EXECUTIVE SUMMARY

INTRODUCTION

The Municipality of Liloan is a first-class income Municipality located within Metro Cebu
in the islands of Visayas, Central Philippines. It is composed of 14 barangays and 331
puroks, with a land area of approximately 5,210 hectares. As of 2020, the National Census
pegged Liloan’s population at 153,197. Known as “the Light of the North,” Liloan was
founded in the year 1845 and derives its name from the word “lilo” or whirling waters
which are abundant in Silot Bay along Liloan’s sprawling coastline.

Nestled between the mountains and the sea, Liloan is abundant in natural resources, with
several marine sanctuaries that are home to rare and endangered corals and marine life,
including seasonal sea turtles, and a sprawling mountain range of lush forest and endemic
trees and wildlife. Liloan’s topography and climate make it ideal for growing agricultural
products such as mangoes, avocados, and a variety of vegetables.

A growing economic hub in Metro Cebu, Liloan’s biggest industry is real estate with over
200 subdivisions and villages home to an educated and skilled population, and is host to a
growing number of businesses and light manufacturing industries such as furniture,
electronic products, foodstuffs, pottery, and the like. A new domestic port was opened in
2021, further establishing Liloan as a central and strategic hub for commerce and trade in
Cebu, being already centrally located a mere 10 kilometers away from the Mactan Cebu
International Airport.

As of December 31, 2021, it has a personnel complement of 461, as follows:

Nature of Appointment to Office No. of Personnel

Elective Officials 12
Permanent Positions 72
Casuals/Contractuals/Job Orders/Co-terminus 377
461

FINANCIAL HIGHLIGHTS

Comparative analysis of the Statement of Financial Position, as graphically illustrated on

the next page, showed an increase in Assets and Net Assets/Equity, and a decrease in
Liabilities.

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 FINANCIAL POSITION
1,000,000,000.00 (in Philippine Pesos)

800,000,000.00

600,000,000.00

400,000,000.00

200,000,000.00

-
Net Assets/
Assets Liabilities
Equity
2021 924,153,152.36 263,596,313.30 660,556,839.06
2020 829,689,458.38 374,908,531.49 454,780,926.89

On the other hand, analysis of the Statement of Financial Performance, as graphically

illustrated below, showed an increase in Revenues and Surplus, and a decrease in Expenses.

FINANCIAL PERFORMANCE
600,000,000.00 (in Philippine Pesos)
500,000,000.00
400,000,000.00
300,000,000.00
200,000,000.00
100,000,000.00
-
(100,000,000.00)
(200,000,000.00)
Revenue Expenses Surplus (Deficit)
2021 560,143,420.04 395,132,778.06 165,010,641.98
2020 392,379,095.62 515,837,735.82 (123,458,640.20)

The graph on the following page illustrates the increase in Allotments, Appropriations and
Actual Obligations during the year.

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 ALLOTMENTS, APPROPRIATIONS, OBLIGATIONS
(in Philippine Pesos)
700,000,000.00
600,000,000.00
500,000,000.00
400,000,000.00
300,000,000.00
200,000,000.00
100,000,000.00
-
Appropriations/
Obligations Balances
Allotments
2021 663,976,209.89 451,213,499.09 212,762,710.80
2020 631,987,339.84 401,200,431.00 230,786,908.84

OPERATIONAL HIGHLIGHTS

In calendar year (CY) 2021, the Municipality implemented the following

Programs/Projects/Activities (PPAs) as part of its developmental projects:

Amount (₱)
PPAs Appropriation Utilization
Liloan Scholarship Program 30,000,000.00 29,676,000.00
Family Congress 100,000.00 56,869.75
TESDA 100,000.00 95,220.00
ECD Projects 21,300,200.00 21,239,000.00
Purchase of Veterinary Medicines, Vaccines and Supplies 50,000.00 49,800.00
Coastal Resource Management 2,113,610.00 1,976,895.00
Economic Support Program 100,000.00 100,000.00
Our Sustainable Cebu Program 2,000,000.00 1,506,825.00
Clean and Green 1,000,000.00 999,725.00
Solid Waste Management Program 8,000,000.00 7,941,214.00
Other Developmental Projects 4,910,391.18 3,830,586.26
Repair and Maintenance of Drainage System (All Barangays) 160,000.00 158,947.29
Repair and Maintenance of P.B. Frasco Sports Complex 250,000.00 203,065.00
Repair and Maintenance of Public Market 50,000.00 49,875.00
Expropriation of Properties for Public Use (All Barangays) 45,000,000.00 35,769,747.60
Other Infrastructure Project (All Barangays) 500,000.00 347,921.64
Total 115,634,201.18 104,001,691.54

SCOPE OF AUDIT

The audit covered the financial and operations of the Municipality of Liloan for the CY
2021. The objectives of the audit were to (a) ascertain the level of assurance that may be
placed on management assertions on the financial statements; (b) determine compliance of
management with laws, rules and regulations on the pre-identified audit thrusts/areas and

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recommend agency improvement opportunities thereon; and (c) determine the extent of
implementation of prior years’ audit recommendations.

