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: November 6, 2023

AUDIT OBSERVATION MEMORANDUM (AOM)

For: HON. NOEL C. OJEDA

Punong Barangay
Barangay Can-aporong
Abuyog, Leyte

Attention: EVANGELINE H. ARIAS

Barangay Treasurer

JUDITH A. BRILLO
Barangay Kagawad-CCA

MARIVIC BUGAL
Barangay Bookkeeper

MICHELLE L. EFREN
Municipal Accountant

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

Property, Plant and Equipment

1. The accuracy of the Barangay’s reported Property, Plant and Equipment

(PPE) accounts aggregating ₱4,544,848.00 as of December 31, 2022 cannot be
confirmed due to absence of the required records and reports on property
accounting and management contrary to Section 111 of PD 1445 and
pertinent provisions of the Manual on the Financial Management of
Barangays, affecting the fair presentation of the accounts in the financial
statements.

1.1. Section 111 of PD 1445 states that:

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page
 “(1) The accounts of an agency shall be kept in such detail as is necessary to
meet the needs of the agency and at the same time be adequate to furnish the
information needed by fiscal or control agencies of the government.

(2) The highest standards of honesty, objectivity and consistency shall be

observed in the keeping of accounts to safeguard against inaccurate or
misleading information.”

1.2. Pertinent provisions in Chapter VII of the Manual on the Barangay Financial
Management of Barangays provide:

7.1 Specific Policies

Property, Plant and Equipment/Infrastructure Assets

Xxx

7.1.6 Property/Equipment Card (PEC), see Annex 26.1, shall be maintained for
all property and equipment of the barangay by the BT.

7.1.7 Property/Equipment Ledger Card (PELC), see Annex 26.2, shall be

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

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.

Xxx

7.2.5 Inventory Taking and Reconciliation

The Inventory Committee headed by the PB or his authorized representative and

the BT as his member shall conduct a physical count of all property and
equipment of the barangay at least once a year.

The Inventory Committee, upon the completion of the physical count, shall
prepare three copies of Report on Inventory of Property and Equipment (RIPE),
as shown in Annex 30 and shall be approved by the PB. The RIPE shall be
distributed as follows:

Original- to COA Auditor through C/M Accountant

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page
 Duplicate copy- to the C/M Accountant
Triplicate copy- to the BT

The RIPE shall be the basis of the C/M Accountant for reconciling the results of
inventory with the PPE accounts.

The RIPE shall be the basis of the BT for reconciling the equipment covered by
PAR and the PECs on file and the ICS for the small items considered as
inventories.

1.3. As of December 31, 2021, the Barangay’s financial statements showed the total,
PPE account of ₱4,868,159.53 representing 61% of its total assets of
₱8,021,867.35 The details of the total PPE account are presented in Table 1.

Table 1. Property, Plant and Equipment

PPE Amount
Land 34,949.00
Road Networks 3,438,644.95
Water Supply Systems 754,549.91
Office Buildings 2,762,047.47
School Building 10,000.00
Office Equipment 48,000.00
Information & Communication Technology Equipment 23,200.00
Accumulated Depreciation-Information &
Communication Technology Equipment -
Disaster Response & Rescue Equipment 49,000.00
Sports Equipment 15,000.00
Other Machinery & Equipment 46,300.00
Furniture & Fixtures 9,744.00
Total 7,191,435.33
Accumulated Depreciation Expense 2,323,275.80
Net Amount ₱ 4,868,159.53

1.4. The required Subsidiary Ledgers or the PPE Ledger Cards and
Property/Equipment Cards were not maintained by the Municipal Accountant and
the Barangay Treasurer, respectively. The absence of the PPE Ledger Cards made
the confirmation of the balance of the PPE account impossible. Likewise, without
the Property/Equipment Cards, the Barangay Treasurer will have difficulty in
filling-out columns 1 to 6 of the RIPE which will be the basis of the Inventory
Team in the conduct of the physical count.

1.5. Due to the afore-cited deficiencies, the valuation of the properties that constitute
the Property, Plant and Equipment account amounting to ₱4,868,159.53 could not
be established, thus affecting the fair presentation of the account in the FS.

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page

1.6. We recommend that the Municipal Accountant maintain and update the
prescribed PPELC and reconcile these with property records of the
Barangay Treasurer.

