REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
REGIONAL OFFICE NO. VIII
LGAS C – Leyte II and Biliran Province
Provincial Satellite Auditing Office (PSAO)
Baybay City, Leyte

Team R8-03, Baybay City

AOM No. 2023-001

Date: August 10, 2023

AUDIT OBSERVATION MEMORANDUM (AOM)

For: HON. ARNULFO V. LENTERIA

Punong Barangay
Barangay San Juan
Mahaplag, Leyte

Attention: Anabella M. Villaflor

Barangay Treasurer

Rodulfo S. Loreto
Municipal Accountant

We have audited some of the Barangay transactions for Calendar Years 2019,
2020 and 2021 and 2022 and observed the following deficiencies:

Property, Plant and Equipment

1. The accuracy, existence and valuation of all properties of the barangay under
Property, Plant and Equipment (PPE) amounting ₱3,600,871.43 as of
December 31, 2022, continued to be unconfirmed due to a) non-conduct of
physical count of its properties for the past 10 years; b) not detailed PPE
Ledger Cards; c) non-maintenance of Property Cards by the Designated
Property Custodian,contrary to Item 7.2.5, Chapter VII of Manual on the
Financial Management of Barangays and other pertinent COA rules and
regulations.

1.1. Chapter 7 of the Manual on the Financial Management of Barangays prescribes

the specific Policies and Procedures on Investment Property, Property, Plant and
Equipment, and Biological Asset. Items 7.1.18 and 7.1.19 of the Manual provides
that:
Xxx

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 1 of 22

 Property, Plant and Equipment/Infrastructure Assets

7.1.18 The barangay shall conduct an annual physical inventory of

all supplies, property and equipment of the barangay.

7.1.19 Report on the results of physical inventory of property/equipment

shall be reconciled with the accounting records.

7.1.7 Property/Equipment Ledger Card (PELC) shall be maintained by

the C/M Accountant as subsidiary ledgers for all property and
equipment of the barangay.

1.2. Likewise, Item 2.1.6 of COA Circular No. 2010-001 requires the Accountants to
submit subsidiary schedules of general ledger accounts, on or before February 14
of each year.

1.3. The Statement of Financial Position for CY 2022 of Barangay San Juan reflected
a total amount of ₱3,600,871.43 properties under Property, Plant and Equipment
(PPE) account. The details are shown in Table 1.

Table 1. Property, Plant and Equipment

PPE Amount
Land ₱ 676,477.00
Power Supply System 177,050.00
Office Building 719,954.00
Hospital and Health Center 39,955.00
Other Structure 492,380.00
Furniture and Fixtures 366,448.29
I.T Equipment 43,145.00
Machineries and Other Equipment 103,146.14
Other Property Plant and Equipment 163,525.00
Road Networks 414,256.00
Water Supply System 404,535.00
TOTAL ₱ 3,600,871.43

1.4. However, an inventory report has not been provided to the Audit Team, and the
Barangay has consistently failed to submit one over the last decade.
Consequently, the accuracy of all the listed Barangay properties in Table 1
remains uncertain.

1.5. The Audit Team was not able to confirm the recorded PPE because, though the
Municipal Accountant had already maintained the PPE Ledger Cards (PPELC),
there is no detailed description of the property such as the brand, size, color, etc.
and the properties were just lumped per major account in the property ledger card

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 2 of 22

 instead of maintaining different PPELC for each class of property. There was also
no data on the reference and quantity.

1.6. During the audit, the Barangay Treasurer informed the Audit Team that no Report
on Inventory of Property and Equipment (RIPE) has been prepared due to the
absence of an Inventory Team to conduct the physical count of barangay
properties and Property Custodian to maintain property records. Also, it was
disclosed that their equipment were not labeled with Property Tags, hence, some
procured equipment were difficult to trace.

1.7. This observation was consistently included in the Audit Report on Barangay
(ARB) San Juan since CY 2013 or for the past 10 years. The continued failure of
the barangay officials to implement the audit recommendations manifests a
complete disregard of the rules on property management and other relevant laws
and regulations. This is despite the seminar conducted by COA to all barangay
officials on the adoption of the Barangay Financial Management Manual wherein
the RIPE was first introduced.

1.8. The RIPE is intended to confirm the existence of the reported assets in the books
of the Barangay and validate whether these assets are within the vicinity of the
same or in its designated location. Without the RIPE, the amount in the books
cannot be substantiated while the existence of the properties cannot be confirmed.
Losses, damages or unserviceable properties will not be detected and the persons
liable for such losses may not be held accountable thereof.

1.9. Due to the above mentioned deficiencies, the accuracy, existence and reliability of
the PPE accounts cannot be confirmed which will affect the fair presentation of the
Barangay’s assets in its Financial Statements.

1.10. We recommend that the Punong Barangay should create an Inventory

Committee and instruct its members to conduct a complete physical count of
all properties of the barangay every year, prepare and accomplish the
Report on Inventory of Property and Equipment completely when the
physical count is concluded and submit to COA and the Municipal
Accountant;

1.11. We also recommend that the Barangay Treasurer as the Property Officer
Designate to:
a. Provide Property Tags for each equipment with complete labels;
b. Update the PAR of each employee every three years;
c. Provide adequate storage for Unserviceable Equipment;
d. Request for disposal of unserviceable properties, and
e. Maintain Property Cards for all properties of the Barangay

1.12. Also, we recommend that the Municipal Accountant should:

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 3 of 22
 a. maintain and update the prescribed PPELC for each class of PPE
with complete details; and
b. provide the required depreciation of properties and submit the
detailed computation thereof to the Audit Team

1.13. Lastly, we recommend that the Barangay Treasurer as the Property Officer-
Designate and the Municipal Accountant should periodically reconcile their
respective records so as to establish a more reliable PPE balance.

