EXECUTIVE SUMMARY

A. Introduction

The Municipality of Kiblawan is one of the 9 municipalities of the Province of Davao

del Sur located in the southern part of Mindanao. It was created into a municipality by
virtue of Republic Act No. 4748 on June 18, 1966. It had been operating as a second-
class municipality with 30 barangays.

The Municipality’s total workforce under the leadership of Honorable

Mayor Carl Jason Rama and assisted by Honorable Vice-Mayor Zacarias S. Awing,
numbered 251 employees which consist of 10 elected officials, 89 appointed
personnel, 3 co-terminus, 24 casual, 125 job orders.

B. Audit Methodology

The Commission has been implementing the risk-based audit in the conduct of its
audit services. However, to meet the evolving developments in public governance
and fund management, the results-based approach in audit was incorporated. The
integration of these two approaches, called the Integrated Results and Risk-Based
Audit (IRRBA) Methodology, was applied in the audit of the accounts and operations
of the Municipality.

C. Scope of Audit

A comprehensive audit was conducted on the accounts and operations of the

Municipality of Kiblawan for the calendar year ended December 31, 2017. The audit
consisted of review of operating procedures, evaluation of the LGU’s programs and
projects; interview of concerned officials and employees; verification; reconciliation;
inspection and analysis of accounts; and such other procedures considered necessary.

D. Financial Highlights

The financial position and results of operation of the Municipality of Kiblawan for
calendar year 2017showed increases as compared to the previous year’s figures as can
be gleaned in the tabular presentation below:

Increase Percentage
Account 2017 2016
(Decrease) (%)
Assets 442,938,602.28 373,763,478.99 69,175,123.29 19%
Liabilities 241,562,062.96 208,997,195.91 32,564,867.05 16%
 Increase Percentage
Account 2017 2016
(Decrease) (%)
Equity 201,376,539.22 164,766,283.08 36,610,256.14 22%
Revenue 180,400,094.43 140,080,855.04 40,319,239.39 29%
Expenses 136,919,400.10 121,531,490.09 15,387,910.01 13%
Net Income 43,480,694.33 18,549,364.95 24,931,329.38 134%

The increase in assets and liabilities was due to the funds received from the NGAs in
the year 2017.

E. Independent Auditor’s Report

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the Municipality of Kiblawan for the year ended December
31, 2017, due to the reliability and accuracy of the Property, Plant and Equipment
valued at P183,630,589.16 or 41.46% of its total assets of P442,938,602.28 could not
be ascertained due to the absence of records required under accounting rules and
regulations in the New Government Accounting System, thus, affecting the fair
presentation of the financial statements.

F. Summary of Significant Observations and Recommendations

Presented below are the significant audit observations noted and the
recommendations suggested in the course of audit:

1. Interest Expense incurred from the Development Bank of the Philippines (DBP)
loan amounting to P973,969.31 was recorded as interest expense instead of
capitalizing it as part of borrowing cost of project Construction of Poblacion
Public Market Building contrary to existing rules and regulations under PPSAS
No. 5 paragraph 5 & 18.

We recommended that the Municipal Accountant prepare a necessary adjusting

entry to correct the recorded interest expense account.

2. The Residual Containment Facility established and maintained by the

Municipality is not in accordance with Republic Act No. 9003, otherwise known
as, the Ecological Waste Management Act of 2000, which could endanger the
ecological condition and pose a threat to the community and the environment.
We recommended to the Municipal Mayor the following:

1. Activate the Ecological Waste Management Board (ESWMB) and revisit the
established CY 2014-2013/ten (10) year ESWMP of the Municipality.
 2. Consider the creation of MENR Office and its manning complement to carry
out the bulk of responsibilities embodied in the ESWMP.

3. Adhere strictly to the guidelines, rules and regulations of R.A. 9003 otherwise
known as, the Ecological Waste Management Act of 2000.

3. Due to the absence of the Municipal Development and Investment Plan for
Children, no PPAs were identified and implemented thus children in the locality
were deprived of the intended benefits embodied in the Republic Act No. 9344,
otherwise known as the “Juvenile Justice and Welfare Act of 2006”.

We recommended the following:

1. Ensure that a Local/Municipal Development Plan for Children and

Local/Municipal Investment Plan for children be formulated so that the
programs, projects and activities which would address the issues and concerns
relative to children’s protection and welfare will be properly addressed.

2. Require the MCPC to formulate the Annual Work and Financial Plan for
Children based on the Municipal Development and Investment Plan for
Children and to actively perform its other functions as provided in the
Executive Order.

3. Monitor the accomplishments vis-a-vis the functions of MCPC to realize the

objectives of the Act.

4. The Municipality has no GAD database which is one of the essential elements in
GAD planning and budgeting hence, Gender Analysis or Review of Sex
Disaggregated Data was not performed to identify gender issues and come up
with related Projects, Programs or Activities (PAPs).

We recommended to the Municipal Mayor to direct the Focal Point System and
GAD assigned personnel to establish and maintain a GAD database to serve as
basis for gender-responsive planning, programming and policy formulation.

5. Projects amounting to P17,184,359.54 funded from the 20% Development Fund

remained unutilized during the year thereby defeating the efficient use of
government resources as well as the essence of planning and budgeting and
ultimately denying the constituents’ early enjoyment of the intended benefits.

We recommended the Management to direct the implementing Office to address

the hindrances in the full implementation of the PPAs and observe efficiency and
economy in the implementation of 20% Development Fund.
G. Summary of Total Suspensions, Disallowances and Charges as at Year-End

The reported audit suspension, disallowance and charge of the Municipality as at

December 31, 2017 were as follows:

Beginning This Period Ending

Balance January 1 to December 31, Balance
12.31.2016 2017 12.31.2017
NS/ND/NC NSSSDC
Notice of P 0.00 P 0.00 P 0.00 P 0.00
Suspension
Notice of 141,934.00 0.00 0.00 141,934.00
Disallowance
Notice of Charge 0.00 0.00 0.00 0.00
Total P 141,934.00 P 0.00 P 0.00 P141,934.00

H. Status of Implementation of Prior Years’ Audit Recommendations

Out of 26 audit recommendations of prior years, 3 were fully implemented, 14 were

partially implemented while the remaining 9 were not implemented.