EXECUTIVE SUMMARY

Introduction

The Municipality of Baras is a fourth-class Municipality in the Province of Rizal. Under the
leadership of Leopoldo Digma, the town became independent Municipality through
Executive Order No. 57 dated November 24, 1920.

The town is politically subdivided into ten Barangays namely: Evangelista, Rizal, San Jose,
San Salvador, Santiago, Concepcion, San Juan, San Miguel, Mabini and Pinugay.

The Organizational Structure of the Municipality is as follows:

a. Key Officials

Municipal Mayor Hon. Kathrine B. Robles

Vice Mayor Hon. Wilfredo C. Robles

Members of the Sanggunian Hon. Hector M. Robles

Hon. John Wilmer R. Elago
Hon. Vergil F. Robles
Hon. Armingol DL Pilapil, Jr.
Hon. Roberto M. Cabandong
Hon. Emmanuel R. Olano
Hon. Mario P. Mendoza
Hon. Renato M. Llagas
Hon. Ray An C. Tesoro (Liga ng Brgy. President)
Hon. Pauline C. Arimado (SK Federation President)

b. No. of Personnel Complement

Elective Officials 12
Permanent 65
Co-Terminus 2
Casual 61
Job Order 55
Consultant 2
Total 197

Audit Objectives

Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion.

Scope of Audit

Financial and compliance audits were conducted on the accounts and operations of the
Municipal Government of Baras, Rizal for CY 2021. The audits consisted of interviews with
concerned local officials and employees, tracing account balances through the accounting

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records, verification of transactions with underlying documents, inspection, analysis and
reconciliation of accounts and such other procedures considered necessary.

The audits were conducted to ascertain the propriety of financial transactions and
compliance with prescribed laws, rules and regulations. It was also made to ascertain the
accuracy of financial records and reports, as well as the fairness of the presentation of the
account balances in the financial statements.

Financial Highlights

For the year 2021, the Municipality generated total revenue of P242,458,531.06 including
subsidies from other funds, a decrease of P4,813,612.13 or 1.95 percent as compared with
last year’s revenue of P247,272,143.19. The significant decrease in the revenue of the LGU
is attributable to the decrease in Subsidy from Other Funds and Subsidy from General Fund
Proper/Other Special Accounts. The total expenses reached P217,793,162.04, including
subsidies to other funds, a decrease of P30,543,078.12 or 12.30 percent from last year’s
level of P248,336,240.16. The surplus for the year amounted to P24,665,369.02 or an
increase of P25,729,465.99 or 241.80 percent from that of last year’s deficit amounting to
P(1,064,096.97) due to the significant decrease of expenses.

Total assets, liabilities and equity as of December 31, 2021 amounted to P471,805,726.77,
P149,475,053.69 and P322,330,673.08, respectively. The total assets of the Municipality
increased by P33,660,027.08 while total liabilities decreased by P7,434,928.75.
Consequently, total equity increased by P41,094,955.83.

Total current appropriations under the General Fund and Special Education Fund amounted
to P241,156,056.16 and P12,506,000.00 of which P213,529,938.94 and P7,468,312.06,
respectively, were the reported expenditures during the year.

The following is the Municipality’s total assets, liabilities and equity, and total income,
expenses and surplus/deficit for CYs 2021 and 2020:

Increase/
Accounts 2021 2020
(Decrease)

Assets P471,805,726.77 P438,145,699.69 P33,660,027.08

Liabilities 149,475,053.69 156,909,982.44 (7,434,928.75)
Equity 322,330,673.08 281,235,717.25 41,094,955.83
Income 242,458,531.06 247,272,143.19 (4,813,612.13)
Expenses 217,793,162.04 248,336,240.16 (30,543,078.12)
Surplus (Deficit) 24,665,369.02 (1,064,096.97) 25,729,465.99

Operational Highlights

During CY 2021, the Municipality received the following awards and recognitions from the
Department of the Interior and Local Government:

