01-Anda2015 Audit Report

Republic of the Philippines
COMMISSION ON AUDIT
Commonwealth Ave., Quezon City
ANNUAL AUDIT REPORT
ON THE
MUNICIPALITY OF ANDA
Province of Pangasinan
For the Year Ended December 31, 2015

COMMISSION ON AUDIT
OFFICE OF THE SUPERVISING AUDITOR
Audit Group D – Pangasinan I
Finance Building, Capitol Compound
Lingayen, Pangasinan
May 16, 2016

HON. ALDRIN C. CERDAN
Municipal Mayor
Municipality of Anda
Anda, Pangasinan
Dear Mayor Cerdan:
We transmit herewith the report on the financial and compliance audit of the accounts
and operations of the Municipality of Anda, Pangasinan for the year ended December 31, 2015,
in compliance with Section 2, Article IX-D of the Philippine Constitution and pertinent Sections
of Presidential Decree No. 1445.
The audit was conducted to ascertain the propriety of financial transactions and
compliance with prescribed rules and regulations. It was also made to ascertain the accuracy of
financial records and reports, as well as the fairness of the presentation of the financial
statements.
The report consists of four parts: Part I – Audited Financial Statements, Part II – Audit
Observations and Recommendations, Part III – Status of Implementation of Prior Year’s Audit
Recommendations and Part IV – Annexes. The Audit Observations and Recommendations were
discussed with concerned Management officials and staff in an exit conference. Management’s
comments are included in the report, where appropriate.
A qualified opinion was rendered on the fairness of the presentation of the financial
statements in view of: 1) Incomplete property records and non-conduct of complete physical
count of agency’s property, plant and equipment (PPE) with net book value of ₱99,363,009.64,
recording of various PPE as outright expenses amounting to ₱1,157,956.29, misclassified PPE
accounts totaling ₱1,690,920.94, double recording of an adjustment which overstated Information
and Communication Technology Equipment, and understated expenses both by ₱700,000.00, and
non-provision of depreciation to fixed assets amounting to ₱747,730.96; 2) Non-reconciliation of
the Cash in Bank balance of the General Ledger against the Cashbook by ₱695,890.38; and 3)
Non-reconciliation of the reciprocal accounts, Due from Other Funds and Due to Other Funds,
which resulted in a net difference of ₱457,852.60.
Among the most significant findings and recommendations are the following:
1. Accuracy, existence and validity of the Property, Plant and Equipment (PPE) accounts
with net book value of ₱99,363,009.64 as of December 31, 2015 could not be ascertained
due to the following:
a. Non-conduct of physical inventory of Property, Plant and Equipment (PPE) as of
December 31, 2015 contrary to Section 490 (a) of the Government Accounting and
Auditing Manual (GAAM), Volume I and Section 66, Volume II of the Manual on
NGAS. Moreover, requirements for property or inventory management stated in
Sections 119 and 120 of the Manual on NGAS for LGUs were still not implemented.
b. Various transactions amounting to ₱1,157,956.29 that met the criteria for asset
recognition under Property, Plant and Equipment were recorded as outright expenses.
It was also noted that ₱598,914.96 of mobilization fees which should have been
recorded as Advances to Contractors were charged to Other Maintenance and
Operating Expenses.
c. Non-maintenance of Construction in Progress account for Infrastructure Projects and

non-transfer thereof to General Fund for projects funded under Trust Fund.
d. Overstatement of the PPE account “Information and Communication Technology

Equipment” by ₱700,000.00 due to error in the recording of account reclassification
from “Other Maintenance and Operating Expenses”.
e. PPEs amounting to ₱1,690,920.94 were not properly classified to the appropriate

accounts, thus affecting the accuracy of the year-end balances in the financial
statements.
f. No depreciation was provided on the Office Equipment booked under Special

Education Fund (SEF) valued at ₱69,380.00 and Office Building recorded under
Trust Fund valued at ₱677,730.96 which is contrary to Philippine Public Sector
Accounting Standard (PPSAS) 17 thus overstated the PPE account in the financial
statements.
We have recommended that management:
 Strictly comply with the required physical count of all properties at least once a year
and to submit a copy of the Inventory Report to the Audit Team not later than
January 31 and every year thereafter to ensure accuracy of the PPE accounts
presented in the financial statements.
 Require the Municipal Accountant and Treasurer to maintain Property Ledger Cards
and Property Cards, respectively, and shall henceforth conduct periodic
reconciliation of the balances of both records.
 Require the Office of the Accountant to adhere to the prescribed accounting rules
relative to the asset recognition under Property, Plant and Equipment, including
maintenance of Construction in Progress account, and the transfer of completed
projects and equipment under Trust Fund to General Fund;
 Instruct the Accounting, Treasury and Engineering departments to identify and

complete the records in the Registry of Public Infrastructures to aid in the full
compliance with PPSAS.
 Require the Accounting Department to provide depreciation on all depreciable
properties in compliance with Philippine Public Sector Accounting Standard
(PPSAS) 17.
2. General Ledger balance of Cash in Bank of the Municipality as of December 31, 2015
did not reconcile with the cashbooks resulting to a total difference of ₱695,890.38, hence
the reliability of the presented Cash in Bank balance in the financial statements could not
be ascertained.
We have recommended that both the Municipal Accountant and Municipal Treasurer
regularly reconcile the general and subsidiary ledger balances of the Cash in Bank-LCCA
accounts with the cashbook balances before closing of the book at month end pursuant to
Section 10 of NGAS Manual for LGUs Volume II to ensure reliability and correctness of
balances of said accounts.
3. Reciprocal accounts, Due from Other Funds and Due to Other Funds showed a net
difference of ₱457,852.60 after consolidation of all funds of the Municipality as of
December 31, 2015, contrary to generally accepted accounting principles.
We have recommended that management require the Municipal Accountant to reconcile the
Intra-agency accounts, Due to Other Funds and Due from Other Funds to promptly identify
any discrepancy in the balances of the two accounts and to be able to effect the necessary
adjustments if appropriate to bring the affected accounts into unison.
We request that the comments and observations contained therein be fully addressed and
we would appreciate being informed of the action taken in this regard within sixty (60) days from
receipt hereof, pursuant to Section 93 of the General Provisions of Republic Act No. 10651,
otherwise known as the General Appropriations Act of 2015 by accomplishing the Agency
Action Plan and Status of Implementation attached herewith.
We acknowledge the cooperation extended to the audit team by the officials and staff of
the Municipality.
Thank you.
Very truly yours,
cc: The Director, DILG Regional Office No. I, City of San Fernando, La Union
The Director, BLGF Regional Office No. I, City of San Fernando, La Union
The Director, DBM Regional Office No. I, City of San Fernando, La Union
The Presiding Officer, Sangguniang Bayan, Municipality of Anda, Pangasinan
Assistant Commissioner, LGS, COA, Quezon City
Annex A

AGENCY ACTION PLAN and

STATUS of IMPLEMENTATION
Audit Observations and Recommendations
For the Calendar Year 2015
Agency Action Plan Reason for

Target Partial/Delay/
Person/Dept. Implementation Status of Non- Action
Ref. Audit Observations Audit Action Plan Responsible Date Implementation Implementatio Taken/
Recommendations n, if applicable Action to be
Taken
From To
Agency sign-off:
__________________________________ ____________
Name and Position of Accountable Officer Date:
Note: Status of Implementation may either be (a) Fully implemented, (b) Ongoing, (c) Not Implemented, (d) Partially Implemented, or (e) Delayed
COMMISSION ON AUDIT
Office of the Auditor
Team 2 – Audit Group D-Pangasinan 1
March 15, 2016
Ms. Thelma A. Orinion

Supervising Auditor
Audit Group D-Pangasinan 1
Madam:
In compliance with Section 2, Article IX-D of the Philippine Constitution and pertinent
sections of Presidential Decree No 1445, we conducted a Financial and Compliance Audit on the
accounts and operations of the Municipality of Anda, Pangasinan for the year ended December
31, 2015.
The audit was conducted to ascertain the propriety of financial transactions and
compliance with prescribed rules and regulations. It was also made to ascertain the accuracy of
financial records and reports, as well as the fairness and presentation of the financial statements.
The results of our audit are embodied in our report consisting of four parts: Part I –
Audited Financial Statements, Part II – Audit Observations and Recommendations, Part III –
Status of Unimplemented Prior Year’s Recommendations and Part IV – Annexes. The findings
and recommendations were discussed with management officials and staff concerned during the
exit conference held on February 24, 2016.
A qualified opinion was rendered on the fairness of presentation of the financial

statements in view of: (a) Incomplete property records and non-conduct of complete physical
count of agency’s property, plant and equipment (PPE) with net book value of ₱99,363,009.64,
recording of various PPE as outright expenses amounting to ₱1,157,956.29, misclassified PPE
accounts totaling ₱1,690,920.94, double recording of an adjustment which overstated Information
and Communication Technology Equipment, and understated expenses both by ₱700,000.00, and
non-provision of depreciation to fixed assets amounting to ₱747,730.96; (b) Non-reconciliation of
the Cash in Bank balance of the General Ledger against the Cashbook by ₱695,890.38, and (c)
Non-reconciliation of the reciprocal accounts, Due from Other Funds and Due to Other Funds,
Our audit was conducted in accordance with Philippine Public Sector Accounting
Standards (PPSAS) No. 1, paragraph 21 and we believe that it provides reasonable bases for the
results of the audit.
Respectfully yours,
AMYTIS I. NOVERO
State Auditor IV
Audit Team Leader
EXECUTIVE SUMMARY
INTRODUCTION
The Municipality of Anda, the only island town of the Province of Pangasinan,
is located at the core of the Western portions of Lingayen Gulf. The Municipality is
blessed with natural resources such as farmland for agriculture, coastal water rich in
marine resources and a white sand beach with pristine water.
Anda is a 3rd class municipality headed by Hon. Municipal Mayor Aldrin C.

Cerdan supported by 10 other municipal officials, 55 permanent employees, 3 co-
terminus employees, one temporary employee and 100 job-order employees.
FINANCIAL HIGHLIGHTS
Presented below are the financial position, sources of funds, appropriations and
obligations of the Municipality for calendar year 2015.
Increase
2015 2014 (Decrease) %
Assets ₱ 152,606,227.81 ₱ 123,985,936.44 ₱ 28,620,291.37 23.08
Liabilities 59,171,576.82 36,348,877.12 22,822,699.70 62.79
Government Equity 93,434,650.99 87,637,059.32 5,797,591.67 6.62
Income 87,467,863.55 79,420,802.49 8,047,061.06 10.13
Expenses 80,195,557.46 63,410,854.42 16,784,703.04 26.47
Appropriations 106,006,951.70 121,963,504.56 (15,956,552.86) (13.08)
Obligations 77,748,530.14 93,835,340.55 (16,086,810.41) (17.14)
The total appropriation had included the provision for Local Risk Reduction
Management Fund or Calamity Fund amounting to ₱4,350,000.00 and Development
Fund of ₱21,357,522.51, respectively.
OPERATIONAL HIGHLIGHTS
The following validated/inspected projects are the significant accomplishments of

the Municipality for the year 2015:
% of
Plans and Targets Accomplishments
Completion
Engineering Services
1. Construction of Anda Wet Market Constructed Anda Wet Market 100%
under Design & Build Scheme under Design & Build Scheme
2. Rehabilitation/Concreting of various Concreted roads at: 100%
roads Brgy. Cabungan Roadline (150m)
Awile - Macandocandong (180m)
Namagbagan - Sablig (180m)
San Jose – Cabungan (180m)
Dalaoan – Carot (180m)
Brgy. Batiarao (145m)
3. Upgrading /Concreting of Municipal Concreted Municipal Covered 100%
Covered Court Slab Court Slab
4. Construction of Mezzanine Floors for Constructed Mezzanine Floors for 100%
Agriculture and Comelec Office Agri and Comelec Office
5. Rehabilitation/Repainting of Rehabilitated Municipal Hall 100%
Municipal Hall Building Building
6. Rehabilitation/Construction & Rehabilitated Aray-Ayan Fishport 100%
Riprapping of Eroded Portion of Aray- at Awag
Ayan Fishport at Awag
7. Construction of Anda Aquaculture Constructed Anda Aquaculture 100%
Trading Center at Brgy Awag Trading Center at Brgy Awag
8. Maintenance/Regravelling of various Regravelled brgy. roads at: 100%
brgy. roads Namagbagan, Imbo, Poblacion-
Awag, Awile-Macandocandong,
and Tondol-Caniogan
9. Rehabilitation/Repair of Daycare Rehabilited Daycare Centers of 100%
Centers of Brgys. Imbo & Sablig Brgys. Imbo & Samblig
10. Construction of Pantawid Bakeshop Constructed Pantawid Bakeshop 100%
Building Building
11. Construction of Communal Constructed 4 Communal 100%
Farm/Palay Sheds Farm/Palay Sheds
12. Rehabilitation/Repair of Bantay Bata Rehabilitated 5 Bantay Bata 100%
Guardhouses for Fish Sanctuaries Guardhouses for Fish Sanctuaries
13. Construction of Training and Constructed Training and 100%
Livelihood Center (Phase I) Livelihood Center (Phase I)
14. Construction/Maintenance & Repair of Constructed Tondol Beach 100%
Tondol Beach Amenities Amenities
15. Rehabilitation/Upgrading of Anda Partially completed - upgrading of 85%
Waterworks System (Level III) Anda Waterworks System (Level
III)
16. Construction of Tourism Office with Partially completed Tourism Office 85%
Pasalubong Center with Pasalubong Center
Social Services
1. Fund FSCAP Programs, Activities and - 850 issued OSCA ID, 414 100%
Projects Purchased booklets for medicines
and 186 for Grocery Booklets
- ₱4,380,000 Social Pensioners
Funds released for 730 Active
SocPen of Anda
- 139 Death Aids amounting to
₱208,500.00
- Senior Citizens Month
Celebration last Oct. 31, 2015 with
more than 1,000 participants
- 200 Senior Citizens Lakbay Aral
to the City of Vigan – Nov. 7, 2015
2. PWD Programs, Activities and - 483 Issued PWD IDs and 183 100%
Projects renewed IDs
- Implementation of “Inclusion Isla
Cabarruyan” as an output of Japan-
Cambodia Training sponsored by
JICA
3. Fund and Conduct Day Care Services - Conducted International 100%
Children’s Month Celebration
- Conducted the First Day Care
Parents Seminar on VAWC and
Child Abuse
4. Livelihood Programs - BUB 2015 Sustainable Livelihood 100%
Program (SLP) amounting to ₱2M
was turned over last September 17,
2015
SCOPE OF AUDIT
A financial and compliance audit and value for money audit were conducted on
the accounts and operations of the Municipality of Anda. The audit consisted of review
of operating procedures, inspection of the agency’s programs and projects, interview of
some officials and employees, verification/confirmation of accounts, and such other
procedures considered necessary under the circumstances.
OPINION ON THE INDEPENDENT AUDITOR’S REPORT
A qualified opinion was rendered on the fairness of the presentation of the

financial statements in view of: 1) Incomplete property records and non-conduct of
complete physical count of agency’s property, plant and equipment (PPE) with net book
value of ₱99,363,009.64, recording of various PPE as outright expenses amounting to
₱1,157,956.29, misclassified PPE accounts totaling ₱1,690,920.94, double recording of
an adjustment which overstated Information and Communication Technology Equipment,
and understated expenses both by ₱700,000.00, and non-provision of depreciation to
fixed assets amounting to ₱747,730.96; 2) Non-reconciliation of the Cash in Bank
balance of the General Ledger against the Cashbook by ₱695,890.38; and 3) Non-
reconciliation of the reciprocal accounts, Due from Other Funds and Due to Other Funds,
SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS
Summarized below are the significant audit findings and the corresponding
recommendations which were discussed with management officials during the exit
conference on February 26, 2015. Management comments were included in this report,
where appropriate:
1. Accuracy, existence and validity of the Property, Plant and Equipment (PPE)
accounts with net book value of ₱99,363,009.64 as of December 31, 2015 could not
be ascertained due to the following:
a. Non-conduct of physical inventory of Property, Plant and Equipment (PPE) as of

December 31, 2015 contrary to Section 490 (a) of the Government Accounting
and Auditing Manual (GAAM), Volume I and Section 66, Volume II of the
Manual on NGAS. Moreover, requirements for property or inventory
management stated in Sections 119 and 120 of the Manual on NGAS for LGUs
were still not implemented.
b. Various transactions amounting to ₱1,157,956.29 that met the criteria for asset
recognition under Property, Plant and Equipment were recorded as outright
expenses. It was also noted that ₱598,914.96 of mobilization fees which should
have been recorded as Advances to Contractors were charged to Other
Maintenance and Operating Expenses.
c. Non-maintenance of Construction in Progress account for Infrastructure Projects

and non-transfer thereof to General Fund for projects funded under Trust Fund.
d. Overstatement of the PPE account “Information and Communication Technology

Equipment” by ₱700,000.00 due to error in the recording of account
reclassification from “Other Maintenance and Operating Expenses”.
e. PPEs amounting to ₱1,690,920.94 were not properly classified to the appropriate

statements.
f. No depreciation was provided on the Office Equipment booked under Special

Accounting Standard (PPSAS) 17 thus overstated the PPE account in the financial
statements.
 Strictly comply with the required physical count of all properties at least once a
year and to submit a copy of the Inventory Report to the Audit Team not later
than January 31 and every year thereafter to ensure accuracy of the PPE
accounts presented in the financial statements.
 Require the Municipal Accountant and Treasurer to maintain Property Ledger

Cards and Property Cards, respectively, and shall henceforth conduct periodic
reconciliation of the balances of both records.
 Require the Office of the Accountant to adhere to the prescribed accounting rules
relative to the asset recognition under Property, Plant and Equipment, including
maintenance of Construction in Progress account, and the transfer of completed
projects and equipment under Trust Fund to General Fund;
 Instruct the Accounting, Treasury and Engineering departments to identify and

complete the records in the Registry of Public Infrastructures to aid in the full
compliance with PPSAS.
 Require the Accounting Department to provide depreciation on all depreciable

properties in compliance with Philippine Public Sector Accounting Standard
(PPSAS) 17.
2. General Ledger balance of Cash in Bank of the Municipality as of December 31,

2015 did not reconcile with the cashbooks resulting to a total difference of
₱695,890.38, hence the reliability of the presented Cash in Bank balance in the
financial statements could not be ascertained.
We have recommended that both the Municipal Accountant and Municipal Treasurer
regularly reconcile the general and subsidiary ledger balances of the Cash in Bank-
LCCA accounts with the cashbook balances before closing of the book at month end
pursuant to Section 10 of NGAS Manual for LGUs Volume II to ensure reliability and
correctness of balances of said accounts.
3. Reciprocal accounts, Due from Other Funds and Due to Other Funds showed a net
difference of ₱457,852.60 after consolidation of all funds of the Municipality as of
December 31, 2015, contrary to generally accepted accounting principles.
We have recommended that management require the Municipal Accountant to

reconcile the Intra-agency accounts, Due to Other Funds and Due from Other Funds
to promptly identify any discrepancy in the balances of the two accounts and to be
able to effect the necessary adjustments to bring the affected accounts into unison.
SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND CHARGES

