Part II

DETAILED FINDINGS AND

RECOMMENDATIONS
 DETAILED FINDINGS AND RECOMMENDEDATIONS

Financial and Compliance Audit

Unreliable PPE balances in the financial statements

1. The completeness, existence, accuracy and condition of the reported Property,

Plant and Equipment (PPE) with a carrying amount of P 4,773,623.06 as at
December 31, 2022 are doubtful due to the continued non-conduct of physical
inventory of its PPE by the Inventory Committee headed by the Punong
Barangay as required under Section 124, Volume I of the MNGAS for LGUs
and Sections 7.1.18 and 7.1.19, Chapter VII of the Manual on the Financial
Management of Barangays.

1.1 Section 124, Volume I of the Manual on the New Government Accounting
System (MNGAS) for LGUs provides that:

Physical count of property, plant and equipment shall be made annually and
reported in the Report of the Physical Count of Property, Plant and Equipment
which shall be submitted to the Auditor concerned not later than January 31 of
each year.

1.2 Moreover, Sections 7.1.18 and 7.1.19, Chapter VII, of the Manual on the
Financial Management of Barangays provide the following:

The Barangay Treasurer (BT) shall act as the Property Officer of the barangay
and shall be responsible for the receipt, custody, issuance and physical
inventory of barangay property, except for the buildings and other physical
structures which shall be under the accountability and responsibility of the
Punong Barangay (PB)…

7.1.18 The barangay shall conduct an annual physical inventory of all

supplies, property and equipment of the barangay.

7.1.19 Report on the results of physical inventory of property/equipment

shall be reconciled with the accounting records.

1.3 Inquiry from the concerned barangay officials disclosed that they did not
conduct the required annual physical count of Property, Plant and Equipment
thus, the corresponding inventory report were not prepared and no basis for
reconciliation with accounting records. This is despite the consistent issuance
of audit observation by the Audit Team on the matter and prior years’
recommendations.

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 1.4 The conduct of physical inventory of PPEs is an indispensable procedure to
ensure that adequate control is adapted in the safeguarding of assets and that
the integrity of property custodianship is ensured. The continued inability of
the concerned barangay officials to conduct physical inventory impairs the
Management’s assertion on the completeness, existence, accuracy and
condition of said barangay properties.

1.5 We recommended that Management strictly adhere to the pertinent

provisions of COA Circular No. 2015-011 dated December 1, 2015 and
cause the following:

1. create an inventory Committee to be headed by the Punong Barangay

or his authorized representative and the Barangay Treasurer as his
member, which shall conduct the inventory of all the PPE accounts of
the barangay at least once a year;

2. immediately conduct the physical count of barangay properties and

submit to the Office of the Auditor the Report on Inventory of
Property and Equipment (RIPE) as of December 31, 2021;

3. reconcile any discrepancies between the accounted barangay

properties with the subsidiary ledgers in order that the financial
statements reflect the more accurate value of existing barangay
properties at hand as at year-end; and

4. unserviceable properties of the barangay should be disposed or sold at

public auction, if any, subject to applicable rules and regulations, to
prevent further deterioration and obsolescence.

No land account recorded in the books due to absence of land titles

2. No Land account is recorded in the books of the BLGU due to the absence of
proof of ownership of the land where various barangay infrastructures were
erected or constructed contrary to Section 2 of PD No. 1445, thereby exposing
the BLGU and its properties to risks associated with adverse legal claims in the
future.

2.1. Section 39(2) of PD No. 1445 provides that: “In the case of deeds to property
purchased by any government agency, the Commission shall require a
certificate of title entered in favor of the government or other evidence
satisfactory to it that the title is in the government”

2.2. Moreover, Section 2 of PD No 1445 states the following: Declaration of

Policy. It is the declared policy of the State that all resources of the
government shall be managed, expended or utilized in accordance with law and
regulations, and safeguarded against loss or wastage through illegal or

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 improper disposition, with a view to ensuring efficiency, economy and
effectiveness in the operations of government. The responsibility to take care
that such policy is faithfully adhered to rests directly with the chief or head of
the government agency concerned.

2.3. Further, Section 148 of COA Circular No. 92-386 dated October 20 1992 states
that, “Every local chief executive shall be immediately responsible for the
proper and effective use and management of real estate owned or titled in the
name of the local government unit. He shall ensure that all real estate under
his responsibility are registered, under the Torrens Title System and
safeguarded from squatters, unlawful occupants or the like.”

2.4. Review of the financial reports disclosed that the Barangay does not account
for any Land in its Statement of Financial Position although several
structures/properties were already constructed and reported by the BLGU as
this was not yet covered by a certificate of title in the name of the barangay.
Thus, the legal ownership on the barangay lot could not be ascertained which
may expose the property from adverse claims in the future.

2.5. We recommended that the Punong Barangay and the concerned barangay
officials facilitate the titling of land owned/used by the Barangay in
coordination with the concerned government agencies to secure
ownership/rights of the Barangay and include in the Annual Budget the
cost of processing the transfer of land title.

Collections still undeposited at year-end

3. Cash on hand balance of P29,308.50 remained undeposited at year-end contrary

to Section 4.1.12 of Manual on the Financial Management of Barangays, hence
government moneys were exposed to unnecessary risk of loss or misuse.

3.1 Section 4.1.12 of the Manual on the Financial Management of Barangays

provides that:

Collections accruing to the barangay shall be deposited intact daily. Where

travel time to the depository bank is more than one day, deposit shall be made
at least once a week or as soon as the collections reach P5,000.00.

