EXECUTIVE SUMMARY

Highlights on the Financial Operations

To cope with the current year’s operation, the municipality appropriated

P37,128,167.65 for the General Fund and P400,000.00 for the Special Education Fund.
Continuing appropriation for the General fund amounted to P1,153,195.52.

For calendar year 2010, the municipality was able to generate revenues of
P39,994,840.76. Actual income during the year showed an increase of P2,684,374.87 or
7.19% compared with that of last year’s P37,310,465.89.

On the other hand, total expenditures incurred during the year for all funds amounted
to P34,810,066.06 or a decrease of P1,667,203.83 or 4.57% compared with last year’s of
P36,477,269.89.

The municipality has a current ratio of 2.15:1 during the year. It has substantial assets
to meet its current liabilities. However, it showed an increase of .87 or 68% compared with
last years’ as shown below:

Current Assets
Current Ratio = ----------------------
Current Liabilities

2010 2009
Increase
(Decrease)

P7,726,529.17 P19,383,623.53
------------------ = 2.15:1 ------------------- = 1.28: (.87)
P 3,598,181.24 ==== P 15,174,307.15 ==== ====

SCOPE OF AUDIT

An audit was conducted on the accounts and operations of the Municipality of Anda,
Bohol for calendar year ended December 31, 2010. The audit consisted of review of
operating procedures; interview with concerned government officials and employees;
verification, reconciliation and analysis of accounts; post audit; validation of projects; and
such other procedures considered necessary. It was aimed at ascertaining the propriety of
disbursements and reliability of financial report and determining whether the agency’s
operations had been conducted in accordance with laws, rules and regulations.

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AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The auditor rendered a qualified opinion on the financial statements as of December 31,
2010 as the newly constructed public market amounting to P13,162,500.00 was not booked-
up as construction in progress account while the cost of the demolished building amounting
to P90,316.20 is still carried in books of the municipality understating the Property, Plant and
Equipment as well as the government equity accounts by P13,072,183.80. Likewise, cash
advances amounting to P1,931,599.88 remain unsettled, thus overstating the asset account
and understating the expense account as of the end of the year.

SIGNIFICANT FINDINGS AND RECOMMENDATIONS

1. The municipal accountant failed to book-up the newly constructed public market and
bagsakan center amounting to P 13,162,500.00, contrary to Section 50 of the NGAS
Volume I, thus understating the asset and government equity accounts of the LGU.

We recommend that the Municipal Accountant:

1. Effect the necessary correcting/adjusting entries to book-up the cost of the newly
constructed public market as follows:

Construction in Progress- Agency Asset 264 P13,162,500.00

Due to NGAs 416 P13,162,500.00

2. Substantial amount of cash advances amounting P1,931,599.88 remain unliquidated at

the end of the year due to the laxity of the local officials concerned to monitor and
enforce liquidations required under COA Circular No. 96-004 and 97-002, understating
the expenses and consequently overstating the income.

We recommend that management:

1. Demand immediate liquidation of those outstanding cash advances including the

Intelligence and Confidential fund of the former Mayor. Withhold payments of
amount due the concerned officials until such time the cash advance has been fully
liquidated.

2. Require strict compliance with the provisions of COA Circular No. 97-002 and 96-
004 in the granting, utilization and liquidation on cash advances.

3. Failure of the Municipal Accountant to comply with COA Accounting Circular No.
2006-001 dated November 9, 2006 resulted to misclassification of account Due from
Officers and Employees (123) in the amount of P1,587,688.58, instead of Advances
to Officers and Employees (148).

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 We recommend to management that:

1. The Municipal Accountant effect the necessary adjusting and/or correcting journal
entries to its appropriate account – Advances to Officers and Employees as
prescribed in COA Accounting Circular No. 2006-001.

4. Demolished/Destroyed building totaling P90,316.20 are still carried in the books of

accounts contrary to Section 162 of COA Circular No. 92-386, rendering overstatement
of the Market and Slaughterhouse account and government equity accounts.

We recommend that management:

1. Require the municipal treasurer to prepare the Inventory and Inspection Report of
Unserviceable Property (IIRUP) for the demolished public market duly signed by
the inventory committee.

2. Require the municipal accountant to draw a journal entry voucher (JEV) dropping
of the cost of the demolished municipal building and make necessary adjustments in
the books of accounts.

5. Infrastructure projects amounting to P15,788,633.79 and payments of terminal leave

benefits of three (3) municipal officials amounting to P222,179.76 were not subjected
to pre-audit contrary to COA Circular No. 2009-002 dated May 18, 2009, thus, the
validity and propriety of the accomplishments/payments could not be ascertained.

We recommend that the Municipal Accountant and other concerned officials ensure
and require that all transactions enumerated in Circular 2009-002 submitted to
Commission on Audit for pre-audit before payments are effected.

6. Purchase Orders and Inspection and Acceptance Report amounting to P840,600.16 lack
the necessary data to ensure that liquidated damages maybe imposed in case of delayed
deliveries and Contracts/POs were not submitted to Commission on Audit within 5 days
from date of issuance contrary to Revised Implementing Rules and Regulations of
Republic Act 9184, Annex D & E and COA Circular No. 2009-001, thus, legality,
validity and propriety of the transactions could not be properly evaluated.

