EXECUTIVE SUMMARY A, INTRODUCTION The Municipality of Magarao is a 4" class, partially-urban municipality founded in 1570 with a population of 26,742 as of the 2020 census. The Municipality is spread out over an area of 44,97 square kilometers, yielding a density of around 595 people per square kilometer. The township is included in the Third Legislative District of the Province of Camarines Sur and composed of 15 barangays, Audit Methodology and Scope of Audit The Financial, Compliance, Project Evaluation and Revenue audit conducted covered the accounts and operations of the Municipality of Magarao, Camarines Sur for all funds for the period January 1 to December 31, 2021 The audit was conducted to ascertain the propriety of financial transactions and compliance of the agency with prescribed 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 financial statements. ‘The audit was focused on the different audit thrusts/areas required by the Local Government Sector of the Commission. B, FINANCIAL HIGHLIGHTS B.1 Financial Position and Performance Financial Position Highlights 20,000,000.00 s ] 200,000,000.00 _— 150,000,000 97,897.80. 4 100,000,000.00 058.95 50,000,000.00 538.85. 40g 0.00 — - - Assets Liabilities Government Equity =CY¥ 2021 CY 2020Assets increased from P192,197,897.80 to P201,184,122.22 in CY 2021, while liablity also decreased from PS50,106,838.85 to P40,913,495.38. Moreover, equity increased from P142,091,058.95 to P160,270,626.84 Financial Performance Highlights 120,000,000,00 eee | 100,000,000.00. |" '80,000,000,00 jo31,491 | 60,000,000.00 156,921.79. 845 40,000,000.00 20,000,000.00 2 mek ai a 19.89 Total Income Total Expenditures Net Surplus, mcy2021 mcy 2020 ‘On the other hand, income increased from P105,93 1,749.89 to P106, 134,056.91, while expenses decreased from P87,756,921.70 to P84,544,423,38, Also, Net Surplus increased from P17,833,719.89 to P21,133,633.53. B.2 Sources and Application of Funds In Philippine Peso | %or Particulars Increase/ | Increase CY 2021 CY 2020 (Decrease) (Decrease) General Fund E Allotments 73,858,850.40 | _ 74,313,724.00| _(454,873.60)|__(1%)_| Obligations 69,350,884.03 66,861,777.13 | 2,489.106.90 4% Balance 4,507,966.37 | __7,451,946.87 | (2,943,980.50) | _ (40%) Special Education Fund Allotments 835,805.92 805,092.40[ _30,713.52[ 4% Obligations 819,514.21 718,146.41 | 101,367.80] 14% Balance 16,291.71 86,945.99 | (70,654.28) | (81%) _| B.3 Major Program/Projects/Activities undertaken in CY 2010 Some of the major projects reported as implemented by LGU Magarao during the year consisted of various infrastructure projects totaling P23,191,099.11Completed projects of the LGU were not all validated as to existence by the Au Team due to time constraint. Our audit was limited only to available records and documents submitted to the Office of the Auditor. AU ‘OR’S OPINION ON THE FINANCIAL STATEMENTS We rendered a qualified opinion on the fairness of the presentation of the financial statements as of December 31, 2021 because the existence, completeness and accuracy of Property, Plant and Equipment (PPE) accounts could not be ascertained due to unreconciled balance between the agency books and Report on Physical Count of Property, Plant and Equipment (RPCPPE) amounting to P158,997,45 1.02. D. SUMMARY or SIGNIFICANT. OBSERVATIONS AND RECOMMENDATIONS For the exception mentioned earlier, we recommended that Management: a) direct the Property Custodian to maintain individual property card for all PPE owned by the LGU; b) require the Municipal Accountant to maintain a complete and updated PPELC; c) instruct the Municipal Engineer to provide the Municipal Accountant the complete description and cost segregation of road components for road projects, d) instruct the Inventory Committee to conduct an inventory and submit the complete Report on Physical Count of Property, Plant and Equipment (RPCPPE); and e) instruct the Muni Accountant to prepare an updated lapsing schedule. The Audit Team has communicated the observations and recommendations with the Auditee through the issuance of Audit Observation Memorandum (AOMs) and discussed them with agency officials during the exit conference conducted on June 10, 2022. Their comments and explanations were incorporated in the report, where appropriate. The following are the significant observations together with the corresponding recommendations: 1, Government Service Insurance System (GSIS) contributions, loan amortizations and the employees’s loan amortizations deducted from employees’ salaries with net amount of 751,440.80 were either uunreconciled and/or unremitted due to lack of separation of duties We recommended that management: a) separate the offices in charge of the preparation of payroll deductions and remittances, b) through Accounting Office to reconcile the contributions and loan amortizations deductions and remittances, and c) assign the Head of Office to be in charge in approving employee requests related to the deferment of employee's salary deduction of Joan amortizations iii2. The Local Development Project on livelihood amounting to P2,691,520.00 was not properly implemented and evaluated We recommended that management: a) provide the additional supporting documents for the discrepancy noted between the number of quantity purchased and distributed and the additional supporting IDs for recipients that did not submit their ID's; and b) ensure proper planning, implementation and evaluation of the projects funded by 20% LDF. 3. Several disbursements for COVID-19 related transactions amounting to P1,260,544.00 were made thru reimbursements. We recommended that management require the Municipal Accountant, the Municipal Treasurer and all other officials concerned to ensure that the LGU official/s discontinue or refrain from the practice of procuring goods without following the procurement law and to stop the practice of payment through reimbursements and ensure that taxes are appropriately withheld on all ‘government money payments, 4, Procurement of 670 sacks of rice and other gocds charged against the DRRM Funds amounting to P2,226,313.08 could not be ascertained if distributed to disaster related activities due to non-submission of complete distribution list We recommended that management require the: a) municipal Accountant and the LDRRM Officer to strictly adhere to the provision of NDRRMC-DBM- DILG Joint Memorandum Circular No, 2013-1 and utilize the fund that support disaster risk management activities such as, disaster prevention and mitigation, disaster preparedness, disaster response and disaster rehabilitation and recovery; and b) LDRRM Officer to submit Distribution List for goods and rice distributed to each recipient with complete details as to name, address, number of kilos, purpose and date given. 5. The non-application for insurance policy of DRRM vehicle for CY 2020- 2021 resulted in incurrence of unavoidable expenses amounting to P400,000.00, not in keeping with COA Circular No. 92-390, thus entailing additional cost for repair of damaged vehicle We recommend that the Management: a) regularly monitor the expiration of insurance policy for all properties insured; b) ensure that all documents submitted to the Team are duly filled out and supporting documents were attached prior to payments thereof for consideration in audit; and explain why no insurance was procured for the vehicle herein mentionedE. SUMMARY OR AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES Balance Jan 1, Balance Dee Particulars 2021 eee 31, 2021 Issued Seitled Suspensions | _P510.400.00| P 510,400.00 Disallowance | __247,821.22 P46,42032 201,400.90 Charges Total £758.22122 4642032 711,800.90 | F. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS, We monitored and verified the implementation of the audit recommendations contained in CY 2020 Annual Audit Report and noted that out of the 91 audit recommendations, eight were fully implemented, 29 were partially implemented and $4 were not implemented as of December 31, 2021