EXECUTIVE SUMMARY

INTRODUCTION

Mariveles is a first class municipality in the province of Bataan. It is located in a

cove at the southern tip of the Bataan Peninsula. It has a total land area of 153.9 square
kilometers, representing 12% of the total land area of Bataan. Of this, about 69% consists
of pastureland, 19% of forestland, 6% of agricultural lands and the remaining 6% for
residential and industrial use. It is home to an Aeta community speaking a Sambalic
language called Mariveleño.

The executive and legislative body of the municipal government of Mariveles is

headed by Municipal Mayor Ace Jello C. Concepcion and Vice Mayor Angelito S. Rubia,
respectively.

As of December 31, 2016, the Municipality had a total personnel complement of

605 as follows: 195 permanent employees, 3 co-terminus, 11 consultants, 79 casual
employees and 317 job order personnel.

The audit covers the financial transactions and operations of the Municipality of
Mariveles for CY 2016. It included the examination of supporting documents of pre-
selected accounts and areas, employing audit procedures and techniques such as analysis
of accounts and such other procedures considered necessary. The audit was aimed to
determine propriety of financial transactions, compliance by the auditee to prescribed
laws, rules and regulations and accuracy of financial records and reports, as well as the
fairness of the presentation of the financial statements.

FINANCIAL HIGHLIGHTS

Increase
2016 2015
(Decrease)
Financial Condition
Assets ₱ 2,103,297,526.24 ₱ 2,165,409,803.50 ₱ (62,112,277.26)
Liabilities 996,824,665.85 1,300,300,096.97 (303,475,431.12)
Accumulated Surplus 1,106,472,860.39 865,109,706.53 241,363,153.86
Results of Operations
Revenue 606,661,472.84 617,168,244.64 (10,506,771.80)
Expenses 338,130,294.36 347,999,619.16 (9,869,324.80)
Surplus for the Period 268,531,178.48 269,168,625.48 (637,447.00)
Sources and Applications of Funds
Allotment 610,205,718.25 538,029,078.47 72,176,639.78
Obligations 474,092,777.44 457,196,030.51 16,896,746.93
Balances 136,112,940.81 80,833,047.96 55,279,892.85

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AUDITOR’S REPORT

We rendered a qualified opinion on the fairness of the presentation of the

financial statements of the Municipality of Mariveles, Bataan as of December 31, 2016
due to deviations from the prescribed procedures and non-compliance with rules and
regulations resulting in accounting deficiencies as follows:

1. The reported balances of Property, Plant and Equipment (PPE) accounts totaling
₱916,976,355.91 could not be established due to the continuous failure of the
Municipality to (a) conduct actual physical count of all properties; (b) reconcile property
and accounting records; (c) maintain PPE Ledger Cards (PPELC) and property cards
(PC); (d) derecognize disposed properties of ₱3,496,581.00; and (e) create appraisal
committee that will appraise the value of renovated/reconstructed market, slaughterhouse,
municipal building, donated lots and other properties with no costs which were not in
consonance with pertinent sections of the Manual on the New Government Accounting
System (NGAS) for Local Government Units (LGUs), Volume I, thus, affecting the
validity and accuracy of PPE accounts as of year-end. (Observation No. 1)

We reiterated our recommendation that the (a) LCE (i) create an appraisal committee to
determine the value of the renovated/reconstructed market, slaughterhouse, municipal
building, donated lots and other properties with no costs; (b) OIC-GSO (i) conduct actual
count of all properties and summarize the results in the RPCPPE; and (ii) maintain
Property Cards (PCs) by class and/or type to monitor the whereabouts and status of PPE
and reconcile the balances with the Accounting records; and (c) Municipal Accountant (i)
transfer the infrastructure assets in appropriate PPE accounts; (ii) provide PPELCs by
class and/or type to monitor the receipt and disposal of PPE and reconcile the balances
with the PCs; and (iii) derecognize the value of the disposed unserviceable properties
from the books of accounts.

