Observations and Recommendations
Audit Findings 2023
The 11 audit observations in the COA Annual Audit Report for CY 2023: 6 financial audit findings and 5 performance and compliance audit findings, with the regulatory basis and recommendations for each.
Bases for Qualified Opinion
Why the opinion was qualified
The four exceptions set out in the Independent Auditor’s Report, for which the existence, completeness, accuracy, valuation, presentation and disclosure of the affected accounts were not established
- 1Accuracy of Cash in Bank, Local Currency Current Account cannot be ascertained₱532,437.81The accuracy of the Cash in Bank, Local Currency Current Account balance of ₱222,979,149.84 cannot be ascertained due to non-preparation of monthly Bank Reconciliation Statements, resulting in its understatement amounting to ₱532,437.81 owing to the unadjusted recording of cancelled checks.
- 2Deficiencies in the accounting for Property, Plant and Equipment₱622,563,261.85Deficiencies were observed in the accounting of the reported balance of Property, Plant and Equipment (PPE) account totaling ₱622,563,261.85 (excluding the Construction In Progress Account) as at December 31, 2023, such as a variance of ₱620,948,128.99 between the Report on the Physical Count of the Property, Plant and Equipment (RPCPPE) and the accounting records, and non-provision of depreciation for some PPE accounts.
- 3Completed projects and equipment recorded as PPE in the Trust Fund not transferred to the General Fund₱58,796,474.24Completed projects and various equipment recorded as Property, Plant and Equipment in the Trust Fund totaling ₱58,796,474.24 were not transferred to the General Fund and were not depreciated.
- 4Eighteen (18) completed projects not reclassified from Construction in Progress₱53,943,142.70Eighteen (18) completed projects totaling ₱53,943,142.70 were not reclassified from Construction in Progress (CIP) account to the appropriate asset account, thus overstating the CIP by ₱53,943,142.70 and understating the corresponding asset account and Depreciation Expense account by ₱53,943,142.70 and ₱799,290.24, respectively.
Total Audit Findings
11
6 financial audit · 5 performance and compliance
Largest Flagged Balance
₱622,563,261.85
Finding 2 — PPE accounting deficiencies
Prior-Year Recommendations
16 of 48 implemented
32 not acted upon
NS / ND / NC Balance
₱14,726,562.97
As of December 31, 2023
Findings and Recommendations
4 of the 11 observations repeat issues that COA first raised in earlier audit reports.
Amount: ₱532,437.81
| Fund | Balance per Books |
|---|---|
| general Fund | ₱182,553,527.00 |
| sef Fund | ₱1,197,659.20 |
| trust Fund | ₱38,999,229.04 |
| CIB-LCCA Balance per Books | ₱222,750,415.24 |
The municipality maintains 12 bank accounts with a combined balance of ₱227,794,295.91, or ₱5,043,880.67 more than the financial statements balance. 30 cancelled checks totaling ₱532,437.81 were not reverted to the CIB-LCCA account.
| Account | Direction | Amount |
|---|---|---|
| cash in bank | Understated | ₱532,437.81 |
| accounts payable | Overstated | ₱329,621.96 |
| donations | Overstated | ₱33,875.00 |
| office supplies expense | Overstated | ₱102,692.69 |
| insurance expense | Overstated | ₱5,600.00 |
| prepaid insurance | Overstated | ₱1,828.91 |
| other general expenses | Overstated | ₱4,000.00 |
| other mooe | Overstated | ₱10,410.72 |
| membership dues and contributions to organizations | Overstated | ₱30,000.00 |
| advances for payroll | Overstated | ₱14,408.53 |
| Date | Check No. | Account Affected | Amount |
|---|---|---|---|
| 01/16/2023 | 1314645 | Accounts Payable | ₱3,000.00 |
| — | 1314742 | Donations | ₱2,500.00 |
| 02/03/2023 | 1315015 | Accounts Payable | ₱326,621.96 |
| 04/03/2023 | 1356828 | Office Supplies Expenses | ₱3,625.40 |
| 04/03/2023 | 1356844 | Donations | ₱2,000.00 |
| 04/11/2023 | 1356919 | Office Supplies Expenses | ₱3,625.40 |
| 04/14/2023 | 1356990 | Office Supplies Expenses | ₱36,254.00 |
| 04/17/2023 | 1357011 | Office Supplies Expenses | ₱6,772.40 |
| 04/17/2023 | 1357018 | Office Supplies Expenses | ₱7,892.75 |
| 04/17/2023 | 1357020 | Office Supplies Expenses | ₱21,467.40 |
| 04/25/2023 | 1357087 | Insurance Expenses | ₱5,005.00 |
