EXECUTIVE SUMMARY

Introduction

The Municipality of General Mariano Alvarez, Cavite is considered as the

youngest town in the Province of Cavite. It was created by virtue of Parliamentary Bill
No. 681 and approved under Batas Pambansa Blg. 76 on June 13, 1986. From its humble
beginning as a 4th class municipality, it became a first class municipality in July 2005. It is
located some 34 kilometers south of Manila and composed of 27 barangays with a total
estimated population of 200,000.

Financial Highlights

For CY 2014, the Municipality of General Mariano Alvarez generated a total

income of P236,859,269.80 from local taxes, permits and licenses, service and business
income and internal revenue allotment. The total funds utilized for the year amounted
to P207,015,451.52 out of the total appropriation of P234,254,799.10.

The total assets, liabilities, government equity, income and expenses for CY 2014
compared with that of the preceding year are as follows:

CY 2014 CY 2013 (Decrease)

Assets P 216,642,912.81 P 173,347,798.33 P 43,295,114

Liabilities 90,956,955.90 51,229,432.35 39,727,524
Equity 125,685,956.91 122,118,365.98 3,567,591
Income 236,859,269.80 215,573,280.97 21,285,989
Expenses 197,953,748.70 177,154,125.84 20,799,623

i
Major Accomplishments

We noted the following major accomplishments of the Municipality in CY 2014:

PROGRAMS/PROJECTS/ACTIVITIES TARGETS ACCOMPLISHMENTS

Implemented Tree Planting Law

Implementation of MRF Facility 1 100%
Distribution of Shading and Fruit trees 1 100%
Seed Distribution 1 100%
Massive Anti-Rabbies Vaccination 1 100%
Implementation of Plastic Banning Ordinance 1 100%
Conducted Brangay training on Disaster
1
Preparedness Contigency Plan Formula 100%
Construction of Deep Well 1 100%
Repair of Electrical Installation at Municipal Plaza 1 100%
Construction of San gabriel II District Office (Phase 1 100%
Construction of 400 Apartment-type Niche 1 100%
Completion of Compehensive Land Use Plan
(CLUP) for submission to SB Provincial and SB 1
GMA for approval 100%
Renovation of Mayor's Office 1 100%
Construction of National Child Development Center 1 100%
Improvement and Extension of Multi-Purpose Hall
1
San Jose Community High School 100%
Building Improvement of New RHU Bulding 1 100%
Access Road of MRF Cluster 1 1 100%
Human Bone Temporary Storage 1 100%
Road Concreting infront of MAGRA Central Market 1 100%

Scope of Audit

Financial, compliance and value for money audits were conducted on the accounts
and operations of the Municipality of General Mariano Alvarez, Cavite for Calendar
Year 2014. The audit was conducted to ascertain the fairness of the presentation of the
financial statements and compliance of the Municipality to laws, rules and regulations as
well as the economical, efficient and effective utilization of resources.

Audit Opinion on the Financial Statements

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

statements of the Municipality as forty-three percent (43%) or P67,296,802.87 of the
year-end balance of Property, Plant and Equipment is not supported with appropriate
accounting and property records, thus, casting doubts on the existence and accuracy of
the account. The absence of records and documents did not allow the Audit Team the
application of alternative audit procedures to determine the accuracy of the balance of the
PPE accounts.

ii
Significant Audit Observations and Recommendations

For the exception cited above, we recommended that the Inventory Committee
prioritize completion of the physical inventory taking and the preparation and submission
of a complete and accurate Report on the Physical Count of Property, Plant and
Equipment (RPCPPE).

Other significant observations and recommendations are as follows:

1. Cash balance of P21,057,962.42 in all funds as of year-end was not sufficient to

cover the existing current obligations and the unutilized balances of the 20
percent Development Fund and Calamity Fund totaling P38,442,257.03, resulting
in cash deficit of P17,384,294.61 contrary to Section 337 of Republic Act (RA)
No. 7160.

We recommended that the Municipal Budget Officer, Accountant and Treasurer

exercise diligence, prudence and proper control in the disposition of government
funds and limit the expenditures within the total income realized during the year
to avoid incurrence of cash deficit and to find ways to cover the cash deficit with
the collections in the ensuing year.

We also recommended that the Municipal Treasurer ensure that funds received for
a particular purpose is made available and spent only for specific purpose for
which the trust was created or the funds received.

2. The procedures in the grant, utilization and liquidation of cash advances were not
in accordance with the provisions of COA Circular No. 97-002, thus, resulting in
accumulation of unliquidated cash advances amounting to P6,905,306.51 as of
December 31, 2014.

