EXECUTIVE SUMMARY

Introduction

The City of Catbalogan (City) was created on March 15, 2007 by virtue of Republic
Act (RA) No. 9391, otherwise known as “AN ACT CONVERTING THE
MUNICIPALITY OF CATBALOGAN IN THE PROVINCE OF SAMAR INTO A
COMPONENT CITY TO BE KNOWN AS THE CITY OF CATBALOGAN”. However,
the City, along with 15 other cities, temporarily lost its cityhood status when the Supreme
Court of the Philippines approved a petition brought by the League of Cities of the
Philippines and declared invalid the cityhood law (RA 9391) that allowed the town to
obtain city status. The City and the other 15 cities affected filed a move for reconsideration
with the court on December 10, 2008. More than a year later, on December 22, 2009, the
court reversed its earlier decision, ruling that "at the end of the day, the passage of the
amendatory law (regarding the criteria for cityhood as set by Congress) is no different
from the enactment of a law, i.e., the cityhood laws specifically exempting a particular
political subdivision from the criteria earlier mentioned. Congress, in enacting the
exempting law/s, effectively decreased the already codified indicators”. As a result, the
City's cityhood status was effectively restored. The City is politically subdivided into 57
barangays and has a total land area of 274.22 square kilometers or 105.88 square miles
which constitutes 4.53% of Samar's total area.

For Calendar Year (CY) 2022, the City intended to have a solid ground for a
sustained development for all sectors and integrating and preparing for, responding to and
recovering from the impact of disasters and contain the spread of diseases.

Under the administration of Hon. Dexter M. Uy, with the legislative body
composed of 12 Members of the Sangguniang Panlungsod, headed by Hon. Coefredo T.
Uy, and with 463 employees, the City continues to implement programs consistent with its
vision of providing delivery of basic services to its constituents.

An audit was conducted on the accounts and operations of the City for CY 2022 in
accordance with International Public Sector Standards on Auditing with emphasis on the
audit thrusts for the Local Government Sector on the audit of Financial Statements of the
following accounts - Cash & Cash Equivalents, Property, Plant and Equipment, Loans
Payable, Real Property Tax and Special Education Tax Receivable, Accounts Payable, Due
to NGAs/LGUs/GOCCs, and Other Significant and Material accounts identified in the
Materiality Thresholds.

To determine the extent of implementation of the programs and projects,

compliance with the budget/allocation, procurement regulations, terms and conditions, we
likewise conducted a performance and compliance audit on the following:

1. Fund Transfers from NGAs to LGU

1.1. COVID-19 fund receipt and allocation
 1.2. Fund Transfers from National Government Agencies
1.3. Local Government Support Fund (LGSF)
2. COVID-19 fund appropriation and utilization (LGU funded)
3. Vaccination Program
2. Utilization of 20% Development Fund
3. Utilization of LDRRMF
4. Payment to Casuals, Job Orders, Contractual and Consultants
5. Enforcement of COA Disallowances and Charges
6. Compliance with tax laws
7. Remittance of mandatory GSIS, HDMF, PhilHealth contributions and
remittance of loan amortizations

The audit included examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements; assessing the appropriateness of accounting
principles used and the reasonableness of accounting estimates made by management;
verification, reconciliation and analysis of financial accounts; as well as evaluating the
overall presentation of the financial statements. It also involved ocular inspection of
infrastructure projects undertaken; interview with officials/employees concerned; and
other audit procedures and techniques considered necessary under the circumstances.

Financial Highlights

Comparative analysis of the City’s total assets, liabilities, equity, income and
expenses for CY 2022 and the immediately preceding year showed an increase of the
Assets, Liabilities, Equity, Income and Expenses as seen in the graphical presentation. The
material increase in assets and equity account is due to the significant increase of cash
provided by Operating, Investing and Financing Activities due to the onset of the National
Tax Allotment, the increase in the procurement of capital outlays and the increase of the
Surplus for the period.