| 04/25/2023 | 1357100 | Donations | ₱9,375.00 |
| 05/03/2023 | 1357178 | Office Supplies Expenses | ₱6,179.74 |
| 05/15/2023 | 1357353 | Donations | ₱3,000.00 |
| 05/23/2023 | 1357426 | Other General Services | ₱4,000.00 |
| 05/24/2023 | 1357454 | Office Supplies Expenses | ₱9,200.00 |
| 06/02/2023 | 1357538 | Donations | ₱2,000.00 |
| 06/14/2023 | 1357609 | Donations | ₱1,500.00 |
| 06/14/2023 | 1357613 | Donations | ₱1,500.00 |
| 06/16/2023 | 1357649 | Donations | ₱2,000.00 |
| 06/16/2023 | 1357676 | Other MOOE | ₱10,410.72 |
| 07/14/2023 | 1357948 | Donations | ₱2,000.00 |
| 07/14/2023 | 1357966 | Donations | ₱3,000.00 |
| 07/14/2023 | 1357975 | Membership Dues and Contributions to Organizations | ₱30,000.00 |
| — | 1358073 | Office Supplies Expenses | ₱6,656.40 |
| 07/25/2023 | 1358092 | Donations | ₱5,000.00 |
| 07/25/2023 | 1358113 | Office Supplies Expenses | ₱1,019.20 |
| 08/02/2023 | 1358196 | Insurance Expenses | ₱595.00 |
| 08/22/2023 | 1358325 | Prepaid Insurance | ₱1,828.91 |
| 08/31/2023 | 1358496 | Advances for Payroll | ₱14,408.53 |
| Total (30 cancelled checks) | ₱532,437.81 | ||
Also raised in prior audit reports
- AAR CY 2019-2Not implemented
- 2021-9Implemented
Status as reported in Part III of the CY 2023 audit report.
Regulatory basis
- Section 74 and 111, P.D. No. 1445
- COA Circular No. 96-011 dated October 2, 1996
Recommendation
LCE to require the Municipal Accountant to revert cancelled check disbursements to the CIB-LCCA and regularly prepare monthly Bank Reconciliation Statements
Prior Years’ Audit Recommendations
| Reference | Audit Observation | Status | Reason for Partial / Non-Implementation |
|---|---|---|---|
| AAR CY 2022-1 | Turn-over of collections by Revenue Collectors to the Liquidating Officer were delayed by 1 to 66 days. | Implemented | — |
| AAR CY 2022-2 | CY 2022 cash advances amounting to ₱30,858,597.81 were not supported with complete documentation. | Not implemented | — |
| AAR CY 2022-3 | PPE balance of ₱495,919,128.20 remained unreliable: ₱2,923,450.14 recorded as PPE despite not meeting the ₱50,000.00 capitalization threshold, over-depreciation of ₱2,007,370.96, and PPE Ledger Cards and Property Cards not maintained. | Not implemented | — |
| AAR CY 2022-4 | Accuracy, validity and propriety of the year-end Accounts Payable balance in the General Fund (₱18,649,407.81) could not be ascertained. | Not implemented | — |
| AAR CY 2022-5 | Drugs and Medicines and Medical, Dental and Laboratory Supplies procured during the year (amounting to ₱5,484,090.35) recorded as expense outright instead of recognizing the corresponding inventory account. | Not implemented | — |
| AAR CY 2022-6 | The current appropriation of ₱18,700,000.00 and continuing appropriation of ₱12,800,000.00 of the 20% Development Fund were not optimally utilized and remained unimplemented. | Implemented | — |
| AAR CY 2022-7 | Payment for vaccination ancillary supplies totaling ₱411,400.00 lacks supporting documents; purchases amounting to ₱502,945.00 were charged outright as expense instead of inventory. | Not implemented | — |
| AAR CY 2022-8 | Fund transfers totaling ₱98,603,855.00 from various National Government Agencies could not be validated due to lack of Memorandum of Agreement or Trust Agreement. | Implemented | — |
| AAR CY 2022-9 | Funds for the Construction of Rice Processing Center I (CY 2015) were retained by the DA Regional Office VIII for almost seven years; the project remained unfinished as of December 31, 2022. | Implemented | — |
| AAR CY 2022-10 | Failure to set up receivables for Real Property Tax and Special Education Tax for CY 2022, understating RPT and SET receivable accounts by ₱8,097,681.20, and weak RPT collections. | Partially implemented | — |
| AAR CY 2022-11 | Payments to 967 job order personnel amounting to ₱44,445,381.66 were not supported with certification and individual job order contracts. | Not implemented | — |
| AAR CY 2022-12 | Deficiencies in the utilization and reporting of LDRRMF: prior years' unexpended balance of ₱15,448,793.83 excluded from the CY 2022 LDRRMFIP; ₱15,261,732.76 not transferred to the Special Trust Fund; non-observance of accounting and reporting guidelines. | Partially implemented | Reiterated in this report. Monthly Report of Sources and Utilization of DRRMF not prepared and submitted to COA. |
