01-CatbaloganCity2014 Audit Report

Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. VIII
Candahug, Palo, Leyte
ANNUAL AUDIT REPORT
On The
CITY OF CATBALOGAN
Province of Samar
For the Year Ended December 31, 2014

3. Cash advance for travelling expenses totaling P417,483.27 were refunded after
9 to 228 days from the cancellation of the trip, while liquidation of cash
advances for special time-bound undertakings amounting to P1,623,691.00
lacked appropriate supporting documents.
4. The CDRRMF capital outlay appropriation amounting to P2,838,166.45 was

realigned to Maintenance and Other Operating Expenses contrary to Section
336 of the Local Government Code of 1991, while the amount of P200,000.00
was earmarked for the office maintenance of the CDRRMC Secretariat &
DRRMO which do not constitute disaster risk management activities.
5. The LDRRMF was used to pay expenditures totaling P7,347,773.28 that are not
related to disaster risk management activities, such as purchase of vehicles
amounting to P7,070,389.28, purchase of uniforms of Traffic Brigade Enforcers
totaling P262,500.00, and registration fee and travelling expenses totaling
P14,884.00. While some purchases of relief goods amounting to P1,199,855.50
were made thru cash advance instead of direct payment to suppliers, and claims
totaling P12,255,537.40 were paid without complete documentation.
6. The accounting and reporting of the Local Disaster Risk Reduction and
Management Fund (LDRRMF) did not conform to COA Circular 2012-002
dated September 12, 2012 and COA Circular No. 2014-002 dated April 15,
2014 resulting in inadequate disclosures, incomplete submission of required
reports, and understatement of the CY2014 QRF balance to be transferred to the
Special Trust Fund by P1,332,500.00.
7. The 20% Development Fund was not optimally utilized because out of the
appropriation for development projects amounting to P74,559,186.00, 37.85%
or P28,221,790.35 was not utilized. Likewise, the Report on the Utilization of
the 20% Development Fund was not rendered.
8. Contracts on infrastructure projects amounting P17,432,660.38 were awarded to

various bidders with incomplete eligibility documents and post-qualification
requirements.
9. Advance payments amounting to P1,795,050.02 were granted to contractors

whose Bidder’s Bond and/or Performance Securities issued by the respective
surety companies were not supported with certification from the Insurance
Commission and were not properly signed by the contractor.
10. The BAC Secretariat failed to post the Notices of Award, approved Contracts
and Notices to Proceed on six (6) infrastructure projects costing P13,574,965.38
to the PhilGEPS website.
11. Procurement of Consulting Services for the establishment of Tindahang Pinoy

Project of Catbalogan City in the total amount P804,200.00 was made without
EXECUTIVE SUMMARY
Introduction
The City of Catbalogan is the capital of Samar Province. The Cityhood of

Catbalogan was effectively restored way back December 10, 2008 after the Supreme
Court decided with finality the constitutionality of Republic Act 9391 entitled “An Act
Converting the Municipality of Catbalogan in the Province of Samar.”
A financial and compliance audit was conducted in its accounts and operations for
the calendar year 2014. The audit was aimed to ascertain the propriety and validity of
disbursements and receipts, and to obtain reasonable assurance about whether the
financial statements are free from material misstatements. The audit consisted of post-
audit of transactions, review of operating procedures, interview with concerned city
officials and employees, verification and analysis of accounts, and such other procedures
considered necessary under the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the
financial statements.
Financial Highlights
The city’s total assets, liabilities, equity, income and expenses for current and
previous years’ are as follows:
Particulars CY 2014 CY 2013

Assets P 414,027,138.87 P 367,625,206.14
Liabilities 59,848,150.81 113,339,398.97
Equity 354,178,988.06 254,285,807.17
Income 425,823,479.23 376,387,551.11
Expenses 257,109,597.53 221,744,065.19
Its appropriation/allotment/obligation for current and previous years, including

funds received from and transferred to other agencies and non-government and people’s
organizations are as follows:
Particulars CY 2014 CY 2013

Appropriation P 480,845,930.00 P 408,564,351.82
Allotment 393,288,153.40 350,083,430.05
Obligation 355,944,518.73 308,930,483.05
Funds transferred to Other LGUs 19,203,496.23 18,621,600.00
Independent Auditor’s Report
The Auditor rendered a qualified opinion on the financial statements of the City
of Catbalogan, Province of Samar because the unexpended CY 2014 Quick Response
Fund to be transferred to the Special Trust Fund is understated by P1,332,500.00, and the
physical inventory report of Property, Plant and Equipment amounting to
P276,838,625.40 submitted by the General Services Office does not reconcile with the
balance per ledger totaling P283,193,105.51, thereby showing a difference of
P6,354,480.11.
Summary of Significant Observations and Recommendations
1. The City Treasurer retained huge amount of undeposited cash every end of the
month which accumulated to P1,145,472.51 as of December 31, 2014 thus,
exposing the funds to risks of loss and/or misuse.
We recommend that the City Mayor direct the City Treasurer to deposit
intact all collections in accordance with law and regulations and to refrain
from retaining huge amount of cash on hand to safeguard funds from risks of
loss and/or misuse.
2. Cash amounting to P41,352,444.95 as of December 31, 2014 was still maintained

with Philippine National Bank, a private bank, without specific authority from the
Department of Finance (DOF).
We recommend that Management secure the approval from the Department

of Finance if they are to maintain their depository account with PNB,
otherwise, effect immediate closure of the account and transfer the funds to
an authorized government depository bank.
3. Cash advance for travelling expenses totaling P417,483.27 were refunded after 9
to 228 days from the cancellation of the trip, while liquidation of cash advances
for special time-bound undertakings amounting to P1,623,691.00 lacked
appropriate supporting documents.
We recommend that the City Mayor require the officials and employees
concerned to: (a) refund travel advances immediately upon cancellation of
the trip; and (b) to settle the audit suspensions through compliance with the
requirements called for in the Notices of Suspensions.

realigned to Maintenance and Other Operating Expenses contrary to Section 336
of the Local Government Code of 1991, while the amount of P200,000.00 was
earmarked for the office maintenance of the CDRRMC Secretariat & DRRMO
which do not constitute disaster risk management activities.
We recommend that Management adhere strictly to Section 336 of the Local
Government Code of 1991 and allocate the DRRM funds only to programs,
projects and activities that are related to disaster prevention and mitigation,
preparedness, relief and recovery.
5. The LDRRMF was used to pay expenditures totaling P7,347,773.28 that are not
P14,884.00. While some purchases of relief goods amounting to P1,199,855.50
were made thru cash advance instead of direct payment to suppliers, and claims
totalling P12,255,537.40 were paid without complete documentation.
We recommend that Management strictly utilize the LDRRMF for related

disaster risks management activities, issue checks directly to
creditors/suppliers and refrain from granting cash advance for purchase of
relief goods. Likewise, require the City Accountant and responsible officials
and employees to submit the lacking supporting documents.
Management Fund (LDRRMF) did not conform to COA Circular 2012-002 dated
September 12, 2012 and COA Circular No. 2014-002 dated April 15, 2014
resulting in inadequate disclosures, incomplete submission of required reports,
and understatement of the CY2014 QRF balance to be transferred to the Special
Trust Fund by P1,332,500.00.
We recommend that Management include the programs/projects and

activities to be funded from continuing appropriations in the LDRRMFIP
and AIP, adhere strictly to COA Circular Nos. 2012-002 and 2014-002 on the
accounting and reporting of the LDRRMF, and direct the City Budget
Officer to restore the amount of P1,332,500.00 from the QRF of CY 2014 to
correct the understatement of the fund balance.
appropriation for development projects amounting to P74,559,186.00, 37.85% or
P28,221,790.35 was not utilized. Likewise, the Report on the Utilization of the
20% Development Fund was not rendered.
We recommend that the City Mayor ensure that the 20% of the IRA is
optimally utilized to help achieve desirable socio-economic development and
environmental outcomes, and require the City Planning and Development
Office in coordination with the City Budget and City Accounting Department
to regularly prepare and submit to COA, the Report on the Utilization of the
20% Development Fund.
requirements.
We recommend that the City Mayor require the BAC Secretariat to submit
the lacking procurement documents and the BAC to judiciously undertake
the evaluation of bids and post-qualification process so that contracts are
awarded only to bidders who passed the criteria for eligibility check and
post-qualification.
9. Advance payments amounting to P1,795,050.02 were granted to contractors

whose Bidder’s Bond and/or Performance Securities issued by the respective
surety companies were not supported with certification from the Insurance
Commission and were not properly signed by the contractor.
We recommend that Management require the winning bidders to submit the

certification from the Insurance Commission and to affix the signature in the
performance bond, and henceforth, adhere strictly the provisions of Section
39 of the Revised IRR of R.A. No. 9184.
10. The BAC Secretariat failed to post the Notices of Award, approved Contracts and
Notices to Proceed on six (6) infrastructure projects costing P13,574,965.38 to the
PhilGEPS website.
We recommend that the City Mayor require BAC Secretariat to post the
Notices of Award, Notice to Proceed, and approved Contract in the
PhilGEPS website in accordance with Sections 37.1.6 and 37.4.2 of the
Revised IRR of R.A. No. 9184.

Project of Catbalogan City in the total amount P804,200.00 was made without
public bidding and was negotiated without adherence to the prescribed process for
alternative methods of procurement. Likewise, some reports, documents and
outputs required from the consultants were not submitted, such as training design
and modules, schedule of activities, and list of trainers and topics assigned.
We recommend that management conduct public bidding on the

procurement of consulting services and resort to alternative method of
procurement only when the conditions for the use of the same are present.
Likewise, require the consultants to submit reports, documents and outputs
such as training design and modules, schedules of activities, and list of
trainers and topics assigned.
12. The payment of honoraria to some national government officials/employees

amounting to P757,500.00 was bereft of legal basis.
We recommend that management submit legal basis for the grant of
honoraria to some national government officials and employees, otherwise,
they should stop the payment of the same to the subject personnel.
Summary of Audit Suspensions, Disallowances and Charges (SASDC)
The total audit suspensions, disallowances and charges found in the audit of
various transactions of the City as of December 31, 2014 was P 0.00. The Notices of
Suspension and/or Disallowance resulting from post-audit of CY 2014 transactions are
still for issuance.
Status of Implementation of Prior Years’ Audit Recommendations
Of the ten (10) audit recommendations contained in the 2013 Annual Audit
Report, six (6) were implemented, four (4) were partially implemented by management.
TABLE OF CONTENTS
Page No.
Part I - Financial Statements
Independent Auditor’s Report 1-2

Statement of Management Responsibility for Financial Statements 3
Consolidated Comparative Balance Sheet 4
Consolidated Comparative Statement of Income and Expenses 5
Consolidated Comparative Statement of Cash Flows 6
Notes to Consolidated Financial Statements 7-17
Part II - Detailed Audit Observations and Recommendations 118-42
Part III - Status of Implementation of Prior Years’ Unimplemented Audit 43-50

Recommendations
Part IV - Annexes
A - Balance Sheet
A.1 General Fund
A.2 Special Education Fund
A.3 Trust Fund
B - Statement of Income and Expenses
B.1 General Fund
B.2 Special Education Fund
C - Statement of Cash Flows
C.1 General Fund
C.2 Special Education Fund
C.3 Trust Fund
D - Notes to Consolidated Financial Statements
D.1 - Schedule/Aging of Accounts Payable
D.2 - Schedule of Loans Payable
E - Status of Appropriations, Allotments, Obligations and Balances
F - Schedule of Liquidation of Cash Advances With Incomplete
Supporting Documents
G - Appropriation of LDRRMF
H - List of LDRRMF transactions lacked appropriate supporting
documents
I - List of Infra Projects Not Implemented in CY 2014
J - List of Infra Projects Awarded to Participating Bidders whose
Required Eligibility Documents submitted to the BAC were
Incomplete
K - List of Contractors with Deficient Bidder’s/ Performance Bond
L - List of Awarded/Approved Contracts, Notices to Proceed and
Notices of Award Not Posted in the PhilGEPS Website
PART I
AUDITED FINANCIAL STATEMENTS

Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. VIII
Leyte Government Center
Candahug, Palo, Leyte
INDEPENDENT AUDITOR’S REPORT
Hon. Stephany U. Tan

