EXECUTIVE SUMMARY

A. Introduction

The Municipality of Pateros was created on March 29, 1900, and became an
independent municipality on January 1, 1909, by virtue of Executive Order No. 36.
It became part of the Metropolitan Manila on November 7, 1975, through Presidential
Decree (PD) No. 824.

Situated within the Congressional District of Taguig-Pateros, Pateros was reclassified

to a first class municipality effective on November 20, 2001, pursuant to Section 2
(c) of Department Order No. 32-01 of the Department of Finance, as implemented by
Memorandum Circular No. 01-M (NCR) dated January 28, 2002.

The mission of the Municipality of Pateros is to provide quality service which will
make the municipality an ideal community where people live and do business in a
peaceful, orderly and disciplined environment. It envisions itself to be highly
responsible in leadership, working with an empowered citizen in building a
sustainable community.

The Municipality of Pateros is headed by Mayor Miguel F. Ponce III and supported
by Vice Mayor Gerald S. German with 12 regular members of the Municipal Council
joined by the President of the Liga ng mga Barangay and Sangguniang Kabataan as
ex-officio members. It has a total personnel complement of 515 consisting of 16
Elected Officials, 124 Regular/Permanent, six Temporary/Co-Terminus,
39 Contractual/Casual and 330 Job Order employees.

B. Financial Highlights

For Calendar Year (CY) 2021, the appropriations of the Municipality of Pateros for
the General Fund (GF) and Special Education Fund (SEF) totaled P348.171 million.
The obligations for the CY 2021 amounted to P293.265 million.

Funds Appropriations Obligations

General Fund P 334,170,968.23 P 280,394,591.88
Special Education Fund 14,000,000.00 12,870,341.98
Total P 348,170,968.23 P 293,264,933.86

The total revenue of P301.949 million during the year was sourced as follows:

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 Particulars GF SEF Total
Tax Revenue P 53,116,053.28 P13,641,065.16 P 66,757,118.44
Share from Internal Revenue
Collection 167,849,693.00 - 167,849,693.00
Other Share from National
Taxes 12,000.00 - 12,000.00
Service and Business Income 64,067,102.00 5,731.29 64,072,833.29
Shares, Grant and Donations 839,407.81 - 839,407.81
Other Income 2,417,756.47 - 2,417,756.47
Total Revenue P288,302,012.56 P13,646,796.45 P301,948,809.01

The Statement of Financial Position for CY 2021 with corresponding figures for
CY 2020 shows an increase in Assets, Liabilities and Government Equity. On the
other hand, the Statement of Financial Performance shows an increase in Income and
Expenses.

2020 Increase
Particulars 2021
(As Restated) (Decrease)
Financial Position
Assets P500,376,791.85 P474,004,395.58 P26,372,396.27
Liabilities 188,105,431.70 184,137,748.40 3,967,683.30
Government Equity 312,271,360.15 289,866,647.18 22,404,712.97
Financial Performance
Income 301,948,809.01 267,678,990.72 34,269,818.29
Expenses 278,625,828.04 242,492,977.06 36,132,850.98

C. Operational Highlights

Among the most significant accomplishments reported by the Municipality during

the year:

1. Programs to address the COVID-19 pandemic:

 Provided medicines, medical supplies and materials and equipment for

various isolation, swabbing and vaccination centers;
 Provided food assistance to Patients Under Monitoring (PUM); and
 Extended special risk allowance to health workers and employees assigned
in health facilities and isolation centers.

2. Provided/programs for the Recovery Development Intervention thru the joint

undertaking with DSWD, DILG and DOLE for the grant of employment and
livelihood assistance to unemployed individuals in the Municipality.

