EXECUTIVE SUMMARY

A. Introduction

During the 17th century, the Spanish Missionaries founded a courageous

ethnic group known as the Gaddangs, who were ruled by a chieftain named
Gaddanan. As a gesture of reverence and respect to perpetuate his name, this
settlement was named ANGADANAN. The town of Angadanan was officially
established in October, 1976, under the advocation of Nuestra Señora de Atocha
de Angadanan. Don Jose de Tagle, the last Gobernadorcillo during the Spanish
regime, was the first Presidente Municipal of Angadanan.

The Municipality of Angadanan is a landlocked Municipality located in

the southern Isabela Province and is politically subdivided into 59 Barangays. It is
bounded on the north by Cauayan City, on the east by Benito Soliven and San
Guillermo, on the South by Echague, and on the west by Alicia.

Angadanan is rich in natural resources, historical heritage, legends and

traditions. It has a total land area of 204.40 square kilometers which constitutes
1.65% of Isabela’s total area and 60% of which are devoted in agricultural crop
production. The Municipality of Angadanan remained a 3rd class municipality,
composed of 59 progressing Barangays. The town yearly celebrates with pride
and joy the Gakit Fluvial Festival, a cultural tradition of resourcefulness and self-
reliance.

The Municipality of Angadanan is under the leadership of the Honorable

Mayor Joelle Mathea S. Panganiban and Municipal Vice-Mayor Diosdado S.
Siquian. As of December 31, 2020, the Municipality of Angadanan had a total
personnel complement of 166 personnel who are 12 elective officials, 81
permanent employees, 1 co-terminus employee, 1 temporary employee and 71 Job
Orders (JOs). The Municipality of Angadanan was a recipient of the Seal of
Good Local Governance.

B. Financial Highlights
Presented below is the comparative information of the financial condition
and results of operation of the Municipality for calendar years 2020 and 2019:

Particular 2020 2019 Increase(Decrease)

Assets P 508,695,157.32 P 478,514,097.12 P 30,181,060.20
Liabilities P 38,901,696.84 P 54,345,381.78 P (15,443,684.94)
Government Equity P 469,793,460.48 P 424,168,715.34 P 45,624,745.14
Income P 179,196,837.56 P 149,949,755.21 P 29,247,082.35
Expenses P 168,994,161.62 P 151,746,695.25 P 17,247,466.37
Net Income P 10,202,675.94 P (1,796,940.04) P 11,999,615.98
C. Scope of the Audit

The audit covered the accounts and operations of the Local Government of
Angadanan for the year 2020 and was aimed at determining whether the financial
statements of the municipality are faithful representation of the financial
transactions of the Agency, recognized, measured, presented and disclosed in
adherence to International Public Sector Accounting Standards (IPSAS), whether
prevailing laws, rules and regulations have been complied with, and whether
funds were utilized in the most efficient, effective and economical manner. A
financial and compliance audit was conducted to achieve these audit objectives.
The audit involves the review of operating procedures, inspections and
evaluations of the agency’s programs and projects, interviews and verification.

In compliance with unnumbered COA Memorandum dated 15 October

2020 of Assistant Commissioner, Local Government Sector, COA, Quezon City,
the following are the significant thrust areas that were prioritized in audit:

A. COVID-19 fund receipts, allocation and utilization

1. Budget
2. Local Government Support Fund – COVID-19 Financial Assistance to
LGUs
3. Grants and Donations
4. Annual Investment Plan (AIP)/Local Disaster Risk Reduction
Management Fund Investment Plan (LDRRMFIP)
5. Utilization of Funds
6. Reporting
7. Return of unutilized funds from the bayanihan grants to the Bureau of
Treasury

B. Financial Audit

1. Cash and cash equivalents

2. Property, Plant and Equipment
3. Inventories and Supplies for Distribution and for Operations and the
corresponding expense accounts, if utilized

C. Compliance Audit
4. Utilization of 20% Development Funds
5. Utilization of Disaster Risk Reduction and Management Funds
(DRRMF)

Other material financial accounts were also audited such as Receivable

Accounts, Financial Liabilities, Compliance with tax laws and rules, Remittances
of mandatory contributions.
D. Summary of Utilization of Funds in support of COVID-19-related PPAs

Pursuant to Bayanihan to Heal As One Act, the Local Government Unit of

Angadanan has appropriated funds that were utilized for its disaster preparedness
and response efforts to contain the spread of Coronavirus Disease (COVID-19)
and for provision of basic services to its affected constituents as follow:

E. Auditor’s Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of the

presentation of the financial statements of the Municipality of Angadanan, Isabela
for Calendar Year 2020 due to the following:

a) The accuracy and reliability of the Cash in Bank – Local Currency, Current
Account amounting to P52,396,381.49 as at December 31, 2020 cannot be
fully established due to (a) unreconciled balances and inconsistencies in the
books, (b) creation of new bank account with incomplete details and basis,
 and (c) unreverted stale checks at year-end, thereby the cash accounts may
not be fairly presented in the financial statements inconsistent with
International Public Sector Accounting Standards (IPSAS) 1 and Section
112 of Presidential Decree (PD) No. 1445.