City Mayor
City of Catbalogan
Province of Samar
Pursuant to Section 2, Article IX-D of the Philippine Constitution and Section 43(2)
of Presidential Decree No. 1445, we have audited the accompanying consolidated financial
statements of the City of Catbalogan, Province of Samar which comprise the Balance Sheet
as of December 31, 2014 and the Statements of Income and Expenses and Cash Flows, for
the year then ended.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with applicable financial reporting framework and for such internal
control as it determines necessary to enable the preparation of financial statements that are
free from, material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our

audit. We conducted our audit in accordance with laws and applicable Philippine Public
Sector Standards on Auditing (PPSA). Those standards require that we comply with the
ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatements.
An audit includes performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the Auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk statements, the Auditor
considers internal control relevant to the agency’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
agency’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
Management, as well as evaluating the overall presentation of the financial statements.
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2
3
Consolidated CY 2014 Balance Sheet
Catbalogan City
4
Consolidated CY 2014 Statement of Income and Expenses
Catbalogan City
5
Consolidated CY 2014 Statement of Cash Flows
Catbalogan City
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CITY OF CATBALOGAN
Province of Samar
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Agency Profile
The Cityhood of Catbalogan was effectively restored way back

December 10, 2008 after the Supreme Court decided with finality the constitutionality
of Republic Act 9391 entitled “ An Act Converting the Municipality of Catbalogan in
the Province of Samar.
It is still the capital of Samar Province and located on the western coast of the
Province of Samar in the Eastern Visayas Region with a total land area of 274.22
square kilometer (105.88 sqm). Catbalogan City is subdivided into fifty Seven (57)
barangays, Twenty one (21) of which are situated in the poblacion, another Twenty
One (21) are located in the coastal areas and Fifteen (15) are in the interior or upland
areas.
Note 2 - Basis of Financial Statements Presentations
The Financial Statements have been prepared in accordance with Generally

Accepted State Accounting Principles and Standards, as well as the Circulars issued
by the Commission on Audit. It consists of the Consolidated Statements of
transactions of three funds – General Fund, Special Education Fund and Trust Fund.
Note 3 - Summary of Significant Accounting Policies
 The Local Government Unit uses a modified accrual basis of accounting. All
expenses are recognized when incurred and reported in the financial statements in
the period to which it relates. Income is on accrual basis except in transactions
where accrual basis is impractical or when other methods are required by law.
 The Real Property Taxes due to the LGU shall be recorded in the books of
accounts as “Real Property Tax Receivable and Special Education Tax
Receivable” at the beginning of the year.
 Cost of inventories are based on perpetual method and priced following the
moving average method. Purchases of supplies and materials intended for
immediate consumption are directly charged to the appropriate expense account.
 Property, Plant and Equipment are carried at historical cost. For assets under
construction, the Construction Period Theory shall be applied for costing
purposes. While Public Infrastructures are assets for use of the general public,
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such as roads, bridges, waterways, railways, plazas, monuments, etc. A Registry
of Public Infrastructures (RPI) shall be maintained according to classification to
record all infrastructures for use of the general public. Completed public
infrastructures funded out of a loan shall, however be retained in the books of
account until the loan is fully paid.
For depreciable properties, the straight-line method of depreciation shall be used

and shall start on the month following the purchase/completion of the Property,
Plant and Equipment. The depreciable lives and residual or scrap value of various
types of assets is based on the guidelines issued by the COA.
 Liability shall be recognized at the time goods and services are accepted or
rendered and supplier/creditor bills are received. All borrowings and loans
incurred shall be recorded direct to the appropriate liability accounts.
 Fundamental errors of prior years are corrected using the Prior Year’s Adjustment
account, while errors affecting the current years’ operations are charged to the
current year’s account.
Note 4 – Cash
4.1 The composition of Cash is as follows:

2014 2013
Cash in Vault
General Fund P 932,205.48 P 600,695.87
Special Education Fund 212,132.33
Trust Fund 1,134.60 149,289.55
Total P 1,145,472.41 P 749,985.42
Petty Cash Fund
General Fund P - P 12,925.90
Cash in Bank - Local Currency

General Fund P 133,984,744.01 P 116,861,911.38
Special Education Fund 16,379,990.35 15,471,336.65
Trust Fund 3,828,126.90 8,937,128.27
Total P 154,192,861.26 P 141,270,376.30
TOTAL CASH P 155,338,333.67 P 142,033,287.62
4.2 The Cash in Vault balance of P1,145,472.41 represents undeposited collections.
4.3 The Cash in Bank – Local Currency consists of current accounts maintained with
the authorized government depository bank of the city, to wit:
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Balance per Reconciling Items
Bank/Account No. Balance per SL Bank Statement Amount Nature
General Fund
LBP CA# 0602-1038-11 P 48,434,407.85 P 53,547,463.17 P (5,113,055.32) Outstanding Checks
LBP CA# 0602-1082-28 36,240,159.64 36,240,159.64 -
LBP CA# 0602-1082-79 391,811.85 391,811.85 -
(INFRES)
DBP CA#328-732-1 19,757,032.37 19,757,032.37 -
PNB CA#329-933100020 29,161,332.30 41,352,444.95 (12,191,112.65) Outstanding Checks
Sub-total P 133,984,744.01 P 151,288,911.98 P (17,304,167.97)
Special Education Fund
LBP CA#1000-90 P 16,379,990.35 P 16,698,349.99 P (318,359.64) Outstanding Checks
Sub-total P 16,379,990.35 P 16,698,349.99 P (318,359.64)
Trust Fund
LBP CA#0602-1028-31 P 3,023,613.52 P 3,570,641.37 P (531,793.00) Outstanding Checks
Bank Error: Reconciling
(15,234.15)
Item
LBP CA#0602-1099-76 10,000.00 10,000.00 -
DBP CA#000-00769-730-8
STF-DRRMF 794,513.38 1,081,475.53 (286,962.15) Outstanding Checks
Sub-total P 3,828,126.90 P 4,662,116.90 P (833,990.00)
Grand Total P 154,192,861.26 P 172,649,378.87 P (18,456,517.61)
Note 5 – Receivables
5.1 Composition of the account:
Accounts Receivable
General Fund P 5,397.48 P -
Trust Fund 64,868.94 64,868.94
Sub-total P 70,266.42 P 64,868.94
Due from Officers and Employees
General Fund P 23,170.66 P 68,039.58
Real Property Tax Receivable
General Fund P 5,607,704.40 P 24,349,432.15
Special Education Tax Receivable
Special Education Fund P 24,870,140.54 P 25,685,361.97
Due from NGAs
General Fund P 241,168.19 P 241,168.19
Trust Fund 40,658.00 40,658.00
Sub-total P 281,826.19 P 281,826.19
Due from GOCCs
General Fund P 8,334.00 P 8,334.00
50,457,862.83 50,457,862.83
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Due from LGUs
General Fund 8,508,304.65 2,709,000.00
Special Education Fund 3,374.03 3,374.03
Trust Fund 6,775.50 6,775.50
Sub-total 8,518,454.18 2,719,149.53
Due from Other Funds
General Fund 93,122.81 88,399.17
Trust Fund - 11,010.00
Sub-total 93,122.81 99,409.17
Receivables-Disallowance/Charges
General Fund 46,081.00 46,081.00
Sub-total 50,081.00 50,081.00
Advances to Officers & Employees
General Fund P 29,476,620.17 P 20,585,570.88
Special Education Fund - 130,000.00
Sub-total P 29,476,620.17 P 20,715,570.88
Other Receivables
General Fund P 700,000.00 P 700,000.00
Trust Fund 96,445.00 96,445.00
Sub-total P 834,714.26 P 834,714.26
TOTAL P 69,834,434.63 P 74,876,787.67
5.3 Receivables-Disallowance/Charges –General Fund represents amount due from

officers and employees resulting from audit disallowances of previous years,
which have become final and executory.
5.4 Due from LGUs- General Fund represents advances to the different barangay's
as financial assistance to the barangays for construction/repairs/rehab of
pathways and other priority projects subject to liquidations. Once the project is
completed the barangays will submit the liquidation papers to the Accountant’s
Office.
5.5 Beginning Balances of Advances to Officers and Employees amounting to

P142,312.43 could not be ascertained due to prior year’s balance were carry over
from balances many years back for which it could no longer be accounted as to
specific officers and employees. Out of P29,476,620.17 total advances to
officers and employees, P33,518.04 were returned as of January 30, 2015 and
P28,423,917.70 consists of cash advances for confidential and intelligence fund
by the Local Chief Executive of which liquidation papers were already submitted
amounting to P15,740,039.80 for CY 2012 & 2013 to the Office of the
Chairman, COA Central Office and awaiting receipt of credit advice and
P12,683,877.90 for current year 2014 dated February 3, 2015.
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5.6 Included in the Other Receivables account were balances from Kilusang
Kabuhayan at Kaunlaran (KKK) recipients in the Trust Fund – P96,445.00 which
remained uncollected over the years and cash shortage of accountable officer in
the General Fund – P700,000.00 wherein the case was already terminated but no
pronouncement as to the status of the cash shortage.
Note 6 – Inventories

2014 2013
Office Supplies Inventory
General Fund P 1,021,746.18 P 993,613.08
Special Education Fund - -
General Fund
Accountable Forms Inventory 437,369.08 473,473.61
Animal, Zoological Supplies Inventory 91,283.40 171,890.64
Food Supplies Inventory 6,890,103.05 4,753,750.00
Drugs and Medicines Inventory 6,962,383.96 4,687,088.40
Medical, Dental, Laboratory Supplies Invty. 1,175,463.89 476,157.74
Agricultural Supplies Inventory 311,864.55 259,461.52
Other Supplies Inventory 154,800.00 157,934.00
Spare Parts Inventory 1,387,808.50 1,054,436.00
Livestock and Crop Inventory 26,200.00 26,200.00
TOTAL P 18,459,022.61 P 13,054,004.99
6.2 Food Supplies Inventory amounting to P6,890,103.05 represents Rice Subsidy

for Hunger Mitigation Program and distribution to the victims of calamity as well as
other food commodities during typhoon ruby and seniang of the City of Catbalogan
under the supervision of the CDSWD.
Note 7 – Prepayments
7.1 The account consists of:

2014 2013
Prepaid Rent
General Fund P 673,243.74 P 673,243.74
Advances to Contractors
General Fund P - P 205,175.73
Trust Fund 447,009.77 0.10
Sub-Total P 447,009.77 P 205,175.83
TOTAL P 1,120,253.51 P 878,419.57
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The amount of P673,243.74 represents the advance rental and deposit for the
spaces leased by the City.
Note 8 - Property, Plant and Equipment (Consolidated)

Balance Net Addition Balance
Dec. 31, 2013 (Reduction) Dec. 31, 2014
Land P 5,801,299.19 P 1,700,000.00 P 7,501,299.19
Land Improvement 742,084.35 - 742,084.35
Elec., Power and Energy Struc. 13,389,955.00 13,266,600.00 26,656,555.00
Office Building 21,980,363.18 2,918,789.23 24,899,152.41
School Building 8,640,449.95 556,376.75 9,196,826.70
Hospital and Health Center 2,013,543.04 283,650.00 2,297,193.04
Market and Slaughterhouse 25,687,655.86 (77,055.60) 25,610,600.26
Other Structures 8,944,383.36 3,751,116.93 12,695,500.29
Leasehold Improvement-Bldg. 180,645.00 - 180,645.00
Office Equipment 8,147,460.73 527,278.65 8,674,739.38
Furnitures and Fixtures 2,489,375.52 745,131.00 3,234,506.52
IT Equipment and software 46,631,976.90 5,686,412.50 52,318,389.40
Library Books 47,784.00 21,805.10 69,589.10
Machineries 91,190.00 26,000.00 117,190.00
Agri'l, Fishery & Forestry Equipt. 361,780.00 - 361,780.00
Communication Equipment 1,723,205.00 - 1,723,205.00
Cons. & Heavy Equipment 64,626,176.49 (960,000.00) 63,666,176.49
Disaster Response & Rescue Equipt. 620,260.00 13,223,546.00 13,843,806.00
Medical, Dental & Lab. Equipt. 1,742,200.00 162,825.00 1,905,025.00
Military and Police Equipment 258,450.00 24,350.00 282,800.00
Sports Equipment 628,130.50 - 628,130.50
Technical & Scientific Equipt. 1,548.10 - 1,548.10
Other Machineries & Equipt. 1,159,388.05 98,290.00 1,257,678.05
Motor Vehicles 10,117,398.00 2,813,080.00 12,930,478.00
Watercraft 1,283,203.80 - 1,283,203.80
Other Transportation Equipt. 2,522,440.00 (22,440.00) 2,500,000.00
Other Property, Plant & Equipt. 1,993,240.41 267,400.00 2,260,640.41
Construction in Progress-RH&D - 2,461,548.37 2,461,548.37
Construction in Progress-AWRPSC - 982,248.07 982,248.07
Construction in Progress-WASRO - 1,916,406.67 1,916,406.67
Construction in Progress-Other PI - 994,160.41 994,160.41
Construction in Progress-Agency Asset 250,000.00 - -
Total PPE P 232,075,586.43 P 51,367,519.08 P 283,193,105.51
Less: Accum. Depreciation 95,610,710.88 19,321,752.92 114,932,463.80
Total PPE (Net of Dep'n) P 136,464,875.55 P 31,795,766.16 P 168,260,641.71
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8.2 The Straight-line method of depreciation is followed. No depreciation is charged
to public infrastructures. The useful lives of the assets are based on COA
Circular No. 2003-007 dated December 31, 2003.
8.3 The significant increase of the Property, Plant and Equipment was due to the
following:
Amount
Land P 1,700,000.00
Office Building 2,918,789.23
School Building 556,376.75
Hospital & Health Center 283,650.00
Market & Slaughterhouse (77,055.60)
Other Structures 3,751,116.93
Acquisition of:
Elec., Power & Energy Structure 13,266,600.00
Office Equipment 527,278.65
Furniture and Fixtures 745,131.00
IT Equipment & Software 5,686,412.50
Library Books 21,805.10
Machineries 26,000.00
Construction & Heavy Equip. (960,000.00)
Disaster Response & Rescue Equip. 13,223,546.00
Medical, Dental & Lab. Equip. 162,825.00
Military & Police Equipment 24,350.00
Other Machineries & Equip. 98,290.00
Motor Vehicles 2,813,080.00
Other Transportation Equipment (22,440.00)
Other Property, Plant & Equip 267,400.00
Construction in Progress 6,354,363.52
Total P 51,367,519.08
8.4 Physical Inventory of Property, Plant and Equipment Report amounting to

