EXECUTIVE SUMMARY

The Municipality of Mabini, Bohol is a coastal town located in the eastern part of Bohol.
It was formally established in 1904. It is about one hundred four (104) kilometers away
from Tagbilaran City, which is the capital city of the Province of Bohol.

The town has a land area of 10,457.48 hectares, with twenty two (22) barangays, sixteen
(16) of which are in coastline and six (6) barangays are in the upper land. The main
source of livelihood of the constituents are farming and fishing.

Nature of Appointment to Office Quantity

Elective Officials 11
Permanent Positions 43
Plantilla Casuals 32
Job Orders 116
Total 202

The Municipality derives its mandates from Republic Act No. 7160, known as the Local
Government Code of 1991. The Code empowers Local Government Units to exercise
efficient and effective governance essential to the promotion of the welfare and the
provision of basic services and facilities to its constituents. It is committed to discharge
its mandated functions and responsibilities with the highest degree of integrity, dedication
and nationalism, and to deliver prompt, responsive and quality service to its constituents.

To improve the standard of living of all the constituents had been the main thrust of the
municipality. To attain this goal, this municipality uses its resources to the maximum
level by implementing the programs and projects for the benefit of its constituents.

FINANCIAL HIGHLIGHTS

Comparative analysis of the Statement of Financial Position as graphically illustrated

showed an increase in Assets, Liabilities and Equity.

Financial Position
200,000,000.00
In Pesos

150,000,000.00

100,000,000.00

50,000,000.00

0.00
Assets Liabilities Equity
2016 167,701,634.93 37,833,774.85 129,867,860.08
2015 119,179,419.25 32,507,571.50 86,671,847.75

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On the other hand, the Statement of Financial Performance exhibits an increase of
expenses but decrease in income.

Financial Performance
80,000,000.00

60,000,000.00

40,000,000.00
In Pesos

20,000,000.00

0.00
Total Total Net
Income Expenses Income
2016 86,902,805.86 75,027,865.27 11,874,940.59
2015 81,140,505.61 66,950,593.35 14,189,912.26

The following graph illustrates the difference of the Budget against the Actual Amounts
during the year:

Comparison of Budget and Actual Amounts

100,000,000.00

90,000,000.00

80,000,000.00
In Pesos

70,000,000.00

60,000,000.00

50,000,000.00

40,000,000.00

30,000,000.00

20,000,000.00

10,000,000.00

0.00
Revenue Expenditures Surplus
Budget 94,393,537.28 94,391,728.44 1,808.84
Actual 91,672,301.45 73,107,004.95 18,565,296.50

SCOPE OF AUDIT

The audit covered the operations of the Municipality of Mabini, Bohol for calendar year
2016. The objectives of the audit were to ascertain the fairness of presentation and
reliability of the financial position and results of operations, to determine whether the
programs, projects and activities for the year were attained in an efficient, economical
and effective manner. We also conducted compliance audit to check the validity and
propriety of the transactions and adherence to pertinent laws, rules and regulations.
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AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

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

statements of the municipality for the year 2016 because the existence, validity and
correctness of the municipality’s total Property, Plant and Equipment amounting to
P107,814,484.83 as of December 31, 2016 could not be effectively substantiated due to
non-submission of the Report on the Physical Count of Property, Plant and Equipment
and the failure to maintain PPE and Property Ledger Cards. Likewise, cash advances for
Intelligence and Confidential Fund amounting to P1,556,651.00 of the previous local
chief executives and advances to officers and employees for travel and other time-bound
undertakings of P177,703.08 were not liquidated within the reglementary period, thus,
expenses was understated and the Government Equity account was overstated.

SIGNIFICANT OBSERVATIONS 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 Mabini, Bohol for the
year 2016. Other audit observations are fully discussed in Part II of this report.

1. Property, Plant and Equipment amounting to P107,814,484.83 as of December 31,

2016 was not supported with a Report of Physical Count of Property, Plant and
Equipment (RPCPPE) due to the failure of the Municipality to conduct a complete
physical inventory-taking of the assets contrary to Section 124 of the Manual on the
New Government Accounting System for Local Government Units (NGAS), thus the
existence, correctness and reliability of the recorded Property, Plant and Equipment is
rendered doubtful.

Require the inventory committee/team to conduct the physical inventory of all

properties and submit the corresponding Report on the Physical Count of Property,
Plant and Equipment (RPCPPE) to the Auditor in accordance with Section of the
Manual on New Government Accounting System (NGAS), Volume 1. Likewise,
reconciliation between the records maintained by the Office of the Municipal
Treasurer and the Municipal Accountant should be made and effect necessary
adjustments when appropriate.

