EXECUTIVE SUMMARY

Introduction

The Municipality of Balasan is one of the few oldest Municipal Governments in the Province
of Iloilo. In 1894, a Civil Government was established under the leadership of Governor
Blanco. By virtue of an executive commission in Manila, three Municipalities namely: Carles,
Estancia and Batad were fused to this Municipality on December 31, 1903 but was later
amended. Today, the Municipality of Balasan is a fourth-class Municipality and composed of
23 barangays.
Pursuant to RA No. 7160, known as the Local Government Code of 1991, the Municipality,
like other local government units, was given more power, authority, responsibilities and
resources to enable it to attain full development as a self-reliant community and as an
effective partner in the attainment of national goals.
The Municipality of Balasan is headed by Municipal Mayor Filomeno V. Ganzon. It has a
total of 113 employees composed of the following:

Permanent - 64
Casual - 34
Elected - 12
Co-terminus - 3
Total - 113

Audit Objectives

The objectives of the financial and compliance audit were to determine the reliability of the
Municipality’s accounts and to express an opinion on the fairness of presentation of the
financial statements as well as to determine whether or not the Municipality’s transactions
were made in accordance with existing government laws, rules and regulations.

Scope of Audit

The audit covered the accounts and operations of the Municipality of Balasan for the
Calendar Year ended December 31, 2022.

Highlights of Financial Operations

Highlights of the financial position and performance of the Municipality of Balasan for
Calendar Year (CY) 2022, with comparative figures for CY 2021 are the following:

Increase
2022 2021
(Decrease)
Financial Position
Assets ₱ 470,805,895.22 ₱ 450,835,979.52 ₱ 19,969,915.70
Liabilities 50,585,645.98 74,124,603.76 (23,538,957.78)
Net Assets/Equity ₱ 420,220,249.24 ₱ 376,711,375.76 ₱ 43,508,873.48

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 Increase
2022 2021
(Decrease)
Financial Performance

Revenue ₱ 187,456,168.78 ₱ 165,638,519.27 ₱ 21,817,649.51

Expenses 140,346,054.58 107,869,506.58 32,475,375.00
Transfers, Assistance
0.00 0.00 0.00
and Subsidy From
Transfers, Assistance
0.00 0.00 0.00
and Subsidy To
Surplus (Deficit) ₱ 47,110,114.20 ₱ 57,769,012.69 ₱ (10,658,898.49)

Independent Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of presentation of the Calendar
Year 2022 Financial Statements due to the following:

1. The accuracy, existence, and completeness of the Property, Plant, and Equipment
(PPE) as of December 31, 2022 amounting to ₱202.587 million could not be ascertained
due to (a) incomplete submission of Report on the Physical Count of Property, Plant,
and Equipment (RPCPPE); (b) non-maintenance of PPE Ledger Cards and Property
Cards; (c) non-reconciliation of accounting and property records; and (d) non-recording
of the donated properties, thus making the PPE account balance unreliable and doubtful.

2. The validity and accuracy of the account balances of Due to NGAs and Due to LGUs, as
of December 31, 2022, amounting to ₱23.191 million and ₱6.866 million, respectively is
unreliable due to: (1) the non-submission of subsidiary ledgers and other supporting
schedules; (2) the non-submission of Status of Fund Transfers, Memorandum of
Agreement and other documents peculiar to the fund transfer; and (3) erroneous entries
made to record the transactions pertaining to the utilization of fund transfers from other
NGAs and LGUs.

3. Lapses in the accounting of RPT and SET resulted to discrepancy between the reported
balances of RPT/SET Receivables and the Certified List of RPT Delinquencies as of
December 31, 2022 in the amount of ₱14.477 million and ₱14.477 million for the RPT
and SET Receivables, thus affecting the reliability and accuracy of the Receivable
accounts presented in the financial statements.

Other Significant Audit Observations and Recommendations

Financial and Compliance Audit

The following are several significant audit observations and the corresponding
recommendations:

1. Acquisition and issuance of inventories are not properly accounted and the Report on
Physical Count of Inventories for the period was not prepared and submitted contrary to

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 COA Circular No. 2015-009 and the New Government Accounting System (NGAS)
Manual for Local Government Units (LGUs), thus reported utilization of inventories in the
total amount of ₱12.674 million is unreliable.

We recommended and management agreed that the Local Chief Executive (LCE) direct
the following:

1. Municipal Accountant to record the purchases and issuance/utilization of goods and

supplies in its appropriate accounts in order to reflect the correct balances at year-
end;

2. Inventory Committee to properly maintain inventory records for monitoring and

record-keeping purposes, conduct the semestral physical count on inventories, and
submit the same to the Office of the Auditor within the period prescribed;

3. Municipal Health Officer to ensure that data for vaccines received and administered
are properly monitored and submitted to the Accounting Office for recording.

2. Total Revenue reported in the Statement of Financial Performance, Statement of

Comparison of Budget and Actual Amounts and Statement of Receipts and
Expenditures from the Municipal Treasurer’s Office, as of December 31, 2022 have
discrepancies resulting from the non-reconciliation of the amount of revenue recorded
and in the absence of subsidiary records to easily identify and reconcile differences, thus
rendering the reported revenues in the financial statements unreliable.

We recommended and management agreed that the Local Chief Executive direct the
Municipal Accountant and the Municipal Treasurer to prepare subsidiary records duly
counter-checked by each office to prove that reconciliation is regularly done and to
easily identify the source of error or discrepancies in the reports.

We also recommended and management agreed that the Municipal Accountant and
Budget Officer closely coordinate in the preparation and submission of the SCBAA to
ensure accuracy and that it will be submitted on time together with the other financial
statements.

3. Delinquent Real Property Tax amounting to ₱33.206 million remained uncollected as of

December 31, 2022 and the Bureau of Local Government Finance (BLGF) collection
target was not achieved incurring a shortfall of ₱6.373 million or 46.2 percent contrary to
pertinent provisions of Republic Act No. 7160, thus potential revenues which could have
been utilized for the development programs and projects of the Municipality were not
realized.

We recommended and management agreed that the Local Chief Executive direct the
following:

1. Municipal Treasurer to enforce collection of the delinquent real property taxes by

conducting more aggressive tax campaigns and by strictly implementing the
remedies provided in Sections 256 to 260 of R.A. No. 7160; and

2. Municipal Treasurer, in coordination with the Municipal Assessor, to conduct ocular

inspection on lands with outdated records, inquire on the status with the current
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 possessor if any, and require them to submit documents to correct and update the
records.

STATUS OF SUSPENSIONS, DISALLOWANCES AND CHARGES

Statement of Audit Suspensions, Disallowances and Charges (SASDC) showed a balance

of ₱4.442 million, broken down as follows:
Balance, Balance,
Suspensions Disallowances Charges Settlements
Jan. 1, 2022 Dec. 31, 2022
Suspension 152,057.00 0.00 0.00 0.00 0.00 152,057.00
Disallowances 4,290,300.00 0.00 0.00 0.00 0.00 4,290,300.00
Charges 0.00 0.00 0.00 0.00 0.00 0.00
Total 4,442,357.00 0.00 0.00 0.00 0.00 4,442,357.00

Status of Implementation of Prior Years’ Audit Recommendations

Of the 83 audit recommendations embodied in the previous years’ Annual Audit Reports, 14
were fully implemented, 55 were partially implemented and 14 were not implemented.

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