AS OF YEAR-END
For the year 2015, the Audit Team issued notices of suspensions, disallowances
and charge amounting to ₱997,836.00, ₱779,700.00, and ₱39,500.00, respectively in
addition to the beginning balances of ₱27,569,920.00 for suspensions and ₱1,658,482.79
disallowances. Settlements of suspensions amounted to ₱27,867,979.46, ₱349,929.00 for
disallowances, and none for the issued charge, thus leaving outstanding balances of
₱1,441,121.79, ₱2,108,182.79, and ₱39,500.00, respectively.
STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS
Out of 16 recommendations contained in the Annual Audit Report for the year
2014, 3 were fully implemented, 6 were partially implemented, and 7 were not
implemented.
TABLE OF CONTENTS
Part I- Audited Financial Statements

 Independent Auditor’s Report 1
 Statement of Management Responsibility
3
 Consolidated Statement of Financial Position
4
 Consolidated Statement of Financial Performance 5
 Consolidated Statement of Changes in Net Assets/Equity
6
 Consolidated Statement of Cash Flows
7
 Consolidated Statement of Comparison of Budget
and Actual Amounts 8
 Notes to the Financial Statements
11
Part II- Audit Observations and Recommendations
I. Financial and Compliance Audit 28
II. Value for Money Audit 65

III. Compliance with Tax Laws 68
IV. Compliance with PDAF/DAP Fund Decisions 69
V. Statement of Audit Suspensions, Disallowances and Charges
(SASDC) 69
Part III- Status of Implementation of Prior Year’s

Audit Recommendations 71
Part IV- Annexes
A. Status of Appropriations, Allotments and Obligations

A.1 Current Legislative Appropriations
A.2 Continuing Appropriations
B. Annexes
B.1 Capitalizable PPE Purchases and Projects Recorded as Outright Expenses
B.2 List of Infrastructure Projects and Equipment Not Transferred to General
Fund or Not Charged to CIP Account – Trust Fund
B.3 List of Misclassified Property, Plant and Equipment
B.4 Schedule of Unreconciled Cash in Bank Account
B.5 Summary of Collections and Deposits
B.6 Aging of Unliquidated Cash Advances
B.7 Schedule of Delayed Submission of Monthly Accounts/Reports
B.8 Schedule of Unauthorized Allowances to Election and BIR Officers
B.9 Schedule of Unremitted GSIS Premiums/Contributions
PART I – FINANCIAL STATEMENTS

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
Independent Auditor’s Report
THE HONORABLE MAYOR

We have audited the accompanying combined financial statements of the Municipality of

Anda, Pangasinan, which comprise the Statement of Financial Position as of December
31, 2015, and the Statement of Financial Performance, Statement of Changes in Net
Assets/Equity, Statement of Comparative Budget and Actual and Statement of Cash
Flows for the year then ended, and a summary of significant policies and other
explanatory information.
Management Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with the Philippine Public Sector Accounting Standards and for
such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our

audit. We conducted our audit in accordance with Philippine Public Sector Standards on
Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the financial statements are free
of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
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We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our qualified opinion.
Bases for Qualified Opinion
As discussed in Part II of the report, Management failed to reconcile the balance of

Property, Plant and Equipment (PPE) valued at ₱99,363,009.64 in account of incomplete
property records, non-conduct physical count of agency’s property, recording of various
PPE as outright expenses amounting to ₱1,157,956.29, misclassified PPE accounts
totaling ₱1,690,920.94, double recording of an adjustment which overstated Information
and Communication Technology Equipment, and understated expenses both by
₱700,000.00, and non-provision of depreciation to fixed assets amounting to
₱747,730.96. Moreover, there were unreconciled differences of ₱695,890.38 in the
balance of Cash in Bank with the Cashbook and ₱457,852.60 in the balances of
reciprocal accounts, Due from Other Funds and Due to Other Funds, thus rendering the
balances unreliable.
Qualified Opinion
In our opinion, except for the effects of the matter/s described in the Bases for Qualified
Opinion paragraph, the combined financial statements present fairly, in all material
respects, the financial position of the Municipality of Anda as of December 31, 2015, and
its financial performance and its cash flows for the year then ended in accordance with
the Philippine Public Accounting Standards.
COMMISSION ON AUDIT
By:
AMYTIS I. NOVERO
State Auditor IV
Audit Team Leader
February 29, 2016
2
3
Notes to Financial Statements
Note I - Profile
The Municipality of Anda, the only island town of the Province of

Pangasinan, is located at the core of the Western portions of Lingayen Gulf.
The Municipality is blessed with natural resources such as farmland for
agriculture, coastal water rich in marine resources and a white sand beach with
pristine water. Anda is now at its right path to remarkable progress. We are
always proud to say, “GOD-FRIENDLY ANDANIANS” living in a peaceful
inland Municipality.
Despite of the growing complexities in public governance brought about by

increasing public demands with limited resources, the present administration,
spearheaded again by MAYOR ALDRIN C. CERDAN, have proven their
sincerity and efficiency in the service.
The Municipality took the cudgels for change to take place. It had proven that
“Yes We Can”. The Seal of Good Housekeeping award is the culmination of
the concerted efforts and the commencement of what is yet to come.
Note 2 - The consolidated financial statements of the LGU have been prepared in
accordance with and comply with the Philippine Public Sector Accounting
Standards (PPSAS). The consolidated financial statements are presented in
pesos, which is the functional and reporting currency of the LGU. The
accounting policies have been applied starting the year 2015.
Note 3 - Summary of significant accounting policies
3.1 Basis of accounting
The consolidated financial statements are prepared on an accrual basis in

accordance with the Philippine Public Sector Accounting Standards
(PPSAS).
3.2 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees and fines
The LGU recognizes revenues from taxes and fines when the event occurs
and the asset recognition criteria are met. To the extent that there is a
related condition attached that would give rise to a liability to repay the
amount, liability is recognized instead of revenue. Other non-exchange
revenues are recognized when it is improbable that the future economic
11
benefit or service potential associated with the asset will flow to the entity
and the fair value of the asset can be measured reliably.
Transfers from other government entities
Revenues from non-exchange transactions with other government entities

are measured at fair value and recognized on obtaining control of the asset
(cash, goods, services and property) if the transfer is free from conditions
and it is probable that the economic benefits or service potential related to
the asset will flow to the LGU and can be measured reliably.
3.3 Investment Property
Investment properties are measured initially at cost, including transaction

costs. The carrying amount includes the replacement cost of components
of an existing investment property at the time that cost is incurred if the
recognition criteria are met and excludes the costs of day-to-day
maintenance of an investment property.
Investment property acquired through a non-exchange transaction is

measured at its fair value at the date of acquisition. Subsequent to initial
recognition, investment properties are measured using the cost model and
are depreciated over a 30-year period.
Investment properties are derecognized either when they have been

disposed of or when the investment property is permanently withdrawn
from use and no future economic benefit or service potential is expected
from its disposal. The difference between the net disposal proceeds and
the carrying amount of the asset is recognized in the surplus or deficit in
the period of derecognition. Transfers are made to or from investment
property only when there is a change in use.
3.4 Property, plant and equipment
All property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items. When significant parts
of property, plant and equipment are required to be replaced at intervals,
the LGU recognizes such parts as individual assets with specific useful
lives and depreciates them accordingly. Likewise, when a major
inspection is performed, its cost is recognized in the carrying amount of
the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognized in surplus
or deficit as incurred. Where an asset is acquired in a non-exchange
transaction for nil or nominal consideration the asset is initially measured
at its fair value.
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Depreciation on assets is charged on a straight-line basis over the useful
life of the asset.
Depreciation is charged at rates calculated to allocate cost or valuation of

the asset less any estimated residual value over its remaining useful life:
(refer to COA issuances on the prescribed useful life of assets)
Public Infrastructures were not previously recognized in the books. The

LGU availed of the 5-year transitional provision for the recognition of the
Public Infrastructure. For the first year of implementation of the PPSAS,
the LGU will not recognize the Public Infrastructure in the books of
accounts.
3.5 Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are classified as financial assets at fair value through

surplus or deficit, loans and receivables, held-to-maturity investments or
available-for-sale financial assets, as appropriate. The LGU determines the
classification of its financial assets at initial recognition.
The LGU’s financial assets include: cash and short-term deposits and
loans receivables.
Subsequent measurement
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or

determinable payments that are not quoted in an active market. After
initial measurement, such financial assets are subsequently measured at
amortized cost using the effective interest method, less impairment.
Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the
effective interest rate. Losses arising from impairment are recognized in
the surplus or deficit.
Derecognition
13
The LGU derecognizes a financial asset or, where applicable, a part of a
financial asset or part of a group of similar financial assets when the rights
to receive cash flows from the asset have expired or is waived;
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 are classified as

financial liabilities at fair value through surplus or deficit or loans and
borrowings, as appropriate. The LGU determines the classification of its
financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case
of loans and borrowings.
The LGU’s financial liability includes loans payable-domestic.
Subsequent measurement
The measurement of financial liabilities depends on their classification.

The LGU’ financial liability was classified as loans and borrowings.
After initial recognition, interest bearing loans and borrowings are

subsequently measured at amortized cost using the effective interest
method. Gains and losses are recognized in surplus or deficit when the
liabilities are derecognized as well as through the effective interest method
amortization process.
Amortized cost is calculated by taking into account any discount or

premium on acquisition and fees or costs that are an integral part of the
effective interest rate.
Derecognition
A financial liability is derecognized when the obligation under the liability

is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same

lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and the recognition of a new
liability.
14
3.6 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank,
deposits on call and highly liquid investments with an original maturity of
three months or less, which are readily convertible to known amounts of
cash and are subject to insignificant risk of changes in value. For the
purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits as defined above, net
of outstanding bank overdrafts.
3.7 Inventories
Inventory is measured at cost upon initial recognition. To the extent that

inventory was received through non-exchange transactions (for no cost or
for a nominal cost), the cost of the inventory is its fair value at the date of
acquisition.
After initial recognition, inventory is measured at the lower of cost and net
realizable value. However, to the extent that a class of inventory is
distributed or deployed at no charge or for a nominal charge, that class of
inventory is measured at the lower of cost and current replacement cost.
Net realizable value is the estimated selling price in the ordinary course of
operations, less the estimated costs of completion and the estimated costs
necessary to make the sale, exchange, or distribution. Inventories are
recognized as an expense when deployed for utilization or consumption in
the ordinary course of operations of the LGU.
3.8 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy

retrospectively. The effects of changes in accounting policy are applied
prospectively if retrospective application is impractical.
The LGU recognizes the effects of changes in accounting estimates

prospectively by including in surplus or deficit.
3.9 Related parties
The LGU regards a related party as a person or an entity with the ability to
exert control individually or jointly, or to exercise significant influence
over the LGU, or vice versa. Members of key management are regarded as
related parties and comprise the Governor, Mayors, Vice-Governors and
Vice-Mayors, Sanggunian Members, Committee Officials and Members,
Accountants, Treasurers, Budget Officers, General Services and all Chiefs
of Departments/Divisions.
15
3.10 Budget information
The annual budget is prepared on the modified cash basis, that is, all
planned costs and income are presented in a single statement to determine
the needs of the LGU. As a result of the adoption of the Modified cash
basis for budgeting purposes, there are basis, timing or entity differences
that would require reconciliation between the actual comparable amounts
and the amounts presented as a separate additional financial statement in
the statement of comparison of budget and actual amounts. Explanatory
comments are provided in the notes to the annual financial statements;
first, the reasons for overall growth or decline in the budget are stated,
followed by details of overspending or underspending on line items.
3.11 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, management

has made judgments, which have the most significant effect on the
amounts recognized in the consolidated financial statements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The LGU
based its assumptions and estimates on parameters available when the
consolidated financial statements were prepared. However, existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control of the
LGU. Such changes are reflected in the assumptions when they occur.
Useful lives and residual values
The useful lives and residual values of assets are assessed using the
following indicators to inform potential future use and value from
disposal:
a) The condition of the asset based on the assessment of experts

employed by the LGU;
b) The nature of the asset, its susceptibility and adaptability to
changes in technology and processes;
c) The nature of the processes in which the asset is deployed; and
d) Changes in the market in relation to the asset
16
Loans and receivables
The LGU assesses its loans and receivables at the end of each reporting
period. In determining whether an impairment loss should be recorded in
surplus or deficit, the LGU evaluates the indicators present in the market
to determine if those indicators are indicative of impairment in its loans
and receivables.
3.12 Financial instruments - financial risk management
The fair value of the financial assets and liabilities are included at the
amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced sale or
liquidation.
The following methods and assumptions were used to estimate the fair
values:
a) Cash and short-term deposits, trade receivables, trade payables and

other current liabilities approximate their carrying amounts largely due
to the short-term maturities of these instruments;
b) Long-term fixed-rate and variable-rate receivables / borrowings are

evaluated by the LGU based on parameters such as interest rates,
individual creditworthiness of the customer and the risk characteristics
of the financed project. Based on this evaluation, allowances are taken
to account for the incurred losses of these receivables and market
related interest rates. As at 31 December 2015 the carrying amounts
of such receivables, net of allowances, are not materially different
from their calculated fair values;
Cash and cash equivalents
The LGU limits its exposure to credit risk by investing cash and cash
equivalents with only reputable financial institutions that have a sound
credit rating, and within specific guidelines set in accordance with the
Sanggunian’s approved investment policy. Consequently, the LGU does
not consider there to be any significant exposure to credit risk.
Note 4. Cash and Cash Equivalents

2015
Cash on Hand
Cash- Local Treasury ₱ 468,651.06
Cash in Bank – Local Currency
Cash in Bank-Local Currency-Current Account 41,228,473.70
17
Total Cash and Cash Equivalent ₱ 41,697,124.76
Cash in banks earns interest based on the prevailing bank deposit rates. Short-
term deposits are made for varying periods, depending on the immediate cash
requirements of the LGU and earn interest at the respective short-term deposit
rate. The LGU cash in bank balances as of December 31, 2015 amounting to
₱41,228,473.70 is maintained in different accounts. Details of which are as
follows:
Name of Depository Bank Account 2015

PNB - General Fund ₱ 3,439,359.69
DBP - General Fund 6,586,394.10
LBP - General Fund 2,226,599.02
LBP – SEF 2,126,126.27
LBP - Trust Fund 22,289,563.45
LBP – PCF 937,221.57
LBP - Trust Fund GPBP 3,623,209.60
Total Cash in Bank ₱ 41,228,473.70
Note 5 - Receivables
Loans and Receivable Accounts 2015

Real Property Tax Receivable ₱ 897,382.80
Allowance for Impairment - 897,382.80
Special Education Tax Receivable 605,087.26
Loans Receivable – Others 979,500.00
Total ₱ 2,481,970.06
Inter-Agency Receivables 2015

Due from National Government
₱ 1,568.92
Agencies
Total ₱ 1,568.92
Intra-Agency Receivables 2015

Due from Other Funds ₱ 6,006,647.53
Total ₱ 6,006,647.53
18
Advances 2015
Advances for Officers and
₱ 600,042.00
Employees
Total ₱ 600,042.00
Other Receivables 2015

Receivables – Disallowances and
₱ 1,814,974.45
Charges
Allowance for Impairment - ₱ 1,814,974.45
Other Receivables 108,150.00
Total ₱ 1,923,124.45
Loans Receivables-Others represent loans granted out of “Isang Milyon

Pisong Programa ni Pangulong GMA” Fund under Trust Fund.
Transfers from other government agencies represent those funds received for
specific projects undertaken by the LGU for specific purpose. These funds
were received on the basis of the project budgets submitted. Accordingly, the
LGU is contractually bound to spend these funds only in connection with the
projects. Furthermore, the contracts stipulate that the funds received for the
project may only be applied to the costs incurred for the project, as and when
the phases of the project are certified as complete. The conditions remaining
therefore represent phases of the projects that are yet to be certified as
complete. Returned of the unspent portion of the fund is subject to the
conditions stated in the respective Memorandum of Agreements executed
between the LGU and the proponent government agencies.
Note 6 – Inventories
2015
Inventory Held for Distribution
Other Supplies and Materials for Distribution ₱ 5,280.50
Total ₱ 5,280.50
Note 7 - Property, Plant and Equipment
2015 2014
Land 5,182,085.95 5,182,085.95
Road Networks 3,705,082.05 1,706,290.78
Accumulated Depreciation - Road
Networks - -
19
Book Value Road Networks 3,705,082.05 1,706,290.78
Buildings 25,191,470.40 25,191,470.40
Accumulated Depreciation - Buildings (4,813,015.00) (3,930,520.38)
Book Value Buildings 20,378,455.40 20,583,219.06
School Buildings 2,001.00 2,001.00
Accumulated Depreciation - School
Buildings -
Book Value School Buildings 2,001.00 2,001.00
Markets 50,225,641.90 22,775,642.00
(4,073,371.64
Accumulated Depreciation - Markets (4,985,344.54) )
Book Value Markets 45,240,297.36 18,702,270.36
Slaughterhouses 1,027,755.69 1,027,755.69
Accumulated Depreciation -
Slaughterhouses (180,396.80) (70,915.14)
Book Value Slaughterhouses 847,358.89 956,840.55
Other Structures 1,586,378.45 682,770.11
Accumulated Depreciation - Other
Structures (45,957.40) (18,964.55)
Book Value Other Structures 1,540,421.05 663,805.56
Machinery 556,000.00 556,000.00
Machinery - -
Book Value Machinery 556,000.00 556,000.00
Office Equipment 1,623,829.23 1,067,389.48
Accumulated Depreciation - Office (108,643.14
Equipment (180,379.51) )
Book Value Office Equipment 1,443,449.72 889,366.34
Information and Communication
Technology Equipment 2,879,534.29 2,012,006.29
Information and Communication (879,462.52
Technology Equipment (1,187,713.05) )
Book Value Information and
Communication Technology
Equipment 1,691,821.24 1,132,543.77
Communication Equipment 10,399.00 10,399.00
Communication Equipment - -
Book Value Communication
Equipment 10,399.00 10,399.00
Construction and Heavy Equipment 2,372,565.00 2,372,565.00
Accumulated Depreciation - (870,436.89
Construction and Heavy Equipment (1,083,697.74) )
20
Book Value Construction and Heavy
Equipment 1,288,867.26 1,502,128.11
Military, Police and Security
Equipment 168.00 168.00
Accumulated Depreciation - Military,
Police and Security Equipment - -
Book Value Military, Police and
Security Equipment 168.00 168.00
Other Machinery and Equipment 152,420.00 152,420.00
Accumulated Depreciation - Other (120,273.60
Machinery and Equipment (136,410.60) )
Book Value Other Machinery and
Equipment 16,009.40 32,146.40
Motor Vehicles 3,407,164.10 3,157,164.10
Accumulated Depreciation - Motor (1,022,489.99
Vehicles (1,306,327.50) )
Book Value Motor Vehicles 2,100,836.60 2,134,674.11
Watercrafts 156,602.12 156,602.12
Accumulated Depreciation - (117,451.59
Watercrafts (131,545.78) )
Book Value Watercrafts 25,056.34 39,150.53
Furniture and Fixtures 2,629,281.74 2,493,917.74
Accumulated Depreciation - Furniture (774,384.35
and Fixtures (1,058,889.13) )
Book Value Furniture and Fixtures 1,570,392.61 1,719,533.39
Books 521.50 521.50
Accumulated Depreciation - Books - -
Book Value Books 521.50 521.50
Other Property, Plant and Equipment 18,181,357.47 18,156,557.47
Accumulated Depreciation - Other (3,567,724.33
Property, Plant and Equipment (4,376,143.25) )
Book Value Other Property, Plant and
Equipment 13,805,214.22 14,588,833.14
Construction in Progress - Other
Public Infrastructures 18,749,927.71
Book Value Construction in Progress
- Other Public Infrastructures - 18,749,927.71
Total Net Book Value - Property
Plant and Equipment ₱ 99,404,437.59 ₱ 89,899,016.22
Note 8 – Biological Assets
21
2015
Breeding Stocks ₱ 486,032.00
Total ₱ 486,032.00
Note 9 – Liabilities
Financial Liabilities 2015

