Republic of the Philippines

COMMISSION ON AUDIT
LGS C-Leyte II and Biliran Province – Team R8-01
Ormoc City, Leyte

AOM NO: 2021-08

Date : March 02, 2021

AUDIT OBSERVATION MEMORANDUM (AOM)

HON. MANUEL VICENTE M. TORRES

Municipal Mayor
Kananga, Leyte

Attention: Proceso Thomas Pabio Carlito Torreon

Municipal Accountant Municipal Agriculturist

We have audited the funds transferred from National Government Agencies for
various projects to be implemented by the Municipality and observed the following:

1. Implementation of eight (8) projects, programs, activities (PPAs) funded by

National Government Agencies in CY 2020 and prior years were delayed and
were not fully implemented as of December 31, 2020, with a total fund
utilization of P72.87 million or 79% of the P92.7 million available for such
PPAs since the revised proposals and plans have not been prepared and
procurement of the projects were initiated only in the last quarter of the
year, contrary to the timeframe stipulated in the Memorandum of
Agreement (MOA), thus, the expected benefits from such PPAs for the
residents of Kananga were not attained.

1.1 The Municipal Government of Kananga has been a recipient of funds from
various National Government Agencies (NGAs) in CY 2020 and previous years.
The funds transferred were accompanied with a Memorandum of Agreement
(MOA) between the Municipality and the source agency. Perusal of the MOAs
revealed that the completion period of the PPAs ranges from one year to two years
from the date of signing of the MOA.

1.2 For CY 2020, the Municipality received a total of P63,421,000.00 financial

assistance from NGAs. Part of these funds were from the Department of Social
Welfare and Development (DSWD) for the Social Amelioration Program and
from the Department of Labor and Employment (DOLE) for the TUPAD program
amounting P46,735,000.00 and P3,432,000.00, respectively. These two programs
were assistance in the form of subsidies to provide the marginalized sectors of
society the means to afford basic needs during the pandemic. In addition, the

AOM No. 2021-08 LGU Kananga- Due to NGAs - Fund Transfers Page 1 of 6
 amount of P9,254,000.00 and P4,000,000.00 were received by the Municipality
for the Local Government Support Fund – Assistance to Municipalities (LGSF-
AM) program and Yolanda Recovery and Rehabilitation Program (YRRP),
respectively.

1.3 At the start of CY 2020, unutilized funds from NGAs amounted to

P29,292,474.84 bringing the total available funds to P92,713,474.84.

1.4 In the review of the utilization of the available funds, the Audit Team noted that
P72,874,289.86 or 79% were utilized during the year as shown in Table 1.

Table 1. Programs/Projects to be Implemented in CY 2020

Agency/Department Balance PY Received CY Utilization Returned BALANCE
2019 2020 CY 2020 CY 2020

Department of Social Welfare & Development (DSWD) 

Supplemental Feeding P326,700.00 P 0.00 P319,582.00 P7,118.00 P 0.00
Program
Transitional Shelter 1,042,648.40 - - - 1,042,648.40
Social Amelioration 0.00 44,735,000.00 44,730,000.00 5,000.00 0.00
Program
Assistance to Individuals 0.00 2,000,000.00 1,992,500.00 - 7,500.00
in Crisis Situation
(AICS)
Sub Total 1,369,348.40 46,735,000.00 47,042,082.00 12,118.00 1,050,148.40
Department of Agriculture
Expanded Modified 1,212,000.00 0.00 0.00 0.00 1,212,000.00
Rapid Composting
Program (BSWM)
Construction of Lonoy 6,932,619.45 0.00 140,000.00 0.00 6,792,619.45
Dam (YRRP)
Implementation of 500,000.00 0.00 0.00 0.00 500,000.00
Scion Grove Project
Sub Total 8,644,619.45 0.00 140,000.00 0.00 8,504,619.45
Department of Labor and Employment (DOLE)  

