EXECUTIVE SUMMARY

AGENCY PROFILE

The Municipality of Sibulan is a 2nd class municipality located six kilometers

north of Dumaguete City, the capital of the Province of Negros Oriental. On April 2,
1903, by virtue of Republic Act No. 715, Sibulan was fused with Dumaguete, which
was still then a municipality. On January 31, 1910, through the passage of Republic
Act No. 52, Sibulan was separated from Dumaguete and officially recognized as a
municipality. The municipality is composed of 15 barangays, with a land area of
16,300 hectares and a total population of 51,519 as per NSO census dated May 1, 2010.

PERSONNEL COMPLEMENT

The municipality has four hundred eighteen (418) personnel under the following
categories:

Elective Officials 11
Regular Employees 68
Casual Employees 1
Job Order Personnel 338
Total 418

MAJOR ACCOMPLISHMENTS

During the year the municipality was able to complete various infrastructure
projects, all of which were validated by the audit team:
PROJECT COST

Concreting of Ajong Barangay Road (Infront of Kennedy’s Farm to

Downward) P 365,063.50
Concreting of Ajong Barangay Road (Infront of Taguibolosan’s
Residence to Upward) 644,742.45
Concreting of Boloc-Boloc Barangay Road (Continuation of Kalye
Pitong Gatang) 938,757.55
Concreting of Balugo Barangay Road (Infront of Jenny Asierto’s
Residence 160,248.85
Concreting of Balugo Barangay Road (From BADC to Upward) 574,971.70
Concreting of Sitio Ata-ata, San Antonio Barangay Road 518,111.45
Concreting of Sitio Parador, San Antonio Barangay Road 524,371.75
Construction of Poblacion Drainage Canal Along Nillas St. (From
Zamora’s Residence Going to Lotto Outlet) 271,617.25
Construction of Poblacion Drainage Canal (At the back of DYWC) 205,659.00
Concreting of Magatas Barangay Road (From Ugabang Area to
Upward) 965,605.45
TOTAL P 5,169,148.95

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HIGHLIGHTS OF FINANCIAL OPERATIONS

INCOME

For calendar year 2013, the Municipality of Sibulan earned a gross income of
P 105,069,382.49, showing anincrease of P 11,337,495.99 or 12.10% compared to that
of calendar year 2012. Presented hereunder is a comparative statement of income for
calendar years 2013 and 2012.

Sources of Increase
%
Income 2013 2012 (Decrease)
Local Taxes P 11,529,576.61 P 11,309,615.94 P 219,960.67 1.94
Permits and
Licenses 3,088,349.37 2,195,362.11 892,987.26 40.68
Service Income 5,901,383.49 5,486,982.55 414,400.94 7.55
Business 3,510,032.19 4,184,293.82 (674,261.63) (16.11)
Income
Other Income 81,040,040.83 70,555,632.08 10,484,408.75 14.86

Total Income P 105,069,382.49 P 93,731,886.50 P 11,337,495.99 12.10

APPROPRIATIONS

For CY 2013, the municipality had total current appropriations of

P108,051,796.45 which is P9,127,820.23 or 9.23% higher than that of the preceding
year. Details are shown below:

Current Appropriations
Increase
%
Fund 2013 2012 (Decrease)
General Fund P 106,600,254.35 P 97,076,176.22 P 9,524,078.13 9.81
SEF 1,451,542.10 1,847,800.00 (396,257.90) (21.44)
Total P 108,051,796.45 P 98,923,976.22 P 9,127,820.23 9.23

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 In addition to its current appropriations of P108,051,796.45, the municipality had
continuing appropriations of P13,096,912.09 as of the beginning of the year.
Continuing Appropriations
Increase
%
Fund 2013 2012 (Decrease)
General Fund P 13,096,912.09 P 12,826,507.26 P 270,404.83 2.11
SEF 0.00 31,292.10 (31,292.10) (100.00)
Total P 13,096,912.09 P 12,857,799.36 P 239,112.73 1.86

OBLIGATIONS

Total expenditures charged to current appropriations reached P88,952,320.88

which was 8.78% more than the previous year while obligations charged to continuing
appropriations amounted to P5,122,652.39, a decrease of 49.07% from that of CY
2012.