Accounts Payable ₱ 20,510.00
Loans Payable - Domestic 22,165,067.54
Total ₱ 22,185,577.54
The Accounts Payable account consists of check disbursement vouchers obligated

this year and will be paid January next year.
The Loans Payable – Domestic account represents the loan balance of the LGU to
PNB for the construction of the Anda Wet Market.
Inter-Agency Payables 2015

Due to BIR ₱ 1,193,702.81
Due to GSIS 764,096.87
Due to Pag-IBIG 230,575.83
Due to PhilHealth 183,930.48
Due to NGAs 12,386,223.42
Due to GOCCs 876,898.38
Due to LGUs 1,797,690.67
Total ₱ 17,433,118.46
The first four accounts represent the amount deducted from the salaries of
officials and employees. While the remaining accounts represents balances of
funds received by the LGU for specific purposes.
Intra-Agency Payables 2015

Due to Other Funds ₱ 6,464,500.13
Total ₱ 6,464,500.13
Trust Liabilities 2015

Trust Liabilities- Disaster Risk Reduction and
₱ 9,392,352.78
Management Fund
Guarantee/Security/Deposits Payable 227,460.39
Total ₱ 9,619,813.17
22
Deferred Credits/Unearned Income 2015
Deferred Credits
Deferred Real Property Tax ₱ 895,754.53
Deferred Special Education Tax 662,002.56
Total ₱ 1,557,757.09
Note 10– Other Payables

2015
Other Payables ₱ 1,910,810.43
Total ₱ 1,910,810.43
Note 11 – Tax Revenue
Tax Revenue – Individual and Corporation 2015

Community tax ₱ 367,935.07
Tax Revenue-Property
Real Property Tax – Basic 856,203.78
Special Education Tax 1,200,029.45
Business Tax 967,922.97
Tax Revenue – Fines and Penalties
Tax Revenue – Fines and Penalties Taxes on Individual
125,856.30
and Corporations
Total ₱ 3,517,947.57
Note 12– Service and Business Income

2015
Service Income
Permit Fees ₱ 484,533.85
Registration Fees 96,300.00
Clearance and Certificate Fees 273,080.00
Verification and Authentication Fees 62,255.00
Fishery Rental Fees 1,667,706.00
Fees for Sealing and Licensing of Weights and
Measures 5,450.00
Fines and Penalties-Service Income 45,205.87
Business Income
Waterworks System Fees 295,923.00
Parking Fees 82,830.00
Receipt from Market Operations 4,182,562.76
Receipt from Cemetery Operations 53,450.00
Garbage Fees 105,170.00
23
Interest Income 8,258.47
Total ₱ 7,362,724.95
Note 13 - Employee Costs

2015
Personnel Services
Salaries and Wages – Regular ₱ 18,723,803.30
Other Compensation
Personal Economic Relief allowance 1,684,000.00
Representation Allowance 1,510,950.00
Transportation Allowance 1,510,950.00
Clothing/Uniform Allowance 350,000.00
Subsistence Allowance 198,000.00
Productivity Incentive Allowance 1,573,645.00
Hazard Pay 108,175.10
Overtime and Night Pay 22,610.91
Year-End Bonus 1,551,181.00
Cash Gift 550,000.00
Personnel Benefit Contribution

Retirement and Life Insurance Premiums 2,210,669.70
Pag-IBIG Contribution 306,123.38
PhilHealth Contribution 215,834.14
Employees Compensation Insurance Premiums 86,484.33
Other Personnel Benefit
Terminal Leave Benefits 518,301.90
Total ₱ 31,120,728.76
Note 14 – Maintenance and Other Operating expenses

2015
Traveling Expenses
Traveling Expenses – Local ₱ 1,405,398.93
Training and Scholarship Expenses
Training Expenses 814,036.00
Supplies and Material Expenses
Office Supplies Expense 1,302,248.58
Accountable Forms Expense 78,860.00
Animal/Zoological expenses 34,137.00
Drugs and Medicines Expenses 1,526,340.00
Medical, dental and Laboratory Supplies Expenses 48,538.00
Fuel, Oil and Lubricant Expenses 1,519,407.30
24
Agriculture and Marine Supplies Expenses 30,000.00
Utility Expenses
Electricity Expenses 1,738,096.52
Communication Expenses
Telephone Expenses 554,000.00
Internet subscription Expenses 7,790.98
Confidential Expenses 300,000.00
Extraordinary and Miscellaneous Expenses 729,143.00
Total ₱ 10,087,996.31
Note 15 – Contracted Services

2015
Professional Services
Auditing Services ₱ 120,239.32
General Services
Janitorial Services 57,478.64
Security services 90,500.00
Other General Services 6,539,652.65
Total ₱ 6,807,870.61
Note 16 – Repairs and Maintenance

2015
Repairs and Maintenance -Infrastructure Assets ₱ 1,085,978.10
Repairs and Maintenance -Buildings and Other Structure 1,006,662.68
Repairs and Maintenance -Machinery and Equipment 221,706.12
Repairs and Maintenance -Transportation Equipment 569,317.89
Repairs and Maintenance - Furniture, Fixtures 8,165.00
Repairs and Maintenance -Other Property, Plant and
440,194.00
Equipment
Total ₱ 3,332,023.79
Note 17 - Financial Assistance/Subsidy

2015
Subsidy to NGAs ₱ 358,736.58
Subsidy to Local Government Units 1,092,000.00
Total ₱ 1,450,736.58
Note 18 - Transfers
25
2015
Transfers of Unspent Current Year DRRM Funds to the
₱ 9,392,352.78
Trust Funds
Total ₱ 9,392,352.78
Note 19 - Taxes, Insurance Premiums and Other Fees

2015
Fidelity Bond Premiums ₱ 14,201.25
Insurance Expenses 232,581.31
Total ₱ 246,782.56
Note 20 – Other Maintenance and Operating Expenses

2015
Advertising Expenses ₱ 293,724.00
Printing and Publication Expenses 0.00
Representation Expenses 235,733.00
Transportation and Delivery Expenses 1,062.00
Membership Dues and Contributions to Organizations 1,500.00
Other Maintenance and Operating Expenses 10,711,974.32
Total ₱ 11,243,993.32
Note 21 - Financial Expenses

2015
Interest Expenses ₱ 1,404,982.9
Guarantee Fees 298,886.96
Other Financial Charges 831,996.21
Total ₱ 2,535,866.07
Note 22 – Non-Cash Expenses

2015
Depreciation and Amortization
Depreciation-Buildings and Other Structure ₱ 1,930,942.03
Depreciation-Machinery and Equipment 655,409.25
Depreciation-Transportation Equipment 297,931.70
Depreciation-Furniture, Fixtures and Book 284,504.78
Depreciation-Other Property, Plant and Equipment 808,418.92
Total ₱ 3,977,206.68
Note 23 - Reconciliation of Net Cash Flows from Operating Activities to

Surplus/(Deficit)
26
2015
Surplus or (Deficit) ₱ 7,272,306.09
Non-cash Transactions
Depreciation 3,977,206.68
Amortization of Intangible Assets -
Impairment Loss -
Increase in current payables and other payables 19,355,894.56
(Gains) Losses on Sale of PPE -
(Gains) Losses on Sale of Investments -
Increase in inventory -
Increase in current receivables (546,069.71)
Increase in investments due to revaluation -
Prior period adjustment - total (1,474,714.42)
Prior period adjustment - reversal of depreciation (6,333.00)
Net Cash from Operating Activities ₱ 28,578,290.20
Note 24 - Reconciliation between actual amounts on a comparable basis as presented

in this statement and in the Statement of Financial Performance for the
Year Ended December 31, 2015
27
Personnel Financial
Income MOOE Capital Outlay
Services Expenses
Comparison Statement of Budget and Actual ₱ 86,265,442.87 ₱ 31,065,913.93 ₱ 32,012,563.06 ₱ 1,404,982.90 ₱ 12,319,875.25
Entity Differences - 54,814.83 1,130,883.17 (1,130,883.17)
Basis Differences: - - - - -
Income not considered budgetary items - - - - -
Non-cash expenses: - - - - -
Depreciation - - 3,977,206.68 - -
Amortization – Intangible Assets - - - - -
Impairment Loss - - - - -
Losses - - - - -
Debt Service (Loan Amortization, Retirement of - - - -
Debt Instruments)
Interest Expenses capitalized - - - - -
Capital Expenditures - - (147,091.47) - (11,188,992.08)
Timing Differences: - - - - -
Prepayments charged to current appropriations - - - - -
Subsidy to NGAs 358,736.58
Transfer of Unexpended LDRRMF - - 9,392,352.78 - -
Per Statement of Financial Performance ₱ 86,265,442.87 ₱ 31,120,728.76 ₱ 45,593,767.63 ₱ 2,535,866.07 -
PART II – AUDIT OBSERVATIONS AND

RECOMMENDATIONS
AUDIT OBSERVATIONS AND RECOMMENDATIONS
A. FINANCIAL AND COMPLIANCE AUDIT
Property, Plant and Equipment (PPE) - ₱99,404,437.59
1. Accuracy, existence and validity of the Property, Plant and Equipment (PPE)
accounts with net book value of ₱99,404,437.59 as of December 31, 2015 could not
be ascertained due to the following:
a) Physical inventory of Property, Plant and Equipment (PPE) was not completed
and reported as required in Section 490 (a) of the Government Accounting and
Auditing Manual (GAAM), Volume I and Section 66, Volume II of the Manual
on NGAS. Moreover, requirements for property or inventory management
stated in Sections 119 and 120 of the Manual on NGAS for LGUs were still not
implemented.
This is a reiteration of our previous audit finding.
Section 490 of the GAAM, Volume I states that:
“Each agency head is required to take physical inventory of all the

equipment belonging to the agency. Such inventory shall be made as of
December 31 of each year and the report shall be submitted to the Auditor
concerned not later than January 31 of each year.”
Section 66, Volume II of the Manual on the NGAS provides that:
“The Report of Physical Count of Property, Plant and Equipment

(RPCPPE) shall be used to report the physical count of property, plant
and equipment by type as of a given date. It shall be submitted to the
Auditor concerned not later than January 31 of each year.”
The Local Chief Executive, as previously recommended, had created an Inventory

Team under E.O. No, 17 series of 2015, however due to different constraints most
particularly on completeness of existing records, the inventory process was still not
completed, hence the failure to furnish a year-end Physical Inventory Reports.
This perennial audit observation pertaining to PPE accounts has been adversely
affecting the fair presentation of the accounts in the financial statements; hence we
reiterate this audit finding to give emphasis on the need for the conduct of physical
inventory of properties as required by the foregoing rules and regulations.
In addition with the noted deficiencies in previous audit engagement, the

management still failed to implement the following requirements relative to the
management of property or inventory as mandated in the said manual, quoted as follows:
28
“Section 119. Property Records to be Maintained. – The General Services
Officer or the Local Treasurer, as the case may be, shall number each type of
supplies and maintain Stock Cards per stock number. He shall likewise maintain
Property Cards per category of property, plant and equipment.
Section 120. Recording of Deliveries of Supplies or Property in the Books of

Accounts. – The Chief Accountant shall maintain Supplies Ledger Cards per
stock number; Property, Plant and Equipment Ledger Cards for each category
of assets; and Real Property Ledger Cards for land.
During the exit conference, management assured to take appropriate actions to

implement the audit recommendations.
We reiterate our recommendations that management:
 Strictly comply with the required physical count of all properties at least
once a year and to submit a copy of the Inventory Report to the Audit Team
not later than January 31 and every year thereafter to ensure accuracy of the
PPE accounts presented in the financial statements.
 Require the Municipal Accountant and Treasurer to maintain Property

Ledger Cards and Property Cards, respectively, and shall henceforth
conduct periodic reconciliation of the balances of both records.
b) Various errors were noted in the audit of the equipment purchases and
infrastructure projects relative to accounting rules on capitalization of
particular assets in the books of accounts, the use of Construction Period
Theory, including the transfer of Trust Fund projects and equipment to General
Fund and the subsequent recording/transfer of items that fall under the
definition of “Public Infrastructures” to the Registry of Public Infrastructures
(RPI), to wit:
i. Various transactions amounting to ₱1,157,956.29 that met the criteria for asset
recognition under Property, Plant and Equipment were recorded as outright
expenses (Annex B.1).
Property, Plant and Equipment are tangible assets of an entity that are purchased,
constructed, developed or otherwise acquired; are held for use in the production or supply
of goods or services or to produce program outputs; for rental to others; for
administrative purposes; have a useful life extending beyond one fiscal year and are
intended to be used on a continuing basis; and are not intended for resale in the ordinary
course of operations.
29
Review of the pertinent records disclosed that various items were purchased by
the Municipality amounting to ₱679,250.00 which should have been booked up in the
PPE accounts, but were taken up as outright expenses.
Also, final payments made for the infrastructure projects i.e. Construction/
Rehabilitation of Tondol Beach Amenities and Upgrading or Concreting of Municipal
Covered Court Slab amounting to ₱133,802.63 and ₱344,903.66, respectively, were
charged to expense account inconsistent with the “Other Structures” account initially
charged for the first billings.
ii. No Construction in Progress account was maintained for infrastructure projects

of the Municipality which is contrary to what was provided in the new Chart of
Accounts under COA Circular No. 2015-009 dated December 1, 2015 and the
required transfer thereof to General Fund upon completion, which also
consequently barred the proper recording of public infrastructures in the Registry
of Public Infrastructures (RPI) to which the new accounting rule of recording
such assets in the books of accounts will be based in compliance with Philippine
Public Sector Accounting Standards (PPSAS). Same was noted on the purchases
of equipment funded by trust fund but were not transferred to General Fund. It
was also noted that ₱598,914.96 of mobilization fees which should had been
recorded as Advances to Contractors were charged to Other Maintenance and
Operating Expenses.
The new Chart of Accounts based on Philippine Public Sector Accounting

Standards (PPSAS) under COA Circular No. 2015-009 provides different Construction in
Progress (CIP) accounts per category of asset which generally requires CIP to be used to
record the accumulated cost or other appropriate value of the particular asset still in the
process of construction or development.
It was noted that the Office of the Accountant didn’t maintain “Construction in
Progress” account for all infrastructure projects of the Municipality except for the
construction of the Anda Wet Market. This practice understated the total assets of the
LGU relative to the projects which were still not fully completed as of the end of the
year. Nevertheless, for transactions under General Fund, such had no implication on the
asset accounts of the LGU in account of the fact that the projects were all completed, or
no progress payment has thus far been made for unfinished projects.
On the other hand, for projects and equipment purchases under Trust Fund, the
accounting department only provided for the initial set-up of inter-agency liability
account – Due to Other NGAs and reversal thereof upon completion. The payments
recorded for CY 2015 pertaining to various identified infrastructure projects and
equipment purchases under trust fund amounted to ₱14,654,353.30, out of which
₱6,895,540.16 for on-going projects, ₱7,414,454.14 for completed projects and
₱344,359.00 for various equipment (see Annex B.2 for further details). Inquiry with the
Municipal Accountant disclosed that the Memoranda of Agreements were still being
collated to determine the final treatment of the projects and equipment. Such practice of
30
recording had understated the total assets in the financial statements or the Registry of
Public Infrastructures (RPI), as the case may be.
Upon further inquiry with the Municipal Accountant, it was noted that the
Registry of Public Infrastructures was not regularly updated which might later on affect
the compliance of the Municipality with the COA Circular No. 2015-008 in line with
PPSAS requirement that all public infrastructures shall now form part of and be recorded
in the books as Property, Plant and Equipment.
On a side note, the payment of 15% mobilization fees amounting to ₱598,914.96

for Municipal Building Roofing, LDRRMC Operation Center, and Training & Livelihood
Center (Phase II) projects were charged to Other Maintenance and Operating Expenses,
instead of the correct account which is “Advances to Contractors”, hence overstating
expense and understating the total assets of the LGU as of year-end.
iii. The PPE account “Information and Communication Technology Equipment”

(10705030) was overstated by ₱700,000.00 due to error in the recording of
account reclassification from “Other Maintenance and Operating Expenses”.
An adjustment was provided for the reclassification of a computer purchase

charged to expense account (Check No. 100007) to the correct asset account which is
“I.T. Equipment” with JEV No. 276 in the amount of ₱700,000.00 inconsistent with the
amount based on documents and the original entry of ₱34,970.54. Upon further review of
the general ledger, it was noted that on October 31, 2015, the accounting department had
already provided an adjustment for the said transaction with JEV No. 145.
The cited entries overstated the account “Information and Communication

Technology Equipment” and understated the “Other Maintenance and Operating
Expenses” account by ₱700,000.00.
iv. PPEs amounting to ₱1,690,920.94 were not properly classified to the proper
statements.
Section 111 (1) and (2) of PD 1445 provides the Keeping of Accounts, to wit:
1) The accounts of an agency shall be kept in such details as is necessary to meet

the needs of the agency and at the same time be adequate to furnish the
information needed by fiscal or control agencies of the government.
2) The highest standards of honesty and consistency shall be observed in the

keeping of accounts to safeguard against accurate or misleading information.
Review of each PPE items revealed that some assets recorded totaling
₱1,690,920.94 were misclassified, thus affecting the accuracy of the year-end balances
(See Annex B.3 for details).
31
Moreover, the cost associated with the original construction of the Municipal
Covered Court Slab could not be traced in the records which precluded the audit team to
verify if the recording of the 2015 upgrading/concreting project of the court with a total
cost of ₱998,512.00 was booked up in conformity with existing accounting rules and
regulations particularly on replacements and betterments.
During the exit conference, the management affirmed their compliance with the
audit recommendations.
We have recommended that the Local Chief Executive:
 Require the Office of the Accountant to adhere to the prescribed accounting

rules relative to the asset recognition under Property, Plant and Equipment,
including maintenance of Construction in Progress account, and the transfer
of completed projects and equipment under Trust Fund to General Fund;
 Require the Municipal Accountant to provide necessary adjusting entries to

reclassify the misclassified PPE accounts and those completed infrastructure
projects.
 Instruct the Accounting, Treasury and Engineering departments to identify

and complete the records in the Registry of Public Infrastructures to aid in
the full compliance with PPSAS.
c. No depreciation was provided on the Office Equipment booked under Special