1.7. We also recommend that the Barangay Treasurer maintain

Property/Equipment Cards for each kind of PPE owned by the Barangay
and reconcile the same with the accounting records.

Non-Transfer to Special Trust Fund of unexpended DRRMF

2.0. Unexpended balance of DRRMF on CY 2022 totaling ₱348,633.29 was not

transferred to the Special Trust Fund contrary to Section 4.4 an of COA
Circular 2012-002, thus, the Trust Liabilities-Disaster Risk Reduction and
Management Fund(DRRMF) was understated by the same amount at year-
end.

2.1. Section 4.4 of COA Circular 2012-002 states “The unexpended LDRRMF shall
accrue to a special trust fund solely for the purpose of supporting disaster risk
reduction and management activities of the Local Disaster Risk Reduction
Management Council (LDRRMC) within the next five years.

2.3. In CY 2022, the barangay appropriated a total of ₱121,883.25for its LDRRMF. In

addition, it has a balance of ₱298,633.29 from previous year’s unexpended
balance, while no disbursements were made during the year, leaving a balance of
₱420,516.54. Details are shown in Table 2.

Table 2. Balance of BDRRMF

PPA Appropriation Disbursements Balance
30% QRF 36,564.98 - 36,564.98
Current COVID19 related supplies;
Year megaphone, tent and 85,318.28 - 85,318.28
generator set
Subtotal Current Year 121,883.25 0.00 121,883.25
Previous Years Unexpended 298,633.29 0.00 298,633.29
Total 420,516.54 0.00 420,516.54

2.4. However, review of the Trust Liabilities-DRRMF account as of year-end

disclosed that only the amount of ₱71,883.25 was transferred to the Special Trust
Fund instead of the balance of ₱420,516.54, thus an understatement in transfer
amounting ₱348,633.29.

2.5. Due to non-transfer of the unexpended balance of DRRMF as of CY 2022

amounting ₱348,633.29, the Trust Liabilities-DRRMF account was understated
by the same amount at year-end.

2.6 We recommend that the Municipal Accountant thru her Designated

Bookkeeper transfer and record the unexpended BDRRM Fund amounting
AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page
 ₱348,633.29 Trust Liabilities-DRRMF under Special Trust Fund and
maintain subsidiary ledgers by year of transfer.

Local Disaster Risk Reduction Management Fund

3.0. Disbursements totaling ₱111,300.00 in CY 2019 were paid from prior year’s
unexpended DRRMF despite not being included in the LDRRMF Investment
Plan for CY 2019, contrary to Sections 5.1.2 and 5.1.3.2 of COA Circular
2012-002, thus, resulted to irregular expenditures.

3.1. 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.

3.2. 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

3.3. During the review of Barangay’s appropriation and utilization of the 5% BDRRM
Fund, the Audit Team noted that Barangay Can-aporong appropriated a total
amount of ₱539,105.45 under DRRM Fund during the 4-year period under audit,
as presented in Table 3.

Table 3. BDRRMF balance

Amount
Particulars Total
2019 2020 2021 2022
Beginning Balance 292,451.04 252,199.29 212,385.94 298,633.29 292,451.04
Current Appropriation 71,048.25 80,676.65 86,247.35 121,883.25 359,855.50
Utilization 111,300.00 120,490.00 - 231,790.00
Balance as of year- 252,199.29 212,385.94 298,633.29 420,516.54 420,516.54
end

3.4. It was further noted by the Audit Team that the Barangay still had a balance of
₱292,451.04 out of its prior years’ LDRRM Fund as of December 31, 2018.
However, it was observed that the LDRRMF IP for CY 2019 did not include the
planned PPAs out of the unutilized DRRMF as of December 31, 2018 but only
those appropriated under CY 2019 Budget. The same observations were noted
for CYs 2020, 2021 and 2022. Consequently, the unexpended balances of prior
years’ cannot be used in the absence of the LDRRMFIP which should have
indicated the PPAs for which said prior years’ balances will be used for.