SUBMISSION OF MANAGEMENT REPRESENTATION LETTER

International Standards of Supreme Audit Institutions 1580 requires the submission of

written representations about management responsibilities such as the Management
Representation Letter (MRL), which shall be issued as near as practicable to, but not after,
the date of the auditor’s report on the financial statements. To date, however, Management
has not submitted the said MRL due to the letter request of the Government Association of
Local Accountants-Cebu, Inc. to defer its submission for reasons contained in that letter
which was referred by our Regional Office to the Local Government Sector in the Central
Office.

AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

We rendered an unmodified opinion on the fairness of presentation of the financial

statements of the Municipality for CY 2021.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

The following are significant observations and recommendations in the audit and/or
evaluation of the operations of the Municipality for CY 2021. These and other audit
observations and recommendations which were discussed by the Audit Team with the
concerned Department Heads in an exit conference on March 4, 2022 are fully discussed
in Part II of the report.

1. Disposal of unserviceable Property, Plant and Equipment (PPE) under the General
Fund with costs totaling ₱9,574,493.23 were not yet undertaken, thereby, exposing
these PPE to further deterioration.

We recommended that the Municipal Mayor demand from the accountable officers the
return of all unserviceable properties and the Municipal General Services Officer
initiate the disposal of the listed unserviceable PPEs.

2. Seven parcels of land with assessed value totaling ₱2,255,890.00 were not registered
under the Torrens Title System contrary to the IRR of RA No. 7160 and COA Circular
No. 92-386; thereby, exposing these to third party claims and land disputes.

We recommended that Management secure and prepare all the legal documents
necessary for land titling including those cited in the Annual Audit Report for CY 2020.

3. PPAs for preparedness, prevention, and mitigation with appropriation totaling

₱13,551,166.51 were not implemented within the year these were programmed
resulting in low utilization of ₱1,539,526.76 or 10.20 per cent of the current
appropriation totaling ₱15,090,693.27 contrary to Republic Act (RA) No. 10121.

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 We recommended that the Local Disaster Risk Reduction and Management (LDRRM)
Officer conduct judicious planning and scheduling to ensure implementation of its
disaster preparedness, prevention and mitigation PPAs. We also recommended that the
Municipal Mayor convene the LDRRM Council to review the current LDRRM Fund
Investment Plan and assess whether the PPAs are implementable within the current
year, and submit, if warranted, a revised or supplemental LDRRM Fund Investment
Plan clearly specifying the PPAs therein to the Sanggunian for approval.

4. Public bidding of infrastructure projects with contract costs totaling ₱44,592,974.14

would take 176 to 378 calendar days, which is beyond the maximum procurement
timeline of 141 calendar days, thereby, delaying the implementation of the projects and
depriving the constituents of the benefits from the immediate use of these projects.

We recommended that Management endeavor to improve the procurement time on the

approval of resolution/issuance of Notice of Award, and the contract preparation and
signing so as to observe the required procurement timeline as provided in the Revised
Implementing Rules and Regulations (IRR) of RA No. 9184 and to achieve efficiency
in the delivery of services to the requesting offices and the constituents.

5. The Bids and Awards Committee (BAC) did not adhere to certain provisions of the
Revised IRR of RA No. 9184 or the Government Procurement Reform Act in the
procurement of infrastructure projects with contract cost totaling ₱44,592,974.14,
thereby, raising doubts on the conduct of the bid evaluation.

We recommended that the BAC henceforth, strictly follow the Revised IRR of RA No.
9184 specifically on the conduct of detailed evaluation of all bids.

6. The Contract Agreement between the Municipality of Liloan and a contractor was not
executed and the Notice to Proceed (NTP) was not issued prior to the commencement
of construction of two road concreting projects with contract costs totaling
₱6,077,306.16.

We recommended that Management stop the practice of allowing contractors to start

the projects even before the execution of the contract and the issuance of the NTPs.

7. Liquidated damages were not imposed to a contractor despite the delay in the
implementation of four infrastructure projects totaling ₱13,875,334.58, thus,
precluding the Municipality to be compensated of the losses that may have been
incurred as a result of delayed project implementation and allowing contractors to be
unmindful of the timely completion of government projects.

We recommended that Management impose the recovery of appropriate liquidated

damages from the supplier/contractor, otherwise hold the official/s responsible for the
non-computation of such liquidated damages liable.

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SETTLEMENT OF ACCOUNTS

As of December 31, 2021, the Municipality had no suspensions, disallowances and charges
as reported in the Statement of Audit Suspensions, Disallowances and Charges.

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ UNIMPLEMENTED

AUDIT RECOMMENDATIONS

Out of the 18 audit recommendations embodied in the CY 2020 and Prior Years’ Annual
Audit Report of the Municipality, 6 were fully implemented, 3 was partially implemented
and 9 were not implemented.

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