2. Because of lack of personnel, non-amendment of errors/deficiencies of existing

Real Property Tax Administration System (RPTAS) of the Municipality and lack of
coordination between the Officer-In-Charge (OIC)-Municipal Treasurer and Municipal
Assessor in updating and generating the duly certified list showing the name of taxpayers
and the amount due and collectible for the year, the Municipal Accountant did not set up
an amount for Real Property Tax (RPT) and Special Education Tax (SET) Receivables at
the beginning of CY 2016 and the discrepancies between their balances remained
unreconciled, the RPT/SET Receivables at year-end totalling ₱563,044,764.18 and
₱158,081,601.85, respectively, could not be relied upon inconsistent with Section 20 of
the National Government Accounting System (NGAS) Manual for Local Government
Units (LGUs), Volume I. (Observation No. 2)

We reiterated our prior year’s recommendation that the (a) Municipal Mayor assign
personnel to help the Municipal Treasurer in updating the list of taxpayers; and instruct
the Municipal Assessor to (i) require the RPTAS provider to amend/correct the
errors/deficiencies of the RPTAS to come up with an updated duly certified list of

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taxpayers showing the amount due and collectible for the year; and (ii) continue the
representation with the Province of Bataan on linking the existing RPTAS with the
PATAS so that the use of both systems will be fully optimized; (b) OIC-Municipal
Treasurer (i) coordinate with the Municipal Assessor to update and generate the duly
certified list showing the names of taxpayers and the amount due and collectible for the
year; and (ii) furnish the Municipal Accountant of the said list at the beginning of each
year to correctly set-up the RPT/SET Receivables; and (c) Municipal Accountant exert all
efforts to reconcile the increasing discrepancy between the RPT/SET Receivables and
Deferred RPT/SET Income accounts and take the necessary adjustments.

3. Owing to the continuous non-adoption of perpetual inventory method, non-

maintenance of Supplies Ledger Cards (SLCs) and Stock Cards (SCs), non-preparation of
Summary of Supplies and Materials Issued (SSMI) and procurement of supplies and
materials as the need arises instead of quarter needs based on the approved Annual
Procurement Program (APP), in contradiction with pertinent sections of the National
Government Accounting System (NGAS) Manual for Local Government Units (LGUs),
Volume 1, therefore, the supplies and materials inventory balance at year-end could not
be determined. (Observation No. 3)

We reiterated that the (a) Municipal Accountant (i) recognize all regular procured
supplies and materials to the appropriate inventory accounts following the perpetual
inventory method; and (ii) maintain SLCs for each supplies and materials by type/class;
(b) OIC-GSO (i) maintain SCs for each supplies and materials by type/class; (ii) always
prepare the SSMI based on consolidated RIS and submit the SSMI to the Municipal
Accountant on a weekly basis; and (iii) conduct actual count of inventories semestrally
and submit RPCI not later than July 31 and January 31 of each year; (c) Bids and Awards
Committee (BAC) Chairman procure supplies and materials needed by different
departments quarterly based on approved Annual Procurement Program.

4. Owing to non-prioritization of delegation of personnel to confirm the status and

actual balance of the dormant Loans Payable account and non-implementation of
additional measures to coordinate with Privatization and Management Office (PMO), the
reported balance of the loan from the Development Bank of the Philippines (DBP)
amounting to ₱3,601,146.56 as of CY 2016 remained doubtful contrary to Section 4 of
the New Government Accounting System (NGAS) Manual for Local Government Units
(LGUs), Volume I. (Observation No. 4)

We reiterated our recommendations that the (a) Local Chief Executive prioritize the
delegation of personnel who will coordinate with PMO; and (b) Municipal Accountant
and OIC-Municipal Treasurer exert all efforts to establish the correct status of its dormant
Loans Payable with DBP.

