PART II –AUDIT OBSERVATIONS AND RECOMMENDATIONS

Financial Audit

Unreliable balances of Property, Plant and Equipment (PPE)

1. The Municipality was unable to substantially address prior year’s issues on

PPE such as on the: (a) non-conduct of regular physical inventory; (b)non-disposal of
unserviceable assets; and (c) non-recording of donated properties. Further deficiencies
were also noted such as: (a) lapses in internal control in the management of PPE on
account of non-maintenance of property records of the Municipal Treasurer’s Office;
and (b) inaccurate recording of PPE owing to late recognition of PPE account
contrary to the pertinent provisions of the New Government Accounting System
(NGAS) Manual for LGUs, Philippine Public Sector Accounting Standards (PPSAS)
and Presidential Decree (PD) No. 1445, hence the accuracy and existence of the
reported carrying value of PPE amounting to ₱79,046,264.09 were not established.

1.1. As of year-end, the Municipality reported a carrying amount of ₱79,046,264.09

for its Property, Plant and Equipment, however, the accuracy of the account could not be
ascertained due to the following audit exceptions:

Non-conduct of physical count

1.2. As in the previous years, physical count on Property, Plant and Equipment was
not conducted in violation of Section 124 of the NGAS Manual for LGUs which requires
that the physical count property, plant, and equipment by type shall be made annually and
reported on the Report on the Physical Count of Property, Plant and Equipment
(RPCPPE).

1.3. The Audit Team was able to conduct ocular verification of the existence of the
Municipality’s Motor Vehicles and found no adverse findings thereof.

Unserviceable properties

1.4. On the other hand it was noted that various defective/unserviceable supplies and
equipment located at the Municipal warehouse still remained undisposed contrary to
Section 79 of P.D. No. 1445 which states that when government property has become
unserviceable for any cause, or is no longer needed, it shall, upon application of the
officer accountable therefore, be inspected by the head of the agency or his duly
authorized representative in the presence of the auditor concerned and, if found to be
valueless or unsalable, it may be destroyed in their presence.

1.5. The timely and systematic disposal of unserviceable properties generate greater
benefits to the Municipality in terms of higher appraisal value for the property, further

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deterioration of its value, lesser storage cost and better management of limited office
space.

Ownership of Municipal properties

1.6. Records also showed that properties donated to the Municipality such as the lot
where the Municipal Hall, Municipal Material Recovery Facility (MRF), Xevera
Municipal Hall and Bacolor Evacuation Center are situated were not recorded in the
books due to absence of deed of donation and other pertinent documents. COA Circular
No. 2015-002 dated March 9, 2015 provides the guidelines on recording PPE controlled
but not owned by the agency.

1.7. PPSAS 17 provides that an entity shall recognize the cost and the related
accumulated depreciation and impairment losses of existing PPE which were not
previously recognized due to absence of ownership/title based on contract, memorandum
of agreements and other reasons. If no documents are available, an entity shall recognize
the cost of the PPE based on fair value as of: (a) the date of the acquisition, it available,
or (b) January 1, 2014, or (c) at the date the FV was determined.

1.8. For failure of the Municipality to obtain properly executed ownership documents,
such as deed of donation and the like, for the said parcel of lot and transfer the same in
the name of the Municipality, the land and all improvements made thereon were exposed
to risk of third party claim which caused the same to remain unrecorded in the books
contrary to Section 63 of P.D. No. 1445 which states that all moneys and property
officially received by a public officer in any capacity or upon any occasion must be
accounted for as government funds and government property. Government property shall
be taken up in the books of the agency concerned at acquisition cost or an appraised
value.

Property records not maintained by the Municipal Treasurer’s Office

1.9. Pertinent section of the NGAS Manual for LGUs requires that the General
Services Officer or the Municipal Treasurer, as the case may be shall likewise maintain
stock cards and property cards for supplies; property, plant and equipment; and work
animals in their custody to account for the receipt and disposition of the same. The
balance per stock card/property cards should always reconcile with the ledger cards of
the accounting unit.

1.10. Audit revealed that only the Accounting Office maintained records of the PPE.
PPE is recorded once payment has been completed. Moreover, acceptance and inspection
of deliveries of PPE were not being performed by the Municipal Treasurer contrary to
Section 118 of the NGAS which provides that deliveries of items purchased by the local
government units shall be accepted first by the general services officer or municipal
treasurer as the case maybe before inspection…Acceptance and inspection shall be made
using the Acceptance and Inspection Report (AIR). Consequently, the MT failed to
maintain their own record of the Municipality’s PPE.

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Estimated useful life (EUL)

1.11. Review of the depreciation schedule disclosed that 5 years EUL was used in
computing for the depreciation expense of Military and Police Equipment instead of 10
years as suggested in COA Circular No. 2003-007.

1.12. Such inconsistency may understate the carrying value of PPE and overstate the
expenses reported for the period because of inaccurate computation of depreciation
expense.

Late recognition of PPE account

1.13. Construction in Progress (CIP) as defined in the Revised PPSAS Chart of

Accounts is an account used to record the accumulated cost or other appropriate value of
Land Improvements/Infrastructure Assets/ Buildings and Other Structures which are still
in the process of construction or acquisition. The account shall be credited for
reclassification to the appropriate Asset account upon completion.

1.14. According to the Municipal Accountant, CIP transactions were reclassified to the
appropriate asset account once full payment has been made, however, it was noted that all
completed projects for the year were reclassified only at year-end regardless of their
completion date and date of final payment.Verification with the Engineering’s Office
revealed that some projects were already available for use in the early and middle part of
CY 2017.This practice resulted to late recognition of PPE account in the books,
consequently delaying the recognition of the related depreciation thereto contrary to the
principles of PPSAS which requires that an entity should begin depreciating an item of
property, plant and equipment when it is available for use such as when it is in the
location and condition necessary for it to be capable of operating in the manner intended
by management and to continue depreciating it until it is derecognized, even if during
that period the item is idle.

1.15. For the inability of the Municipality to recognize all PPE accounts and charge
corresponding depreciation expenses thereon at the appropriate time, the accuracy of
reported balances of the accounts appearing in the book at year-end was not established.

1.16. We reiterated that the Local Chief Executive direct the: (a) Inventory Team
to regular conduct physical count of all properties and submit the prescribed report
thereon to COA on or before January 31 of each year; (b) Disposal Committee to
undertake the proper disposal of unserviceable assets in accordance with applicable
rules and regulations on disposal procedures; (c) Municipal Accountant to observe
PPSAS 17 and initiate efforts towards the recognition in the books using cost or
appraised value of unrecorded PPE for fair presentation of the accounts in the
financial statements.

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1.17. We also recommended that the LCE direct the: (a) Municipal Treasurer to
handle the inventory of PPE and monitoring thereof to prevent opportunities for
fraud.

1.18. The Local Chief Executive informed the Audit Team that physical count of all
properties will be immediately undertaken. Also, a disposal committee will be established
to undertake the proper disposal of unserviceable properties. On the other hand, the
Accounting Office gave assurance of the accurate recording of PPE in the books and the
transfer of custody and monitoring thereof to the Municipal Treasurer.

Doubtful balance of Inventories account

2. Deficiencies were still noted in the management and recording of Inventories

Account as evidenced by: (a) untimely recording of issuances thereof; (b) non-adoption
of Perpetual Inventory Method; and (c) failure to conduct physical inventory in
violation of Sections 121, 114 and 124 respectively of the New Government Accounting
System (NGAS) Manual thus, rendering the reported year-end balance of Inventories
of ₱1,321,022.82 doubtful.

2.1. In compliance with the previous year’s audit recommendation, the custody and
issuance of the common-use supplies which were formerly handled by the Municipal
Accounting Office (MAO) were transferred to the Municipal Treasurer’s Office (MTO),
however, the latter failed to regularly maintain records thereof.

2.2. As of this writing, the MTO has yet to submit up-to-date records of supplies on
hand at year-end owing to the lack of personnel to perform the job. Updating of stock
cards for supplies was set aside because priority was given to their main function of
managing the revenue and cash flow of the Municipality, banking, collection, receipt,
reporting, custody, investment or disbursement of funds.

2.3. Moreover, the timely recording of issuances of supplies was still not practiced due
to the failure of the MTO to submit weekly the Requisition and Issue Slip (RIS) for
which supplies and materials were issued using the Summary of Supplies and Materials
Issued (SSMI) as required under Section 121 of the NGAS Manual. The SSMI together
with the original copy of the RIS shall be submitted to the Chief Accountant, who shall
compute cost of supplies issued and ending inventory. A journal entry voucher shall be
prepared to record the expenditures using appropriate expenditure accounts.

2.4. Audit further disclosed that the Municipality still failed to conduct periodic
physical inventory of supplies contrary to Section 124 of NGAS. Physical count of
inventory items by type shall be conducted semestrally and reported in the Report of the
Physical Count of Inventories (RPCI). This shall be submitted to the Auditor concerned
not later than July 31 and January 31 of each year for the first and second semesters,
respectively.

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2.5. Since the MTO failed to comply with the weekly submission of SSMI to the
Accounting office and to conduct physical count of inventories, the prompt reconciliation
of inventory balances both in the Accounting and MTO records was not achieved.

2.6. It was also noted that purchase of drugs & medicines as well as welfare goods for
distribution and accountable forms were not coursed through the inventory account but
were expensed outright contrary to Section 114 which states that purchase of supplies
and materials for stock, regardless of whether or not they are consumed within the
accounting period, shall be recorded as inventory following the perpetual inventory
method. Regular purchases shall be coursed thru the inventory account and issuances
thereof shall be recorded as they take place, except those purchased out of the petty cash
fund which shall be for immediate use and for stock in which case shall be charged
immediately to the appropriate expense accounts.

2.7. Examination of records and inspection of inventory items at the beginning of year
revealed that there were accountable forms, medicines and welfare goods for distribution
which remained used/undistributed as of year-end but were not reflected in the books,
thus overstating the expenses and understating the inventory account.

2.8. Owing to the above mentioned deficiencies the accuracy and reliability of the
year-end balance of Inventory account was doubtful.

2.9. We reiterated our recommendation that the LCE require the MTO to (a)
conduct physical count of all inventory items regularly at the end of every semester
and render a report thereon within the prescribed deadline; and (b) reconcile the
records of the MTO with the Accounting records on a per category basis.

2.10. We further recommended that the LCE require the (a) MTO to consolidate
weekly the RIS using the SSMI and submit to the Accounting office for recording of
issued supplies; and (b) Accounting office to follow the procedure of recording in
the books the procurement of supplies inventory.

2.11. Management agreed a prompt submission of the consolidated RIS for recording of
issued supplies and will reflect the accurate recording thereof in the books. They also
agreed to conduct a reconciliation of the account between the records of the MTO and the
MAO.

Prior year’s expenses charged to current year’s appropriation –₱920,831.61

3. Prior year’s expenses amounting to ₱920,831.61 were charged against current

year’s appropriation, contrary to the accrual basis of accounting as stated in the NGAS
Manual and Section 350 of the Local Government Code, casting doubt on the accuracy
of the reported balances of expenses at year-end.

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3.1. Audit of sample payments in the first quarter of CY 2017 showed that various
expenditures aggregating to ₱920,831.61 were incurred in CY 2016. Similarly, review of
financial records also showed that the liabilities were not recorded in CY 2016 to
recognize the obligations at the time the expenses were made.

3.2. Payments included various expenses for utility bills, procurement of cellular
phones, various supplies, and the like as follows:

Nature of Expense Amount

Medicine, sports, and office supplies ₱ 237,224.75
Procurement of cellphones 165,000.00
Garbage Fees 137,400.00
Meals 94,034.20
Laboratories 69,845.00
Gasoline 49,898.76
Printing 39,610.00
Appliances 37,564.00
Repairs and Maintenance 27,870.00
Filling materials 24,700.00
Telephone bills 14,242.84
Internet bills 7,373.31
Drinking water 6,960.00
Electricity bills 4,321.75
Seminar 4,000.00
Water bills 787.00
Total ₱ 920,831.61

3.3. Section 04(s), Volume I of the Manual on NGAS for LGUs states that liability
shall be recognized at the time goods and services are accepted or rendered and
supplier/creditor bills are received. Under item a. thereof, the accrual accounting method
provides that all expenses shall be recognized when incurred.

3.4. Section 350 of the Local Government Code instructs that all lawful expenditures
and obligations incurred during a fiscal year shall be taken up in the accounts of that year.

3.5. Review of the Status of Appropriation, Allotment, Obligation, and Balances

(SAAOB) for CY 2016 showed that the Maintenance and Other Operating Expenses
(MOOE) account has still an available balance of ₱1,727,273.41 as of year-end which
was enough to cover the disbursements charged in the succeeding year. Also,
examination showed sufficient cash to pay for the said expenses as indicated in the year-
end Cash in Bank (GF) of ₱49,568,553.16.

3.6. Interview with the Municipal Budget Officer (MBO) disclosed that the delay in
filing the Obligation Request was caused by the late submission of Disbursement
Vouchers along with pertinent documents from the concerned offices for the issuance of
obligation request. As gathered, billings from suppliers were also not received on time,
hence the preparation of supporting documents for the claim thereof were also not
prepared as incurred.