Unrecorded Property, Plant and Equipment

2. Project amounting ₱149,890.00 charged to Financial Assistance (FA) from

LGU Mahaplag were erroneously not recorded to its appropriate PPE account
contrary to Section 4.2 of COA Circular 2020-006, thus the PPE and
Government Equity were understated at year-end.

2.1 Section 4.2 of COA Circular 2020-006 provides that the cost of an item of PPE
shall be recognized as an asset if, and only if:

a. it is probable that the future economic benefits or service potential associated

with the item will flow to the entity;
b. the cost or fair value of the item can be measured reliably;
c. beneficial ownership and control clearly rest with the government;
d. the asset is used to achieve government objectives; and
e. it meets the capitalization threshold of ₱15,000.00 (now ₱50,000.00)

2.2 For CY 2020, Barangay San Juan received financial assistance from the LGU
Mahaplag and Provincial Government of Leyte totaling ₱150,000.00 which were
correctly recorded as Due to LGUs in the books.
Table 2. Financial Assistance –CY 2022
Date Project Amount
December 2022 Rehabilitation of Load Road 150,000.00
Total ₱150,000.00

2.3 Audit of disbursements for the said financial assistance revealed that a total of
₱149,890.00 were disbursed and the project was already completed as shown in
Table 3.

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 4 of 22

 Table 3. Utilization of Financial Assistance
Should be
Check recorded as
Project Date No. Particulars Amount (PPE Account)
Rehabilitation 3/11/22 583738 Materials 100,290.00
of Load Road 3/17/22 583745 Labor 49,600.00 Road Network
Total ₱149,890.00

2.4 However, review on the entries made on the above disbursements totaling
₱149,890.00 revealed that these were not recorded to their proper PPE account but
were erroneously directly recorded as debit to Due to LGUs upon disbursement,
even before preparation and submission of utilization report to source agency.

2.5 The projects should have been recorded as PPE in the books as the barangay owns
these properties and is responsible for their maintenance. Also, they qualify with
section 4.2 of COA Circular 2020-006 on when a PPE should be recognized as an
asset.

2.6 The correct recording upon receipt of FA, completion of the project and submission
of Fund Utilization Report to the source agency should be the following:

Table 4. Accounting entries on utilization of FA

Particulars Entry
Receipt of Financial AssistanceDebit - Cash in Bank
from Other LGUs Credit- Due to LGUs
Payment of Materials for Debit- Construction Materials Inventory
Projects Credit- Cash in Bank
Cash Advance for Labor Debit- Advances For Payroll
Credit- Cash in Bank
Payment of Labor Debit- Construction in Progress
Credit- Advances For Payroll
Upon Completion of Project Debit - Property, Plant and Equipment
Credit - Construction Materials Inventory
Credit - Construction in Progress (Labor)
Submission of Fund Utilization Debit - Due to LGUs
Report to Source Agency Credit- Subsidy from LGU

2.7 The non-recording of PPE resulted in the following misstatements at year-end:

Table 5. Misstatements
Account Understatement
Road Network 149,890.00
Government Equity 149,890.00
TOTAL 299,780.00

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 5 of 22

2.8 We recommend Municipal Accountant to make adjusting entry to recognize
above PPE amounting ₱149,890.00.

2.9 Henceforth, we recommend that the Municipal Accountant record only as

debit to Due to LGUs the amount of utilization upon submission of Fund
Utilization Report to source agency, and the amount of excess upon refund of
the same to the source agency.

Cash in Bank

3. The balance of Cash in Bank amounting to ₱834,137.95 is unreliable due to

non-preparation of monthly Bank Reconciliation Statements (BRS) contrary
to Section 111 (2) of Presidential Decree No. 1445 and Section 3.2 and 3.3 of
COA Circular 96-011.

3.1. Section 111 (2) of PD 1445 provides that the highest standards of honesty,
objectivity and consistency shall be observed in the keeping of accounts to
safeguard against inaccurate or misleading information.

3.2. Pertinent provision of COA Circular No. 96-011 dated October 2, 1996, provide:

Section 3.2 The Local Accountants shall within ten (10) days from
receipt of the Bank Statements (BS), reconcile the same BS with
the General Ledgers (GL) and prepare the BRS in five (5) copies.

Section 3.3 The accountant shall draw journal vouchers to record

all valid reconciling items that require adjustment and correction in
the GL.

3.3. The Financial Statements of the Barangay showed that the Cash in Bank-LCCA
has a total balance of ₱834,137.95 as of yearend. However, no Bank
Reconciliation Statements were prepared and submitted by the Municipal
Accountant for the CY 2022.

3.4. The failure to submit the BRS resulted to difficulty in ascertaining the accuracy
and correctness of the funds Cash in Bank Balance at yearend. Further, errors
committed by the bank cannot be promptly corrected.

3.5. We recommend that the Municipal Accountant submit explanation to the

Audit Team why Bank Reconciliation Statements were not prepared.

