EXECUTIVE SUMMARY

A. INTRODUCTION

San Nicolas is a first-class municipality composed of thirty-three (33) barangays

with a total land area of 23,481 hectares and it is located in the northeastern part
of Pangasinan.

According to the 2020 census, it has a population of 39,778 people. Bamboo

propagation, farming, livestock and pottery making are the major source of
livelihood where people derived their income.

Under the present leadership of Municipal Mayor Dr. ALICIA L. PRIMICIAS-

ENRIQUEZ, Local Chief Executive of the Municipality, assisted by Municipal
Vice Mayor ALVIN O. BRAVO and the Sangguniang Bayan Members, the
Municipality was able to serve the public effectively and efficiently under the
administration’s battle cry “San Nicolas, Pangasinan: My Home, My Pride”.
Because of the best practices of governance and public service, the Municipality
was able to continuously obtain various awards from different provincial and
national government agencies.

The local government unit is manned by 229 officials and employees assigned in
the different offices, to wit:

Nature of Appointment/ Employment No. of Employees

Elected Officials 13
Permanent 57
Casual 8
Contract of Service 4
Job-Order 147
Total 229

B. OPERATIONAL HIGHLIGHTS

The following programs, projects and activities are the significant

accomplishments of the Municipality for the year 2021:

AMOUNT
PROGRAMS/ PROJECTS/ ACTIVITIES STATUS
IN ₱
1. Improvement of Road at Brgy. San Felipe 1,985,208.97
Completed
East
2. Improvement of Brgy. Malilion – Brgy. 1,997,432.19
Completed
Sto. Tomas Road

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 AMOUNT
PROGRAMS/ PROJECTS/ ACTIVITIES STATUS
IN ₱
3. Improvement of Municipal Plaza, Park, 9,000,000.00
Completed
Auditorium
4. Const./ Rehab. Of Government Buildings 4,040,232.88
Completed
and Other Structures
5. Purchase of Heavy Equipment 2,000,000.00 Completed

C. FINANCIAL HIGHLIGHTS

The Municipality’s assets, liabilities and government equity for the calendar year
(CY) 2021 with comparative figures for CY 2020 are as follows:

Increase/
2021 2020 %
(Decrease)
Assets 316,906,450.13 326,919,977.13 -10,013,527.00 -3.06%
Liabilities 122,144,564.85 147,601,575.49 -25,457,010.64 -17.25%
Government
194,761,885.28 179,318,401.64 15,443,483.64 8.61%
Equity
Income 182,565,958.99 177,262,668.16 5,303,290.83 2.99%
Expenses 161,963,617.60 180,873,506.61 -18,909,889.01 -10.45%
Appropriations 216,845,850.72 186,593,193.43 30,252,657.29 16.21%
Obligations 207,073,564.12 157,139,996.11 49,933,568.01 31.78%

D. SCOPE OF AUDIT

The audit covered the accounts and operations of the Municipality of San Nicolas
for CY 2021. The audit was conducted to: a) ascertain the level of assurance that
may be placed on the Management assertion on the financial statements; b)
determine the propriety of transactions as well as extent of compliance on the
applicable laws, rules and regulations; c) recommend agency’s improvement
opportunities; and d) determine the extent of implementation of prior year’s audit
recommendations. Moreover, the audit was conducted in accordance with
International Standards of Supreme Audit Institutions (ISSAIs).

The audit was focused on the 2021 audit thrusts issued by the Local Government
Sector of the Commission. Financial, compliance and value for money (VFM)
audits were conducted to achieve these audit objectives.

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E. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the Municipality of San Nicolas for the reason that the
existence, condition and accountability assertion of the Municipality on Property,
Plant and Equipment (PPE) accounts with a gross value of ₱419,276,511.42 in the
Financial Statements cannot be verified due to non-conduct of one-time cleansing
of PPE accounts. Moreover, non-maintenance of stock cards and absence of
Report of Physical Count of Inventories at year-end and non-compliance with the
prescribed perpetual method of recording for the Inventories of the Municipality
raises doubt on the accuracy and reliability of Inventories totaling ₱5,756,957.68.

The inadequacy of records maintained by the Municipality and the absence of

documents did not allow the application of alternative audit procedures to
establish validity of affected balances.