We recommended that the Municipal Accountant ensure strict adherence to the

guidelines in the granting, utilization and liquidation of cash advances to prevent
accumulation of the same. Specifically, the Municipal Accountant and Municipal
Treasurer should see to it that:

1) No Additional cash advances are granted to officials and employees prior

to settlement and accounting of previous advances;

2) No Elected officials will be granted cash advances aside from official

travel;

3) Cash advances are reported as soon as the purpose/s for which these were
given have been served;

4) Cash advances are liquidated before the end of the year;

iii
 5) An employee with outstanding cash advance who is no longer in the
service and connected with the municipal government be reminded to
settle her unliquidated cash advances immediately; and

6) Only bonded accountable officers are granted cash advances for other
special activities and programs to be undertaken by the Municipality.

3. Fourteen(14) Unserviceable vehicles with a net book value of P2,851,267.00

were still kept at the motor pool of the Municipality and remained not disposed
of, contrary to Section 79 of Presidential Decree No. 1445, resulting in the
overstatement of the Property, Plant and Equipment account by the same amount
and exposure of the properties to further deterioration.

We recommended that the General Services Officer facilitate the immediate

disposal of the unserviceable motor vehicles and request the Municipal Engineer
to appraise the serviceability of the existing motor vehicles.

We also recommended that the Municipal Mayor consider the procurement of

brand new service vehicles and replacement of those which are beyond economic
repair, if funds are available, to minimize expenses in the repairs of motor
vehicles and to reduce expenses for gasoline, oil and lubricants.

4. Trust collections due the BIR, GSIS, PAG-IBIG and PHILHEALTH accounted as
Inter-agency Payables totaling P1,993,504.98 were not yet remitted as of
December 31, 2014 and of the total amount P1,090,970.08 pertained to prior
years’ deductions which could not be remitted as there were no available
records to provide adequate information as to the details of the deductions made.

We recommended that the Municipal Accountant and Municipal Treasurer remit

all the withheld funds due the BIR, GSIS, PAG-IBIG and PHILHEALTH within
the prescribed period to enable the concerned agencies to use the needed funds for
their operations in a timely manner. We also recommend that the Municipal
Accountant conduct detailed review and analysis on the long outstanding accounts
and coordinate with the concerned agencies for the reconciliation of
records/accounts to facilitate the immediate remittance of the amount due them.

5. Procurement of goods and services amounting to P6,138,522.08 were made on

reimbursement basis, in violation of Section 7 of Republic Act No. 9184 and
Section 2.2 of COA Circular No. 97-002 dated February 10, 1997, thus, the
purpose of extending equal opportunity to enable private contracting parties who
are eligible and qualified to participate in public bidding was not met.

We recommended that the Municipal Mayor instruct the concerned department

heads to (1) limit the procurement of goods and services on a reimbursement
basis, unless the circumstances warrant its application; (2) see to it that the
documentary requirements such Certificates of Emergency Purchase and

iv
 completely dated and filled-up Acceptance and Inspection Report (AIR), Report
of Waste Materials, Pre-Repair Inspection Report and Summary of Expenses are
attached to the Disbursement Voucher (DV), where applicable; (3) secure at least
three (3) price quotation from known suppliers if reimbursement could not be
avoided.

6. Disbursements totaling P17,955,202.37 with appropriate expense accounts were

erroneously charged to Other Maintenance and Other Operating Expenses (969),
thus affecting the fair presentation of the appropriate expense accounts in the
financial statements as required under COA Circular No. 2004-008 dated
September 20, 2004.

We recommended that the Municipal Budget Officer and the Municipal

Accountant see to it that appropriate expense accounts are used in the recording
and charging of transactions incurred by the Municipality for fair presentation of
the related accounts in the financial statements.

7. Various transactions involving a total amount of P98,070,715.37 were paid

without complete documentation as required under Section 4 (6) of Presidential
Decree No. 1445 and Section 474 b(5) of the Local Government Code, thus
casting doubts on the validity and propriety of the expenses incurred for Calendar
Year 2014.

We recommended that the Municipal Accountant and Municipal Treasurer ensure

that all the required supporting documents are duly signed and attached to the
Disbursement Vouchers before payment to facilitate review of the validity/
propriety of the disbursements and avoid audit suspension and/or disallowance.

8. The Municipality did not prepare the Project Procurement Management Plan
(PPMP) and Annual Procurement Plan (APP) for Calendar Year 2014 as required
under Sections 7.1, 7.2 and 7.3.3 of the Implementing Rules and Regulations
(IRR)-A of Republic Act No. 9184, thus proper planning and monitoring of the
Programs, Activities and Projects (PAPs) to be prioritized of the agency could
not be ascertained.