Accounting Standard (PPSAS) 17 thus overstated the PPE account in the
financial statements.
This is a reiteration of previous audit finding.
PPSAS 17 states that Property, Plant and Equipment (PPE) shall be recorded
using the cost model requiring that after the initial recognition of the particular asset, the
cost must be systematically allocated over its useful life through depreciation, and
impairment, if any, must also be recognized.
Per inquiry, no depreciation has been provided ever since for depreciable
properties booked under the Special Education and Trust Funds.
It was noted that the Municipality maintains office equipment under the Special
Education Fund valued at ₱69,380.00 which cannot be identified in particular since no
records exist aside from the fact that such amount already appeared in the 1997 financial
statements which also signifies that the equipment should have already been fully
depreciated since the maximum useful life of equipment is 10 years per COA Circular
No. 2003-07. The useful lives of assets as listed on the said circular were still referred to
32
be continuously used by government agencies in the adoption of PPSAS until revoked or
amended.
In addition, an office building booked under the Trust Fund at ₱677,730.96 has
not been depreciated since the time it was constructed which is also unknown because of
the absence of records except that such office building already appeared in the financial
statements since 1997. Moreover, said office building was not transferred to the General
Fund after its completion.
The failure to provide depreciation on the foregoing agency assets overstated their
true values thus affected the fair presentation of the financial statements.
In reply also to the aforementioned audit observation memorandum, the

management agreed with the audit recommendations.
We have reiterated our previous recommendation that Management require

the Accounting Department to provide depreciation on all depreciable properties in
compliance with Philippine Public Sector Accounting Standard (PPSAS) 17. Also,
the management should expedite the tracing or securing of records relative to the
noted assets existing since the 1997 Financial Statements so as to provide the
necessary depreciation and final disposition/treatment of the cited assets in the
books of accounts, including the transfer of the building from trust fund to general
fund.
Non-reconciliation of General Ledger balance of Cash in Bank account against the

Cashbook with net difference of ₱695,890.38
2. Correctness and existence of the balance of Cash in Bank could not be relied upon
due to non-reconciliation of the General Ledger against the Cashbook with net
difference of ₱695,890.38 contrary to Section 10 of the New Government Accounting
System (NGAS) Manual for LGUs Volume II, thus casting doubts on the reliability
of balances presented in the financial statements.
Section 10 of the New Government Accounting System (NGAS) Manual for

LGUs Volume II states that ledger balances should be periodically reconciled with their
respective control accounts at the end of every month.
Accordingly, Section 111 of Presidential Decree No. 1445 provides that “(1)The
accounts of an agency shall be kept in such detail as is necessary to meet the needs of the
agency and at the same time be adequate to furnish the information needed by fiscal or
control agencies of the government. (2) The highest standard of honesty, objectivity and
consistency shall be observed in the keeping of accounts to safeguard against inaccurate
or misleading information.”
As of September 21, 2015, cash examination date, cashbooks of three (3) bank
accounts were not reconciled with their respective subsidiary ledgers with net difference
33
of ₱86,909.56 which further augmented to ₱695,890.38 as of December 31, 2015 from
six (6) bank accounts, hence the reliability of the presented Cash in Bank balance in the
financial statements couldn’t be ascertained, details of which are presented in Annex B.4.
The foregoing deficiencies should have been corrected if the Municipal

Accountant and Municipal Treasurer periodically perform reconciliation of accounts.
Cash in Bank account could have been presented correctly if these deficiencies were
found prior to the preparation of bank reconciliation statements and financial statements.
During the exit conference, management assured to take appropriate action to

implement our audit recommendation.
We have recommended that both the Municipal Accountant and Municipal

Treasurer regularly reconcile the general and subsidiary ledger balances of the
Cash in Bank-LCCA accounts with the cashbook balances before closing of the
book at month end pursuant to Section 10 of NGAS Manual for LGUs Volume II to
ensure reliability and correctness of balances of said accounts.
Unreconciled reciprocal accounts by ₱457,852.60
3. Reciprocal accounts, Due from Other Funds and Due to Other Funds had an
unreconciled difference of ₱457,852.60 after consolidation of all funds of the
Municipality as of December 31, 2015, contrary to generally accepted accounting
principles and made its financial statements not accurately presented,
In the verification of the year-end Consolidated Balance Sheet of the

Municipality, we noted that the intra-agency receivable account, “Due from Other Funds”
has a balance of ₱6,006,647.53. On the other hand, the intra-agency payables account,
Due to Other Funds has an ending balance of ₱6,464,500.13 or a net credit balance of
₱457,852.60. The balances and differences are presented in the table below:
Due from Due to Other

Funds Difference
Other Funds Funds
General Fund ₱4,125,140.18 ₱1,560,017.53 ₱2,565,122.65
Special Educ. Fund - 86,480.65 (86,480.65)
Trust Fund 1,881,507.35 4,818,001.95 (2,936,494.60)
TOTAL ₱6,006,647.53 ₱6,464,500.13 (₱457,852.60)
The non-reconciliation of the accounts was not in conformity with the generally
accepted accounting principle which provides that “reciprocal receivable and payable
accounts within the same accounting entity shall be eliminated after consolidation
thereof.”
The Due to/Due from Other Funds accounts represent charges to other funds
within the agency that are properly chargeable to another fund giving rise to receivable
34
and payable accounts between two funds. Theoretically, after consolidation of the
accounts, the Due to/Due from Other Funds accounts shall have been eliminated.
A comparison of the balances of the two accounts showed a difference of

₱457,852.60 even after a consolidation of the accounts which is unusual or abnormal
considering that the two accounts operate as reciprocal accounts and must therefore
reflect the same amount at any given date. This shows that there were charges under the
account “Due to Other Funds” which were either not paid or received from its reciprocal
account “Due from Other Funds” at the end of the year.
Consequently, the inequality or discrepancy in the balances of the reciprocal

accounts, Due from Other Funds and Due to Other Funds as of December 31, 2015 could
be attributed to the failure of the Accounting Office to record and account properly the
charges affecting the accounts and conduct of reconciliation, thus raises doubt on the
reliability of the two accounts.
Moreover, in comparison with the discrepancy noted in prior year audit, records
indicate an increase of ₱807,337.48 or 231 percent from the net debit balance of
₱349,484.88 as of December 31, 2014, hence increasing the level of doubt on the faithful
representation of the two accounts.
During the exit conference, management instructed the Municipal Accountant to

identify the discrepancy in the balances of the reciprocal accounts and to effect necessary
adjustments to bring the affected accounts into unison.
We have reiterated our previous recommendation that management require

the Municipal Accountant to reconcile the Intra-agency accounts, Due to Other
Funds and Due from Other Funds to promptly identify any discrepancy in the
balances of the two accounts and to be able to effect the necessary adjustments if
appropriate to bring the affected accounts into agreement.
Deficiencies in the handling and recording of Cash Local Treasury account
2.1 Collections under General Fund and Special Education Fund were not deposited
promptly and intact, which resulted to undeposited collections of ₱452,051.06
contrary to Section 32 of the NGAS Manual for LGUs, COA Memorandum No.
2013-004 dated July 9, 2013, thus funds collected may be prone to possible risk of
loss or misuse.
Review of the Cash Local Treasury account of the Municipality of Anda through
the pertinent books of accounts submitted disclosed that the undeposited collections of all
funds amounted to ₱468,651.06 as of December 31, 2015. Collections and deposits under
General Fund and Special Education Fund exhibited inobservance with the mandates of
NGAS Manual for LGUs and COA Memorandum No. 2013-004, as these funds represent
96% or ₱452,051.06 of the total undeposited collections.
35
Below shows the balances of Cash Local Treasury account under the two funds:
General Fund ₱ 408,208.07

Special Education Fund 43,842.99
TOTAL ₱ 452,051.06
Section 32 of the Manual on the New Government Accounting System (MNGAS)

for Local Government Accounting System (LGUs) states that:
“The Treasurer/Cashier shall deposit intact all his collections as

well as all collections turned over to him by the collectors/tellers with the
authorized depository bank daily or not later than the next banking day.
He shall record all deposits made in the cashbook and prepare the RCD.”
COA Memorandum No. 2013-004 dated July 9, 2013 prescribes the use of the
Revised Cash Examination Manual. Under this manual, relevant laws and rules were
issued to ensure that all resources of the government shall be managed, expended or
utilized in accordance with laws 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. Specific provisions on this manual for
remittances/deposits were issued, namely as follows:
 “Officers of the local government authorized to receive and

collect monies arising from taxes, revenues, or receipts of any kind shall
remit the full amount received and collected to the treasury of such legal
government unit which shall be credited to the particular account or
accounts to which the monies properly belong.
 The Local Treasurer/Cashier shall deposit intact all his

collections turned over to him by the Collectors/Tellers with the
authorized depository bank daily or not later than the next banking day.
He shall record all deposits made in the Cashbook-Cash in Treasury and
in the case of municipalities where travel time to the depository bank is
more than one (1) day, deposit of collections shall be made at least once a
week, or as soon as the collections reach ₱10,000.00.
 Collections of field collectors shall be remitted to the

Cashier/designated Liquidating Officer of the field office of the local
government unit. When travel distance from the field office to the local
treasury may expose government funds to risk such as loss in transit, the
Cashier/designated Liquidating Officer, upon authorization by the Local
Treasurer, may deposit the collections in the authorized depository bank
near the field office of the local government unit.”
36
Review of the cash receipts journals and other relative documents disclosed that
the Municipality has undeposited collections totaling ₱452,051.06 under General Fund
and Special Education Fund. Complete details are shown in Annex B.5
Analysis of the daily collections and deposits showed that the Accountable
Officer did not strictly observe the rules and regulations on the handling of collections
and deposits, thus the continued practice of delaying deposits of collections may increase
the risk of loss, improper use and misappropriation of funds.
While it may be noted that most of the month end balances of undeposited
collections were deposited the next working/banking day, thorough analysis of data
showing daily transactions revealed some deposits were still executed without observing
the aforementioned provisions.
As indicated in the management comments, the Municipal Treasurer was required

to deposit her collections promptly and intact for the efficient discharge of her duties and
avoid risk of possible loss or misuse of funds.

the Accountable Officer to deposit her collections promptly and intact as prescribed
under COA Memorandum No. 2013-004 for the efficient discharge of her duties and
avoid the risk of possible loss or misuse of funds.
.2 Cash Local Treasury account under General Fund (GF) and Special Education
Fund (SEF) disclosed balances as of December 31, 2015 which are not deemed
representative of the correct cash on hand of the Municipality rendered by the
noted incongruence between the balances disclosed in the financial statements and
the Cashbook with a total difference of ₱17,351.71.
Section 111 of Presidential Decree No. 1445 provides that “(1)The accounts of an
agency shall be kept in such detail as is necessary to meet the needs of the agency and at
the same time be adequate to furnish the information needed by fiscal or control agencies
of the government. (2) The highest standard of honesty, objectivity and consistency shall
be observed in the keeping of accounts to safeguard against inaccurate or misleading
information.”
Based on the financial statements of the Municipality, the Cash Local Treasury
accounts under General Fund and Special Education Fund have a total balance of
₱452,051.06 inconsistent with the balances per Municipal Treasurer’s cashbook, details
of which are as follows:
FUND FS Cashbook Difference
General Fund ₱ 408,208.07 ₱ 429,207.97 ₱(20,999.90)
Special Education Fund 43,842.99 40,194.80 3,648.19
Total ₱ 452,051.06 ₱ 469,402.77 ₱(17,351.71)
37
Scrutiny of the pertinent documents revealed the following discrepancies/errors in
the recording of transactions in the related books of accounts to wit:
GENERAL FUND
1) An adjusting entry was erroneously provided on October 31, 2015 with JEV
No. 157 to record Check No. 572505 as deposited collections on January 8,
2015 in the amount of ₱15,000.00 by reducing Cash Local Treasury (Cash in
Vault) and increasing Cash in Bank – LCCA account. Upon further review, by
tracing the said check, such transaction was noted to be a fund transfer from
SEF to GF on December 23, 2014 to support an expense chargeable to SEF
but disbursed through GF. No entry was initially made to recognize the
transfer in General Fund books for Cash Local Treasury account, thus the said
adjusting entry understated the account balance by ₱15,000.00 as of
December 31, 2015.
2) Double recognition of expense or transaction under personnel services by

recording an already paid payroll transaction on November 30, 2015 with JEV
No. 246 amounting to ₱6,000.00 by crediting Cash Local Treasury account,
hence understating the account and overstating the related expense.
3) Deposit made on November 12, 2015 with JEV No. 328 was recorded in the
amount of ₱24,731.00 instead of ₱24,731.10, thus overstating the Cash Local
Treasury account.
SPECIAL EDUCATION FUND
1) Deposit made under Special Education Fund on December 2, 2015 was

recorded as collection overstating Cash Local Treasury account by ₱3,648.16
and understating both Cash in Bank - LCCA and Special Education Tax
Receivable by ₱1,824.08.
2) Collection on November 3, 2015 with JEV No. 290 was recorded in the
amount of ₱4,156.39 instead of ₱4,156.36 overstating the Cash Local
Treasury account.
During the exit conference, the Municipal Accountant informed the team of the
adjustments booked up in CY 2016 to correct the balance of Cash Local Treasury
account. The management also committed for the periodic reconciliation of the said
account to reflect necessary adjustments prior to the preparation of financial statements.
 Require the Office of the Accountant to provide necessary adjusting entries

for the findings cited; and
38
 Mandate periodic reconciliation of Cash Local Treasury account between the
Municipal Accountant and the Municipal Treasurer to identify necessary
adjustments prior to the preparation of financial statements.
Unliquidated Cash Advances - ₱600,042.00
4. Deficiencies in the granting, liquidation, recording and monitoring of Advances to

Officers and Employees resulted to unsettled balances stated at ₱600,042.00 as of
December 31, 2015 out of which ₱519,762.00 represents unliquidated cash advances
for more than one year which is not in keeping with the rules and regulations
provided for under Section 89 of PD 1445 and COA Circular No. 97-002.
Section 89 of Presidential Decree No. 1445 states that “No cash advance shall be
given unless for a legally authorized specific purpose. A cash advance shall be reported
on and liquidated as soon as the purpose for which it was given has been served.
xxx….”
COA Circular No. 97-002 provides the guidelines in the granting, utilization and
liquidation of cash advances, as follows:
 No additional cash advances shall be allowed to any official or employee

unless the previous cash advance given to him is first settled or a proper
accounting thereof is made.
 A cash advance shall be reported on as soon as the purpose for which it was
given has been served.
 Within ten (10) days after receipt of the report and supporting documents
from the AO, the Accountant shall verify the report, record it in the books and
submit the same with all the vouchers/payrolls and supporting documents to
the auditor. The cash advance shall be considered liquidated upon the
recording thereof by the Accountant in the books of accounts although not yet
audited by the COA auditor.
As of December 31, 2015, the Municipality of Anda has unliquidated cash

advances to officers and employees amounting to ₱600,042.00. Aging of this account is
summarized below and presented in detail in Annex B.6:
PARTICULAR AMOUNT
Less than 30 days ₱ 0.00
31 to 90 days and below 0.00
91 to 365 days 80,280.00
Over 1 year 519,762.00
TOTAL ₱ 600,042.00
39
Data above shows that out of ₱600,042.00 unsettled cash advances, ₱519,762.00
or 86.62% pertains to prior years’ unliquidated cash advances for more than a year. The
remaining balance of ₱80,280.00 represents additional cash advances granted and
unliquidated during the year.
The details of our observation/ verification of the said account also showed that:
 Additional cash advances were granted to officers and employees with

outstanding cash advances which may result in misuse of funds and
intentional delay of liquidation.
 Some cash advances for travel/ seminar were still outstanding from
previous years even if the intended purpose for the travel has been served.
 Liquidations were made without observing the minimum days prescribed
for each nature or type of expenses.
 Cash advances granted to elective officials which remained unliquidated
despite of their separation from the service have no guarantee of collection
which implies possible losses of government funds.
 Various prior years’ cash advances remained dormant for years despite
demand letters sent.
In comparison with the balance of unliquidated cash advances of December 31,

2014 which amounted to ₱3,134,222.00, records indicate a ₱2,534,180.00 or 80.86%
decrease in the total balance of unliquidated cash advance.
However, considering the length of time that has passed, the outstanding cash
advances may have already been expended, thus overstating the Advances to Officers and
Employees and understating the related expenses accounts.
During the exit conference, management committed to comply with our audit
recommendations.
We have reiterated that Management:
 Require all Accountable Officers to liquidate their cash advances on time,

otherwise, impose administrative sanctions against them for any unjustifiable
reasons due to failure to liquidate cash advances within the prescribe period,
in accordance with Section 89 of PD 1445, COA Circular No. 97-002 dated
February 10, 1997 and Civil Service Commission No. 0676 dated June 17,
2004.
 Strictly adhere to the provisions of COA Circular No. 97-002 dated February
10, 1997 in the granting, utilization and liquidation of cash advances.
 Cause or order the withholding of any money claims against the accountable
officers concerned until they have fully settled their unliquidated cash
advances.
40
Non-submission of accounts within the prescribed time frame
5. Municipality did not submit monthly accounts on time: trial balances, statement of
bank reconciliation, disbursement vouchers, collection accounts and other required
reports as provided under Section 7.2.1 of the 2009 Rules and Regulations on
Settlement of Accounts, Section 39 (1) of Presidential Decree 1445, Section 23 (1)
and (3) of the Administrative Code of 1987 and Article 218 of the Revised Penal
Code, thus precluded the Auditor from timely examination and verification of the
accounts of the Municipality.
Section 7.2.1 of the 2009 Rules and Regulations on the Settlement of Accounts
states that:
“Section 7.2.1 The Chief Accountant. Bookkeeper or other authorized

official performing accounting and/or bookkeeping functions of the audited
agency shall ensure that:
 The reports and supporting documents submitted by the accountable officers

are immediately recorded in the books of accounts and submitted to the
Auditor within the first ten (10) days of the ensuing month.”
Section 39 (1) of Presidential Decree 1445 and Section 23 (1) and (3) of the
Administrative Code of 1987, “SUBMISSION OF PAPERS RELATIVE TO
GOVERNMENT OBLIGATIONS” provides that:
(1)The Commission shall have the power, for purposes of inspection, to require
the submission of the original of any order, deed, contract, or other documents under
which any collection of, or payment from, government funds may be made, together with
any certificate, receipt, or other evidence in connection therewith xxx.
(3) It shall be the duty of the officials or employees concerned, including those in
non-government entities under audit, or affected in the audit of government, to comply
with these requirements. Failure or refusal to do so without justifiable cause shall
constitute a ground for administrative disciplinary action as well as for disallowing
permanently a claim under examination xxx.
Likewise, Article 218 of the Revised Penal Code states that “Failure of
accountable officer to render accounts. – Any public officer, whether in the service or
separated there from by resignation or any other cause, who is required by law or
regulation to render account to the Commission, or to a provincial auditor and who fails
to do so for a period of two months after such accounts should be rendered, shall be
punished by prison correctional in its minimum period, or by a fine ranging from 200 to
6,000 pesos, or both.”
41
Records disclosed that accounts and documents covering January to December
2015 were not submitted within the time frame specified. (See Annex B.7 for details)
The failure of management to submit the revenue and disbursement documents

and financial reports within the prescribed period stated in P.D. No. 1445, will not allow
the audit team to fully conduct the required audit on the accounts in a systematized
matter. Moreover, delayed submission of accounts and transactions can affect the fairness
of presentation of the financial statements.
As discussed in the exit conference, the management advised the Accounting