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3.7. The Municipality could communicate with concerned suppliers to immediately
provide their billings as soon as the goods were delivered or services were rendered to
facilitate the recognition of liability thereto. Further, the agency could also enroll their
accounts on paper-less billings (e.g. utilities and communications expenses) for a more
timely recognition of expenses.

3.8. We recommended that management: (a) communicate with the suppliers

regarding the timely delivery of the billings; and (b) consider enrolling accounts for
various utilities under paper-less billing if possible.

3.9. Management concurred with our recommendations. The Accounting Department

assured the Audit Team that all expenses be recognized following the accrual basis of
accounting.

Compliance Audit

Management of Cash in Treasury Account

4. The Municipality was unable to substantially address previous year’s

observations on its Cash in Treasury account, particularly on the (a) unreconciled
difference of ₱415,979.13 between the cashbook and subsidiary ledger balance; (b)
cash shortage of ₱252,000.00 from a robbery incident in CY 2015 which remained
unsettled; (c) inadequate internal control as manifested in (i) allowing job order
personnel to perform collecting functions without supervision; (ii) failure to update
individual cashbooks of collecting officers on a daily basis; (iii) disbursing officer still
in-charge of depositing collections; and (iv) no segregation of duties of accounting
personnel in-charge in the reconciliation of cash as well as processing cash
transaction, in violation of pertinent sections of the NGAS Manual for LGUs and other
pertinent regulations.

4.1. Comparison of balances of cashbooks and subsidiary ledgers of all funds as of

December 31, 2017 still showed unreconciled balances of ₱415,979.13 which remained
unadjusted in the books as of audit date, as shown below:

Balances
Fund
Per cashbook Per SL Difference
General Fund ₱ 438,006.36 ₱ 503,861.27 ₱ (65,854.91)
Special Education Fund 58,864.66 408,988.88 (350,124.22)
Trust Fund - - -
Total ₱ 496,871.02 ₱ 912,850.15 ₱ (415,979.13)

4.2. As stated in our previous years’ reports, the balance of ₱350,124.23 under the
Special Education Fund was a carry-over balance in the cash examination report dated
March 19, 2010 which remained unadjusted. The Municipal Accountant stated that the
lack of supporting documents to support the amount rendered difficulty in
adjusting/correcting the account.

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Collection of market fees assigned to job order personnel

4.3. Also, a job order personnel was still assigned to collect market fees. Collections
were named under one of the Administrative Aides in the Municipal Treasurer’s Office,
hence would be the AO responsible in case of loss of collections of market fees. We
gathered that the City was unsuccessful in recruiting suitable or eligible applicant for the
job.

4.4. Joint Circular No. 1 s. 2017 dated June 15, 2017 of the Civil Service Commission,
Department of Budget and Management, and Commission on Audit provides that hiring
of Job Order workers shall be limited to emergency or intermittent work, such as clearing
of debris on the roads, canals, waterways, etc. after natural/ man-made
disasters/occurrences; other trades and crafts, and manual tasks such as carpentry,
plumbing, painting, electrical, and the like which are not part of the regular functions of
the agency. The same Circular further states that job order workers should not, in any
case, be made to perform functions which are part of the job description of the agency's
existing regular employees.

Cashbook not updated on a daily basis

4.5. Review of cashbooks showed that the individual cashbooks of collecting officers
were still not updated on a daily basis, contrary to sections 26 and 27, Volume II, Manual
on the New Government Accounting System which provides that:

“Sec. 26. Cashbook – Cash in Treasury. – Cashbook for Cash in

Treasury (Annex 19) shall be used to record collections (Debit column)
and deposits to the bank (Credit column) based on the RCD. The cashbook
shall be maintained by the Treasurer by fund and shall be updated and
balanced daily. The Accountable Officer shall, at the end of the month or
when required to do so by proper competent authority, rule and foot the
cashbook.

Section 27.Cashbook – Cash in Bank. – Cashbook for Cash in Bank shall

be used to record deposits of collections (Debit column) and withdrawals
from the bank thru issuance of checks (Credit column). The cashbook shall
be maintained by bank account and by fund and shall be updated and
balanced daily. The Accountable Officer shall, at the end of the month or
when required to do so by proper competent authority, rule and foot the
cashbook. He shall likewise accomplish the same certification in the
cashbook for cash-in-treasury.”

4.6. The abovementioned provisions clearly state that the Treasurer shall maintain the
cashbooks to monitor the cash balance as of specific date and that all transactions for the
day shall be recorded immediately. As previously stated, the ICO-MT still failed to
regularly update the cashbook for the Cash in Bank on a daily basis although we are
pleased to note that the entries in the General, Special Education, and Trust Fund had
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been updated. The Treasurer’s Office maintains a worksheet which is updated on a daily
basis then record the updated entries in the cashbooks after a thorough review of the
report.

4.7. It was further noted that all collecting officers had already started to maintain
their individual cashbooks. However, because of the bulk of transactions handled by each
collecting officer, cashbooks were not updated on a daily basis.

4.8. The ICO-MT and some other AOs continuous failure to update their respective
cashbooks daily, may result in poor monitoring of collections, thus the accountability
thereof at any given time could not be readily determined.

Other lapses in internal control

4.9. Sections 123 and 124 of the P.D. No. 1445 defines internal control as the plan of
organization and all the coordinate methods and measures adopted within an organization
or agency to safeguard its assets, check the accuracy and reliability of its accounting data,
and encourage adherence to prescribed managerial policies. It further provides that it
shall be the direct responsibility of the agency head to install, implement, and monitor a
sound system of internal control.

4.10. Other lapses in the internal control over cash collections and disbursements were
again noted such as:

a) The personnel who deposits all collections to the Land Bank of the Philippines
was still the Disbursing Officer (DO) for salaries and wages. It is worth noting
that the said employee was no longer the Treasurer of the Municipality’s
Cooperative in compliance with previous audit memorandum.

b) Also, reconciliation of cash accounts was still done by the same accounting
personnel who records cash transactions, hence may provide lesser check and
balance on recording.

4.11. The above-noted deficiencies which remained uncorrected could result in possible
loss of government funds and resources.

Daily deposit of collections

4.12. We have reviewed collections and deposits from December 16, 2015 to August 1,
2017 of all funds. To date, collections were generally deposited daily and intact in
compliance with the previous observation.

4.13. Collections were also vouched and compared with the Report of Collections and
Deposits and cashbooks. On the other hand, deposits were compared to the statement of
account generated through the “we-access” account of the Municipality to validate
collections and deposits made.

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4.14. Vouching of collections showed that collections from previous dates were not
reported in the Report of Collections and Deposits (RCD) on a timely basis. Interview
with the ICO-MT disclosed that these collections pertain to those coming from
subdivisions with various ORs, payers who cancelled payment for the day and promised
to return the other day, and untimely remittances of MTO personnel in exceptional cases.

4.15. The failure to report collections on a timely basis affects the reliability of the Cash
in Treasury account as of a specific date.

4.16. Collections for CY 2017 for all funds are as follows:

Table 1. General Fund

Collections Deposits Balance
Beginning Balance, December 15, 2015 8,061,412.02 8,588,511.22 418,673.10
January1-31,2017 16,225,569.00 16,120,423.55 523,818.55
February1-29,2017 6,351,792.47 6,236,841.37 638,769.65
March1-31,2017 6,666,692.56 6,723,174.63 582,287.58
April 1-30,2017 4,930,961.98 5,024,823.51 488,426.05
May 1-31,2017 4,554,880.39 4,343,655.88 699,650.56
June 1-30,2017 6,015,823.38 6,022,035.33 693,438.61
July 1-31, 2107 6,538,442.09 6,979,880.70 252,000.00
August 1-31,2017 7,467,734.08 6,980,563.88 739,170.20
September 1-30,2017 5,175,421.91 4,871,739.46 1,042,852.65
October 1-31,2017 5,034,619.58 5,680,743.37 396,728.86
November 1-30, 2017 4,689,955.18 4,648,677.68 438,006.36
December 1-31,2017 8,402,410.43 8,528,847.78 311,569.01
Total 155,062,096.02 154,750,527.01 311,569.01
per count 59,569.01
shortage (overage) 252,000.00

Table 2. Special Education Fund

Collections Deposits Balance
Beginning Balance, December 1-31,2016 3,173,860.92 3,079,493.10 110,026.09
January1-31,2017 1,780,399.50 1,849,530.76 40,894.83
February1-29,2017 1,170,743.74 991,342.92 220,295.65
March1-31,2017 1,383,270.96 1,386,072.39 217,494.22
April 1-30,2017 432,421.36 644,093.86 5,821.72
May 1-31,2017 384,242.95 383,484.72 6,579.95
June 1-30,2017 717,456.71 452,849.83 271,186.83
July 1-31, 2107 378,125.98 649,312.81 -
August 1-31,2017 544,011.77 500,853.31 43,158.46
September 1-30,2017 525,847.27 444,498.66 124,507.07
October 1-31,2017 509,419.75 627,118.02 6,808.80
November 1-30, 2017 342,810.00 342,656.28 6,962.52
December 1-31,2017 4,332,667.69 4,280,765.55 58,864.66
Total 24,873,113.37 24,814,248.71 58,864.66
per count 58,864.66
shortage (overage) -

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 Table 3. Trust Fund
Collections Deposits Balance
Beginning Balance, December 1-31,2016 45,000.00 630,145.11 (480,000.00)
January1-31,2017 495,000.00 15,000.00 -
February1-29,2017 111,600.00 111,600.00 -
March1-31,2017 - - -
April 1-30,2017 - - -
May 1-31,2017 20,865,000.00 20,865,000.00 -
June 1-30,2017 1,794,908.00 1,794,908.00 -
July 1-31, 2107 1,500,000.00 1,500,000.00 -
August 1-31,2017 2,313,400.00 2,313,400.00 -
September 1-30,2017 2,361,104.68 2,361,104.68 -
October 1-31,2017 35,000.00 35,000.00 -
November 1-30, 2017 35,000.00 35,000.00 -
December 16-31, 2017 3,377,019.16 3,377,019.16 -
Total 58,128,998.49 58,128,998.49 -
per count -
shortage (overage) -

4.17. As shown in the tables above, examination of the cash collections of the In
Charge of Office-(ICO-MT) for CY 2017 again reflected the cash shortage of
₱252,000.00, due to robbery of which a case has been filed against the suspected robber
under Criminal Case No. 21721. The lost collections pertained to the following ORs.

Regulatory fees
OR No. 9704551-5500 ₱ 114,000.00
OR No. 9705501-6650 138,000.00
Total ₱ 252,000.00

4.18. Section 73 of PD No.1445 states that the credit for loss occurring in transit due to
casualty or force majeure requires that when a loss of government funds or property
occurs while they are in transit or the loss is caused by fire, theft, or other force majeure,
the officer accountable therefor or having custody thereof shall immediately notify the
Commission or the auditor concerned and, within 30 days or such longer period as the
Commission or auditor may in the particular allow, shall present his application, for
relief, with the available supporting evidence. Whenever warranted by the evidence,
credit for the loss shall be allowed. An officer who fails to comply with this requirement
shall not be relieved of liability or allowed credit for any loss in the settlement of his
accounts.

4.19. Previously, owing to incomplete documents, the accountable officer was unable to
file her request for relief from accountability on account of robbery.

4.20. We recommended that management: (a) require the ICO-MT to produce the
missing funds of ₱252,000.00 and deposit the same to the authorized government
depository bank; (b) require the ICO-MT and the Municipal Accountant to (i)
perform reconciliation of accounts and records at least quarterly; (ii) exert best
efforts to locate records pertaining to prior year’s difference of cash balances and
prepare adjusting entries thereat; and (iii) review reconciling items for proper

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adjustment in appropriate books; (c) apply for the appropriate fidelity bond
coverage for the job-order personnel assigned in the collection of market fees; (d)
continue to improve compliance on the need to update the cashbooks on a daily
basis for proper determination of accountabilities; (e) instruct the ICO-AMT to
refrain from assigning personnel to handle incompatible functions such as
disbursing officer who deposits collections of the Municipality; (f) require the
Municipal Accountant to assign different personnel in processing cash transactions
and reconciliations; (g) require MT to reflect collections in the RCD and cashbooks
on a timely basis; and (h) continue to deposit daily and intact the collections.

4.21. Management committed to improve the internal control for cash collections and
disbursements particularly on the segregation of incompatible functions and
reconciliation of accounts between the records of the ICO-MT and the Accounting
Office.

Non-Imposition of Warranty Security

5. The continuous failure of the Municipality to require the supplier to post

warranty security on the procurement of goods resulted in additional repair and
maintenance expense of ₱45,610.00 for the newly procured Farm Equipment of
₱4,490,000.00 which were still under the warranty period. Moreover, it also failed to
withhold 10% retention fee and warranty security on selected Infrastructure Projects
contrary to pertinent provisions of Republic Act No. 9184.

