EXECUTIVE SUMMARY

A. Introduction

The Municipality of Uyugan was officially established by virtue of Act 2711. The
Spaniards made San Antonio de Florencia as the Patron Saint. It was founded in March,
1901 when the Americans established Batanes as a province. The Municipal Government as
a local government unit is mandated and assumed to build its own capabilities for self-
governance and to develop as self-reliant community which is the very essence of local
autonomy. It serves primarily as a general purpose of the government for the coordination
and delivery of basic, regular and direct services and effective governance of the inhabitants
within its territorial jurisdiction.

The Municipality of Uyugan, as a local government unit, ensures program

implementation on socio-economic development through strong political will and support,
with judicious utilization of natural resources; preserves and enriches the Uyugan culture
and values; and promotes capability building, technological advancement, Provision of basic
infrastructure and support services.

B. Highlights of Financial Information

Presented below are the financial position and sources of funds, appropriations and
obligations of the Municipality of Uyugan for the years 2013 and 2012:

2013 2012

Assets 25,595,114.30 23,326,478.53

Liabilities 12,377,904.81 10,222,864.65
Government Equity 13,217,209.49 13,103,613.53

Income 21,590,096.79 19,609,686.72

Expenses 21,502,379.60 20,371,310.27
Appropriations 24,528,763.35 23,604,097.36
Obligations 20,587,768.83 19,862,005.20

C. Operational Highlights

The accomplished major programmed activities under the 20% Development Fund
are as follows:

Program/ Appro- % of Accom-

Projects/Activities priations Expended Balance plishment
Preservation & conservation of 92,400.00 85,194.95 7,205.05 92.20%
natural resources
Solid waste management program 700,000.00 623,797.50 76,202.50 89.11%
Improvement of Tu,lungan Gi-Iraya 60,000.00 60,000.00 - 100%
 retaining wall
Improvement/concreting of Bastillo 220,000.00 218,360.00 1,640.00 99.25%
street
Construction/concreting of Panao 200,000.00 200,000.00 - 100%
road
Construction of Rahaung at 60,000.00 44,110.00 15,890.00 73.52%
Songsong
Proposed Improvement of 85,660.00 85,660.00 - 100%
distribution line from Aymang
Road to Kahampuay Bridge
Rehabilitation of Cobaria St 97,726.00 97,726.00 - 100%
Proposed improvement of 66,050.00 66,050.00 - 100%
Chanayran pipes from Chavatuan
to Sumanga
Improvement of Dacudas reservoir 18,660.00 18,660.00 - 100%
Total 1,600,496.00 1,499,558.45 100,937.55

D. SCOPE OF AUDIT

A Financial and Compliance Audit and Value for Money Audit were conducted on
the accounts and operations of the Municipality of Uyugan for the period ended December
31, 2013. The audit was aimed at ascertaining the propriety of disbursements, the reliability
of financial reports and the adequacy of accounting books and records. Likewise, the audit
was conducted to identify whether the projects/programs implemented by the LGU met its
planned objectives.

E. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered an unqualified opinion on the fairness of presentation of the

financial statements as of December 31, 2013.

F. SIGNIFICANT FINDINGS AND RECOMMENDATIONS

The following are the most significant findings with the corresponding
recommendations.

1. Traveling Allowance (TA) of some elective officials and heads of offices and
Representation Allowance (RA) differential of the ICO-Municipal Treasurer
totaling P 167,059.75 were improperly charged to Salaries and Wages,
Personnel Economic Relief Allowance and Life and Retirement insurance
contribution instead of transportation and representation
allowance.Moreover,said payments were not supported with documents as
required under Sec. 4 (6) of PD. 1445; COA Circular No. 2002-003 and Local
Budget Circular No. 103.
 We recommended the following:

1. Claim of RATA must be charged to appropriate accounts as prescribed by

the Manual on the NGAS;
2. Changes in the approved annual budget must be supported by enacted
supplemental budget or appropriation ordinance;
3. Payment of RATA must be based on the Local Budget Circular 103
4. All payments must be supported with complete documentation.

2. Payment of hazard pay for public health workers is not in accordance to the
provisions of DBM-DOH Joint Circular No. 1, s. 2012 dated November 29, 2012.

We recommended that management adhere strictly to the provisions of DBM-DOH

Joint Circular No. 1, s. 2012 in the payment of hazard pay for health workers in order
to forestall its possible disallowance in audit.

3. Some personnel hired under Job Order contracts were granted cash advance
for traveling expenses to attend seminars and conventions, which is not proper
and beneficial to the government.

We recommended that management stop the granting of cash advances for travel to
all job order personnel pursuant to COA Circular No. 92-382 to prevent its eventual
disallowance in audit.