Office to ensure timely submission of accounts to COA in compliance with the
aforementioned provisions. Likewise, it was agreed internally that the Municipal
Treasurer will render all vouchers to the former every 5th day of the ensuing month.
We have recommended that the Accounting Office in cooperation with the

Treasury Office ensure the complete submission of accounts within the prescribed
period for timely examination and verification of accounts pursuant to Section 7.2.1
of the 2009 of the Rules and Regulations on the Settlement of Accounts, Section 39
(1) and (3) of P.D 1445, thus to avoid disciplinary actions and/or penalties provided
for under Section 23 (1) and (3) of The Administrative Code of 1987 and Article 218
of the Revised Penal Code.
Deposit account maintained with non-government depository bank without prior

approval from the Department of Finance
6. Municipality maintained a deposit account with Philippine National Bank under

Checking Account No. 161114400013 which is not in accordance with Department of
Finance (DOF) Department Circular No. 001-2015 dated June 1, 2015 and DOF
Department Circular No. 003-2015 dated August 24, 2015, hence considered
unauthorized.
This is a reiteration of previous audit finding.
Per verification of records and interview with management, the Municipality’s

Internal Revenue Allotment (IRA) was still being directly credited to the agency’s PNB
Checking Account No. 161114400013 with an ending adjusted balance of ₱9,956,081.38
mainly due to the existing loan agreement between the LGU and PNB in which the IRA
was assigned as one of the loan securities. However, as previously recommended, the
Municipal Treasurer had already opened a depository bank account at the Land Bank of
the Philippines to deposit the general funds of the Municipality with account no. 1272-
1052-74, and the transfer of funds has already been initiated.
Amending the DOF Order No. 27-05, DOF Department Circular No. 001-2015
provides that:
42
“5.2 As part of the Government’s effort to strengthen its overall fiscal position,
all NGAs, GOCCs, and LGUs specifically allowed by law, rules and regulations
to retain income and/or for operations and/or working balances shall deposit and
maintain accounts with GFIs with a universal bank license and CAMELS rating
of at least “3”.
5.3 In view of Executive Order No. 55, series 2011 removing revenue and
expenditure floats, the NGA. GOCC/ LGU may engage the payment and
collection services of a bank other that as referred under Section 5.2, thru a
transaction free-based arrangement, without the need for prior approval from the
DOF, in the case of GOCCs, or from the BLGF, in case of LGUs … provided,
further, that the (proposed) bank will only serve as a collection bank for the
account of the NGA/GOCC/LGU: provided, finally that, in the case of collection
banks, all collections shall be transferred to any of the GFIs referred in Sections
5.2 on the next banking day counted from the collection date.
5.4 Bank accounts with banks other than the GFIs referred in Section 5.2 may be
allowed for the NGA/ GOCC/ LGU under the following circumstances:
5.4.1 Where the GFIs referred under Section 5.2 cannot provide the necessary
banking products and services;
5.4.2 Where there are no accessible (within the twenty (20) kilometer radius)
GFIs, as referred under Section 5.2, or its collection facility … ; and,
5.4.3 Where security and safety are the reasons for opening and maintaining an
account in a (proposed) bank. The Requesting Agency shall furnish the DOF/
BTr/ BLGF an independent report or Certification from the Philippine National
Police Provincial Office confirming the existence of the security risks.
In the case of GOCCs and LGUs, a maintaining balance may be allowed for
operating expenses of to three (3) months, after having performed a cost-benefit
analysis, or up to the maximum deposit insurance coverage of the Philippine
Deposit Insurance Corporation (PDIC) of P500,000.00, whichever is lower. All
funds deposited shall be limited to operating funds and no other deposits shall be
maintained for special projects or investment purposes. Any amount in excess of
the authorized cash balance in Section 5.4 shall be transferred to any of the GFIs
in Section 5.2.
5.5 Where the Requesting Agency cannot meet all the conditions set forth
under Sections 5.2 to 5.4, it shall request for prior approval from the DOF for
GOCCs/ BTr for NGAs/ BLGF for LGUs, to Open and maintain an account in
the (proposed) bank other than those referred under Section 5.2.
43
5.5.2 In cases where the GFIs mentioned in Section 5.2 hereof establishes or
operates a branch within the territorial jurisdiction or in the locality where the
NGA/ GOCC/ LGU or any of its branches, field offices, departments, divisions or
operating units holds or conducts its office or business, or where the
circumstances under Section 5.4 is no longer prevailing, the NGA/ GOCC/
LGU shall transfer all funds and cash balance to GFIs mention in Section 5.2
within three (3) banking days from the time the exceptional circumstance is no
longer prevailing, whichever comes first … ”
Furthermore, DOF D.C. No. 003-2015 states that:
“6.1 All NGAs, GOCCs or LGUs maintaining accounts with banks not compliant
with the requirements of Section 5.2, except those allowed under Sections 5.3 and
5.4, shall have one (1) year from the effectivity of this Circular to transfer all
funds and cash balances to a bank compliant with the provisions of Section 5.2
hereof.
6.2 During the period mentioned in Section 6.1, NGAs, GOCCs and LGUs may
maintain existing accounts with a non-compliant bank but may not increase
deposit balances beyond what they were as of the effectivity of this circular.”
With the revised guidelines on authorized depository banks, it only pertains to

temporary accounts that can be maintained by LGU hence, the situation of LGU Anda is
not within the perverse of the Department Circulars. Likewise, relative to the transition
period of 1 year, since there were still deposits made in the PNB account after the
effectivity of the aforementioned circular, such account is considered unauthorized.
The audit team was informed that the management is already in the process of
making arrangements with Land Bank of the Philippines for the Loan take out in order to
transfer the balance maintained with PNB.
We have recommended that management expedite the transfer of Cash in

Bank account balance maintained with Philippine National Bank to the new account
of the Municipality with the Land Bank of the Philippines pursuant to the
aforementioned provisions.
Deficiencies in the management and acceptance of the completed Anda Wet Market
2.1 Municipality failed to collect liquidated damages for the delay in the completion of
the project (Construction of Anda Wet Market) for three hundred forty three (343)
calendar days amounting to ₱2,345.72 per day or a total of ₱804,581.96 contrary to
pertinent provisions of the Revised IRR of RA 9184, otherwise known as the
Government Procurement Reform Act.
44
This is a reiteration of prior year’s audit finding.
Per Inspection Report prepared and approved by the Office of the Technical
Service Office (TSO), COA Region I, the completion of the project was delayed by 343
calendar days.
Pertinent provisions of the Revised IRR of RA 9184 on Liquidated damages

require that:
8.1. Where the contractor refuses or fails to satisfactorily complete the

work within the specified contract time, plus any time extension duly
granted and is hereby in default under the contract, the contractor
shall pay the procuring entity for liquidated damages, and not by way
of penalty, an amount, as provided in the conditions of contract, equal
to at least one tenth (1/10) of one (1) percent of the cost of the
unperformed portion of the works for every day of delay.
8.3. To be entitled to such liquidated damages, the procuring entity

does not have to prove that it has incurred actual damages. Such
amount shall be deducted from any money due or which may become
due the contractor under the contract and/or collect such liquidated
damages from the retention money or other securities posted by the
contractor whichever is convenient to the procuring entity.”
Per Invitation to Bid published by the Bids and Awards Committee, the
construction period will last for 350 calendar days. The effectivity date of the project
started on January 27, 2013. However, the contractor requested and was approved a time
extension of 51 calendar days due to bad weather conditions and additional/revision of
works in the second floor exterior walls and concrete roof deck on top of the stairs at the
rear portion, the Municipal Engineer and MPDC recommended a total time extension of
51 calendar days to end on February 26, 2014 which was approved by the Local Chief
Executive. Per TSO Inspection Report, the project was completed on March 3, 2015 thus
the estimated liquidated damages based on the nearest Statement of Work Accomplished
dated February 12, 2014, the unaccomplished portion is 8.53% of the total cost of project
which incurred ₱2,345.72 per day of delay or a total amount of ₱804,581.96 computed as
follows:
Original Contract Cost ₱ 27,499,663.35
Multiply by the unaccomplished portion 8.53%
Unaccomplished portion ₱ 2,345,721.28
Multiply by the rate of Liquidated Damages
(1/10 of 1%) 0.001
Liquidated damages per day ₱ 2,345.72
Multiply by the total number of days delayed 343
Total Amount of Liquidated Damages ₱ 804,581.96
45
Non-collection of the corresponding liquidated damages deprived the
Municipality of additional funds which could have been used to finance other
development projects. In addition, the Municipality had already incurred losses because
it had already started paying interest expenses with the borrowed funds used for the
construction of the wet market but the expected source of income from the market was
not realized as expected due to the delayed completion of the project.
.2 Municipality entered into a guarantee agreement which is deemed

unnecessary/inappropriate for the regular loan availed by the LGU for the
construction of Anda Wet Market.
This is a reiteration of prior years’ audit finding.
Review of the Invitation to Bid for the construction of Anda Wet Market under
design and build scheme disclosed the sum of ₱27,517,000.00 as the Approved Budget
for the Contract (ABC). However, the Supplemental Procurement Plan 1 disclosed an
estimated budget for the project of ₱30,000,000.00 through bank loan.
Section 1(c) of the Loan Agreement with Philippine National Bank enumerated
the details on which the approved loan of ₱30,000,000.00 shall be used as follows:
Purposes of the Loan Estimated Amount

1. Public Wet Market ₱27,520,000.00
2. Advisory fees 1,000,000.00
3. Guarantee fees 1,000,000.00
4. Overhead expenses 480,000.00
Total ₱30,000,000.00
As noted in the agreement the loan included guarantee fees of ₱1,000,000.00. Per
Guarantee Agreement entered into by and among LGU Guarantee Corporation,
Municipal Government of Anda, Pangasinan, and Philippine National Bank, a guarantee
fee in an amount equivalent to one point twenty-five percent (1.25%) per annum, based
on the guaranteed portion of the principal and interest of the loan (equivalent to 85%),
plus value added tax (VAT), shall be payable in the following manner:
 The guarantee fee for the first two (2) years shall be remitted to the Guarantor
on or before the day of the initial drawdown;
 The subsequent and succeeding annual guarantee fees shall be payable to the
Guarantor two (2) years in advance of the covered year reckoned from the
anniversary date of the initial drawdown, based on the outstanding principal
balance and one year interest of the covered year, based on the interest rate
one (1) month before the covered year.
Per Official Receipt No. 1609 dated February 11, 2013 issued by the LGU
Guarantee Corporation, the amount of ₱756,840.00 was received from Philippine
46
National Bank – Trust Banking for the account of the Municipality of Anda, Pangasinan
representing guarantee fee payment for the period Feb. 11, 2013 to Feb. 11, 2015, and
Official Receipt No. 5100 in the amount of ₱19,896.06 for the period April 30, 2015 to
February 8, 2016.
Considering that the Municipality of Anda has already paid guarantee fees in the
amount of ₱776,686.06 for the initial three (3) years, it is certain that unless the total loan
will be fully paid in advance that the total guarantee fees will exceed the amount of
₱1,000,000.00 allotted for guarantee fees under the Loan Agreement. These amounts
should not have been paid by the Municipality considering that the loan was only a
regular loan, i.e., Development Incentive Loan – Monthly. Guarantee fees are being paid
in some other types of borrowings such as bond flotation where there is a need for
someone to manage the fund to be used in paying the bond as it matures but not in the
case of a regular loan, the payment of which is automatically deducted from the
Municipality’s IRA which is deposited with the Bank.
During the exit conference, management informed the audit team that a demand
letter was already sent to the contractor for the collection of liquidated damages and all of
the Letter of Instructions for the loan releases is being collated to provide further
supporting documents. Also, the management informed the audit team that they will be
rendering further justification for the payment of guarantee fees.
We have recommended that Management:
 Collect from the contractor the corresponding liquidated damages pursuant

to the provisions of Section 68 of RA 9184 and Annex “E”(8) of its Revised
Implementing Rules and Regulations.
 Explain and justify the payments of the guarantee fees and provide legal
bases thereof otherwise these shall be suspended in audit for being contrary
to the above-cited rules and regulations.
Subsistence and Laundry Allowances - ₱61,400.00
7. Subsistence and Laundry Allowances totaling ₱61,400.00 were paid to Municipal

Health Officers in excess of the allowable amounts set forth under Sections 8 and 10
of DBM-DOH Joint Circular No. 1 dated November 29, 2012, thus rendering such
payments unauthorized.
DBM-DOH Joint Circular No.1 dated November 29, 2012 which seeks to balance
and harmonize the implementation of the provisions of R.A. No 7305 or the “Magna
Carta for Public Health Workers” specifically provides as follows:
“8.0 Subsistence Allowance
47
8.1 Pursuant to Section 22 of R.A. No. 7305, PHWs who render services
within the premises of hospitals, sanitaria, health infirmaries, health centers,
rural health units, and other health-related establishments such as clinics or
medical departments of NGAs, GOCCs, and GFIs, and are required to make their
services available at any and all times may be entitled to Subsistence Allowance.
8.2 PHWs under the following circumstances, however, are not entitled to
Subsistence Allowance:
8.2.1 When not required to make their services available at all times such that
they can leave their work stations during break-times;
8.2.2 When on leave of absence, with or without pay;
8.2.3 While on official travel and entitled to travel expenses under E.O. No. 298
and as amended; and
8.2.4 While attending trainings, seminars, workshops, and similar activities

where meals are provided.
8.5 The Subsistence Allowance shall be P50 for each day of actual full-time
service, or P25 for each day of actual part-time service.
10.0 Laundry Allowance
10.1 In view of Section 24 of R.A. No. 7305, Laundry Allowance may be

granted to PHWs in hospitals, sanitaria, health infirmaries, or other health-
related establishments, to defray the cost for washing and pressing their personal
protective clothing or uniforms required to be worn at all times while working –
that will provide them the required degree of protection while re-assuring
patients of their professionalism, competency, and identity.
10.2 A PHW who rendered actual service on workdays in a month shall be

granted Laundry Allowance at P150/month.
10.3 A PHW who rendered less than a month of actual service shall be granted
the Laundry Allowance for the month, LA, corresponding to the number of days
of actual services rendered, D, computed by using the following formula:
LA = [P150/1 month] [1 month/22 days] (D days of actual services

rendered)
To simplify, LA = (6.818)(D) ”
48
Verification of the Daily Time Records and Payroll of the Municipal Health
Workers disclosed that Municipality of Anda has been paying health workers with the
maximum allowable amount of ₱1,500.00 and ₱150.00 for Subsistence and Laundry
Allowances, respectively, which are stated under the revised IRR of R.A. 7305 despite
failure of the officers to meet the foregoing rules of the joint circular.
DBM-DOH Joint Circular No. 1 series 2012 clearly provides that the grant of
SALA should be in line with the aforementioned provisions allowing only ₱50
subsistence allowance for each actual full-time service excluding days when the
employee is on leave, when not required to make their services available, on official
travel or when attending trainings, seminars, workshops and similar activities, and ₱6.818
laundry allowance for each day of rendering actual services if an officer has rendered less
than a month of service, otherwise the full ₱150.00 shall be granted. Therefore, payments
which were not in concurrence with these rules are considered unauthorized.
Upon inquiry and verification of records, it was noted that the Municipal
Accountant had been deducting the subsistence allowance of the MHWs directly from
their claims when on travel or attending seminars or conferences which resulted to
misclassification of expenses.
During the exit conference, management agreed to comply with the

recommendations. Further, to strengthen the control in year 2016 and thereafter, it was
agreed that the deductions will be effected in the ensuing month to provide ample time to
the preparer of the payroll to validate the attendance of the municipal health workers.
We have recommended that Management stop granting the maximum

allowable amount of Subsistence and Laundry Allowances to Municipal Health
Workers without considering the provisions set forth under DBM-DOH Joint
Circular No. 1 s. 2012 and require the officers to refund the unauthorized amounts
paid to them.
Deficiencies in the granting and liquidation of cash advances relative to travels,

seminars and conferences
0.1 Documentary requirements in drawing and liquidating cash advances for

travels, seminars and conferences were not all submitted and aptly
accomplished to allow for more extensive verification of claims as to each
transaction’s legality and propriety as set forth under COA Circular No.
2012-001 dated June 14, 2012. Discrepancies or inconsistencies were also
noted in the accounting process and the rendering of liquidation reports to
the auditor vis-à-vis the supporting documents, as provided under Section
5.3 of COA Circular No. 90-331, dated May 3, 1990.
Audit of the documentation of various seminars and travel related to cash

advances granted to officials and employees of the Municipality disclosed control lapses
in both grant and liquidation, summarized as follows:
49
a. Basic documentary requirements such as travel order, certificate of
appearance/attendance, certificate of travel completed, invitation or
program, and paper or electronic plane tickets were not attached or
submitted by some officials or employees in drawing or liquidating cash
advance, as the case may be.
b. Some of the itineraries of travels were prepared without showing daily

breakdown of expenses, lumping into one line item the entire duration of
travel even if the same will run more than one day. Moreover, departure
and arrival time were at times not specified. These practices deterred the
auditor from extensively verifying the validity of each claim.
c. Some officials or employees had collected sums for the payment of

expenses for seminars and travel with their co-participant(s) without
authorization or waiver.
d. Inconsistencies were noted in filling out Journal Entry Vouchers (JEVs).

