EXECUTIVE SUMMARY

Introduction

The Municipality of Roxas became a municipality by virtue of Republic Act No.

615 dated September 30, 1951. It is geographically located 147 kms. north of Puerto
Princesa City. The said municipality occupies a land area of 117,347 hectares, which
represents 8.19% of the total land area of the province.

The Municipality is classified as a first class municipality with thirty-one

barangays under its jurisdiction. It is the 4th largest municipality of the province. The
present administration is under the leadership of Mayor Maria Angela V. Sabando and
Vice Mayor Alfredo B. Enojas Jr. and SB Members. The Municipality maintained three
(3) funds, namely; General Fund, Special Education Fund and Trust Fund.

Financial Highlights

For CY 2014, the Municipal Government of Roxas, Palawan generated a total

income of P216,003,212.72 from internal revenue allotment, local taxes, permits and
licenses, service and business income. The appropriations aggregating to
P285,904,824.91 is equal to the total current and continuing appropriations of General
Fund amounting to P284,449,449.94 and Special Education Fund totalling
P1,455,374.97. Of the total allotments of P285,861,167.78, the amount of
P210,640,170.09 was obligated for the year.

The total assets, liabilities, government equity, income and expenses for CY 2014
compared with that of the preceding year are as follows:
Increase/
2014 2013 (Decrease)
Total Assets P 349,575,852.45 P 291,681,979.43 P 57,893,873.02
Total Liabilities 165,840,679.70 159,156,341.63 6,684,338.07
Total Equity 183,735,172.75 132,525,637.80 51,209,534.95
Total Income 216,003,212.72 185,818,679.66 30,184,533.06
Total Expenses 165,598,791.57 166,227,601.53 (628,809.96)

Scope of Audit

Financial and compliance audits were conducted on the accounts, transactions and
operations of the Municipality of Roxas, Palawan for the Calendar Year 2014. It
included analysis of accounts of the financial statements, review of transactions and test
of compliance with financial rules and regulations. The objectives of the audit are to
ascertain the fairness and reliability of the Municipality’s financial position and results of
operations and to determine whether the Municipality’s operations were conducted in
compliance with applicable laws, rules and regulations.

Audit Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements since the existence and accuracy of Property, Plant and Equipment
account with net book value of P52,447,473.91 as of December 31, 2014 could not be
ascertained because it was not supported by physical inventory report and complete and
accurate property cards contrary to Sections 114, 119 and 124 of the Manual on the New
Government Accounting System (NGAS) for Local Government Units (LGUs), Volume
I. Further, Land account totaling P2,791,630.50 is not covered and supported by
Certificates of Title contrary to the provisions of Section 148 of COA Circular no. 92-
386.

Significant Audit Findings and Recommendations

For exception cited above, the audit team recommended the following:

 The inventory committee should immediately complete the physical inventory

count and submit a copy thereof to the Auditor;

 The Municipal Treasurer should maintain property cards for PPEs with complete
information. These property cards should be reconciled with other property records
like Acknowledgement Receipt for Equipment (ARE);

 The Municipal Accountant should ensure that property subsidiary ledgers contain
complete details/description of the PPEs to facilitate proper reconciliation with the
inventory report of the inventory committee;

 The Municipal Mayor should require the immediate transfer of the land titles in the
name of the Municipal Government of Roxas. The Certificates of Title shall be
safely kept by the Municipal Treasurer as the custodian for all properties (since the
agency has no General Services Officer), real or personal, owned by the
Municipality pursuant to Section 490(b)(3)(i) of R.A. No. 7160;