Financial Position and Performance

(in Philippine Peso)

2,500,000,000.00

2,000,000,000.00

1,500,000,000.00

1,000,000,000.00

500,000,000.00

-
Assets Liabilities Equity Income Expenses
2022 2,018,012,054 443,948,960.8 1,574,063,093 1,359,094,874 1,032,718,868
2021 1,684,838,137 278,281,342.8 1,333,680,618 885,513,867.5 634,408,207.1

2022 2021
 The following graph also illustrates the changes in appropriation and obligations
during the year which shows a decrease in CY 2022 appropriations and an increase
obligation in comparison to CY 2021 data.

Appropriagtion and Obligation

(in Philippine Peso)
1,600,000,000.00
1,400,000,000.00
1,200,000,000.00
1,000,000,000.00
800,000,000.00
600,000,000.00
400,000,000.00
200,000,000.00
-
Appropriations Obligations
2022 1,207,609,818.20 811,213,979.97
2021 1,485,922,190.88 693,921,886.83

2022 2021

While the succeeding graphical presentations details the changes in the

appropriations and obligations according to the classes of expenditures for CY 2022 and
2021.

Detailed Appropriations
(in Philippine Peso)
1,600,000,000.00
1,400,000,000.00
1,200,000,000.00
1,000,000,000.00
800,000,000.00
600,000,000.00
400,000,000.00
200,000,000.00
-
PS MOOE CO FE Total
2022 324,368,760. 575,077,347. 294,067,405. 14,096,304.8 1,207,609,81
2021 294,423,378. 425,949,840. 731,081,875. 34,467,096.8 1,485,922,19

2022 2021

The decrease in appropriations in CY 2022 is due to the decrease of the amount of

allotment received from the national government. Also, as can be gleaned from the graph
that the City appropriated more on the capital outlays than other class of expenditures.
 The increase in Capital Outlay under the obligations is due to the utilizations of the
significant amount of appropriation for the year for the implementation of infrastructure
projects and procurement of equipment. The unexpended capital outlays of Programs,
Projects and Activities (PPA’s) for CY 2022 will form part of the continuing appropriations
in CY 2023.

SIGNIFICANT ACCOMPLISHMENTS

The significant PPAs accomplished by the City in CY 2022 were reported and
certified complete by the management, as follows:

Infra Projects

1. Installation of Sheet Piles, Step North, Barangay Payao

2. Rehabilitation of Catbalogan City Road, 5Th Street
3. Construction of Women Wellness Facility Covered Court, Barangay Payao
4. Repair of City Sidewalk, Street Signs, San Francisco Street, Brgy. 07
5. Repair and Rehabilitation of Bahay Silangan/Bahay Pag-asa, Barangay Payao
6. Construction of Slope Protection (Catbalogan City Agro-Industrial School)
Phase I, Barangay San Vicente
7. Repair and Rehabilitation of Catbalogan City Division Office/Building Phase
I, Barangay Payao
8. Repair and Rehabilitation of Evacuation Center Iii, Barangay Payao
9. Repair of City Sidewalk, Street Signs, Allen Avenue & San Francisco Street,
Brgy. 04
10. Construction of Water System, Barangay Guindapunan
11. Rehabilitation of Catbalogan City Road, Bougainvilla and Esmeralda Street,
Barangay Muñoz
12. Repair of City Sidewalk, Street Signs, Brgy. 09
 13. Rehabilitation of Catbalogan City Road, Santan Street, Purok 7, Barangay
Canlapwas
14. Repair and Rehabilitation of Evacuation Center, Barangay Payao
15. Repair of City Sidewalk, Street Signs, Allen Avenue, Brgy. 03
16. Repair and Rehabilitation of Regional Evacuation Center, Barangay Payao

Programs and Activities

1. Formulated the Enhanced Comprehensive Development Plan (CDP+) 2023-

2028, Executive-Legislative Agenda (ELA) 2023-2025, Comprehensive Land
Use Plan (CLUP), and the Climate Disaster Risk Assessment (CDRA)
2. Started updating and revisiting the City’s Revenue Coded
3. Inaugurated the Catbalogan City Bahay Pagasa
4. Installed the Integrated Business Permit and Licensing System (IBPLS) – the
Business Permit with Barangay Clearance Module (BPBC)

The City Government is also a recipient of various awards, citations and

recognitions for Calendar Year 2022, to wit:

• Acquired certificate of compliance for the Program to Institutionalize

Meritocracy and Excellence in Human Resource Management of PRIME-HRM
Level II Assessment of the Civil Service Commission (CSC);
• Received Maturity Level II Bronze award from the CSC.
• Received the Seal of Good Local Youth Governance during the YES Awards
2022.

