EXECUTIVE SUMMARY

I. Introduction

Talisay is a diverse, yet subtle city, rich in culture and heritage. It is a

center of learning, a tranquil community and an ideal haven for agricultural and
technological industries. The City is envisioned to become “The Next Wave City:
Center for Information Technology Industry in Negros by 2026.”

The City of Talisay came into existence by virtue of Republic Act No. 8489
signed by the President of the Republic of the Philippines on February 11, 1998,
converting the Municipality of Talisay, Negros Occidental into a component city to
be known as the City of Talisay.

The City Government is currently headed by Honorable Nilo Jesus Antonio

Neil E. Lizares III, as the City Mayor. He is supported by 13 elective officials, 396
permanent employees, 331 employees on casual status and 580 job order personnel.
Talisay City is classified as a fourth-class city, composed of 27 barangays. It is
located eight kms. north of Bacolod City.

Talisay City received the following recognition for the year 2019:

1. 1st Platinum Seal of Good Environmental Governance

2. Seal of child-Friendly Local Governance
3. Regional Grand Winner, Best PESO Employment Information System
(PEIS) Implementer

II. Financial Highlights

a. Sources and Application of Funds

During the year, the City realized a total gross revenue of

₱794,920,778.24 which is ₱73,371,816.66 or 10.17% higher than last year’s
income of ₱721,548,961.58. The total income is broken down as follows:

2019 2018 Increase/Decrease

Tax Revenue ₱205,566,423.01 ₱177,613,420.16 ₱27,953,002.85
Share from IRA 563,652,981.00 508,449,096.00 55,203,885.00
Other Share from
National Taxes 43,063.09 2,255,953.59 (2,212,890.50)
Service & Business
Income 20,992,038.09 19,574,886.11 1,417,151.98
Shares, Grants &
Donations 4,666,273.05 13,655,605.72 (8,989,332.67)
Total Income ₱ 794,920,778.24 ₱ 721,548,961.58 ₱ 73,371,816.66

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 Total operating expenditures incurred during the year at ₱667,746,041.96
has increased by ₱82,653,189.13 or 14.13% as compared to last year’s expenses of
₱585,092,852.83. The increase was caused by increases of ₱33,298,298.39 in
Personnel Services, ₱57,682,334.54 in MOOE and offsetted by the decrease of
₱8,323,468.78 in Non-Cash Expenses, and ₱3,975.02 in Financial Expenses.
Comparative breakdown of Expenditures is presented below:
Increase/
2019 2018 Decrease

Personnel Services ₱ 316,308,432.36 ₱ 283,010,133.97 ₱ 33,298,298.39

MOOE 338,071,965.06 280,389,630.52 57,682,334.54
Non-Cash Expenses 13,097,271.78 21,420,740.56 (8,323,468.78)
Financial Expenses 268,372.76 272,347.78 (3,975.02)
Total Expenses ₱ 667,746,041.96 ₱ 585,092,852.83 ₱ 82,653,189.13

b. Appropriations

The City appropriated ₱1,177,219,6607.84 comprised of ₱832,267,768.53

for CY 2019 current appropriations and ₱344,951,839.31 pertaining to continuing
appropriations, a decrease of ₱257,281,227.98 as shown below:

2019 2018 Increase

(Decrease)
Current Appropriations:
General Fund ₱ 751,198,502.60 ₱ 1,093,740,173.78 ₱ (342,541,671.18)
Special Educ. Fund 81,069,265.93 85,451,021.50 (4,381,755.57)
TOTAL ₱ 832,267,768.53 ₱ 1,179,191,195.28 ₱ 346,923,426.75

Continuing Appropriations:
General Fund ₱ 297,526,208.74 ₱ 216,306,966.83 ₱ 81,219,241.91
Special Educ. Fund 47,425,630.57 39,002,673.71 8,422,956.86
TOTAL ₱ 344,951,839.31 ₱ 255,309,640.54 ₱ 89,642,198.77
Total
Appropriations
for the Year ₱ 1,177,219,607.84 ₱ 1,434,500,835.82 ₱ (257,281,227.98)

c. Obligations

As of year-end, the total obligations for the current year totaled

₱832,267,768.53 consisting of ₱751,198,502.60, and ₱81,069,265.93 for the
General and Special Education Funds, respectively, while total continuing
obligations amounted to ₱426,018,105.24, consisting of ₱297,523,208.74 for
General Fund and ₱128,494,896.50 for Special Education Fund.