Bahay Ko Barangay 0.00 2,684,500.00 2,684,500.00 0.00 0.00

Ko TUPAD Project
Bahay Ko Barangay 0.00 422,500.00 422,500.00 0.00 0.00
Ko TUPAD Project
Bahay Ko Barangay 0.00 325,000.00 318,500.00 6,500.00 0.00
Ko TUPAD Project
Sub Total 0.00 3,432,000.00 3,425,500.00 6,500.00 0.00
LGSF - Assistance to Municipalities
Upgrading of Barangay 0.00 4,804,000.00   0.00 4,804,000.00
Road in Brgy. Libertad,
Kananga, Leyte
Upgrading of Barangay 0.00 4,450,000.00   0.00 4,450,000.00
Road in Brgy. Lonoy,
Kananga, Leyte
LGSF - AM FY 2019 - 6,938,000.00 0.00  6,935,936.74 0.00 2,063.26

AOM No. 2021-08 LGU Kananga- Due to NGAs - Fund Transfers Page 2 of 6
 Agency/Department Balance PY Received CY Utilization Returned BALANCE
2019 2020 CY 2020 CY 2020

Local Access Road

Rehab. Brgy. Mahawan
Sub Total 6,938,000.00 9,254,000.00 6,935,936.74 0.00 9,256,063.26
Other NGAs
DOH - HFEP - 743,626.99 0.00 0.00 0.00 743,626.99
Construction/Renovation
of KMH

DENR – 171,000.00 0.00 0.00 0.00 171,000.00

Implementation of
Ecological Solid Waste
Management System in
the Public Market
EMB - Safe Closure & 3,476,050.00 0.00 3,395,943.81 80,106.19 0.00
Rehab. Of Open
Controlled Dumpsite
Office of the Vice 1,949,830.00 0.00 1,949,830.00 0.00 0.00
President- Angat Buhay
Program
NMIS - Rehabilitation 6,000,000.00 4,000,000.00 9,984,997.31 0.00 15,002.69
of Slaughterhouse -
YRRP
Sub Total 12,340,506.99 4,000,000.00 15,330,771.12 80,106.19 929,629.68
Grand Total : P29,292,474.84 P63,421,000.00 P72,874,289.86 P98,724.19 P19,740,460.79
Total Available Funds P 92,713,474.84 0.79    
for CY 2020

1.5. As shown in Table 1, the Social Amelioration Program, Assistance to Individuals

in Crisis Situation (AICS) of DSWD and the DOLE Bahay Ko Barangay Ko
TUPAD Projects were fully utilized in CY 2020. The timely and immediate
utilization of these funds helped in providing the basic necessities to families and
individuals affected by the imposition of Community Quarantine during the
COVID 19 pandemic, especially the indigents and their families.

1.6. Although the Municipality prioritized the needs of its constituents during the
pandemic, it was also able to implement other projects which were already
programmed and funded from prior years. However, eight (8) PPAs were not
implemented and funds amounting P19,722,394.84 were not utilized as of
December 31, 2020. Details are shown in Table 2.

Table 2. List of Unimplemented PPAs as of Dec. 31, 2020

Source PPA Amount Amount Balance
Agency Received Utilized
DSWD - Transitional P1,042,648.40 P 0.00 P1,042,648.4
YRRP Shelter
DA-BSWM Expanded 1,212,000.00 0.00 1,212,000.0
Modified

AOM No. 2021-08 LGU Kananga- Due to NGAs - Fund Transfers Page 3 of 6
 Source PPA Amount Amount Balance
Agency Received Utilized
Rapid
Composting
Program
(BSWM)
DA - Construction of 6,932,619.45 140,000.00 6,792,619.45
YRRP Lonoy Dam
DA RO8 Implementation 500,000.00 0.00 500,000.00
of Scion Grove
Project
DOLE Bahay Ko 2,684,500.00 2,684,500.00 0.00
Barangay Ko
TUPAD Project
422,500.00 422,500.00 0.00
  325,000.00 318,500.00 6,500.00
LGSF - Upgrading of 4,804,000.00 0.00 4,804,000.00
Assistance to Barangay Road
Municipalities in Brgy.
Libertad,
Kananga, Leyte
Upgrading of 4,450,000.00 0.00 4,450,000.00
Barangay Road
in Brgy. Lonoy,
Kananga, Leyte
DENR Implementation 171,000.00 0.00 171,000.00
of Ecological
Solid Waste
Management
System in the
Public Market
DOH - HFEP Construction/ 743,626.99 0.00 743,626.99
Renovation of
Kananga
Municipal
Hospital
TOTAL P23,287,894.80 P3,565,500.0 P19,722,394.84

