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    A. Introduction: Executive Summary

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    sandra bolok
    The audit of the Municipality of Baao, Philippines for 2018 found that: 1) Total assets increased 24% to 561 million pesos while liabilities rose 16% to 235 million pesos. Revenues grew 8% while expenses increased 2%, resulting in an 18% rise in net surplus. 2) Major projects in 2018 included road concreting and grouted riprap costing over 9 million pesos. 3) The auditor issued a qualified opinion due to overstated assets and liabilities from recording unstarted awarded projects of 31.29 million pesos. 4) Significant observations included unsettled fund transfers of 44.65 million pesos, undeclared property value increases

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    A. Introduction: Executive Summary

    Uploaded by

    sandra bolok
    63 views4 pages
    The audit of the Municipality of Baao, Philippines for 2018 found that: 1) Total assets increased 24% to 561 million pesos while liabilities rose 16% to 235 million pesos. Revenues grew 8% while expenses increased 2%, resulting in an 18% rise in net surplus. 2) Major projects in 2018 included road concreting and grouted riprap costing over 9 million pesos. 3) The auditor issued a qualified opinion due to overstated assets and liabilities from recording unstarted awarded projects of 31.29 million pesos. 4) Significant observations included unsettled fund transfers of 44.65 million pesos, undeclared property value increases

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    03-BaaoCamSur2018_Executive_Summary

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    The audit of the Municipality of Baao, Philippines for 2018 found that: 1) Total assets increased 24% to 561 million pesos while liabilities rose 16% to 235 million pesos. Revenues grew 8% while expenses increased 2%, resulting in an 18% rise in net surplus. 2) Major projects in 2018 included road concreting and grouted riprap costing over 9 million pesos. 3) The auditor issued a qualified opinion due to overstated assets and liabilities from recording unstarted awarded projects of 31.29 million pesos. 4) Significant observations included unsettled fund transfers of 44.65 million pesos, undeclared property value increases

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    63 views4 pages

    A. Introduction: Executive Summary

    Uploaded by

    sandra bolok
    The audit of the Municipality of Baao, Philippines for 2018 found that: 1) Total assets increased 24% to 561 million pesos while liabilities rose 16% to 235 million pesos. Revenues grew 8% while expenses increased 2%, resulting in an 18% rise in net surplus. 2) Major projects in 2018 included road concreting and grouted riprap costing over 9 million pesos. 3) The auditor issued a qualified opinion due to overstated assets and liabilities from recording unstarted awarded projects of 31.29 million pesos. 4) Significant observations included unsettled fund transfers of 44.65 million pesos, undeclared property value increases

    Copyright:

    © All Rights Reserved
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    of 4

    EXECUTIVE SUMMARY

    A. INTRODUCTION

    The Municipality of Baao is a 3rd class partially urban municipality. According to


    the 2015 census, the population of Baao was 58,849 people with a density of 550
    inhabitants per square kilometers or 1,400 inhabitants per square mile. The township is
    included in the Fifth Legislative District of the Province of Camarines Sur and composed
    of 30 barangays.

    Audit Methodology and Scope of Audit

    The Financial, Compliance and Value for Money (VFM) audits conducted
    covered the accounts and operations of the Local Government of Baao, Camarines Sur
    for all Funds for the period January 1 to December 31, 2018.

    The audit was done on a sampling basis and various techniques were used like
    verification/confirmation, observation, interview with concerned officials and employees,
    evaluation of control system/s, and other auditing procedures and techniques considered
    necessary under the circumstances.

    The audit was focused on the different audit thrusts/areas issued by the Local
    Government Sector of the Commission.

    B. FINANCIAL HIGHLIGHT

    B.1 Financial Position and Performance

    In Philippine Peso
    % of Increase
    Particulars Increase/
    2018 2017 (Decrease)
    (Decrease)
    Financial Position
    Assets 561,473,731.64 453,827,256.49 107,646,475.15 0.24
    Liabilities 235,030,446.35 203,307,266.41 31,723,179.94 0.16
    Government Equity 326,443,285.29 250,519,990.08 75,923,295.21 0.30
    Financial Performance
    Total Income/Subsidies 153,107,598.87 141,658,303.15 11,449,295.72 0.08
    Total Expenses/Subsidies 90,912,462.65 88,933,556.60 1,978,906.05 0.02
    Net Surplus 62,195,136.22 52,724,746.55 9,470,389.67 0.18

    i
    B.2 Sources and Application of Funds

    In Philippine Peso % of
    Particulars Increase/ Increase
    2018 2017
    (Decrease) (Decrease)
    General Fund
    Allotments 213,931,080.15 238,243,529.42 -24,312,449.27 -10.20
    Obligations 147,958,173.11 158,688,950.51 -10,730,777.40 -6.76
    Balance 65,972,907.04 79,554,578.91 -13,581,671.87 -17.07
    Special Education Fund
    Allotments 3,474,946.53 2,044,774.00 1,430,172.53 69.94
    Obligations 2,518,041.94 1,163,107.53 1,354,934.41 116.49
    Balance 956,904.59 881,666.47 75,238.12 8.53

