EXECUTIVE SUMMARY

A. INTRODUCTION
The Municipality of Canaman, Camarines Sur was founded sometime in 1599. In the first
decade of 1600, Canaman was grouped with other parishes in Ambos Camarines and Nueva
Caceres was the seat of governing power. It continued its municipal existence until 1902, when it
was annexed to Nueva Caceres (now Naga City) until 1908. In 1909, Canaman has regained its
status as an independent municipality through an Act of First Legislature. Canaman is a fourth
class Municipality and is composed of 24 barangays.
Pursuant to R.A. 7160, the Local Government Code of 1991, the Municipality enjoys
autonomy in managing, deciding and planning its administrative and fiscal development affairs in
conformity with the national trust for sustainable social and economic growth.

Organizational Set-up

The Municipality is under the Leadership of Honorable Emmanuel S. Requejo.

The other elected officials are as follows:

Vice Mayor : Hon. Henry P. Ragodon

Sangguniang Bayan Members:

Hon. Larry Nico M. Basmayor

Hon. Honesto S. Bermudo, Jr.
Hon. Amaamalhy D. Capsa
Hon. Digno F. Caudilla
Hon. Ruel B. Espiritu
Hon. Nelson M. Legaspi
Hon. Venancio B. Regulado
Hon. Reynata A. Trampe
Hon. Myrna F. Cantillo

Vision:

A God-loving municipality, excellent in all areas of leadership and service delivery,

seen in the brilliant blend of urban and rural development, caring people, a resilient
environment and rich Canaman culture.

Mission:

With the blessings of the Almighty and driven by the leaders and employees known
for being upright and disciplined servants of the people, the Local Government of Canaman
will provide a brilliant blend of services and supports that promote:

• Maorop asin sararo na komunidad.

 • Maogmang familia sa gabos na barangay.
• Paghahanda sa kalamidad.
• Magayon na kapalibotan.
• Toltol asin matibay na lideres.
• Maogmang taga-Canaman.

1.4 Economic Enterprise Operated

The LGU operates a Public Market a two storey building with a total land area of
144 sq. m., a 1st floor of 72 sq. m. and 2nd floor of 72 sq. m., and a Birthing Clinic and
Clinical Laboratory both in barangay Pangpang, which is located in the poblacion area of
the Municipality.

B. HIGHLIGHTS OF FINANCIAL OPERATION

Financial Condition
For CY 2013, the Municipality’s assets, liabilities and residual equity decreased by
11.03%, 43.067% and 3.68% respectively, compared with CY 2012.
CY 2013 CY 2012 Inc (Dec) %tage
Total Assets P 64,721,652.27 P 72,749,026.18 P (8,027,373.91) -11.03%
Total Liabilities P 7,740,494.93 P 13,593,038.67 P (5,852,543.74) -43.06%
Total Equity P 56,981,157.34 P 59,155,987.51 P (2,174,830.17) -3.68%

Results of Operation
For the year under audit, the Local Government Unit of Canaman posted an Income from
Operations of P9,998,334.85 which is P4,237,680.35 or 73.56% higher when compared to last
year. The Breakdown of the financial performance of the LGU is presented below and in the
succeeding page:
CY 2013 CY 2012 Inc(Dec) %tage
Local Taxes P 2,144,802.90 P 2,284,605.90 P (139,803.00) -6.12%
Internal Revenue Allotment 51,976,550.00 46,794,033.00 5,182,517.00 11.08%
Other Income 1,852,747.47 1,918,356.66 (65,609.19) -3.42%
Total Operating Income P 55,974,100.37 P 50,996,995.56 P 4,977,104.81 9.76%
Less: Expenses:
Personal Services P 29,023,084.31 P 27,027,492.79 P 1,995,591.52 7.38%
MOOE 16,952,681.21 18,208,848.27 (1,256,167.06) -6.90%
Total Expenses P 45,975,765.52 P 45,236,341.06 P 739,424.46 1.63%
Income from Operations P 9,998,334.85 P 5,760,654.50 P 4,237,680.35 73.56%

Appropriations and Obligations

Presented below is the comparative data of Appropriation and Obligation of the
Municipality for Calendar Years 2013 and 2012.
 CY 2013 CY 2012 Inc (Dec) %tage
Appropriations P 57,118,998.32 P 61,280,196.41 P (4,161,198.09) -6.79%
Obligations P 52,317,319.18 P 58,887,351.43 P (6,570,032.25) -11.16%
Unobligated Balance P 4,801,679.14 P 2,392,844.98 P 2,408,834.16 100.67%