3.6. We also recommend that the Municipal Accountant prepare and submit the
BRS of the Barangay within 10 days from receipt of Bank Statements in
order to have a reliable Cash in Bank Balance
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 6 of 22
Lacking Details or Supporting Documents for Distribution of Relief/Welfare Goods

4. The reports on the distribution of various relief goods amounting to

₱236,805.00 to the families/household affected by calamities were not
properly documented, and the related expense were erroneously recorded as
Food Supplies Expense instead of Welfare Goods for Distribution upon initial
recording and Welfare Goods Expense upon distribution, contrary to
Sections 2 and 4 of Presidential Decree (P.D.) No. 1445 and COA Circular
No. 2015-009, thus, the propriety of the program could not be ascertained
while the accounts Welfare Goods Expense and Food Supplies Expense were
misstated as at year end.

4.1. Section 2 of P.D. 1445 states that:

“It is the declared policy of the State that all resources of the government
shall be managed, expended or utilized in accordance with law and
regulations, and safeguard against loss or wastage through illegal or
improper disposition, with a view to ensuring efficiency, economy and
effectiveness in the operations of government. The responsibility to take
care that such policy is faithfully adhered to rests directly with the chief
or head of the government agency concerned.”

4.2. While Section 4 of P.D. 1445 provides, that financial transactions and operations
of any government agency shall be governed by certain fundamental principles.
Paragraph 6, thereof, states that claims against government funds shall be
supported with complete documentation.

4.3. Moreover, COA Circular No. 2015-009 dated December 1, 2015 prescribed the
Revised Chart of Accounts for LGUs to conform with the adoption of the Phil.
Public Sector Accounting Standard (PPSAS). On recording of expenses, the
following accounts were prescribed to be used by LGUs:

Welfare Goods for Distribution

1-04-02-020
Debit

This account is used to record the cost of goods for distribution to people affected
by calamities/disasters/ground conflicts such as canned goods, blankets, mats,
kitchen utensils, flashlights and other similar items. Credit this account for
issuance to end-users, transfers or write-down.
Welfare Goods Expenses
5-02-03-060
Debit

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 7 of 22

 This account is used to record the cost of goods issued/distributed to people
affected by calamities/disasters/ground conflicts such as canned goods, blankets,
mats, kitchen utensils, flashlights and other similar items. This also includes the
cost of food served to people affected by calamities/disasters/ground conflicts.
Food Supplies Expense
5-02-03-050
Debit

This account is used to record the cost of food issued to hospital/rehabilitation

patients, jail inmates and the like.

4.4. Audit of disbursements in CY 2019-2022 disclosed that the Barangay procured a

total of ₱236,805.00 goods for distribution. Details on the purchase of various
relief goods in response to calamities are as follows:
Table 6. Food Items and Other Relief Goods
Check Check Gross Check
Payee Particulars Remarks
Date No. Amount Amount
8 Sacks of Rice-
P17,600;

300 pcs of sardines-

no
Jeffrey M. P5,700.00;
distribution
03/19/2020 446696 Revelo 24,486.00 23,506.56
Sheet
Store 10 pcs of alcohol-
submitted
P850.00; &

7 pcs of bathing
soap- P336.00
28 Sacks of Rice-
P61,600;

500 pcs of sardines-

no
Jeffrey M. P9,500.00;
distribution
03/31/2020 446697 Revelo 76,044.00 73,002.24
Sheet
Store 60 pcs of biscuit-
submitted
P3,600.00; &

12 pcs of noodles-
P1,344.00
15 sacks of Rice-
P29,250.00;

5 boxes of sardines-
no
Jeffrey M. P9,000.00;
distribution
11/24/2021 583712 Revelo 45,000.00 44,100.00
Sheet
Store 5 boxes of noodles-
submitted
P4,050.00; &

30 ties of Top
Coffee-P2,700.00
12/27/2021 583724 Jeffrey M. 14 sacks of Rice- 41,800.00 40,964.00 no
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 8 of 22
 Check Check Gross Check
Payee Particulars Remarks
Date No. Amount Amount
P29,400.00;
distribution
Revelo 4 boxes of sardines-
Sheet
Store P7,600.00; &
submitted
6 boxes of noodles-
P4,800.00

18 Sacks of Rice-
With
P37,800;
distribution
Jeffrey M. sheet
5 boxes of sardines-
12/28/2022 583799 Revelo 49,475.00 48,485.50 submitted
P9,100.00; &
Store but lacks
information
3 boxes of noodles-
on quantity
P2,575.00

GRAND TOTAL ₱ 236,805.00 ₱230,058.30

4.5. Perusal of the submitted documents related to the distribution of the purchased
relief goods revealed that no distribution reports was submitted for the
procurement totaling ₱187,330.00 while the distribution reports submitted for the
procured goods totaling ₱49,475.00 do not contain information as to the quantity
of such goods received by the affected beneficiaries.

4.6. Moreover, it was also disclosed that the issuances of the above transactions were
erroneously recorded as Food Supplies Expense instead of Welfare Goods for
Distribution upon initial recording and Welfare Goods Expense upon distribution.

4.7. The non-submission and/or incomplete details of distribution list on the

distribution of the relief goods casts doubts on the regularity and even existence
of the program which aims to provide relief of the affected families, while the
erroneous entry of expense resulted in an overstatement of Food Supplies Expense
by ₱236,805.00 and an understatement of the Welfare Goods Expense by the same
amount.

4.8. We recommended that the Punong Barangay submit to the Audit Team for
review and evaluation the lacking reports on the distribution of relief goods
with complete details such as the name of the beneficiary, signature and the
items and quantity received.