    B. 3 Major Program/Projects/Activities undertaken in CY 2018

    Some of the major projects implemented by LGU Baao during the year are shown
    in the table below:

    Project/Program/Activity Qty. Cost (₱)


    Road Concreating/Improvement of Roads 6 7,064,662.60
    Grouted Riprap 1 1,998,867.10
    Total 9,063,529.70

    Completed projects of the LGU were not validated as to existence b the Audit
    Team due to time constraint. Our audit was limited only to available records and
    documents submitted to the Office of the Auditor.

    C. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

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


    statements of the Municipality because awarded projects not yet started amounting to
    ₱31.29 million were recorded to Construction in Progress and Accounts Payable accounts
    thereby overstating both asset and liability accounts by the same amount.

    ii
    D. SUMMARY OF SIGNIFICANT OBSERVATIONS AND
    RECOMMENDATIONS

    For the exceptions cited, we recommended that Management require the Office of
    the Municipal Accountant to refrain from the pre-mature recording of Construction in
    Progress in the absence of a measurable basis of recording;

    The Audit Team has communicated the observations and recommendations with
    the Auditee through the issuance of Audit Observation Memorandum (AOMs) and
    discussed them with the agency officials during the exit conference conducted on
    May 10, 2019. Their comments and explanations were incorporated in the report, where
    appropriate.

    The following are the significant observations together with the corresponding
    recommendations:

    1.) Fund transfers from National Government Agencies (NGAs) for completed
    projects costing ₱44.650 million were not yet settled from the source agencies
    while three completed projects costing ₱6.600 million and unexpended
    balance of ₱1.090 million remain unliquidated despite completion of the
    projects, thereby overstating the liabilities by at least 7.690 million.

    We recommended that Management: a) require the Municipal Accountant to


    validate the reliability of the recorded balances of fund transfers and refund
    the unused fund in order that the account of the LGU in the books of the
    source agencies are settled and/or request for authority to use the savings in
    the implementation of other related projects; b) follow up from the source
    agencies –DAR and DA the release of the remaining amount to be transferred;
    and c) ensure that the projects are implemented promptly in accordance with
    the Memorandum of Agreement.

    2.) Substantial improvements on real properties remain un-declared due to the


    failure of the Office of Municipal Assessor to conduct regular real property
    appraisal and assessment contrary to Section 204 of RA 7160 in relation to
    Section 202, thereby failing to assess the same with appropriate real property
    taxes to the disadvantage of the local government unit.

    We recommended that the Management through the Office of the Municipal


    Assessor prioritize the updating of its records particularly the Field Appraisal
    & Assessment Sheet of all real properties in the Municipality so that correct
    amount of real property taxes may be assessed.

    iii
    3.) Payrolls for Job Orders Workers (JOWs) amounting to ₱11.19 million were
    not supported by service contracts as well as Certification by the LCE that
    activities and services cannot be provided by regular/ permanent employees
    contrary with Item 4.1.3 of COA Circular No. 2012-001, thus the necessity of
    hiring job orders and the reasonableness of the expenditure cannot be
    determined.

    We recommended that Management require the: a.) Human Resource Officer


    to furnish the Office of the Auditor the certification by the Local Chief
    Executive/Personnel Officer that the activities/ services to be rendered by the
    JOWs cannot be provided by regular or permanent personnel of the LGU;
    include in JOW contract the functions, duties and responsibilities for each
    JOW; and evaluate the staffing requirements of each department taking into
    consideration the available work force provided by permanent employees and
    the department’s performance targets; b.) Accounting Office and Human
    Resource Office to ensure that required supporting documents for overtime
    claims are attached in the payroll and c.) JOWs to provide accomplishment
    reports which are quantifiable and traceable to their department’s/section’s
    performance targets.

    E. STATUS OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES

    AMOUNT in ₱
    Balance,
    Balance
    Particulars Issued Settled December
    January 1, 2018
    31, 2018
    Suspensions 0.00 0.00
    Disallowance 1,809,074.92 1,809,074.92
    Charges 0.00 0.00
    Total 1,809,074.92 1,809,074.92

    F. STATUS OF IMPLEMENTATION BY THE MUNICIPALITY OF PRIOR


    YEARS’ AUDIT RECOMMENDATIONS

    Of the 10 audit recommendations embodied in the previous years' audit reports


    four were fully implemented, two were partially implemented and four was not
    implemented as of December 31, 2018.

    iv

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