 In case of loss of property, the officer immediately accountable thereof should file
an application for relief from accountability. The request should be accompanied
by the following documents (Sec. 151 of COA Circular No. 92-386):

a. Notice of loss showing the exact date of filing and receipt in the office of the
auditor concerned or the COA;
b. Affidavit of the accountable officer containing a statement of facts and
circumstances of the loss;
 c. Affidavits of two (2) disinterested persons cognizant of the facts and
circumstances of the loss;
d. Final investigation report of the office or department head and proper
government investigating agency on the facts and circumstances surrounding
the loss;
e. A list and description including book value, date of acquisition, property
number, account classification, condition of the property, and other
additional relevant information on the properties lost duly certified by the
GSO, or municipal treasurer, as the case may be;
f. Comment and/or recommendation of the LCE on the request;
g. Exact or accurate amount of government cash or book value of the property,
subject of the request for relief;
h. Memorandum Receipt/ARE, if any, covering the properties subject of the
request; and
i. In case of delay in filing of notice, satisfactory explanation or the reasons for
such delay.

The following is the summary of other significant audit observations and

recommendations in the audit of the Municipality of Roxas for the year 2014, as
discussed in detail in Part II of the Report.

1. Accuracy and reliability of the balance of RPT and SET Receivables account
amounting to P3,431,067.21 and P3,295,720.42, respectively, could not be
ascertained since the tax receivables set up in the current and prior years
were not based on the Certified List of Taxpayers that should have been
provided by the Municipal Treasurer, contrary to Section 20 of the New
Government Accounting System (NGAS) Manual, Volume I.

We recommended that the Municipal Treasurer should expedite the

preparation/completion of the certified list of taxpayers, showing thereof the name of
taxpayers and the amount due and collectible for the year. It is likewise recommended
that the Municipal Treasurer advise all her revenue collectors to comply with Section 86
of NGAS Manual, Volume I.

2. Personnel performing regular office work and clerical or administrative

functions were hired through Contract of Service/Job Orders contrary to
Sec. 520 of GAAM, Volume I and Section 2, Rule XI of CSC MC No. 40,
s.1998. Wages totalling P2,645,236.74 paid for their services were charged
and recorded to various MOOE accounts contrary to COA Circular No.
2004-008 dated September 20, 2004. Moreover, the amount paid for their
services which is in the nature of Personal Services (PS) contributed to the
excess of PS expenses over PS limitation amounting to P2,753,306.25
contrary to Section 325 (a) of R.A. No. 7160.
We recommended that the management:

a. Ensure that the contract of service shall only be entered into for a specific
work or job requiring special or technical skills not available in the
Municipality to be accomplished within a specific period not exceeding one
(1) year:

b. Ensure that the job order shall only cover a piece of work or intermittent job
of short duration not exceeding six months and pay is on a daily basis;

c. Record the wages of personnel performing regular work and clerical or

administrative function to proper Personal Services accounts pursuant to the
updated description of accounts in the New Government Accounting System
per COA Circular No. 2004-008; and

d. Review and evaluate the budget, whether annual or supplemental, prior to its
submission to the Sangguniang Bayan. Ensure that the appropriations for PS
complied with the PS limitation at any point in time during the budget year as
required under Section 325 (a) of R.A. No. 7160. Wages of personnel which
are PS in nature should not be charged against the appropriations for MOOE.

3. Cash advances granted to officials and employees totalling P6,332,569.55

remained unliquidated as of December 31, 2014 contrary to the provisions of
COA Circular No. 97-002 dated February 10, 1997.

We recommended that:

a. The Municipal Mayor require all concerned officials and employees to strictly
adhere with the rules and regulations on the granting, utilization and
liquidation of cash advances, as provided for under COA Circular No. 97-002
dated February 10, 1997;

b. The Municipal Accountant closely monitor unsettled cash advances of each

officers and employees and send within ten (10) days before the expiration of
the prescribed period, a written reminder under the signature of the head of
agency or his duly authorized representative, enjoining officials or employees
concerned, including those that are separated from service, to immediately
liquidate their cash advances. (Section 3.3.2(a) of COA Circular No. 96-004
dated April 19, 1996);