P276,838,625.40 submitted by the GSO is not reconciled with the PPE Ledger
accounts in the amount of P283,193,105.51. This is still subject for verification
and reconciliation as to the correct balances of the PPE by CY 2015.
8.5 The significant increase of Other Assets was due to transferred from the Property,
Plant and Equipment Account to Other Assets Account which were considered
unserviceable :
Amount
Beginning Balance P 289,830.74
Construction and Heavy Equipment 96,000.00
Motor Vehicles 600,622.00
Total P 986,452.74
13
Note 9 – Current Liabilities
9.1 Composition of the Current Liabilities:
2014 2013
Payable Accounts:
Accounts Payable
General Fund P 9,506,331.48 P 25,215,528.70
Total P 9,641,912.95 P 25,717,690.73
Inter-Agency Payables:
Due to BIR 271,261.50 147,475.75
Due to GSIS 449,433.04 400,296.11
Due to PAG-IBIG 3,340.26 1,414.26
Due to PHILHEALTH 102,282.00 93,769.50
Due to Other NGAs
General Fund 4,387,143.62 3,631,716.89
Trust Fund 6,124,267.89 3,065,580.73
Total 11,345,152.77 7,347,677.70
Due to Other LGUs
General Fund P 3,624,306.33 P 6,484,135.29
Trust Fund 302,328.66 2,328.66
Total P 4,392,940.84 P 6,952,769.80
TOTAL 15,738,093.61 14,300,447.50
Intra-Agency Payables:
Due to Other Funds
General Fund P - P -
Trust Fund 15,048.97 17,591.45
Total P 53,506.96 P 49,511.32
Other Current Liability Accounts:
Guarantee Deposits Payable
Trust Fund P 573,903.70 P 573,903.70
Performance/Bidders/Bail
Bonds Payable
General Fund P - P -
Trust Fund 9,990.00 9,990.00
Total P 9,990.00 P 9,990.00
Trust Liabilities-DRRMF
General Fund P 5,258.60
Trust Fund P 794,594.93 5,628,810.27
Total 799,853.53 5,628,810.27
Other Payables
General Fund P 309,834.43 P 290,689.14
Trust Fund 281.00 281.00
Total P 310,115.43 P 290,970.14
Total Curre nt Liabilitie s P 27,127,376.18 P 46,576,582.26
9.2 The Accounts Payable account consists of the various obligations of the City as of
December 31, 2014 which were obligated, and with approved disbursement
vouchers. For details refer to Annex D.1 - Schedule/Aging of Accounts Payable.
14
9.3 The account Due to Other NGAs consists of the amount received from various
national government agencies for implementation of specific programs/projects
subject to liquidation and previous years’ balances amounting to P4,387,143.62 –
General Fund, P7,424.46 - SEF and P6,124,267.89- Trust Fund.
9.4 The account Guaranty Deposits Payable in the Trust Fund represents bail bond
deposit.
Note 10 - Long-term Liabilities
2014 2013
Loans Payable - Domestic
General Fund P 2,070,621.31 P 16,426,929.31
P 2,070,621.31 P 16,426,929.31
10.1 The summary of loans payable as of December 31, 2014 is as follows:
Institution Total Amount Principal & Interest Balance

1 LBP P 8,299,947.87 7,716,323.29 1,046,211.90
2 LBP 3,986,072.40 3,705,785.14 502,446.09
3 LBP 4,140,909.04 3,849,734.16 521,963.32
Total P 16,426,929.31 P 2,070,621.31
(Note: For details see Annex D.2.) Loans were fully paid as of January 5,
2015.
10.2 Items 1 to 6 in the above table were loans acquired for the acquisition of heavy
equipment in 2007 and 2010 with payment terms of seven years at 10% interest
per annum, subject to quarterly repricing.
Note 11 - Deferred Credits

2014 2013
Deferred Real Property
Tax Income
General Fund P 5,607,704.40 24,349,432.15
Total 5,607,704.40 24,349,432.15
Deferred Special Education
Tax Income
Special Education Fund 24,870,140.54 25,685,361.97
Total 24,870,140.54 25,685,361.97
Other Deferred Credits
General Fund 86,154.19 150,546.64
Total 172,308.38 301,093.28
TOTAL 30,650,153.32 50,335,887.40
15
11.2 Other Deferred Credits represents undistributed collection of Real Property Tax
for the advance payment made by the taxpayer.
Note 12 - Government Equity
12.1 The account is composed of:

Amount
General Fund
Invested Capital P 27,645,068.99
Contingent Capital 746,081.00
Continuing Appropriations- 2013 22,484,066.06
Continuing Appropriations- LPRAP Equity2013 770,000.00
LDRRMF-2013-Capial Outlay 861,987.30
Continuing Appropriations- 2014 19,846,396.49
Continuing Appropriations- LPRAP Equity2014 3,247,400.00
Barangay Assistance-Continuing 1,350,000.00
Countryside Development Fund 3,561,392.00
GAD Program-2014 5,611,225.92
Capital Outlay 40,107,923.31
LDRRMF-2014 100,000.00
LDRRMF-2014 Capital Outlay 3,867,833.55
LDRRMF-2013 to be transferred to Trust Fund
MOOE & QRF 5,078,398.15
Available for Operations 195,272,875.69
P 330,550,648.46
Portion pertaining to PPE P 486,601.19
Continuing Appropriation 2,641,629.41
Available for Operations 19,486,996.30
P 22,615,226.90
Trust Fund
Balances of funds received for the implementation
of programs and projects which are not subject for
liquidation. P 1,013,112.70
P 1,013,112.70
TOTAL P 354,178,988.06
12.2 Separate Accounting and Reporting guidelines for the Local Disaster Risk
Reduction and management fund (LDRRMF) of Local Government Units is
being implemented and shall be recognized as special Trust Fund to be spent in
the succeeding five years for MOOE and QRF.
Note 13 – Per estimated budget, the Internal Revenue Allotment was P372,795,930.00 but
the actual receipt for the year 2014 was only P370,986,108.00. There was a
reduction of IRA in the amount of One Million Six Hundred Twenty
Thousand Sixty Two & 40/100 only (P1,620,062.40) . Despite the
understatement of income received from the National Government, LGU-
16
Catbalogan was able to exceed its estimated revenue from all regular receipt
with a 105% collection rate. Per Budget, the estimated income from regular
receipt was P45,000,000.00 . Actual collection for the year was
P47,144,091.28.
Note 14 - Other Receipts
13.1 Composition:
2014 2013
General Fund
Share from PAGCOR/PCSO P 976,444.56 P 986,338.00
Miscellaneous Income 305,615.00 100,000.00
Increase in Payable 9,136,224.25 11,629,783.59
Decrease in Receivables 5,009,359.58 9,229,167.49
Return of Cash Advance 688,914.67 970,636.04
P 16,116,558.06 P 22,915,925.12
Return of Cash Advance P 92.75 P 2,666.00
Decrease in Adv. to Officers & Empl - 129,120.00
Decrease in Inventory - 59,772.60
Increase in Accounts Payable 344.40 502,162.03
P 437.15 P 693,720.63
Trust Fund
Equity-Salintubig 300,000.00 -
DA-San vicente -Palanyogon Road 2,462,500.00 -
Suplemental Feeding 3,900,000.00 2,120,000.00
Socail Pension Program 300,000.00 900,000.00
Spring Development 100,000.00 -
SAR/Transportation 3,500,000.00 -
Multi-Hazard Map 500,000.00
OTOP 704,160.00
Bamboo-DENR 49,500.00
Mangroove-DENR 51,750.00
Parola-DOT 960,000.00
Cash Donation-Catb Bankers Club 20,000.00
Cash Donation-Sen Ralph Recto 250,000.00
Cash Donation- Metro Manila 500,000.00
Trust Liabilities-DRRMF 4,107,046.08 5,628,966.62
Environment Management Bureau - 500,000.00
Salintubig Program - 1,325,000.00
Social Pension Program - -
Decrease in Receivable 11,010.00
Increase in Payable 23,926.99 12,776.50
P 17,739,893.07 P 10,486,743.12
Total P 33,856,888.28 P 34,096,388.87
17
PART II
AUDIT OBSERVATIONS AND RECOMMENDATIONS
Cash in Vault –
3. The City Treasurer retained huge amount of undeposited cash every end of the
month which accumulated to P1,145,472.51 as of December 31, 2014.
Section 69 of PD 1445 (Government Auditing Code of the Philippines) states

that, “Public officers authorized to receive and collect moneys arising from taxes,
revenues, or receipts of any kind shall remit or deposit intact the full amounts so
received and collected by them to the treasury of the agency concerned and credited to
the particular accounts to which the said moneys belong. The amount of the collections
ultimately payable to the other agencies of the government shall thereafter be remitted
to the respective treasuries of these agencies xxx.”
In relation to this, Section 2.1 of COA Circular 97-002 dated February 10, 1997
also requires that, “daily receipts of collections must be deposited intact with the proper
bank.” Furthermore, Section 32 of the MNGAS for Local Government Units also
provides that, “ the Treasurer/Cashier shall deposit intact all his collections as well as
all collections turned over to him by the collectors/tellers with the authorized
depository bank daily or not later than the next banking day. He shall record all
deposits made in the cashbook and prepare the RCD.”
Verification of the general ledger showed the following monthly balances of

Cash in Vault account of the City in CY 2014:
Month General Fund SEF Trust Consolidated

