EXECUTIVE SUMMARY A. INTRODUCTION The earliest reference to the town of Libmanan in Spanish records is the decree issued by Guido de Lavazaris to a certain Sargento on April 3, 1574 entrusting to the latter the administration of the natives of “Licmanan”. The decree paved the way for the creation of Libmanan as Spanish pueblo. The Sangguniang Bayan of Libmanan, on the basis of this decree, issued Resolution No. 10-027 adopting April 3, 1574 as the foundation day of Libmanan. The Municipality’s vision is to be an Agro-Industrial Center and Tourism Destination in the Province. Its operation mandate as provided for in R.A. 7160 is to serve primarily as a general purpose government for the coordination and delivery of basic, regular and direct services and effective governance of the inhabitants within its territorial jurisdiction. Its major development goal is to provide its people with good governance, programs and projects that will cater development and contribute to the local and national effort of eradicating poverty. Audit Methodology and Scope of Audit The Financial, Compliance and Value for Money (VFM) audits, conducted covered the accounts and operations of the Municipality of Libmanan, Camarines Sur for all Funds for the period from January 1 to December 31, 2015. ‘The audit was done on a sampling basis and various techniques were used like verification, observation, interview with concemed officials and employees, evaluation of control system/s, and other auditing procedures and techniques considered necessary under the circumstances. ‘The audit was focused on the different audit thrusts/areas issued by the Local Government Sector of the Commission. B. FINANCIAL HIGHLIGHTS B.1 Financial Position and Performance In Philippine Peso Increase (Decrease) CY 2015 CY 2014 Amount % 574,883,936.79 |__345,914,428.70 [__228,969,508.09 0.66 Total Liabilities 374,078,243.67 | _'190,543,153.07 | 183,535,090.60. 0.96 Government Equity 200,805,603.12 [7155,371,275.63 | 45,434,417.49 035)InPhilppine Peso Increase (Decrease) a CY 2015) CY 2014 Amount % Financial Performance ‘Total inoome 198,753,682,66 |_179,806,893.21 | _18,946,789.45, oil Total Expenses 146,764,642.35 | 139,557,182.61 |__7,207,459.74 0.05 ‘Net Surplus 51,989,040.31 | _40,249,710.60 | 11,739,329.71 0.29 B.2 Sources and Application of Funds pcaen Ta Philippine Peso Tncrease (Decrease) 2018 2014 Amount (P) | Percentage | General Fund ‘Appropriations 31941505132 | 18149553025 | TS7ST9SDLOT| 76% ‘Obligations 232,454,02092 [151,182,713 81,271,30659[ 58% Balanoe 86,959,03040 | 30,310,81592 | 56,648.21448 | 187% Special Edveation Fund | Appropriations Sonne] 380905648| 30161480] 87% Obiigations 40,4168 2.507,03551 (,104,593.83)| 24% Balance 165,000.00 1,302,00097[ (,197,02097)| 92% B.3 Major Program/Projects/Activities Undertaken in C¥ 2015 For the year under review, the municipal administration lined up significant programs and projects to accelerate its economic development and improve the quality of life of the people. Post-audit of financial transactions was made on a test basis; however, time constraint deterred validation and verification as 10 conformance to specifications and as to the existence of some of the projects. ‘The following are the reported significant programs and projects undertaken by the municipal government for calendar year 2015: ; a ‘Appropriation | _ % of Programs/Projects/Activity @) Completion Counterpart for Grassroots Participatory Budgeting Projects 6,600,000.00, 100% Solid Waste Management Program 1,000,000.00 100% ‘Construction of Municipal MRF 2,240,000.00 | 100% ‘Closure of Uson Dumpsite 400,000.00 100% Concreting of Access Road to Dumpsite. 436,419.66 100% Barangay Development Projects 7,500,000.00 96% improvement of Municipal Roads 7,419,706.20 89.48%C. AUDITOR'S OPINION ‘We rendered a qualified opinion on the fairness of presentation of the financial statements because property records maintained by the General Services Office (GSO) did not reconcile with the accounting records by P189.814 million, D. SUMMARY OF _ SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS For the exception cited above, the Auditor recommended the submission of complete physical inventory reports and its reconciliation with the accounting records. ‘The Audit Team bas communicated the observations and recommendations with the Auditee through the issuance of Audit Observation Memorandum (AOM) and discussed them with agency officials during the exit conference conducted on June 20, 2016, and the latter's comments were incorporated in the report, where appropriate The following are the significant findings together with the corresponding recommendations. 