5. The allocation and utilization of Local Disaster Risk Reduction and Management
Fund (LDRRMF) of the Municipality as of December 31, 2016 were inconsistent with
the provisions of COA Circular No. 2012-002 dated September 12, 2012, Sections 5 and

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6 of Presidential Decree (PD) No. 1445 and Section 114 of the National Government
Accounting System (NGAS) Manual for Local Government Units (LGUs), thus, resulting
in the non-achievement of the agency’s goal of decreasing disaster risk and improving
disaster preparedness and response abilities while exposing the unexpended balance
thereof to risk of misuse or misapplication. (Observation No. 5)

We reiterated our recommendation that the (a) Municipal Accountant (i) adhere to the
accounting and reporting guidelines of the LDRRMF to properly account the expenses
related thereto; (ii) make the necessary adjustments for the overstatement of Trust
Liability–DRRMF and understatement of Accumulated Surplus; (iii) transfer the
unexpended/unobligated balance of the QRF and the DRRMF-MOOE to the Special
Trust Fund at the end of the year; and (iv) ascertain completeness of the supporting
documents, information and signatures before the payments are processed; and (b) OIC-
MDRRMO prepare a certified monthly Report on Sources and Utilization of DRRMF
and submit the report on or before the 15th day after the end of each month.

6. The Cash in Vault and Cash in Bank balances of the Municipality remained
inaccurate and unreliable as of December 31, 2016 due to late reconciliation of books of
accounts of Accounting and Treasury Departments and untimely preparation of Bank
Reconciliation Statements (BRS) for Special Education Fund (SEF) and Trust Fund (TF)
which is not in accordance with Item 6.3 of COA Circular No. 97-002 dated February 10,
1997, Section 26 of the New Government Accounting System (NGAS) Manual for Local
Government Units (LGUs) and Sections 3.2 and 3.3 of COA Circular No. 96-011 dated
October 2, 1996, consequently affecting the existence of actual fund balances as of year-
end. (Observation No. 6)

We reiterated that the (a) Municipal Accountant and OIC-Municipal Treasurer reconcile
their books of accounts at least quarterly to minimize, if not avoid, the occurrence of
errors; and (b) Municipal Accountant (i) consistently monitor the timely preparation of
the BRS for SEF and TF funds; and (ii) furnish the Audit Team of the Journal Entry
Voucher (JEV) for the adjustments made on the reconciling items noted during the audit.

7. The granting, utilization and liquidation of cash advances for CY 2016 were not
in accordance with the provisions of COA Circular No. 97-002 dated February 10, 1997
and lacked proper documentation pursuant to Sections 4(5) and (6) of Presidential Decree
(PD) No. 1445, COA Circular No. 2012-001 dated June 14, 2012 and COA Accounting
Circular No. 2006-001 dated November 9, 2006, thus resulting in the delay of
recognizing relevant assets and expenses acquired or paid out of cash advances while
exposing any unused balance thereof to risk of loss or misuse. Moreover, the
Municipality Social Welfare and Development Office (MSWDO) were granted hazard
allowances totaling ₱168,589.60 without observing the requirements of Republic Act
(RA) No. 9433, or An Act Providing for A Magna Carta for Public Social Workers, cast
doubts in the validity and legality of the disbursements. (Observation No. 7)

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We recommended that the Municipal Mayor (a) instruct the Municipal Accountant and
OIC-Municipal Treasurer to (i) ensure the completeness of the supporting documents and
authorization for cash advances drawn and liquidated before the same are processed; (ii)
monitor the status of cash advances and send reminders to Accountable Officers for the
timely liquidation of their accountability; (iii) recognize cash advances for special
purposes as Advances to Officers and Employees; and (iv) recommend for the imposition
of sanctions on Accountable Officers who unjustly failed to liquidate their cash advances;
and (b) stop the granting of hazard allowances to MSWDO employees.