4.9. We also recommended that the Bookkeeper record issuances of relief goods
not as Food Supplies Expense but as Welfare Goods Expense.

Non-disclosure of LDRRMF to the Notes to FS

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 9 of 22
5. There was no disclosure in the Notes to Financial Statements pertaining to
the amount and details of the unexpended balance of Local Disaster Risk
Reduction Management Fund (LDRRMF) amounting ₱259,927.00, contrary
to COA Circular No. 2012-002 dated September 12, 2012, thus additional
information value to the financial statements was not provided.

5.1. COA Circular 2012-002 dated September 12, 2012 was issued to prescribe
accounting and reporting guidelines for the LDRRMF of LGUs (including
BLGUs) and NDRRMF given to LGUs and Receipts from other sources.

5.2. Whereas, Section 5.1.16 of the same Circular states “The amount and details of
the unexpended balance of LDRRMF shall be discussed in the Notes to Financial
Statements”. A sample of disclosure was attached as Annex D of the same
circular as shown below:

Annex D
Notes to the Financial Statements

Note____. Local Disaster Risk Reduction Management Fund (LDRRMF)

The LDRRMF represents the amount set aside by the LGU to support its
disaster risk management activities pursuant to R.A No.10121, otherwise known
as the Philippine Disaster Risk Reduction and Management Act of 2010.The
amount available and utilized during the year totaled ₱_________ and
₱_________ , respectively, broken down as follows:

5.3. Verification of amounts presented in the Annual Budget and Supplemental

Budgets prepared for Calendar Years 2019 to 2022 disclosed that the barangay
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 10 of 22
 appropriated a total amount of ₱359,442.00 as 5% LDRRMF. Moreover, the
report showing the balances and list of utilizations made in CYs 2019-2022,
signed by the Barangay Bookkeeper and certified correct by the Municipal
Accountant, states that the utilizations of the fund totalled ₱99,515.00, while
continuing balance of the 5% BDRRMF balance as of December 31, 2018 had
zero balance. Details are shown in Table 7.

Table 7. BDRRMF balance

Amount
Particular
CY 2019 CY 2020 CY 2021 CY 2022 TOTAL
Beginning
₱ - ₱ 71,817.00 ₱ 136,339.00 ₱ 223,434.00
Balance
Current
71,817.00 81,622.00 87,095.00 118,908.00 ₱359,442.00
Appropriation
Utilization - 17,100.00 - 82,415.00 ₱ 99,515.00
Balance as of
₱ 71,817.00 ₱ 136,339.00 ₱ 223,434.00 ₱ 259,927.00
year end

5.4. As can be seen in Table 7, the Barangay Local Government Unit of San Juan,
Mahaplag, Leyte has still a significant amount of BDDRMF balance of
₱259,927.00 as of December 31, 2022. However, review of the Notes to
Financial Statements disclosed that the amount and details of the unexpended
balance of LDRRMF were not discussed.

5.5. The Notes failed to disclose the amount available, utilized and balances during the
four- year period under audit, CYs 2019, 2020, 2021, and 2022. The balance
should have been discussed in a detailed manner so as to give additional value to
the financial statements.

5.6. We recommend that the Municipal Accountant disclose in the succeeding

Notes to Financial Statements the details of the unexpended balance of the
BDRRMF using the format provided in COA Circular No. 2012-002 dated
September 12, 2012.

Utilization of BDRRMF

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 11 of 22

6. Disbursements from CY 2019 to CY 2022 amounting to ₱99,515.00 were paid
from BDRRM Fund despite the non-preparation and non-submission of the
LDRRMF Investment Plan by the BDRRMO, contrary to Sections 5.1.2 and
5.1.3.2 of COA Circular No. 2012-002 which resulted to irregular
expenditures.

6.1. Section 5.1.2 of COA Circular 2012-002 states that, a Local Disaster Risk
Reduction and Management Fund Investment Plan (LDRRMFIP) for the DRRM
program shall be prepared annually. It shall present the 30% allocation for QRF in
lump sum and the allocation for disaster mitigation, prevention and preparedness
with details as to projects and activities to be funded. The LDRRMFIP shall also
include under a separate caption, the list of projects and activities charged to the
unexpended LDRRMF of previous years.

6.2. Section 5.1.3.2 of the same circular states that the release and use of LDRRMF
shall be supported by LDRRMFIP for projects and activities listed in the
approved plan as incorporated in the local development plan and annual work and
financial plan.

6.3. For CY 2019-2022, the Barangay has a total appropriation of ₱359,442.00 (see
details in table 7, finding no. 5) for its BDRRMF including previous years
balance. It was, however, noted that a Work and Financial Plan was prepared
annually and not the prescribed BDRRMFIP. The said document lacks
information on the Functional Classification (Gen. Public Services, Health,
H o u s i n g , Community Development); Schedule of Implementation (Starting
Date & Completion Date); Amount of Appropriation and classification whether
MOOE or Capital Outlay

6.4. Despite the absence of a duly approved BDRRMFIP, disbursements totaling

₱99,515.00 were incurred and paid from the BDRRMF. Details of the
disbursements are shown in Table 8.