1. Property records maintained by the General Services Office (GSO) did not reconcile with the accounting records by P189.814 million, thus, resulted in unreliable balances of the Property, Plant and Equipment (PPE) accounts totaling P278.029 million net of accumulated depreciation. We recommended that Management direct the: (2) GSO and the Accounting Office to reconcile their respective records, investigate the differences noted in the two reports and adjustments, if any, may be effected immediately; and (2) GSO to conduct of the physical inventory taking all the properties of the Municipal Government and prepare and submit the corresponding reports of the RCPPE to the Audit Team not later than January 31 of each year as mandated in Section 124 of the NGAS Manual for LGU, Volume I. 2. Funds for Bottom-Up Budget Budgeting (BUB) Projects totaling P19.88 million were not yet received from several National Government Agencies (NGAs) while BUB Projects with total available fund of P16.465 million remained unimplemented by the LGU as at the end of the year, thus, deprived the constituents of the benefits that could have been derived had these projects been fully funded and completed as planned.‘We recommended that Management require: (1) the focal persons to follow up and/or submit the required documents to the concemed NGAs to fast track the release of the P19,881,225.00 BUB funds; and 2) the involved offices such as the MPDC, BAC, Office of the Municipal Engineer and Office of the Municipal Agriculturist to implement the projects. Promptly and ensure that implementation thereof are in accordance with the agreements set forth in the MOA. 3. Brand new heavy equipments costing P16.2 million were paid thru Letter of Credit despite non-delivery, contrary to the stipulations of the contract dated June 26, 2015, thus, disadvantageous to the Municipality. ‘We recommended that Management direct the Bids and Awards Committee and the Head of the GSO to immediately submit the required documents to the: a) (Office of the Auditor to provide as basis of audit of the transaction, and b) Office of the Municipal Accountant as basis in recording the transactions and in computing the liquidated damages, if there is any, pursuant to the stipulations of the contract. 4. The Municipality was unable to implement P8 million or 20% of key programs and Projects identified and approved by Municipal Development Council under the 20% Local Development Fund for CY 2015 totaling P39.596 million, thus, the intended benefits from its development projects were not: ‘fully achieved in contravention with DILG/DBM Joint Memorandum Circular No. 2011-1. We recommended that Management strategically implement its developmental Projects within the target period of accomplishment to ensure that the 20% of the IRA is optimally utilized in the prompt implementation of programs and projects to achieve the desirable socio-economic development as prescribed under DILG-DBM Joint Memorandum Circular 2011-1 dated April 13, 2011. 5. Estimated revenue totaling P2.6 million was notjrealized during the year due to non- implementation of strategies to intensify collections, contrary to Section 1, Article 5 of the Revenue Code of the Municipality lof Libmanan, thus, deprived the Municipality of the revenue which could have financed priority projects for the benefits of its constituents, : We recommended that Management direct the: (@ Municipal Treasurer to implement strategies to intensify collections and to ‘enforce the necessary tax remedies. iv(b) Business and Licensing Division and involved Offices to monitor existing establishments to provide assurance that they were granted with necessary permits or fees prior their operation and necessary penalties and sanctions be accorded to the violators. (©) Public Market Supervisor to immediately send out demand letters to delinquent stallholders to pay their arrears and after the lapse of the grace period, declare the stall vacant and submit the same to the Market Administration for proper adjudication, notwithstanding the immediate filing of appropriate legal charges to those stallholders who failed to pay their arrears after due demand, E. SUMMARY OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES Balanees as of €x2015 Balances as of Particulars January 1, December 31, | 2018 ea ees 2015 Notice of Suspension P 0.00|P 000| P 000 [> 0.00 Notice of Disallowance 29,660.79 | _0.00| 0.00] 29,660.79 Notice of Charge 0.00 | 0.00 | 0.00 0.00 Total F_ 29,660.79 P_0.00|® _0.00| P 29,660.79 F. STATUS OF IMPLEMENTATION OF PRIOR YEAR'S AUDIT RECOMMENDATIONS: A review of management's actions on our previous years’ audit recommendations as contained in the 2014 Annual Audit Report (AAR) disclosed that out of the seventeen (17) audit recommendations, eight (8) were implemented, five (5) were partially implemented and four (4) were not implemented by the Municipality as of December 31, 2015.