8. Due to inadequate personnel and transfer/additional workload of some of

accounting staff, the Municipality continuously failed to promptly submit the accounts
and required reports in violation of Item 7.2.1 of COA Circular No. 2009-006 dated
September 15, 2009, Items 3.2 and 3.4 of COA Circular No. 96-011 dated October 2,
1996, Sections 23(1) and (3) of the Administrative Code of 1987 and Section 122 of
Presidential Decree (PD) No. 1445, consequently prohibiting the Audit Team to conduct
timely audit thereof that may deprive Management of advisory inputs on financial
management and related decisions. (Observation No. 11)

We recommended that the (a) Municipal Mayor (i) assign additional competent personnel
to help the Accounting Department with the voluminous transactions of the Municipality;
and (b) instruct the Municipal Accountant to (i) submit to the Auditor’s Office the
accounts and required reports within the prescribed period; (ii) monitor and evaluate from
time to time the assigned tasks of the staff in-charge to avoid delay in the submission of
accounts and required reports; and (iii) strictly comply with the provisions of Section
7.2.1 of the RRSA, Sections 23 (1) and (3) of the Administrative Code of 1987 and other
laws, rules and regulations on submission and rendering of accounts to avoid suspension
and eventually, disallowance of the Municipality’s transactions.

SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

1. Despite insufficiency of the supporting documents and lack of signature of proper

authorities, various expenditures under the Special Education Fund (SEF) totaling
₱96,588,718.27 were processed, approved and paid in violation of Sections 4(5) and (6)
of Presidential Decree (PD) No. 1445, COA Circular No. 2012-001 dated June 14, 2012
and Section 123 of the National Government Accounting System (NGAS) Manual for
Local Government Units (LGUs), Volume I which rendered the veracity of the
transactions doubtful. Likewise, medical supplies/drugs and medicines and
communication allowances amounting to ₱284,478.80 and ₱799,500.00, respectively, or
an aggregate amount of ₱1,083,978.80 were charged to the SEF though such expenses
were not among the priority expenditures of the fund in contravention with Department
of Education, Culture and Sports (DECS)–Department of Budget and Management
(DBM)–Department of the Interior and Local Government (DILG) Joint Circular Nos. 1,
s. 1998, 01-A and 01-B dated April 14, 1998, March 14, 2000 and June 25, 2001,
respectively. (Observation No. 8)

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We recommended that the (a) Municipal Mayor (i) refrain from charging medical
supplies/drugs and medicines against SEF; and (ii) stop the granting of communication
allowances to DepEd employees; (b) Municipal Accountant and OIC-Municipal
Treasurer ascertain completeness of the supporting documents and signatures in every
transaction before the same is processed, approved and paid; (c) Municipal Engineer and
BAC Chairman ensure that all procurements are properly supported with documents; (d)
OIC-GSO issue Acknowledgement Receipt for Equipment for every equipment
purchased by the Municipality for the proper identification of accountability and
responsibility of end-users.

2. The authenticity and validity of DOLE Integrated Livelihood Enterprise

Enhancement Program (DILEEP), Motorized Fishing Boat, Establishment of Payao
Project, Irrigation Projects and Repair and Upgrading of Day Care Centers (DCC) funded
under the Bottom-up Budgeting (BuB) could not be established due to the non-
submission of perfected Memorandum of Agreement (MOA) and non-inclusion in the
Annual Investment Plan (AIP) of the Municipality for CY 2016 in violation of
Department of Budget and Management (DBM), Department of the Interior and Local
Government (DILG), Department of Social Welfare and Development (DSWD) and
National Anti-Poverty Commission (NAPC) Joint Memorandum Circular No. 7 dated
November 3, 2015. Moreover, payments of BuB programs/projects/activities (PPAs)
were made despite insufficiency of supporting documents, information and signature
contrary to COA Circular No. 2012-001 dated June 14, 2012, Implementing Rules and
Regulations (IRR) of Republic Act (RA) No. 9184 and Sections 4(5) and (6) of
Presidential Decree (PD) No. 1445 thus, rendering the BuB transactions doubtful.
(Observation No. 9)

We recommended and the Management agreed that (a) Project Coordinators (i) make
representation with the DOLE, BFAR, DA and DSWD Region III for the perfected MOA
of the DILEEP, Motorized Fishing Boat and Establishment of Payao Project, Irrigation
Projects and Repair and Upgrading of DCCs; (b) OIC-MPDO always include the BuB
PPAs in the Annual Investment Plan; (c) Municipal Accountant review the subsidiary
ledgers of each BuB PPAs and take the necessary adjustments thereof; and (d) Municipal
Accountant, Municipal Engineer and BAC Chairman ensure that all documentary
requirements are attached in the disbursement vouchers, supported by sufficient
information and signed by authorized officials and employees before payment as
evidence of the validity of transactions.