F. SIGNIFICANT AUDIT OBSERVATIONS AND RECOMMENDATIONS

Summarized below are the significant audit findings and the corresponding
recommendations which were discussed with Management during the exit
conference conducted on April 21, 2022. Management comments were
incorporated in the report, where appropriate.

1. The Municipality’s Cash and Cash Equivalents of ₱9,750,215.39 of the

General Fund (GF) and ₱ 3,866,755.76 of the Special Education Fund (SEF)
is insufficient to cover mandatory obligations and commitments due to
contractors if all the programs/ projects/ activities (PPAs) funded from the
twenty percent (20%) Development Fund as of December 31, 2021 and
Capital Outlay – Local Disaster Risk Reduction Management Fund be
implemented resulting to a Cash Deficit of ₱10,500,940.23 and ₱608,824.94,
for the GF and SEF, respectively in violation of Section 337 of Republic Act
No. 7160 and Sections 85 and 86 of Presidential Decree No. 1445.

We recommended Management to conduct regular coordination between the

Municipal Accountant, Municipal Treasurer and Municipal Budget Officer
and discuss the Status of Appropriation, Allotment, Obligation and Balances,
Statement of Receipts and Expenditures, the financial Statements and the
Bank Reconciliation Statements, not the Bank Statement alone, to have a real
picture of the financial status of the Municipality in order to prevent budget
overdraft and cash deficit. Likewise, Management shall limit disbursement
within the appropriated budget and prioritized funding and implementation
subject to availability of funds. Before implementation of a certain project,
they shall verify if these projects have appropriation and cash backing.

2. The Municipality’s non-observance of economy measures in the

disbursement of funds and not keeping track of its monthly expenditures

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 despite the availability of its monthly financial reports have caused the actual
obligations for some line items exceed the appropriations, resulting to an
overdraft in appropriation totaling ₱8,855,362.34, which is not in conformity
with Section 305 (a) of the Local Government Code and Section 47 of PD No.
1177.

We recommended that Management:

• Submit a copy of an Ordinance, if any, covering the grant of authority to

the Local Chief Executive and/ or the Presiding Officer of the Sanggunian
to use savings and augment for the aforesaid expenditures within the same
expense class in their respective appropriations under Section 336 of RA
No. 7160; and/ or submit an Appropriation Ordinance, if any, covering a
supplemental budget authorizing the use of savings under Article 417 of
the IRR of RA No. 7160 as amended by AO No. 47, s. 1993
(implementing Section 321 of RA No. 7160) for re-appropriation of object
of expenditures (may be to a different expense class) for the aforesaid
expenditures
• Be judicious and frugal in its expenses for the rest of the year 2021 and
onwards considering the application of economy measures to prevent
unnecessary and uneconomical disbursement so that expenses are kept
within the Approved Budget of the Municipality

• Not allowing expenditures which are beyond the Approved Budget to

prevent the incurrence of another overdraft in appropriation. The
Municipality shall always be guided by its Approved Budget and not to
spend on items or PPAs not included in the AIP and Approved Budget

G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Of the 17 audit recommendations contained in the CY 2020 Annual Audit Report,

9 or 52.94% were implemented, and 8 or 47.06% were not implemented:

Status of Implementation Quantity

Fully Implemented 9
Not implemented 8
Total 17

H. STATUS OF TOTAL SUSPENSIONS, DISALLOWANCES AND

CHARGES

The balances of Audit Suspensions, Disallowances and Charges of the Municipality

of San Nicolas prior to the effectivity of 2009 Rules and Regulations on Settlement of

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Accounts (RRSA) is ₱519,488.52. The persons liable to said disallowances could not
be determined due to non-availability of records.

On the other hand, the status of Notice of Suspensions (NS), Notice of Disallowance
(ND), and Notice of Charge (NC) from 2009 to 2021 are as follows:

Particulars Balance as of Issued for Settled for Balance as of

December 31, 2020 CY 2021 CY 2021 December 31, 2021
(₱) (₱) (₱) (₱)
Suspensions 00.00 00.00 00.00 00.00
Charges 00.00 00.00 00.00 00.00
Disallowances 2,000,000.00 00.00 00.00 2,000,000.00