Table 8. 5% DRRMF Utilizations

Check Check Gross Check
Payee Particulars
Date No. Amount Amount
GRCG 18 pcs of raincoats-
11/10/2020 530430 Builders and P9,000.00 and 18 pairs of 17,100.00 16,416.00
Enterprises boats- P8,100.00
30 pcs of Raincoat-
AG General P11,040.00; 30 pairs of
12/07/2022 583792 Merchandis boots- P12,600.00 and 30 32,940.00 31,175.36
e pcs of flashlights-
P9,300.00
18 Sacks of Rice- P37,800;
Jeffrey M.
5 boxes of sardines-
12/28/2022 583799 Revelo 49,475.00 48,485.50
P9,100.00; & 3 boxes of
Store
noodles- P2,575.00
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 12 of 22
 Check Check Gross Check
Payee Particulars
Date No. Amount Amount
GRAND TOTAL ₱ 99,515.00 ₱ 96,076.86

6.5. Without an approved LDRRMFIP, the Chairman Committee on Appropriation

had no basis for certifying the existence of available appropriations authorized for
the purpose. Thus, disbursements charged against LDRRMFIP were irregular. In
addition, the absence of an approved plan denotes that the procured items and
other activities were not approved by the other members of the LDRRM council
and based only on arbitrary decision of the requesting officials.

6.6. We recommend that the BDRRMO, through the Punong Barangay, convene
the LDRRM Council and prepare the LDRRMFIP which also includes PPAs
to be paid from previous years unexpended DRRMF annually as basis for the
use of the LDRRMF based on the priority programs, projects and activities
included in COA Circular 2012-002.

6.7. We also recommend that the Punong Barangay, Chairman Committee on

Appropriation, and Barangay Treasurer stop processing disbursements from
LDRRMF without the approved LDRRMFIP.

20% Development Fund

7. Balances from prior years completed programs and projects totaling

₱11,560.00 were not reverted and re-appropriated in CY 2022, contrary to
Section 322 of Republic Act No. 7160, hence, the Barangay was deprived of
additional funding for other important PPAs while constituents were
deprived of the benefits that could have been derived had the amount was re-
appropriated.

7.1. Section 322 of the Philippine Local Government Code provides:

SECTION 322. Reversion of Unexpended Balances of Appropriations,

Continuing Appropriations. - balances of appropriations authorized in the
annual appropriations ordinance shall revert to the surplus of the general fund
at the end of the fiscal year and shall not thereafter be available for
expenditure except by subsequent enactment. However, appropriations for
capital outlays shall continue and remain valid until fully spent, reverted or
the project is completed. Reversions of continuing appropriations shall not be
allowed unless obligations therefor have been fully paid or otherwise settled.

The balances of continuing appropriations shall be reviewed as part of the

annual budget preparation and the Sanggunian concerned may approve, upon
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 13 of 22
 recommendation of the local chief executive, the reversion of funds no longer
needed in connection with the activities funded by said continuing
appropriations subject to the provisions of this Section. (emphasis supplied)

7.2. Evaluation of the Annual and Supplemental Budgets of Barangay San Juan,
Mahaplag, Leyte disclosed that the Barangay appropriated the total amount of
₱1,431,314.00 as 20% Development Fund for CYs 2019-2022. Breakdown of the
appropriation is shown in Table 9.
Table 9. 20% DF Appropriation for CYs 2019-2022
Appropriation
Calendar Program/ Project Activity/
Year Description Supplemental
Annual Budget Total
Budget
Rehabilitation of Multi-
₱ 40,000.00 ₱ 40,000.00
Purpose Hall
Rehabilitation of Streetlight 30,000.00 30,000.00
Rehabilitation of Water
95,000.00 95,000.00
2019 System
Continuation of Construction 80,700.0 80,700.0
of Local Road 0 0
Rehabilitation of Health 40,000.0 40,000.0
Center 0 0
Sub-Total (2019) 285,700.00 0.00 285,700.00
Rehabilitation of Multi- 170,000.0
170,000.00
Purpose Hall 0
Rehabilitation of Streetlight 30,000.00 30,000.00
2020 rehabilitation of Water
60,000.00 60,000.00
System
Continuation of Construction
64,634.00 64,634.00
of Local Road
Sub-Total (2020) 324,634.00 0.00 324,634.00
Streetlight rehabilitated 47,157.00 47,157.00
2021 Water rehabilitated 100,000.00 100,000.00
Local road constructed 200,000.00 200,000.00
Sub-Total (2021) 347,157.00 0.00 347,157.00
Construction of Drainage
253,823.00 253,823.00
Canal
2022 Rehabilitation of Water
150,000.00 150,000.00
System
Installation of Streetlight 70,000.00 70,000.00
Sub-Total (2022) 473,823.00 0.00 473,823.00
Total Savings ₱1,431,314.00 ₱0.00 ₱1,431,314.00

7.3. Further, review of the project implementation and utilization of the same fund, the
Audit Team positively noted that all identified projects of the barangay as priority
projects for CYs 2019-2022 were all implemented as of December 31, 2022. Out
of the ₱1,431,314.00 appropriation, only ₱1,418,196.00 was utilized hence,
leaving a savings of ₱13,118.00 out of the 15 projects. Details of utilization and
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 14 of 22
 implementation are shown in Table 10 while comparison of appropriation and
disbursements are shown in Table 11.