5.1. Section 62 of the Revised IRR of R.A. No. 9184 prescribes the warranty required
for the procurement of goods and services. For the procurement of goods, a warranty
shall be required from the contract awardee for a minimum period of one (1) year, in the
case of equipment, after performance of the contract. The obligation for the warranty
shall be covered by either retention money in an amount equivalent to at least ten percent
(10%) of every progress payment, or a special bank guarantee equivalent to at least ten
percent (10%) of the total contract price. The said amounts shall only be released after the
lapse of the warranty period.

5.2. Audit of the payments for the purchase of Farm Equipment and Disaster Response
& Rescue Vehicles revealed that an amount equivalent to 10% of the contract price or a
total of ₱739,400.00 was not retained by the Municipality nor a special bank guarantee
was submitted by the supplier thus disregarding the obligation for the warranty as
mentioned in the above-cited regulation. Details of the procured goods are as follows:
Project Cost Required Warranty
Purchase of one (1) unit of four-wheel Drive Tractor ₱ 2,495,000.00 ₱ 249,500.00
Purchase of one (1) unit Rice Combine Harvester
with Heavy Duty Transport Trailer 1,995,000.00 199,500.00
Purchase of one (1) unit Utility & Passenger Cargo
Rescue Vehicle 1,490,000.00 149,000.00
Purchase of one (1) unit Hydraulic Combi Tool with
Mechanical Ram and Extension Hose 1,414,000.00 141,400.00
TOTAL ₱ 7,394,000.00 ₱ 739,400.00

41
5.3. Our validation showed that the two units of farm equipment were delivered in
January 2017 and had already undergone repairs after being accepted by the
Municipality. Records showed that four months after the machineries were delivered,
some repairs had already been done, the first one was in May and the other one was in
October 2017. Consequently, the cost of repair was paid by the Municipality, incurring
additional expenses of ₱45,610.00. Had the Municipality required the supplier to post the
required warranty security prior to full payment, the cost of repair during the warranty
period of one year should have been borne by the supplier.

5.4. On the other hand, for the procurement of infrastructure projects, the contractor
shall assume full responsibility for the contract work from the time project construction
commenced up to final acceptance by the government and shall be held responsible for
any damage or destruction of the works except those occasioned by force majeure. The
contractor shall be fully responsible for the safety, protection, security, and convenience
of his personnel, third parties, and the public at large, as well as the works, equipment,
installation and the like to be affected by his construction work and the contactor shall be
required to put up a warranty security in the form of cash, bank guarantee, letter of credit,
GSIS or surety bond callable on demand, in accordance with the following schedule:

Form of Warranty Minimum Amount in % of Total

Contract Price
1. Cash deposit, cash bond or Five percent (5%)
letter of credit
2. Bank guarantee Ten percent (10%)
3. Surety Bond Thirty percent (30%)

5.5. However, review of the disbursement vouchers for the payment of selected
infrastructure projects enumerated in the next table revealed that the warranty security in
the forms shown in the matrix above was not again complied with by management.

Project Contract Cost Remarks

Improvement/Concreting of Banlic Cabalantian
Barangay Road (From G.S.O Road to Mc Arthur
Highway) ₱ 2,986,500.00 one-time payment
Improvement/concreting of San Vicente - San Antonio
Gugu Barangay Road funded by 2017 ADM Fund 8,313,714.95 1st progress payment
4,501,533.05 final and full payment
Construction of Bacolor Evacuation Center Extension 2,058,519.00 one-time payment
TOTAL ₱ 17,860,267.00 -

5.6. Further, progress payment for the project entitled “Improvement/concreting of

San Vicente - San Antonio Gugu Barangay Road funded by 2017 ADM Fund” was not
also subjected to retention of ten percent (10%) referred to as the "retention money."
Such retention shall be based on the total amount due to the contractor prior to any
deduction and shall be retained from every progress payment until fifty percent (50%) of
the value of works, as determined by the procuring entity, are completed. If, after fifty

42
percent (50%) completion, the work is satisfactorily done and on schedule, no additional
retention shall be made; otherwise, the ten percent (10%) retention shall be imposed.

5.7. With the above-noted deficiencies, the Municipality was remiss in implementing
the provisions of the RIRR of R.A. No. 9184 on warranty security to protect its interest
and to prevent unnecessary expenses on its part. It allowed contractors and suppliers to
commit breach of contract as regards warranty security.

5.8. We recommended that the General Services Officer/Procuring

Officer/Municipal Engineer, as the case may be, require awardees of
contracts/purchase order to comply with the submission of the appropriate
warranty security at the prescribed amount, as necessary, to protect the interest of
the Municipality.

5.9. Management concurred with our observations and assured the Audit Team to
require the awardees of contract/purchase order to comply with required warranty
security in the procurement of goods and services.

Utilization of 20% Development Fund (DF)

6. The Municipality was substantially compliant in the appropriation and

utilization of the 20% DF as it registered an overall 85% completion rate of the
programs and projects in its Annual Investment Plan (AIP) for CY 2017, in
compliance with Joint Memorandum Circular (JMC) No. 2017-1 dated February 2,
2017 of the Department of the Interior and Local Government (DILG) and Department
of Budget and Management (DBM) thus, providing desirable socio-economic
development and environmental management outcomes to its constituents.

6.1. For CY 2017, the Municipality allotted ₱18,839,310.60 for 20% Development
Fund (DF) to finance the LGU's priority development projects, as embodied in its duly
approved local development plans and Annual Investment Program (AlP) pursuant to
Joint Memorandum Circular (JMC) No. 2017-1 dated February 2, 2017 of the
Department of the Interior and Local Government (DILG) and Department of Budget and
Management (DBM).

6.2. It further states that all development projects to be funded under the 20% DF shall
contribute to the attainment of desirable socio-economic development and environmental
management outcomes of the LGU, and shall partake the nature of investment or
capital expenditures.

43
 6.3. Review and validation of accomplishment report indicated in the AIP for 20% DF
showed the following:

Target
Date Date
Project/ Program/ Activities Budget Project Status Date of
Started Completed
Completion
Graveling of Dolores Brgy. Road
with Box Culvert ₱1,000,000.00 Completed 7/7/2017 9/7/2017 9/5/2017
Construction of Drainage System
Along the Jose Abad Santos Ave.
Macabacle Portion 6,000,000.00 Ongoing 10/12/2017 5/1/2018 n/a
Construction of Multi-Purpose
Structure (Back of Municipal
Building) 2,000,000.00 Completed 3/24/2017 8/1/2017 6/21/2017
Concreting of Brgy. Road along
Maris Village - San Vicente 1,200,000.00 Completed 7/1/2017 8/22/2017 8/11/2017
Improvement/Concreting of Balas
Barangay Road 2,000,000.00 Completed 8/3/2017 9/24/2017 9/20/2017
Construction of Solar Dryer @
Zone 3 - Cabalantian and
Concreting of Maliwalu Sitio
Centro Brgy. Road L=140m 1,300,000.00 Ongoing 11/16/2017 2/16/2018 n/a
Concreting of Maliwalu Sitio
Centro Barangay Road 1,000,000.00 Completed 6/21/2017 8/7/2017 8/2/2017
Improvement/ Concreting of San
Vicente Barangay Road 1,639,310.60 Ongoing 12/13/2017 2/17/2018 n/a
Installation/Maintenance of Street
Lighting along JASA (in front of
King's Royal Hotel) 1,000,000.00 Ongoing
Environmental ₱1,132,501.40
Management/Proper Waste already obligated
Disposal/Maintenance of as of December
Garbage Truck 1,700,000.00 11, 2017
Total ₱18,839,310.60

6.4. As shown in the table, all of the identified projects implemented by the
Municipality were in the nature of developmental projects chargeable against the 20% DF
for social development, economic development, and environmental management.

6.5. Ocular inspection of the infrastructure projects showed that majority of the
reported ongoing projects as of year-end were almost complete as of December 14, 2017,
inspection date. As per accomplishment report of the Municipal Engineering Office
(MEO), the Municipality was able to implement 85.00% or ₱16,000,000.00 of the total
projects costing ₱18,839,310.60.

6.6. We also noted that continuing projects, programs, and activities from previous
years had already been completed during the current year.

44
 6.7. We recognized the effort of the Municipality in adhering to the rules and
regulations in the appropriation and utilization of 20% Development Fund. We also
commend the officials concerned in their effort to maximize fully the utilization thereof.

6.8. We recommended that Management: (a) ensure full completion of the

remaining projects identified in the AIP for CY 2017; (b) continue to comply with
the regulations in the appropriation and utilization thereof; (c) continue to
implement projects which are capital or investment in nature; (d) continue to
implement projects on a timely basis to attain desirable socio-economic development
and environmental management outcomes of the said fund.

6.9. Management assured that all ongoing projects planned for CY 2017 will be
completed by the end of April 2018.

Minimal use of the Special Education Fund (SEF)

7. The Special Education Fund’s (SEF) purpose/objective of providing

supplementary budgetary needs for the operation and maintenance of public schools
within the Municipality to improve the delivery of basic education services as provided
for in DepEd-DBM-DILG Joint Circular No. 1, s. 2017 was not substantially attained
due to the minimal utilization thereof at 49.65% or ₱2,680,367.28.

7.1. For CY 2017, the Municipality appropriated the amount of₱5,397,983.00 for the
Special Education Fund (SEF) per Local School Board (LSB) Resolution No. 1, series of
2017. Allocation by major group of expenditure is presented below as lifted from the said
Resolution:

Percentage to
Expense Amount
Total
Personnel Services (PS) ₱ - -
MOOE 3,291,000.00 60.97%
Capital Outlay (CO) 2,106,983.00 39.03%
Financial Expense (FE) - -
Total ₱ 5,397,983.00 100%

7.2. Records showed that the LSB appropriately made allocations for all priority
projects for CY 2017 as compared to last year where only 80.76% of the total budget of
₱5,348,481.82 was allocated for priority items. The table below shows the
distribution/allocation and utilization of SEF by specific type of expenses:

Item of Expenditures Amount Utilization Balance

SEF Budget CY 2017
Maintenance and Other Operating Expenses
Sports Development/Other Supplies and
Materials Expenses ₱ 350,000.00 ₱ 79,840.00 ₱ 270,160.00
SPED Program 150,000.00 - 150,000.00

45
 Item of Expenditures Amount Utilization Balance
ALS Program 70,000.00 - 70,000.00
Books and Modules 250,000.00 - 250,000.00
Research Training 180,000.00 376,688.48 (196,688.48)
Repair of Classrooms 1,540,000.00 548,910.72 991,089.28
Honorarium 170,000.00 - 170,000.00
Water Expenses 20,000.00 6,898.86 13,101.14
Electricity Expenses 120,000.00 210,979.39 (90,979.39)
Job Order Utility/Other General Services 60,000.00 67,500.00 (7,500.00)
Other Maintenance and Operating Expenses - 729.83 (729.83)
Subtotal 2,910,000.00 1,291,547.28 1,618,452.72

Capital Outlays
I.T. Equipment 100,000.00 16,270.00 83,730.00
Office Equipment 365,000.00 - 365,000.00
Repair of ALS Classroom 110,000.00 - 110,000.00
1 Storey Building (for School with proposed
ALS 1,391,983.00 1,372,550.00 19,433.00
Learning Center 2nd floor)
Perimeter Fences:
Sta. Barbara Elementary School 90,000.00 - 90,000.00
San Antonio Elementary School 90,000.00 - 90,000.00
Tinajero Elementary School 90,000.00 - 90,000.00
Maliwalu Elementary School 135,000.00 - 135,000.00
Eliseo Belen Elementary School 35,000.00 - 35,000.00
Tiling of District Office - Bacolor Elementary
School 81,000.00 - 81,000.00
Subtotal 2,487,983.00 1,388,820.00 1,099,163.00

Total ₱ 5,397,983.00 ₱ 2,680,367.28 ₱ 2,717,615.72

Continuing Appropriations
2015: Const. of 2 Classrooms-Tinajero Elem School ₱ 665,457.55
2016: Const. of 2 Classrooms-Tinajero Elem School 700,000.00 ₱ 1,493,984.00 ₱
Total ₱ 1,365,457.55 ₱ 1,493,984.00 ₱ (128,526.45)

7.3. As gleaned from the above matrix, ₱2,680,367.28 or 49.65% of ₱5,397,983.00

SEF budget was utilized. Further, only one of the eight construction/improvement of
schools under capital outlay projects was implemented and completed as of year-end,
which was the construction of one-storey building (for school with proposed ALS
Learning Center 2nd floor). In addition, only one unit of printer with accessories costing
₱16,270.00 constituted the utilization of SEF for IT Equipment while no Office
Equipment were procured for CY 2017 despite availability of funds. Records showed an
appropriation of ₱360,000.00, with a supplemental budget of ₱255,000.00.Moreover, the
appropriation of ₱1,540,000.00 intended for minor repairs of various schools within the
Municipality was only utilized at 35.64% or ₱548,910.72.

7.4. We also noted that several other projects/programs/activities (PPAs) such as

SPED Program, ALS Program and Books and Modules were not procured/implemented.

