountable officers was not properly filled up and does not contain complete
information as to the whereabouts of the accountable forms and other required data
in violation to Section 95 of the Government Accounting and Auditing Manual (GAAM)
for LGUs, Volume 1.

c. Collectors failed to prepare and submit the Report of Accountability for Accountable
Forms (RAAF) and for the Municipal Treasurer the Consolidated Report of
Accountability for Accountable Forms (CRAAF) and submit the same to the Auditor in
violation of Section 50 and 51 of the Manual on NGAS for LGUs, Volume II.

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 We recommended that management require the Municipal Treasurer to:

a. Demand submission of Accountable Forms/Official Receipts still in the hands of

three Collectors and account the collections and deposit immediately to the
authorized government depository bank;
b. Impose the daily turn-over of collections by the Revenue Officers/ collectors. See
to it that close monitoring on the frequency of turn-over of the collections be strictly
imposed.
c. Deposit intact all collections with the authorized depository bank daily, or not later
than the next banking day, to ensure protection from possible misuse of
government funds;
d. Ensure that there is proper physical count of the accountable forms remaining in
the custody of the collectors and check the same to the new balances on hand
column in the DSCAF;
e. Keep adequate permanent record book and that will contain all the information as
set forth in Section 95 of the GAAM, Volume 1;
f. Strictly follow the use of RIS for an accurate utilization/issuance of accountable
forms and establish responsibility on the AF issued to collectors;
g. Require the Revenue Collectors to prepare the RAAF and then prepare CRAAF to
consolidate the RAAFs. Submit the required monthly reports in the prescribed
forms provided in the NGAS Manual and submit the same not later than the fifth
day of the ensuing month to the audit team;
h. Strictly observe daily recording of collections and deposits in the cashbooks;
i. Reconcile the cashbooks against the cash on hand on a daily basis for accuracy
of balance at any given time;
j. Submit justifications for still giving responsibility as collecting agents despite of
failure to turn-over collections in due time.

Further, we recommended to the management to demand the immediate restitution and

deposits of the government funds on the hand of the Municipal Treasurer and collectors
and cause the proper accounting of assets and income accounts in the books of the
Municipality.

2. Preventive internal control mechanisms in the operations of the Municipal Slaughterhouse

were not in place, as required under COA Circular No. 77-48 dated January 31, 1977, thus
assets/collections are not safeguarded against fraud or loss of government funds.

We recommended the following:

1. Preventive control or segregation of duties must be observe not only in the operation
of slaughterhouse but in the whole operation of the Municipality;
2. Immediately assign personnel other than the Collector to be in-charged in the
assessment of slaughter fees. Official Receipts must be supported with Order of
Payment to ensure that every slaughter activity is properly assessed and receipted;
and
3. Assign personnel to check/investigate the previous slaughterhouse transactions to
ensure that there was no loss of government funds and if found that there was
mishandling and misuse of same, file an appropriate charges.

3. Cash incentive bonus through PRAISE granted to regular employees at P20,000.00 each
totaling to P3.12 million was paid in the absence of individual accomplishment/ appraisal

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 or evaluation reports or contribution contrary to the provisions of CSC Memorandum
Circular No. 1, s. 2001, thus casting doubt on the propriety of transaction.

We recommended that the PRAISE Committee submits the employees’ individual

accomplishment/appraisal or evaluation reports or employees’ contribution in compliance
with the provisions of CSC Memorandum Circular No. 1, s. 2001. Likewise, Municipality’s
PRAISE Committee must have a written established guidelines in assessing the
performance and conduct of each employee.

4. Prior year’s taxes withheld from suppliers/contractors and compensation of employees

and government share were not remitted intact to Bureau of Internal Revenue (BIR) as
required under Revenue Memorandum Circular No. 23-007 dated March 20, 2007, leaving
an unremitted balance of P1.409 million as of year-end, thus depriving the government of
revenues needed to finance its projects.

We recommended that the Municipal Accountant remit regularly and within the prescribed
period all the withheld trust funds due to the BIR. Verify in the municipality’s book of
accounts the correctness of prior year’s past due accounts with BIR and cause the proper
adjusting entries, if found some error in recording.

5. Expenditures totaling P.758 million were incurred by the Municipality on meals and snacks
served to visitors/guests on official business, catering services during meetings,
conferences and special occasions which are considered non-essential and could be
dispensed with without loss or damage to property, contrary to Section2 of Presidential
Decree No. 1445 and Section 343 of Republic Act No. 7160, resulting in wastage of
government funds.

We recommended that management (i) minimize or stop the practice of serving meals and
snacks for entertaining guests or visitors in the normal course of conducting official
functions and during ordinary staff meetings or conferences in order to prevent the
incurrence of irregular an unnecessary expenditures and wastage of government funds;
(ii) ensure that expenses to be reimbursed pass the “public purpose test” by requiring that
the basic supporting documents for government expenditures are attached to the claims;
and (iii) explain why these transactions will not be disallowed in audit.

6. Year-end balances of Real Property Tax (RPT) and Special Education Tax (SET)
Receivables were overstated by P456,910.41 and P209,649.50, respectively due to the
non-adherence of agency’s officials on the procedural guidelines provided under Sections
20 and 36, Volume 1 of the National Government Accounting System (NGAS) Manual for
LGUs.
We recommended that:
a. The Municipal Accountant adjust the previously recorded RPT and SET Receivable
based on the Certified List of Delinquent Accounts, to correct the RPT and SET
Receivables balance and deferred RPT/SET Income as of December 31, 2018; and
b. The Municipal Treasurer, based on AR prepared by the Municipal Assessor,
immediately update the RPTAR/TIC and then the Certified List of Taxpayers (CLT)
showing real property taxes due and collectible for the year; and then submit the same
to the Municipal Accountant as basis in the setting-up of RPT and SET Receivables
for ensuing year.

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7. BAC Secretariat was not able to furnish the Office of the Auditor of infrastructure contracts
amounting to P40.735 million contrary to COA Circular No. 2009-001 dated February 12,
2009 and Section 14.1 in IRR of RA No. 9184, which hinder the timely review and
evaluation thereof.

We recommended that BAC Secretariat:

a. Submit copy of infrastructure contracts to COA within five working days from perfection
thereof for review and evaluation pursuant to COA Circular No. 2009-001;
b. Document and monitor the flow or movement of the contracts to establish
accountability for the non-submission of contracts for audit.

E. SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND CHARGES AS OF

YEAR-END

As of December 31, 2018, total unsettled suspensions amounted to P1.161 million.

F. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

Of the 24 recommendations embodied in the Annual Audit Report eight were implemented,
two were partially implemented and the remaining 14 remained not implemented.