EXECUTIVE SUMMARY

A. Introduction

We conducted the audit on the Municipality of Sasmuan, a fourth-class municipality

comprising of 12 barangays.

Sasmuan is situated in the Southwestern tip of the Province of Pampanga, bounded on the
Northwest by the town of Guagua, in the East by the town of Macabebe and Masantol; in
the West by the town of Lubao; and in the South by Manila Bay. It lies along the bank of
the grand Pampanga River reaching and winding until Manila Bay.

B. Financial Highlights

The financial highlights of the Municipality of Sasmuan for CY 2017 with comparative
figures for CY 2016 follow:

Increase (Decrease)
Particulars 2017 2016 Amount %
Financial Condition
Total Assets 43,962,214.78 50,996,986.94 (7,034,772.16) (13.79)
Total Liabilities 12,784,061.77 14,274,201.41 (1,490,139.64) (10.44)
Net Assets/Equity 31,178,153.01 36,551,858.20 (5,373,705.39) (14.70)

Results of Operations
Total Revenue 86,308,521.56 79,096,871.11 7,211,650.45 9.12
Total Expenses 81,021,836.16 73,428,271.13 7,593,565.03 10.34
Surplus(Deficit) 4,936,304.47 5,322,199.98 (385,895.51) (00.07)

Sources and Application of Funds

Appropriations 87,687,140.61 79,065,856.99 8,621,283.62 10.90
Allotments 87,687,140.61 79,065,856.99 8,621,283.62 10.90
Obligations 78,571,962.87 68,831,004.51 9,940,958.56 14.48
Balances of Allotments 9,035,177.74 10,234,852.57 (1,200,674.83) (11.73)

C. Scope of Audit

The audit covered the examination, using risk-based approach, of the accounts and
financial transactions of the Municipality of Sasmuan for CY 2017 particularly those
contained in the Memorandum dated October 12, 2017 of the COA Local Government
Sector Assistant Commissioner. The audit was aimed to (a) ascertain the level of assurance
that may be placed on management’s assertion on the financial statements; (b) determine
compliance of management with laws, rules and regulations on the pre-identified audit
thrust/areas and recommend agency improvement opportunities thereon; and (c) determine
the extent of implementation of prior year’s audit recommendations.

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We conducted our audit in accordance with Philippine Public Sector Standards on Auditing
and we believe that it provided a reasonable basis for the audit results.

D. Independent Auditor’s Report

We rendered a qualified opinion on the fairness of presentation of the financial statements

because the accuracy of the balance of the Property, Plant and Equipment (PPE) accounts
with total carrying value of ₱22,467,956.70 as of year-end was not established owing to
the (i) failure of the Management to conduct physical inventory of its property during the
year; (ii) non-submission of the Report on the Physical Count of Property, Plant and
Equipment (RPCPPE); (iii) non-reconciliation of property records by the Municipal
Accountant’s Office and the GSO; and (iv) non-recognition of parcels of land owned by
the Municipality contrary to Volume I of the Manual on New Government Accounting
System and the New Chart of Account.

For the above deficiencies, we reiterated the recommendations that Management require -
(a) the Inventory Committee to (i) conduct a physical count on the property, plant and
equipment to determine existence and condition of the PPEs; (ii) submit the Report on the
Physical Count of Property, Plant and Equipment (RPCPPE) duly reconciled with the
accounting and property records; (b) require the Municipal Accountant and the GSO to (i)
maintain subsidiary records for PPE items such as PPE ledger cards and property cards,
respectively, starting with current year acquisitions until all items are covered; and (ii)
reconcile the respective records of the Accounting Office and Property Officer on PPE; (c)
direct all concerned Municipal officials to exert effort in the reproduction of titles on all
lots owned by the Municipality; and (d) recognize in the books lands owned by the
Municipality using appraised value.

E. Summary of Other Significant Observations and Recommendations

Summarized below are other significant audit observations with their recommendations,
the details of which are presented in Part II of this report. Management views and
comments, including those offered during the exit conference were incorporated in the
report, where appropriate.

1. Cash Advances totaling P3,265,971.18 remained unliquidated as of December 31,

contrary to Section 89 of Presidential Decree (PD) No. 1445 and COA Circular No.
972017 -002 dated February 10, 1997 due to the absence of effective monitoring in the
grant, utilization and liquidation thereof, thus understating the expenses on the year the
advances were incurred.
We recommended that the Local Chief Executive require (a) the concerned
officials/employees with unliquidated cash advances to immediately settle their accounts,
otherwise, impose the withholding of salary or other sanctions in accordance with Section
89 of P.D No. 1445; (b) the Municipal Treasurer to grant cash advances for specific purpose
only and for expenses which are difficult, impractical or impossible to be paid by check;
and (c) the Municipal Accountant and the Municipal Treasurer to monitor the granting and

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liquidation of cash advances and refrain from granting additional cash advances unless the
previous ones are settled or duly accounted for.