We recommend that management:

1. Ensure that every Purchase Order be duly filled up with all the data needed as guide
for the suppliers in complying with the terms and conditions of the contract. The
delivery term and date of receipt of PO by the supplier as well as the actual date of
the receipt and inspection of the items purchased by the concerned
personnel/official in the municipality. The data is required in order to have
sufficient basis to demand from the supplier liquidated damages or penalty of 1/10
of 1% of the cost of undelivered items per day of delay, in case of the latter’s failure
to meet the contract time/period.

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 2. Require the submission of the perfected contracts, purchase orders and their
supporting documents to the Commission on Audit, within five (5) working days
upon approval pursuant to COA Circular No. 2009-001 dated February 12, 2009,
in order to facilitate the review and evaluation process of the transaction.

7. Salaries of casual and regular employees amounting to P50,066.81 were claimed in

advance contrary to Section 194 and Section 261-of the Government Accounting and
Auditing Manual Volume 1, thus correctness of the amount claimed could not be
ascertained.

We recommend that the municipal accountant strictly comply with Sections 194 and
261 of the GAAM, Volume I on the timely payment of salaries and wages and in no
case should payments be effected in advance.

8. Collections remitted by the collectors to the Liquidating Officer were not turned over
to the Municipal Treasurer but were directly deposited to the authorized depository
banks by the liquidating officer contrary to Section 31 (c) of NGAS Volume I, thus,
no validation, review and recomputation of the Official Receipts issued by the
collectors was performed by the Municipal Treasurer to ascertain the accuracy and
completeness of the amount received due for deposit.

We recommend that the liquidating officer turn over all collections received by her
to the municipal treasurer for review, validation and recomputation of the official
receipts to ascertain the accuracy and completeness of the amount received due for
deposit. Deposit of collection should always be undertaken by the Municipal
Treasurer.

9. The Municipal Treasurer also performs disbursing functions (in the absence of a
designated Disbursing Officer), which is in conflict with his collecting function and
to the basic internal control policy that collection and disbursing functions should be
segregated, thus exposing funds to possible loss/misappropriation.

We recommend to management that disbursement and collection functions be

segregated to avoid lapping and or juggling of funds and other possible irregularities.

10. Collections turned over by the collectors to the liquidating officer and its
corresponding deposit slips which were supported by the Report of Collection and
Deposits (RCD) were not recorded by the Municipal Treasurer in his cashbook –
Cash in Vault, but directly debited in the Cashbook - Cash in Bank Account contrary
to Section 32 and 35 c and d of the New Government Accounting System Manual
Volume 1, thus total collections made for any given period cannot be determined in
the cashbook.

We recommend to the municipal treasurer to record in his Cash in Vault cashbook,

collections and deposits turned over by the liquidating officer for proper control
before effecting any deposit with the bank.

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 11. Monthly Report of Fuel Consumption of Motor Vehicles and Monthly Report of
Official Travels were not prepared and submitted to the Auditor while trip tickets
were not properly filled-up and lack complete and necessary data contrary to COA
Circular No. 77-61 dated September 26, 1977, thus the reasonableness of fuel
consumption for the month cannot be established.

To properly account and control gasoline, oil and lubricants consumption, and use
of motor vehicles, the provisions of COA Circular 77-61 dated September 26, 1977
should be adhered to, among others:

a. Require the drivers/heavy equipment operators to present a duly accomplished

and approved Driver’s Trip Tickets before and an official travel or use of heavy
equipment duly signed by passenger/user.

b. Prepare and submit monthly, a Report of Fuel Consumption to the Auditor,

supported with signed and approved trip tickets to include data on the different
types of motor vehicles utilized by the LGU during the month, total distance
travelled, total fuel used and the normal fuel consumption for each vehicle; and

c. Require the driver of each of the motor vehicle of the LGU to prepare at the end
of the month, a Monthly Report of Official Travels, summarizing in chronological
order his trips for the month. The Report shall be certified by the driver and
approved by the LCE or her authorized representative.

12. Total expenditures amounting to P1,735,956.18 were spent for non developmental
activities/projects which are not supportive of economic/environmental
projects/programs of the 20% Development Fund contrary to the objectives of
DILG/DBM Memo Circular No. 1 and Section 287 of RA 7160, thus the constituents
were deprived to partake the benefits out of the fund.

We recommend that the Municipal Officials should limit the utilization of the 20 %
Development Fund to viable and sustainable programs, projects and activities that
directly generate jobs and livelihood opportunities to its constituents in accordance
with Department of Budget and Management and Department of Interior and Local
Government Joint Memorandum Circular No. 1 dated September 20, 2005 and
Section 287 of RA 7160.

STATUS OF IMPLEMENTATION BY MANAGEMENT OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Out of thirty six (36) recommendations embodied in the 2009 Annual Audit Report and in
prior years, seven (7) were implemented, fourteen (14) were partially implemented while fifteen
(15) were not implemented during the year, thus some were reiterated in this Report.