EXECUTIVE SUMMARY

Introduction

The Municipality of Estancia was formerly an “arabal” of Carles and later of Balasan. In the
year 1918 Governor Jose Yulo signed the formal separation of Estancia from Balasan, thus
becoming a separate municipality. It has 25 barangays; seven urban, 15 rural and three
island barangays. It has a total land area of 29.38 square kilometers with a population of
59,759 based on the PSA Report for the Year 2022.

The Municipal Government of Estancia, Iloilo is headed by the Municipal Mayor Honorable
Mary Lynn N. Mosqueda. It has a total of 359 employees composed of the following:

Elected - 12
Permanent - 104
Co-Terminus - 8
Temporary/Job Hires - 235
Total 359

Audit objectives

The objectives of the financial and compliance audit were to determine the reliability of the
LGU’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 LGU’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 Estancia for the
Calendar Year ended December 31, 2022.

Financial Highlights

Highlights of the financial position and results of operations of the Municipality of Estancia in
Calendar Year (CY) 2022, are the following:

Increase
2022 2021
(Decrease)
Financial Position
Assets ₱ 445,656,574.60 ₱ 388,164,974.94 ₱ 57,491,599.66
Liabilities 66,692,831.78 99,838,112.83 (33,145,281.05)
Net Assets/Equity ₱ 378,963,742.82 ₱ 288,326,862.11 ₱ 90,636,880.71

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 Increase
2022 2021
(Decrease)
Financial Performance
Revenue ₱ 246,534,933.35 ₱ 185,577,753.83 ₱ 60,957,179.52
Expenses 161,706,857.01 124,074,962.47 37,631,894.54
Transfers, Assistance
(7,730,126.70) (7,765,245.00) (35,118.30)
and Subsidy To
Surplus (Deficit) ₱ 77,097,949.64 ₱ 53,737,546.36 ₱ 23,360,403.28

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:

The accuracy, existence, and completeness of the Property, Plant, and Equipment (PPE) as
of December 31, 2022 amounting to ₱171.137 million could not be ascertained due to (a)
non-conduct of physical count of properties at the end of the year; (b) non-submission of
Report on the Physical Count of Property, Plant, and Equipment (RPCPPE); (c) non-
maintenance of PPE Ledger Cards and Property Cards; and (d) non-reconciliation of
accounting and property records, thus making the PPE account balance unreliable and
doubtful.

Significant Audit Observations and Recommendations

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

1. Acquisition and issuance of inventories were not properly accounted and the Report on
Physical Count of Inventories for the period was not prepared and submitted contrary to
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 ₱14.920 million is unreliable.

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

1. OIC-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; and

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.

2. Appropriation for the Barangay Development Project totaling ₱12.265 million was not
fully utilized as of year-end leaving a balance of ₱12.060 million, thus the municipality’s
constituents were prevented from fully enjoying the services that they could have
enjoyed had these projects been implemented and completed timely.

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 We recommended and the management agreed that the Local Chief Executive together
with the members of the Municipal Development Council do the following:

1. Create a written internal policy in the granting of financial assistance to Barangays to

ensure its timely and efficient utilization;

2. Conduct a survey or inventory of proposed development projects for all barangays

for consideration in planning the succeeding years’ budget preparation; and

3. Call the attention of the barangay officials, with unutilized funds from prior years to
submit their revised project proposals, and give a timeline for the implementation of
such projects, otherwise, unutilized funds should be appropriated to other
development projects that are well-planned and procurement-and-implementation-
ready.

3. The completeness and accuracy of the accounting and documentation of the distribution
and utilization of the COVID-19 vaccines could not be ascertained due to the non-
submission of the various reports pertaining to the COVID-19 Vaccination Program such
as the List of Procured/Received Vaccines, Utilized Vaccines and the List of Sex-
Disaggregated Vaccine-Recipients contrary to Section 122 of the Presidential Decree
No. 1445.

We recommended and the management agreed that the Local Chief Executive direct the
Municipal Health Officer to submit to COA Office the various reports pertaining to the
COVID-19 Vaccination Program such as the List of Procured Vaccines, Received
Vaccines, Utilized Vaccines, List of Vaccine-Recipient, and Procured Ancillary Supplies
and Services for the storage, transport, deployment and administration of COVID-19
vaccines.

4. Job Order contracts/Contract of Services were entered into by the Municipality (a)
without an existing internal policy, (b) non-requiring the submission of Accomplishment
Reports, and (c) with payment on a monthly basis contrary to Section 77 of RA No.
7160, pertinent provisions of CSC Resolution No. 020790, and Section 4(6) of PD No.
1445, thus the propriety and validity of the disbursements cannot be ascertained and
may be considered irregular.

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

1. HRMO, together with all other Department Heads, to spearhead the drafting of the
internal policy regarding the hiring of the job order personnel. The policy must
include the basis of rates on a daily wage or piecework basis pursuant to Sec. 77 of
RA 7160 and CSC Resolution No. 020790, and monitoring of the services rendered
by the JO personnel among others;

2. HRMO, with the aid of all other Department Heads, to maintain a database of all JO
personnel hired for monitoring purposes;

3. HRMO and OIC-Municipal Accountant to require the persons hired as JOs and COS
to submit Accomplishment Reports and attach it to the corresponding Liquidation
Reports;
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 4. Comply with the requirements set in hiring of JOs and COS provided in Section 77 of
the RA No. 7160 and CSC in its Resolution No. 020790; and

5. Submit to the office of the auditor the Memorandum of Agreement between the LGU
of Estancia and KALAHI for the Contract of Service counterpart.

6. Only six or 4.3 percent in the total amount of ₱0.892 million were implemented in CY
2022 out of the 43 projects set for implementation under the 70 percent Mitigation Fund
of the LDRRMF with a total appropriation of ₱20.739 million which is not in accordance
with Republic Act No. 10121, thus desired goals and objectives of reducing disaster risks
and enhancing disaster preparedness and response capabilities in the community was
not achieved.

We recommended and the management agreed that the MDRRMO together with the
MPDC and Municipal Engineer see to it that all programs, projects and activities to be
funded under the 70 percent Mitigation Fund are well-planned and procurement-and-
implementation-ready.

We also recommended and the management agreed that the MDRRMO re-visit the
previous years’ LDRRM Annual Investment Plan, and determine if the programs and
projects that remained unimplemented as of CY 2022 are still doable and necessary or if
it needs to be re-allocated to more responsive programs and projects.

STATUS OF SUSPENSIONS, DISALLOWANCES AND CHARGES

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

of ₱2.612 million, broken down as follows:

Beginning
This Period Ending
Balance
January 1- December 31, 2022 Balance (As of
(As of
December 31,
December 31,
NS/ND/NC NSSDC 2022)
2021)
Notice of
₱ 651,365.66 ₱ 0.00 ₱ 0.00 ₱ 651,365.66
Suspension
Notice of
2,555,757.00 11,213.97 605,790.00 1,961,180.97
Disallowance
Notice of Charge 0.00 0.00 0.00 0.00
Total ₱ 3,207,122.66 ₱ 11,213.97 ₱ 605,790.00 ₱ 2,612,546.63

Status of Implementation of Prior Years’ Audit Recommendations

Of the 75 audit recommendations embodied in the previous years’ Annual Audit Reports, 15
were fully implemented, 39 were partially implemented, and 21 were not implemented.

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