• CY 2021 Good Financial Housekeeping

• 2021 LGU Compliance Assessment - ECA Bronze Awardee
• Model LGU for Risk Resiliency Program - Climate Change Adaptation and Mitigation
(RRP-CCAM)

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• Best Community and Service Oriented Policing (CSOP) System Implementor for Class
"C” Category

Audit Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of the presentation of the Financial
Statements of the Municipality of Baras, Rizal due to the following:

1. Various reconciling items totaling P4,056,859.41 remained unadjusted in the books of

accounts of the Municipality as at year-end, contrary to COA Circular No. 96-011 dated
October 2, 1996. Thus, overstating the Cash in Bank-Local Currency, Current Account
(LCCA)-Land Bank of the Philippines (LBP) account by P4,056,859.41 and Government
Equity account by P4,043,359.98, while understating the related income and expense
accounts in the amounts of P1,000.00 and P14,499.43, respectively.

2. The general ledger balances of Property, Plant and Equipment accounts and the
balances in the Report on the Physical Count on Property, Plant and Equipment
(RPCPPE) showed a net difference of P169,764,896.05 as at year-end due to failure of
the Inventory Committee to conduct a complete physical count of PPE of the Municipality,
contrary to Section 124 of the Manual on New Government Accounting System (MNGAS)
for Local Government Units (LGUs), Volume I. Also, Property Cards and PPE Ledger
Cards were not updated and maintained by the OIC-General Services Officer (GSO) and
the OIC-Municipal Accountant, respectively, contrary to Sections 119 and 120 of the
same Manual. Thus, casting doubt on the reliability and accuracy of the balances of PPE
accounts with carrying amount of P252,075,701.97 excluding Construction in Progress
and Road Networks amounting to P5,940,681.59 and P47,311,392.43, respectively as
presented in the financial statements as of December 31, 2021.

3. The general ledger balance of Infrastructure Assets - Road Networks account and the
balance in the Report on the Physical Count on the Road Network System amounting to
P62,090,384.17 and P47,218,818.00, respectively, shows a difference of P14,871,566.17
as at year-end due to failure of the Inventory Committee to conduct a complete physical
count of Local Road Networks of the Municipality, contrary to Item VI.3 of COA Circular
No. 2015-008 dated November 23, 2015. Likewise, subsidiary records for roads and
road components and Local Road Network Property Card were not maintained by the
OIC-Municipal Accountant and the OIC-General Services Officer (GSO), respectively,
contrary to Items VII.a.3 and VII.b.2 of the same COA Circular. Thus, casting doubt on
the reliability and accuracy of the balance of Infrastructure Assets - Road Networks
account with carrying amount of P47,311,392.43 as presented in the financial statements
as of December 31, 2021.

4. The year-end balances of Real Property Tax (RPT) Receivables and Special Education
Tax (SET) Receivables accounts amounting to P37,590,763.64 and P40,933,114.16,
respectively, have a difference of P(2,760,867.18) and P(3,123,378.68), respectively,
with their reciprocal accounts Deferred RPT and Deferred SET, contrary to Sections 111
and 112 of Presidential Decree (PD) No. 1445, thus, casting doubt on the reliability and
validity of the said accounts as presented in the Municipality’s financial statements.
Significant Audit Observations and Recommendations

For the exceptions cited above we reiterated/recommended that the Municipal Mayor direct
the:

1. OIC-Municipal Accountant to draw journal entry vouchers to record all valid reconciling
items that require adjustments and correction in the books for fair presentation of the
balance of Cash in Bank-LCCA-LBP account in the financial statements; augmenting of
workforce of the Municipal Accounting Office in order to immediately locate the
documents and determine the details pertaining to the unrecorded disbursements and
unidentified reconciling items for proper adjustment in the Municipality’s books; and strict
compliance with the provisions of COA Circular No. 96-011 dated October 2, 1996.

2. Inventory Committee to expedite the completion of the inventory of PPE, indicate whether
the items counted are under GF or SEF and prepare a summary per class of PPE and
submit thereon to the Audit Team; OIC-GSO to update Property Cards for all PPE
accounts and the OIC-Municipal Accountant to prepare and maintain PPE Ledger Cards
for each category of assets and Real Property Ledger Cards for land to substantiate the
correctness of the general ledger balances for PPE accounts; and the reconciliation of
Accounting and GSO records. Any discrepancies found should be investigated, and the
necessary adjustments should be made where the error was committed.