4. Transferred funds received by the Municipality from other government

agencies were not supported with complete documents and was recorded in the
General Fund instead of Trust Fund in violation of Item 3.1.2 of COA Circular
No. 2012-001 dated June 14, 2012 and Section 309, Title Five, Chapter II,
Article One of Republic Act No. 7160.

We recommended management to strictly follow the provisions of Item 3.1.2 of

COA Circular No. 2012-001 and Section 309, Title Five, Chapter II, Article One
of Republic Act 7160 in the receipt and recording of funds which officially come
into the possession of the local government as trustee, agent or administrator.

5. The local Sanggunian has not enacted an appropriate ordinance to create the
Disaster Risk Reduction and Management Office (DRRMO) including the
allocation of necessary staff/personnel and budget as provided under Section 6,
Rule 6 of the Implementing Rules and Regulations (IRR) of Republic Act (RA)
No. 10121.

We recommended that the Municipal Mayor request the members of the local
sanggunian to enact an ordinance creating a DRRMO including the allocation of
personnel and budget. The Municipal Government should seek clarification from the
National Disaster Risk Reduction and Management Council, which issued the
 Implementing Rules and Regulations of RA No. 10121, on the position titles,
qualifications and salary grades of the personnel composing the Disaster Risk
reduction and Management Office (DRRMO).

6. The unobligated balance of the Local Disaster Risk Reduction and Management
Fund (LDRRMF) was not transferred to a Special Trust Fund in the Trust
Fund books in violation of COA Circular No. 2012-002 dated September 12,
2012, hence, exposing said fund to possible misapplication.

We recommended that the acting Municipal Accountant prepare a journal entry

voucher transfer the unexpended/unobligated balance of the LDRRMF to a Special
Trust Fund to ensure and facilitate the continued use of the fund for disaster risk
reduction and management activities as provided in the LDRRMFIP within the next
five years.

7. Disbursements amounting to P50,250.00 charged against 20% Development

Fund were not in conformity with the programs/projects/activities outlined in
Department of the Interior and Local Government and Department of Budget
and Management Joint Memorandum Circular No. 2011-1 dated April 13, 2011,
hence could result to either suspensions or disallowances of the same in audit.

We recommended that management strictly follow the provisions of DBM-DILG

Joint Memorandum Circular No. 2011-01 dated April 13, 2011 in the utilization of
its 20% Development Fund.

8. Procurement of goods used for the 2013 Women’s Day celebration amounting to
P14,991.00 and reimbursement of cost of apparels used by the 2013 Miss
Batanes candidate amounting to P41,510.00 is not in conformity with the
implementing rules and regulations of Republic Act No. 9184 and the Manual
on the New Government Accounting System and considered irregular per COA
Circular No. 2012-003 dated October 25, 2013.

We recommended that management adhere strictly to the provisions of the Revised

IRR of RA 9184 and the Manual on NGAS in the procurement of goods. Likewise,
the guidelines, procedures, policies, rules and regulations on the utilization of funds
as provided under COA Circular No. 2012-003 Should be strictly followed.

9. Disbursement Vouchers, trial balances and other required reports of the

municipality were not submitted to the Office of the Auditor within the
prescribed period in violation of the provisions of COA Circular No. 2009-006
dated September 15, 2009.

We recommended Accounting Office to adhere strictly with the provisions of COA

Circular No. 2009-006 in submitting accounts and other financial reports of the
municipality.
 10. Payment of wages of some job order personnel charged from Gender and
Development (GAD) fund – Clean and Green Program were not in accordance
with the programs and plans set by the LGU.

We recommended that management disburse the GAD fund according to its set
programs/plans and activities. Likewise, the gender issues and concerns prevailing
among the women constituency be identified. It is also recommended that GAD
projects and activities for the year should be identified and the corresponding
specific strategies to address the issues should be properly set to ensure the success
of the program.

11. Disallowances and suspensions in audit of P1,380,025.46 and P240,845.00,

respectively, remained unsettled as of December 31, 2013 due to the laxity of
management to effect its settlement.

We recommended that management require the persons liable/responsible for the

audit disallowances and suspensions to settle their accounts.

12. The Municipal Mayor failed to hire a Municipal Accountant, Municipal

Engineer and Municipal Treasurer which are mandatory positions under the
Local Government Code. This resulted in weak internal control system, non-
maintenance of accounting records prescribed under the National Government
Accounting System (NGAS) and inaccurate and incomplete financial records
and accounting reports, delayed submission of accounts and financial
statements and delayed implementation of priority programs and projects.

We recommended that management fill up the positions of Municipal Accountant,

Municipal Treasurer and Municipal Engineer with persons possessing the
qualifications as provided under the Local Government Code in order to improve the
financial management, financial reporting system and project management of the
Municipality.

F. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Of the seven (7) prior year’s audit recommendation incorporated in the 2012 Annual
Audit Report, four (4) were fully implemented, two (2) were partially implemented and one
(1) was not implemented.