Republic of the Philippines

COMMISSION ON AUDIT
Regional Office No. IX Zamboanga City

ANNUAL AUDIT REPORT

of

Barangay Lower Dimalinao

Municipality of Molave
Province of Zamboanga del Sur

For the Years Ended

December 31, 2010, 2011 and 2012
 Republic of the Philippines
COMMISSION ON AUDIT
OFFICE OF THE SUPERVISING AUDITOR
Audit Group C, Province of Zamboanga del Sur
Provincial Capitol, Pagadian City

October 31, 2013

Hon. CEFERINO U. APIAG, JR.

Punong Barangay
Barangay Lower Dimalinao
Molave, Zamboanga del Sur

Sir,

In compliance with Section 2, Article IX-D of the Philippine Constitution and

pertinent sections of Presidential Decree No. 1445, otherwise known as the Government
Auditing Code of the Philippines, we are pleased to transmit the report of our Auditor on
the results of the audit on the accounts and operations of Barangay Lower Dumalinao,
Municipality of Molave, Zamboanga del Sur for the years ended December 31, 2010,
2011 and 2012.

The audit was conducted to ascertain the propriety of financial transactions and
compliance of the agency to 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 audit findings together with the
recommended courses of actions are discussed in detail in the attached report.

We request that the recommendations be implemented and we would appreciate

being informed of the actions taken hereon within one (1) month from receipt hereof.

We acknowledge the cooperation extended to our auditors by the officials and

employees of the Barangay and the Municipal Accounting Office, facilitating our work
and the submission of this report.

Very truly yours,

By Authority of the Chairman:

FERMO T. AVILA
State Auditor V
Supervising Auditor
Copy Furnished:

1. The Municipal Mayor

Municipality of Molave
Province of Zamboanga del Sur

2. The Presiding Officer of the Sangguniang Bayan

Molave, Zamboanga del Sur

3. The Audit Team Leader

Team No. 22

4. File
 TABLE OF CONTENTS

Page

PART I FINANCIAL STATEMENTS

- Audit Certificate 1

- Statement of Management Responsibility 2

- Balance Sheet as of December 31, 2012, 2011 3

and 2010

- Statement of Operations for the Years Ended 4

December 31, 2012, 2011and 2010

- Statement of Cash Flows for the Year Ended 5

December 31, 2012, 2011 and 2010

- Notes to Financial Statements 6

PART II FINDINGS AND RECOMMENDATIONS 11

PART III STATUS OF IMPLEMENTATION OF PRIOR YEARS’

AUDIT RECOMMENDATIONS 19
 PART I

FINANCIAL STATEMENTS
 Republic of the Philippines
COMMISSION ON AUDIT
Local Government Sector
Audit Group C, Team No. 22, Province of Zamboanga del Sur
Molave, Zamboanga del Sur

INDEPENDENT AUDITOR’S REPORT

We have audited the accompanying Condensed Balance Sheets of Barangay Lower

Dimalinao, Municipality of Molave, Province of Zamboanga del Sur, as of December 31, 2012,
2011 and 2010 and the related Condensed Statements of Income and Expenses and Cash Flows
for the years then ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on our audit.

Except as stated in the following paragraph, we conducted our audit in accordance with
laws, COA, and INTOSAI standards and applicable generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. Our audit includes examining on a test
basis, evidence supporting the amount and disclosures in the financial statements. Our audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statements presentation. We believe that our audit
provides reasonable basis for our opinion.

As discussed in the Findings and Recommendations, validity and accuracy of the Cash in
Bank account of P31,007.33 is doubtful since reconciling items of P5,623.00 is long outstanding
in the books; the existence, condition and accuracy of the Property, Plant and Equipment
accounts of P694,477.49 cannot be ascertained since physical inventory was not conducted even
though depreciation expense for subject Property, Plant and Equipment accounts were already
provided. Further, the Barangay exceeded the 55% PS limitations by P36,295.99 and did not fully
implement the projects/programs/activities under its 20% Local Development Fund and GAD
funds, depriving the barangay constituents of the benefits for which the funds are intended. The
inadequacy of its records did not permit us to apply alternative procedures to determine the
validity of these accounts.

In our opinion, except for the effects of any adjustments which might have been made on
the accounts briefly discussed in the preceding paragraph, or had existing records allowed us to
apply alternative procedures, the financial statements present fairly the financial position of
Barangay Lower Dimalinao, Municipality of Molave, Zamboanga del Sur, as of December 31,
2010, 2011 and 2012, and the results of operations for the years then ended, in accordance with
applicable laws and regulations and in conformity with the generally accepted state accounting
principles.

COMMISSION ON AUDIT
By:

MADELINE J. MAJESTRADO
State Auditor III
Audit Team Leader

May 31, 2013

 Republic of the Philippines
Region IX
Province of Zamboanga del Sur
Municipality of Molave

BARANGAY LOWER DIMALINAO

Statement of Management Responsibility for Financial Statements

The Management of Barangay Lower Dimalinao, Molave, Zamboanga del Sur is

responsible for all information and representation in the Balance Sheets as of December
31, 2010, 2011 and 2012 and the related Statements of Income and Expenses and
Statements of Cash Flows for the period then ended. The financial statements have been
prepared based on the certified registers and other reports prepared and submitted by the
Barangay Treasurer/Barangay Record Keeper.

In this regard management maintains a system of accounting and reporting which

provides for the necessary internal control to ensure that transactions are properly
authorized and recorded, assets are safeguarded against unauthorized use or disposition
and liabilities recognized.

MARTIN D. BLANCO, JR.

Municipal Accountant

CEFERINO U. APIAG, JR.

Punong Barangay