2. The Municipal Treasurer failed to deposit collections daily and intact and/or not
later than the next banking day with the authorized government depository bank in
violation of Section 69 of P.D. No. 1445, Section 32, Volume I of the Manual on the New
Government Accounting System for LGUs causing the retention of P1,351,091.66 at year-
end which could lead to possible misuse, theft and embezzlement of government funds.
Moreover, the Municipal Treasurer’s cashbooks for General Fund and Special Education
Fund were not certified at the end of each month in violation of Section 28 of the MNGAS,
Volume II.

We recommended that the Local Chief Executive require the Municipal Treasurer to
strengthen internal control over collections by (a) strictly adhering to the regulations requiring
the deposit of collections daily and intact; (b) posting daily entries in the cashbook the
collections and deposits pursuant to Section 32 of the Manual on NGAS and ensuring that the
balance thereof corresponds to the actual cash in vault by fund; and (c) complying with the
requirement on the need for the accountable officer to rule, foot and certify at the end of each
month the cashbook.

4. The attendance to the Seminar on the 4th Quarterly National Executive Officers-
National Board (NEO-NB) Meeting and 3rd Series of Continuing Local Legislative
Education Program (CLLEP) of the Philippine Councilors League held at Vigan
Convention Center, Vigan City, Ilocos Sur on December 6 to 8, 2017 at the total cost of
P290,500.00 was found excessive and unnecessary as defined under COA Circular 2012-
003 dated October 29, 2012, hence, proper utilization of funds and/or management of
resources was not observed contrary to Section 2 of P.D. No. 1445.

We recommended that the Local Chief Executive (a) exercise prudence and economy in
the disbursement of funds especially for those expenses relating to authorized out-of-town
seminars and similar situations; (b) require the Municipal Accountant to check the
adequacy of supporting documents such as letter of invitation of host/sponsoring
agency/organization addressed to the agency participants and travel orders which shall
indicate the purpose of travel and the urgency and necessity of the travel; and (c) require
the immediate settlement of the disallowed amount of ₱100,800.00 from all the persons
deemed liable for the afore-cited purported travel/incidental expenses.

5. The Municipality failed to substantially comply with Republic Act No. 9003 or
Ecological Solid Waste Management as manifested by: (a) poor segregation of waste at
source and improper disposal of solid wastes ; and (b) failure to consistently monitor the
implementation of solid waste management at barangay level owing to absence of a
Municipal Environment and Natural Resources Office (MENRO) hence, the protection of
public health and environment was not fully achieved.

We recommended that the Local Chief Executive (LCE) and the Solid Waste Management
Board (SWMB) prioritize the creation of Municipal Environment and Natural Resources

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Officer (MENRO) as soon as the budget allows. Likewise, we recommended that the LCE
(a) continue to (i) coordinate efforts with the barangay officials on the implementation of
the five basic environmental laws on preserving and protecting the environment required
under R.A. No. 9003; (ii) conduct information and education campaign on the hazards of
open burning and throwing of waste in the river and strictly monitor compliance thereof
especially at the barangay level; (iii) enforce strictly the Sangguniang Bayan ordinance on
the “no segregation, no collection” policy.; (iv) intensify information drive and awareness
campaign on the regulations on solid waste management in coordination with the DepEd
officials in the Municipality and barangay officials; (v) strengthen the information
campaign by putting up signages in public places displaying the acts prohibited under
Section 49 of R.A. No. 9003 and the corresponding sanctions thereof; and (vi) follow up
the approval of the Ten-Year Solid Waste Management Plan.
6. The Municipality failed to comply with the rules and regulations on fuel and oil
consumption such as the submission of (a) a fully accomplished driver’s trip tickets; (b)
monthly report of fuel consumption of government vehicles; and (c) monthly report of
official travels contrary to Section 361 of GAAM Volume 1 thus, consumption of gasoline,
oil and lubricants totaling P759,426.72 for the period January to December 2018 was not
properly controlled, regulated, and accounted thereby opening opportunities to wasteful
use or misuse thereof for non-official purposes.

We recommended that the Local Chief Executive and all officials concerned (a) institute
necessary control in the issuance of gas/diesel fuel to all of its government owned motor
service vehicles to regulate fuel consumption caused by unofficial trips; (b) attach and
accomplish trip tickets by supplying all data called for therein and submit the Monthly
Report of Fuel Consumption and Monthly Report of Officials Travels for proper
monitoring and control; and (c) stop the practice of allowing gas reimbursements from
officials who are using private vehicles to prevent audit disallowances.
F. Summary of Total Suspensions, Disallowances and Charges at Year-End

As of year-end, suspensions, disallowances and charges stood at ₱58,975,976.03,

₱74,415,666.62 and ₱0.00, respectively.

G. Status of Prior Year’s Unimplemented Audit Recommendations

There were 23 observations contained in the 2015 Annual Audit Report for which 45
recommendations were offered. As of report date, 25 recommendations were fully
implemented while nine were partially implemented and 11 were not implemented.

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