Monthly Balance
Beg. Bal. 600,695.87 149,289.55 0.00 749,985.42
Jan. 851,533.93 258,762.41 0.00 1,110,296.34
Feb. 315,819.95 46,909.24 0.00 362,729.19
Mar. 444,076.26 147,146.11 0.00 591,222.37
Apr. 347,940.50 26,834.10 0.00 374,774.60
May 410,745.81 50,696.17 0.00 461,441.98
Jun. 515,415.61 0.00 0.00 515,415.61
Jul. 444,057.94 10,028.05 0.00 454,085.99
Aug. 222,179.55 19,375.42 0.00 241,554.97
Sept. 288,843.65 30,340.70.009 0.00 319,184.44
Oct. 608,360.91 0.00 960,000.00 1,568,360.91
Nov. 633,091.58 5,884.69 0.00 638,976.27
Dec. 932,205.58 212,132.33 1,134.60 1,145,472.51
It can be noted from the above data that collections in the Trust Fund had been
deposited in full or intact, such that only a minimal balance of P1,134.60 was left
18
undeposited at year-end. However, in the General Fund and SEF, it was observed that
huge balances of cash were allowed to remain on hand every end of the month, which
had accumulated to P932,205.58 and P212,132.33, respectively, as of December 31,
2014. This indicates that collections were not being deposited in full/intact by the City
Treasurer, despite the proximity of her office to the depository banks.
The practice of retaining huge amount of cash on hand is contrary to sound cash
management as it exposes the funds to risks of loss, misuse or misappropriation.
Notice of suspension was not issued for this audit finding because it pertained to
internal control deficiency.
During the exit audit conference, the City Treasurer explained that the
unremitted collections in December, 2014 pertained to collections made during the last
working day of the year. To fully comply with the daily deposit of collections as required
by regulation, the cashier’s office will observe a cut-off time of 1:00 PM for the turn-
over of collections made by revenue collectors/tellers and other accountable officers to
the City Treasurer.
We recommend that the City Mayor direct the City Treasurer to deposit
intact all collections in accordance with law and regulations and to refrain from
retaining huge amount of cash on hand to safeguard funds from risks of loss and/or
misuse.
Cash in Bank- Local Currency, Current Account –
4. Cash amounting to P41,352,444.95 as of December 31, 2014 was still maintained

with Philippine National Bank, a private bank, without specific from Department of
Finance (DOF).
Section 311 of the Republic Act 7160 or the Local Government Code and Section
14 of the New Government Accounting System Manual for LGUs provides that local
treasurers shall maintain depository accounts in the name of their respective local
government units with banks, preferably government-owned, located or nearest to their
respective areas of jurisdiction. Earnings of each depository account shall accrue
exclusively thereto.”
On the other hand, Department of Finance (DOF) Department Order No. 27-05
dated December 9, 2005, provides that Provincial, City and Municipal Treasurers, are
required to secure prior DOF approval if they are to deposit their funds or maintain
depository accounts with banks other than the Land Bank of the Philippines and the
Development Bank of the Philippines. Banks concerned are therefore reminded to take
appropriate measures to ensure that government offices and/or agencies that maintain
deposit accounts with them have complied with the recent DOF directive, otherwise,
affected deposit accounts may have to be closed.”
19
Records show that the City Government maintains five (5) depository bank
accounts for the General Fund – three (3) with Land Bank of the Philippines (LBP), one
(1) with Development Bank of the Philippines (DBP), and one (1) with Philippine
National Bank (PNB), which is already a private bank. In CY 2014, transactions and
account balances from these banks revealed the following data:
Bank Accounts Collections Deposited – Checks Issued- Balance as of December

General Fund CY 2014 General Fund CY 2014 31, 2014
LBP - 0602-1038-11 0 202,559,451.16 53,547,463.17
LBP - 0602-1082-28 0 73,176,141.28 36,240,159.64
LBP 0602-1082-79 0 0 391,811.85
DBP - 328-732-1 11,529,373.35 0 19,757,032.37
PNB 329-933100020 49,314,816.95 50,720,971.25 41,352,444.95
Total 60,844,189.60 326,456,563.69 151,288,911.98
It was noted that 81% of the collections during the year, or P49,314,816.95 were
deposited with PNB – Catbalogan Branch, and a significant balance. Disbursements
from this account consist of various operating expenses and other remittances. In an
inquiry with the City Treasurer, she stated that she has no knowledge of any existing
authority or approval from the DOF since she assumed office, and this account had been
maintained with PNB for quite some time.
The continued maintenance of the depository account with PNB without prior
approval from the Department of Finance may undermine the interest of the public and
stakeholders.
weaknesses in administrative controls.
Management furnished the audit team snap shots from the Development Bank of
the Philippines (DBP) showing their daily deposits. This shows their intention to transfer
their account from PNB to DBP. Management was awaiting for the interest income to be
earned for June 30, 2015 and clearing of all their outstanding checks. They said that
before the end of CY 2015 they will close their PNB account.
The audit team will monitor management’s compliance with the directives of the
Department of Finance.
We recommend that Management secure the approval from the Department

of Finance if they are to maintain their depository account with PNB, otherwise,
effect immediate closure of the account and transfer the funds to an authorized
government depository bank.
20
Cash Advances –
5. Cash advances for travelling expenses totaling P417,483.27 were refunded after 9 to
228 days from the cancellation of the trip while liquidation of cash advances for
special time-bound undertakings amounting to P1,623,691.00 lacked appropriate
supporting documents.
Section 4(6) of PD 1445 states that, “Claims against government funds shall be
supported with complete documentation.”
Whereas, Section 3.1.2.3 of COA Circular No. 96-004 dated April 19, 1996
states that “Where a trip is cancelled, the amount paid in advance shall be refunded in
full. In cases where the trip is cut short or terminated in advance of the itinerary, the
excess payment shall likewise be refunded. These refunds shall be made immediately
upon cancellation or termination of the trip. It shall be the primary duty of agency heads
to enforce promptly the refund. (Underscoring ours)
Vouching of travel transactions disclosed that travel advances totaling

P417,483.27 were refunded after 9 to 228 days from the cancellation of the trip, as shown
in the table below:
Reference Date Date No. of Days Amount

Granted Refunded to Refund Refunded
Ck. No. 1046804 4/15/2014 5/9/2014 24 P 8,447.76

Ck. No. 1046837 4/15/2014 5/26/2014 41 8,447.76
Ck. No. 1046793 4/15/2014 5/16/2014 31 8,447.76
Ck. No. 1047116 5/09/2014 8/27/2014 110 26,345.00
Ck. No. 1066677 7/28/2014 8/18/2014 21 209,804.00
Ck. No. 1077711 10/2/2014 10/16/2014 14 9,689.36
Ck. No. 1066251 6/23/2014 11/13/2014 143 9,461.96
Ck. No. 1047157 5/13/2014 11/17/2014 188 10,020.00
Ck. No. 1047222 5/15/2014 11/24/2014 193 18,890.00
Ck. No. 1099526 11/14/2014 12/29/2014 45 25,427.00
Ck. No. 1077875 10/15/2014 10/24/2014 9 12,758.67
Ck. No. 1047205 5/15/2014 12/29/2014 228 18,890.00
Ck. No. 1099527 11/14/2014 12/31/2014 47 25,427.00
Ck. No. 1099528 11/14/2014 12/9/2014 25 25,427.00
Total P 417,483.27
Likewise, liquidation of cash advances for special time-bound undertakings

amounting to P 1,623,691.00, lacked appropriate supporting documents. The details of
deficiencies per disbursement voucher are shown in Annex F and summarized as
follows:
21
a) Purchase Request (PR);
b) Request for Quotation (RFQ);
c) List of Recipients of items (t-shirts, food, etc.) purchased and distributed;
d) Inspection and Acceptance Report;
e) Approved budget proposal;
f) Contract of service;
g) Attendance sheet to support claim for meals and snacks;
h) Acknowledgement receipt for equipment for the machine issued to end-user;
Further, some liquidation reports did not bear the date of receipt of the
documents, thus making it difficult to determine the actual submission of the documents
and the liquidation of the same.
Notices of suspensions were issued for the immediately preceding deficiencies

requiring the submission of the lacking supporting documents.
During the exit conference, management gave the following reasons why travel
advances were refunded: (a) conflict of schedule; (b)liquidation papers were lost in
transit; and (c) postponement of the training. The Accountant informed the Legislative
Department through their session, the need to liquidate the cash advance within the
prescribed period of time.
We emphasize strict compliance with Section 3.1.2.3 of COA Circular No. 96-
004.
We recommend that the City Mayor require the officials and employees
concerned to: (a) refund travel advances immediately upon cancellation of the trip;
and (b) to settle the audit suspensions through compliance with the requirements
called for in the Notices of Suspensions.
Local Disaster Risk Reduction Management Fund (LDRRMF) –

realigned to Maintenance and Other Operating Expenses contrary to Section 336 of
the Local Government Code of 1991, while the amount of P200,000.00 was
earmarked for the office maintenance of the CDRRMC Secretariat & DRRMO
which do not constitute disaster risk management activities.
Section 336 of the Local Government Code of 1991 provides that, “Funds shall be
available exclusively for the specific purpose for which they have been appropriated. No
ordinance shall be passed authorizing any transfer of appropriations from one item to
another. However, the local chief executive or the presiding officer of the sanggunian
concerned may, by ordinance, be authorized to augment any item in the approved annual
22
budget for their respective offices from savings in other items within the same expense
class of their respective appropriations.”
Section 3 of COA Circular 2012-002 dated September 12, 2012 states that,
LDRRMF shall be used to support disaster risk management activities such as, but not
limited to pre-disaster preparedness programs, post-disaster activities, payment of
insurance premiums on property, and relief and recovery programs.
Joint Memorandum Circular No. 2013-1 of the NDRRMC, DBM and DILG
enumerates the specific programs, projects and activities chargeable against the DRRM
Fund.
For calendar year 2014 the City appropriated P 21,088,046.50 for its DRRMF
which is more than 5% of its estimated revenue of P 417,795,930.00 from regular
sources. The details of the fund allocation is shown in Annex G and summarized as
follows:
Personal Services (PS) P 100,000.00

Maintenance and Other Operating 10,613,646.50
Expense (MOOE)
Capital Outlay (CO) 10,374,400.00
Total P 21,088,046.50
Of the total appropriation for CO, the amount of P5,000,000.00 was allocated for
the purchase of equipment (CCTV) and other accessories. Since the project was not in
any manner related to disaster mitigation as outlined in NDRRMC, DBM and DILG Joint
Memorandum Circular No. 2013-1 and previously commented in the CY 2013 Annual
Audit Report, the City, through Ordinance No. 2014-028 dated November 19, 2014, re-
programmed/ realigned the said amount to other projects and activities. Similarly, the
amount of P138,166.45 for the procurement & acquisition of disaster equipage classified
as “Disaster Response & Rescue” Equipment was realigned to rental of warehouse per
Ordinance No. 2014-005 dated March 13, 2014. The re-programmed/realigned projects
are as follows:
Amount Re-programmed/
Program/Project/Activity Program/Project/Activity
Realigned
(from Appropriations CY (pursuant to Ordinance No. 2014-028
2014 CDRRMF) and 2014-005) Capital Outlay MOOE
Capital Outlay – Electronic Community Based Monitoring 2,006,000.00
Purchase of equipment (CCTV) System Survey ( E-CBMS)
& other accessories
Construction of grouted rip-raps/ seawall
P5,000,000.00
in:
Brgy Cagutsan 400,000.00
Brgy Canhawan Gote 300,000.00
Brgy Buluan 300,000.00
Brgy Bagongon 400,000.00
Brgy Rama 300,000.00
Brgy Cinco 300,000.00
Brgy Darahuway Daco 300,000.00
23
Conduct of trainings, CDRRM Meetings 694,000.00
and other related activities, multi-
stakeholders dialoguees, and IEC
campaign between LGU and it
communities
Procurement & acquisition of Rental of warehouse for storage facility 138,166.45
disaster equipage classified as and for other purposes
“Disaster Response & Rescue”
Equipment
Total 2,300,000.00 2,838,166.45
On the other hand, it was noted that the City appropriated the amount of
P200,000.00 for the office maintenance of the CDRRMC Secretariat & DRRMO, which
includes the following:
Personal Services - P 100,000.00

MOOE - 50,000.00
Capital Outlay - 50,000.00
Total P 200,000.00
The above expenses do not relate to any of the disaster risk management activities
enumerated in Joint Memorandum Circular No. 2013-1 and as required under COA
Circular 2012-002 dated September 12, 2012, hence, should have been provided by the
agency under the regular office appropriations.
The realignment/reversion of capital outlay to maintenance and other operating

expenses was contrary to Section 336 of the Local Government Code of 1991, and devoid
of legal basis. The provision of budget for non-related disaster risk management activities
had limited the use of the DRRM funds to more significant projects/programs.
During the exit audit conference, Management commented that by 2016 Budget
preparation, they will provide funds for the DRRM office for their Personal Services,
Operating Expense and Capital Outlay. Moreover, upon receipt of the AOM,
management refrain from disbursing funds not related to CDRRM fund. The budget for
personal services from DRRMF amounting to P100,000.00 was not disbursed and they
will just realign it to Capital Outlay for CDRRMF.
The audit team will monitor management’s disbursement of the CDRRMF.
We recommend that Management adhere strictly to Section 336 of the Local

Government Code of 1991 and allocate the DRRM funds only to programs, projects
and activities that are related to disaster prevention and mitigation, preparedness,
relief and recovery.
7. The LDRRMF was used to pay expenditures totaling P7,347,773,28 that are not
P14,884.00. Some purchases of relief goods amounting to P1,199,855.50 were made
24
thru cash advance instead of direct payment to suppliers, and claims totaling
P12,255,537.40 were paid without complete documentation.
Memorandum Circular No. 2012-73 dated April 17, 2012 provides the guidelines
in the utilization of Local Disaster Risk Reduction and Management Fund (LDRRMF).
The Circular enjoined all Local Chief Executives to utilize their LDRRMF to ensure that
basic “rescue and response equipment” are procured.
Whereas, Section 4(6) of PD 1445 provides that claims against government funds
shall be supported with complete documentation. Corollary to this, COA Circular No.
2012-001 dated June 14, 2012 prescribes the Revised Documentary Requirements for
Common Government Transactions.
Section 2 of COA Circular No. 97-002 dated Feb. 10, 1997 provides that all
payments must be made by check.
Section 54.1 of the IRR of RA 9184 states that “Splitting of Government