| 2021-2 | PPE balance of ₱505,269,491.23 remained unreliable: ₱1,468,078.50 recorded as PPE despite not meeting the ₱15,000.00 capitalization threshold; one-time cleansing of PPE accounts not availed. | Not implemented | — |
| 2021-4 | Notes to Financial Statements for CY 2021 did not extensively disclose relevant information; reconciliation statements and supporting schedules were not submitted. | Not implemented | Insufficient disclosure on the Notes to Financial Statements, lacking supporting schedules on the Notes to FS. |
| 2021-5 | Deficiencies in PPA implementation and reporting: incomplete list of on-going PPAs, non-posting of project billboards, and non-integration of the Construction Safety and Health Program in the ABC and POW. | Implemented | — |
| 2021-6 | Propriety of the bidding process could not be ascertained due to deficiencies in the bidding process and non-submission of relevant documents and perfected contracts within five working days. | Not implemented | Reiterated in this report. |
| 2021-7 | Validity and propriety of disbursements totaling ₱5,522,838.00 under the Assistance to Individuals in Crisis Situation (AICS) Program could not be ascertained due to absence of policies and guidelines. | Implemented | — |
| 2021-8 | Propriety, regularity, legality, validity and accuracy of check disbursements totaling ₱9,440,598.86 could not be ascertained due to non-submission of required supporting documents. | Not implemented | — |
| 2021-9 | Accuracy and propriety of recorded check disbursements totaling ₱9,732,784.87 could not be ascertained due to non-submission of 163 Disbursement Vouchers and 18 cancelled checks. | Implemented | — |
| AAR CY 2020-1 / 2016-2 / 2014-2 | Inventory balances totaling ₱24,266,001.99 unreliable due to erroneous recording of procured goods and non-preparation of RIS and RSMIs. | Not implemented | — |
| AAR CY 2020-3 | Deficiencies in the utilization and recording of the Bayanihan Grant to Cities and Municipalities (BGCM); compliance with procedural guidelines could not be validated. | Not implemented | — |
| AAR CY 2020-6 | Non-compliance with the procedural, documentary and posting requirements for emergency procurement under the Bayanihan Act, resulting in incomplete documentation. | Not implemented | — |
| AAR CY 2019-1 | Validity and existence of the Road Networks balance of ₱215,107,469.27 could not be ascertained due to non-compliance with COA Circular No. 2015-008. | Not implemented | No Property Ledger Cards were presented by the Municipal Accountant. |
| AAR CY 2019-2 | Validity and accuracy of the combined CIB-LCCA balance of ₱188,861,271.96 could not be ascertained due to non-preparation and submission of Bank Reconciliation Statements for seven bank accounts. | Not implemented | Reiterated in this report. |
| AAR CY 2019 (RPT/SET) | Receivables for real property tax and special education tax were set up based on the estimated annual budget of ₱500,000.00 instead of the assessment roll; collection efforts not intensified. | Implemented | — |
| AAR CY 2018-1 | Validity of the Due from Other Funds balance of ₱176,048,660.89 could not be ascertained: subsidiary ledgers not maintained, financial statements of InFRES I/II and ARCP II not submitted, and no disclosures in the Notes. | Not implemented | Subsidiary Ledgers are not yet submitted as of reporting date. |
| AAR CY 2017-1 | Validity and accuracy of assets and liabilities totaling ₱193,641,568.65 and ₱47,246,481.48, respectively, could not be ascertained due to absence of subsidiary ledgers, inadequate disclosures and improper recording of loan amortization. | Not implemented | Non-submission of subsidiary ledgers. |
Suspensions, Disallowances and Charges
| Particulars | Balance Jan 1, 2023 | Balance Dec 31, 2023 |
|---|---|---|
| Notice of Suspension | ₱14,420,531.08 | ₱14,420,531.08 |
| Notice of Disallowance | ₱306,031.89 | ₱306,031.89 |
| Notice of Charge | ₱0.00 | ₱0.00 |
| Total | ₱14,726,562.97 | ₱14,726,562.97 |
No notices were issued in CY 2023. No new Notices of Suspension, Disallowance or Charge were issued during CY 2023; balances pertain to prior years' issuances.