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 3. Infrastructure Projects:
 Construction of local access road and drainage improvement at P. Rosales St.
in Barangay Sta. Ana;
 Installation of 36” diameter RCCP drainage, asphalt overlaying and
concreting of affected pavement at F. Imson St., Barangay San Pedro;
 Upgrading of Moises R. Flores Health Center in Barangay San Pedro;
 Construction of a 3-storey new Delfin Salonga Health Center in Barangay
Sto. Rosario – Kanluran;
 Improvement of road and drainage at P. Rosales St., C. Lorenzo St. and
Santiago Compound;
 Repair and renovation of the 5th floor of the Municipal Hall, fire exit
stairways, replacement of floor tiles at 4th floor and mezzanine hallway, and
rehabilitation package of comfort rooms; and
 Installation of solar lamp posts in three Barangays namely Int. B. Morcilla
St., Barangay Pobacion, J. T. Capco St., Barangay Sta. Ana and M. Almeda
Ext. (N. V. Ponce St.), Barangay Martirez del ’96.

4. Recipient of the following awards/achievement:

 Secretary’s Bayanihan Service Award given by the DOLE-NCR to the

Regional Winner - Municipality of Pateros PESO in its exceptional and
extraordinary contribution resulting to the provision of decent employment
among its constituents at the time of pandemic given on August 2021;

 Certificate of Recognition awarded by the Department of Health to the

Municipality of Pateros for its outstanding performance and attainment of
100% COVID-19 vaccination coverage of the targeted eligible population
towards a safe and protected National Capital Region on December 03, 2021;
and

 Certificate of appreciation given by the Department of Education-NCR to

PESO-Municipality of Pateros in recognition of its exemplary project titled
“TUPAD FOR A CAUSE: Para sa Malinis na Paaralan at Gadget sa
Kalinangan” which remarkably motivated learners, parents, teachers and the
school environment of all public schools in the Municipality of Pateros in the
pursuit of the Learning Continuity Plan in the new normal set up on
December 27, 2021.

D. Scope and Objective of Audit

The audit covered the accounts and operations of the Municipality of Pateros for the
period January to December 31, 2021. The objectives of the audit are to: (a) be able to
lend credence to Management’s assertions on the financial statements;
(b) recommend agency improvement opportunities; (c) determine compliance with
existing laws, rules and regulations; and (d) determine the extent of implementation
of prior years’ audit recommendations.

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E. Auditor’s Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements because of the following:

1. The recorded RPT/SET Receivables were not based on certified list of taxpayers
showing the amount due and collectible for the year pursuant to Section 20 of
Manual on the New Government Accounting System (MNGAS) for Local
Government Units (LGUs), Volume I. In effect, the reconciliation of delinquent
taxes at year-end, is not made possible and the overstatement of the receivable
accounts by P60.678 million, occurred.

We reiterated our recommendation that the MTO should be required to provide

the MAO at the beginning of the year with the certified list of taxpayers showing
the amount of tax due and collectible, to serve as basis for the set up of the
correct RPT/SET Receivables in the books, pursuant to Section 20 of the
MNGAS for LGUs, Volume I.

We likewise recommended that the MTO and MAO undertake periodic

reconciliation of RPT/SET receivables with the reported delinquent taxes and
make necessary adjustments to avoid misstatement of RPT/SET Receivables and
serve as basis for the subsequent collection of taxes.

2. The reconciliation of Inventory accounts per Report of the Physical Count of

Inventories (RPCI)/stock cards with the accounting records was not undertaken,
resulting in unreconciled difference of P375,245.33 at year-end. Thus, casting
doubt on the accuracy of the reported Inventory Accounts as of
December 31, 2021.

We recommended that Management:

 Require the MGSO, concerned personnel in MHD and other concerned

departments or Office and MAO to undertake the reconciliation of
RPCI/stock cards with the records of the MAO;

 Require the MGSO to -

 Regularly update the recording in the stock cards for all the Inventory
accounts as basis of reporting the correct amount of Inventory;

 Submit to MAO, the RPCI, monthly SSMI supported with Requisition Issue
Slip (RIS) and duly acknowledged List of Recipients/Distribution List, among
other documents, as basis of the adjustment of Inventory accounts in the
books; and

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  Maintain stock cards for all supplies, and for MAO to update regularly the
subsidiary ledgers of supplies as the basis of reporting the correct amount of
Inventory.