1.7. The Audit Team obtained from the implementing offices the causes which
contributed to the delay and non-implementation of the PPAs. Among the reasons
given were the following:

a. Department of Social Welfare and Development

 Transitional Shelters – The relocation site for Barangay San Ignacio

beneficiaries was identified only in CY 2020. Procurement of the
AOM No. 2021-08 LGU Kananga- Due to NGAs - Fund Transfers Page 4 of 6
 materials for the construction of the Transitional Shelters were started in
the last quarter of CY 2020. Construction of the Transitional Shelters for
Barangay San Ignacio is to be implemented in CY 2021.

b. Department of Agriculture

 Expanded Modified Rapid Composting Program – Query with the

Municipal Agriculturist revealed that a check was already prepared by
the Municipal Treasurer in April 2020 to return the whole amount of the
fund for the unimplemented project, per our recommendation from prior
years’ audit. However, the Municipal Agriculturist requested for the
cancellation of the check and informed the Municipal Accountant that he
was advised by the DA RO8 to make a request to change the project and
re program it. When asked if the necessary request has already been
made, the Municipal Agriculturist replied that he was still going to draft
the said request.

 Construction of the Lonoy Dam - The project was still not implemented
due to the relocation of the project site. Interview with the personnel
from the Engineering Department disclosed that a new site has been
approved by the DA RO8 and they are going to schedule the
implementation of the project in CY 2021.

 Scion Grove Project - The audit team requested for the MOA of the
project but were told by the Municipal Agriculturist that it is not
available and he will request from DA RO8 for this. When asked why
this was not implemented, the Municipal Agriculturist replied that due to
the pandemic, he was not able to implement said project.

c. Department of Health

 Construction/Renovation of Kananga Municipal Hospital – The

remaining
balance of P743,626.99 from the 40% Health Facility Enhancement
Program (HFEP) in CY 2018 was not utilized since this was
inadvertently excluded among the planned projects and programs for
implementation in CY 2020.

d. Department of Environment and Natural Resources

 Implementation of Ecological Solid Waste Management System in the

Public Market – Interview with the Municipal Engineer revealed that the
project was not implemented, since, the location of said project has been
changed several times due to the changes also in the planning of the
Construction of the Public Market.

AOM No. 2021-08 LGU Kananga- Due to NGAs - Fund Transfers Page 5 of 6
 e. Local Government Support Fund – Assistance to Municipalities

 Upgrading of Barangay Road in Brgy. Lonoy, Kananga, Leyte – Funds

were received in August 24, 2020 and bidding of the project was done in
August 27, 2020. This is 20% completed per the Accomplishment report
of the Municipal Engineer as of December 31, 2020.

 Upgrading of Barangay Road in Brgy. Libertad, Kananga, Leyte - Funds

were received in August 24, 2020 and bidding of the project was done in
August 27, 2020. This is 17% completed per the Accomplishment report
of the Municipal Engineer as of December 31, 2020.

1.8 The delay in the completion of the above stated PPAs deprived the intended
beneficiaries of the benefits that could have been derived therefrom, which could
provide for an additional source of livelihood and improve their living conditions.

1.9 We recommend that the Mayor issue a directive to all the Department Heads,
who are in-charge in the implementation of programs/projects of National
Government Agencies, to:

1. Complete the implementation of the delayed/unfinished programs and

projects;

2. Determine the feasibility of its continuance and inform the Source

Agencies of any problems/difficulties on its implementation, otherwise
return the funds to the national government, if not viable;

3. Submit Purchase Requests and/or Program of Works promptly to the

Municipal Bids and Awards Committee to commence the procurement
process and ensure completion of the projects within the year.

May we have your comments on the audit observations noted within three (3)
calendar days from receipt hereof.

LINDETTE S. DEL VALLE

State Auditor IV
Audit Team Leader

WEMIA P. SENO
State Auditor IV
OIC - Supervising Auditor
AOM No. 2021-08 LGU Kananga- Due to NGAs - Fund Transfers Page 6 of 6