Contracts is not allowed. Splitting of Government Contracts means the division or
breaking up of GOP contracts into smaller quantities and amounts, or dividing contract
implementation into artificial phases or sub-contracts for the purpose of evading or
circumventing the requirements of law and this IRR, especially the necessity of public
bidding and the requirements for the alternative methods of procurement.”
Audit of disbursements from LDRRMF disclosed that the fund was used to pay
expenditures totaling P7,347,773,28 that are not related to disaster risk management
activities, broken down as follows:
Particulars Check No. Date Amount

Payment of one (1) unit rescue truck 17982 1-15-14 P2,034,821.43
Payment of one (1) unit commuter Deluxe 17983 1-15-14 1,508,323.22
Type Ambulance
Payment of one (1) unit Rescue Van 17984 1-15-14 2,060,280.35
Payment of one (1) unit Fire Truck 17985 1-15-14 1,466,964.28
Total Cost of Vehicle Purchased 7,070,389.28
Purchase of uniforms of Traffic Brigade 1066370 6-27-14 262,500.00
Enforcers
Payment of travelling expenses 1046838 4-15-14 8,447.76
Reimbursement of travelling expenses 1047143 5-12-14 2,036.24
Registration fee 1066094 6-09-14 4,400.00
Grand Total P7,347,773.28
The above expenditures are not among the list of preparedness equipment and
other equipage to be charged to LDRRMF as provided for in DILG Memorandum
Circular No. 2012-73 dated April 17, 2012. Records also disclosed that the procurement
of vehicles was based on negotiated procurement under emergency cases as provided for
in the BAC Resolution and duly approved by the Head of Procuring Entity. The BAC
cited GPPB Resolution No. 34-2013 to support the use of the alternative mode of
25
procurement, however, the authority was for the purpose of providing rescue, recovery,
relief and/or rehabilitation efforts for and to continue to provide basic services to victims
in areas affected by Typhoon Yolanda. The team believes that the BAC referred to the
GPPB Resolution to circumvent the required public bidding. In addition, these vehicles
were delivered only in January, 2014, two months after the Typhoon Yolanda, and the
nature/kind of these vehicles could not be directly associated with the relief and/or
rehabilitation efforts intended by the government.
Moreover, review of transactions showed that procurement of various goods for

the relief operation for the victims of typhoon Ruby totaling P1,199,855.50 were made
through cash advance by the City Treasurer, instead of payment by check directly to the
supplier, contrary to COA Circular No. 97-002. They are broken down as follows:
Date per
Cash Cash Advance Amount paid to
advance Check No. Particulars suppliers
Various goods for Relief Operation
12/4/2014 1099803 of Typhoon Ruby P 326,947.00
12/4/2014 40238431 of Typhoon Ruby 194,361.50
300 boxes of noodles for the Relief
12/8/2014 40238432 Operation of Typhoon Ruby 165,000.00
200 cases of sardines for the Relief
12/8/2014 40238433 Operation of Typhoon Ruby 251,000.00
12/8/2014 40238435 of Typhoon Ruby 262,547.00
Total P 1,199,855.50
Further, the propriety and validity of various disbursements totaling

P12,255,537.40 could not be ascertained due to lack of supporting documents such as: list
of recipient of food items; inspection and acceptance report; request for quotation;
abstract of price quotation; BAC resolution recommending alternative mode of
procurement duly approved by Head of Agency; BAC resolution recommending award of
contract; Notice of Award posted on PhilGeps; LTO registration in the name of the City
Government (for the vehicles) and list submitted to the GPPB- Technical Support office
for all transactions granted by GPPB resolution 34-2013 (See Annex H for details).
Other noted deficiencies include the procurement of goods and services thru
shopping even if the amount exceeds the thresholds prescribed in Annex “H” of RA 9184
and its IRR. In some cases, splitting of contract was resorted to in order to circumvent the
requirements for the use of alternative mode of procurement, as illustrated in the
following transactions:
Check PR No./ PO No./

Date No. Payee Particulars Net Amount Date Date
Catering Services -Seminar - 2014-043- 2014-027-
COCINA DE Workshop on First Aid, Radio 011 / 002/
5/15/14 1047202 CABRAL communication, and Clean and P 77,343.76 3/13/2014 3/18/2014
26
Green Program (Mar 20-22,
2014)
Catering Services -Seminar -

Workshop on First Aid, Radio
communication, and Clean and 2014-046- 2014-028-
COCINA DE Green Program (Mar 24-26, 003/ 001/
5/15/14 1047203 CABRAL 2014) 77,343.76 3/17/2014 3/20/2014
Catering Services -Seminar -
Workshop on First Aid, Radio
communication, and Clean and 2014-041- 2014-026-
COCINA DE Green Program (Mar 17-19, 001/ 002/
5/23/14 1047309 CABRAL 2014) 77,343.76 3/12/2014 3/14/2014
2014-047- 2014-030-
JK Goldline Gen. One (1) set refugee circular 001/ 001/
5/30/14 1047356 Mdse tent 34,071.44 3/19/2014 3/28/2014
2014-037-
JK Goldline Gen. 001/ 2014-023/
6/4/14 1047378 Mdse Three (3) Sets of tent 85,178.58 3/4/2014 3/10/2014
2014-016-
JK Goldline Gen. 001/ 2014-011/
6/11/14 1066127 Mdse One (1) set refugee framed tent 40,696.44 2/7/2014 2/13/2014
Payment of various Emergency
5/26/14 1047323 PALMER ASIA INC Equipment 517,365.19
Total P909,342.93
Apparently, catering services for the Seminar-Workshop on First Aid, Radio

Communication and Clean and Green Program were divided into three batches so that
shopping maybe used as an alternative mode of procurement. The same was done for the
procurement of tents. However, considering that that Catbalogan City is classified as a
5th class city per DOF Department Order No. 23-08 dated July 29, 2008, the applicable
threshold for shopping under Section 52.1 (a) is only P50,000.00.
During the exit audit conference, management explained that the purchase of
ambulance was based on DILG Memorandum Circular 2012-73, which authorized the
procurement of preparedness equipment and other equipage, such as but not limited to the
listed items thereon. Although the purchase of vehicle is not specifically mentioned in the
list, however, they are of the view that purchase of items should not be limited to what
has been listed in the memorandum circular. They believed that purchase of ambulance is
related to disaster preparedness. In time of emergency, ambulance is absolutely
necessary to rescue a patient that needs immediate help. Management further averred that
that the purchase of food commodities for the victims of Typhoon Ruby was done in
Tacloban City and the same was paid in cash. The goods were purchased in Tacloban
because the grocery stores in Catbalogan were not able to meet the needed volume of
commodities . Moreover, list of recipient for the goods purchased was already submitted
subject for Auditor’s verification.
The audit team emphasized that the purchase of vehicle (ambulance) to be used
for the LGU’s disaster preparedness programs using LDRRM would constitute spending
a specific fund for something other than what it has been specifically appropriated for.
The list of recipient of goods purchased is subject to scrutiny by the audit team.
27
We recommend that Management strictly utilize the LDRRMF for related
disaster risks management activities, issue checks directly to creditors/suppliers and
refrain from granting cash advance for purchase of relief goods. Likewise, require
the City Accountant and responsible officials and employees to submit the lacking
supporting documents.
Management Fund(LDRRMF) did not conform to COA Circular 2012-002 dated
September 12, 2012 and COA Circular No. 2014-002 dated April 15, 2014 resulting
in inadequate disclosures, incomplete submission of required reports, and
understatement of the CY2014 QRF balance to be transferred to the Special Trust
Fund by P1,332,500.00.
COA Circular No. 2012-002 dated September 12, 2012 prescribes the Accounting
and Reporting Guidelines for Local Disaster Risk Reduction and Management Fund
(LDRRMF) of Local Government Units (LGUs), National Disaster Risk Reduction and
Management Fund (NDRRMF) given to LGUs and Receipts from Other Sources.
Item 5.1.2 thereof provides that a LDRRMFIP for the DRRM program shall be
prepared annually. It shall present the 30% allocation for Quick Response Fund (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.
Item No. 5.1.5 of the same circular, requires that a “Report on Sources and
Utilization of DRRMF” using the format, shall be prepared and certified correct by the
Local Accountant. The Local Disaster Risk Reduction and Management Officer
(LDRRMO) shall submit the report on or before the 15th day after the end of each month
through the LDRRMC and Local Development Council (LDC) to the COA auditor of the
LGU.
In addition, COA Circular No. 2014-002 dated April 15, 2014 provides for the
accounting and reporting guidelines on the receipt and utilization of NDRRMF, cash and
in-kind aids/donations from local and foreign sources, and funds allocated from the
agency regular budget for DRRM program. Pertinent sections of the subject Circular are
as follows:
a) Item V.1 - requires the preparation and submission to NDRRMC through the
Office of the Civil Defense, on the 5th day following the end of each month,
the Report on the Receipt and Utilization of DRRMF sourced from General
Appropriations Act and Report on the Receipt and Utilization of Cash
Donations. The reports shall be furnished the respective COA Auditor;
b) Item VII – prescribes the required disclosures in the notes to the Financial
Statements pertaining to DRRM such as, but not limited to the following:
28
 Total procurement of inventories, issuance and balance
 Quantity of donated relief goods received, issuance and balance
 Procurement of Property, Plant and Equipment (PPE), receipt of
donated PPE, and disposal/transfer
 Trust Liabilities - DRRM
Review on the reports submitted by the LGU revealed the following deficiencies
in the accounting and reporting of the LDRRMF:
a. It was found out that an obligation was charged to the Quick Response Fund
(QRF) amounting to P1,332,500.00 for the purchase of 1,066 bags of rice,
however, upon verification of the ledgers, this expenditure was also charged
to the Special Trust Fund, resulting in double recording of obligation in the
current year’s QRF, thus the amount to be transferred to the Special Trust
Fund in the ensuing year had been understated by P1,332,500.00.
b. Local Disaster Risk Reduction Management Fund Investment Plan was based
only on the annual investment plan, which only provides for the
projects/programs/activities for the current year and it does not include the list
of projects and activities charged to the unexpended LDRRMF of previous
years.
c. The Report on the Sources and Utilization of LDRRMF as required in COA

circular 2012-002 was prepared quarterly instead of the monthly basis.
Moreover, it was observed that some utilization reports were based on the
amount obligated and not per actual disbursement, thus verification of the
breakdown of disbursements per disbursement voucher submitted was
difficult to determine. The format of the subject report was revised with the
issuance of COA Circular 2014-002.
d. The required disclosure on DRRM per COA Circular No. 2014-002 was not
provided in the Notes to Financial Statements.
In view of the above mentioned deficiencies, the implementation of the disaster

risk reduction management activities could not be monitored and the understatement of
the unexpended balance of LDRRMF negates proper accountability of the fund as called
for in COA Circular Nos. 2012-002 and 2014-002.
The City Accountant failed to submit management response to the audit team,
however, during the exit conference, the City Budget Officer assured us that the amount
of P1,332,500.00 will be restored to the QRF CY 2014 before actual transfer to the
Special Trust Fund.
We recommend that Management include the programs/projects and

activities to be funded from continuing appropriations in the LDRRMFIP and AIP,
29
adhere strictly to COA Circular Nos. 2012-002 and 2014-002 on the accounting and
reporting of the LDRRMF, and direct the City Budget Officer to restore the amount
of P1,332,500.00 from the QRF of CY 2014 to correct the understatement of the
fund balance.
20% Development Fund –
appropriation for development projects amounting to P74,559,186.00, 37.85% or
P28,221,790.35 was not utilized. Likewise, the Report on the Utilization of the 20%
Development Fund was not rendered.
Section 287 of RA 7160 mandates each Local Government Unit (LGU) to

appropriate in the Annual Budget no less than twenty percent (20%) of its Annual
Internal Revenue Allotment (IRA) for development projects.
Whereas, DILG-DBM Joint Memorandum Circular No. 2011-1 dated April 13,
2011, defines the projects covered by the 20% development fund as social development,
economic development, and environmental management. Section 5 thereof, states that
“It is the responsibility of every Provincial Governor, City and Municipal Mayor and
Punong Barangay to ensure that the 20% of the IRA is optimally utilized to help achieve
desirable socio-economic development and environmental outcomes.” (Underscoring
ours)
The Annual Budget of the City include appropriations amounting to