2. Lack of proper control and close monitoring in the grant, utilization and liquidation of
cash advances resulted to the accumulation of unliquidated cash advances to
P1,734,354.08 as of December 31, 2016, contrary to COA Circular No. 97-002 dated
February 10, 1997, thus overstating the receivable accounts and understating the
related expense accounts and exposing the unexpended cash balance to possible loss
through misappropriation.

We recommend that Management require all officials and employees concerned to

submit immediately the liquidation reports of their outstanding cash advances and/or
refund the unexpended cash balance, if any, otherwise, direct the Municipal
Accountant to withhold the payment of their salaries or any amount due them and

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 strictly enforce that no additional cash advance shall be granted until full liquidation
of the previous cash advances is made.

We also recommend that Management require the former municipal officials to make
follow-up or send tracers for the issuance of Credit Advice from the COA Central
Office and monitor the liquidation of the outstanding balance of the
Confidential/Intelligence Fund.

3. Financial assistance under the Aid to Individual in Crisis Situation (AICS) program of
the municipality amounting to P525,000.00 were granted to individuals who are
deemed not qualified recipients due to absence of documents to support the claims, in
violation of DSWD Memorandum Circular No. 15 dated June 9, 2014, rendering the
transactions irregular.

We recommend that management submit justification in writing on why financial

assistance under the AICS Program were granted to clients despite the absence of
supporting documents as enumerated in Section 4.2 of DSWD Memorandum
Circular No. 15, Series of 2014.

Also, direct the Municipal Social Welfare Officer to submit the records of the cases
and all other basic supporting documents relative to the claims for further evaluation,
otherwise the transactions will be disallowed in audit.

4. Supporting documents in the procurement of construction materials amounting to

P945,139.00 appear to have been signed by another person other than the proprietor,
without a duly notarized Special Power of Attorney, contrary to Section 25.3 of the
Revised Implementing Rules and Regulations (IRR) of Republic Act No. 9184,
rendering the validity, reliability and regularity of the transaction doubtful.

We recommend that management require the Bids and Awards Committee (BAC) to
submit justification in writing on why another person was able to sign official
documents and represents a supplier/bidder for and in his behalf without the later
executing a duly notarized Special Power of Attorney, contrary to Section 25.3 of the
Revised Implementing Rules and Regulations of Republic Act No. 9184.

We also recommend that management install, implement and monitor a sound

Internal Control System pursuant to Section 124 of Presidential Decree No. 1445.

5. The unexpended balance of the CYs 2014-2015 Local Disaster Risk Reduction and
Management Fund (LDRRMF) amounting to P1,409,485.95 were not transferred to
Trust Fund contrary to Item 5.1.10 of COA Circular No. 2012-002 dated September
12, 2012, as a result, charges thereto were still recorded in the General Fund and not a
direct debit to the Trust Liability –DRRMF account.

We recommend that management instruct the LDRRM Officer to furnish a copy of

the LDRRMF Investment Plan to the Municipal Accountant-Designate for the
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 recording of the unexpended CYs 2014-2015 Quick Response Fund and DRRMF-
MOOE in the Trust Fund as Trust Liability, and to the Budget Officer for the
recording of the DRRMF-Capital Outlay as continuing appropriation in the SAAOB.

We also recommend that management require the Municipal Treasurer-Designate to

issue check to actually set aside and transfer to the Trust Fund account the
unexpended LDRRMF for CY 2014-2015.

6. Retainer’s Fee totalling P45,232.73 representing 10% of the gross receipts from the
operation of a fish port was not remitted to the Philippine Fisheries Development
Authority (PFDA), contrary to the provisions stipulated in the Memorandum of
Agreement (MOA) entered into between the Local Government Unit (LGU) and the
PFDA thereby resulting to the accumulation of the unremitted balances.

We recommend that the Local Chief Executive direct the Municipal Treasurer and the
Municipal Accountant-Designate to remit immediately to the PFDA the accumulated
retainer’s fee totaling P45,232.73 representing 10% of the gross income from the
operations of the Barangay Baybayon Fish Port pursuant to Paragraph 17, Article III
of the MOA entered into by the LGU and the PFDA.

Moreover, require the Municipal Accountant-Designate to regularly furnish monthly

and annual financial and statistical reports to PFDA as required.

SETTLEMENT OF ACCOUNTS

An audit suspensions of P205,339.75 and audit disallowances amounting to

P1,420,082.50 remained unsettled as of December 31, 2016.

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Of the thirty two (32) prior years’ audit recommendations, eight (8) were fully
implemented, sixteen (16) were partially implemented, eight (8) were not implemented
during the year.