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 III. Scope of Audit

A financial and compliance audit on the accounts and operations of the City
of Talisay was conducted for the period ended December 31, 2019. The audit was
conducted to ascertain the propriety of financial transactions and compliance of the
City to prescribed rules and regulations. It was also made to ascertain the accuracy
of financial records and reports, as well as the fairness of the presentation of the
financial statements. A verification of the implementation of prior years’ audit
recommendations was also undertaken.

In compliance with unnumbered Memorandum dated July 3, 2019 of the

Assistant Commissioner, Local Government Sector, COA, Quezon City, the
following are the significant thrust areas that were looked into by the Audit Team,
viz:

1. 20% Development Fund

2. Local Disaster Risk Reduction Management Fund (LDRRMF)
3. Solid Waste Management
4. Job Order and Consultant

In addition to the above thrust areas, we conducted audit on the following

accounts:

1. Property, Plant and Equipment

2. Advances to Officers and Employees
3. Other Personnel Benefits
4. Assistance to Disadvantaged Individuals in Crisis Situation (AICS)
5. Special Education Fund (SEF)

A performance audit was likewise conducted on the programs and projects

funded by the City to determine the extent of implementation and to ascertain if
they are implemented economically, efficiently, and effectively.

IV. Auditor’s Opinion on the Financial Statement

The Auditor rendered a Qualified Opinion on the fairness of the presentation of

the financial statements of the City of Talisay, Negros Occidental, as of
December 31, 2019, due to the possible effect of any adjustments which might have
been made had the agency conducted complete physical inventory of its properties
valued at ₱999,631,247.11 and had reconciliation been undertaken by the General
Services Office (GSO) and the Accounting Office and resolved the discrepancy of
₱28,323,043.58 between the general ledger and property cards on Transportation
Equipment valued at ₱149,453,703.50 as against the Inventory Report of the General
Services Office (GSO) amounting to ₱121,130,659.92.

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 The inadequacy of its records as well as limitations in the scope of audit did not
permit the application of other alternative audit procedures to establish the validity of
the PPE accounts, as discussed in detail in Part II of the report.

V. Summary of Significant Findings and Recommendations

1. The reliability of the carrying value of Property, Plant and Equipment (PPE)
accounts totaling ₱999,631,247.11 or 51.36% of total assets at year-end is
doubtful due to continuous failure to conduct physical inventory, contrary to
Section 124 on the Manual of the New Government Accounting System
(MNGAS) for LGUs, Volume I.

We recommended that:

a) The City Inventory Committee complete the conduct of physical count of

all City’s PPE so they could submit the complete Report on the Physical
Count of Property, Plant and Equipment (RPCPPE) not later than January
31 of each year pursuant to Section 124 of the MNGAS for LGUs,
Volume I;

b) The City Accountant and the GSO to implement regular reconciliation of

their records and undertake specific measures to eliminate the
discrepancies between the two records; and

c) The City Accountant and the GSO maintain updated PPE ledger and
property cards, respectively so reconciliation of the two records could be
done easily.

2. The City granted Assistance to Individuals in Crisis Situation (AICS) totaling

₱1,388,666.12 to individuals and families in crisis situation or difficult
circumstances without providing its own guidelines on the use of the City’s
fund to support the implementation of the program.

We recommended that the City Mayor propose for approval to the Sangguniang
Panlungsod specific guidelines on the implementation of the Assistance to
Individuals in Crisis Situation using as basis the guidelines issued by the DSWD
under DSWD Memorandum Circular No. 011.

3. The City of Talisay failed to establish the specific legal authority in granting
the CY 2019 Other Personnel Benefit (OPB) totaling ₱25,434,000.00 to its City
Officials and Employees, which is not in accordance with COA Circular
No. 2013-003 dated January 30, 2013.

