EXECUTIVE SUMMARY INTRODUCTION ‘The Municipality of San Isidro is a sixth class municipality of Bohol Province and was created when the late President Ferdinand Marcos signed into law RA 5662 on June 21, 1969. It is part of the 2nd congressional district of the province and is politically subdivided into twelve barangays with a total population of approximately 9,125 people per 2010 census. Tt has a total land area of 41.01 square kilometer. ‘The municipality, like any other municipalities, enjoys total independence in planning, ‘managing and deciding its own administrative, fiscal and developmental affairs in consonance with the national trust for sustainable social and economic benefits to its constituents pursuant to Republic Act No. 7160 or otherwise known as the Local Government Code of the Philippines. HIGHLIGHTS OF FINANCIAL OPERATION Comparative analysis of the Statement of Financial Position as graphically illustrated showed a decrease in Assets and Liabilities and an increase in Equity. On the other hand, the Statement of Financial Performance exhibits an increase in income, expenses and net income. Statements of Financial Position 250,000,000.00 200,000,000.00 +, 150,000,000.00 é © 100,000,000.00 50,000,000.00 - Assets Liabilities Equity 2020) 184,717,033.18 20,542,264.02 164,174,769.16 = 2019] 200,423,082.18 64,964,745.00 135,458,337.18Statements of Financial Performance YS 120,000,000.00 100,000,000.00 0,000,000.00 2 60,000,000.00 40,000,000.00 20,000,000.00 - Total Income Total Expenses Net Income 2020) 113,216,447.94 $2,881,987.52 30,334, 460.42 2019] 90,824,187.20 75,249,968.94 15,574218.26 ‘The following graph illustrates the increase in Appropriations and Obligations with a decrease in Balances during the year: Allotments, Obligations and Balances 100,000,000.00 90,000,000.00 80,000,000.00 70,000,000.00 60,000,000.00 30,000,000.00 40,000,000.00 30,000,000.00 20,000,000.00 10,000,000.00 Allotments Obligations Balances = 2020] 97,736,362.00 83,350,145.60, 14,386,216.40 = 2019] 82,679,668.00 64,012,877.21 18,666,790.79SCOPE OF AUDIT ‘An audit was conducted on the accounts and operations of the Municipality of San Isidro, Bohol for calendar year 2020, ‘The audit was conducted to ascertain the propriety of financial transactions and compliance of the agency with prescribed rules and regulations and the programs and objectives achieved efficiently and effectively. 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. AUDITOR’S OPINION ON THE FINANCIAL STATEMI TS ‘The auditor rendered a qualified opinion on the faimess of presentation of the financial statements of the Municipality of San Isidro as of December 31, 2020 due to deficiencies that materially affected the reliability of the account balances as discussed below: 1. Government Equity in the Trust Fund has an abnormal debit balance of P457,880.22 as of December 31, 2020 which may indicate errors in recording or omission of required accounting entries contrary to the Philippine Public Sector Accounting Standards (PPSAS) 23, casting doubt on the correctness and accuracy of the balances reflected in the financial statements. 2. Purchases of construction materials and payment for labor expenses procured through Pakyaw Contracts totaling P4,715,437.65 were directly recognized under Property, Plant and Equipment (PPE) instead of setting up the corresponding Construction in Progress accounts, thereby overstating PPE, accumulated depreciation and the depreciation expenses accounts, 3. The Transfer of Unspent Current Year Disaster Risk Reduction Management (DRRM) Funds per books did not equal the unutilized balance of the Current Year Appropriations of LDRRM per utilization report resulting in a discrepancy of 74,720.57, thus, casting doubt on the faimess of the municipality's financial statements, contrary to paragraph 27 of the International Public Sector Accounting Standards (IPSAS). SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS The following are the summary of significant observations and recommendations in the audit and/or evaluation of the operations of the Municipality of San Isidro for the CY 2020. Other audit observations are fully discussed in Part II and included in Part III of the report. 1. The non-adjustment of the reconciling items totaling P20,183.37 per Bank Reconciliation Statement as of December 31, 2020 resulted in the understatement of the Cash in Bank accounts, thus, not reflecting the correct balance of the said accounts. on the year-end financial statements.We recommend the Municipal Accountant to record the necessary adjusting entries based on the reconciling items in the bank reconciliation statement and to reflect the correct adjusted cash in bank balance. Stale checks totaling P4,336.20 was still included in the bank reconciling item as outstanding check as of year-end resulting in understatement of both Cash in Bank and Accounts Payable accounts. We recommend that the Municipal Accountant coordinate with the Municipal ‘Treasurer for the cancellation of above mentioned checks and set up the cash and payable accounts relative to these transactions and prepare the following proposed journal entries: Cash in Bank- Local Currency, Current Account 4,336.20 Accounts Payable P4,336.20 Disbursements totaling P1,274,000.00 for the payment of catering services for Locally Stranded Individuals (LSI) and Medical Team quarantined in the municipality's isolation facility due to COVID-19 pandemic were not supported with complete documents to prove the validity, propriety and legality of the claim, We recommend that management submit justification on the deficiency noted in the payment of catering services for LSI/Medical Teams. Furthermore, the BAC has to ensure that the retumed RFQ from the suppliers of the catering services will indicate the food specifications/menu in support to the price quoted. Reasonableness of the municipality’s purchases of diesel and gasoline totaling P697,976.00 cannot be determined and verified because management did not submit the Monthly Report of Fuel Consumption and Report of Official Travels of government motor vehicles and that Driver's Trip Tickets were not properly filled out with necessary details. We recommend that management require that the Driver's Trip Tickets be serially numbered and completely filled out with necessary details for the purpose of monitoring and controlling the use of government vehicles and consumption of fuel. Moreover, require the Municipal Drivers to prepare the Monthly Report of Official Travels for each vehicle duly certified by the driver and approved by the Administrative Officer and submit it to the auditor for verification. Further, the Agency personnel concemed have to prepare a Report of Fuel Consumption and submit it to the auditor on a monthly basis in compliance with COA Circular No. 77- 61 to determine the reasonableness of the Fuel, Oil and Lubricants Expenses. ‘The municipality did not prepare the required format for Annual Procurement Plan (APP) as basis for any procurement activity of the agency which is in violation of the provision of Section 4 of GPPB Circular 07-2015, hence, transparency and impartiality of procurement processes may not be achieved.We recommend that management submit a valid justification letter for not preparing, the APP based on the required format. Moreover, management has to prepare the APP based on the approved format provided in the GPPB Circular 07-2015. STATUS OF AUDIT SU: ISSUED AND/OR SE’ PENSIONS, DISALLOWANCES AND CHARGES, LED DURING THE YEAR During the Calendar Year (CY) 2020 there were Notices of Suspensions and Disallowances issued which were not yet settled in ensuing year, as shown below Beginning Tssued/Settled Ending Balance Balance during this Period (As of December (As of December | (January I to December 31, 31, 2020) 31, 2019) 2020) NS/NDING NssDC Notice of Suspension | _P 13,242,581.28 0.00 0.00 | _P 13,242,581.28 Notice oF Disallowance 309,482.00 0.00 0.00 309,482.00 Notice of Charge 0.00 0.00 0.00 0.00 Total P13,552,063.28 0.00 0.00 | P 13,552,063.28 STATUS OF IMPLEMENTATIONBY MANAGEMENT OF PRIOR YEAR’S AUDIT RECOMMENDATIONS Of the fifty (50) audit recommendations embodied in the prior years’ and CY 2019 Annual Audit Report twenty (20) were fully implemented, twenty-four (24) were partially implemented and six (6) were not implemented.