46
 There was also a noticeable decrease in the budget for Sports Development and for
Research and Training due to provision of appropriations for the following:

Projects/Programs/Activities Appropriation Realignment Balance

Sports Development ₱ 450,000.00 ₱ (100,000.00) ₱ 350,000.00
Research Training 586,000.00 (406,000.00) 180,000.00
Tiling of District Office – Bacolor Elementary
School - 81,000.00 81,000.00
Maliwalu Elementary School - Completion of Perimeter
Fence - 45,000.00 45,000.00
San Isidro Elementary School - Repair of ceiling of one
Classroom - 25,000.00 25,000.00
Electricity Expenses - 100,000.00 100,000.00
Office Equipment - 255,000.00 255,000.00
Total ₱ 1,036,000.00 ₱ - ₱ 1,036,000.00

7.5. Consequently, the utilization of SEF for Trainings resulted to a budget overdraft
of ₱196,688.48 since the actual utilization aggregated to ₱376,688.48. Further, despite
the realignment of ₱100,000.00 for Electricity, the utilization thereof resulted to an
overdraft of ₱90,979.39.

7.6. In addition, the construction of Maliwalu Elementary School – Perimeter Fence

amounting to ₱89,870.00 paid under Check No. 2371732 dated October 12, 2017 was
treated as expense under the Repairs and Maintenance – Building and Other Structures
instead of treating it as a capital expenditure under the School Building account. Sound
accounting principle dictates that major improvements on an asset should be capitalized.

7.7. The minimal use of SEF for purposes other than those explicitly provided in
DepEd-DBM-DILG Joint Circular No. 1, s. 2017 may defeat the primary objective of the
fund to support the annual budgetary needs for the operation and maintenance of public
schools while the incurrence of budget overdraft for items in the SEF utilization dictates
poor planning and incomprehensive needs evaluation and project identification.

7.8. We recommended that the Local School Board of Municipality of Bacolor:

(a) improve the utilization rate of the SEF and implement programs, projects,
especially construction of school buildings and classrooms to provide a convenient
facility that is conducive for learning; and (b) utilize the Special Education Fund
only for purposes explicitly allowed in DepEd-DBM-DILG Joint Circular No. 1, s.
2017. We also recommended that the Accounting Office make the necessary
adjustment on the improperly recorded improvement of school buildings and
continue to monitor the proper utilization of the fund.

7.9. The LSB committed to maximize the utilization of the Special Education Fund
following the provisions of DepEd-DBM-DILG Joint Circular No. 1, s. 2017. Further,
the Accounting Department assured that necessary adjusting entry pertaining to the
improperly recorded school building improvement will be made.

47
Accomplishment of BUB and ADM-funded projects

8. Programs/projects totaling ₱14,800,000.00 funded under the CY 2016 Bottom-

Up-Budgeting (BUB) and infrastructure projects of ₱15,865,000.00 sourced from the
Assistance to Disadvantaged Municipalities (ADM) Program were all implemented in
CY 2017. However, issues were noted in the utilization and necessity of the completed
projects such as: (a) medical equipment procured not being used by Barangay Health
Stations; (BHS); (b) inadequate control on the use of rice harvester and four-wheeled
tractor as well as collection of fees by a person not related to the Municipality; and (c)
lack of control and monitoring on the current status of distributed “Nego-karts” by
concerned office. The aforementioned deficiencies may lead to the non-attainment of
the program objectives in the delivery of basic services as contemplated in Joint
Memorandum Circular No. 7 dated November 3, 2015 of the DBM, DILG, DSWD, and
NAPC.

8.1. The Municipality together with some participating National Government

Agencies implemented the Grassroots Participatory Budgeting Process (GPBP) in CY
2016, formerly known as Bottom-up Budgeting (BUB) program. This program sought to
increase citizens' engagement, participation, and access to local service delivery through
a demand-driven budget planning process and strengthen government accountability in
local public service provision.

8.2. In CY 2016, the Municipality’s BUB funds totaled ₱14,800,000.00 of which

₱13,300,000.00 was sourced from national government agencies such as Department of
Agriculture (DA), Department of Education (DepEd), Department of Social Welfare and
Development (DSWD), Department of Health (DOH), and Department of Interior and
Local Government (DILG), while ₱1,500,000.00 was the Municipality’s counterpart.

On BUB funds

8.3. Validation of programs/projects and interview with concerned focal persons

showed the year- end status of BUB funds.

Date Name of Source Status/

NGA Total
Received Project from NGA from LGU Remarks
11/25/2016 DA Rice program- ₱2,000,000.00 ₱- ₱2,000,000.00 completed;
combined fully
harvester utilized on
April 20,
2017
11/25/2016 DA Corn Program- 2,500,000.00 2,500,000.00 completed;
Four-wheel - fully
drive tractor utilized on
April 11,
2017

48
 Date Name of Source Status/
NGA Total
Received Project from NGA from LGU Remarks
1/17/2016 DSWD Sustainable 2,000,000.00 2,000,000.00 completed;
Livelihood - unutilized
Program- balance
Microenterprise amounting
development to
track ₱56,558.00
to be
returned to
source
agency.
4/5/2016 DSWD Protective 500,000.00 500,000.00 1,000,000.00 completed;
services- fully
capacity utilized on
building September
(construction of 26, 2017
Day care
centers)
4/5/2016 DOH Equipping of 1,600,000.00 1,600,000.00 completed;
BHS - fully
utilized on
April 10,
2017
4/5/2016 DepEd Construction of 1,200,000.00 1,200,000.00 completed;
faculty rooms - fully
utilized on
April 11,
2017
4/5/2016 DILG Rescue 800,000.00 800,000.00 completed;
equipment - fully
(Inflatable utilized on
boat) April 11,
2017
4/5/2016 DILG Rescue vehicle 1,500,000.00 1,500,000.00 completed;
- fully
utilized on
May 5,
2017
4/5/2016 DILG Flood control 1,200,000.00 1,000,000.00 2,200,000.00 completed;
Total ₱13,300,000.00 ₱1,500,000.00 ₱14,800,000.00

8.4. As gleaned from the table above, all of the above funds were transferred in CY
2016 but projects thereto were only implemented and completed in CY 2017. Ocular
inspection of programs and projects as well as interview with end-user beneficiaries
disclosed the following, viz:

On Equipping of Barangay Health Stations (BHS)

8.5. Funds received from the Department of Health amounting to ₱1,600,000.00 was
utilized for the procurement of various clinical equipment particularly instruments needed

49
in maternal and child care centers. These equipment were distributed to four chosen
barangays in the Municipality.

8.6. Medical equipment granted to each barangay included the following:

Name/ Description Quantity

BP Apparatus, non-mercurial, with adult and pedia cuff, desk type
Aneroid 3
Digital 6
Cervical inspection set/ vaginal speculum set 3
Vaginal speculum small 1
Vaginal speculum medium 1
Vaginal speculum large 1
Vaginal retractor 1
Needle holder long 1
Tissue forceps long 1
Dressing set 3
Surgical scissor straight 1
Surgical scissor curved 1
Bandage scissor 1
Pick-up (Ovum) forceps 2
Mosquito forceps with teeth 2
Tissue forceps without teeth 2
Tissue forceps with teeth 2
Suture removal scissor 1
Non-contact thermometer (Heavy duty) 3
Examining light 3
Examining table with stirrup, drain pan, and cover footstep 2
Glucometer (with 1000 needles and strips) 3
Instrument table 3
Instrument tray with cover 3
Nebulizer 3
Revolving stool 3
Weighing scale, infant, digital 3

8.7. Our ocular visit showed that majority of the delivered medical equipment and
clinical instruments have not been used by the recipient Barangay Health Stations owing
to the following reasons:

a. Lack of sufficient space/area to accommodate the equipment which resulted to

improper piling/storage of equipment, thus could cause deterioration thereof;

50
 b. Lack of medical personnel who will use the equipment particularly those for
cervical inspection; and

c. Existence of medical equipment which are still in good working condition and
currently used by the Health Stations aside from the additional equipment of the
same kind that have been delivered. As gathered, these medical equipment like
BP apparatuses were also donated/ granted by the Department of Health.

8.8. It was also observed that the Barangay Health Stations (BHS) were relatively
small in office area and each BHS is managed only by a midwife with some Barangay
Health Workers. The Municipality has two RHUs with only one medical physician
assigned.

8.9. Interview with the midwife assigned at the BHS disclosed that majority of the
medical/clinical equipment procured were specifically used in birthing homes or lying-in
clinics, hence the necessity of having such equipment for the BHS cast doubt on the
judicious utilization of the fund. This should have been used for the procurement of basic
medicines which are commonly-used by barangay residents or could also be used for the
expansion of the BHSs.

8.10. Proper planning in the utilization of the fund particularly on the basic medical
needs of each barangay resident as well as the capacity of the BHS to house the
equipment should have been considered first to ensure that funds will be utilized for
projects usable and beneficial to end-users.

On the Procured Rice Harvester and Four-wheeled tractor

8.11. To attain an increase in crop production and encourage farmers to engage in farm
mechanization, the Municipality procured a 4-wheel drive tractor and rice harvester
amounting to ₱2,495,000.00 and ₱1,995,000.00, respectively under the BUB program.
Said equipment were procured from Agri-Component Corporation, located at the City of
San Fernando, Pampanga.

8.12. The beneficiaries of the project were the 21 barangays of the Municipality. As
gathered, the harvester and four-wheeled tractor were currently under the custody of a
certain Ms. Eva Pineda, the head of the farmers in Barangay Cabetican, who is not an
employee of the Municipality. She was also responsible for the collection of fees from
the use of harvester and tractor from the farmer beneficiaries for the purchase of
diesel/fuel of the tractor. Currently, ₱1,200.00 is collected from farmers for every hectare
of lot.

8.13. We noted that the Municipal Agricultural Office (MAO) has no overall control on
the usage and maintenance of the equipment nor even the collection of fees. There was
also no monitoring report maintained which would indicate the name of farmer
beneficiaries who are the beneficiaries of the project. Incidentally, the Audit Team was

51
not provided with a MOA between DA and the LGU regarding the implementation and
accountability over the project.

8.14. It was noted however, that the maintenance/repairs of the equipment were charged
against Municipal funds. Ocular inspection showed that these were currently being
repaired at the supplier’s shop without the knowledge of the MAO.

8.15. Given that it was the Municipality that implemented the project, the MAO should
have proper control over the property and should conduct regular monitoring of its usage.
Proper control should also be in place for the collection of fees. Logbooks and regular
accomplishment and monitoring reports should be submitted and validated by the
concerned office to ensure that these equipment are working as intended.

On Sustainable Livelihood Program

8.16. The Sustainable Livelihood program received from the Department of Social
Welfare and Development (DSWD) amounting to ₱2,000,000.00 was utilized for the
Nego-Kart Livelihood Project. It aims to develop entrepreneurial skills of its beneficiaries
and provide them additional earnings.

8.17. The project included the provision of complete starter kit, initial starting capital of
₱2,000.00, and trainings on social preparation on self-awareness, time awareness, and
financial literacy. Initial stocks of various street foods were also provided with the
following choices: a) kikiam, squid ball, and fish ball; (b) french fries, cheese sticks, and
lumpiang shanghai; and c) one day old, kwek-kwek, and orange egg.

8.18. As gathered, the Punong Barangay concerned was the one who recommended to
the Municipal Mayor the target indigent beneficiaries. Verification disclosed that there
were no exact addresses indicated in the list of beneficiaries. We were informed that only
the name of the barangay recipient was indicated, leading to difficulty in validating the
current status of “Nego-karts” as well as the actual location of businesses granted.

8.19. The Audit Team was able to validate three vendors near the Municipal Hall and
noted that one food cart was already fixed, which meant that there are issues in the
sturdiness of their make. Another cart was no longer working with a worn-out bicycle.
Although, the three vendors were still selling food stuffs, the current condition of their
carts may impede the continuity of their businesses.

8.20. Further, the Municipality also failed to monitor on a regular basis the status of the
“Nego-karts” owing to the absence of reports to ensure the effectiveness of the program.

8.21. Project implementation does not end in the distribution of “Nego-karts”. The
Municipality thru the Municipal Social Welfare Department (MSWD) should conduct
their own monitoring followed by accomplishment reports to ensure that the program will
be able to obtain its objective in the long-run.

52
On ADM Funds received in CY 2017

8.22. In CY 2017, the Municipality also received funds amounting to ₱15,865,000.00

from the Department of Budget and Management through the Bureau of Treasury under
the Assistance to Disadvantaged Municipalities (ADM) Program.

8.23. The funds were used to finance two infrastructure projects namely:
Improvement/Concreting of San Vicente- San Antonio Gugu Barangay Road amounting
to ₱12,865,000.00 and Improvement/ Concreting of Cabalantian Banlic Barangay Road
amounting to ₱3,000,000.00. Ocular inspection showed that these projects were already
completed on January 31, 2018.