Independent Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the combined financial statements of

City of Catbalogan, Province of Samar for the year ended December 31, 2022 due to the
exceptions as stated in the Independent Auditor’s Report and as discussed in Part II of the
report.

Summary of Significant Observations and Recommendations

The significant observations and the corresponding recommendations for the CY

2022 audit of the City’s accounts and operations are as follows:

1. Various weaknesses in the control and custody of cash were observed, as

follows: a.) collections of City Treasurer were not deposited daily and intact;
b.) post-dated checks were accepted as payment; and c.) unused accountable
forms were not properly stored and issued, thereby exposing government
funds to possible misuse and loss.
 We recommended and the management agreed to require the City Treasurer to:

a. Deposit all collections promptly and intact with the authorized government
depository bank;

b. Submit a written explanation for failure to deposit collection intact and

regularly.

c. Strictly implement sound internal control on the storage and issuance of

Accountable Forms.

We likewise recommended and Management agreed to require the City Internal

Audit Service Office to monitor the concerned department’s compliance with the
audit recommendations

2. The City did not meet the target collection set by the Bureau of Local
Government and Finance (BLGF) for Calendar Year (CY) 2022 due the
failure of City Treasurer’s Office (CTO) to strictly follow the procedures
prescribed under Sections 254 and 256 of RA No. 7160 relative to the
enforcement of collections of real property taxes, depriving the constituents of
the funds that could have been collected and be used to augment funding of
priority projects for the development of the City. Likewise, the computed Real
Property Tax (RPT) and Special Education Tax (SET) penalties per Statement
of Account were reduced upon payment by the taxpayers, without legal basis
contrary to the City Ordinance No. 2022-111.

We recommended and Management agreed that the City Mayor:

a. Require the City Treasurer’s Office to:

i. Prepare and post the Notice of Delinquency in the Payment of Real

Property Tax at the main entrance of the city hall, and in a publicly
accessible and conspicuous place in each Barangay of the City, and
publish it once a week for two (2) consecutive weeks, in a newspaper of
general circulation in the city;

ii. Prepare and issue the Notices of Real Property Tax Delinquency (first,
second and final) to delinquent tax payers;

iii. Avail remedies for collections of delinquent RPT and SET by

administrative action through a levy on real property or by judicial
action; and

iv. Collect in full the penalties reflected in the RPT-SAO for collections of
delinquent RPT/SET dues.
 b. Require the City Government officials and employees to make prompt payment
of their real property tax dues.

c. Submit the Legal Basis on the reduction of tax assessments; and

d. Require the City Internal Audit System Office to monitor compliance by the
City’s departments and offices of the audit recommendations.

3. The reported balance of the Accounts Payable of ₱87,724,395.85 could not be

ascertained due to: a) absence of proofs of its validity in an aggregate amount
of ₱78,324,100.81 or 89.28% of the total AP; b) misclassification of various
transactions totaling ₱2,971,178.69; (c) Dormant AP amounting to
₱777,365.00 without legitimate claims and remained unreversed; and (d)
double recording of transaction amounting to ₱855,792.00, contrary to
International Public Sector Accounting Standards (IPSAS) 1, Section 98 of
Presidential Decree (PD) No. 1445, and Section 4.1 of Commission on Audit
(COA) Circular No. 2015-009, thus affecting the fair presentations of the
affected accounts.