We recommended that the City of Talisay submit specific law, other statutory
authority, or rules and regulations of competent authority expressly authorizing
such payment of additional benefit to its officials and employees pursuant to COA
Circular No. 2013-003 dated January 30, 2013. Otherwise, such payment could be
considered wanting of legal basis.

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4. The City utilize the Local Disaster Risk Reduction and Management Fund
(LDRRMF) totaling ₱43,201,168.65 under the Special Trust Fund and the
current year Mitigation Fund mostly for trainings and repair and
maintenance of drainage, depriving implementation of other priority projects
included in the plan.

We recommended that the City Mayor:

a) Instruct the DRMM Council to prepare a comprehensive LDRRM Plan that

aims to strengthen the capacity of City, to build disaster resilience of
communities and institutionalize measures of reducing risks and enhance
disaster preparedness and response capabilities;

b) Direct DRRM and other Implementing Offices to properly utilize the

LDRRMF pursuant to the requirements of RA No. 10121 and to use the
LDRRM plan as basis in the execution of projects and programs and refrain
charging unplanned projects under the Mitigation Fund unless the plan was
revised;

c) Require the DRRM Council to prepare a revised DRRMF plan for the
unexpended prior years’ LDRRMF balance for new projects and expenditures
items that will support risk reduction and management activities; and

d) Instruct the City Accountant to revert back to the unappropriated Surplus of the
GF, the unexpended balance of the LDRRMF which could be utilized for other
social services after enactment by the Sanggunian.

5. The identified programs, projects and activities (PPA) totaling ₱112,026,662.20

under the approved 20% Development Fund (DF) including supplemental
budget of ₱703,934.00 were described in generic terms and subsequent charges
against the fund were not supported with prior approval from Sangguniang
Panlungsod (SP) contrary to COA Memorandum No. 2010-014 dated
April 22, 2010.

We recommended that the City Mayor:

a) Require the City Development Council (CDC) to prepare and include specific
program, projects and activities that partakes the nature of investments and
capital expenditures in the 20% Development Fund Plan pursuant to Item 2.3
of JMC No. 2017-01 dated February 22, 2017; and

b) Secure first approval or authorization from the Local Sanggunian prior to

implementation of programs/projects/activities funded out of the lumpsum
appropriation under the 20% Development Fund pursuant to COA
Memorandum No. 2010-014.

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6. Cash advances totaling ₱8,949,655.00 were granted to the eight Special
Disbursing Officers for the payments of foods/meals and other related
materials for the different trainings and school activities charged against the
Special Education Fund (SEF) instead of paying the same through checks,
contrary to Section 40, Manual on New Government Accounting (MNGAS) for
LGUs, Vol. I and general guideline no. 2 of COA Circular No. 97-002 dated
February 10, 1997.

We recommended that the Local School Board:

a) Follow the procurement procedures prescribed under the Implementing Rules

and Regulations of RA No. 9184 in all its procurement charged against the
SEF pursuant to Item 6.3 of JC No. 1, series of 2017;

b) Discontinue the grant of cash advances to Special Disbursing Officers for the
procurement needs funded by the SEF and adhere to the regulation that all
payments must be made by check pursuant to Section 40 of the MNGAS for
LGUs and guideline no. 2 of COA Circular No. 97-002 dated
February 10, 1997;

c) Authorize only the City Treasurer to disburse funds from the SEF pursuant to
the budget prepared and in accordance with existing rules and regulations
provided under Section 99 of RA No. 7160 or the Local Government Code;
and

d) Allocate and utilize the SEF on the priority programs and projects provided
under Section 272 of RA No. 7160 and refrain utilizing the fund for seminars
and trainings since they are not priority expenses chargeable to the SEF
pursuant to Item 4.0 of Dep ED, DBM and DILG Joint Circular (JC) No. 1,
series of 2017 January 17, 2017.

VI. Status of Suspensions, Disallowances and Charges

The audit suspensions and disallowances as of December 31, 2019

amounted to ₱33,023,575.15 and ₱915,960.00, respectively, with no Notice of
Charge issued during the year.

VII. Status of Implementation of Prior Year’s Audit Recommendations

Of the 21 recommendations contained in the prior years’ audit report, eight

were fully implemented, nine were partially implemented and four remained
unimplemented.

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