Remittance Schedules
| Mandatory Deductions (GSIS, PhilHealth, Pag-IBIG, GOCCs) | Amount |
|---|---|
| Prior Year Balance | ₱4,272,959.34 |
| Total Deductions (Withheld) | ₱25,095,504.13 |
| Total Remittances | ₱25,713,089.91 |
| Under (Over) Remittance | -₱617,585.78 |
| Ending Balance (Unremitted) | ₱3,655,373.56 |
| BIR Withholding Taxes | Amount |
|---|---|
| Beginning Balance | ₱629,889.63 |
| Total Deductions (Withheld) | ₱18,773,283.54 |
| Total Remittances (CY) | ₱18,749,168.78 |
| Total Remittances (Prior Year) | ₱585,353.11 |
| Ending Balance (Unremitted) | ₱68,651.28 |
| GSIS Premium — Monthly Remittances (Appendix K) | Deductions | Remittances | Under (Over) Remittance | Balance | |
|---|---|---|---|---|---|
| January | ₱1,642,291.25 | ₱1,542,890.45 | ₱99,400.80 | ₱1,700,108.58 | |
| February | ₱1,596,265.93 | ₱0.00 | ₱1,596,265.93 | ₱3,296,374.51 | |
| March | ₱1,565,711.22 | ₱1,520,862.68 | ₱44,848.54 | ₱3,341,223.05 | |
| April | ₱1,576,328.66 | ₱2,937,137.12 | -₱1,360,808.46 | ₱1,980,414.59 | |
| May | ₱1,668,741.52 | ₱2,557.40 | ₱1,666,184.12 | ₱3,646,598.71 | |
| June | ₱1,596,132.03 | ₱3,054,125.51 | -₱1,457,993.48 | ₱2,188,605.23 | |
| July | ₱1,617,669.42 | ₱1,641,431.01 | -₱23,761.59 | ₱2,164,843.63 | |
| August | ₱1,605,325.85 | ₱2,201,013.68 | -₱595,687.83 | ₱1,569,155.80 | |
| September | ₱1,607,788.91 | ₱14,583.15 | ₱1,593,205.76 | ₱3,162,361.56 | |
| October | ₱1,595,284.48 | ₱3,003,346.87 | -₱1,408,062.39 | ₱1,754,299.17 | |
| November | ₱1,577,904.50 | ₱1,465,929.22 | ₱111,975.28 | ₱1,866,274.45 | |
| December | ₱1,633,885.56 | ₱1,483,252.64 | ₱150,632.92 | ₱2,016,907.37 | |
| PhilHealth Premium — Monthly Remittances (Appendix K) | Deductions | Remittances | Under (Over) Remittance | Balance | |
|---|---|---|---|---|---|
| January | ₱181,545.52 | ₱176,004.08 | ₱5,541.44 | ₱54,555.99 | |
| February | ₱181,988.85 | ₱374,710.24 | -₱192,721.39 | -₱138,165.40 | |
| March | ₱178,231.54 | ₱0.00 | ₱178,231.54 | ₱40,066.14 | |
| April | ₱184,921.52 | ₱401,901.82 | -₱216,980.30 | -₱176,914.16 | |
| May | ₱190,088.70 | ₱180,393.20 | ₱9,695.50 | -₱167,218.66 | |
| June | ₱183,457.58 | ₱181,227.52 | ₱2,230.06 | -₱164,988.60 | |
| July | ₱189,745.33 | ₱180,495.36 | ₱9,249.97 | -₱155,738.63 | |