Some JEVs for cash advances had no accounting entries specified or
incorrect account had been charged per voucher, nonetheless, by
conducting tracing of each transaction to the journal, correct accounts
were used in posting except for the cash advance drawn by Mr. Zosimo
Celeste which was directly charged to expense account. This may have
precluded such transaction from monitoring particularly in the aging of
unliquidated cash advances. Documents related to actual expenses for the
said travel were already submitted upon request and no further adjusting
entry is necessary due to parity between the amount of cash advance and
actual expenses.
e. Liquidation reports related to cash advances were just rendered to the

Office of the Auditor in the period after the calendar year subject to audit
which runs contrary to the provision of Section 5.3 of COA Circular No.
90-331, dated May 3, 1990 which specifically provides as follows:
“5.3 Within 10 days after receipt of the report and supporting documents for
the AO, the Accountant shall verify the report, record it in the books and
submit the same with all the vouchers/payrolls and supporting documents to
the Auditor.
Untimely submission of complete and accurate documents related to cash

advance/ liquidation will not afford the auditor of conducting timely review of the same.
During the exit conference, the management agreed to comply and further
reiterate to all officials and employees the necessity of submitting complete and proper
supporting documents for all claims.
50
We have recommended that the Local Chief Executive instill to all LGU
officials and employees the necessity of submitting complete and proper
documentation for all claims pursuant to the provisions of COA Circular No. 2012-
001 and require the Office of the Accountant to strictly check details of the vouchers
and other pertinent documents, and to submit the same within the prescribed
period.
0.2 Various claims related to travels, seminars and conferences were allowed to
officials and employees without observing the provisions of COA Circular
No. 96-004 dated April 19, 1996, Executive Order No. 298 dated March 23,
2004 and COA Circular No. 2012-003 dated October 29, 2012.
Audit of the claims of various officials and employees of the Municipality relative
to travels, seminars and conferences disclosed the following:
a. The municipality paid some claims on transportation expenses involving fares

from temporary residence to temporary station while on official travel
amounting to ₱4,360.00 which is contrary to the provisions of COA Circular
No. 96-004 which specifically provides, in part, as follows:
“3.1.1.2 The amount of transportation expenses allowable shall be the

actual rates of the authorized means of transportation (land, sea, and air)
from the permanent official station to the destination or place of work or
assignment in the field and back, plus other incidental expenses:
a. From the office or residence to the point of embarkation;

b.From the point of embarkation to the point of debarkation in the place
of destination;
c. From the point of debarkation to the office of destination or temporary
residence in the place of assignment in the field and return.
…
3.1.1.4 The allowable transportation expenses shall not include local or
inland transportation and other expenses after arrival in the office or
temporary residence in the place of assignment in the field which are
contemplated to be covered by the travel allowance specified in Section 6(a)
of EO 248.”
Payment of transportation expenses for commuting from temporary residence to

temporary station is not covered by the aforementioned provisions, hence rendering such
payments unauthorized. While it may be noted that E.O. No. 248 had already been
superseded without noting the inclusion of inland transportation in the travel allowance,
there’s still no amendment of the foregoing provisions of COA Circular 96-004 has thus
far been made.
b. ₱6,000.00 worth of tour expenses incurred on December 4, 2015, and lodged

under incidental expenses were allowed for Mr. Elmo Carino and Mr. Suny C.
51
Olermo, consenting ₱3,000.00 to each of them, during the PICE National
Convention on December 2-4, 2015 at SMX Convention Center which is
considered as unnecessary expenditure also defined in Section 4.1 of COA
Circular No. 2012-003 as follows:
“Unnecessary expenditures are those not supportive of the implementation of

the objectives and mission of the agency relative to the nature of its operation.
This would also include incurrence of expenditure not dictated by the
demands of good government, and those utility of which cannot be
ascertained at a specific time. An expenditure that is not essential or that
which can be dispensed with without loss or damage to property is considered
unnecessary.”
Moreover, no receipt was submitted evidencing payment by Mr. Olermo and on

same date, both had already claimed ₱160.00 each as incidental expense which implies
double payment of expenditures.
During the exit conference, the management also agreed to the noted excessive
claims on travel expenditures and assured to strictly comply with the audit
recommendations.
 Instruct all concerned employees and officials to strictly adhere to the

provisions of COA Circular No. 96-004, Executive Order No. 298 and COA
Circular No. 2012-003 relative to expenses on travel, seminars and
conferences.
 Oblige all signatories of the documents, particularly on Itinerary of Travel,

Liquidation Reports and Disbursement Vouchers to certify only travel-
related expenses which are observant of the said provisions.
Unauthorized payments of Allowances to Election and BIR Officers - ₱136,000.00
11. Allowances totaling to ₱136,000.00 were granted to the Election Officer and BIR
Officer for the period January 2014 to August 2015 contrary to Section 2.0 of the
Compensation Policy Guidelines No. 98-1.
In our review of the transactions, we have observed that the Municipality have
granted allowances to national government officials assigned in the Municipality in the
person of Mr. Diosdado Cas, Election Officer II totaling ₱68,000.00 and BIR Collection
Officers Verlina Celzo and Myra DP. Estrada amounting to ₱27,000.00 and ₱41,000.00,
respectively (Annex B.8).
The grant was based on the provision in Section 447 (XI) of the Local
Government Code of 1991 (RA 7160) which states that “when the finances of the
52
municipal government allow, provide for additional allowances and other benefits to
judges, prosecutors, public elementary and high school teachers, and other national
government officials stationed in or assigned to the municipality”.
However, in Section 2.0 of the Compensation Policy Guidelines No. 98-1, the
other national government official was clarified as stated:
“The following national government officials may collect additional

compensation in the form of honorarium from the local government unit where they are
assigned as provided under section 5.0 of Local Budget Circular 62.
2.1 Prosecutors, (Provincial/City Fiscals) and their Assistants of the Department

of Justice
2.2 Judges of Regional Trial Courts/Municipal Trial Courts/Municipal Trial
Courts in Cities/ Municipal Trial Courts of the Supreme Courts
2.3 Clerks of Courts in TRC’s and MTC’s in Cities
2.4 Fire Station Commander of the Bureau of Fire and Protection (BFP)
2.5 Police Station Commander of the Philippine National Police
2.6 Municipal Government Operations Officer of the DILG
2.7 Public School Teachers
The Election Officer of the Commission on Election and Collecting Officer of the
Bureau of Internal Revenue were not among the national government official mentioned
who are allowed to receive honoraria/allowance from the Municipality where they are
assigned, thus the grant was illegal.
During the exit conference, management informed the audit team that the
payment of additional allowances to BIR and COMELEC Officers had been stopped.
We have recommended that the Local Chief Executive ensure compliance

with DBM Compensation Policy Guidelines No. 98-1, limiting the grant of
additional allowances to those specifically enumerated therein. Likewise, require the
COMELEC Election Officer and BIR Collection Officers to refund the total
allowances received for the period January 2014 to May 2015, otherwise, such
payments shall be disallowed in audit.
Deficiencies in the implementation of DOT Training of Drivers for Tourism

Promotion for 2014
.1 Honoraria paid to the resource speakers were in excess of the amounts prescribed
under DBM Budget Circular No. 2007-1 dated April 23, 2007, hence considered
unauthorized.
In our review of the transactions, we have observed that the Municipality paid the
two (2) resource speakers their honoraria totaling ₱43,008.00. Per contract entered into
53
between the Municipality and the resource speakers, each speaker was paid honoraria at a
rate of ₱1,344.00 per hour, or a total of ₱21,504.00 for two (2) days at 8 hours per day.
DBM Budget Circular No. 2007-1 dated April 23, 2007 prescribes the guidelines
on the grant of honoraria to lecturers, resource persons, coordinators and facilitators
whether from the national government agencies (NGAs) including SUCs, GOCCs, GFIs,
and LGUs, or from the private sector, thus:
“In view of the expertise of lecturers, resource persons,

coordinators or facilitators, the minimum honoraria rates shall be two (2)
times their hourly rates based on their monthly salaries at 22 work days
per month, and 8 work hours per day. Such honoraria rates may be raised
further but not exceeding the maximum honoraria rates of two (2) times
the hourly rate for a position of Professor VI, step 1 of SG-29, depending
on the difficulty and complexity of the subject matter, the professional
qualifications of the lecturers, resource persons, coordinators and
facilitators, and the position levels of the participants. Furthermore, the
honoraria to be paid shall correspond to the number of actual
lecture/training hours plus equal number of hours for preparation.”
Based on the foregoing DBM guidelines, even assuming that the speakers
possessed the highest professional qualifications for being master trainors accredited by
the Department of Tourism (despite the fact that the participants/beneficiaries were only
tricycle drivers and the subject matter may not be that difficult and complex), the
maximum hourly honoraria to be paid to each of the speakers based on the hourly rate for
a position of Professor VI, step I of SG-29 is only ₱415.33. Thus, each speaker should
have been paid total honoraria of ₱13,290.56 only and not ₱21,504.00, or an excess of ₱
₱8,213.44, computed as follows:
Monthly salary rate of a position of Professor VI, step 1 of SG-29 ₱ 73,099.00

Divided by 22 days/month
Daily salary rate of a position of Professor VI, step 1 of SG-29 ₱ 3,322.68
Divided by 8 hours/day
Hourly salary rate of a position of Professor VI, step 1 of SG-29 ₱ 415.34
Multiply by (assuming the maximum honorarium rate) 2
Maximum hourly rate per speaker ₱ 830.68
Multiply by the actual number of hours per day that lectured 8 hours
Maximum daily rate per speaker ₱ 6,645.44
Multiply by the total number of days lectured 2 days
Total honoraria that should have been paid per speaker ₱ 13,290.88
Honoraria actually paid per speaker 21,504.00
Excess honoraria paid per speaker ₱ 8,213.12
Upon inquiry on the payment of excess honoraria to the resource speakers, the
Municipal Tourism Officer submitted a justification issued by the Department of Tourism
R1 explaining that starting last quarter of 2010, honoraria for master trainors accredited
54
by the DOT was pegged at ₱1,200.00/hour based on a bargaining verbal agreement by
both Office of Tourism Standards and master trainors due to the following reasons:
1. It was agreed upon by DOT main office and accredited master trainors that
honoraria especially for out-of-town trips shall be pegged at ₱1,200.00/hour;
2. For private corporate trainings, these trainors charge ₱80,000.00-up/day;
3. Taking into consideration that these trainors were trained and accredited by
the DOT, they charge a special rate for DOT;
4. Therefore, for these trainors to give priority to DOT sponsored trainings, a
verbal agreement has been made that this consideration in the honoraria be
made.
However, without any legal basis, the foregoing verbal agreement between the
DOT main office and the master trainors will not produce any legal effect more so that it
exceeded the amounts prescribed by the DBM guidelines on the grant of honoraria to
lecturers, resource persons, coordinators, and facilitators. A mere verbal agreement will
not hold any water since it cannot be subject to review as to whether or not such contract
is disadvantageous to the government especially so when the DOT had no authority to
enter into such contract.
During the exit conference, management informed the audit team that they will be
providing another computation or their basis for the honoraria paid.
We have recommended that management submit concrete legal basis in the

granting of honoraria to the resource speakers beyond what was allowed under
DMB Budget Circular No. 2007-1 dated April 23, 2007. Otherwise, the excess
honoraria paid will be disallowed in audit.
.2 Municipality did not observe and comply with the provisions of R.A. No.
9184 or the Government Procurement Reform Act, in the procurement of
goods and services, rather reimbursements were made instead of conducting
the applicable modes of procurement.
Out of the total expenditures of ₱170,000.00, the Local Chief Executive made a
cash advance amounting to ₱74,700.00 to cover for the initial expenses while the balance
was liquidated in the form of reimbursements. Review of the supporting documents
revealed that the total amount of ₱170,000.00 was spent for the procurement of the
following:
Tarpaulin ₱ 800.00
Accommodation (rooms, function hall) 65,000.00
Assorted items for tokens 10,000.00
Ink, advance card care, hot stamping cert., festival bonds 1,152.00
T-shirt with print 12,500.00
Assorted supplies 1,000.00
Foods 27,680.00
55
Speakers’ honoraria 43,008.00
Tourism package 8,860.00
Total ₱ 170,000.00
It was noted that the LGU did not any more conduct competitive bidding or any
of the alternative modes of procurements applicable but instead made reimbursements
which is not a mode of procurement prescribed by RA 9184. In making reimbursements,
all the procedures required for bidding were not any more observed neither was the
complete supporting documents submitted.
One of the responsibilities of the LGU in the implementation of the program as

embodied in the Memorandum of Agreement with the DOT is to observe and comply
with the provisions of RA 9184 – Government Procurement Reform Act – in the
procurement of goods and services.
Failure to observe the provisions of RA 9184 prevents competitiveness and

transparency in the procurement process and in the implementation of procurement
contracts.
During the exit conference, management stated that due to time constraint or the
time given by the source agency to implement the project and the actual release of fund,
going through the complete process of procurement would not afford them to meet the
timeline given, so reimbursement was made instead of the prescribed process of
procurement.
Upon verification of records, it was noted that the LGU had 2 months to facilitate
the programs or activities from the date of the receipt of funds-September 2, 2014 to the
1st day of the training-November 3, 2014. Referring also to the period of procurement
activities as illustrated under Annex “C” of the Revised IRR of R.A. 9184, the earliest
possible periods to complete a procurement activity are 28 cd, 28 cd, and 34 cd for goods,
infrastructure and consulting services, respectively. With this, the management was
actually capable of going through the prescribed process of R.A 9184 let alone the fact
that the Memorandum of Agreement was made and entered on June 2, 2014 giving more
time for the management to plan the activities. The management should have also
discussed with the Department of Tourism such constraint, if it did really exist, since the
Memorandum of Agreement called for the compliance with the R.A. 9184.
We have recommended that management explain the non-compliance with

the provisions of RA 9184 in the procurement of goods and services otherwise the
transactions shall be suspended in audit.
Incomplete supporting documents for Infrastructure Projects and non-conduct of Pre-

Bid Conference for projects with ₱1,000,000.00 Approved Budget for the Contract
.1 Procurement of infrastructure projects totaling ₱10,870,786.46 were not supported

with complete documentation which is not in conformity with Section 9.1 of COA
56
Circular No. 2012-001 dated June 14, 2012 and COA Memorandum Circular No.
2005-027 dated February 28, 2005, hence legality and validity of the transactions
were uncertain.
In the review of the documents submitted, audit disclosed that some of the basic
documentary requirements for public bidding and payments thereof, if any, were not
submitted to establish the legality and validity of the transactions.
The basic requirements for public bidding which were not submitted are as
follows:
1) Specifications
2) Bill of Quantities
3) Records of BAC on the sale of Bid Documents
4) Statement of Ongoing Contracts
5) Tax Clearance
6) Financial Bid Form
7) Duly Signed Detailed Estimates
8) BAC Resolution on the Preliminary Examination of Bids
9) Certificate of Phil-GEPS Registration
10) Print out copy on posting of Notice of Award:
a. Phil-GEPS
b. Conspicuous place certified by the Head of BAC Secretariat
11) Construction Schedule and S-Curve
12) Manpower Schedule
13) Construction Methods
14) Equipment Utilization Schedule
15) Construction safety and health program approved by DOLE
16) PERT/CPM
17) Print out copy on posting of Notice to Proceed:
a. Phil-GEPS
b. Conspicuous place certified by the Head of BAC Secretariat
On payments of Work Accomplished for the project:
1) Letter Request from contractor for final payment

2) Inspection Report by the AAE
3) Statement of Time Elapsed
4) Certificate of Payment
5) Contractor's Affidavit on payment of laborers and materials
6) Certificate of Completion
7) Pictures before, during and after construction of items of work
8) As-Built Plans
9) Warranty Security
57
Upon further verification of the Municipality’s Programs, Projects and Activities
(PPA) as of December 29, 2015 and Accomplishment Report as of December 31, 2015, it
was also noted that the respective sets of bidding documents of the following completed
projects were still not handed over to the Office of the Auditor and/or submitted after the
lapse of the prescribed period, to wit:
PROJECT Contract Price

Upgrading /Concreting of Municipal Covered Court Slab ₱ 998,512.00
Rehabilitation/Re-Painting of Municipal Hall Building 998,302.68
Rehabilitation/Construction & Riprapping of Eroded Portion of
Aray-Ayan Fishport at Awag 398,953.00
Construction of Mezzanine Floor for Agriculture and Comelec
Office 297,899.75
Maintenance/Re-gravelling og Brgy. Roads at Namagbagan, Imbo
& Pob.-Awag Road 299,482.14
Improvement/Rehabilitation & Concreting of road at Cabungan
Roadline 998,085.00
TOTAL ₱ 3,991,234.57
COA Memorandum Circular No. 2005-027 dated February 28, 2005 requires the
“submission of documentary requirements that shall be looked into the conduct of
contract review and inspections of government projects.” Furthermore, Section 3.1.1 of
COA Circular No. 2009-001 dated February 12, 2009 clearly states that:
“3.1.1 Within five (5) working days from the execution of the contract by the
government or any of its subdivisions, agencies or instrumentalities,
including government-owned and controlled corporations and their
subsidiaries, a copy of said contract and each of all the documents forming
part thereof by reference or incorporation shall be furnished to the Auditor
of the agency concerned.”
Non-submission of the foregoing documents in timely manner precluded the

Auditor from verifying the legality and validity of the claims and the review and
evaluation of the technical aspects of the contract.
During the exit conference, management assured to take appropriate action to

comply with the audit recommendation.
We have recommended that management submit the documentary

requirements for the conduct of auditorial review of the contracts as mentioned in
COA MEMO Circular No. 2005-027 and for payment of claims under COA
Circular No. 2012-001, and shall henceforth observe the prescribed period for the
submission of contract documents.
.2 Pre-Bid Conferences for projects with an Approved Budget for the Contract of
₱1,000,000 were not conducted which runs contrary to the rules set forth under the
58
revised IRR of R.A. 9184, otherwise known as the Government Procurement
Reform Act.
Section 22 of the revised IRR of R.A. 9184 clearly provides that:
“22.1 For contracts to be bid with an approved budget of One Million Pesos
(₱1,000,000) or more, the BAC shall convene at least one (1) pre-bid conference
to clarify and/or explain any of the requirements, terms, conditions, and
specifications stipulated in the Bidding Documents. For contracts to be bid with
an approved budget of less than One Million Pesos (₱1,000,000), pre-bid
conference may be conducted at the discretion of the BAC. Subject to the
approval of the BAC, a pre-bid conference may also be conducted upon written
request of any prospective bidder.”
Records submitted by the Bids and Awards Committee revealed that no Pre-Bid
Conference was conducted for the following projects with an Approved Budget for the
Contract of ₱1,000,000.00, as follows:
1) Rehabilitation/Concreting of Sablig Road, Brgy. Sablig, Anda, Pangasinan

2) Rehabilitation/Concreting of Tondol-Caniogan Road
3) Rehabilitation/Concreting of Poblacion-Awag Road
4) Maintenance/Regravelling of Roads at Poblacion-Awag Road, Awile-
Macandocandong Road and Tondol-Caniogan Road
5) Rehabilitation/Concreting of Batiarao Road
During the exit conference, management assured the audit team of their
compliance with the recommendation.
We have recommended that the Local Chief Executive require the Bids and
Awards Committee to stringently observe the decreed process in the conduct of
procurement stated under the revised IRR of R.A. 9184 to establish higher degree
of reliability on every project of the LGU.
Deficiencies in the management and utilization of Local Risk Reduction and