Table 10. Utilization of 20% DF in CY 2019-2022

Gross Check
Check Date Check No. Payee Particulars
Amount Amount
Materials for
AG General
02/18/2019 446626 Rehabilitation of 24,500.00 23,187.50
Merchandise
Streetlight
Labor Payroll for
Anabella M.
02/26/2019 446635 Rehabilitation of 5,500.00 5,500.00
Villaflor
Streetlight
Materials for
AG General
02/26/2019 446634 Rehabilitation of 30,100.00 28,487.50
Merchandise
Multi-purpose Hall
Labor Payroll for
Anabella M.
02/26/2019 446636 Rehabilitation of 9,900.00 9,900.00
Villaflor
Multi-purpose Hall
Materials for
AG General
07/11/2019 446648 Rehabilitation of 37,985.00 35,950.10
Merchandise
Water System
Materials for
AG General
07/11/2019 446649 Rehabilitation of 28,755.00 27,214.56
Merchandise
Health Center
Labor for
Anabella M.
08/07/2019 446661 Rehabilitation of 10,000.00 10,000.00
Villaflor
Water System
Labor for
Anabella M.
08/07/2019 446660 Rehabilitation of 11,200.00 11,200.00
Villaflor
Health Center
Materials for
AG General Continuation
11/25/2019 446666 48,938.00 46,316.33
Merchandise Construction of
Local Road
Labor for
Anabella M. Continuation
02/04/2020 446687 21,000.00 21,000.00
Villaflor Construction of
Local Road
Materials for
AG General
03/18/2020 446694 Construction of 40,308.00 38,148.65
Merchandise
Road
Labor for
Anabella M.
03/31/2020 446698 Construction of 24,300.00 24,300.00
Villaflor
Road
AG General Materials for repair
07/07/2020 446698 31,585.00 29,892.96
Merchandise of water system
AG General Materials for repair
07/07/2020 530410 21,500.00 20,348.22
Merchandise of Street Light

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 15 of 22

 Gross Check
Check Date Check No. Payee Particulars
Amount Amount

Anabella M. Labor for repair of

08/07/2020 530412 15,400.00 15,400.00
Villaflor water system

Anabella M. Labor for repair of

08/07/2020 530413 8,500.00 8,500.00
Villaflor Street Light
Materials for repair
AG General
11/10/2020 530427 of water system at 40,400.00 38,235.72
Merchandise
sitio Agutagon
Labor for repair of
Anabella M.
02/09/2021 530457 water system at sitio 19,600.00 19,600.00
Villaflor
Agutagon
Materials for
AG General
04/06/2021 530462 completion of water 49,930.00 47,255.19
Merchandise
system
Labor for
Anabella M.
05/27/2021 530470 completion of water 39,900.00 39,900.00
Villaflor
system
AG General Materials for repair
07/02/2021 530477 35,900.00 33,976.79
Merchandise of Brgy. Street Light
Anabella M. Labor for repair of
07/23/2021 530481 11,200.00 11,200.00
Villaflor Street Light
Labor for
Anabella M. completion of water
07/23/2021 530482 10,170.00 10,170.00
Villaflor system for Hauling
Materials
Materials for
AG General
11/05/2021 583704 Rehabilitation of 132,750.00 125,638.40
Merchandise
Multi-purpose Hall
Materials for
AG General
11/05/2021 583705 Rehabilitation of 133,710.00 126,546.97
Merchandise
Concrete Pathway
Labor for
Anabella M.
11/24/2021 583710 Rehabilitation of 66,000.00 66,000.00
Villaflor
Concrete Pathway
Labor for
Anabella M.
12/15/2021 583722 Rehabilitation of 36,900.00 36,900.00
Villaflor
Multi-purpose Hall
AG General Materials of Brgy.
07/14/2022 583762 49,500.00 46,848.22
Merchandise Street Light
Anabella M. Labor of Brgy.
07/26/2022 583764 20,450.00 20,450.00
Villaflor Street Light
Materials for
AG General
09/14/2022 583777 Construction of 186,150.00 176,177.68
Merchandise
Drainage Canal
Materials for
AG General
09/14/2022 583778 Rehabilitation of 109,465.00 103,600.81
Merchandise
Water System
10/06/2022 583781 Anabella M. Labor for 66,600.00 66,600.00
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 16 of 22
 Gross Check
Check Date Check No. Payee Particulars
Amount Amount
Construction of
Villaflor
Drainage Canal
Labor for
Anabella M.
10/06/2022 583782 Rehabilitation of 40,100.00 40,100.00
Villaflor
Water System
GRAND TOTAL ₱ 1,418,196.00 ₱ 1,364,545.60