We recommended that the City Mayor require the:

a. City Accountant to:

i. Ensure that recorded procurement transactions as AP are duly

supported with OBR, contract and proof of delivery.

ii. Regularly check, monitor and keep the Payable accounts updated
and adequate;

iii. Evaluate as to validity of the long outstanding obligations totaling

₱777,365.00 under the GF and recommend for the reversion of the
amount if warranted; and

iv. Effect the necessary adjusting entries for the double entry and
misclassification of accounts pursuant to Annex B of COA Circular
No. 2015-009 dated December 1, 2015.

b. City Internal Audit System Office to monitor compliance by the concerned

employees of the audit recommendations

4. Payment to the City’s permanent, contractual, and job order personnel of One
COVID-19 Allowance (OCA) for the period January 2022 to June 2022
aggregating ₱3,660,750.00 were not supported with complete supporting
documents, thus casting doubts on the validity and regularity of the payments.
Likewise, the amount paid for OCA were erroneously recorded as Honoraria
 instead of Other Personnel Benefits and Other MOOE for payments to regular
employees, contractual and job order employees, contrary to International
Public Standards Accounting Sector (IPSAS) 1 and COA Circular No. 2015-
009, affecting the fair presentation of the financial statements.

We recommended that the City Mayor require:

a. The concerned CHO personnel to submit immediately to the audit team, thru
the Accountant, the following documents to establish their claim to OCA:

i. Office Order or equivalent from the City Mayor or his authorized

representative requiring the personnel (regular, contractual, or on a job
order) to report for work to the health facilities involved in the COVID-
19 response, especially the BHWs and personnel from other
departments.

ii. Daily Time Records with Biometric printouts or copies of logbook or

Certificate of Attendance in the health facilities involved in COVID-19
response by their immediate supervisor during the period of claims;

iii. Certification by the City Health Officer, or his/her authorized

representative of the number of hours that the HCWs and non-HCWs
physically report for work in a month.

b. The City Accountant to reclassify the payments of OCA amounting to

₱3,660,750.00 from Honoraria to Other Personnel Benefits (regular
employees) and Other Maintenance and Operating Expenses (contractual
employees) in the CY 2022 Statement of Financial Performance.

c. The City Internal Audit System Office to monitor compliance by the

concerned employees and personnel of the audit recommendations.

5. Various deficiencies were noted on the utilization of the Local Disaster Risk
Reduction and Management (LDRRM) fund and acquired inventories such
as: a) available fund for preparedness, prevention and mitigation was not fully
utilized; b) Investment Plan not compliant to the required format; and c)
failure to maintain documents and report for the receipt and utilization, and
to comply with the reporting requirements of received in-kind donations,
thereby affecting the fair presentation of affected accounts in the financial
statements; the capability of the City to effectively and efficiently prevent
losses and alleviate the impacts of disasters; and exposing the resources to risk
of loss/wastage, mishandling and misappropriation.
We reiterated our prior year’s audit recommendations that:

a. The City Mayor directs the City DRRM Officer to prepare the LDRRMFIP
in accordance with the prescribed format under COA Circular 2012-002 for
LDRRMF’s current appropriation and previous years’ LDRRMF unexpended
balance.

b. The City, through the City Mayor, maximize the utilization of appropriated
funds for disaster preparedness, prevention and mitigation in order to further
enhance the capability of the City to effectively and efficiently prevent losses
and alleviate the impacts of disasters.

We likewise recommended that the City, through the City Mayor require:

a. The City DRRM Officer to:

i. Enhance monitoring of LDRRMF utilization focusing on PPAs requiring

the highest priority in terms of urgency and/or impact on the four
thematic areas of DRRM; and

ii. Ensure efficient and effective implementation of all programmed

projects identified during the budget year to optimize the utilization of
the fund and to warrant that the goals and objectives of reducing disaster
risk and enhancing disaster preparedness and response capabilities are
achieved.

b. The designated SOs to:

i. Use the In-Kind Donations-DRRM form for the issuance of in-kind

donations;

ii. Maintain the Registry of Donated Relief Goods for DRRM for donated
relief goods;

iii. Prepare and submit to Office of the Civil Defense (OCD), Auditor of the
OCD and to City COA Auditor, the Monthly Report on the Receipt and
Distribution/Issuance of Donated Relief Goods;

iv. Prepare Stock Cards for each in-kind donation; and

v. Prepare and submit the monthly Inventory List of Items for DRRM
supported with the required supporting documents to COA and to City
Accounting Office.
 c. The City Accountant to ensure that all Acknowledgement Receipts for the In-
Kind donations are submitted for recording and disclosures in the financial
statements are made of the received in-king donations; and
d. The City Internal Audit System Office to monitor compliance of the audit
recommendations by the concerned officials and employee/s

6. Prior Years’ unexpended balances of LDRRM Fund amounting to

₱2,455,406.57 was used for the training expenses and traveling expenses of
City officials and employees who attended the Workshop on Climate and
Disaster Risk Assessment (CDRA) Report Mainstreaming to Catbalogan City
Enhanced Comprehensive Development Plan (CDP) 2023-2028 and Executive
Legislative Agenda (ELA) 2023-2025 in Parañaque City, cast doubt as to the
regularity of the transactions.

