EXECUTIVE SUMMARY

A. Highlights of Financial Information

Presented below are the financial position, sources of funds, appropriations and
obligations of the Municipality of Umingan during years 2012 and 2011:

Increase
2012 2011 (Decrease) %
Assets P70,688,124.72 P 67,973,878.47 2,714,246.25 4%
Liabilities 33,177,020.09 35,540,886.33 (2,363,866.24) (6.7%)
Government Equity 37,511,104.63 32,396,992.14 5,114,112.49 15.79
Income 108,489,257.69 110,340,556.41 (1,851,298.72) (16.78%)
Expenses 103,392,665.67 107,661,440.96 (4,268,775.29) (3.96%)
Appropriations 122,720,228.00 114,332,461.00 11,506,613.00 10.06
Obligations 113,614,574.74 114,130,255.84 (515,681.10) (.45%)

B. Operational Highlights

The following are the reported significant accomplishments of the municipality for
the year 2012:

Projects/Activities Amount Status

National Funded Projects:
1. Rehabilitation of Pemienta /CIS Upper Barrila 37,307,231.01 Completed
2. Barrila River Dike-Calitlitan Protection, Tanggal Cagaoan 15,000,000.00 Completed
(SWIP) Nampalcan
3. Construction of Rice Processing (San 11,483,500.00 Completed
Leon,Umingan,Pang.)
4. Construction of Senior Citizen Building 6,000,000.00 Completed
5. Purchase Medical kits & Medicines for RHU 4,500,000.00 Completed
6. Center for Agrarian reforms 4,000,000.00 Completed
7. Implementation of Livelihood Program 4,000,000.00 Completed
8. Supplemental Feeding/Pap Smear Project 3,000,000.00 Completed
9. FMR – San Leon 1,447,500.00 Completed
10.Concreting Capas/Fulgosino Road 1,253,301.31 Completed
11.Construction of Belisario Bridge III 1,000,000,.00 Completed
12. Construction of Multi-Purpose Building 1,000,000.00 Completed
13.Scholarship Grant 600,000.00 Completed
14.Hog Raising/Tribu/Organic 497,100.00 On-going
Municipal Funded Projects:
1. Barrila River Dike-Calitlitan Barik Protection Tanggal 5,000,000.00 Completed
Cagaoan (SWIP) Nampalcan
2. Rehabilitation of Pemienta/CIS – Upper Barrila 3,879,176.41 Completed
3. Construction of Multi-Purpose Building 2,000,000.00 Completed
4. Concreting of Capaas/Fulgosino Road 746,698.69 Completed
C. Scope of Audit

The audit covered the operations of the Municipality for the calendar year 2012. The
type of audit employed consists of financial and compliance audit to ascertain the fairness and
reliability of the financial position and results of operation of the Municipality and to check
agency’s adherence to auditing laws, rules and regulations. Likewise, a Value for Money
Audit was conducted to ascertain whether management had attained its goals and objectives in
an economical, efficient and effective manner.

D. Opinion on the State Auditor’s Report on the Financial Statements

A qualified opinion on the fairness of the presentation of financial statements was

rendered due to the non-submission of an actual physical inventory report and incomplete
records to back-up all of the agency’s property rendering the Property, Plant and Equipment
(PPE) accounts valued at P44,830,028.40 unreliable. Likewise, the non-provision of
depreciation on PPEs amounting to P3,180,581.20 rendered PPE accounts and income
overstated while accumulated depreciation and depreciation expense were understated. The
inadequacy of records did not permit us to apply adequate alternative audit procedures to
determine the validity of the PPE account.

E. Significant Findings and Recommendations

Summarized below are the significant audit findings and the corresponding
recommendations which were discussed with Management. Management’s comments were
included in the report, where appropriate.

1. The Cash in Vault (101) account had a year-end balance of P1,981,526.69, an

indication that collections were not deposited intact which is not in conformity
with Section 32, Chapter 3 of the Manual on the New Government Accounting
System (MNGAS), Volume I.

We reiterate previous year’s recommendation that the Municipal Treasurer deposit

intact his collections to the authorized depository bank of the agency daily or not later
that the next working day. Strict compliance to the above-cited provision is also
recommended to prevent possible loss or misuse of the government funds.