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page

3.5. Despite the absence of a duly approved LDRRMFIP for previous years
unexpended balances, disbursements totaling ₱111,300.00 were incurred and paid
from previous years balance. Details of Disbursements are shown in Table 4.
Table 4. Disbursements charged to LDRRMF
Amount
Charged to Charged to
Current Previous
Check
Date Particulars Appropriati Years Total Remarks
No.
on/included unexpended/
in without
LDRRMFIP LDRRMFIP
11/28/2019 63772089 handheld radio 4 - 49,000.00 49,000.00 Charged to
units, rechargeable BDRRMFIP STF for
flash lights 2 units unexpended 2017
DRRMF but there was
no updated
LDRRMFIP for STF at
the beginning of CY
2019
11/28/2019 63772090 raincoat ponchos, - 16,000.00 16,000.00 Charged to
spine boards, boots BDRRMFIP STF for
unexpended 2017
DRRMF but there was
no updated
LDRRMFIP for STF at
the beginning of CY
2019
10/12/2019 63772095 1 set public - 46,300.00 46,300.00 Charged to
announcement/siren BDRRMFIP STF for
system unexpended 2017
DRRMF but there was
no updated
LDRRMFIP for STF at
the beginning of CY
2019
TOTAL - ₱111,300.00 ₱111,300.00

3.6. Without an approved LDRRMFIP for the previous year’s DRRMF balances, the
Chairman Committee on Appropriation had no basis for certifying the existence
of available appropriations authorized for the purpose. Thus, disbursements
charged against LDRRMF 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.

3.7. 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 outlined in COA Circular 2012-002.

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page

3.8. We also recommend that the Punong Barangay, Chairman Committee on
Appropriation, and Barangay Treasurer stop processing disbursements from
LDRRMF if said disbursement is not included in the approved LDRRMFIP.

20% Development Fund

4.0. Four projects identified to be priority development projects for CY 2020 to

2022 totaling ₱1,151,029.00 remained unimplemented as of December 31,
2022, contrary to Section 3.2.3 of DBM-DOF-DILG JMC No. 1 dated
November 24, 2020 hence, optimal utilization of the fund was not achieved
and the constituents were deprived from enjoying its benefits.

4.1. DBM-DOF-DILG Joint Memorandum Circular No. 1 dated November 24, 2020
provides the revised guidelines on the appropriation and utilization of the 20% of
the annual internal revenue allotment for development projects. The JMC was
issued to increase the responsiveness of the guidelines and promote greater
autonomy, transparency and accountability in the LGUs’ appropriation and
utilization of their respective 20% DF. Pertinent sections of the subject
Memorandum Circular are as follows:

a) Section 3.1 – In accordance with Section 287 of RA No. 7160, each LGU
shall appropriate in its annual budget no less than twenty
percent (20%) of its annual IRA for development projects.

b) Section 3.2 – The LGUs are enjoined to observe the following policies and
guidelines in the appropriation and utilization of the 20% DF:

3.2.1 The 20% DF shall be utilized to finance the LGUs'

priority development projects, as embodied in their
respective duly approved local development plans, and
medium-term and annual investment programs, which
should be harmonized with the Regional Development
Plan and the Philippine Development Plan.

3.2.2 The development projects that may be included under

the 20% DF shall be those that are necessary,
appropriate, or incidental to efficient and effective local
governance, and those which are essential to the
promotion of the general welfare of the people.

3.2.3 The LGUs shall ensure that the development

projects to be funded out of the 20% DF are well-
planned and procurement-and-implementation-
ready.

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page

 3.2.4 Technical assistance may be sought from National
Government Agencies (NGAs), such as, but not limited
to, the Department of Agriculture, DBM, Department of
Education, Department of Environment and Natural
Resources, DOF, Department of Health, DILG,
Department of Public Works and Highways,
Department of Social Welfare and Development, and
National Economic and Development Authority, for the
determination of the more relevant and responsive
development projects that may be included under the
20% DF and to ensure compliance with the standards
prescribed by the NGAs concerned.

3.2.5 The following expenditure items shall not be allowed to

be charged against the 20% DF:

3.2.5.1 Personal Services expenditures, such as salaries,

wages, overtime pay, and other personnel
benefits;
3.2.5.2 Administrative expenses, such as supplies,
meals, representation, communication, water
and electricity, petroleum products, and the like;
3.2.5.3 Traveling expenses, whether domestic or
foreign;
3.2.5.4 Registration fees and other expenses related to
the conduct of and participation to trainings,
seminars, conferences or conventions;
3.2.5.5 Purchase, maintenance or repair of
administrative office' furniture, fixtures,
equipment or appliances; and
3.2.5.6 Purchase, maintenance or repair of motor
vehicles used for administrative purposes.

