EXECUTIVE SUMMARY

A. INTRODUCTION

Labrador has a total land area of 11,233 hectares which was subdivided into 10
barangays with a total population of 23,201. The former name of this town is San Isidro
Labrador in 1903 and was renamed Labrador by virtue of Republic Act No. 2390. It is
currently a 4th class Municipality and is basically an agricultural town. Farming and
fishing are its main sources of income.

The Municipality of Labrador is headed by the Municipal Mayor Honorable

Dominador V. Arenas, supported by 11 municipal officials, 53 permanent employees, 87
Job Order employees and seven (7) co-terminus (consultants) as of December 31, 2018.

B. FINANCIAL HIGHLIGHTS

The financial position, sources of funds, appropriations and obligations of the

Municipality during the year 2018 are as follows:

Increase
2018 2017 %
(Decrease)
Assets 232,690,126.27 198,268,320.86 34,421,805.41 17.36%
Liabilities 28,953,945.80 30,250,733.75 (1,296,787.95) (4.29%)
Government
203,736,180.47 168,017,587.11 35,718,593.36 21.26%
Equity
Revenue 88,508,051.53 83,859,886.25 4,648,165.28 5.54%
Expenses 68,194,046.71 63,320,373.32 4,876,673.39 7.70%
Appropriations 95,227,562.14 95,669,227.36 (441,665.22) (0.46%)
Obligations 83,887,034.70 84,219,494.79 (332,460.09) (0.39%)

C. OPERATIONAL HIGHLIGHTS

To accelerate the social and economic development of the Municipality for the
year, LGU Labrador was able to implement most of its plans and targets thru the
leadership of Mayor Dominador V. Arenas. These infrastructure projects are as follows:
 % of
Program/Projects/Activity Description Amount Completi
on
Local Access Road Rehabilitation at Barangay Uyong 4,479,245.45 100%
Expansion of Multi-purpose Gym at Poblacion 2,487,829.92 100 %
Installation of Solar Panel at Multi-purpose Building at
1,995,000.00 100%
Poblacion
Local Access Road Barangay Poblacion 1,989,514.34 100%
Construction of Multi-purpose Building Phase I at
Brgy. Uyong 1,884,309.39 100 %
Improvement and Repainting of Multi-purpose Gym
Tobuan 1,190,608.32 100 %
Local Access Road Barangay Dulig 1,488,370.23 100%
Local Access Road Barangay Bolo 1,488,084.57 100 %
TOTAL 17,002,962.22

The above projects/programs/activities were implemented based on the approved

Annual Investment Plan (AIP) for CY 2018, thus most of the targets of the LGU were
accomplished.

D. SCOPE OF AUDIT

A financial and compliance audit was conducted to ascertain the fairness and
reliability of the agency’s financial position as of December 31, 2018 and the results of
its operation for the year then ended. A Value for Money (VFM) Audit was also
conducted to determine whether resources had been managed and utilized in an
economical, efficient and effective manner on selective basis.

E. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

A qualified opinion was rendered on the fairness of the presentation of the

financial statement of the Municipality in view of the balance of the Property, Plant and
Equipment (PPE) with book value of ₱247,733,772.58 as of December 31, 2018 was not
reconciled with the Property Records due to the non-submission of the Report on the
Physical Count of PPE, and the lack of complete and updated Property/Equipment
Ledger Cards, contrary to Sections 119 to 124, Volume I of MNGAS for LGUs, thus,
accuracy, validity and existence of the PPE account could not be ascertained.

F. FAVORABLE OBSERVATIONS

We noted the following favorable observations in the operations of the

Municipality:

1. Credit Financing / Debt Servicing

For the calendar year 2018 and for the previous years the Municipality
did not enter into loan contract from any government or private depository
banks.

2. Compliance with GSIS policies

For the monthly personal share of employees and the contribution for
employer’s share covered by GSIS Act of 1997 mandates that this shall be
remitted within the first ten days of the calendar month to which the
contribution apply.
During the year under review, the Municipality withheld GSIS contributions
from personnel salaries and accordingly remitted the same to Government Service
Insurance System in compliance with the rules and regulations promulgated by the
GSIS. The contributions withheld in December, 2018 were remitted before the due
date.