c. After expiration of the prescribed period, cause the immediate withholding of

salaries and other claims of those officers and employees who have failed to
settle cash advances for travel and other purposes, as well as the institution of
other sanctions, pursuant to Sections 5.1.3 and 5.9 of COA Circular No. 97-
002. The Municipal Accountant is authorized to “delete the name of the
official or employee from the subsequent payrolls until such time that the
 travel cash advance has been fully liquidated.” (Section 16 of Executive Order
No. 248 and Section 3.3.2(b) of COA Circular No. 96-004 dated April 19,
1996);

d. The Municipal Accountant, Municipal Treasurer, Municipal Budget Officer

and Municipal Mayor refrain from signing cash advance vouchers and
obligation requests of officials and employees with outstanding cash
advances; and

e. Send demand letters to the former employees of the municipality with

unliquidated cash advances otherwise institute legal action against them.

4. Declaration of state of calamity by the local sanggunian by reason of

preemptive evacuation prompted by the threat of Typhoon Ruby is not in
accordance with the criteria for calamity area declaration provided under
Item 4.0 of NDCC Memo Order No. 4 dated March 4, 1998. Such declaration
was not supported by damage assessment and needs analysis conducted by
the LDRRM Council contrary to the provisions of Section 16 of R.A. No.
10121, thereby casting doubts to the propriety of charges to the 30% Quick
Response Fund (QRF) totalling to P1,534,060.00.

Further, the amount of P947,653.90 that were utilized for the Municipal DRRM
Office and P109,630.00 representing expenses not related to disaster mitigation,
prevention and preparedness were charged to 70% Mitigation Fund and LDRRM
Special Trust Fund contrary to Item 4.3 of NDRRMC-DILG-DBM-CSC Joint
Memorandum Circular (JMC) No. 2014-1 dated April 4, 2014 and the provisions of
NDRRMC-DBM-DILG JMC No. 2013-01 dated March 25, 2013.

We recommended that the guidelines provided in RA No. 10121 and its Implementing
Rules and Regulations, NDCC Memo Order No. 4 dated March 4, 1998, NDRRMC-
DILG-DBM-CSC Joint Memorandum Circular No. 2014-1 dated April 4, 2014, COA
Circular No. 2012-002 dated September 12, 2012 and NDRRMC-DBM-DILG Joint
Memorandum Circular No. 2013-1 dated March 25, 2013 for the allocation, utilization
and reporting of LDRRMF be strictly observed.

5. Engagement of services of five (5) individual consultants who were paid a

total amount of P818,626.84 for the calendar year 2014 was not in
accordance with Republic Act (R.A.) No. 9184 and in violation of COA
Circular 2012-003 dated October 29, 2012.

We recommended that the management:

a. Procure consultancy services in accordance with R.A. No. 9184 and its
Revised IRR. Engagement of the service of a consultant must be done through
competitive bidding or any alternative methods of procurement;
 b. Explicitly provide in the contract of each professional consultants the detailed
scope of work, detailing all of the tasks/functions to be performed,
output/expected deliverables, time frame or delivery schedules, obligations,
minimum qualifications of consultants, confidentiality of information,
grounds for termination of services, penalty clause, compensation/fees,
payment terms and all other provisions necessary in the interest of the
Municipality;

c. Engage the services of individual consultants for a period not exceeding six
months, renewable at the option of the Municipal Mayor, but not exceeding
her term, subject to criteria established by the Management;

d. Limit the contracting of services of consultants only for tasks/works/activities

which are highly technical in nature. Evaluate the necessity of procuring
consultancy services and carefully review and evaluate the responsibilities and
functions to be assigned to a consultant to avoid duplication of duties of the
regular employees and to prevent unnecessary expenditures on the part of the
Municipality; and

e. Comply with the provisions of COA Circular No. 98-002 dated June 09, 1998,
pertaining to the hiring or employment of a private lawyer.