2. Withdrawals for Petty Cash Fund (PCF) (104) were found excessive as compared
with the actual disbursements, which is not in conformity with Section 48 of the
Manual on the New Government Accounting System (MNGAS), Volume I.

We recommend that the Management refrain from granting excessive cash advances
for Petty Cash Fund to avoid misuse/misappropriation of the funds. Petty Cash Fund
shall be used only for petty expenses. The balance of the fund be deposited
immediately at the municipality’s depository bank to prevent possible loss/misuse of
government funds.
 3. The Payroll Fund (106) account showed balances at the end of each month, an
indication that withdrawals made for the payment of salaries and wages were not
equal to the net amount of the payroll corresponding to the pay period.

We recommend that the Management stop the practice of making withdrawals more
the net amount of payroll payable for one pay period in compliance with the above
provision.

4. Unliquidated cash advances of municipal officials and employees as of

December 31, 2012 totaled P3,408,565.41. This is not in conformity with the
provisions of Section 89 of Presidential Decree No. 1445 and COA Circular No.
97-002.

We reiterate previous year’s recommendation that the Management stop granting cash
advances which are not in accordance with the existing rules and regulations on cash
advances. Likewise, it was recommended that the management exert effort in causing
the immediate settlement/liquidation of the cash advances. In addition, it was also
recommended that in case where officials/employees were not able to liquidate
immediately their cash advances, the following measures should be resorted to:

a. The OIC-Municipal Accountant should withhold the salaries and/or other

benefits as provided for under Section 5.1.3 of COA Circular No. 97-002
and/or:
b. Appropriate actions against the official/employee be undertaken for the
liquidation of their cash advances.
c. No granting of additional cash advances to official/employee unless their
previous cash advances were liquidated.

5. The year–end balances of Real Property Tax (RPT) and Special Education Tax
(SET) Receivables amounting to negative (P338,673.98) and P249,795.29,
respectively, were of doubtful validity in view of the absence of a certified list of
taxpayers and the total amount of taxes due as required under Section 20 of the
Manual on New Government Accounting System (MNGAS).

We reiterate previous year’s recommendation that the Municipal Treasurer in

coordination with the Municipal Assessor prepare and furnish the Municipal
Accountant with a duly certified list of taxpayers based on RPTAR/Taxpayer’s index
card in compliance with Section 20 of the MNGAS and to provide an accurate and
reliable basis in setting up of Receivables for Real Property Taxes and Special
Education Taxes.

6. The non-submission of an actual physical inventory report, incomplete records to

back-up all of the agency’s property and the non-provision of depreciation on
properties amounting to P3,180,581.20 cast doubts as to the reliability and
accuracy of the Property, Plant and Equipment (PPE) accounts valued at
P44,830,028.40.
 We reiterate previous year’s recommendation that the Local Chief Executive create a
committee to conduct physical count of all the properties of the municipality to be able
to ascertain the validity, accuracy and whereabouts of the PPE accounts presented in
the financial statements. The conduct of physical inventory shall be made annually and
a copy of the report be submitted to the Auditor concerned not later than January 31 of
each year.

It is also recommended that the General Services Officer see to it that complete
records/documents are maintained for all the properties for proper safeguarding of the
agency assets.

Further, it is also recommended that the OIC-Municipal Accountant exert effort to

trace and update records to be able to provide depreciation on the undepreciated
properties for fair presentation of the accounts in the financial statements.

7. Some Capital Expenditures of the Municipality were debited/charged to Other

Maintenance and Other Operating Expenses (969), thereby overstating the Other
MOOE account and understating the Property, Plant and Equipment (PPE)
account.

We recommend that the Accounting Unit draw a Journal Entry Voucher to correct and
reclassify the accounts erroneously recorded as Other MOOE, instead of an appropriate
PPE account in order to present fairly the financial statements of the Municipality. The
Management is also required to provide budget for Capital Outlay to refrain from
charging to Other MOOE account.

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

Out of the eleven audit recommendations contained in the 2011 Annual Audit
Report, one was fully implemented, one was partially implemented, while the other
nine were not implemented.