3. Inventory Committee to expedite the completion of the inventory of Municipality’s Local

Road Networks, indicate the required details such as Road Network ID No. and
description of each road component and submit thereon to the Audit Team; OIC-
Municipal Accountant and OIC-GSO to maintain subsidiary records for roads and road
components and Local Road Network Property Card to substantiate the correctness of
the general ledger balance for Infrastructure Assets - Road Networks account; and
Accounting and GSO to reconcile their records. Any discrepancies found should be
investigated, and the necessary adjustments should be made where the error was
committed.

4. OIC-Municipal Accountant to exert extra effort to retrieve the related documents/records

and conduct a detailed review of the accounts and investigate/determine the causes of
the unreconciled amounts; and thereafter, prepare the required adjusting journal entries
in the books of accounts to present the correct balances of the said accounts in the
financial statements of the Municipality

The following are the other significant observations and recommendations:

1. Payment for the acquisition of parcels of land totaling P8,634,250.00 for Calendar
Year (CY) 2021 were not supported with complete documentation, contrary to Section
4(6) of Presidential Decree (P.D.) No. 1445 and COA Circular No. 2012-001, thus
rendering the propriety and validity of claims doubtful.

We recommended that the Municipal Mayor direct the OIC-Municipal Accountant to

immediately submit to the Audit Team all the lacking supporting documents relative to
purchase of lands to substantiate the disbursements made. Otherwise, the said
transactions shall be suspended in audit.

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2. The Memorandum of Agreement (MOA) between the Municipality and the
Development Bank of the Philippines (DBP) remained unimplemented as of December
31, 2021 due to the inability of the DBP to meet the electronic money disbursement
requirements of the Municipality, contrary to the Items 3 and 4 of the said MOA. Thus,
resulted in the idle Cash in Bank-Local Currency, Current Account (LCCA)-DBP
account balance of P10,031,067.33 for more than three years and the intended
purpose of the said agreement was not attained.

We recommended that the Municipal Mayor:

a. direct the MHRMO to coordinate immediately with DBP regarding the status of
the MOA; and

b. formally request from the Sangguniang Bayan to pass a resolution for termination
of the MOA if the same is no longer implementable and for the immediate
transfer the idle cash amounting to P10,031,067.33 to the active bank account of
the Municipality.

3. The subsidiary ledger balances of Due from and Due to Local Government Units
(LGUs)-Province accounts in all funds totaling P2,327,907.25 and P1,188,016.67,
respectively, as at year-end and the reciprocal accounts in the books of the Provincial
Government of Rizal, showed unreconciled net differences of P1,952,341.15 and
P(3,245,782.12), respectively, due to the inability of the OIC-Municipal Accountant to
conduct a periodic reconciliation with the OlC-Provincial Accountant, contrary to
Section 111 of Presidential Decree (PD) No. 1445. Thus, casting doubt on the
reliability and validity of those accounts as presented in the Municipality’s financial
statements.

We reiterated that the Municipal Mayor:

a. direct the OIC-Municipal Accountant and the Municipal Treasurer to coordinate

with the OIC-Provincial Accountant and Provincial Treasurer to verify the net
differences of P1,952,341.15 and P(3,245,782.12) between the recorded
balances of Due from and Due to LGUs accounts of the Municipality and their
reciprocal accounts Due to and Due from LGUs reflected in the books of the
Province;

b. instruct the OIC-Municipal Accountant to subsequently prepare the required

adjusting journal entries to present the correct balances of the said accounts in
the Municipality’s financial statements; and

c. require the OIC-Municipal Accountant to conduct a periodic reconciliation of

accounts Due from LGUs and Due to LGUs in the Municipality books with the
corresponding reciprocal accounts in the books of the Province.