Improvement/Concreting of San Vicente-San Antonio Gugu Brgy. Road

Payee Check No./Date JEV No. Amount
RD Sadsad Construction & 2370389/ 300-17-11-0071/ 300- ₱ 8,313,714.95
Trading 10/30/2017 17-11-0075
RD Sadsad Construction & 2370397/ 300-17-12-0079 4,501,533.05
Trading 12/01/2017
Total Disbursements 12,815,248.00
Unutilized Balance returned to the Bureau of Treasury ₱ 49,752.00

Improvement/Concreting of Cabalantian Banlic Brgy. Road

Payee Check No./Date JEV No. Amount
RD Sadsad Construction & 2370395/
300-17-11-0074 ₱ 2,986,500.00
Trading 11/23/2017
Total Disbursements 2,986,500.00
Unutilized Balance returned to the Bureau of Treasury ₱ 13,500.00

8.24. We recognize the effort of the Municipality to accomplish programs and projects
under the BUB and ADM funds for CYs 2016 and 2017 within the timelines although
there were some delays encountered in their implementation. We also commend the
officials concerned in their effort to maximize fully the utilization of the funds received
from the national government.

8.25. We recommended that the Local Chief Executive: (a) require the GPBP focal
person of the respective implementing offices to make use of lessons learned from
the completed projects to improve efficiency in the implementation of similar NGA-
funded projects in the future; (b) aim to reduce further unnecessary delays in
project implementation to allow the early enjoyment of benefits by the general
public; (c) ensure that needs and capacity of BHS is properly considered before
procurement of medicine/equipment to assure proper storage/housing thereof to
prevent deterioration from non-use and further wastage of government funds; (d)
maximize the use of distributed equipment by deploying them to needy BHS or
other health facility; (e) implement control in the management of rice-harvester and
four-wheeled tractor by assigning one Municipal employee from the MAO in the
monitoring thereof together with the preparation of accomplishment/monitoring
53
reports; (f) as far as availability of time and personnel permit, conduct monitoring
and validation of the current status of all beneficiaries of “Nego-karts” given
accompanied by a report; (g) ensure that actual addresses are indicated to facilitate
better monitoring of the project; and (h) install sufficient controls before, during,
and after the program is implemented to improve effectiveness of the program and
maximization of the use of the funds.

8.26. Management agreed with all our recommendations. Focal persons of respective
implementing offices committed for a better and efficient project implementation and
strict monitoring of GPBP and ADM projects.

Delayed implementation of the Supplemental Feeding Program (SFP)

9. Delay was noted in the utilization of Supplemental Feeding Program for CY

2014 funds from DSWD of ₱1,886,400.00 thus the school children-beneficiaries were
denied the early enjoyment of the benefits thereof contrary to the signed Memorandum
of Agreement (MOA) and COA Circular No. 94-013.

9.1. The most recent data from the 7th National Nutrition Survey (2008) conducted by
the Food Nutrition Research Institute of the Department of Science and Technology
(DOST) revealed that Filipino children have a high incidence of under and over-
malnutrition.

9.2. In line with this, the DSWD provided assistance to Local Government Units
(LGUs) to implement Supplemental Feeding Program (SFP). SFP involves the provision
of food in addition to regular meals to target children/beneficiaries as part of Early
Childhood Care and Development (ECCD).

9.3. In CY 2014, the DSWD transferred ₱1,886,400.00 for the implementation of the
aforesaid project. On August 7, 2014, a Memorandum of Agreement was entered into
between the Municipality and the DSWD setting the terms and conditions as well as the
general guidelines for the implementation thereof.

9.4. However, it was noted that the feeding project was fully implemented and
liquidated only in CY 2017, or three years of delay in the implementation thereof
contrary to the terms of the MOA:

“Xxx

i. Immediately implement the SF program without

unreasonable delay upon the receipt of the fund.
Xxx

54
 k. Liquidate all funds transferred by the DSWD-FO in
accordance with COA Circular No. 94-013 dated December
13, 1994.”

9.5. Shown below is the summary schedule of the program’s implementation:

Payee Check No./Date DV/JEV Nos. Amount

Linelle's Kitchen 2002975 / 06/07/2016 300-16-06-0050/ 300-16-06-0051 ₱260,592.21
Linelle's Kitchen 2003056 / 07/18/2016 300-16-07-0063/ 300-16-07-0064 191,255.00
Linelle's Kitchen 2370268 / 09/19/2016 300-16-10-0080/ 300-16-10-0082 335,572.00
Linelle's Kitchen 2370275 / 10/25/2016 300-16-11-0085/ 300-16-11-0088 306,884.00
Linelle's Kitchen 2370336 / 03/15/2017 300-17-04-0022/ 300-17-04-0022 303,445.00
Linelle's Kitchen 2370358 / 05/08/2017 300-17-05-0041/ 300-17-05-0041 473,011.00
Total Disbursements 1,870,759.21
Unexpended Balance to be returned to DSWD Field Office III 15,640.79
Less: Refund of Unexpended Balance per LBP check no.2370363 dated 5/30/2017 15,640.79
Outstanding Balance -

9.6. As noted, it took the Municipality almost three years to complete the said
program. We gathered that the Municipality communicated with the source agency for an
extension of time to implement the project because there were no interested
bidders/suppliers to cater the food requirements of the school children since majority of
the target beneficiaries reside in various resettlement sites outside of the Municipality
such as in Madapdap, Sta. Lucia, City of San Fernando, and Pandacaqui. This led to
difficulty in finding suppliers/caterers willing to supply food in these areas.

9.7. The Municipality was also required to submit a master list of beneficiaries for the
funding allocation as required in the MOA. Since the MOA was signed in CY 2014, only
1,200 children were initially targeted for the project implementation. However, because
the project started after two years, a new master list was then prepared with 1,692
children. Owing to the increase in target beneficiaries and given the same project cost, the
implementation of the program was shortened from 120 to 87 days.

9.8. The delay in implementation led to reduction of number of days of the program
implementation which may possibly affect its effectiveness in achieving its objective to
address malnutrition.

9.9. We recommended that the Local Chief Executive require the MSWD officer
to closely monitor the fund utilization and anticipate possible issues in the program
implementation for the early introduction of remedial interventions to forestall or
reduce unwarranted delays in the enjoyment of the program benefits.

9.10. Management committed for an effective and efficient implementation of

Supplemental Feeding Program in the ensuing years.

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Incurrence of excessive expenses

10. Expenditures for out-of-town seminars and purchase of cellphone units were
found excessive as defined under COA Circular 2012-003 dated October 29, 2012,
hence, proper utilization of funds and/or management of resources was not observed
contrary to Section 2 of P.D. No. 1445.

10.1. Section 2 of P.D. No. 1445 states that all resources of the government shall be
managed, expended or utilized in accordance with law and regulations, and safeguarded
against loss or wastage through illegal or improper disposition, with a view to ensuring
efficiency, economy and effectiveness in the operations of government.

10.2. Random check of expenditures of the Municipality disclosed that the afore-cited
provision was not observed on the following disbursements:

On Seminars

10.3. Audit of disbursement vouchers on training showed that a seminar entitled

‘Sustaining Local Development and Service Excellence through Empowered Local
Legislators was conducted on June 5-7, 2017 in Coron, Palawan by the Pampanga
Chapters of the Philippine Councilors’ League (PCL), Vice-Mayors’ League of the
Philippines (VMLP) and National Movement of Young Legislators (NMYL). The said
undertaking was designed to further reinforce the local elective officials’ grasp on the
concepts of legislation and other parliamentary procedures as well as their role as local
leaders.City and Municipality Mayors were invited to the said event, however the
members of the Sangguniang Bayan (SB) were the ones who participated in the said
activity.

10.4. The Municipality spent a total of ₱283,040.00 for this activity broken down as
follows:

TEV (₱800*8pax*4days) ₱ 25,600.00

Airfare (₱14,680*8pax) 117,440.00
Registration Fee (₱17,500*8pax) 140,000.00
TOTAL ₱ 283,040.00

10.5. To verify the reasonableness of the cost of the airfare, the audit team inquired
from a travel agency of an actual booking to Coron, Palawan. Per inquiry, the most
expensive cost of a tour package inclusive of airfare, hotel accommodation and tour
package costs around ₱15,000.00 which is somehow equivalent to ₱14,680.00, the full
cost of airfare alone paid by the Municipality to a travel agency.

10.6. Likewise, instead of hiring a travel agency to book the flights, the participants
could already book directly online since they were already granted a cash advance to pay
for the expenses. With this, the Municipality will only spend the actual costs that will be
incurred and will assure economy in the disbursement of funds.

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On purchase of cellphone units

10.7. In January 2017, a total of ₱165,000.00 was incurred for the purchase of 11 units
of Samsung Android phone costing ₱15,000.00 each for the use of the Sangguniang
Bayan (SB) Members, ABC President and the SB Secretary. However, it was noted that
at the end of the year, ₱68,474.00 was again incurred for the purchase of another four
units of Oppo Android phones for the personal use of the four members of the SB who
had already previously claimed for cellphone units within the same year.

10.8. The provision of mobile phone, whether postpaid line subscription or prepaid, in
excess of one unit for each entitle official is deemed excessive especially for a
Municipality categorized as 3rdclass Excessive expenditure as defined in COA Circular
No. 2012-003 dated October 29, 2012 signifies unreasonable expenses incurred at an
immoderate quantity and exorbitant price. It also include expenses in excess which
exceed what is usual or proper, as well as expenses which are unreasonably high and
beyond just measure or amount.

10.9. Thus, the non-commitment of the concerned officials of their responsibility to

observe the abovementioned provision caused the incurrence of excessive expenditures
resulting to wastage of government funds.

10.10. We recommended that the Local Chief Executive: (a) require the concerned
end-users to submit an explanation on the excessive claim of cellphone units and (b)
exercise prudence and economy in the disbursement of funds especially for those
expenses relating to authorized out-of-town seminars and similar situations.

10.11. The Office of the Sangguniang Bayan committed to observe prudence in the use
of government funds particularly for those relating to trainings and seminars held out-of-
town. However, the SB members who claimed additional units of cell phones have not
yet commented on the said observation.

Compliance with Republic Act 10121

11. Management has substantially observed the provisions of R.A. No. 10121 on the
following: (a) 5% allocation of the Local Disaster Risk Reduction and Management
(LDRRM) Fund; and (b) creation of Comprehensive Land Use Plan (CLUP) for the
Municipality of Bacolor for CY 2016-2025. Moreover, some of the minimum standards
set forth in the National Disaster Risk Reduction and Management Council
(NDRRMC) Disaster Preparedness Minimum Standards Volume 2 were essentially
met. However, as in the previous years, the Long-Term LDRRM Plan which could
serve as the guide in building the calamity preparedness and adaptive capacity of the
Municipality in terms of disasters was not yet developed.

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11.1. Our audit showed that the Municipality has sustained its being compliant with the
basic requirements provided under R.A. No. 10121 or the Philippine Disaster Risk
Reduction and Management Act of 2010 particularly on the following:

5% allocation for the LDRRMF

11.2. The Municipality complied fully with the requirement of Section 21 of R.A. No.
10121 in allocating not less than 5% of the estimated revenue from regular sources of
LDRRMF as presented next:

Total Estimated Revenue from Regular Sources ₱ 153,146,553.00

Required Allocation (5%) 7,657,327.65
Appropriation for LDRRMF 7,657,327.65
Difference ₱ -

Creation of Comprehensive Land Use Plan (CLUP)

11.3. The enforcement of a comprehensive land use planning (CLUP), which serves as
a guide in the implementation of the Municipality’s development plans for the current
year and the years ahead, is one of the measures in minimizing the impact of disasters.

11.4. In response to our previous’ years audit observations, the Municipality has finally
prepared and completed a revised 10-Year CLUP covering the periods 2016-2025 instead
of the previously submitted CLUP covering 2014-2023.

11.5. We were informed that the CLUP had already undergone second revision by the
Regional Land Use Committee awaiting for its publication.

11.6. Also, our validation of the Municipality’s extent of disaster preparedness in

accordance with NDRRMC Disaster Preparedness Minimum Standards Volume 2
disclosed that it was generally compliant as manifested by the following:

Composition requirement of Local Disaster Risk Reduction and Management Council

(LDRRMC) observed

11.7. R.A. No. 10121 mandates the creation of the LDRRMC in every local
government unit. Specifically, Section 11, paragraph (a) of the same RA listed the
required composition of the LDRRMC.

11.8. Our verification disclosed that the Municipality created the Municipal Disaster
Risk Reduction and Management Council (MDRRMC) in compliance therewith. It also
complied with the composition requirements of the RA in the reconstitution of the
MDRRMC as evidenced by Executive Order No. CMO 012, series of 2016 where all
concerned Department Heads of the Municipality, Division Head of DepEd, highest
ranking officer of AFP assigned in the Municipal, Municipal Chief of PNP, Municipal

58
Fire Marshall of BFP, President of the Association of Barangay Captains (ABC), four (4)
CSOs, and representative from private sector were all seated as members while the
Municipal Mayor as Chairperson.

Organization and maintenance of Local Disaster Risk Reduction and Management Office
(LDRRMO)

11.9. The Municipality also followed the requirement of the same Act on the
establishment of the LDRRMO. The Municipal Disaster Risk Reduction and
Management Office (CDRRMO) has long been organized with four regular staff who are
responsible for administration and training, research and planning and operations and
warning assisting the CDRRM Officer.