P74,559,186.00 under the 20% Development Fund, purportedly for the implementation of
222 infrastructure projects. Of this amount, only 62.15% or P46,337,395.65 was utilized,
leaving an unutilized fund of P28,221,790.35 for the implementation of 85 infrastructure
projects (See Annex I).
The non-implementation of the 85 infrastructure projects deprived the City

populace the enjoyment of the needed infrastructures and thus, may hindered the uplifting
of the economic and social condition of the people.
Moreover, programs, projects and activities (PPA) totaling P3,939,093.35 were

described in the Annual Investment Plan (AIP) in generic terms, lump-sum
appropriation, as shown in the table below:
Schedule of
PPAs Expected Outputs Amount
Implementation
Water and January to Construction / Repair and 158,600.00
Sanitation Dec. 2014 Rehabilitation of water
Program supply
Local Tourism January to Product development of 600,000.00
Development Dec. 2014 WWII historical light
house: overlooking
30
(WWWII Maqueda Bay
Historical Light
House)
Disaster January to Establishment of fully 340,000.00
Preparedness Dec. 2014 equipped evacuation center
Program
Basic Education January to Innovate program for street 34,000.00
Facilities (Street Dec. 2014 children and OSY (Open
Children & OSY) High School program)
Basic Education January to WATSAN 200,000.00
Facilities December 2014
(WATSAN)
Capital Assistance January to Sustainable and 1,090,800.00
Program Dec. 2014 Community-based
Livelihood program at P
10,000/member Community
based enterprise, Rice
Trading/Marketing, Sea
farming Technology,
Pedicab drivers assistance,
Food Processing,
Handicraft
Establishment of January to OTOP store/Tindahang 500,000.00
OTOP store Dec. 2014 Pinoy
(Tindahang Pinoy)
Marine Reserved January to Rehabilitation of Coastal 166,000.00
and Fish Dec. 2014 Resources
Sanctuaries
Bamboo and January to 33 hectares Bamboo 158,000.00
Mangrove Dec. 2014 reforestation and 30
Reforestation hectares Mangrove
reforestation
Construction & January to Improved living condition 691,693.35
Rehabilitation of Dec. 2014 of the community
Roads & Drainage
Canal
Total 3,939,093.35
The AIP also lack the program/project details such as the approved budget for the
contract (ABC), location(s) and time frames of implementation. It was not supported
with comprehensive data and information that will show the extent of the problems of the
City and how to address it. The expected outputs were not properly identified and
prioritized to achieve the Millennium Development Goals, and the results, whether
immediate or long-term were not stated. Thus, quantitative and qualitative results that the
City Government is aiming for were not determined.
31
It was also observed that the specific provisions detailing the expenditure
program of each PPAs, such as policies and guidelines to be adopted, strategies,
mechanics, rates (honorarium, allowance, cash assistance/donations) and limitations in
the use of funds were also lacking.
On the other hand, the City Planning and Development Officer (CPDO) in
coordination with the City Budget and City Accounting Department did not prepare the
Report on the Utilization of the 20% Development Fund. Our inquiry with the CPDO
disclosed that the City Budget Department is in-charge in the preparation of the said
report. However, the report of the City Budget Department shows only the releases and
certified obligation for each project the City has identified to be charged against the 20%
Development Fund. It has no information on the status of the projects and/or the actual
amount utilized for every projects undertaken. Management failed to note that absence of
Report on the Utilization of the 20% Development Fund hinders the review and proper
monitoring on the said utilization by management, DILG and audit reference by COA.
No notice of suspension or disallowance was issued because the preceding

deficiencies pertained only to lapses in the implementation of projects.
During the exit conference, management commented that the thrust of the
administration is to expedite implementation of programs and projects to give outmost
service to the community. However, there are unforeseen circumstances that caused delay
of the project implementation such as bidding process, typhoon Glenda, Ruby and
Senyang to include the devastating landslide in Brgy. Mercedes that killed 22 people
more or less. Project cited were considered as within the no build zone and the need to re-
align programs and projects in order to adapt or mitigate the effect of calamities on the
communities.
The explanation given by management that bidding process had caused the non-
implementation of projects is not acceptable because they should have strictly followed
the time schedule for each procurement activity as indicated in the Project Procurement
Management Plan (PPMP). As regards typhoons Ruby and Senyang, these two (2)
typhoons occurred in December, 2014, and the projects were already programmed for
implementation prior to December, 2014. Thus, the audit team maintains its stand that
management strictly observe Section 5 of DILG-DBM Joint Memorandum Circular No.
2011-1 dated April 13, 2011.
We recommend that the City Mayor ensure that the 20% of the IRA is
optimally utilized to help achieve desirable socio-economic development and
environmental outcomes, and require the City Planning and Development Office in
coordination with the City Budget and City Accounting Department to regularly
prepare and submit to COA, the Report on the Utilization of the 20% Development
Fund.
Management furnished the audit team, copies of quarterly utilization report only
after an Audit Observation Memorandum was issued.
32
Procurement –

requirements contrary to Section 23 of the IRR of RA 9184.
The relevant provisions on the conduct of public bidding in government

procurement, and embodied in the Revised Implementing Rules and Regulations (IRR) of
R.A. 9184, are as follows:
a) Section 23.1 - For purposes of determining the eligibility of bidders using the
criteria stated in Section 23.5 of the IRR, the following documents shall be
required by the BAC, using the forms prescribed in the Bidding Documents:
Legal Documents:
1. Registration certificate from SEC, DTI or CDA.
2. Mayor’ permit issued by the city/municipality where the principal
place of business of the prospective is located.
Technical Documents:
3. Statement of the prospective bidder of all its on-going and completed
government and private contracts, including contracts awarded but not
yet started, if any, whether similar or not similar, within the relevant
period provided in the Bidding Documents.
4. A valid Phil. Contractors Accreditation Board (PCAB) license and
registration for the type and cost of the contract to be bid.
Financial Documents:
5. The prospective bidder’s audited financial statements, showing, among
others, the prospective bidder’s total and current assets and liability
stamped “received” by the BIR or its duly accredited and authorized
institutions, for the preceding year which should not be earlier than
two (2) from the date of bid submission.
6. The prospective bidder’s computation for its Net Financial Contracting
Capacity (NFCC) or a commitment from a Universal or Commercial
Bank to extend a credit line in favor of the prospective bidder if
awarded the contract to be bid.
b) Section 25.2(b) - enumerates the financial component of the bid which shall
be submitted to the BAC by the prospective bidders or authorized
representative, as contained in the second envelope, thus:
7. Eligibility requirements under Section 23.1 of this IRR;

8. Bid security in the prescribed form, amount and validity period;
33
9. Project Requirements, which shall include the following;
 Organizational chart for the contract to bid;
 List of contractor’s personnel (viz, Project Manager, Project
Engineer, Materials Engineers, and Foremen), to be assigned to
the contract to be bid, with their complete qualification and
experience data;
 List of contractor’s equipment units, which are owned, leased,
and/or under purchase agreements, supported by certification
of availability of equipment from the equipment lessor/vendor
for the duration of the project;
10. Sworn statement by the prospective bidder or its duly authorized

representative in the form prescribed by the GPPB as to the following:
c) Section 34. Objective and Process of Post-Qualification -
a. Section 34.1. The Lowest Calculated Bid/Highest Rated Bid shall

undergo post- qualification in order to determine whether the bidder
concerned complies with and is responsive to all the requirements
and conditions as specified in the Bidding Documents.
b. Section 34.2. Within three (3) calendar days from receipt by the bidder
of the notice from the BAC that the bidder has the Lowest
Calculated Bid or Highest Rated Bid, the bidder shall submit the
following documentary requirements to the BAC:
 Tax clearance;
 Latest income and business tax returns;
 Certificate of PhilGEPS Registration; and
 Other appropriate licenses and permits required by law and
stated in the Bidding Documents.
Failure to submit the above requirements on time or a finding against the veracity
of such shall be ground for the forfeiture of the bid security and disqualify the bidder for
award.
Review and evaluation of bidding documents submitted by all prospective bidders

in the procurement of infra projects of the city government of Catbalogan, revealed that
several projects costing P17,432,660.38, as shown in Annex J, were awarded to
participating bidders whose eligibility documents submitted to the BAC were incomplete
or deficient. The lacking documents and/or deficiencies were as follows:
1. Technical documents(1st envelope) – notice of award, contracts, notice to

proceed, and certificate of completion and acceptance of previously completed
projects, statement of all on-going and completed government & private
contracts within 10 days from submission of the bids; PCAB licenses of some
bidders were to expire during the bidding period.
34
2. Financial documents (2nd envelope) – Audited Financial Statements submitted
pertained only to the immediate preceding year from date of submission of bid
rather than the preceding two (2) years; some financial statements were not
stamped “received by the BIR; list of equipment owned were not properly
supported with valid official receipts or other documents to prove ownership
thereof.
It was further observed that some documents required for post-qualification were
not submitted, such as, tax declaration, latest income and business tax returns, certificate
of PhilGEPs registration, and construction safety and health program approved by the
DOLE. Pursuant to the IRR, failure to submit such documents shall be a ground for the
forfeiture of the bid security and disqualify the bidder for the award. Finally, it was noted
that Plans/Drawings and Technical Specifications for some awarded contracts were not
submitted to the audit team for evaluation.
The awarding of contracts to bidders who have incomplete eligibility documents

and post-qualification requirements indicates laxity and non-compliance of the Bids and
Awards Committee to the eligibility screening and post-qualification processes of the
Procurement Law and its IRR.
The audit team will issue a Notice of Suspension for the above-mentioned
deficiencies.
The Bids and Awards Committee (BAC) failed to submit management response
to the audit team, however, during the exit conference, the BAC Secretariat and the BAC
Chairman promised us to submit all the required lacking documents as soon as possible.
We recommend that the City Mayor require the BAC Secretariat to submit
the lacking procurement documents and the BAC to judiciously undertake the
evaluation of bids and post-qualification process so that contracts are awarded only
to bidders who passed the criteria for eligibility check and post-qualification.
11. Advance payments amounting to P1,795,050.02 were granted to contractors whose

Bidder’s Bond and/or Performance Securities issued by the respective surety
companies were not supported with certification from the Insurance Commission
and were not properly signed by the contractor.
Section 27.2 of the Revised Implementing Rules and Regulations of R.A. 9184
provides: “The bid security shall be in an amount equal to a percentage of the ABC in
accordance with the following schedule:
c) Surety bond callable upon demand issued by a surety - Five percent (5%)
or insurance company duly certified by the Insurance
Commission as authorized to issue such security (Underscoring ours)
35
Similarly, Section 39.1 and 39.2thereof requires that the winning bidder shall post
a performance security prior to the signing of the contract an amount equivalent to 30%
of the contract amount, “callable upon demand issued by a surety or insurance company
duly certified by the Insurance Commission as authorized to issue such
security”(Underscoring ours).
Audit of disbursements on infrastructure projects disclosed that advance payments

equivalent to fifteen percent (15%) of the contract cost, or P1,795,050.02 were granted to
four (4) contractors whose performance securities in the form of surety bond were issued
by the concerned Insurance Company without the accompanying certification from the
Insurance Commission. It was also noted that some performance bonds had no
approval/signature of the principal obligor or contractor, and in other instances, the
official receipt on the performance bond was not signed by the cashier. The advance
payments to contractors with deficient Performance Security/Bidder’s Bond are shown in
Annex K.
The absence of the required certification from the Insurance Commission and
proper signatures in the bidder’s bond and/or performance bond, including that on official
receipt, had casted doubt on the validity and effectivity of the instruments issued.
deficiency.
We recommend that Management require the winning bidders to submit the

certification from the Insurance Commission and to affix the signature in the
performance bond, and henceforth, adhere strictly the provisions of Section 39 of
the Revised IRR of R.A. No. 9184.
12. The BAC Secretariat failed to post the Notices of Award, approved Contracts and
Notices to Proceed on six (6) infrastructure projects costing P13,574,965.38 to the
PhilGEPS website.
Section 37.1.6 of the Revised IRR of R.A. 9184 provides that, “The BAC,
through the Secretariat, shall post, within three (3) calendar days from its issuance, the
Notice of Awards in the PhilGEPS, the website of the procuring entity, if any, and any
conspicuous place in the premises of the procuring entity”.
In addition, Section 37.4.2 of the Revised IRR of R.A.No. 9184 also states that,
“the procuring entity, through the BAC Secretariat, shall post a copy of the Notice to
Proceed and the approved contract in the PhilGEPS and the website of the procuring
36
entity, if any, within fifteen (15) calendar days from the issuance of the Notice to
Proceed”.
Review of six (6) procurement contracts costing P13,574,965.38 disclosed non-

compliance by the BAC Secretariat to the posting requirements for the Notice of Award,
Notice to Proceed and the approved contract in the PhilGEPS website (See Annex L).
An inquiry with the BAC Secretariat confirmed this observation, and explained
that such failure was not intentional but rather, it was due to their lack of awareness of the
rules and regulations.
Non-compliance with the posting requirements of the Procurement Law negates

transparency in the procurement of the City government’s projects.
lapses in the application of regulation.
We recommend that the City Mayor require the BAC Secretariat to post the
Notices of Award, Notice to Proceed, and approved Contract in the PhilGEPS
website in accordance with Sections 37.1.6 and 37.4.2 of the Revised IRR of R.A. No.
9184.