Management Fund
.1 Monthly Reports on the Sources and Utilization of the Local Disaster Risk
Reduction and Management Fund (LDRRMF) for CY 2015 were not
prepared, certified and submitted by the Municipal Accountant to the COA
Auditor thru the Local Disaster Risk Reduction and Management Officer
(LDRRMO) of the LGU on or before the 15th day after the end of each month
as required under Section 5.1.5 of COA Circular No. 2012-002 dated
September 12, 2012, thus the audit team was precluded on the immediate
verification of the monthly charges against the allocation of the fund.
59
COA Circular No. 2012-002 dated September 12, 2012 provides the accounting
and reporting guidelines for the Local Disaster Risk Reduction and Management Fund
(LDRRMF) of Local Government Units and Receipts from Other Sources.
Section 5.1.5 of the said Circular provides that a Report on Sources and
Utilization of DRRMF shall be prepared, certified correct and submitted by the Local
Accountant to the Local Disaster Risk Reduction and Management Officer (LDRRMO)
who in turn shall submit the same report on or before the 15 th day after the end of the
month through the LDRRMC and Local Development Council (LDC) to the COA
Auditor of the LGU.
Only the report pertaining to December 2015 was submitted within the prescribed
period as the monthly reports on the utilization of the fund from January to November
2015 were only submitted on December 22, 2015 which precluded the audit team to
immediately verify the releases out of the LDRRMF.
As indicated in the management comments, the Municipal Accountant was

advised by the management to prepare and submit the monthly reports within the
prescribed period.

the Municipal Accountant to prepare and submit the monthly reports within the
prescribed period to the COA Local Auditor thru the LDRRMO for timely
verification of the receipts and charges of the LDRRMF.
.2 Purchased supplies and equipment out of the LDRRMF were recorded in the books
of accounts as outright expenses, and the non-adherence to the control and
management procedures of the said items were contrary to the Accounting
Guidelines explicitly stated under COA Circular No. 2012-002 dated September 12,
2012 and COA Circular No. 2014-002 dated April 15, 2014.
Section IV.A of COA Circular No. 2014-002 provides accounting guidelines

relative to the procured supplies, materials, equipment and relief goods out of the fund,
quoted in part as follows:
“5. Supplies, materials, equipment and relief goods procured out of the fund shall
be taken up in the books under the appropriate Inventory and/or Property, Plant
and Equipment (PPE) account. Except for PPE, issuances for distribution to end
users/beneficiaries shall be supported with Requisition Issue Slip (RIS) and taken
up under the appropriate expense account.
6. The Accounting Unit shall prepare and maintain PPE Ledger Cards and
Supplies Ledger Cards for all PPE and relief goods, respectively, procured out of
appropriations. For check and balance, the Property and Supply Unit shall
maintain Property Cards and Stock Cards. The formats prescribed in Appendices
8, 9, 38 and 39, Volume II, MNGAS shall be used.
60
7. Small items purchased for disaster response and rescue activities, which do not
qualify under the equipment classification, shall also be recorded under the
appropriate Inventory account and the issuances to be charged to appropriate
expense account. Issuances shall be supported with RIS.
8. The monthly Report of Supplies and Materials Issued (RSMI) shall be prepared
by the Property and Supply Unit based on the RIS, using the formats in
Appendices 59 and 50, respectively, Volume II, MNGAS. The Report shall be
submitted to the Accounting Unit for recording in the books of accounts.”
With regard to procured equipment, in addition to the foregoing rules, Section

5.1.7 of COA Circular No. 2012-002 provides that equipment purchased for disaster
response and rescue operations or activities shall be recorded in the General Fund
books of accounts. The existing account “Fire Fighting Equipment and Accessories”
(Code 231) shall be changed to “Disaster Response and Rescue Equipment” (Code 231).
Review of the relevant documents disclosed that purchases of supplies and

equipment were recorded as outright expenses, which consequently barred the items
procured from going through the prescribed inventory and monitoring procedures.
Further inquiry with the accounting department revealed that on hand LDRRM supplies
couldn’t be ascertained in account of the absence of an established inventory and
monitoring procedures.
Non-adherence to the prescribed guidelines for the recording, inventory and

monitoring of all procured items out of the LDRRMF renders the same to an increased
risk of loss and wastage through illegal or improper disposition. Relative also to the over-
all view of the audit on PPEs and Inventories of the Municipality, non-observance of the
accounting rules and specific provisions for LDRRMF reduces the degree of reliability on
the fairness in the preparation and presentation of financial statements.
During the exit conference, the management agreed to comply with the audit
recommendations.
 Instruct the Municipality’s Inventory or Property and Supply Unit/Team, as

well as the Office of the Accountant, to conduct physical inventory of the
supplies and equipment procured out of the LDRRMF and provide adjusting
entries to set-up asset accounts thereof; and shall henceforth
 Ensure observance of the rules set forth under COA Circular No. 2012-002
and COA Circular No. 2014-002 pertaining to the accounting, inventory and
monitoring guidelines for procured resources out of the LDRRMF.
Deficiencies in the management and utilization of the Gender and Development Fund
61
15. Gender and Development (GAD) Accomplishment Report for C.Y. 2015 was not
accomplished within the prescribed period set forth under Section 5.5 of DILG-
NEDA Joint Circular No. 2013-01 dated July 18, 2013. It was also noted that the
2015 GAD Plan and Budget was formulated without specifying well-defined gender
issues contrary to the purpose of establishing GAD Plan and Budget.
DILG-NEDA Joint Circular No. 2013-01 states that:
“LGUs shall submit their annual GAD ARs formulated based on their
GPBs to the City/Municipal Government in case of barangays, to the
Provincial Government, in case of cities and municipalities and to the
DILG Regional Offices in case of provinces not later than end of January
of the ensuing year for review and consolidation”
Confirmation made with the Municipality’s GAD Focal Person revealed that the
Accomplishment Report was still not prepared as at the end of January 2016 which is
contrary to the aforementioned provision of the joint circular.
A Gender and Development (GAD) Plan is designed to address gender issues in

line with the Philippine Plan for Gender-Responsive Development (1995-2025) and in
compliance with Joint Circular No. 2004-1, dated April 5, 2004 of the DBM-NEDA-
NCRFW.
The GAD Plan should have the following activities:
 Advocacy which remedies the lack of awareness regarding gender concerns;

 Social Welfare Services to empower the women at the barangay level to be
socially, emotionally, and physically responsible in times of disasters and
remedy economic marginalization of women;
 Health to lessen the impact of the women’s multiple burden in her health;
 Nutrition;
 Assistance in Crises Situation;
 Children at Risk Program
Priority gender issues or the GAD agenda may be derived from:
 A review of national GAD-related policies and plans such as those mentioned

in Sec. 2.1 and 3.1 of PCW-NEDA-DBM Joint Circular No. 2012-001;
 The result of gender analysis using sex-disaggregated data or information
from major programs or services of the agency for its clients and gender gaps
or issues faced by their women and men employees;
 Results of programs, projects and evaluation findings in terms of its benefits
to target beneficiaries; and
 A review of the agency GAD funds audit results and previous year’s GPB and
GAD
 ARs to surface remaining issues that have not been addressed in earlier GPBs.
62
Review of the submitted GAD Plan and Budget amounting to ₱7,235,200.00
revealed that Municipality’s LGFPS didn’t specify well-defined gender issues to be
addressed hence it couldn’t be ascertained the propriety of such items to be included in
the computation of the mandated appropriation for GAD. Below table shows the gender
issues included by the Municipality’s LGFPS in their 2015 GPB:
GAD Program Support for Victims of Domestic Violence

Cultural Development Support for Juvenile Justice and Welfare
Community E-Center Support for Children's Right Advocacy
Sports Development Program Support for Tourism
Supports for Education Subsidy to Day Care Workers
Scholarship Program Nutrition Program
Support for Family Welfare Implementation of Population Program
Implementation of Health and Sanitation
Implementation of PTBDOTS Program Program
Support for Indigents Support for Anti Red Tape Act (ARTA)
Livelihood Program Public Affairs Fund
Livelihood Program (Murrah Buffalo) Wages of SPES
Nursery Development Support for PNRC (Red Cross)
Organic Development Support for BSPO
Support to Individuals in Crisis Situation Support to Elderlies if Anda
Support for Victims of Child Abuse Implementation of RA 9442
As can be observed in the above list, no specific gender issue was elaborated in
the preparation of the GBP; hence appropriateness of most of the PPAs to be included in
the appropriation couldn’t be thoroughly determined and analyzed.
During the exit conference, the management assured to take appropriate actions to
implement the audit recommendations.
We have recommended that management require the GAD Focal Person to

elaborate/explain the gender issues being addressed by the particular
program/project/activity as reflected in the GAD Plan and Budget, and to prepare
and submit through the Municipal Accountant the Annual GAD Accomplishment
Report as prescribed under DILG-NEDA Joint Circular No. 2013-01 which is also a
requirement for the conduct of GAD Audit.
GSIS Premiums and Contributions - ₱289,744.06
63
16. Due to GSIS account of the Municipality showed an ending balance of ₱764,096.87
as of December 31, 2015 which is considerably higher than the withheld
contributions of ₱474,352.81 for the month of December 2015 due for remittance in
the ensuing year entailing an unremitted amount of ₱289,744.06 contrary to the
rules set forth under the IRR of R.A. 8291, otherwise known as the Government
Service Insurance System Act of 1997.
Section 14 of the IRR of R.A. 8291 or the Government Service Insurance System
Act of 1997 states that:
“Section 14 Remittance of Contributions
14.1 Each government agency shall remit directly to the GSIS the employees’ and
government agency’s contributions within the first Ten (10) days of the calendar
month following the month to which the contributions apply. The remittance by
the government agency of the contributions to the GSIS shall take priority over
and above the payment of any and all obligations, except salaries and wages of
its employees.
14.2 The government agency shall also deduct from the fixed monthly
compensation of the employee the loan amortizations (consolidated loans, policy
loan, emergency loan, housing loan, and other loans), premium payments
(optional, pre-need and other non-life insurance) and other amounts due the
GSIS.
14.3 The said amounts shall be remitted to the GSIS within the first Ten (10) days
of the calendar month following the month when the deductions were effected,
accompanied by supporting lists in the form prescribed by the GSIS.
Analysis of the subsidiary ledgers relative to the Due to GSIS account of the
LGU, disclosed that out of the ending balance of ₱764,096.87, only the transactions
amounting to ₱474,352.81 pertain to withheld December 2015 contributions signifying
an unremitted amount of ₱289,744.06 as of December 31, 2015 which is contrary to
aforementioned rules, further details presented in Annex B.9.
Inquiry with the Municipal Accountant and the Municipal Treasurer, and further
verification of records revealed that such unremitted balance might have come from
previous years’ transactions which will necessitate further tracing and validation to
determine whether the same is valid for remittance to GSIS.
Late remittance might cause the Municipality additional 2% for every month of
delay as provided under Section 15 of the aforementioned IRR.
During the exit conference, management assured that they would take appropriate
action to determine the validity of the noted unremitted GSIS premiums.
64
We have recommended that the management exert effort in identifying the
noted unremitted balance already due for remittance to GSIS, and review thereof as
to its validity, otherwise effect necessary adjustment if error is determined for such
transactions.
B. VALUE FOR MONEY (VFM) AUDIT
Outstanding Loans Receivables - ₱979,500.00
17. Loans Receivable – Others of ₱979,500.00 remained outstanding for years hence
deprived other constituents in the availment of the benefits that could be derived
therefrom.
The general ledger showed that the Loan Receivables – Others account had an
outstanding balance at year-end of ₱979,500.00 which means that no collections were
made during the year. This amount represents loans granted out of the “Isang Milyon
Pisong Programa ni Pangulong GMA” Fund but was misconstrued as financial assistance.
This is a reiteration of our previous audit finding.
Verification of the true nature of the fund granted could not be made due to non-
submission of supporting document like the Memorandum of Agreement with the
national government agency that granted the fund.
Our inquiry revealed that the loan agreements executed between the borrowers
and the Municipality were not revised despite our recommendation for its revision as
contained in the previous Annual Audit Reports. The loans are still payable on a
voluntary basis with interest of one percent and no maturity date indicated.
Management disclosed that demand letters were already issued to the debtors for
the collection of loan. However, the debtors still fail to pay due to the misconception that
the amount they received was a dole out.
The non-collection of the long outstanding receivables may result in the non-
settlement of the Municipality’s obligation with the National Government, when said
loan becomes due and demandable. In addition, it deprived the Municipality from
increasing the number of beneficiaries by re-loaning the amount collected to other
constituents.
As discussed during the exit conference, the management instructed the

Municipal Treasurer to exert more effort in the collection of the said outstanding loans
receivable. The audit team was also informed that demand letters were already made and
some were already delivered to the debtors. However, the management was informed that
some of the beneficiaries already died and they have already initiated the process of
requesting copies of their death certificates to support such claims.
65
We have reiterated our recommendation contained in the previous Annual
Audit Reports that management adopt or design a better policy in granting loans to
ensure its collection. The loan agreement must be revised, wherein the date of
maturity must be indicated, payment must not be on a voluntary basis and
imposition of interest and penalty must be strict. Likewise, the Municipal
Accountant should make a follow up on the demand letters sent to debtors. In case
where the debtors fail to settle their accounts after due notices, apply legal
sanctions. This may help to improve the collection efficiency of the Municipality
wherein the funds collected may be utilized for re-loaning to other beneficiaries.
Likewise, Management was requested to submit the following documents to

enable the Audit Team to make a decision in audit:
1.) Copy of Memorandum of Agreement between the Municipality and the

source agency and other supporting documents;
2.) Copy of Loan Agreement; and
3.) Copy of Demand Letters sent to the borrowers.
Inefficient utilization of the Municipality’s Special Education Fund
18. Inefficient control in the management of the Municipality’s Special Education Fund
(SEF) resulted to ineligible expenditure totaling ₱84,600.00, contrary to the
provisions of Section 272 of the Local Government Code of 1991 and DECS Order
No. 30, s. 2001, thus deprived the Municipality’s Local School Board of the use of
the said funds to finance other vital projects chargeable to SEF.
This is a reiteration of our previous audit findings.
Section 272 of the Local Government Code of 1991 (RA 7160) provides the
application of the proceeds of the Special Education Fund (SEF), which include among
others the following:
“That the proceeds shall be allocated for the operation and

maintenance of public schools, construction and repair of school
buildings, facilities and equipment, educational research, purchase of
books and periodicals, and sports development as determined and
approved by the local school board.”
Further, DECS Order No. 30, s. 2001 provides certain provisions of DECS, DBM
and DILG Joint Circular No. 01, s. 1998 and 01-A, s. 2000 dated April 14, 1998 and
March 14, 2000, respectively, to include among priority items chargeable to SEF, the
payment of salaries and authorized allowances of teachers hired to handle new
classes as extensions of existing public elementary and secondary schools established
pursuant to Section 2.1 of the said Joint Circular.
66
Expenditures charged to Local School Board Fund which are considered non-
related expenses are as follows:
 Payment of financial assistance for the Team Building Activity of 20

Public Elementary School Heads
 Salary payments for Ms. Riza Consuelo as LSB District Clerk
 Payment for the transportation during the ALS graduation
 Payment of traveling expenses as counter part of the Municipality to
participate in the 2015 Division Science Quest
 Payment of financial assistance for the transportation expense of the
participants in the GSP Provincial Encampment
 Payment of financial assistance for the transportation expense of the
participants in the 38th Provincial Jamboree
Such expenses are not among those for which the SEF proceeds could be applied
to thus depriving the Municipal School Board of the use of additional funds to finance
more vital projects.
During the exit conference, the management stated that the expenses are DEPED-
related activities which are included per above-cited joint circular and the ALS is forming
part of the non-formal education sector.
While it may be noted that DECS-DBM and DILG Joint Circular 1998 included
DEPED-related activities and operation of non-formal education, it is not a tacit evidence
for agencies to allow all that which may be generally referred to these categories for the
SEF was developed under R.A. 5447 and R.A. 7160 to prioritize main educational
purposes including construction and repair of school buildings, facilities and equipment,
educational research, purchase of books and periodicals, and sports development. To
refer mainly on the said inclusive items - operation and maintenance of schools and other
DEPED-related activities would further entail that all expenses can be charged to SEF,
majority of which are already governed by the MOOE budget provided by DEPED to
schools. With this, the audit team reiterates to the management to prioritize the
aforementioned expenses.
We have reiterated our previous recommendation that the officials

concerned refrain from incurring expenditures not chargeable to Special Education
Fund. Likewise, the Municipality should strictly comply with the provisions
governing the use of the Special Education Fund.
C. COMPLIANCE WITH TAX LAWS
Non-remittance of withheld taxes to BIR within the prescribed period - ₱807,929.09
67
19. For the year 2015, the Municipality was not able to strictly comply with the
provisions of BIR Revenue Memorandum Circular No. 23-2012 which prescribes
that the responsible officials and employees, as withholding agents, should see to it
that taxes withheld are accordingly remitted on or before their due dates.
Necessarily, taxes withheld from January to November shall be remitted on the 10 th
day of the following month while taxes withheld in December shall be remitted on or
before the 15th day of January of the ensuing year.
Analysis of Total Taxes Withheld and Remitted disclosed that out of the total
taxes withheld as of November, including the 2014 taxes withheld due for remittance in
2015, amounting to ₱4,500,560.11, only the total amount of ₱3,692,631.02 was remitted
within the period while the balance of ₱807,929.09 was forwarded in December and
added to the taxes withheld for the month. Details are as follows:
Beginning balance
GF ₱ 181,400.86
SEF 1,800.00
TF 384,425.32 ₱ 567,626.18
Add: Total Taxes Withheld (January to
November 2015)
GF 3,140,420.33
SEF -
TF 792,513.60 3,932,933.93
Total Taxes Due for Remittance in 2015 4,500,560.11
Less: Total Amount Remitted in 2015
GF 3,437,189.00
SEF -
TF 255,442.02 3,692,631.02
Unremitted taxes due in 2015 807,929.09
Taxed Withheld in December 2015 385,773.73
Due to BIR ending balance ₱ 1,193,702.82
Further review of the records revealed that out of the unremitted balance,
₱130,908.04 pertains to identified balances of withheld taxes in 2014 carried forward in
2015 but deemed to be unremitted as of year-end, details of which are shown in the table
below:
Amount Other details
GF ₱ 137.74 2% WT
TF 26,295.10 1% WT Beg. bal. ₱70,854.64 less ₱44,559.54 remittance
17,894.01 3% WT
84,781.19 5% WT Beg. bal. ₱295,663.67 less ₱210,882.48
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SEF 1,800.00
TOTAL ₱ 130,908.04
Late remittance might cause the Municipality additional surcharge and interests of
25% and 20%, respectively while those persons responsible for the non-remittance on
time might be subjected to criminal liabilities as imposed by BIR Revenue Memorandum
Circular No. 23-2012 and the National Internal Revenue Code.
During the exit conference, management assured to take appropriate actions to

comply with the audit recommendation.
We have reiterated our previous recommendation that management ensure

that the responsible officials and employees, as withholding agents, should see to it
that taxes withheld are accordingly remitted on or before their due dates to avoid
the possible sanctions imposed by BIR Revenue Memorandum Circular No. 23-2012
and the National Internal Revenue Code for the non-remittance of taxes withheld
within the due dates.
D. COMPLIANCE WITH PRIORITY DEVELOPMENT ASSISTANCE FUND

(PDAF) / DISBURSEMENT ACCELERATION PROGRAM (DAP) DECISIONS
The Municipality of Anda, as recommended in the previous audit report, was able
to comply with PDAF/DAP Decision. For CY 2015, the Municipality has no balance of
unutilized funds for PDAF/DAP releases.
E. STATEMENT OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES

(SASDC)
For the year 2015, the Audit Team issued notices of suspensions, disallowances
and charge amounting to ₱1,739,181.25, ₱799,629.00, and ₱39,500.00, respectively in
addition to the beginning balances of ₱27,569,920.00 for suspensions and ₱1,658,482.79
disallowances. Settlements of suspensions amounted to ₱27,867,979.46, ₱349,929.00 for
disallowances, and none for the issued charge, thus leaving outstanding balances of
₱1,441,121.79, ₱2,108,182.79, and ₱39,500.00, respectively. Details of unsettled
suspensions, disallowances and charges are as follows:
Notice of Suspension
NS No. Date Particular Balance
14-004-300-(14) 14-Oct-14 Groceries for Anda KLAP Cooperative 245,411.00
14-006-300-(12) 16-Oct-14 Construction of TB DOTS Center at
197,874.79
RHU of Anda
15-001-300-(14) 17-Jun-15 Concreting of San Jose Junction-Tondol
997,836.00
Road
Total NS 1,441,121.79
Notice of Disallowance
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ND No. Date Particular Balance
2013-001-(10-12) 15-Nov-13 Joseph Carpo 1,206,482.79
14-001-100-(13) 13-Feb-14 PEI/Municipal Officials & Employees 10,000.00
14-100-002-(14) 8-Dec-14 Unauthorized Transportation Allowance
54,400.00
(TA)/Vice Mayor Cecile Celeste
14-100-002-(14) 8-Dec-14 Unauthorized Transportation Allowance
57,600.00
(TA)/Mayor Aldrin Cerdan
15-001-100-(14) 27-Jan-15 Unauthorized RATA/Regina Casulla 141,000.00
15-002-100-(14) 27-Jan-15 Unauthorized Transportation Allowance
28,800.00
(TA)/Mayor Aldrin Cerdan
15-003-100-(14) 27-Jan-15 Unauthorized Transportation Allowance
27,200.00
(TA)/Vice Mayor Cecile Celeste
15-004-100-(14) 10-Apr-15 Unauthorized RATA/SB Members 130,700.00
15-005-100-(14) 10-Apr-15 PEI/Municipal Officials & Employees 340,000.00
15-006-100-(14) 29-Sep-15 Unauthorized Allowances/Honoraria
112,000.00
paid to COMELEC and BIR Officers
Total ND 2,108,182.79
Notice of Charge
NC No. Date Particular Balance
15-001-100-(14) 27-Jan-15 Under-collected bid price for fish lot
39,500.00
operation/Jojo Caras
Total NC 39,500.00
70
PART III
STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS
Status of Implementation of Prior Year’s Audit Recommendations
Out of 16 recommendations contained in the Annual Audit Report for the year
2014, 3 were fully implemented, 6 were partially implemented, and 7 were not
implemented.
Status of
Audit Observations/ Ref. Management Implementation
Recommendations Actions Reason for Partial /
Non-
Implementation
1. The balance of Property, Plant AAR Management already Partially
and Equipment (PPE) with net 2014 created Inventory and Implemented.
book value of ₱87,639,787.54 as Disposal Teams to
of December 31, 2014 was not commence the The Inventory
reconciled with the Property inventory process. Team instituted by
Records due to the the LGU still
non submission of the Report in Property haven’t completed
the Physical Count of PPE on Acknowledgement the required
account of the non-conduct of the Receipts (PARs) were physical count of
annual physical inventory, and the also issued to all properties of the
lack of complete and updated accountable officials or municipality, hence
Property/Subsidiary Ledger employees for each the non-submission
Cards, contrary to the provisions PPE. of the report on
of GAAM and the NGAs for physical count.
LGUs, thus its accuracy and
existence couldn’t be ascertained. (Reiterated under
finding no. 1)
We have recommended the
following:
 Create an Inventory Committee

to conduct and complete the
physical inventory of all
Property, Plant and Equipment,
prepare an inventory Report
which shall be reconciled with
the accounting records and
submit a copy to the Auditor
not later than January 31 of
each year.
 Instruct the Municipal

Accountant to keep complete
property, plant and equipment
ledger cards or subsidiary
71
ledgers which should reconcile
with the corresponding control
account of the Property, Plant
and Equipment account in the
general ledger; and provide the
corresponding depreciation of
all depreciable assets.
 Instruct the Property Custodian

to keep records of all properties
of the municipality, maintain
property cards and prepare
Property Acknowledgement
Receipt for Equipment (PAR)
for every property issued to
employees and renew every
after three years of issue.
2. Balances of the Quick Response AAR Management instilled to Partially
Fund (QRF) and DRRMF- 2014 the Office of the Implemented.
MOOE which were unutilized Accountant the
during the year amounting to necessity of submitting Only the December
₱1,159,425.00 and ₱781,941.95, the monthly reports on report was
respectively, were not transferred the utilization of submitted on time.
to the Special Trust Fund due to LDRRMF. Likewise,
Management’s failure to create a the unexpended (Reiterated under
Trust Liability account while the balances of the same finding no. 14.1)
previous years’ unexpended had already been
appropriations totaling transferred to the Trust
₱5,924,268.83 which consisted Liability-DRRM
of QRF, MOOE and Capital account.
Outlay were retained in the
General Fund under continuing
appropriations contrary to the
accounting and reporting
guidelines for the Local Disaster
Risk Reduction and Management
Fund (LDRRMF) prescribed by
COA Circular No. 2012-002
dated September 12, 2012 thus
resulted to misclassification of
accounts.
Further, the Monthly Reports on

the Sources and Utilization of the
Local Disaster Risk Reduction
and Management Fund
72
(LDRRMF) for CY 2013 were
not prepared, certified and
submitted by the Municipal
Accountant to the COA Auditor
thru the Local Disaster Risk
Reduction and Management
Officer (LDRRMO) of the LGU
as required under Section 5.1.4
and 5.1.5 of COA Circular No.
2012-002 dated September 12,
2012, thus the audit team was
precluded on the immediate
verification of the monthly
charges against the allocation of
the fund.
We have recommended to the

Municipal Mayor to ensure
compliance with the requirements of
COA Circular No. 2012-002,
providing the accounting and
reporting guidelines for the Local
Disaster Risk Reduction and
Management Fund (LDRRMF) of
Local Government Units and
Receipts from Other Sources; and
for the Accountant to adopt the
following measures:
 To create a “Trust Liability –

DRRM” account (Code 438) in
the Trust Fund books and
prepare a Journal Entry
Voucher to transfer te
unutilized balances of the QRF
and DRRMF-MOOE for the
year;
 To determine the total capital
outlays in the previous years
that should have been
maintained in the general fund
vis-à-vis the correct amount of
QRF and DRRMF-MOOE that
should’ve been transferred to
the Trust Liability-DRRM
account and subsequently make
73
the correcting entry in order to
reflect the correct balances of
the account/s.
 To maintain separate Registry
of Appropriations, Allotments
and Obligations (RAAO) for
QRF, MOOE and CO;
 To ensure that all
unexpended/unobligated
balance of the LDRRMF for
CO shall be made continuing in
the General Fund books until
the projects funded therefore
are completed and any savings
shall be available for use in the
disaster risk reduction and
management activities as
provided in the LDRRMFIP;
and
 To maintain subsidiary ledgers
for transfers of agency’s
unutilized DRRMF to the
Special Trust Fund by year of
transfer;
3. The reciprocal accounts, Due Not implemented.
from Other Funds and Due to
Other Funds showed a net (Reiterated under
difference of ₱349,484.88 after finding no. 3)
consolidation of all funds of the
municipality as of December 31,
2014, contrary to generally
accepted accounting principles,
thus rendering the recorded
balance unreliable.
We have recommended that

management require the Municipal
Accountant to reconcile the Intra-
agency accounts, Due to Other
Funds and Due from Other Funds to
promptly identify any discrepancy in
the balances of the two accounts and
to be able to effect the necessary
adjustments if appropriate to bring
the affected accounts into agreement.
4. Accountable Officers failed to AAR Not implemented.
74
submit monthly accounts, trial 2014
balances, statement of bank (Reiterated under
reconciliation and disbursement finding no. 6)
vouchers within the time frame
which is not in accordance with
Section 7.2.1 of the 2009 Rules
and Regulations on Settlement of
Accounts, Section 39 (1) of
Presidential Decree 1445,
Section 23 (1) and (3) of the
Administrative Code of 1987 and
Article 218 of the Revised Penal
Code, thus precluded the Auditor
from timely examination and
verification of the accounts of
the municipality.
We have recommended to the Mayor

to ensure compliance by the
Accountable Officers concerned on
the submission of their respective
reports as required under the COA
2009 of the Rules and Regulations
on the Settlement of Accounts.
5. The Municipality continued to AAR Not implemented.
maintain a deposit account with 2014
Philippine National Bank under (Reiterated under
Checking Account No. finding no. 7)
161114400013 which is not in
accordance with Department of
Finance (DOF) Order No. 27-05
dated December 9, 2005.
We have recommended to the Mayor

to ensure compliance with the
requirement of DOF Order No. 27-
05 to secure authority from the
Department of Finance for the
continued maintenance of deposit
with the PNB, or transfer of its
account either to LBP or DBP.
6. Collections were not deposited AAR Not implemented.
promptly and intact, which 2014
resulted to undeposited (Reiterated under
collections of ₱285,813.68 which finding no. 4.1)
is not in accordance with Section
75
32 of the NGAS Manual for
LGUs, COA Memorandum No.
2013-004 dated July 9, 2013,
thus funds collected may be
prone to possible risk of loss or
misuse.

management require the
Accountable Officer to deposit her
collections promptly and intact as
prescribed under COA
Memorandum No. 2013-004 for the
efficient discharge of her duties and
avoid the risk of possible loss or
misuse of funds.
7. Representation Allowance (RA) AAR Management required Partially
and Transportation Allowance 2014 the Municipal Treasurer Implemented
(TA) totaling ₱141,000.00 were to refund the
paid to Ms. Regina C. Casulla unauthorized RATA
who was relieved of her position paid to her, to which a
as Municipal Treasurer due to request for staggered
cash shortage on her cash payments was made
accountabilities which is not in and approved.
accordance with Sections 1.1 and
7.1 of DBM Local Budget
Circular No. 103 dated May 15,
2013 thus rendering such
payments unauthorized.

management stop the granting of
RATA to Ms. Regina C. Casulla and
require her to refund the amount paid
to her pursuant to the relevant
provisions of DBM Local Budget
Circular No. 103 dated May 15,
2013.
8. Representation and AAR Management Partially
Transportation Allowances 2014 discontinued the Implemented
(RATA) totaling ₱130,700.00 granting of the full
were paid to various SB amount of RATA to SB
members in excess of the Members with
authorized amounts prescribed incomplete attendance.
under Sections 1.1 and 7.5 of Further, SB Members
DBM Local Budget Circular No. were required to refund
76
103 dated May 15, 2013 thus the unauthorized
rendering such payments amounts paid to them.
unauthorized.
The amounts paid to the
Moreover, the Municipal Mayor Municipal Mayor and
and Vice Mayor were being paid Vice-Mayor were
their Transportation Allowance completely refunded.
although both were assigned
government motor vehicle, thus
resulting to unauthorized
payments in the total amounts of
₱86,400.00 and ₱81,600.00,
respectively.
We have recommended the Mayor to

ensure compliance with DBM Local
Budget Circular No. 103 and pay
RATA based on actual work
performance and require the refund
of such payments.
9. Payments made by the AAR Management informed Partially
Municipality to all its officials 2014 and required all Implemented.
and employees of Performance affected employees and
Enhancement Incentive (PEI) in officials to refund the
the total amount of ₱340,000.00 overpayments.
was in excess of the amount
authorized by Item 1.3.1 of DBM
Budget Circular No. 2014-3
dated December 2, 2014, hence
considered illegal.
We have recommended the Mayor to

limit the payment of the PEI to the
maximum amount of ₱5,000.00 set
in E.O. No. 80, as implemented
under DBM Budget Circular 2014-3,
and require the refund of
overpayments.
10. Cash advances totaling AAR Demand letters had Partially
₱3,134,222.00 remained 2014 been issued to those Implemented.
unsettled/ unliquidated as of with unliquidated cash
December 31, 2014, contrary to advances as of There’s still
Section 89 of PD 1445 and COA December 31, 2014 remaining balance
Circular No. 97-002, thus which resulted to a of unliquidated
resulting to the non-recognition considerable decrease cash advances
of expenses incurred in the in unliquidated cash pertaining to prior
77
utilization of the cash advances. advances from years.
₱3,134,222.00 to
We have recommended that ₱600,042.00. (Reiterated under
Management should: finding no. 5)
 Require all Accountable

Officers to liquidate their cash
advances on time, otherwise,
impose administrative
sanctions against them for any
unjustifiable reasons due to
failure to liquidate cash
advances within the prescribe
period, in accordance with
Section 89 of PD 1445, COA
Circular No. 97-002 dated
February 10, 1997 and Civil
Service Commission No. 0676
dated June 17, 2004.
 Cause or order the withholding

of any money claims against
the accountable officers
concerned until they have fully
settled their unliquidated cash
advances.
11. Loans granted under the program AAR Not Implemented
“Isang Milyong Pisong Programa 2014
ni Pangulong GMA” in the total (Reiterated under
outstanding amount of finding no. 17)
₱979,500.00, remained
uncollected for over four (4)
years, and no further action was
taken by management for its
collection.
We have reiterated our

recommendation contained in the
previous Annual Audit Reports that
the management adopt or design a
better policy in granting loans to
ensure its collection. The loan
agreement must be revised, wherein
the date of maturity must be
indicated, payment must not be on a
voluntary basis and imposition of
78
interest and penalty must be strict.
Likewise, the Municipal Accountant
should make a follow up on the
demand letters sent to debtors. In
case where the debtors fail to settle
their accounts after due notices,
apply legal sanctions. This may help
to improve the collection efficiency
of the municipality wherein the
funds collected may be utilized for
re-loaning to other beneficiaries.
Likewise, Management was

requested to submit the following
documents to enable the Audit Team
to make a decision in audit:
i. Copy of Memorandum of
Agreement between the
Municipality and the source
agency and other supporting
documents;
ii. Copy of Loan Agreement;
and
iii. Copy of Demand Letters sent
to the borrowers.
12. Inefficient control in the AAR Not Implemented
management of the 2014
Municipality’s Special Education (Reiterated under
Fund (SEF) resulted to ineligible finding no. 18)
expenditure totaling
₱130,560.00, contrary to the
provisions of Section 272 of the
Local Government Code of 1991
and DECS Order No. 30, s.
2001, thus deprived the
Municipality’s Local School
Board of the use of the said
funds to finance other vital
projects chargeable to SEF. In
addition, amounts totaling
₱1,480,367.78 were charged
against the SEF without any
attachment, hence the legality
and validity of the claims could
not be ascertained.
79
We have recommended that the
officials concerned refrain from
incurring expenditures not
chargeable to Special Education
Fund. Likewise, the municipality
should strictly comply with the
provisions governing the use of the
Special Education Fund.
13. Taxes withheld due for AAR Not Implemented
remittance totaling ₱509,566.11 2014
were not remitted to the BIR (Reiterated under
within the prescribed period finding no. 19)
contrary to the provisions of BIR
Revenue Memorandum Circular
No. 23-2012 dated February 14,
2012. Further, abnormal
(negative) balances were noted
for the 3% Withholding Tax in
January 2014 and the Taxes
Withheld on Compensation in
November 2014 thus rendering
the balances unreliable.
We have recommended to
Management the following courses
of action:
 Ensure that the responsible

officials and employees, as
withholding agents, should see
to it that taxes withheld are
accordingly remitted on or
before their due dates to avoid
the possible sanctions imposed
by BIR Revenue Memorandum
Circular No. 23-2012 and the
National Internal Revenue
Code for the non-remittance of
taxes withheld within the due
dates; and
 Instruct the persons liable for

the withholding and remittance
of taxes to explain the negative
balances in the 3%
80
Withholding Tax and Taxes
Withheld on Compensation and
ensure that the correct amounts
of taxes withheld and remitted
are correct to avoid over or
under remittance of taxes.
81
PART IV – ANNEXES

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Republic of the Philippines

ANNUAL AUDIT REPORT

For the Year Ended December 31, 2015

May 16, 2016

Dear Mayor Cerdan:

c. Non-maintenance of Construction in Progress account for Infrastructure Projects and

d. Overstatement of the PPE account “Information and Communication Technology

e. PPEs amounting to ₱1,690,920.94 were not properly classified to the appropriate

f. No depreciation was provided on the Office Equipment booked under Special

We have recommended that management:

 Instruct the Accounting, Treasury and Engineering departments to identify and

Republic of the Philippines

AGENCY ACTION PLAN and

Agency Action Plan Reason for

March 15, 2016

Ms. Thelma A. Orinion

A qualified opinion was rendered on the fairness of presentation of the financial

Anda is a 3rd class municipality headed by Hon. Municipal Mayor Aldrin C.

The following validated/inspected projects are the significant accomplishments of

OPINION ON THE INDEPENDENT AUDITOR’S REPORT

A qualified opinion was rendered on the fairness of the presentation of the

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

a. Non-conduct of physical inventory of Property, Plant and Equipment (PPE) as of

c. Non-maintenance of Construction in Progress account for Infrastructure Projects

d. Overstatement of the PPE account “Information and Communication Technology

e. PPEs amounting to ₱1,690,920.94 were not properly classified to the appropriate

f. No depreciation was provided on the Office Equipment booked under Special

We have recommended that management:

 Require the Municipal Accountant and Treasurer to maintain Property Ledger

 Instruct the Accounting, Treasury and Engineering departments to identify and

 Require the Accounting Department to provide depreciation on all depreciable

2. General Ledger balance of Cash in Bank of the Municipality as of December 31,

We have recommended that management require the Municipal Accountant to

SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND CHARGES

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

Part I- Audited Financial Statements

II. Value for Money Audit 65

Part III- Status of Implementation of Prior Year’s

Part IV- Annexes

A. Status of Appropriations, Allotments and Obligations

PART I – FINANCIAL STATEMENTS

Independent Auditor’s Report

THE HONORABLE MAYOR

We have audited the accompanying combined financial statements of the Municipality of

Management Responsibility for the Financial Statements

Our responsibility is to express an opinion on these financial statements based on our

Bases for Qualified Opinion

As discussed in Part II of the report, Management failed to reconcile the balance of

February 29, 2016

The Municipality of Anda, the only island town of the Province of

Despite of the growing complexities in public governance brought about by

Note 3 - Summary of significant accounting policies

3.1 Basis of accounting

The consolidated financial statements are prepared on an accrual basis in

3.2 Revenue recognition

Revenue from non-exchange transactions

Taxes, fees and fines

Transfers from other government entities

Revenues from non-exchange transactions with other government entities

3.3 Investment Property

Investment properties are measured initially at cost, including transaction

Investment property acquired through a non-exchange transaction is

Investment properties are derecognized either when they have been