6. Reduction of back taxes on real properties declared for the first time and
non-imposition of interests on unpaid real property taxes authorized under
Provincial Ordinance No. 1416-14 was contrary to the provisions of Section
276 of RA No. 7160.

We recommended for the Municipal Mayor to 1) require the Municipal Treasurer to

compute the back taxes pand interests that were not collected in August to December
2014 due to the implementation of Provincial Ordinance No. 1416-14 and immediately
submit a schedule thereof to the Auditor; 2) order the collection of the interest and back
taxes condoned contrary to Section 276 of RA No. 7160 so that the municipal
government will not be deprived of additional funds to finance its development projects;
3) ensure that the conditions set forth in Section 276 of RA No. 7160 are satisfied before
implementing ordinances authorizing condonation or reduction of real property taxes and
interests.

7. The Continuing Appropriations include non-capital outlay items amounting

to P3,546,048.60 contrary to Section 322 of Republic Act No. 7160. Further,
there were also inclusions of projects/programs totaling P974,459.52 which
cannot be identified from the prior years’ unexpended balance of
appropriations.

We recommended that the Municipal Mayor and Municipal Budget Officer should
strictly adhere with the mandates of R.A. No. 7160 and discontinue the practice of
allowing PS and MOOE items to be included in the continuing appropriations. The
remaining balances of appropriations for PS and MOOE in the submitted SAAOB of
continuing appropriations as of December 31, 2014 should be reverted to the general fund
and shall thereafter be available for expenditure through a subsequent enactment.

Lastly, any reverted unexpended balance of the 20% Development Fund during
the year shall be re-appropriated to finance only those development programs, projects or
activities identified to be funded under the 20% Development Fund for the ensuing year.

8. The object of expenditure of special purpose appropriations totaling

P130,210,327.15 were not specified in 2014 Annual and Supplemental
Budgets. Moreover, such appropriations were not supported by Local
Budget Preparation Form Nos. 3 and 3A contrary to the provisions of DBM
Local Budget Memorandum No. 67 dated June 28, 2013.

We recommended for the Municipal Mayor to ensure that the budget for the ensuing
years are prepared in accordance with the procedures, schedules and local budget
preparation forms prescribed under the Budget Operations Manual for LGUs and for the
Sangguniang Bayan to require, prior to the approval of the Annual and Supplemental
Budgets, that special purpose appropriations are categorized by object of expenditure and
presented in a similar sequence as a department or office expenditure program except the
staffing and compensation profile where there are no personnel and office to operate.

9. Expenditures charged to 20% Development Fund for CY 2014 totaling

P1,155,648.35 were found inconsistent with the guidelines set forth under
DILG-DBM Joint Memorandum Circular (JMC) No. 2011-1 dated April 13,
2011.

We recommended that the programs and projects under the 20% Development Fund and
the expenditures charged thereto should strictly be in accordance with the provisions of
DILG-DBM Joint Memorandum Circular No. 2011-1 dated April 13, 2011.

10. Disbursements in CY 2014 totalling P1,072,192.94 were paid on a

reimbursement basis contrary to COA Circular No. 97-002 dated February
10, 1997.

We recommended that the management refrain from adopting reimbursement as a mode

of payment for procurement of goods or services and strictly adhere to the requirement
that all payments must be made by check and should be directly paid to the suppliers,
contractors, dealers and creditors. Procure all supplies and materials in bulk in order for
the department heads not to resort to shopping and to make the supplies readily available
to them when the need arises.

Further, the Management may set up a Petty Cash Fund for non-recurring, emergency
and petty expenses sufficient for one month pursuant to Section 48 of the NGAS Manual,
Volume I.
 11. Expenditures totalling P466,808.33, which is 32.33% of the Special Education
Fund budget, was spent for purposes not within the priorities provided
under Section 272 of R.A. No. 7160.