Project of Catbalogan City totaling P804,200.00 was made without public bidding
and was negotiated without adherence to the prescribed process for alternative
methods of procurement. Likewise, some reports, documents and outputs required
from the consultants were not submitted, such as training design and modules,
schedule of activities, and list of trainers and topics assigned.
Below are some of the provisions in the Implementing Rules and Regulations of
R.A. 9184, which management needs to adhere:
a) Section 10 - All procurement shall be done through competitive bidding,

except as provided in Rule XVI of this IRR.
b) Section 48.1 - Subject to the prior approval of the Head of the Procuring
Entity, and whenever justified by the conditions provided in this Act, the
procuring entity may, in order to promote economy and efficiency, resort to
any of the alternative methods of procurement provided in this Rule. In all
instances, the procuring entity shall ensure that the most advantageous
price for the Government is obtained.
37
c) Section 49 to 54 - provide the use of the following alternative methods of
procurement including their processes and terms and conditions, to wit
 Limited Source Bidding (Sections 49.1 to 49.4)

 Direct Contracting (Sec. 50)
 Repeat Order (Sec. 51)
 Shopping (Sections. 52.1 to 52.4)
 Negotiated Procurement (Sections 53.1 to 53.13) –
d) Section 54.2 - For alternative methods of procurement, advertisement and

posting as prescribed in Section 21.2.1 of this IRR may be dispensed with:
Provided, however, That the BAC, through its Secretariat, shall post the
invitation or request for submission of price quotations for Shopping under
Sections 52.1(b) and Negotiated Procurement under Sections 53.1 (two-failed
biddings) and 53.9 (small value procurement) of this IRR in the PhilGEPS
website, the website of the procuring entity concerned, if available, and at any
conspicuous place reserved for this purpose in the premises of the procuring
entity for a period of seven (7) calendar days.
e) Section 54.3 - In all instances of alternative methods of procurement, the

BAC, through the Secretariat, shall post, for information purposes, the notice
of award in the PhilGEPS website, the website of the procuring entity
concerned, if available, and at any conspicuous place reserved for this purpose
in the premises of the procuring entity.
For CY 2014, the City implemented the Establishment of Tindahang Pinoy

Catbalogan or Samar Tourism and Enterpreneurship Promotion Center (STEP-C), a
Project funded by the Department of Trade and Industry (DTI) at a cost of P2.4M. A
perusal of the budget plan revealed that the project consisted of twelve (12) training
components and activities, each having lump sum cost for professional fee of Basic
Development Service Provider (BDSP). A local counterpart of P750,00.00 was also
provided by the City Government for the construction of the building. The initial fund
was downloaded by the DTI to the City in August 11, 2014 in the amount of
P704,160.00.
Audit of disbursements during the year disclosed that the City hired the services
of two BDS/consultants to undertake the following activities of the project:
Project Component/Activity Contract Cost

GDHT Cluster Study Tour (Sept. 17-18, 2014) P 50,000.00
Entrepreneurship & Success Habits Training (Oct. 9-10, 100,000.00
2014)
Strategic & Operational Planning Workshop (Oct. 27, 28 &
29, 2015) 100,000.00
Product Packaging and Labelling ;
Marketing Collaterals Development and Printing (Nov. 6 to
38
Project Component/Activity Contract Cost
Dec. 8, 2015) 554,200.00
TOTAL P 804,200.00
Review of contracts and underlying documents revealed that the procurement of

services of these consultants was not in accordance with the provisions of RA 9184 and
its IRR. The following observations were noted;
a) There were no documents showing that public bidding was conducted by the
City Government for the consulting services, nor was it made evident that the
agency resorted to alternative mode of procurement since there was no
attached BAC resolution as required under Section 48.3 of the IRR.
b) There was no supporting document establishing that the BAC invited other
prospective bidders, or had conducted eligibility check, short listing of
consulting services, and validation of the documentary requirements
submitted. It was noted that the LGU simply invited the consultants and
required the submission of a Curriculum Vitae and a letter of intent.
c) There was no invitation received by the audit team from BAC to witness the
procurement proceedings on this project in disregard to Section 13 of the IRR.
d) There was no proof that eligibility screening, post-evaluation and post-

qualification processes were conducted by BAC.
e) No proof that the BAC Secretariat posted the invitation, request for
submission of price quotation, notice of award, and contract to the PhilGEPS
website, website of the procuring entity, or at any conspicuous place within
the procuring entity’s premises, and .
f) The 15% mobilization for the project components “Product Packaging and
Labelling and Marketing Collaterals Development and Printing”, paid under
Check no. 918096 dated November 21, 2014 in the amount of P74,817.00,
was not supported with an irrevocable standby letter of credit issued by an
entity acceptable to the agency and equal to the advance payment, in violation
of the contract implementation guidelines for the procurement of consulting
services.
Gleaned from the above deficiencies, it was apparent that the City government did
not conduct public bidding on consulting services nor applied the alternative methods of
procurement prescribed under RA 9184, and the hiring of consultants for the
establishment of “Tindahang Pinoy Catbalogan” had become discretionary on the part of
the procuring entity, thus competitiveness and transparency in procurement was not
attained.
39
Moreover, post-audit of disbursement vouchers also disclosed that some reports,
documents and outputs required from the consultants were not submitted, such as training
design and modules, schedule of activities, list of trainers and topics assigned.
deficiency.
Management reasoned out that they have bypassed the necessary bidding and
posting procedures prior to its implementation since the project was undertaken in
partnership with the Department of Trade and Industry (DTI-Samar), and it had to be
implemented within the timeframe that was amenable to both the City Government and
the partner agency. Among the terms of the DTI was to have the said project within the
year 2014, management agreed with them because they believed that the sooner it was
implemented, the sooner it will be able to help intended beneficiaries. For this reason,
initial amount was immediately downloaded to facilitate processing and release of the
next tranche.
Moreover, the total project cost of P804,200.00 covered various activities, each
having a specific purpose and expected output, therefore requiring different terms from
the service provider. The splitting of the amount into smaller contracts was meant to
indicate each of these activities and was done in the spirit of full disclosure as to how the
amount was utilized. With regard to the irrevocable standby letter of credit, the service
provider is willing to submit said document to the audit team as soon as it is secured
from the issuing institution.
The audit team maintained its stand that management strictly adhere to the
provisions of RA 9184 and its Implementing rules and Regulations in the procurement of
consulting services.
We recommend that management conduct public bidding on the

procurement of consulting services and resort to alternative method of procurement
only when the conditions for the use of the same are present. Likewise, require the
consultants to submit reports, documents and outputs such as training design and
modules, schedules of activities, and list of trainers and topics assigned.
Honoraria –
14. The payment of honoraria to some national government officials/employees

amounting to P 757,500.00 was bereft of legal basis.
DBM Compensation Policy Guidelines No. 98-1 dated March 23, 1998 specifies
the national government officials entitled to additional compensation in the form of
honoraria, chargeable against local government funds, to wit:
40
1. Prosecutors (Provincial/City Fiscals) and their Assistants of the Department of
Justice (DOJ)
2. Judges of Regional Trial Courts/Municipal Trial Courts/ Municipal Trial Courts
in Cities/Municipal Trial Courts of the Supreme Court
3. Clerks of Court in RTCs and MTCs in cities
4. Fire Station Commanders of the Bureau of Fire Protection (BFP)
5. Police Station Commanders of the Philippine National Police (PNP)
6. Municipal Government Operations Officer (MGOO) of the Department of the
Interior and Local Government (DILG)
7. Public School Teachers
7.1 For the purpose of these guidelines, public school teachers shall mean
teachers engaged in actual classroom teaching.
It should be noted that the above enumeration is exclusive, therefore, no other

national government officials would be granted honorarium by the local government unit
unless it is expressly provided by other laws, rules and regulations.
Records disclosed that the LGU granted honoraria totaling P757,500.00 to some
national government officials/employees not included in the list of the above cited
provision, as follows:
Position/ Office Rate Jan- Dec 2014

Head / NBI 5,000.00/mo 60,000.00
City Jail Warden/ BJMP 4,000.00/mo 48,000.00
Election Officer / COMELEC 3,000.00/mo 36,000.00
Two (2) Election Assistant/ 1,000.00/mo 24,000.00
COMELEC
OIC School Division 5,300.00/mo 63,600.00
Superintendent/ City Division
Nine (9) Education Program 3,300.00/mo 356,400.00
Supervisor (EPS) 1/ City Division
Eight (8) Support Personnel / 1,437.50/qtr 46,000.00
Office of the Provincial Prosecutor
Eleven (11) PNP Personnel 123,500.00
TOTAL 757,500.00
Payment of honoraria to the above personnel manifests LGU’s deliberate

disregard of the existing guideline which would further result to wastage and losses of
government funds should the same be unstopped.
Notices of Suspension were issued to concerned personnel requiring the

submission of legal basis.
Management commented that upon receipt of the AOM dated March 3, 2015, they
refrain from disbursing the fund until submission of legal basis for the granting of
41
honoraria. Moreover, some concerned personnel already submitted their legal basis to be
verified by the Auditor.
We recommend that management submit legal basis for the grant of

honoraria to some national government officials and employees, otherwise, they
should stop the payment of the same to the subject personnel.
Summary of Audit Suspensions, Disallowances and Charges
The total audit suspensions, disallowances and charges found in the audit of various
transactions of the City as of December 31, 2014 is P 0.00 based on the Notice of Suspension
(NS), Notice of Disallowance (ND), and Notice of Charge (NC) issued by this Commission,
as summarized below:
Issued this Settled this

Beg. Balance
period period Ending Balance
(As of
Particulars (NS/ND/NC) (NSSDC) (As of Dec. 31,
December 31,
Jan. 01 to Dec. Jan. 01 to Dec. 2014)
2013
31, 2014 31, 2014
Notice of Suspension P 170,419.16 P 0.00 P 170,419.16 P 0.00
Notice of Disallowance 0.00 0.00 0.00 0.00
Notice of Charge 0.00 0.00 0.00 0.00
TOTAL P 170,419.16 P 0.00 P 170,419.16 P 0.00
The Notices of Suspension and/or Disallowance resulting from post-audit of CY 2014

transactions are still for issuance.
42
PART III
STATUS OF IMPLEMENTATION OF PRIOR YEARS’

UNIMPLEMENTED AUDIT RECOMMENDATIONS
Of the ten (10) audit recommendations contained in the 2013 Annual Audit Report,
six (6) were implemented and four (4) were partially implemented by management, as shown
in the table below.
Ref Reason for