We recommended that the Municipal Budget Officer and the BAC Chairman
ensure that the required Project Procurement Management Plan (PPMP) and
Annual Procurement Plan (APP) are prepared and submitted before any
procurement of goods, services and civil works is undertaken to properly plan
and monitor the priority projects of the Municipality for a particular budget year.

9. Municipal Officials including Sangguniang Bayan (SB) members and some

Department Heads who are assigned or who use government motor transportation
are still receiving their regular monthly Transportation (TA) in full, contrary to
Section 8.2.1 of Local Budget Circular (LBC) No. 103 dated May 15, 2013.

v
 We recommended that the Municipal Officials including Sangguniang Bayan
(SB) Members and some department heads who are assigned or who use
government motor vehicles stop receiving regular monthly Transportation
Allowance (TA) in full. We also recommended that the practice of allowing the
issuance of fuel to privately owned motor vehicles be stopped immediately to
avoid audit suspensions and/or possible disallowance.

10. Eligibility of the participating and winning bidders cannot be evaluated due to the
non-submission of the bidding documents, particularly the sealed envelopes
marked as Class “A” Documents representing legal, technical and financial
capabilities of the contractor/supplier, thus legal personality and capacity to
undertake the contract cannot be assured.

We recommended that the BAC Chairman and the BAC Secretariat see to it that
all documents supporting the eligibility checklists are attached to the
Disbursement Vouchers to facilitate evaluation of legal personality and capacity
of all participating and winning bidders.

11. The Office of the Municipal Vice-Mayor reimbursed meals and snacks partake by
members of the Sanggunian Bayan during weekly sessions, committee meetings
and/or special sessions amounting to P140,851.18 and P14,796.29, respectively
while the amount of P122,043.21 were claimed without specific purpose,
contrary to Articles 454, paragraph j, Rules and Regulations Implementing the
Local Government Code of 1991.

We recommended that the Municipal Vice-Mayor refrain from reimbursing meals

and snacks during their regular and special sessions and ensure that the monthly
Representation Allowance (RA) granted to the office of the Sangguniang Bayan
are spent for their meals and snacks during their sessions and for the
entertainment of their clients and visitors. We also recommended that
reimbursement of meals and snacks without specific purpose and not for the
general welfare of the constituents should be stopped immediately.

12. The 20% Development Fund and collections from market operations of the
Municipality were deposited with Philippine National Bank, Silang, Cavite
branch, a private bank, inconsistent with the Department of Finance (DOF)
Department Order No. 27-05 dated December 09, 2005.

We recommended that the Municipal Treasurer immediately seek the approval of

the Department of Finance to continue maintaining deposits with PNB - Silang,
Cavite or coordinate with concerned municipal officials to facilitate the transfer of
the funds from PNB to LBP or DBP.

13. Proper evaluation and review of documents presented by the suppliers of drugs
and medicines were not closely undertaken by the members of the Bids and
Awards Committee (BAC), resulting in the non-submission of Certificates of

vi
 Product Registration (CPR) as required under Sections 29.1 and 29.2 of Republic
Act No. 9184.

We recommended that the Bids and Awards Committee (BAC) ensure that all
medicines and drugs procured by the municipality are covered with Certificates of
Product Registration (CPR) and see to it that proper post-qualification process is
observed and other appropriate licenses and permits required by law are submitted
and stated in the BDS.

14. The Gender and Development (GAD) Budget of the Municipality was not
equivalent to at least 5% of the total appropriation for Calendar Year 2014, thus
affecting the implementation of GAD plans, programs, projects and activities as
required under Executive Order No. 273 dated September 8, 1995 and PCW-
NEDA-DBM Joint Circular No. 2012-01.

We recommended that the Municipal Budget Officer and the GAD- Chairperson-
Focal Point System ensure that the Gender and Development (GAD) Budget of
the Municipality is equivalent to at least 5% of total appropriation as required
under Executive Order No. 273 dated September 8, 1995 and PCW-NEDA-
DBM Joint Circular No. 2012-01.

15. Disbursements amounting to P5,160,155.45 charged to Gender and Development

(GAD) Fund were not supportive of gender issues in the Municipality, thus
affecting the effective implementation of other GAD programs, projects and
activities included in the GAD Plan for Calendar Year 2014, as required under
RA No. 7192.

We recommended that the OIC-Municipal Budget Officer and Chairperson, GAD

Focal Point System see to it that all programs, projects and activities included in
the GAD Plan are supportive of the gender issues in the Municipality as required
under RA No. 7192.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 23 prior year’s audit recommendations embodied in the 2013 Annual Audit
Report, ten were fully implemented, nine were partially implemented and four were not
implemented by the Municipality.

vii