We recommended that the members of the Local School Board of the Municipality of
Roxas plan, prepare and utilize the school board budget for Special Education Fund
strictly within the priorities and limits set forth in Section 272 of R.A. No. 7160 or the
Local Government Code and DECS-DBM-DILG Joint Circular No. 01, series of 1998.

12. Honoraria and other allowances totalling P512,800.00 were paid to national
government officials despite the absence of Sangguniang Bayan resolution
authorizing the rates of allowances contrary to Section 447(a)(1)(xi) of the
Republic Act No. 7160.

We recommended that further monthly payments of honoraria and other allowances to

national government officials be immediately stop until the Sangguniang Bayan of Roxas
pass resolution authorizing the grant of and specifying the rates of additional allowances
to these officials, subject to availability of funds.

13. Various claims for travel expenses totaling P278,602.23 were made contrary
to COA Circular Nos. 2012-001; 2012-003 and Executive Order No. 298.

We recommended for the Municipal Mayor to 1) require the concerned officials and
employees to refund the amounts claimed in excess of the authorized travel allowances
and transportation expenses to avoid audit suspensions and/or disallowances; 2) instruct
the Municipal Accountant to thoroughly review the disbursement or liquidation vouchers,
as part of the internal audit system of the municipal government, to determine
completeness of supporting documents, compliance of claims with applicable laws, rules
and regulations on travel and correctness of computations, before recording the same in
the books of accounts; 3) ensure that the provisions of Executive Order Nos. 248, 248-A
and 298, COA Circular No. 2012-001 dated June 14, 2012 and COA Circular No. 2012-
003 dated October 29, 2012 are strictly complied with; and 5) exercise prudence in
approving travel orders and itineraries.

14. The Municipality is not fully compliant on the requirement on information

and publicity of its projects/programs/activities for the calendar year 2014
contrary to the provisions of DILG Memorandum Circular No. 2010-101
dated September 23, 2010 and COA Circular No. 2013-004 dated January 30,
2013.

We recommended for the immediate submission of the list of all on-going government
projects/programs/activities and those that are to be implemented during the year 2015
containing details as to project name, location, total cost, date started, extensions, target
and actual completion date, project status and total cost incurred to date.
Henceforth, we recommended strict compliance with the provisions of COA Circular No.
2013-004 dated January 30, 2013 and DILG Memorandum Circular No. 2010-101.

15. The 2014 Gender and Development (GAD) Plan and Budget amounting to
P13,432,391.65 was not approved by the DILG and the programs/activities
implemented totalling P10,759,450.67 do not address specific gender issues
and/or promote gender equality contrary to provisions of PCW-DILG-DBM-
NEDA Joint Memorandum Circular No. 2013-01.

We recommended strict adherence to the guidelines for the preparation of Annual GAD
Plan and Budget and Accomplishment Report and for the submission of copies thereof to
the Auditor as provided in PCW-DILG-DBM-NEDA Joint Memorandum Circular No.
2013-1 and COA Circular No. 2014-001 dated March 18, 2014. We also recommend for
the GAD Focal Point System to ensure that the Annual GAD Plan and Budget was
approved by the DILG before incorporating the same in the Annual Budget so that the
programs that will be implemented under GAD are directed to improving the municipal
government’s capacity for gender mainstreaming, addressing gender issues and/or
promoting gender equality. We also recommend that if the GAD budget will be
integrated with the regular/flagship programs of the municipal government, the GAD
activity and budget under such regular programs must be specified.

The findings and recommendations contained in the report were discussed with
the concerned Municipal officials and staff during exit conference conducted on May 22,
2015. Management’s views and reaction were considered in the report, where
appropriate.

Status of Implementation of Prior Year’s Audit Recommendations

Of the nine (9) audit recommendations contained in the 2013 Annual Audit
Report and five (5) audit recommendations in years prior to year 2013, ten (10) were
partially implemented and four (4) remained unimplemented by the Municipality.