Audit Management Status of
Audit Observation Partial/Non-
Recommendation Action Implementation
Implementation
1. Collections and We recommend AAR For CY 2014, Implemented.
remittances of cash that the Treasurer 2013 the City
tickets could not be provides a finding Treasurer
accurately accounted monitoring system no. 1 already
for due to absence of for the remittance provided a
a monitoring system of the proceeds of monitoring
by the cash tickets system by
Treasurer/Cashier to perhaps by requiring each
ensure that all maintaining a collector to
proceeds of the cash subsidiary record maintain a
tickets are accounted of collectors who subsidiary
for and remitted were issued cash record by
intact and promptly tickets indicating indicating
contrary to Section 30 thereat the number therein the date,
of Volume I of the and the value of the the number and
Manual on the New cash tickets the value of the
Government received and cash tickets
Accounting System remitted and the received and
for Local running balance. remitted and the
Government Units. running
We also balance.
recommend for the
Treasurer to strictly
implement the
provisions of
Section 30 of
Volume I of the
Manual on the New
Government
Accounting System
for Local
Government Units
as regards
verification of
collections and
accountable forms.
2. Deficiencies were We recommend that AAR For CY 2014, Partially Some
noted in the Management adhere 2013 transactions and Implemented. liquidations of
liquidations of cash strictly to the finding reclassifications the cash
advances for travel provisions of no. 2 of accounts advances for
43
Ref Reason for
Implementation
and reimbursement Executive Orders were corrected, sports
for travelling 248, 248-A and 298 cash advances development
expenses in CY 2013 and COA Circulars have been lacked
in violation of 96-004 and 97-002 liquidated based supporting
Executive Order No. in the grant and on approved documents.
298, COA Circulars utilization of cash travel period
No. 96-004 and 97- advances and in the only,
002. reimbursement of certification as
traveling expenses. to actual hotel
bills had been
certified by the
LCE, claims for
taxi fares were
verified based
on the cash
advances made
by two or more
employees who
were supposed
to travel
together and
reimbursement
of cost of fuels
were based on
the
regular/current
prevailing rate
of air/sea
transportation.
3. The procurement We recommend AAR The City Implemented.
of P17,117,000.00 that Management 2013 Information
Information comply with EO finding System Plan
Technology No. 265 and to no. 3 was already in
hardwares and make an over-all place and in
softwares were made agency information accordance with
without preliminary system or Executive
studies as to whether computerization Order No. 265
the computerization plan so that all dated July 12,
plan of the City was procurements of 2000. The
in accordance with hardwares and computerization
the Government softwares will be project was
Information System aligned with the implemented
Plan as embodied in plan and all years ago by the
Executive Order No. necessary SPIDC and the
265 dated July 12, components of the lacking
2000 and that if all system will be components in
necessary addressed. Further, the system was
components of the it is recommended already
system were that demands for enhanced and
specified. the delivery be augmented in
Information and made for the the modules.
44
Ref Reason for
Implementation
issues about the projects which Further, the IT
training component, were past the hardwares and
after sales support, contract periods. softwares which
deliverables with remained
specific time tables, undelivered as
programs and source of December
codes, license 31, 2013 were
certificates, already 100%
debugging period, delivered to the
test run period and all city government
other necessary data before the end
were not addressed in of December,
the contracts. 2014.
Moreover, there was
no compliance by the
supplier on the
stipulations of the
perfected contracts
amounting to
P15,102,000.00 since
the IT hardwares and
softwares remained
undelivered even past
the agreed delivery
dates.
4. The property We recommend AAR Properties Partially For CY 2014,
records for the IT that Management 2013 amounting to Implemented. The Assistant
Equipment and comply with finding P2,154,421.80 General Services
Software, Motor Sections 119 and no. 4 were Officer and Staff
Vehicles, Other 123, Vol. I of the completely failed to undergo
Transportation Manual on NGAS identified and the training on
Equipment, for Local classified to property and
Construction and Government Units. their proper supply
Heavy Equipment We also asset accounts. management
and Other PPE recommend for the However, the because the COA
accounts were not attendance of those city government Tacloban City
complete thus making in charge with unserviceable Training Center
it difficult to locate property and properties were is not yet
and identify these supplies to undergo still stored in an available due to
properties in violation appropriate training unsecured typhoon “Ruby”.
of Sections 119 and on property and place. However, they
123 of the Manual on supply are planning to
New Government management. attend the said
Accounting for Local training on the
Government Units. 2nd quarter of
The following were this year 2015
also noted, viz: 1) either in
some unserviceable Tacloban,
properties were stored Manila or Cebu.
in an unsecured place
exposing them to the
45
Ref Reason for
Implementation
risk of possible loss,
and 2) properties
amounting to
P2,154,421.80 were
not classified to their
proper asset accounts.
5. Spare parts used in We recommend AAR For CY 2014, Implemented.
the repairs of motor that Management 2013 the Accounting
vehicles in CY 2013 adhere strictly to finding Office properly
amounting to the provisions of no. 5 checked Journal
P2,453,019.50 were COA Circular No. Entry Vouchers
directly charged to 91-200C. It is also as to the correct
expense instead of recommended that charges of
recording the same supporting accounts and
first as inventory in documents to the the
violation of COA repairs and completeness of
Circular No. 91-200C maintenance of the data to be
dated September 9, vehicles be filled up by the
1991 . It was also properly filled up persons
noted that some Job by the persons concerned.
Orders for the repair concerned.
of vehicles and some
Pre and Post Repair
Inspections were not
dated thus making it
difficult to monitor
the period of repair
and the usage of fuel
on the dates when the
vehicle was supposed
to be under repair.
6. The city We recommend AAR As of budget Implemented.
government of that management 2013 year 2014,
Catbalogan adhere strictly with finding appropriation
appropriated by as the provisions of no. 6 for Personal
much as P Section 325 (a) of and Services is
65,903,985.64 or Republic Act 7160 AAR within the
89% and actually and the guidelines 2012 budget limit.
expended provided in Local
P52,417,753.43 or Budget Circular
71% more than the No. 98 and
budgetary limit henceforth take
allowed for Personal into consideration
Services as required the limit in the
in Section 325 (a) of preparation of the
Republic Act 7160 budget.
and Local Budget
Circular No. 98 dated
October 14, 2011
which deprived the
agency to provide
46
Ref Reason for
Implementation
budget for
maintenance and
other operating
expenses and felt-
need development
projects.
7. The utilization of We recommend AAR Utilization of Implemented.
the 5% City Disaster that Management 2013 the 5%
Risk Reduction and adhere strictly to finding CDRRMF is in
Management Fund the provisions of no. 7 accordance with
(CDRRMF) was not NDRRMC, DBM the
in accordance with and DILG Joint NDRRMC,DB
Section 5.0 of the Memorandum M and DILG
NDRRMC, DBM and Circular No. 2013- Joint
DILG Joint 1 dated March 25, Memorandum
Memorandum 2013 for the proper Circular No.
Circular No. 2013-1 utilization of the 2013-1. For CY
with the procurement CDRRM Funds. 2014, The City
of the city wide Government
CCTV surveillance has stopped the
system amounting to procurement of
P4,998,000.00. the citywide
CCTV
surveillance
system upon
receipt of the
2014 Audit
Observation
Memorandum
(AOM).
8. A total of 69 We recommend AAR Partially For CY 2014,
projects amounting to that projects 2013 Implemented. out of the 222
P20,877,268.01 or programmed for finding projects or
31% of the total the year be no. 8 P74,559,186.00
appropriation for the implemented and allocated for
20% CDF remained during the year to AAR 20%
unimplemented as of maximize the 2012 Development
December 31, 2013 utilization of the Fund, only 137
thus depriving the fund and ultimately projects/program
recipients of the use allow the recipients s/activities or P
of the projects as the use of the 46,337,395.65 or
embodied in DILG- facilities and/or 61.95% were
DBM Joint projects. As much utilized, thus,
Memorandum as practicable, leaving 85
Circular No. 2011-1 specify the projects/program
dated April 13, 2011. recipients of the and activities or
It was also noted that projects to P28,221.790.35
included in the facilitate or 38.05%
budget were lump monitoring of the unimplemented
sum appropriations of utilization of the during the year.
P10,977,597.07 thus fund. It is also The partial
47
Ref Reason for
Implementation
recipient of the recommended that implementation
projects were not descriptions be of the 20%
identified. consistently used in Development
the budget and in Fund is beyond
the contracts. control of the
agency due to
incurrence of
natural
calamities.
Moreover, it was
also noted, that
the amount of
P3,939,093.35
were included in
the budget as
lump-sum
appropriations,
thus, recipients
of the projects
were not
identified.
9. Unserviceable We recommend AAR Report of the Partially For CY 2014, the
properties with an that the City mayor 2012 GSO with Implemented. GSO submitted a
acquisition cost of direct the finding regards to the partial report on
P7,154,062.00 have accountant to no. 6 reclassification unserviceable
not been reclassified reclassify the from PPE to be properties
into Other Assets unserviceable transferred to amounting to
Account contrary to properties to their Other Assets P696,622.00
Section 4, Vol. I, of proper asset was not yet reclassified as
the Manual of the account in completely Other Assets
New Government accordance with done, hence, Accounts.
Accounting System Section 4 (p) of the disposal Likewise, a
for Local Manual of the New proceeding for disposal
Government Units, or Government unserviceable proceeding for
were not disposed of Accounting System property is still unserviceable
as required under for Local pending. properties was
Section 79 of PD Government Units, not yet
1445, resulting in Volume I. undertaken and
bloated balances of pending
the PPE accounts as We also attendance of
of December 31, recommend that training on
2012. the City Mayor Property and
undertake the Supply
following Management by
measures, to wit: the GSO
personnel.
1. Direct the
General
Services Office
to prepare and
submit an
48
Ref Reason for
Implementation
updated list of
unserviceable
properties
containing data
on the
following: a)
kind of
property; b)
description; c)
date of
acquisition; d)
acquisition cost;
e) accumulated
depreciation; f)
book value; and
g)
recommended
action; and
2. Constitute the
appropriate
committee or
body to
undertake the
disposal
proceedings.
10. The We recommend AAR Liquidation Implemented.

Memorandum of that management 2012 Report of
Agreement (MOA) include in the finding Barangay
entered into by the MOA a provision no. 7 Financial
City Government of for the period of Assistance
Catbalogan and the implementation charged to the
different Barangays and liquidation and 20%
seeking financial strictly adhere to Development
assistance for projects the provisions of Fund were
charged to the 20% COA Circular No. submitted to the
development fund 2012-001 dated Accounting
failed to stipulate the June 14, 2012 as to Office with
period of the the documentary complete
implementation of the requirements in the supporting
project as well as the grant of the fund documents.
period to liquidate the transfer.
fund transfer, thus,
resulting in delayed
and/or non-
submission of
liquidation reports. It
was also noted that
funds transferred to
the Liga ng Barangay
49
Ref Reason for
Implementation
amounting to
P500,000.00
remained
unliquidated as of
June 15, 2013 and
was not supported
with an Official
Receipt contrary to
COA Circular No.
2012-001 dated June
14, 2012.
50
PART IV
ANNEXES

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Republic of the Philippines

ANNUAL AUDIT REPORT

For the Year Ended December 31, 2014

4. The CDRRMF capital outlay appropriation amounting to P2,838,166.45 was

8. Contracts on infrastructure projects amounting P17,432,660.38 were awarded to

9. Advance payments amounting to P1,795,050.02 were granted to contractors

11. Procurement of Consulting Services for the establishment of Tindahang Pinoy

The City of Catbalogan is the capital of Samar Province. The Cityhood of

Particulars CY 2014 CY 2013

Its appropriation/allotment/obligation for current and previous years, including

Particulars CY 2014 CY 2013

Summary of Significant Observations and Recommendations

2. Cash amounting to P41,352,444.95 as of December 31, 2014 was still maintained

We recommend that Management secure the approval from the Department

4. The CDRRMF capital outlay appropriation amounting to P2,838,166.45 was

We recommend that Management strictly utilize the LDRRMF for related

We recommend that Management include the programs/projects and

9. Advance payments amounting to P1,795,050.02 were granted to contractors

We recommend that Management require the winning bidders to submit the

11. Procurement of Consulting Services for the establishment of Tindahang Pinoy

We recommend that management conduct public bidding on the

12. The payment of honoraria to some national government officials/employees

Summary of Audit Suspensions, Disallowances and Charges (SASDC)

Status of Implementation of Prior Years’ Audit Recommendations

Independent Auditor’s Report 1-2

Part II - Detailed Audit Observations and Recommendations 118-42

Part III - Status of Implementation of Prior Years’ Unimplemented Audit 43-50

AUDITED FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

Hon. Stephany U. Tan

Management’s Responsibility for the Financial Statements

Our responsibility is to express an opinion on these financial statements based on our

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Agency Profile

The Cityhood of Catbalogan was effectively restored way back

Note 2 - Basis of Financial Statements Presentations

The Financial Statements have been prepared in accordance with Generally

Note 3 - Summary of Significant Accounting Policies

For depreciable properties, the straight-line method of depreciation shall be used

4.1 The composition of Cash is as follows:

Cash in Bank - Local Currency

4.2 The Cash in Vault balance of P1,145,472.41 represents undeposited collections.

5.3 Receivables-Disallowance/Charges –General Fund represents amount due from

5.5 Beginning Balances of Advances to Officers and Employees amounting to

6.1 Composition of the account:

6.2 Food Supplies Inventory amounting to P6,890,103.05 represents Rice Subsidy

7.1 The account consists of:

TOTAL P 1,120,253.51 P 878,419.57

Note 8 - Property, Plant and Equipment (Consolidated)

8.1 Composition of the account:

8.4 Physical Inventory of Property, Plant and Equipment Report amounting to

Note 10 - Long-term Liabilities

10.1 The summary of loans payable as of December 31, 2014 is as follows:

Institution Total Amount Principal & Interest Balance

Note 11 - Deferred Credits

Note 12 - Government Equity

12.1 The account is composed of:

Note 14 - Other Receipts

AUDIT OBSERVATIONS AND RECOMMENDATIONS

Section 69 of PD 1445 (Government Auditing Code of the Philippines) states

Verification of the general ledger showed the following monthly balances of

Month General Fund SEF Trust Consolidated

Cash in Bank- Local Currency, Current Account –