Current Appropriations
Increase
%
Fund 2013 2012 (Decrease)
General Fund P 87,597,109.99 P 79,944,498.08 P 7,652,611.91 9.57
SEF 1,355,210.89 1,830,972.96 (475,762.07) (25.98)
Total P 88,952,320.88 P 81,775,471.04 P 7,176,849.84 8.78

Continuing Appropriations
Increase
%
Fund 2013 2012 (Decrease)
General Fund P 5,122,652.39 P 10,058,945.07 P (4,936,292.68) (49.07)
SEF 0.00 0.00 0.00 -
Total P 5,122,652.39 P 10,058,945.07 P (4,936,292.68) (49.07)

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Financial Ratios

Liquidity

Increase
2013 2012 %
(Decrease)
CA 53,733,133.99 46,904,009.51
Current
CL 23,633,248.56 28,456,737.11 0.62 0.38
Ratio
2.27:1 1.65:1
CA-Inventory-
Quick Prepayments 53,731,411.34 46,902,286.86
(Acid Test) 0.62 0.38
Ratio CL 23,633,248.56 28,456,737.11
2.27:1 1.65:1

Financial Leverage

Increase
2013 2012 %
(Decrease)
TL 34,175,701.11 40,204,502.05
Debt to
Equity TL + GE 128,985,868.40 126,911,469.97 (0.05) (15.6)
Ratio
0.27 0.32:1

The Municipality’s ability to pay its short-term debts, as shown in its Current
and Quick Ratios, increased by 0.38% compared to that of CY 2012. Its Debt to
Equity Ratio, on the other hand, decreased by 15.6% due to a decrease in its long-term
liabilities.

SCOPE OF AUDIT

A financial and compliance audit was conducted on the accounts and operations
of the Municipality of Sibulan for calendar year ended December 31, 2013. The audit
was aimed at ascertaining the fairness of the presentation of the financial statements, the
propriety and legality of disbursements and the degree of compliance with existing laws,
rules and regulations.

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 The audit focused on the audit of honoraria and allowances, cash and cash
accounts, cash advances, prepayments, procurement of construction materials, Capitation
Fund disbursements, Gender and Development, and Property, Plant and Equipment
accounts.

Our examination consisted of the verification of records on a test basis, review of

operating procedures, inspection of projects, interview with concerned officials and
employees, analysis of accounts and such other procedures considered necessary in the
circumstances.

AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The auditor expressed a qualified opinion on the financial statements because the
municipality did not conduct the physical count of its movable property, plant and
equipment valued in the books at P11,481,658.60 as of December 31, 2013 thus the
existence, validity and propriety of these assets remain doubtful. The inadequacy of its
records did not permit us to apply adequate alternative audit procedures to determine the
existence of these assets as well as the accuracy of the account balances thereon.

SIGNIFICANT FINDINGS AND RECOMMENDATIONS

1. The validity, propriety and existence of the municipality’s movable property,

plant and equipment amounting to P11,481,658.60, remained doubtful because
the municipality failed to complete the physical count and to reconcile the count
with the books due to the absence of subsidiary records such as PPE Cards,
contrary to Section 124 of the NGAS Manual for LGUs, Volume I.

We reiterate our previous recommendations that:

a. Management require the inventory committee to complete the physical

count of the properties and to undertake the said activity annually.

b. The Municipal Treasurer be required to update the ledger cards, property

records and Acknowledgement Receipts for Equipment (AREs) in order
that the reconciliation of the physical count against book balances can be
facilitated.

c. The Municipal Treasurer and Municipal Accountant reconcile the

accounting and property records and make the necessary adjustments so
that there will be an assurance that the accounts are fairly presented in the
financial statements.

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2. Purchases of supplies and materials costing P1,677,444.07 were not taken up as
inventory but as outright expenses, contrary to Sections 51, 41 and 43 of the
NGAS Manual for LGUs, Volumes I and II, thus dispensing with the required
accounting thereof and further exposed the supplies to possible misuse.

We recommend that the accountant record purchases of supplies and

materials to the proper inventory accounts, not as outright expense, subject to
accounting and submission of monthly Summaries of Supplies and Materials
Issued (SSMI) in order to properly account for the receipts and issuances of
supplies and materials during any particular month.

3. Disbursements amounting to P59,845.00 for BAC honoraria were not supported

with the required documents as prescribed under COA Circular No. 2012-001,
thus the validity, propriety and legality of the claims could not be established.