4.2. During the conduct of our audit, it was noted that the Barangay had appropriated
projects for 20% Development Fund amounting to ₱282,793.00, ₱321,306.60,
₱343,589.40 and ₱486,133.00 for CY 2019, CY 2020, CY 2021 and CY 2022,
respectively. For the 4-year period, the 20% DF appropriation totaled to
₱1,433,822.00. The Barangay had also its beginning balance in the Fund from CY
2018 amounting ₱616,726.49. The said annual appropriations were for the
following projects:

Table 5. Projects to be paid from 20% Development Fund

CY Project/Title Appropriation Utilization Balance
Beginning 616,726.49 128,000.00 488,726.49
2019 Footbridge 200,000.00 200,000.0 32,124.93
0

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page

 CY Project/Title Appropriation Utilization Balance
2019 Water system 22,793.00 - 22,793.00
2019 Pathwalk 20,000.00 - 20,000.00
2019 Brgy road 20,000.00 - 20,000.00
2019 Rehab session hall 20,000.00 - 20,000.00
2020 Electrification of Sitio Tarag 171,306.60 - 171,306.60
2020 Construction of Pathway (Sitio 150,000.00 - 150,000.00
Banloron)
2021 Brgy road 343,589.40 - 343,589.40
2022 Pathway 486,133.00 - 486,133.00
TOTAL 2,050,548.49 328,000.00 1,722,548.49

4.3. Review of utilization revealed that out of the available appropriations the
barangay disbursed a total amount of ₱328,000.00 to implement the Construction
of Footbridge funded under 20% Development Fund from CYs 2018 to 2019, per
check number 63772083 dated October 22, 2019 under the contractor Greatwall
Builders

4.4. As can be seen in Table 5, only one project was implemented during the 4-year
period. Out of the ₱2,050,548.49 appropriation, ₱328,000.00 was actually
disbursed, which is only equivalent to 16% of current and previous years
appropriation.

4.5. Review of the status of implementation of projects of the barangay disclosed that
three projects identified and budgeted in CYs 2020 to 2022 totaling
₱1,151,029.00 were not implemented.

Table 6. Unimplemented Projects Appropriated in CYs 2019-2022

Budget Year PPAs Appropriation
2020 Electrification of Sitio Tarag 171,306.60
2020 Construction of Pathway (Sitio Banloron) 150,000.00
2021 Brgy road 343,589.40
2022 Pathway 486,133.00
TOTAL 1,151,029.00

4.6. We recommend that the Punong Barangay implement all the projects
appropriated under 20% Development Fund so that funds are utilized to its
optimum to help achieve the desirable socio-economic development and
environmental outcomes of the Barangay.

Lack of Appropriation for LCPC

5.0. 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.

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5.1. 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.

5.2. 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.

5.3. 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 7. Available Funds for LCPC

Particulars CY 2022 CY 2021 CY 2020 CY 2019
Estimated IRA 2,430,665.00 1,717,947.00 1,606,533.00 1,413,965.00
SHOULD BE - 1% of IRA 24,306.65 17,179.47 16,065.33 14,139.65
ACTUAL Appropriation - - - -
Lacking Appropriation 24,306.65 17,179.47 16,065.33 14,139.65

5.4. 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.

5.5. 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.

1% Allocation for Senior Citizen and PWD

6.0. 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.

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6.1. 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
programs/projects/activities/services which will address the needs of older
persons and persons with disabilities (PWDs).

6.2. 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 8.
Table 8. Fund for Senior Citizens and PWDs Programs/Projects
Particulars CY 2022 CY 2021 CY 2020 CY 2019
Estimated IRA 2,430,665.00 1,717,947.00 1,606,533.00 1,413,965.00
SHOULD BE - 1% of IRA 24,306.65 17,179.47 16,065.33 14,139.65
ACTUAL Appropriation - - - -
Lacking Appropriation 24,306.65 17,179.47 16,065.33 14,139.65

6.3. 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.

6.4. 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 (PWDs) at an amount of no less than 1% of the
annual IRA as required by the Expanded Senior Citizen Act, R.A. No. 9994.

PS limitation

7.0. Appropriations and actual expenditures in CY 2019 to CY 2022 on Personal

Services (PS) exceeded the 55% PS limitation contrary to Section 331 (b) of
Republic Act No. 7160, thereby incurring illegal disbursements and reducing
the funds that could have been allocated for other beneficial programs and
development projects.