3. The unrecorded credit/debit memos and deposits, errors in recording deposits and
other reconciling items in the net amount of P277,072.52 is contrary to Sections
3.2 and 3.3 of COA Circular No. 96-011 dated October 12, 1996, Sections 39(1)
and (3) of Presidential Decree (PD) No. 1445, Sections 6.03, 6.04 and 6.05 of
COA Circular No. 95-006 dated May 18, 1995 and Section 7.2.1(a) of COA
Circular No. 2009-006 dated September 15, 2009. Thus, overstating the balance
of Cash in Bank - Local Currency, Current Account at year-end.

We recommended the following:

a. The MTO to request for copies of the bank’s debit and credit memos and
other reconciling items for submission to the MAO to support the
adjustments to the related asset and government equity accounts; and

b. The MAO to:

 Coordinate with the MTO for the submission of the unrecorded

reconciling items and the errors in recording deposits to support the
necessary adjustments; and

 Prepare the necessary entries for the reconciling items upon receipt of the
documents from the MTO.

F. Other Significant Observations and Recommendations

The following are the significant observations and recommendations in the audit of
the Municipality of Pateros for CY 2021:

1. The Municipality has not slightly met its revenue projections for the year by
P5.610 million due to lack of periodic review on revenue accounts which fell
short in collections, contrary to Section 316 of RA No. 7160 and DBM Local
Budget Circular (LBC) No. 112 dated June 10, 2016. Thus, the inability of the
Municipality to attain the projected income could result in non-implementation
of certain projects essential in the delivery of public service.

We recommended that Management, through the LFC, to -

a. Involve the MTO and other Departments concerned in generating revenues to

meet its targets;

b. Require the MTO to accomplish the Quarterly Report of Income to keep track
of the status of revenue generation; and

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 c. Require the concerned officials to conduct periodic review of the Quarterly
Report of Income to ascertain whether collection targets are attained, and to
provide assurance of improved finances for the operations of the Municipality.

2. Collections registered a net increase of P53.693 million or 22.51 percent over the
previous year, however, the collection efficiency could have further improved
had there been close monitoring of revenue accounts which reported decrease in
income. Thus, the inability of the Municipality to fully maximize its revenue
collection which would redound to the benefit of its constituents.

We commended Management in surpassing the collections over the last year’s

figures.

We still recommended that Management, through the LFC, conduct periodic

quarterly review of its collection efficiency to ensure improved performance and
higher revenue generation.

3. The Sangguniang Bayan has yet to approve the proposed Schedule of Fair
Market Values (SFMV) pursuant to Sections 219 and 212 of RA No. 7160, thus,
the general revision of assessment and property classification of real properties
for purposes of taxation were not updated.

We recommended that Management coordinate with the Sangguniang Bayan,

through the Presiding Officer, for the enactment of an Ordinance on the adoption
of SFMV, which is necessary in the general revision of assessments and property
classifications.

4. The declared gross receipts at a fixed amount of P100 for CYs 2018 to 2021 of
eighty-eight (88) business establishments were apparently not reflective of the
reasonable amount of sales. Thus, the correctness of the tax assessment and
collections covering the said periods is not assured.

We recommended that the Municipal Treasurer, the BPLO and the person in-
charge in the assessment of the tax due as well as the approving Officer, explain
the occurrence of P100 fixed amount of declared gross receipts for CYs 2018 to
2021 tax period.

We also recommended that the Municipal Treasurer exercise the mandate

prescribed in Section 171 of RA No. 7160, to conduct examination of the books
of accounts of these business establishments to determine actual gross receipts
for CYs 2018 to 2021, compute the tax liabilities, including penalties and
charges, and demand immediate payment of taxes.

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5. The Municipality database is lacking of information on 615 business
establishments operating in 10 barangays giving impression that the same maybe
operating without the required permits. On the other hand, 416 businesses were
granted permits to operate in the Municipality but were not included in the
Barangay lists which resulted in the continued operation without issued barangay
clearances as required under Section 152 (c) of RA No. 7160.

We reiterated our recommendation that the Municipal Treasurer –

 In coordination with Business Permit and Licensing Officer, conduct

inspection of the business establishments that are not included in the database
of the BPLO to actually validate their existence;

 Require the immediate imposition of business taxes, fees and charges and
explanation from owners/proprietors on operating without the benefit of
business permits; and

 Strictly enforce the requirement of Section 152 of the LGC where barangay
clearances are to be submitted by business establishments before business
taxes are paid and permits issued.