3. The efficiency and effectiveness of the implemented programs, projects and

activities (PPAs) of the Municipality funded under the 20% Development Fund (DF)
could not be ascertained due to insufficient planning, lack of monitoring schemes,
documentary requirements and procedures contrary to Annex A of the Implementing
Rules and Regulations (IRR) of Republic Act (RA) No. 9184, Item 2.3 of Department of
the Interior and Local Government (DILG) – Department of Budget and Management
(DBM) Joint Memorandum Circular (JMC) No. 2011-1 dated April 13, 2011 and Section

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5 of Executive Order (EO) No. 471 dated July 23, 1991, hence, resulting in the non-
achievement of the Municipality’s goals in providing PPAs that are more beneficial to the
people of Mariveles, Bataan. (Observation No. 10)

We reiterated that the (a) Municipal Development Council thru the MPDO (i) include in
the AIP and implement livelihood and entrepreneurship/local economic development
projects; (ii) support the AIP with comprehensive data/information showing the extent of
the problems of the Municipality and how to address them; expected output of the PPAs
properly identified and prioritized; and results stating whether the implementation were
immediate or long-term; and (iii) provide written evaluation on the assessment of impacts
and benefits on PPAs implemented by the Municipality and if such PPAs contributed to
the achievement of desirable socio-economic development and environmental
management outcomes; and (b) Municipal Engineer ensure that a feasibility and
preliminary engineering study are conducted before the implementation of development
PPAs.

4. Owing to the volume of transactions and lack of manpower at Engineering Office,

the Municipality continuously failed to submit the documentary requirements for
infrastructure projects amounting to ₱36,681,776.45 in contradiction with the provisions
of engineering requirements and standards of Department of Public Works and Highways
(DPWH) Department Order (DO) No. 216 series of 2000, Implementing Rules and
Regulations (IRR) of Republic Act (RA) No. 9184, COA Circular 2012-001 dated June
14, 2012 and COA Circular No. 2009-001 dated February 12, 2009 which rendered the
veracity, propriety and accuracy of the transactions doubtful. (Observation No. 12)

We recommended that the (a) Municipal Mayor assign additional personnel at

Engineering Office; (b) Municipal Engineer and Bids and Awards Committee Chairman
ensure that infrastructure projects bear all the required documents/engineering
requirements and standards as required by various laws, rules and regulations; and (c)
Municipal Accountant ensure the completeness of required supporting documents in
every transaction before effecting payment.

5. Due to the problems encountered in building its own sanitary landfill, the
Municipality could not fully comply with the requirements of Republic Act (RA) No.
9003 or the Ecological Solid Waste Management Act of 2000 which resulted in the
exposure of the public to various diseases as well as impairment and non-protection of
the environment. (Observation No. 13)

We commended the Management for taking significant action and prioritizing the
implementation of Solid Waste Management PPAs to fully comply with RA No. 9003.
We recommended that extra effort still be exerted and the Municipal Solid Waste
Management Board prioritize and implement the operation of a Sanitary Landfill
especially with the approval of the Ten-Year Solid Waste Management Plan.

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We also recommended that Management strictly implement the existing municipal solid
waste management ordinances and environmental laws by involving the barangay
officials in the implementation thereof.

SUMMARY OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES

Suspensions, disallowances and charges as of December 31, 2016 stood at ₱0.00,

₱19,946,450.00 and ₱0.00, respectively.

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ UNIMPLEMENTED

AUDIT RECOMMENDATIONS

Of the 29 recommendations contained in our previous years’ audit report, five

were implemented, twelve were partially implemented and twelve were not implemented.

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