7.1. Section 331 (b) of Republic Act (RA) No. 7160 otherwise known as the Local
Government Code of 1991, states that “The total annual appropriations for
personal services of a barangay for one (1) fiscal year shall not exceed fifty-five
percent (55%) of the total annual income actually realized from local sources
during the next preceding fiscal year.”

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7.2. DBM Local Budget Circular No. 98 issued on October 14, 2011, prescribed the
guidelines in determining compliance to the personal services (PS) limitation on local
government budgets. Section 4.2 thereof defines Personal Services (PS) Limitation as the
prohibition under Section 331 (b) of the Local Government Code against appropriating
funds for PS in excess of the limits set therein. It provides further that PS Limitation
refers to the amount beyond which no additional appropriation for PS items is
allowed.

7.3. Section 4.6 of the same Circular defines next preceding fiscal year as the fiscal year that
is two (2) years before a budget year. For example, if FY 2011 is the budget year, the
next preceding fiscal year is FY 2009.

7.4. Section 4.3 of the same Circular on the other hand provides items which are
waived in the determination of compliance to the PS limitation in LGU PS
budgets which includes payment of minimum Year-end Bonus of ₱1,000.00 for
the Punong Barangay and P600.00 for other mandatory barangay officials, and
their Cash Gifts.

7.5. Review of the annual budget of the barangay disclosed that appropriations for
Personal Services in CY 2022, 2021, 2020 and CY 2019 exceeded fifty-five
percent (55%) of the total annual income actually realized from local sources
during the next preceding fiscal year. The excess amount is computed in Table 9.

Table 9. Excess of Appropriation over PS Limitation

2022 2021 2020 2019
Total Actual Income (Next 1,614,221.00 1,444,940.66 1,294,358.00 1,204,021.00
Preceding Year)
2020/2019/2018/2017
PS Limitation 55% 887,821.55 794,717.36 711,896.90 662,211.55
Less: Appropriations
Annual Budget 942,643.76 849,643.71 712,643.73 583,284.42
Supplemental Budget 282,000.00 189,975.95 227,000.00 128,519.00
Total Appropriations 1,224,643.76 1,039,619.66 939,643.73 711,803.42
Excess (336,822.21) (244,902.30) (227,746.83) (49,591.87)

7.6. In addition, actual expenditures for CY 2019 to 2022 on personal services also
exceeded the ceiling for the reason that the budget itself for CY 2019 to CY 2022
provided a greater PS appropriation than what was required. Details on Table 10.
Table 10. Excess of Actual PS Expenditure over PS Limitation
2022 2021 2020 2019
PS Limitation 55% 887,821.55 794,717.36 711,896.90 662,211.55
Less: Actual PS 1,206,988.00 1,023,646.00 923,666.00 795,105.00
Expenditures
Difference (319,166.45) (228,928.64) (211,769.10) (132,893.45)
Total PS cost for waived 62,000.00 62,000.00 62,000.00 62,000.00
items
Excess (Difference less (257,166.45) (166,928.64) (149,769.10) (70,893.45)
waived items)

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7.7. The Barangay officials were under the notion that since the budget of the
barangay was already reviewed by the Budget Officer and approved by the
Sangguniang Bayan, their budget was already in consonance with the regulations.

7.8. Failure to observe the mandatory limit on PS resulted in illegal disbursements

totaling ₱644,757.64 and impaired the delivery of some basic services of the
barangay because the excess funds spent for Personal Services could have been
allocated for other beneficial programs and development projects. This is without
prejudice to the issuance of Notice of Disallowance.

7.9. We recommend that the Punong Barangay and Committee Chairman on

Appropriation limit the appropriations and expenditures for Personal
Services of the barangay strictly in accordance with Section 331 (b) of RA
7160 to avoid disallowances on irregular and excessive PS disbursements.

7.10. We further recommend that the barangay council should strive to find ways
to improve collection of revenues from local sources so that the Personal
Services ceiling will correspondingly increase.

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

ARNE S. CABIGAS
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
Barangay Kagawad-CCA
Barangay Bookkeeper
Municipal Accountant

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page

AOM No. 2023-001 Brgy. Can-aporong, Abuyog, Leyte Page