Accomplishments
The following are the significant infrastructure projects undertaken by the municipal
government for 2013.
Fune Project % Accom-
Name of Project / Location Project Location (Bgys) Source Cost plished
1. Imprv. of Stage & Sch. Facilities San Jose-E & S.Vicente 20% & Bgy. P 500,968.65 100.00%
2. Imprv. of MP Bldg and Stage Pangpang & Talidtid 20% LDF 426,142.25 100.00%
3. Imprv. of DCC & MP Bldg & Stage Fundado & Sua 20% LDF 998,715.90 100.00%
4. Imprv. MP Bldg (Evacuation Ctr) San Nicolas 20% & Bgy. 889,899.66 100.00%
5. Agri-Fishery Hatchery/Demo Proj. Bgy. Sta Cruz BFAR, R-V 1,199,906.13 100.00%
6. Storm Drainage Bgy. Dinaga Gen. Fund 988,692.74 100.00%
9. Road Maintenance (Sporadic) Iquin & San Francisco 20% LDF 1,020,661.90 100.00%
TOTAL P 6,024,987.23

C. SCOPE OF AUDIT
Financial and compliance audit were conducted on the operations of the Municipality of
Canaman, Camarines Sur for Calendar Year ended December 31, 2013. The audit included, but
not limited to, the analysis of financial and accounting records, and determination of the validity
and propriety of the agency’s transactions.
Audit on the identified audit foci for CY 2013, such as Cash & Cash accounts, 20% Local
Development Fund, GAD program, procurement, infrastructure projects, credit financing and
revenues were conducted to determine the economy, efficiency and effectiveness of the operation
and performance of the municipality.

D. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the financial statements as the validity,
existence and correctness of the recorded balances of the agency Property, Plant and Equipment
(PPE) accounts valued at P49,891,577.49 could not be ascertained because the Report of Physical
Count of PPE as of December 31, 2013 was not reconciled with the books of accounts and the
balance of cash in bank accounts was overstated by at least P785,571.89 due to non-recording of
reconciling items. Existing records did not allow application of alternative audit procedures.

E. SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

For the exceptions discussed above, the Auditor recommended the reconciliation of the
Report of Physical Count of Property, Plant and Equipment with the books of accounts and the
adjustment of the cash in bank accounts of the reconciling items pertaining to prior years. In
addition, the following are the other significant obsrvations and the corresponding
recommendations.
1. Cash Advances totaling P907,093.24 remained unliquidated as of December 31, 2013 which
was not in consonance with existing law, rules and regulations thus, expenses were not
properly recognized in the periods they were incurred thus resulted in the overstatement of
asset and equity accounts., a reiteration of our audit finding in the previous years.
We recommend that the concerned officials and employees immediately liquidate and/or settle
their unliquidated cash advances. Disregard of demand letters shall constitute a valid ground
for withholding of the payment of any money due them. We also recommended to discontinue
the granting of additional cash advances unless the previous ones are fully liquidated.
We further recommended to pursue administrative and/or legal remedies against those
officials, employees and other accountable officers who are no longer connected with the
municipality.

2. Development Costs of the Agri-Fishery Hatchery Project totaling P1,249,906.13 was not
capitalized contrary to Section 50 of the NGAS Manual for LGUs, Volume I, thus, the PPE
and Equity Accounts were understated by the same amount.
We recommended that the Municipal Accountant adjusts the books of accounts as shown in
Annex G, Likewise, we recommended that the provisions of the above COA Rules and
Regulations be faithfully complied. Further, the proposed accounting journal entries in
Annex G should be made for subsidy funds received from other government agencies.
3. Purchases of office supplies and medicines of at least P241,808.94 and P454,113.01
respectively, were made through Negotiated-Small Value Procurement (N-SVP) although the
approved budget thereof far exceeded the ceiling for SVP, contrary RIRR of R.A. 9184.
We recommended that agency officials meticulously and judiciously plan their supplies
requirement in preparing PPMP, which should include: (a) whether PPAs will be contracted
out, implemented by administration; (b) the type and objective of contract to be employed;
(c) the extent/size of contract scopes/packages; (d) the procurement methods to be adopted,
(e) the time schedule for each procurement activity; and (f) the estimated budget for the
general components of the contract.
Likewise, we recommended that the BAC consolidates the PPMPs of the concerned offices
and other non-office PPAs, with the end in view of conducting procurement thru public
bidding. Alternative mode of procurement should be resorted to only on prevailing
circumstances. We also recommended that procurement of common use supplies be made
from PS-DBM.
We recommended that the agency adhere faithfully to the provisions of the RIRR of R.A. 9184,
particularly the terms and conditions for the use of alternative methods of procurements.