We recommend that:

a. The Municipal Accountant should see to it that the claim is supported with
complete and proper documents.

b. The BAC Committee should support their claims for honoraria with the
documents listed under COA Circular No. 2012-001 before the claim is
processed.

c. The monthly salary rates of BAC and TWG members must be indicated in
the payroll to ensure that their claims for honoraria do not exceed 25% of
their basic monthly salary.

4. No criteria for the payments from PDAF Funds of financial assistance to

indigents for hospitalization expenses and medicines was established by the
municipality thus the covering vouchers were not properly supported by the
documents required under DSWD Administrative Order No. 1, s. 2011 such as
medical certificates/records or clinical abstracts, rendering the payments,
amounting to P796,198.20, questionable.

We recommend that:

a. The Sangguniang Bayan pass a resolution establishing the criteria for the
grant of financial assistance to indigents.

b. The social workers ensure that prior to issuing the Certificates of

Eligibility, the proper documents as required under the established criteria
and the DSWD Administrative Order No. 1, s. 2011, are attached.

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 c. The municipal accountant monitor the disbursements by maintaining a
subsidiary ledger for the PDAF funds according to the purposes stated in
the SARO.

5. August to December, 2012 electricity expenses totaling P 709,551.85 were

charged to CY 2013 appropriations, contrary to Section 119 of PD 1445 and the
accounting principle on accrual which resulted in the misstatement of electricity
expenses and the net income of the municipality.

It is recommended to:

a. Instruct the Budget Officer to provide for a realistic appropriation for

utilities, such as electricity, telephone and water as these are recurring
expenses and to obligate the expenses before the closing of the books of
accounts.

b. Immediately stop the practice of charging prior year’s electricity expenses

against the appropriation of the year it was paid.

c. Instruct the personnel in-charge to get unpaid electric bills from NORECO
II before the closing of the books of accounts at year end so that these can
be obligated in the year they were incurred.

6. As a result of the failure of the municipality to reorganize and activate its

Scholarship Program Screening Committee, monitoring of scholars’ grades was
neglected thus there was a low success rate of only five out of thirteen expected
to graduate in March 2014 while none of its members followed up payments
from those who dropped out, which could lead to the failure of the program and
to waste of government funds.

It is recommended that the mayor:

a. Create a new Scholarship Program Screening Committee to implement the

college education loan program.

b. Require the Committee to carefully monitor the loans, keep records thereof,
and issue demand letters for the refund of tuition fees from drop-outs or
their parents and from those who have graduated.

c. Execute a Memorandum of Agreement between the municipality and each

scholar in order to legally establish the obligations of both parties and
ensure collection of the loans.

d. Instruct the Municipal Accountant to consistently apply the accounting

principle for recording the scholarship loans as receivables and to take up

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 correcting entries for those loans which were taken up as expense
amounting to P424,870.00.

7. The Annual Gender and Development (GAD) Plan and Budget of the
Municipality of Sibulan for CY 2013 included and considered programs, activities
and projects which were not gender-related as these did not address the different
gender issues nor promote and fulfill women’s human rights and women’s
economic empowerment, contrary to the provisions set forth under R.A. 9710 of
the Magna Carta of Women and its Implementing Rules and Regulations and
related guidelines issued under Joint Memorandum Circular No. 2013-01 of the
PCW, DILG, DBM and NEDA, thus the attainment of GAD goals may not have
been substantially addressed.

It is recommended that management:

a. Appropriate the required amount of 5% of the LGU’s total budget

appropriations in order that the envisioned goals of the program, such as
gender-responsive governance, protection of women’s human rights, and the
promotion of women’s economic empowerment, can be fully achieved;

b. Intensify their knowledge and competence of GAD, its goals, objectives, laws,
regulations and the utilization of the GAD budget;

c. Consider as GAD PPAs only those programs and activities which address
issues concerning women’s human rights and economic empowerment in
accordance with Joint Circular No. 2013-01 of the PCW, DILG, DBM and
NEDA.

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

We followed up the actions taken by the Municipality of Sibulan on the

seventeen (17) recommendations for CY 2012 and prior years. As of December 31,
2013, three (3) were fully implemented, eight (8) were partially implemented and six
(6) were not implemented at all.

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