EXECUTIVE SUMMARY

Highlights of Financial Operations

For the Calendar Year 2012, the Municipality generated a total income of P74,
694,170.96 which is 11% higher than last year’s collections of P67, 294,326.22.

Total expenditures for Calendar Year 2012 of P59, 333,795.47 showed a increase
of P2,648,087.91 or 4.67% compared to last year’s P56,685,707.56. Net income of
P14,327,672.28 increase by P3,744,053.72 or 35.38% compared to last year’s
P10,583,618.66.

Scope of Audit

The audit covered the accounts and operations of the Municipality of Concepcion
in the Province of Iloilo for the year ended December 31, 2012. The audit was conducted
to determine the reliability of the LGUs accounts in order to express an opinion on the
fairness of presentation of the financial statements as well as to determine whether or not
the LGU’s transactions were made in accordance with existing laws, rules and
regulations.

Auditor’s Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the financial statements on the

Municipality of Concepcion, Province of Iloilo as of December 31, 2012 and the results
of its operations and cash flows for the year then ended in conformity with generally
accepted accounting principles.

Significant Findings and Recommendations

The following are the significant findings and the corresponding

recommendations:

1. The Municipality failed to conduct physical count of its property, plant and
equipment amounting to P63,446,218.85 and prepare the corresponding Report on
Physical Count of Property, Plant and Equipment (RPCPPE) as of December 31,
2012 in violation of Section 124 of the Manual on New Government Accounting
System for Local Government Units, Vol. I, thus rendering the existence and validity
of the account doubtful.
 We recommend that the Local Chief Executive create an Inventory Committee to
conduct physical inventory of its Property, Plant and Equipment and to prepare the
corresponding report after having reconciled with the accounting records to come up
with the correct account balances in the financial statements.

2. The municipality’s contribution to the Home Development Mutual Fund (HDMF) as

government/employer share exceeded the maximum limit of P100.00 per employee in
violation of the provisions of Section 7, of Republic Act No. 9679 resulting to an
overremittance of P246,847.72.

We recommend that the Municipality comply with the provision of Section 7, of

Republic Act No. 9679 fixing the government/employer contributions to a maximum
of P100.00 per employee.

We also recommend that the excess government/employer share of the municipality

for CY 2012 of P246,847.72 be applied as advance payment for government share for
succeeding years until fully utilized.

3. Official receipts were not issued for collections received amounting to P1,665,767.00
hence government funds were not properly accounted for and subjected to proper
custody, accountability and audit for the period January 23, 2007 to October 19,
2012.

We recommend that the Chief of the MHO be required to account for the amount of
P1,665,767.00 and for other fees paid by patients whose names were included in the
logbook. Explain why she allowed her staff to collect the fees without issuing the
official receipt. Henceforth, all collection shall be forwarded to the Municipal
Treasurer’s Office to be accounted as government funds, and for proper custody,
accountability and audit.

4. Monthly net take home pay of most employees is less than Five Thousand Pesos
(P5,000.00) in violation of Section 37 of the 2012 General Appropriations Act.

We recommend that the Human Resource Management Officer should see to it that
net take home pay of employees shall not be less than P5,000.00. In the event that
total authorized deductions shall reduce net take home pay to less than Five Thousand
Pesos (P5,000.00), deductions shall be made in accordance with the order of
preference under Section 37 of 2012 GAA.

5. Partial and non-implementation of projects in the 20% Development Fund deprived

the constituents/intended beneficiaries of the benefits that can be derived from the
projects had it been completed and implemented.
 We recommend that the LGU properly appropriate and utilize 20% Development
Fund in accordance with Section 1.1 of Joint DILG-DBM Memorandum Circular No.
2011-1 dated April 13, 2011 and to appropriate for projects/activities in order that the
constituents/intended beneficiaries can feel and enjoy efficient and effective delivery
of its services.

6. Taxes withheld from compensation and payment of goods purchased amounting to

P1,165,249.10 as of December 31, 2012 were not regularly remitted to the Bureau of
Internal Revenue, contrary to the provisions of Section 69 of P.D. 1445 and Revenue
Regulations No. 2-98 dated April 17, 1998.

We recommend that the Municipal Accountant shall immediately remit all taxes
withheld from compensation and payments of goods purchased with the Bureau of
Internal Revenue (BIR) and reconcile prior year’s unremitted taxes.

Henceforth, strictly adhere to the provisions of Section 69 of P.D. 1445 and Revenue
Regulations No. 2-98 dated April 17, 1998 pertaining to the remittance of all taxes
withheld on or before the tenth (10th) day of the following month, after the said taxes
were withheld, to the BIR.

7. Expenditures for Personal Services (PS) in 2012 amounting to P35,055,310.04

exceeded the PS Cap Limitation of P26,342,225.47 by P7,270,084.57 contrary to
Section 325 (a) of R.A. 7160 known as the Local Government Code of 1991 and
Local Budget Circular No. 98 dated October 14, 2011 and further resulting to
inadequate funds allocated for the delivery of basic services and development
projects.

We recommend that the Municipal Officials should strictly observe the budgetary
constraints and adhere to the provisions of Section 325(a) of the Local Government
Code of 1991 and Local Budget Circular No. 98 dated October 14, 2011.

8. Payment of Productivity Enhancement Incentives (PEI) totaling P1,856,000.00 to

municipal officials and employees were not in accordance with the PS Cap limitations
as provided under Section 325 (a) of R.A. 760 and Budget Circular No. 2012-3 dated
November 29, 2012, thus legality of the grant or their entitlement thereto is doubtful.

We recommend strict adherence to the provision of Section 9.1 and 9.2 of the Budget
Circular No. 2012-3. The amount of P1,856,000.00, being unauthorized should be
refunded by the municipal officials and employees who were recipients of the
benefits.

9. Cash In Vault as of December 31, 2012 totaling P9,065,437.05 remain undeposited in

violation of Section 32 of the Manual on New Government Accounting System.
 We recommend that the Local Chief Executive should require the relieved Municipal
Treasurer to reconcile her accounts.

Likewise, the OIC Municipal Treasurer should liquidate his cash advances pursuant
to Section 89 of PD 1445 and Section 5.8 of COA Circular No. 97-002. As to
deposits, the provisions of Section 32 of the Manual on NGAS should be strictly
adhered to.

Status of Implementation of Prior year’s Audit Recommendations

Of the thirty five (35) audit recommendations embodied in the previous year's
annual audit report, two (2) were not implemented, twenty-one (21) were partially
implemented and twelve (12) were implemented.