Table 11. Appropriation vs. Project Cost

Calenda Appropriatio Project Cost/
Project Savings Remarks
r Year n Utilization
Rehabilitation
₱ ₱ Fully
of Multi- ₱ 40,000.00
40,000.00 0.00 Implemented
Purpose Hall
Rehabilitation Fully
30,000.00 30,000.00 -
of Streetlight Implemented
rehabilitation
Fully
of Water 95,000.00 94,970.00 30.00
Implemented
2019 System
Continuation
of 80,700. 69,93 10,76 Fully
Construction 00 8.00 2.00 Implemented
of Local Road
Rehabilitation
40,000. 39,95 Fully
of Health
00 5.00 45.00 Implemented
Center
Sub-Total (2019) 285,700.00 274,863.00 10,837.00
Rehabilitation
169,65 35 Fully
of Multi- 170,000.00
0.00 0.00 Implemented
Purpose Hall
Rehabilitation 30,00 Fully
30,000.00
of Streetlight 0.00 - Implemented
rehabilitation
2020 60,00 Fully
of Water 60,000.00
0.00 - Implemented
System
Continuation
of 64,60 Fully
64,634.00
Construction 8.00 26.00 Implemented
of Local road
Sub-Total (2020) 324,634.00 324,258.00 376.00
Streetlight Fully
47,157.00 47,100.00
rehabilitated 57.00 Implemented
2021 Water Fully
100,000.00 100,000.00
rehabilitated - Implemented
Local road 200,000.00 199,710.00 29 Fully
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 17 of 22
 Calenda Appropriatio Project Cost/
Project Savings Remarks
r Year n Utilization
constructed 0.00 Implemented
Sub-Total (2021) 347,157.00 346,810.00 347.00
Construction
1,07 Fully
of Drainage 253,823.00 252,750.00
3.00 Implemented
Canal
Rehabilitation
2022 43 Fully
of Water 150,000.00 149,565.00
5.00 Implemented
System
Installation of Fully
70,000.00 69950
Streetlight 50.00 Implemented
Sub-Total (2022) 473,823.00 472,265.00 1,558.00
₱1,418,196.0
Total Savings ₱1,431,314.00 ₱13,118.00
0

7.4. As can be seen in Table 11, savings totaling ₱11,560.00 was made out of the
implementation of the two completed priority projects under 20% Development
Fund as of December 31, 2021. Since the projects are already completed, the
amount of ₱11,560.00 could have been reverted/re-appropriated in CY 2022 to
other 20% DF PPAs.

7.5. Since balances from previously completed projects was not re-appropriated and
remained unutilized, the Barangay was deprived of additional funding for other
important PPAs while constituents were deprived of the benefits that could have
been derived had the amount was appropriated.

7.6. We recommend that the Punong Barangay and Barangay Treasurer re-
appropriate the balances of completed projects amounting ₱13,118.00 as of
December 31, 2022, to other PPAs so that funds are optimally utilized to help
achieve the desirable socio-economic development and environmental
outcomes of the LGU.

Release of 10% SK Fund share

8. Release of 10% Sangguniang Kabataan share totaling ₱306,879.00 were not

made within the prescribed period and were not supported by Official
Receipts issued by the Sangguniang Kabataan Treasurer while shares
totaling ₱410,218.20 were still not released to the SK contrary to Sections 3.8
and 5.1.4 of the Handbook on the Financial Transactions of the Sangguniang
Kabataan(HFTSK) and Section 4.6 of Presidential Decree (P.D.)No. 1445,
thus, funds intended for SK may be used by the barangay for other purposes
and was not properly documented.

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 18 of 22

8.1. Section 3.8 of the Handbook on the Financial Transactions of the Sangguniang
Kabataan provides that revenue generated from sources expressly authorized
under RA No. 10742 and collections thereof shall at all times be acknowledged
properly by issuing an Official Receipt (OR). Revenue collected by the SK
through direct deposit to the SK’s bank account shall be supported with a copy of
Validated Deposit Slip (VDS)/Credit Memo (CM) in lieu of OR.

8.2. Moreover, section 5.1.4 of the same handbook provides that upon receipt of the
monthly internal revenue allotment (IRA) of the barangay, the Punong Barangay
shall automatically release not later than five (5) working days without further
delay the share of the SK equivalent to ten percent of the general fund of the
barangay by issuing check in the name of the SK for deposit to the latter’s bank
account.

8.3. In addition, section 4.6 of P.D.1445 states that Claims against government funds
shall be supported with complete documentation.

8.4. For CY 2019-2022, the Barangay has released a total of ₱306,897.00 of the 10%
SK share. However, as of to date, shares totaling ₱410,218.20 were still not
released to the SK as required by the Department of Budget and Management
(DBM), Department of the Interior and Local Government (DILG) and National
Youth Commission (NYC) Joint Memorandum Circular (JMC) No. 1, s. 2019
dated January 23, 2019). Details are shown in tables 12 and 13.
Table 12. Release of 10% SK share
Date Check # Particulars Amount
9/9/2020 530421 10% SK Shares 122,427.00
12/28/2020 530443 10% SK Shares 184,452.00
Total 306,879.00

Table 13. Unreleased 10% SK Shares

Monthly
10 %SK No. of TOTAL SK
IRA Released SK Unreleased SK
Year Share Mos. 10 % share
(a) Shares Shares
(a) (b) © (b*c)
2019 120,333.00 12,033.30 12 144,399.60 144,399.60
2020 135,181.00 13,518.10 12 162,217.20 306,879.00 (144,661.80)
2021 144,641.00 14,464.10 12 173,569.20 173,569.20
2022 197,426.00 19,742.60 12 236,911.20 236,911.20
Total ₱ 717,097.20 ₱ 306,879.00 ₱ 410,218.20

8.5. Moreover, it was disclosed that though the barangay has released some of the SK
shares for 2019 and 2021, it was not made monthly or within the prescribed
period which is not later than five (5) working days upon receipt of the monthly

AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 19 of 22

 internal revenue allotment (IRA) of the barangay as it were released in lump sum
as can be seen in table 13.

8.6. Furthermore, the said releases were not supported with Official Receipts issued by
the Sangguniang Kabataan Treasurer. In an interview with the Municipal
Accountant, the SK officials may not still be aware that their receipts of 10%
shares should be supported with official receipts and that they are yet to attended
the seminar on the Handbook on the Financial Transactions of the Sangguniang
Kabataan conducted by the Commission in which such policy is one of the
highlights to be discussed.