11.10. To date, the manpower assigned in the LDRRMO totaled 18, including three
nurses and ten members of the Bacolor Emergency Support Team (BEST) who have
undergone required Incident Command System (ICS) trainings. In addition, inquiry
revealed that five utility workers detailed in some offices of the Municipality also assist
during times of calamity.

Establishment of an Incident Command System (ICS)

11.11. The establishment of an Incident Command System (ICS) as an on-scene disaster

response system, to ensure effective consequence management or disasters or
emergencies was explicitly provided in Rule 7, Section 3, paragraph h of R.A. No. 10121.

11.12. Our confirmation also disclosed that the Municipality had already implemented an
ICS approach to all sorts of planned events and emergency or critical incidents. Inquiry
with the DRRM Officer revealed the Municipality’s ICS is currently at Level 1 and is
currently exerting significant efforts in aiming for the second level ICS.

Establishment of Permanent Evacuation, Command and Operations Center

11.13. Our verification disclosed that the Municipality was able to establish a permanent
Evacuation and Command Center in CY 2017. Meanwhile, the MDRRM Office also
serves as the Operations Center of the Municipality. Both the Command and Operations
Center operate 24/7 with two rescue teams with five members each alternating shifts
every day. The ancillary building of the Evacuation Center also houses the rescue
vehicles and equipment while food packs and hygiene kits, which were less than the
required 500 packs, and other evacuation food supplies were stored at a room inside the
Evacuation Center.

11.14. Our ocular inspection at the Evacuation Center showed that it was disaster-
resilient and was not located in high-risk area. Separate toilet for men, women and
persons with disability were also provided therein. Our inspection also revealed that it has
a proper ventilation and water supply, is well-lighted and can be locked from the inside.

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Perimeter fences were also built surrounding the whole Evacuation Center Complex for
an increased security.

Conduct of Information and Education Campaigns and Activities

11.15. Conduct of National Simultaneous Earthquake and Fire Drills were also witnessed
during our visit to the Municipality. Further, same drills and other community-based
outreach programs were also conducted by the MDDRMO in several public and private
schools and other establishments to improve disaster awareness and preparedness among
students and others.

Trainings and Seminars

11.16. Trainings and seminars were also attended by the staff and rescue units of the
MDRRMO facilitated by the Department of Interior and Local Government, Office of the
Civil Defense, and Provincial DRRMO and other agencies. Some of which were
Motorboat Handling and Water Search and Rescue (WSAR), Crashed Vehicle
Extrication Training, Ambulance Operation Training, Swift Water and Flood Rescue
Training, Basic Ropemanship and Refresher on WSAR Training, Camp Management
Training and Standard First Aid and CPR Training. Further, our inquiry also disclosed
that all members of the rescue unit of Bacolor underwent ICS Trainings.

Equipment and Vehicles

11.17. Our visit to the storage of the disaster response equipment disclosed that the
MDRRMO maintained the minimum standards of equipment for early warning and
communication, responders kits and medical health such as: generators, led flashlights,
work lights, emergency lights, water rescue kit (water rope, full suits, throw bags,
inflatable boats and life rings), warning siren, extrication machine, handheld radios,
personal protective equipment (fire helmets, gloves, safety goggles, and boots), and first
and emergency medical kits, among others. In addition, rescue vehicles and three
ambulances were properly housed in the ancillary building of the Evacuation Center and
are available for use 24/7.

11.18. Verification revealed that the MDRRMO maintained an inventory of all the
response and rescue equipment and rescue vehicles and ambulances of the Municipality.

11.19. Notwithstanding the observations we have favorably cited, the Municipality may
not still be considered fully disaster-prepared owing to the absence of a 10-Year LDRRM
Plan which could serve as a guide in the preparation of the Annual DRRM Plan of the
Municipality and basis in improving its adaptive capacity during times of
calamity/disaster.

11.20. We commended the Management on its efforts in establishing its

comprehensive land use planning (CLUP) for CY 2016-2025, in complying with
some of minimum standards of disaster preparedness as required by the National

60
Disaster Risk Reduction and Management Council, and in establishing a permanent
evacuation center despite its income limitation.

11.21. However, for the Municipality to be considered fully disaster-prepared, we

recommended that the Management, thru the MDRRM Office, prioritize the
preparation and completion of a 10-Year DRRM Plan that will serve as the general
strategy in addressing disaster risk reduction and management as prescribed in
R.A. No. 10121.

11.22. Management officials assured to continue to exert their best efforts to be

considered fully disaster-prepared. They also agreed to prioritize the completion of its 10-
Year DRRM Plan as required by R.A. No. 10121.

Compliance with Ecological Solid Waste Management Act of 2000

12. The Municipality was able to implement the requirements of Republic Act (RA)
9003 or Ecological Solid Waste Management Act of 2000 on the creation of a 10-Year
Solid Waste Management Plan (SWMP) (2014-2023). However, as in the previous
years, it failed to substantially comply with the said Act as manifested by: (a) poor
segregation of waste at source, improper disposal of solid wastes and existence of open
dump sites; (b)failure to consistently monitor the implementation of solid waste
management at barangay level owing to absence of a Municipal Environment and
Natural Resources Office (MENRO); and (c) absence of an ordinance imposing fines
and penalties for prohibited acts under R.A. No. 9003 hence, the protection of public
health and environment was not fully achieved.

12.1. Our verification showed that the Municipality had adopted its 10-Year Solid
Waste Management Plan (SWMP) (2014-2023) under Resolution No. 25, series of 2017
dated February 7, 2017. Further, the Municipality had already passed an ordinance
regarding the prohibition of dumping of toxic waste and garbage materials within its
territorial jurisdiction under Ordinance No. 3, series of 1997, amended by Ordinance No.
4, series of 2010. However, no other ordinance has been passed to implement the
requirements of R.A. No. 9003.

12.2. Notwithstanding the adoption of the 10 –Year SWMP by the Municipality, certain
deficiencies were still noted as follows:

Non-segregation of wastes at source, improper disposal of wastes and existence of open

dump site

12.3. Based on our observation, waste bins for biodegradable, non-biodegradable and
recyclable wastes have been provided within the vicinity of the Municipal Hall and the
Public Market of Bacolor. However, our visit to the Materials Recovery Facility (MRF)
showed that the wastes being dumped therein were unsorted and mixed thus, it is the
workers assigned in the MRF who perform the sorting. Despite the “no segregation, no
segregation policy”, garbage trucks still collect the mixed and unsorted wastes from the
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households as the Municipality would not want to compromise the health and safety of
the majority. The official concerned admitted that the implementation of waste
segregation still remains a big challenge to them.

12.4. Additionally, interview with some barangay residents disclosed that majority of
the populace still practice backyard burning of trashes. Alongside, our inspection in
nearby barangays showed that some solid wastes were scattered along streets.
Incineration and existence of open dump site were also observed during our inspection at
nearby barangays. (See Annex F)

12.5. The non-segregation of wastes at the barangay level is contrary to Section 10 of

R.A. No. 9003. Our confirmation disclosed that the difficulty in the implementation of
solid waste management at barangay level was attributable to the absence of garbage
trucks and functional MRF per barangay or cluster thereof. Also, discipline of the
residents and concern for the environment play a crucial role in the observance of
segregation of wastes at source.

12.6. On the other hand, we gathered that the Municipality has only two garbage trucks,
wherein one is unserviceable as it could no longer be used in the collection of household
wastes.

12.7. The inability to enforce the mandatory of segregation of wastes at source, cases of
incineration of wastes and existence of open dump site as a method of disposal of wastes
negatively impact our environment and greatly affect public health and safety.

Failure to consistently monitor the implementation of solid waste management at

barangay level

12.8. Inquiry disclosed that there were no specific measures or systematic approach
adopted to monitor the implementation of solid waste management plan at barangay
level. Our inquiry with the Municipal Administrator disclosed that due to budgetary
constraints, the Municipality could not yet establish the Municipal Environment and
Natural Resources Office (MENRO).

12.9. In the meantime, the head of the Research and Planning Division of the Municipal
Disaster Risk Reduction and Management Office (MDRRMO) concurrently acts as the
MENR Officer because of personnel constraint.

12.10. The establishment of a fully functional MENRO that should be responsible in the
carrying out of the 10-Year SWMP would greatly improve the capability of the
Municipality in facing solid waste-related issues and threats that may possibly arise.

Absence of an ordinance imposing fines and penalties for acts in violation of RA 9003

12.11. Aside from providing the legal framework for the systematic, comprehensive and
ecological solid waste management program of the Philippines, R.A. No. 9003 also

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provides for the imposition of fines and penalties for acts in violation of any of its
provisions.

12.12. Section 49 of the Act lists the corresponding fines and penalties to be settled by
violators of the Act. Punishment ranges from three hundred pesos (₱300.00) to one
thousand pesos (₱1,000.00) or a community service for not less than one (1) day to not
more than fifteen (15) days depending on the violation made.

12.13. However, our confirmation disclosed that no ordinance was passed adopting the
provisions of R.A. No. 9003 as regards imposition of fines and penalties, except for the
previously discussed ordinance prohibiting the dumping of toxic waste and garbage
materials within the Municipality of Bacolor. Further inquiry revealed that no
apprehensions on violations of R.A. No. 9003 have been imposed.

12.14. The non-imposition of fines and penalties to those deliberately and

indiscriminately violating the provisions of R.A. No. 9003 manifests non-priority of the
implementation of the said Act.

12.15. Based from the deficiencies discussed, the Municipality failed to substantially
address all environmental issues and threats to public health and environment.

12.16. We recommended that the: (a) Sangguniang Bayan in coordination with the
Solid Waste Management Board formulate ordinances to carry out the
requirements of R.A. No. 9003, specifically the imposition of fines and penalties to
strengthen the implementation of solid waste management plan throughout the
Municipality; and (b) Local Chief Executive (LCE) and the Solid Waste
Management Board (SWMB): (i) as soon as the budget allows, prioritize the
creation of Municipal Environment and Natural Resources Office (MENRO); and
(ii) impose the “no segregation no collection policy”, especially at the barangay level.

12.17. We also reiterated our previous year’s recommendation that the

Management, through the SWMB: (a) consider developing concrete programs and
projects that are supportive of proper solid waste management and reduction of
waste at source e.g. reuse, reduce and recycle of non-biodegradable materials; (b)
conduct information and education campaigns on the hazards of open burning and
strictly monitor compliance thereof especially at the barangay level; and (c)
strengthen the information campaign by putting up signages in public places
displaying the acts prohibited under Section 48 of R.A. No. 9003 and the
corresponding sanctions thereof.

12.18. The Sangguniang Bayan members are currently in the process of formulating
ordinances supportive of the strategies and objectives of its 10-Year SWMP. Further, the
Management and SWMB concurred with our recommendations and committed to
develop concrete programs and projects for the enforcement of waste segregation and
minimization at source and the proper disposal thereof.

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Inadequate monitoring and evaluation of GAD Programs

13. The Municipality was substantially compliant with GAD rules and regulations
except that the monitoring of its GAD programs could have been enhanced from the
use of monitoring tools like Harmonized Gender and Development Guidelines (HGDG)
and Program and Project Implementation, Management and Monitoring and
Evaluation (PIMME) by the Technical Working Group (TWG) to ensure that projects
are gender-responsive as espoused in Joint Memorandum Circular 2013-01 of the
Department of the Interior and Local Government (DILG), Philippine Commission on
Women (PCW), Department of Budget and Management (DBM), and National
Economic and Development Authority (NEDA).

13.1. One of the roles of Local Government Units (LGUs) is the implementation of
gender-responsive, rights-based and culture-sensitive projects, programs, and activities
that promote the comprehensive health of girls, adolescents, women and elderly women.

13.2. For CY 2017, the City adequately allocated the 5% Gender and Development
(GAD) Fund amounting to ₱7,657,327.65 in compliance with Section 2, paragraph 3 of
Joint Circular No. 2012-01 of the PCW, NEDA, and DBM, which states: “GAD Planning
shall be integrated in the regular activities of the agencies, the cost of implementation of
which shall be at least five percent (5%) of their total budgets.”

13.3. Municipal Ordinance No. 13, series of 2015 dated September 29, 2015 also
known as the “Gender and Development (GAD) Code of the Municipality of Bacolor,
Province of Pampanga”, was enacted which serves as a guide in the planning, preparation
and monitoring of GAD related programs.

13.4. To further provide basis for gender planning, programming, and policy
formulation, the Municipality started to formulate their GAD database in coordination
with the Province of Pampanga which provided them information on the Municipality’s
residents. The Municipality on the other hand, maintained relevant information of their
constituents, which were filed in various folders. The formulation of GAD database was
in accordance with Joint Memorandum Circular (JMC) No. 2013-01 of the DILG, PCW,
DBM, and NEDA which provides that one of the general functions of the LGU-GFPS is
to lead in setting up appropriate systems and mechanisms to ensure the generation,
processing, review, and updating of sex-disaggregated data or GAD database to serve as
basis in performance-based and gender-responsive planning and budgeting.

