Accounting and Reporting Guidelines in the implementation of the Local Disaster

Risk and Management Fund (LDRRMF) prescribed under the Manual on the
Financial Management of Barangays were not followed that resulted to the non-
recognition of the account Trust Liabilities of P14,463.88 in the financial statements
and non-disclosure in the Notes to the Financial Statement of the details of the fund,
thus there was no transparency and accountability in the management of the
disaster funds.

Chapter XI of the Manual on the Financial Management of Barangays provides:

11.1 Specific Policies

xx

11.1.2 Disbursements for specific STF shall not exceed the balance
of the STF.

11.1.3 A Registry for Special Trust Fund (RSTF) – Annex 33 shall

be maintained for each STF until the STF is fully utilized.

11.1.4 The RSTF shall show the amount of funds for specific
purposes and charges thereof.

11.1.5 Any unspent balance from the appropriation for current year
appropriation for LDDRMF shall at the end of the year be
transferred to the STF.

xx

11.3 Illustrative Accounting Entries

11.1.6 Transfer of unused LDRRM Funds

Account DR CR

Transfer to TF unutilized current year xx

allocation for LDRRMF
Trust Liabilities – DRRMF xx
To transfer the unexpended QRF and DRRMF-MOOE
to the special trust fund account at year-end

xx

During the year, the 5% Disaster Funds of the Barangay totaled to P98,580.55 for
the Current Year and P154,016.63 of Continuing Appropriation or a total of P252,597.18.
From this amount, P163,000.00 and P0.00 was utilized from the current year and
continuing appropriation, respectively, or a total of P163,000.00. At the end of the year,
the unspent balance was P89,597.18.

Audit of the fund showed that a total of P14,463.88 was deposited to the special
trust fund bank account instead of unutilized balance of P89,597.18 or a balance of
P75,133.30.

The deposit to the special trust fund bank account was recorded as debit to Other
Maintenance and Operating Expenses (under MOOE) and credit to the Cash in Bank
account.

The Municipal Accountant failed to recognize the transfer of the unutilized

balance from General Fund to a Special Trust Fund account that resulted to non-
recognition of the account Trust Liabilities- Disaster Risk Reduction and Management
Fund in the financial statements. This is shown as follows:

Recorded As Should Be
Debit Credit Debit Credit
Other Maintenance Transfer to Trust
and Operating Fund unutilized
Expenses current year
allocation for
14,463.88 LDRRMF 14,463.88
Cash in Bank 14,463.88 Trust Liabilities 14,463.88

The amount of P14,463.88 was deposited to the depository account maintained for
the disaster funds per LBP San Juan Branch, Savings Account Number 4182100590.
However, the depository account is not recorded in the books hence not reported in the
Statement of Financial Position. The balance per bank statement as of December 31,
2020 was P14,463.88.

Shown in Table 1 is a summary of the Disaster Funds:

Table 1

Available Utilized Balance

Current Year Appropriation
Quick Response Fund (QRF) 29,574.17 29,574.17 0.00
Mitigation Fund
MOOE 69,006.38 133,425.83 (64,419.45)
Capital Outlay - - -
Total 98,580.55 163,000.00 (64,419.45)
Continuing Appropriation:
CY 2015 - - -
 Available Utilized Balance
CY 2016 - - -
CY 2017 - - -
CY 2018 71,151.26 - 71,151.26
CY 2019 82,865.37 - 82,865.37
Total 154,016.63 0.00 154,016.63
Grand Total 252,597.18 163,000.00 89,597.18
Less: Fund Deposited to Special
14,463.88
Trust Fund Bank Account
Balance 75,133.30

Due to the non-adherence to the accounting and reporting guidelines on the

disaster fund, there was no transparency and accountability in the management of the
disaster fund.

We recommend that:

a. The Municipal Accountant deposit the unutilized balance of P75,133.30 to

the Special Trust Fund Bank Account; and

b. Make adjusting entry to record the disaster funds as Trust Liabilities to reflect
the same in the financial statements.

May we have your comments on the abovementioned audit observations within

five (5) calendar days from receipt hereof.