| August | ₱185,849.88 | ₱181,020.28 | ₱4,829.60 | -₱150,909.03 | |
| September | ₱186,087.46 | ₱181,940.80 | ₱4,146.66 | ₱146,762.37 | |
| October | ₱185,732.16 | ₱182,675.36 | ₱3,056.80 | ₱143,705.57 | |
| November | ₱183,592.04 | ₱0.00 | ₱183,592.04 | ₱39,886.47 | |
| December | ₱195,837.45 | ₱356,786.44 | -₱160,948.99 | ₱121,062.52 | |
| Pag-IBIG Premium — Monthly Remittances (Appendix K) | Deductions | Remittances | Under (Over) Remittance | Balance | |
|---|---|---|---|---|---|
| January | ₱176,792.64 | ₱184,802.78 | -₱8,010.14 | ₱566,798.60 | |
| February | ₱179,952.49 | ₱154,723.37 | ₱25,229.12 | ₱592,027.72 | |
| March | ₱165,206.72 | ₱176,908.05 | -₱11,701.33 | ₱580,326.39 | |
| April | ₱154,592.84 | ₱188,575.99 | -₱33,983.15 | ₱546,343.24 | |
| May | ₱154,641.03 | ₱151,592.84 | ₱3,048.19 | ₱549,391.43 | |
| June | ₱153,977.77 | ₱258,080.26 | -₱104,102.49 | ₱445,288.94 | |
| July | ₱156,814.37 | ₱157,914.37 | -₱1,100.00 | ₱444,188.94 | |
| August | ₱149,244.18 | ₱53,538.54 | ₱95,705.64 | ₱539,894.58 | |
| September | ₱141,830.23 | ₱122,274.91 | ₱19,555.32 | ₱559,449.90 | |
| October | ₱148,818.92 | ₱138,830.23 | ₱9,988.69 | ₱569,438.59 | |
| November | ₱157,714.88 | ₱146,818.92 | ₱10,895.96 | ₱580,334.55 | |
| December | ₱155,449.73 | ₱179,884.15 | -₱24,434.42 | ₱555,900.13 | |
| Employees’ Loan (Due to GOCC) — Monthly Remittances (Appendix K) | Deductions | Remittances | Under (Over) Remittance | Balance | |
|---|---|---|---|---|---|
| January | ₱246,215.74 | ₱234,498.16 | ₱11,717.58 | ₱2,060,145.85 | |
| February | ₱178,710.44 | ₱178,711.23 | -₱0.79 | ₱2,060,145.06 | |
| March | ₱166,326.85 | ₱0.00 | ₱166,326.85 | ₱2,226,471.91 | |
| April | ₱170,547.61 | ₱357,425.44 | ₱186,877.83 | ₱2,039,594.08 | |
| May | ₱165,872.95 | ₱169,987.46 | -₱4,114.51 | ₱2,035,479.57 | |
| June | ₱143,111.06 | ₱150,626.86 | -₱7,515.80 | ₱2,027,963.77 | |
| July | ₱102,165.84 | ₱887,821.03 | -₱785,655.19 | ₱1,242,308.58 | |
| August | ₱130,908.02 | ₱127,444.02 | ₱3,464.00 | ₱1,245,772.58 | |
| September | ₱121,346.46 | ₱124,382.46 | -₱3,036.00 | ₱1,242,736.58 | |
| October | ₱111,346.46 | ₱124,382.46 | -₱13,036.00 | ₱1,229,700.58 | |
| November | ₱60,293.12 | ₱0.00 | ₱60,293.12 | ₱1,289,993.70 | |
| December | ₱93,216.43 | ₱179,581.55 | -₱86,365.12 | ₱1,203,628.58 | |