13.5. The same Circular also provides that LGUs, through their Local Planning and
Development Offices (LPDO), shall spearhead the setting up and maintenance of the
GAD database to serve as basis for gender-responsive planning, programming and policy
formulation. The GAD database, which can either be manually operated or developed
through software, shall form part of the overall management information system (MIS) of
the LGU.

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13.6. Our audit showed that during the year, several activities and programs were
implemented by the Municipality to address gender-responsive issues such as conduct of
trade fairs, provision of livelihood and medical assistance, PhilHealth Enrollment,
purchase of assorted medicines for pregnant women, provision of additional salary to
child development workers, and conduct of various trainings and seminars.

13.7. However, the Municipality failed to avail itself of the monitoring and evaluation
tools such as the Harmonized Gender and Development Guidelines (HGDG) and
Program and Project Implementation, Management and Monitoring and Evaluation
(PIMME), as prescribed by Joint Memorandum Circular 2013-01 of the DILG, PCW,
DBM, and NEDA which states that LGUs shall establish and/or strengthen their
monitoring and evaluation systems to assess the effectiveness and efficiency of their
gender mainstreaming efforts.

13.8. To date, various meetings had been conducted by the Technical Working Group
to monitor GAD related activities. The GAD accomplishment report was also used after
compilation of various departments’ accomplishments. The use of HGDG and PIMME
would enhance the monitoring and evaluation functions of the TWG.

13.9. As gathered, the Municipality was in coordination with the Department of the
Interior and Local Government for the conduct of seminar regarding the preparation and
use of monitoring tools.

13.10. The failure to use HGDG and PIMME may lead to inadequate monitoring and
evaluation of the GAD related activities which may result to projects not fully
accomplished at year end as well as failure to evaluate the effectiveness and efficiency
of gender mainstreaming programs in the locality.

13.11. We recommended that the Local Chief Executive encourage the TWG to use
monitoring tools such as the HGDG and PIMME in monitoring and evaluating
GAD activities as required under JMC No. 2013-01.

13.12. Management will coordinate with the DILG with regards to the conduct of
seminar on the preparation and use of the monitoring tools on GAD so they can put these
tools in place the soonest possible time.

Local Council for the Protection of Children (LCPC)

14. The Municipality’s Local Council for the Protection of Children (LCPC) has
been consistently functional in the implementation of various child development
programs as manifested by the receipt of Seal of Child-Friendly Local Governance
Award for CY 2016. However, it was unable to allocate the required one percent (1%)
of the IRA for the strengthening and implementation of programs, projects and
activities (PPAs) as suggested under Section 15 of R.A. No. 9344.

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14.1. The Local Council for the Protection of Children (LCPC) serves as the umbrella
organization for all children’s concerns. It is a council harnessed to be an efficient and
effective advocate of child’s rights that fully implements all children’s development
programs at the local level.

14.2. Section 15 of Republic Act No. 9344 also known as Juvenile Justice and Welfare
Act of 2006 mandates the establishment of LCPC or its strengthening, if already
established, in all levels of the government. The same section also provides that one
percent (1%) of the internal revenue allotment of barangays, municipalities and cities
shall be allocated for the strengthening and implementation of the programs of the LCPC.

14.3. Our verification revealed that an LCPC had long been established in the
Municipality of Bacolor. Data gathering and inquiry also disclosed that the Council was
able to convene regular meetings for purposes of planning, implementing and monitoring
child care programs and activities as well as engaging on issues and concerns pertaining
to children.

14.4. It was confirmed that the Municipality has been a consistent recipient of the Seal
of Child-Friendly Local Governance Award since CY 2014 to 2016. As of this writing,
an evaluation was being held by the Council for the Welfare of Children together with
DILG to ascertain whether the Municipality was able to sustain its being child-friendly
Municipality for CY 2017.

14.5. However, it was noted that for CY 2017, the Municipality was not able to allocate
the required allocation of one percent of the IRA to fund for various programs and
projects relating to children. Records showed that only ₱400,000.00 was allocated which
was short by ₱541,965.53 of the required ₱941,965.53.

14.6. We were informed that the Municipality draws its fund from other sources such as
Gender and Development (GAD) Fund and 20% Development Fund for other LCPC
projects. For CY 2017, the ₱400,000.00 allocated for LCPC programs and interventions
for children was utilized for the following:

a. Child development programs such as participation in Provincial Children’s

Congress Competition;
b. Procurement of workbooks and coloring materials distributed to 29 Day
Care Centers;
c. Representation expenses incurred in conduct of regular meetings of the
LCPC; and
d. Honoraria of LCPC members.

14.7. We recommended that the Management, thru the LCPC, continue to

implement programs, activities and projects that will protect the interest of children
based on Annual Work and Financial Plan as stipulated in Section 15 of R.A. No.
9344 and henceforth aim to sustain its Seal of Child-Friendly Local Governance
Award.

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Doubtful and unnecessary hiring of job order personnel

15. Several deficiencies were observed in the hiring of job order (JO) personnel
namely: (a) job-order personnel who are performing regular functions; (b) hiring of
researchers who are unfit for the position; (c) employees under the legislative branch
who did not undergo the proper hiring process under the HRMO; (d) presence of
nepotism; and (g) doubtful accomplishment reports and attendance of job-order
personnel under the legislative branch, exposing the Municipality to possible wastage
of government funds because of unnecessary and unproductive labor force, contrary to
the pertinent provisions of the Local Government Code and applicable CSC
Resolutions.

15.1. Section 77, Title III of R.A. No. 7160 provides that the Chief Executive of every
local government unit shall be responsible for human resources and development in his
unit and shall take all personnel actions in accordance with the Constitutional provisions
on civil service, pertinent laws, and rules and regulations thereon, including those
policies, guidelines, and standards as the Civil Service Commission may establish.

15.2. Relative thereto, the Municipality maintains a Human Resource Management

Office (HRMO) whose officer is under the supervision of the Municipal Administrator.
The HRMO is responsible in assisting the LCE in the effective and efficient
implementation of Civil Service Law and Rules governing public personnel and
administration.

15.3. We have reviewed the Municipality’s controls in the process of hiring JOs,
monitoring their attendance and evaluating their performance. We also conducted
interviews in the validation of the accomplishment reports rendered by the personnel
under JO and noted the following exceptions:

Job Order personnel performing regular functions

15.4. R.A. No. 7160 provides that the Local Chief Executive may employ emergency or
casual employees or laborers paid on a daily wage or piecework basis and hired through
job orders for local projects authorized by the Sanggunian concerned, without the need of
approval or attestation by the Civil Service Commission: Provided further, that the period
of employment of emergency or casual laborers as provided in this Section shall not
exceed six (6) months.

15.5. Records showed that a number of JOs were employed which were charged under
the Other Maintenance and Operating Expenses as follows:

Executive Department No. of JOs Legislative Department No. of JOs

Municipal Quarry Checkers 26 Vice Mayor's Office 30
Day Care Workers 29 SP Office- Researchers 43
Various offices 76

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15.6. As gleaned from the previous tables, several JOs were assigned in different
offices who were performing regular duties under the Municipal Treasurer’s Office,
Accounting Office, Engineering Office, and other offices to name a few. These
personnel performed regular functions such as collection, preparation of reports, and
other office-related work contrary to CSC Resolution No. 020790 which describes
Individual Contract of Services/ Job Order as: (a) The contract covers lump sum work
or services such as janitorial, security, or consultancy where no employer-employee
relationship exists between the individual and the government; (b) The job order covers
piece of work or intermittent job of short duration not exceeding six months and pay is on
a daily basis;xxx.

15.7. Further, the said practices were also not in adherence to Section 3 of the same
CSC Memorandum which provides that the contract of services, MOA or job order shall
not contain the following provisions:

a. The employee performs work or a regular function that is

necessary and essential to the agency concerned or work
also performed by the regular personnel of the hiring
agency;
b. The employee is required to report to the office and render
service during the agency's prescribed office hours from
8:00 am to 5:00 pm or for forty (40) hours per week;
c. The employee is entitled to benefits enjoyed by government
employees such as ACA, PERA and RATA and other
benefits given by the agency such as mid-year bonus,
productivity incentive, Christmas bonus and cash gifts.
d. The employee's conduct and performance shall be under
the direct control and supervision of the government
agency concerned.
e. The employee's performance shall be evaluated by the
government agency.

15.8. The hiring of JO may result to lack of social protection for the workers and
inequality in benefits and obscure accountability due to lack of employee-employer
relationship with the hiring agency.

15.9. Also, the limitation on personal services caused the abovementioned deficiencies,
resulting to the hiring of JOs who performed regular duties the appointment of whom was
subject for renewal every 6 months thereafter.

Unqualified researchers under the Legislative Department

15.10. The Municipality thru the Office of the Vice Mayor hired 30 job order personnel
assigned at the Vice Mayor’s Office and 43 researchers at the Office of the Sangguniang
Bayan with a monthly salary of ₱6,000. We were able to interview all of the 43 “legal

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researchers” and 30 JOs at the VMs office. Each Sangguniang Bayan member was
assigned with 3-5 researchers who reportedly performed legal research functions. Review
of Personal Data Sheets as well as conduct of interview with these legal researchers
showed that none of them was able to finish a bachelor’s degree in college. Majority of
them were only able to attend elementary or primary education.

15.11. Accordingly, a legal researcher performs research to confirm information relevant

to hearings, depositions and legal meetings. As in the legislative department, they could
conduct relevant research that would initiate the drafting of a new Municipal Ordinance.

15.12. Owing to their educational attainment and other credentials, not even one of them
was fit for the position they were hired for, which casts doubt on the necessity and
propriety of their hiring.

Employees under the legislative branch bypassing the proper hiring process

15.13. An effective HRMO helps an organization in attracting and retaining talents who
have the right tools and drive to pursue excellent performance that could contribute to
organizational effectiveness.To achieve this, proper and sufficient processes and controls
should be implemented at all levels in the hiring process to ensure that only those who are
qualified will be hired.

15.14. Currently, the HRMO maintains a process flowchart for the hiring of various
employees for plantilla positions. However, apparently the same was not followed as it
was unable to regulate the hiring of JOs.

15.15. All of the JOs who appeared for interview did not undergo written examination
before hiring. It was noted that some of them did not submit personal resume or Personal
Data Sheet (PDS) because their names were just noted by the official or recommending
official. As gathered, the appointments of JOs assigned at the legislative department were
only prepared by the SB office and not by the HR office.

15.16. The hiring of researchers solely rested on the discretion of the SB officials
concerned. The inadequate hiring process and non-submission of required documents
such as resume, PDS, certificates, NBI clearance, etc. upon application could result in
unnecessary hiring of personnel.

15.17. Further interview also disclosed that some of them were close friends of the SB
official, while others helped during election campaign.As gathered, some of the
researchers would be considered as belonging to the needy and by hiring them would
provide financial assistance to indigent members of the society.

15.18. The abovementioned deficiencies was contrary to Article 168 (a), Rule 12 of the
IRR of the Local Government Code which states that “All appointments to positions in
LGUs, except those classified by law or competent authority as policy determining,

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primarily confidential, or highly technical, shall be made only according to merit and
fitness to be determined as far as practicable by competitive examinations.”

On nepotism

15.19. Interview also disclosed that some JOs were relatives of the respective SP official.
We noted that one was a brother of the SB member, while two were brothers-in-law of
another SB. This may result in possible conflict-of-interest or may be a cause of undue
disadvantage to those who are willing to apply for the position but had no necessary
connection with an elective official.

15.20. The said practice was contrary to CSC Resolution No. 020790 which provides
that: “The following are prohibited from being hired under a contract of services and job
order: (a) Those who have been previously dismissed from the service due to commission
of an administrative offense; (b) Those who are covered under the rules on nepotism; (c)
Those who are being hired to perform functions pertaining to vacant regular plantilla
positions; and (d) Those who have reached the compulsory retirement age except as to
consultancy services.”

15.21. Similarly, Article 168 (j), Section 12 of the IRR LGC provides that “No person
shall be appointed in the local government career service if he/she is related within the
fourth civil degree of consanguinity or affinity to the appointing or recommending
authority.

Performance of unrelated duties by legal researchers

15.22. Interview with the researchers and review of accomplishment reports attached to
paid payrolls showed the following activities which are not related to their position as
researcher:

a. Assisting senior citizens, single parents, scholars in getting financial

assistance or medicines or in getting their IDs;
b. Verify/ check requirements of those applying for scholarships;
c. Coordinating with farmers regarding their needs;
d. Helping in clean and green activities;
e. Acts as driver of SB official concerned in visiting different barangays;
f. Delivering trophies, basketballs, and notebooks to different barangays;
g. Calling/looking for scholars;
h. Calling/ looking for zumba participants;
i. Encourage people to pay their business permit;
j. Assisting patients to the hospital especially during settlement of bills;
k. Conduct of inquiry with those who lost their loved ones if they are
residents of Bacolor;
l. Give feedback of residents regarding the programs of the Municipality;
m. Bringing medical prescription to the SP official;
n. Acts as personal security of the SP official;

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 o. Doing household chores for the official concerned; and
p. Accompanying or assisting the SP official in his activities.