b) Unreconciled variances between the books and the Report on Physical

Count of Property, Plant and Equipment (RPCPPE) amounting to
₱14,208,507.89 were observed due to non-compliance with Sections 266
and 269 of the Government Accounting Manual for Local Government
Units, Volume I which cast doubts on the existence, propriety and
correctness of the affected PPE account balances reported in the financial
statements.

c) The two hundred seventy-two (272) unreleased commercial checks totaling

P8,831,493.99 as at December 31, 2020 were not restored to cash and
liability accounts inconsistent with Section 352 of the Government
Accounting Manual (GAM) for Local Government Units (LGUs), Volume I,
thus, misstating the affected accounts.

d) The accuracy, validity and fair presentation of the Real Property Tax (RPT)
and Special Education Tax (SET) Receivable accounts totaling
₱4,379,670.56 as at December 31, 2020 cannot be fully established and may
be misstated due to incomplete basis and supporting documents for all the
current and delinquent accounts inconsistent with Section 246 of RA No.
7160 and Section 42, Volume I of the Government Accounting Manual
(GAM) for Local Government Units (LGUs).

F. Summary of Significant Findings and Recommendations

1. The unexpended/unobligated balances and other receipts for Local Disaster

Risk Reduction and Management Funds (LDRRMF) totaling P3,197,001.11
were not transferred to the Special Trust Fund under the account “Trust
Liability-DRRM” in the Trust Fund books inconsistent with COA Circular
No. 2012-002 dated September 12, 2012 and Government Accounting
Manual (GAM) for Local Government Units (LGUs), thus misstating the
financial statements.

We recommended that management cause the transfer of the

unexpended/unobligated balances totaling P3,197,001.11 to the Special
Trust Fund under the account “Trust Liability-DRRM” and strictly comply
with the funding requirements and disclosure of LDRRMF under COA
Circular No. 2012-002 and GAM for LGUs.

2. Long outstanding receivables amounting to P2,779,665.23 should be

validated and verified by the Agency in accordance with COA Circular No.
2016-005 dated December 19, 2016 in order to establish its existence and
validity and to achieve fair presentation of the affected accounts in the
Financial Statements.
 We recommended the Management to undertake the above-procedures and
validate the existence of the receivables before filing a written request for
authority to write-off the accounts in compliance with COA Circular No.
2016-005 dated December 19, 2016.

3. Reasonableness of the amounts of burial, financial assistance and other

donations amounting to P4,971,251.59 cannot be fully established in the
absence of specific guidelines and procedures for the grant inconsistent with
Section 124 of Presidential Decree (PD) No. 1445, Sections 447 and 483 of
RA No. 7160.

We recommended that the Management, through the Municipal Social

Welfare and Development Officer and the Sangguniang Bayan formulate
their own specific guidelines and procedures for the grant and payment of a
fair, just and equitable amount of donations with full deliberation on the
social and living conditions of recipients.

4. Accounting and reporting guidelines for the Local Disaster Risk Reduction
and Management Funds (LDRRMF) amounting to P12,580,551.90 were not
consistently complied by the management, which affected the accuracy,
reliability and fair presentation of LDRRMF accounts in the financial
statements.

We recommended the Management of the following courses of action:

a) The unexpended balances of LDRRMF as well as the other receipts of

funds should be transferred and established as Special Trust Funds in the
Trust Liabilities-DRRMF in the Trust Fund books;

b) Proper adjustments both in the books be made to reflect the accurate

balances of the LDRRMF as at December 31, 2020;

c) Gather and submit for proper evaluation in audit the summary/list of

donations received and distributed with complete documents; and

d) All concerned officials comply with the aforementioned laws, rules and
regulations.

5. Collection of repayments under Sustainable Livelihood Program (SLP) was

not undertaken in accordance with DSWD Memorandum Circular No. 13,
series of 2015 and as revised by DSWD Memorandum Circular No. 22,
series of 2019, thus the objective of establishing a community-based credit
and savings facility may not be optimally attained, hence depriving intended
recipients of its immediate benefits.
 We recommended that the Municipal Mayor require both the Municipal
Social Welfare and Development Officer and the Municipal Treasurer to:

a) Submit Fund Utilization Report showing how the funds were utilized;
and

b) Comply strictly with the specific guidelines on the grant,

implementation and any repayments required under DSWD
Memorandum Circular No. 22, series.

The other significant deficiencies noted in audit are presented in Part II of

the report.

G. Summary of total Suspensions, Disallowances and Charges as of year-end

The Status of Audit Suspensions, Disallowances and Charges (SASDC) as

of December 31, 2020 is presented as follows:
Beginning Current year Ending
Particulars
Balance NS/ND/NC NSSDC Balance
Suspensions P0.00 P0.00 P0.00 P0.00
Disallowances 265,302.06 323,595.36 323,595.36 265,302.06
Charges 0.00 0.00 0.00 0.00
Total P265,302.06 P323,595.36 P323,596.36 P265,302.06

H. Status of Implementation of Prior Years’ Audit Recommendations

Out of thirty-one (31) prior years’ audit recommendations, eleven (11)

were implemented and twenty (20) were partially implemented. Some
recommendations which were partially implemented were reiterated in this report
with changes in amounts and subject to existing condition during the year.