4. The balances of reciprocal accounts Due from Other Funds and Due to Other Funds
amounting to P604,521.45 and P13,636,767.68, respectively, have a net difference
totaling P(13,032,246.23) as of December 31, 2021, contrary to Sections 111 and 112
of Presidential Decree (PD) No. 1445, thus, casting doubt on the reliability and validity
of the said accounts as presented in the Municipality’s financial statements.

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 We reiterated that the Municipal Mayor direct the OIC-Municipal Accountant to
continue exerting extra efforts in retrieving the JEV or other related documents,
conduct thorough analysis of the accounts to determine the cause/s of the difference
in the reciprocal accounts and thereafter, make the necessary adjusting entry to
correct the records.

5. The Municipality was unable to fully implement the identified program and/or fully
utilize the fund transfer from the National Nutrition Commission amounting to
P10,756,950.00, contrary to COA Circular No. 94-013 dated December 13, 1994 and
Section 2.2.6 of the Memorandum of Agreement (MOA), thus deprived the intended
beneficiaries of the benefits that could have been derived from the immediate
implementation of the program.

We recommended that the Municipal Mayor direct the Municipal Nutrition Action
Officer to ensure the immediate and proper implementation of the program funded by
the fund transfer from Source Agency; and henceforth, observe the provisions of COA
Circular No. 94-013 in implementing programs funded by the Source Agencies so as
to ensure that funds are utilized and liquidated in a timely manner.

6. The Municipality was unable to fill up 42 vacant plantilla positions including mandatory
positions such as Municipal Accountant, Municipal Treasurer, Municipal Planning and
Development Coordinator and other prescribed positions, contrary to Section 443(a) of
Republic Act (RA) No. 7160. Thus, the effectiveness and efficiency of the municipal
officials and employees designated in concurrent capacity to execute the mandates of
their respective offices could not be fully attained.

We recommended that the Municipal Mayor:

a. direct the Municipal Human Resource Officer to publish the vacancy and
expedite the hiring of the mandatory positions and other prescribed positions;
and

b. fill out the vacant positions, as prescribed in Section 443(a) of RA No. 7160 and
in accordance with existing guidelines and rules and regulations of the Civil
Service Commission, for more effective administration of the said offices which in
turn will benefit the Municipality as a whole.

7. Disbursements totaling P1,003,980.00 for Coronavirus Disease 2019 (COVID-19)

vaccination program funded under the 20% Development Fund (DF) were without
complete documentations, contrary to Section 4(6) of Presidential Decree (PD) No.
1445 and COA Circular No. 2012-001, thus casting doubt on the validity and propriety
of the said transactions.

We recommended that the Municipal Mayor require the OIC-Municipal Accountant to

immediately submit to the Audit Team the lacking supporting documents to
substantiate the disbursement made and to facilitate post audit of the same.
Otherwise, the transactions shall be suspended in audit.

8. The Municipality was unable to fully comply with the posting and reporting
requirements on the utilization and disbursements of financial assistance received
from the National Government (NG) thru the Bureau of the Treasury (BTr) amounting

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 to P103,443,000.00 that was released to cities and municipalities in the National
Capital Region (NCR) and in the Provinces of Bulacan, Cavite, Laguna, and Rizal,
collectively known as the "NCR Plus” , that are placed under Enhanced Community
Quarantine (ECQ), contrary to Items 4.3 and 4.4 of Local Budget Circular (LBC) No.
136 dated March 30, 2021, thus related information regarding the utilization and
disbursements of the said financial assistance were not properly disclosed in public.

We recommended that the Municipal Mayor:

a. direct the Local Finance Committee to revised the submitted Report of Fund
Utilization and Status of P/P/A for the months of April to June 2021 to reflect the
correct information regarding the utilization and disbursements of financial
assistance as of reporting period and prepare the report for the succeeding
months until December 31, 2021 and submit the same to the Audit Team and to
other offices pursuant to Item 4.4 of LBC No. 136; and

b. instruct the concerned official to post the revised reports on the Municipality’s
website in order to properly disclose the related information regarding the
utilization and disbursements of the aforesaid financial assistance in public.