15.23. It was noted that majority of these JOs assist the Barangay residents in their
respective assignments. As noted, these legal researchers were assigned on field and were
not required to use the Biometric Time Recording (BTR) system. They were assigned to
different barangays in the Municipality while others were deployed in different
resettlement sites such as Madapdap, Bulaon, Sta. Lucia, and Pandacaqui.

15.24. As per interview, majority of them were just waiting for calls or instructions.
They would wait for orders to visit those asking for financial assistance, hence they
worked on an “on-call” basis. Without instructions, they would just wait in their
respective residences.

15.25. We also noted that majority of the interviewees only reports in the Municipality
every 15th and 30th of the month or during pay day as disclosed during the interview.

15.26. Review of accomplishment reports (ARs) showed that the submitted ARs of
different personnel who were assigned to the same SB official were all the same. It was
disclosed that some employees assigned at the legislative department were tasked to
prepare the DTRs and ARs of the legal researchers. These employees will just report to
the SB office during pay-day to sign the AR and DTR for them to be able to withdraw
their monthly salary which cast doubt whether actual work was indeed performed
although actual duties “performed” were not related to their position as “legal
researcher”.

15.27. Further, some JOs receive their salary from the SB official and not from the
Disbursing Officer at the Municipal Treasurer’s Office. Instead, the payroll were
personally delivered for signature. However, verification and comparison of specimen
signatures with those appearing in paid payrolls disclosed no exceptions.

15.28. The aforementioned observations could result in possible wastage of government

funds owing to unnecessary disbursements on job order personnel with no actual services
rendered.

15.29. We recommended that management: (a) strengthen its recruitment and

selection process in hiring job order personnel by reviewing its current workforce,
specific work to be done, and objectives before hiring personnel; (b) reduce the
hiring of personnel whose functions do not contribute to the attainment of the
Municipality’s objectives; (c) refrain from hiring personnel who is a relative within
the fourth civil degree of consanguinity of the appointing or recommending
authority unless the nature of the work is highly confidential in nature; ( d) require
the HR Officer to conduct the proper selection and recruitment process such as the
conduct of written, oral, and medical examinations in order to ascertain applicant’s
qualifications; (e ) require the concerned SB official to explain in writing the reasons
why their personnel were not regularly reporting to office but stayed only at their

70
residences and those who work on on-call basis; (f) require the concerned official to
explain in writing the payment of wages of personnel assigned at the personal
residences of the official; (g) consider reducing the number of job-order personnel
at the legislative department; and (h) require all department heads to carefully
evaluate or assess the need for job order personnel with due consideration on their
fitness to the job requirement.

15.30. Management agreed with our recommendations on the close monitoring of job
order personnel particularly on the proper recruitment and selection process in the hiring
thereof and in the periodic assessment on the need for job order personnel.

Compliance with Tax Laws

16. The Municipality has consistently complied with the Revenue Regulations in
the withholding of taxes from the salaries and wages of personnel and payments of
purchases and business contracts for CY 2017 and in the remittance thereof to the
Bureau of Internal Revenue (BIR) through Electronic Filing Payment System (EFPS)
within the prescribed period. However, the Due to BIR account showed unremitted
amount of ₱141,444.06 pertaining to prior years.

16.1. Audit of financial records for CY 2017 disclosed that the Municipality complied
with the provisions of Revenue Regulation No. 2-98 which require that “Taxes deducted
and withheld shall be covered by the Monthly Return of Internal Revenue Taxes withheld
on Government Money Payments (BIR Form 1600) in duplicate to be filed and the tax to
be paid to the Authorized Agent Bank located within the Revenue District Office (RDO)
having jurisdiction over the place where the government office is located. The required
return shall be filed and payments made within ten (10) days following the end of the
month the withholding was made.”

16.2. Examination of pertinent documents showed that taxes were withheld by the
Municipality from the compensation of employees and creditable taxes to suppliers and
contractors and remittances thereof using the EFPS in compliance with Revenue
Regulation No. 9-2001.

16.3. However, examination further showed that not all taxes withheld under the
General Fund account appeared to be remitted resulting in the accumulated balance of
₱141,444.06 at year-end, as presented in the hereunder schedule:

Date
General Fund Withheld Remitted Balance
Remitted
January 1, 2017 ₱ 649,690.02 ₱ - ₱ 649,690.02
January 1/6/2017 479,661.05 536,180.54 593,170.53
February 2/8/2017 707,898.96 763,817.36 537,252.13
March 3/7/2017 332,978.41 574,518.54 295,712.00
April 4/7/2017 473,656.37 521,389.44 247,978.93
May 5/4/2017 505,358.60 654,596.11 98,741.42

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 Date
General Fund Withheld Remitted Balance
Remitted
June 6/7/2017 707,491.58 615,920.01 190,312.99
July 7/5/2017 884,181.91 417,343.58 657,151.32
August 8/9/2017 452,683.84 885,123.87 224,711.29
September 9/6/2017 817,693.55 474,725.26 567,679.58
October 10/6/2017 464,595.49 820,316.03 211,959.04
November 11/7/2017 484,303.14 439,357.24 256,904.94
December 12/6/2017 2,358,654.86 1,532,877.42 1,082,682.38
January 1, 2018 ₱ 941,238.32 ₱ 141,444.06

16.4. As shown in the above table, there was an unremitted amount of ₱141,444.06
which was a carry-over balance from prior years. The absence of subsidiary ledger to
support the account rendered difficulty in tracing the difference. The Accounting Office
assured the Audit Team that thorough examination on the account will be done to
determine the discrepancy noted.

16.5. We commend the Municipality for its faithful compliance with the revenue
regulations for taxes withheld and remittance to BIR within the prescribed period.
However, the issue on the prior years’ retained balance should also be looked into.

16.6. We recommended that the Municipal Accountant (a) continue being

compliant with the revenue regulations on the withholding of taxes from
compensation of employees and creditable taxes for payments to suppliers and
contractors and the remittance thereof within the prescribed period; (b) continue
with the efforts to resolve the carry-over discrepancy on the Due to BIR account
balance.

16.7. The Municipal Accountant agreed to determine the cause of the carry-over
discrepancy on the Due to BIR account balance and make appropriate adjustment in the
books.

Unreliable balance of the Due to GSIS account

17. For CY 2017, the GSIS premiums/contributions of office personnel were fully
remitted to the GSIS in observance with the provision of Section 5 (b) of Republic Act
8291. However, the Due to GSIS account showed an accumulated balance totaling
₱251,510.91 owing to possible unremitted premiums and/or contributions to GSIS
from prior years, hence rendering doubt on the accuracy of the balance thereof.

17.1. Our review of the Due to GSIS account disclosed that premiums/contributions as
well as payment of employees’ loans were timely recorded and remitted to the GSIS as
required by Section 5 (b) of Republic Act 8291, which states that “each employer shall
remit directly to the GSIS the employee’s and employer’s contributions within the first
ten (10) days of the calendar month following the month to which the contributions apply.
The remittance by the employer of the contribution to the GSIS shall take priority over

72
and above the payment of any and all obligations, except salaries and wages of its
employees.”

17.2. Further examination of records showed that the Municipality was able to consider
our previous year’s audit recommendation regarding the maintenance of subsidiary
accounts used for GSIS contributions and premiums as provided by the Philippine Public
Sector Accounting Standards (PPSAS), to wit:

Account Title Due to GSIS

Account Number 2-02-01-020

Normal Balance Credit

Description This account is used to record the withholding of employees’ premium

payment and other payables for remittance to the Government Service
Insurance System (GSIS). Debit this account for the remittance of
withheld amount.

Subsidiary Ledgers:
01 - Life and Retirement Premium
02 - ECC
03 - Salary Loan
04 - Policy Loan

17.3. However, as in the previous years, we noted that an average amount of

₱250,000.00 remains in the balance of the Due to GSIS account. Our analysis of the said
account for CYs 2015 to CY 2017 is as follows:

Due to GSIS account CY 2015 CY 2016 CY 2017

Year-end Balance ₱831,827.07 ₱965,003.15 ₱1,010,665.15
Less: Contribution for month of December of current
579,108.63 696,355.56 759,154.24
year remitted in January of the succeeding year
Accumulated Balance ₱252,718.44 ₱268,647.59 ₱251,510.91

17.4. Inquiry on the unremitted balance of the Due to GSIS account of ₱251,510.91 as
of December 31, 2017 disclosed that the Accounting Office had already exerted their best
efforts to trace the details of employees’ contributions or to whom these contributions
pertained to. It was found that the non-separation of office of the Accounting and
Treasury since time immemorial and non-maintenance of member’s index card for
contributions and premiums until 2003 have contributed to the accumulation of the
ending balance of the account.

17.5. The foregoing issue raised doubt on the accuracy of the balance of the Due to
GSIS. Similarly, it may deprive the employees of loan privileges or full benefits upon
retirement if the balance resulted from untimely remittance of premiums and
contributions of prior years.

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17.6. We reiterated our previous year’s recommendations that the Municipal
Accountant (a) exert further efforts to reconcile employees’ records at GSIS to
identify the affected employees on the unremitted accumulated balance of the Due to
GSIS account, if any; (b) check with the records whether all Personal Share (PS)
deducted from the payroll of employees and Government Share (GS) and
Employee’s Compensation Contribution (ECC) for all employees were remitted;
and; (c) cause the immediate remittance to GSIS for the unremitted premiums and
contributions of employees, as warranted by the results of the research.

17.7. The Accounting Office agreed with our recommendations and committed to exert
more efforts to facilitate the reconciliation of the Due to GSIS account.

Compliance with Home Development Mutual Fund (HDMF) Law of 2009

18. For CY 2017, the Municipality adhered to the provisions of HDMF Law of
2009 or R.A. No. 9679 on the proper deduction of HDMF contributions and
repayments of loan amortizations of its personnel and the remittance thereof to the
HDMF. However, an accumulated balance totaling ₱38,716.03 was noted on the Due
to Pag-IBIG account as of year-end which might have resulted from possible
unremitted contributions and/or loan repayments to the HDMF from prior years.

18.1. Records showed that the Municipality abided by the provision of R.A. No. 9679
on the deduction of contributions and loan amortizations from the salaries of its
employees and on the timely remittance thereof to the HDMF for CY 2017.

18.2. Sampling on several payroll liquidation reports of selected employees disclosed

that contributions and loan repayments were indeed deducted from their salaries on every
15th of the month. Further, our inquiry and examination of pertinent documents revealed
that the Accounting Office maintained ledger cards for each employee to monitor not the
just contributions and loan repayments to Pag-IBIG but also that of those pertaining to
GSIS and PhilHealth.

18.3. However, we noted that a total of ₱38,716.03 remained outstanding in the balance
of the Due to Pag-IBIG account even after full remittance of contribution and loan
payments was effected, as follows:

Due to Pag-IBIG account CY 2017

December 31, 2017 Balance ₱136,611.23
Less: Contributions and loan repayments for month of December
97,895.20
2017 remitted in January 2018
Accumulated Balance ₱38,716.03

18.4. The absence of member’s index/ledger card for contributions and loan repayments
until 2003 rendered it difficult to identify the cause of the accumulation of the balance of

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the account. Also, the inability to identify the cause of the accumulated balance of the
Due to Pag-IBIG account rendered it unreliable.

18.5. We recommended that the Municipal Accountant (a) exert best efforts to
reconcile employees’ records at HDMF to be able to trace the affected employees on
the unremitted accumulated balance of the Due to Pag-IBIG account, if any; (b)
check with the records whether all Pag-IBIG premiums, Multi-Purpose Loan
repayments and Housing Loan repayments deducted from the payroll of employees
and Government Share (GS) for all employees were remitted; and (c) cause the
immediate remittance to Pag-IBIG for the unremitted premiums and contributions
of employees, as warranted by the result of inquiry and reconciliation with HDMF.

18.6. The Accounting Department committed to exert best efforts to facilitate the
reconciliation of employees’ records at HDMF and trace unremitted accumulated balance
of the Due to PagIBIG account, if any.

Status of Audit Suspension, Disallowances and Charges

19. As of December 31, 2017, the balances of the Audit Suspension, Disallowances,
and Charges totaled ₱915,851.13.

19.1. The suspended transactions pertained to various disbursements of doubtful

legality which are subject to suspension and disallowance, if not validly justified and/or
the audit requirements were not submitted by concerned officials/employees within the
90- day period. The Statement of Audit Suspension, Disallowances, and Charges showed
an unsettled balance of ₱915,851.13, arrived at as provided on the next page:

Beginning Balance This period Ending Balance

(As of December January 1 to December 31, 2017 (As of December
31, 2016) (See B Below) 31, 2017)
Issued Settled
Notice of Suspension ₱ - ₱ - ₱ - ₱ -
Notice of Disallowance 1,403,112.30 227,378.20 714,639.37 915,851.13
Notice of Charge - - - -
Total ₱ 1,403,112.30 ₱ 227,378.20 ₱ 714,639.37 ₱ 915,851.13

19.2. We recommended that management enforce the settlement of

disallowances within the prescribed period pursuant to COA Circular 2009-006.

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