8.7. The delayed and non-release of SK shares exposes the risk of the fund being used
for other purposes while the Official Receipts issued by the SK Treasurer would
have supported the disbursements made by the barangay as proof of receipt by the
SK.

8.8. We recommend that the Barangay release the unreleased SK shares totaling
₱410,218.20 and ask for Official Receipt from SK Treasurer as their proof of
receipt and for future SK shares to be automatically released not later than
five (5) working days without further delay upon receipt of the monthly IRA
of the.

8.9. We further recommend that the Barangay Treasurer demand the SK

Treasurer for the issuance of Official Receipts of the above releases and
submit the same to the audit Team.

1% Allocation for Senior Citizen and PWD

9. No funds were appropriated for programs and projects for Senior Citizens
and Persons with Disabilities (PWD) in CY 2019 to 2022 which should be 1%
of the barangay’s IRA, contrary to DBM and DSWD Joint Circular No.
2003-01 dated April 28, 2003, thus depriving the elderly citizens in the
barangay the full benefits of the programs due them.

9.1. DBM-DSWD Joint Circular No. 2003-001 dated April 28, 2003 was issued to
prescribe guidelines for the implementation of Section 29 of the General
Appropriations Act of 2003 which states that the plans, programs and projects
intended to address the concerns of senior citizens and persons with disability
shall be integrated in the regular activities of the agencies. Sections 4.2 and 4.3
thereof directs all government agencies, departments, bureaus, offices,
commissions and state universities and colleges to allocate at least one percent
(1%) of their respective budget to be utilized in the implementation of

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 programs/projects/activities/services which will address the needs of older persons
and persons with disabilities (PWDs).

9.2 Our perusal of the Annual Budgets of the barangay disclosed that no funds were
appropriated for Senior Citizens and PWDs programs and activities for the
periods CY 2019, CY 2020, 2021 & CY 2022 as shown in Table 14.

Table 14. Fund for Senior Citizens and PWDs Programs/Projects

CY 2022 CY 2021 CY 2020 CY 2019

Estimated IRA 2,378,146.00 1,741,887.00 1,632,445.00 1,436,351.00
SHOULD BE - 1% of
IRA 23,781.46 17,418.87 16,324.45 14,363.51
ACTUAL
Appropriation 0.00 0.00 0.00 0.00
Lacking Appropriation 23,781.46 17,418.87 16,324.45 14,363.51

9.3. Without the necessary appropriation sanctioned by law, the elderly citizens and
PWDs of the barangay are deprived of the benefits of the programs which could
have been financed from the said amount.

9.4. We recommend that the Punong Barangay and its Council appropriate funds
in its annual budget for programs and projects benefitting Senior Citizens
and Persons with Disabilities (PWD) at an amount of no less than 1% of the
annual IRA as required by the Expanded Senior Citizen Act, R.A. No. 9994.

Lack of Appropriation for LCPC

10. No funds were appropriated in the CY 2019 to 2022 budget of the barangay
for the implementation of programs, projects and activities for the protection
of children, contrary to Republic Act No. 9344, thus protection of children’s
rights within the barangay is not strengthened.

10.1 Republic Act No. 9344 (Juvenile Justice and Welfare Act of 2006) adopts as a
policy the protection of the interests of children and promotes their physical,
moral, spiritual, intellectual and social well-being. The Act also recognizes the
rights of children to assistance, proper care and nutrition and special protection
from all forms of neglect, abuse, cruelty and exploitation, and other conditions
prejudicial to their development.

10.2 Section 15 of the said Act mandates the creation of Local Councils for the
Protection of Children (LCPC) in all levels of local government. It provides
further that 1% of the internal revenue allotment (IRA) of barangays,
municipalities and cities, shall be allocated for the strengthening and
implementation of the LCPC.
AOM No. 2023-001 Brgy. San Juan, Mahaplag, Leyte Page 21 of 22
10.3 Our perusal of the Annual Budget of the barangay disclosed that no funds were
appropriated for the implementation of programs, projects and activities (PPA)
intended for the Council for the protection and well-being of children although the
barangay has established and created their own LCPC. Based on the estimated
IRA for the noted budget years, the following could have been appropriated for
LCPC programs and activities:

Table 15. Available Funds for LCPC

CY 2022 CY 2021 CY 2020 CY 2019

Estimated IRA 2,378,146.00 1,741,887.00 1,632,445.00 1,436,351.00
SHOULD BE - 1% of IRA 23,781.46 17,418.87 16,324.45 14,363.51
ACTUAL Appropriation 0.00 0.00 0.00 0.00
Lacking Appropriation 23,781.46 17,418.87 16,324.45 14,363.51

10.4 Without the necessary budget and plan, the rights, interest and well-being of the
children in the barangay will not be protected, established and strengthened.

10.5 We recommend that the Punong Barangay include in its annual budget an
appropriation equivalent to 1% of its IRA intended for the protection and
welfare of the children in the barangay, identify and implement the
programs, projects and activities using the said fund pursuant to RA 9344.

May we have your comments on the foregoing audit observations within five (5)
calendar days from receipt hereof.

MA. SHIELA T. ELMIDO

State Auditor II
OIC- Audit Team Leader

SANTIAGO P. SEÑASE
State Auditor IV
OIC-Supervising Auditor

Proof of Receipt of AOM:

Name of Receiving Date
Officer Signature
Officer Received
Punong Barangay
Barangay Treasurer
Municipal Accountant
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