9. Seven projects with a total estimated cost of P7,750,000.00 were still on-going or not
implemented representing 20.04 percent of the 18 identified projects funded under
20% Development Fund (DF) due to inadequate planning, contrary to Items 3.2.3 and
4.0 of the Department of Budget and Management (DBM)-Department of Finance
(DOF) and the Department of the Interior and Local Government (DILG) and Joint
Memorandum Circular (JMC) No. 1 dated November 4, 2020, thus depriving its
constituents of the benefits that could be derived therefrom.

We recommended that the Municipal Mayor instruct the OIC-MPDO to:

a. properly plan and monitor the effective and efficient implementation of the
projects under 20% DF;

b. ensure that development projects for inclusion in the 20% DF have gone through
a thorough study, procurement-implementation-ready; and

c. henceforth, maximize the utilization of the 20% DF in compliance with DBM-

DOF-DILG JMC No. 1 dated November 4, 2020.

10. As of December 31, 2021, 14 out of the 24 approved Gender and Development (GAD)
programs/projects/activities (PPAs) with total appropriation of P11,365,600.00 or 84.82
percent of the total GAD Plan and Budget (GPB) of P13,399,200.00 were partially/not
implemented, contrary to Item 2.3 of Philippine Commission on Women-Department of
Interior and Local Government-Department of Budget and Management-National
Economic and Development Authority (PCW-DILG-DBM-NEDA) Joint Memorandum
Circular (JMC) No. 2013-01 dated July 18, 2013, as amended by PCW-DILG-DBM-
NEDA JMC No. 2016-01. Thus, depriving the intended beneficiaries oftheprogram
the benefits that could be derived from using the said fund.

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 We recommended that the Municipal Mayor:

a. require the GAD Focal Person to ensure that all programs, plans and activities
are properly planned and that implementation thereof be in accordance with the
approved GAD Plan and Budget to optimize the use of allocated funds, and that
all issues on gender mainstreaming are duly addressed by the prepared plan, for
the benefit of the intended beneficiaries;

b. direct the concerned municipal officials to submit the GAD accomplishment

report to the GAD Focal Person in accordance with the Municipality’s GFPS
policy, for proper monitoring; and

c. henceforth, maximize the utilization/implementation of the GAD Plan and Budget

to attain its objective in accordance with Item 2.3 of PCW-DILG-DBM-NEDA JMC
No. 2013-01, as amended by JMC No. 2016-01

11. The unexpended balances of Quick Response Fund (QRF) and the Mitigation Fund
(MF)-Maintenance and Other Operating Expenses (MoOe) for CY 2021 Local
Disaster Risk Reduction Management Fund (LDRRMF) amounting to P800,040.43
and P1,608,325.00, respectively, or a total of P2,408,365.43 in the General Fund were
not transferred to Trust Fund books as at year-end, contrary to Section 21 of Republic
Act (RA) No. 10121 and Items 5.1.10 of COA Circular No. 2012-002 dated September
12, 2012. Thus, exposing the funds to risks of being used for other purposes which
may deprive the Municipality of readily available funds in cases of emergencies and/or
calamities.

We recommended that the Municipal Mayor:

a. direct the OIC-Municipal Accountant to prepare the required journal entries to

record the proper transfer of the unexpended balance of the LDRRMF totaling
P2,408,365.43 to the Trust Fund books;

b. require the Acting Municipal Treasurer to effect immediately the actual cash
transfer of P2,408,365.43 to the Trust Fund bank account.

Management views and reactions were appropriately incorporated in this report.

Summary of Suspensions, Disallowances and Charges

As of December 31, 2021, the Municipality has an outstanding disallowance amounting to

P1,195,000.00 and zero suspensions and charges based on their Statement of Audit
Suspensions, Disallowances and Charges.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 33 audit recommendations embodied in the CYs 2020 and 2018 Annual Audit
Reports, 14 or 42.42 percent were fully implemented, 18 or 54.55 percent were partially
implemented and one or 3.03 percent was not implemented by the Municipality.

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