EXECUTIVE SUMMARY

Highlights of Financial Operations

The Municipality of Pavia, Iloilo generated a total income of

P 104,393,791.49 which is 6.92% or P 6,759,106.52 higher compared to last year’s
collections of P 97,634,684.97 as of December 31, 2012.

Total expenses incurred amounted to P 76,233,422.83 generating an excess of

income over expenses of P 11,774,630.19 at the end of the year, which
correspondingly decreased by 35.50 % or P 6,468,385.37 from last year’s figure of
P 18,243,015.56.

The Municipality’s assets, liabilities and residual equity as of the period

ending December 31, 2012 amounted to P 163,109,031.73, P 55,230,985.09 and
P 107,878,046.64 respectively.

Scope of Audit

The audit covered the accounts and operations of the Municipality of Pavia,
Province of Iloilo for the Fiscal Year ended December 31, 2012. Pursuant to
Commission on Audit Office Order No. 2013-100 dated January 11, 2013, the present
audit team assumed office as auditor of the municipality on January 14, 2013. Actual
field work for the audit was performed by the previous audit team, while incumbent
audit team’s responsibility was to prepare and submit the annual audit report based on
the interim report and working papers turned over by the outgoing audit team.

Auditor’s Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the financial statements of the

Municipality of Pavia as of December 31, 2012 because of the unascertained PPE
accounts balances as discussed in Part II - Observations and Recommendations
portion of this Report.

Significant Findings and Recommendations

1. Cash advances amounting to P 2,092,189.74 remained unliquidated contrary to

Section 89 of P.D. 1445 and COA Circular No. 97-002 dated February 10, 1997,
thus placing government funds to risk of loss or misappropriation.

We recommend that the Local Chief Executive require concerned AOs to

immediately settle their cash advances after the purpose for which they were
granted had already been served pursuant to Section 89 of PD No. 1445 and COA
Circular No. 97-002, otherwise impose proper sanction such as the withholding of
salaries of those who fail to comply with the Circular.
2. The Municipality failed to conduct physical inventory of all its property and to
prepare and submit Report on the Physical Count of Property, Plant and
Equipment (RCPPE) and maintain the prescribed Property, Plant and Equipment
Ledger Card (PPELC); thus, showing uncertainty on the correctness of the
balance of PPE amounting to P 58,551,216.81 as of December 31, 2012.

We recommend that the Local Chief Executive cause the implementation of the
executive order creating an inventory committee that shall conduct physical count
of all the property, plant and equipment owned by the Municipality and prepare
the Report on the Physical Count of Property, Plant and Equipment promptly.

Likewise, we recommend that the Accounting Office should maintain the

prescribed PPELC which should be reconciled with the RPCPPE to establish the
correctness of the PPE accounts amounting to P 58,551,216.81

3. Non-observance of preferential deduction for the monthly payroll of LGU

employees resulted to reduced net take home pay to an amount lower than the
required Five Thousand Pesos ( P 5,000.00) contrary to Section 37 of the General
Appropriation Act (GAA) of 2012.

We recommend that the provisions of Section 40 of the General Appropriations

Act of 2012 be strictly complied with in the subsequent monthly salary payrolls.

Status of Implementation of Prior Year’s Audit Recommendations

Of the nine (9) audit recommendations embodied in the previous year’s Annual
Audit Report, two (2) were fully implemented, four (4) were partially implemented and
three (3) were not implemented.