G. SIGNIFICANT AUDIT OBSERVATIONS AND

RECOMMENDATIONS
Summarized below are the significant audit observations and the corresponding
recommendations which were discussed with Management officials during the exit
conference. Management comments were included in the report, where appropriate.

1. Balance of the Property, Plant and Equipment (PPE) with book value of
₱247,733,772.58 as of December 31, 2018 was not reconciled with the
Property Records due to the non-submission of the Report on the Physical
Count of PPE, and the lack of complete and updated Property/Equipment
Ledger Cards, contrary to Sections 119 to 124, Volume I of MNGAS for
LGUs, thus, accuracy, validity and existence of the PPE account could not
be ascertained.
 We reiterated the previous years’ audit recommendations that the
Local Chief Executive:
1. Instruct the Inventory Committee to conduct the required annual
physical count of the PPE as of December 31 of every year. The
actual account may be undertaken any month during the current
year, but has to be updated at year-end. This procedure is necessary
in order to know the physical existence and condition of the PPE,
and to identify, segregate and reclassify unserviceable assets.
Reconciliation of the result of the count with the accounting records
is to be undertaken to effect the necessary adjustments and to pin
point responsibility/accountability for any missing PPE;
2. Maintain/update the subsidiary Ledgers, PPE Ledger Cards, Property
Cards, Property Acknowledgement Receipts (PARs), and placing
Property Tags which are required under MNGAS for proper
control, monitoring and facilitate identification of the PPE; and
3. Make use of Inventory Custodian Slip (ICS) for semi-expendable
items to avoid loss as these are usually small items.
2. Ownership of twenty five (25) parcels of land of the Municipality with an
assessed value of ₱3,432,570.00 were not yet transferred in the name of the
Municipality which is not in conformity with Section 39(2) of Presidential
Decree (PD) No. 1445, thus validity of the Land Account could not be
ascertained.
We recommended that Management instruct the OIC-Municipal Assessor
and OIC-Municipal Treasurer to exhaust all possible means for speedy titling
of land and acquire Certificate of Title in order to protect the interest of the
Municipality for any adverse claims by third parties and in compliance with
the above-cited laws, rules and regulation.
3. Unserviceable motor vehicles carried in the books with book value of
P4,421,320.00 which were not disposed of in accordance with Sections 76
and 79 of Presidential Decree No. 1445 were shown to have further
deteriorated, thus, depriving the LGU of higher recoverable value if not
immediately dispose of.
We recommended that Management instruct the officials concerned to cause
the immediate disposal of the said unserviceable properties in order to avoid
further deterioration and decline in its value pursuant to Section 79 of P.D.
1445.
4. Municipal Ecological Solid Waste Management Board had not addressed the
problem in the collection of segregation of wastes, and of providing a
 Sanitary Landfill in the disposal of wastes as required under R.A. 9003, thus
exposing the public to potential hazard to human health or to the environment
when improperly treated, stored, disposed of, or otherwise managed.
We recommended that Management formulate and immediately implement a
long term solution leading to a self-reliant LGU as mandated by the Local
Government Code, and provide its own sanitary landfill in accordance with
the 10–year Municipal Solid Waste Management (MSWM) Plan.

The other audit observations and recommendations were discussed in Part II of

this report.

SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND

CHARGES

As of December 31, 2018, the Municipality had unsettled total suspensions and
disallowances and charges, as follows:

Balance as of December 31, 2018

Particulars Prior to 2009 RRSA 2009-2018
Suspensions - 0.00
Disallowances - 117,000.00
Charges - 0.00
Total - 117,000.00

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Of the 19 audit recommendations contained in the 2018 Annual Audit Report, six
were implemented, eleven were partially implemented and the remaining two were not
implemented.

Status of Implementation Quantity

Fully Implemented 6
Partially Implemented 11
Not Implemented 2
TOTAL 19