We also recommended that the BPLO pursue the checking of the database for the
CY 2021 with the information contained in the schedule attached for
establishments listed in the Barangays which may not be found in their records
for the possibility that these were in operation in the past but per their records on
present date have already discontinued business activities. Information generated
should be forwarded to the Municipal Treasurer for appropriate action as well.

6. The registration/transfer of title in the name of the Municipality of 22 parcels of

land measuring 27,962.50 square meters costing P55.245 million
purchased/donated prior to CY 2011 has yet to be undertaken. The practice is
inconsistent with the requirements of Section 39 of PD No. 1445 or the State
Audit Code of the Philippines.

We recommended the following:

a. The Management to allocate adequate appropriation to cover payment of

capital gains tax, documentary stamp tax, other taxes and relevant fees to
facilitate the transfer of the land titles in the name of the Municipality; and

b. Thereafter, the designated Municipal General Service Officer (MGSO) take

appropriate actions to fast-track the registration/transfer of the
purchased/donated land in favor of the Municipality.

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 7. The appropriations for personnel complement, facilities, maintenance and other
operating needs of the Pateros Disaster Risk Reduction Management Office
(PDRRMO) remained not considered in the formulation of the CY 2021 Annual
Budget contrary to Section 12 of RA No. 10121 and the National Disaster Risk
Reduction Management (NDRRM) Plan.

We recommended that the funding requirements for manpower, facilities,

maintenance and other operating needs of PDRRMO be considered in the annual
budget, in compliance with Section 12 of RA No. 10121 and the NDRRM Plan.

8. The Municipality has utilized P3.647 million or 23.19 percent of the

P15.723 million of GAD programs and projects in addressing the objectives of
its gender issues and concerns, through the implementation of 21 Programs,
Projects and Activities (PPAs) out of the 74 GAD programs. Thus, defeated the
purpose for which the fund was created and deprived the benefit due to the
public.

We recommended that the GAD Focal Person monitor the implementation of

GAD activities to assure maximum implementation thereof and ensure that the
planned programs, projects and activities for GAD and other relevant issues for
GAD be implemented in compliance with the provisions of PCW-DILG-DBM-
NEDA JMC No. 2013-01.

9. The 18,167 affected families during ECQ were recipients of the financial
assistance from the transferred funds of the national government amounting to
P104.771 million, extended in two separate fund releases. The requirements of
DBM LBC Nos. 136 and 138 dated March 30 and August 6, 2021, respectively,
were substantially complied, with few exceptions on incomplete documentation.

We commended Management for the substantial compliance with the

requirements on the grant of financial support to the identified low income
individuals and families pursuant to LBC Nos. 136 and 138 and JMC
No. 03, s. 2021.

With few exceptions on incomplete documentation, we recommended

Management to require MSWD-OIC and Social Worker Focal Person to adhere
with the requirements of Section 4(6) of PD No. 1445 by submitting the required
documents such as photocopy of the beneficiaries’ ID with three specimen
signatures, the submission of proof of residency for some beneficiaries without
valid ID’s, and certification from the recipients whose claim was received by
their representative or did not acknowledge the receipt of the financial assistance.

The above observations and recommendations were discussed with the concerned
Municipal officials and staff on May 19, 2022. Management’s views and comments were
incorporated in the report, where appropriate.

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G. Summary of Suspensions, Disallowances and Charges

The suspension of P354,879.25 shown in the Statement of Audit Suspensions,

Disallowances and Charges as of December 31, 2021, was not fully settled at year
end due to the inability of the Management to fully satisfy the needed documents,
explanations and/or justification or settlement to cause the lifting
of the suspension and issuance of the Notice of Settlement of
Suspension/Disallowance/Charges.

H. Status of Implementation of Prior Years’ Audit Recommendations

Monitoring of implementation of the 29 audit recommendations embodied in the

CYs 2020, 2019, 2018 and 2017 Annual Audit Reports, disclosed that 8 or 28 percent
were fully implemented, 14 or 48 percent were partially implemented and 7 or 24
percent was not acted upon.

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