4. Unnecessary expenses for the honoraria of BAC of P48,000.00 was incurred due to the
splitting of the biddings/contracts in the procurement of supplies/materials pertaining to its
Agri-Fishery Hatchery Project contrary to COA Cir. No. 2012-003 and Sec. 2 of the RIRR of
R.A. 9184, thus, caused delay in its implementation and to the prejudice of the government.
 We recommended that the BAC refund the amount of P48,000.00. We also recommended that
the Members of BAC faithfully adhere to the provisions of R.A. 9184 and its IRR and exercise
prudence and/or diligence of a good father of a family, in the discharge of their functions.
5. The agency granted ACCORD, an NGO based in Quezon City, the amount P59,400.00 for the
Scale Up and Build Up projects of two barangays without complying the documentary
requirements set-forth under COA Cir. No. 2007-001.
We recommended that the concerned agency official(s) require ACCORD to submit the
following: (a) Documents enumerated in Item No. 4.4.1 to 4.4.8 of COA Cir. No. 2007-001,
(b) ACCORD accreditation and award of the project; (c) Inspection report by LGU-Canaman
of the project; and (d) ACCORD final fund utilization/liquidation. We also recommended that
the provisions of the above COA Circular be faithfully adhered to.
6. The agency disbursed P2,747,806.08 or 81.92% of its appropriation for the year totaling
P3,354,314.75 for PPAs under Donations, in the first and second quarter of the year, without
an Allotment released for the purpose, contrary to Section 8, Vol. 1 of the MNGAS for LGUs.
We recommended that management submits a justification for spending almost all of the
appropriation in the first semester of the year and why advice of allotments were not
prepared and issued, notwithstanding the provisions under Section 8 of the M NGAS for LGU.
We further recommended that the Muninicipal Budget Officer and Mununicipal Accountant
record the annual budget in the Registry of Appropriations, allotments and Obligations in
accordance with the form prescribed in Annex 13-16 of the MNGAS for LGUs.
7. Disbursements Vouchers (DVs) pertaining to various expenditures totaling P6,968,536.23
were not supported with complete documents contrary to Sec. 4.6 of P.D. 1445 and COA Cir.
No. 2012-001.
We recommended that the Mun. Accountant ensure the completeness and validity of
supporting documents by providing the Checklist of Supporting Documents for every kind of
transaction, furnished the various offices. We also recommended that the concerned officials
and employees adhere faithfully to the provisions of the IRR of R.A. 9184 in adopting
alternative methods of procurement and impose withholding taxes thereon.
8. The RCDs, DVs, Payrolls and JEVs, and mandatory reports were submitted belatedly ranging
from 45 to 220 days, contrary to law, rules and regulations, thus, precluded the Auditor from
conducting timely audit.
We recommended that the Mun. Treasurer submits the RCDs, reports of disbursements to
the Office of the Mun. Accountant within the period prescribed in Item 7.2 of COA Cir. No.
94-006. The Mun. Accountant shall records the transactions in the books of accounts, prepare
financial reports and submits the same to COA as provided in Item 7.3 COA Cir. 94-006, Item
6.05 of COA Cir. No. 95-006 and Sec. 70, 72 and 73 of the MNGAS, Vol. I, for LGUs.
9. More constituents could have been benefited had the agency implemented P2,241,063.93
worth of developmental programs, projects and activities during the year, under its 20% Local
Development Fund, which was not in consonance with DILG-DBM JMC No. 2011-1 dated
April 13, 2011 to the prejudice of the constituents beneficiaries.
 We recommended that the concerned agency officials ensure the timely implementation of the
agency’s development PPAs to maximize the benefits to constituents. The MPDC and the
Municipal Engineer should regularly apprise the LCE of the progress and status thereof.

F. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

Of the 17 prior year’s audit recommendations in the previous Annual Audit Reports,
seven (7) were fully implemented, seven (7) were partially implemented and three (3) were not
implemented.