We recommended and Management agreed to submit documents to support the

necessity of the study tour. This is without prejudice to an audit disallowance if
management failed to justify the said study tour and/or there is an indication of
excessive charging of the travel/training expenses.

We further recommended that Management:

a. Refrain from conducting trainings, seminars, workshops or similar activities

outside the geographical island where the City is located, as much as practicable;

b. Ensure that study tour or similar conducted outside of the geographical island
activity is anchored on good practices and is drawn from the list of publicly
recognized good practices downloadable from, but not limited to, the website of
the Galing Pook Foundation (www.galingpook.org), of the Local Government
Academy (www.lga.gov.ph) and of the Department of the Interior and Local
Government (www.dilg.gov.ph, pursuant to DILG Memorandum Circular No.
2011-59; and

c. Require the City Internal Audit System Office to monitor compliance of the audit
recommendations by the City’s departments and offices.

7. The 20% DF was still not optimally utilized as prescribed by Department of

Interior and Local Government (DILG) and Department of Budget and
Management (DBM) Joint Memorandum Circular (JMC) No. 2020-1 dated
November 4, 2020 and Republic Act (RA) No. 7160 due to the City’s failure to
fully implement 21 projects totaling ₱125,947,836.78 thereby depriving the
constituents of the benefits had the PPAs been completed.
 We reiterated our prior year’s audit recommendations that Management:

a. Cause the timely implementation of the development projects by City’s Local

Development Council through proper coordination with the City Engineer, the
BAC and other Offices involved; and

b. Conduct thorough evaluation on the feasibility of proposed development

projects prior to identification and inclusion in the Annual/Supplemental
Investment Plan to preclude delay in project implementation and to ensure
optimal utilization of the 20% DF for the attainment of the desirable socio-
economic development of the City of Catbalogan.

We likewise recommended that the City, through the City Mayor require the City
Internal Audit System Office to monitor compliance by the City’s departments and
offices of the audit recommendations.

8. Various deficiencies were noted on the City’s reverse logistic procedure such
as: a) receipt, safekeeping and transfer of used and discarded vials were
assigned to person with incompatible position; b) improper storage of the
vials; and c) delayed transfer of the vials and submission of consolidated Form
A – Reverse Logistics to PHO contrary to Department of Health (DOH)
Department Circular (DC) No. 2021-0439, thereby affecting the timeliness and
accuracy of the DOH’s consolidated report of used and discarded vials, and
may expose people to infectious waste and a potential health risk.

We recommended that Management:

a. Assign the receipt, safekeeping and transfer to PHO of the used and
discarded vials functions to Sanitation Inspector (SI).

b. Require SI to properly store and transfer the vials together with the
consolidated Form A – Reverse Logistic to PHO every Friday of the
vaccination week.

We likewise recommended that the Management require the City Internal Audit
System Office to monitor compliance of the audit recommendations by the
concerned employees.

Summary of Audit Suspensions, Disallowances and Charges

The balance for the audit suspensions, disallowances and charges as at December
31, 2022 was ₱5,866,435.50, ₱17,047,970.53, and ₱00.00, respectively, or a total of
₱22,914,406.03, based on the Notices of Suspension (NS), Notices of Disallowance (ND)
and Notices of Charge (NC) issued by this Commission. While any NS, ND and NC for
CY 2022 post-audit of transactions are still to be issued.
Status of Implementation of Prior Years’ Unimplemented Audit Recommendations

Of the 37 audit recommendations embodied in CY 2021 and prior year’s Annual

Audit Reports, 28 were implemented and 9 were not fully implemented by management.