3.2 Review of financial statements of the BLGU disclosed that Cash-Local

Treasury account balance totaling P29,308.50 remained undeposited at year
end. The above-cited Manual purports to protect the cash, the most liquid asset,
from potential risks of loss or misuse. Hence, the cash collections of the
Barangay must be deposited.

3.3 We recommended that the Barangay Treasurer deposit intact her

collections within the period set forth by regulation to amply protect the

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 barangay cash and to prevent the possible loss or misuse thereof.in line
with Section 27 of IPSAS 1 and Section 111 of P.D. 1445.

Unreliable Inventories balance in the financial statements

4. The completeness and existence of the balance of Inventories accounts of

P2,853,301.43 as at December 31, 2022 cannot be ascertained due to the
following reasons: (a) non-conduct of physical count on inventories and non-
submission of the corresponding Report on Inventory of Supplies and Materials
(RISM) by the Inventory Committee; and (b) non-preparation by the Municipal
Accountant of Stock Cards (SC) to monitor and control procurement and
issuance of supplies and materials.

4.1. Section 111 of P.D. 1445 provides that the accounts of the agency shall be kept
in such details as necessary to meet the needs of the agency and at the same
time be adequate to furnish the information needed by the fiscal or control
agencies of the government.

4.2. Moreover, Items 6.1.1 and 6.2.3, Chapter VI of the Manual on Financial
Management for Barangays provide the following:

6.1.1 Stock Card (SC) shown in Annex 22 shall be maintained to

monitor and control procurement and issuance of supplies and
materials.

6.2.1 Inventory taking and Reconciliation

a. The Inventory
Committee headed by the PB or his authorized representative and
the BT as his member shall conduct a physical count of all the
supplies and inventory of the barangay at least once a year.

b. The Inventory
Committee, upon the completion of the physical count, shall
prepare three copies of Report on Inventory of Supplies and
Materials (RISM), as shown in Annex 31and shall be approved
by the PB. The RISM shall be distributed as follows:

Original – to COA Auditor through C/M Accountant

Duplicate copy – to the C/M Accountant
Triplicate copy – to the BT

The RISM shall be the basis of the C/M Accountant for reconciling the
inventory accounts.

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 4.3 Our monitoring of the submission of reports of BLGU Salinas disclosed that
the required RISM and Stock Cards were not submitted to the Audit Team by
the Inventory Committee which ultimately render doubt on the completeness
and existence of the balances of Inventories presented in the financial
statements amounting to P2,853,301.43.

4.4 It shall be noted that the conduct of physical count and the regular
updating/maintenance of inventory records are indispensable procedures to
ensure the integrity of inventory custodianship and that adequate internal
control is adapted thereon.

4.5 We recommended that the Inventory Committee headed by the Punong

Barangay conduct physical count of the Inventories and submit the
required RISM to the Audit Team within the prescribed deadline.
Moreover, direct the Barangay Treasurer to prepare and update the
required Stock Cards (SC) pursuant to pertinent provisions of Chapter VI
of the Manual on Financial Management for Barangays. Finally, we
recommended that the Municipal Accountant effect the necessary
adjustments to come up with a more accurate and reliable financial
information in line with Section 111 of P.D. 1445.

Unreliable Construction in Progress balance in the financial statements

5. The validity, accuracy and existence of the reported balance of Construction in

Progress accounts in the amount of P4,528,924.51 as at December 31, 2022 could
not be established due to non-submission of Project Status Reports and non-
monitoring of the implementation of these projects.

5.1. Section 27 of International Public Sector Accounting Standards (IPSAS 1)

provides that, “Financial statements shall present fairly the financial position,
financial performance and cash flows of an entity. Fair presentation requires
the faithful representation of the effects of transactions, other events, and
conditions in accordance with the definitions and recognition criteria for
assets, liabilities, revenue, and expenses set out in IPSASs.”

5.2. Moreover, Section 111 of P.D. 1445 provides that the accounts of the agency
shall be kept in such details as necessary to meet the needs of the agency and
at the same time be adequate to furnish the information needed by the fiscal or
control agencies of the government.

5.3. In relation, Paragraph 14 of IPSAS 17 provides that the cost of an item of

property, plant and equipment shall be recognized as an asset if, and only if: (a)
It is probable that future economic benefits or service potential associated with
the item will flow to the entity; and (b) The cost or fair value of the item can be
measured reliably.

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5.4. Furthermore, COA Circular No. 2015-009 dated December 1, 2015 prescribes
the adoption of the Revised Chart of Accounts (RCP) for Local Government
Units. Page 45, Annex B of the Circular provides the use of the following
accounts:

Account Title Construction in Progress - Land Improvements

Account Code 1-07-10-010
Normal Balance Debit
Description This account is used to record the accumulated cost or
other appropriate value of land improvements still in the
process of construction or development. Credit this account
for reclassification to the appropriate Land Improvement
account upon completion.

Account Title Construction in Progress - Infrastructure Assets

Account Code 1-07-10-020
Normal Balance Debit
Description This account is used to record the accumulated cost or
other appropriate value of infrastructure assets which are
still in the process of construction or acquisition. Credit
this account for reclassification to the appropriate
Infrastructure Asset account upon completion.

Account Title Construction in Progress - Buildings and Other Structures

Account Code 1-07-10-030
Normal Balance Debit
Description This account is used to record the accumulated cost or
other appropriate value of buildings and other structures
which are still in the process of construction or
development. Credit this account for reclassification to the
appropriate Buildings and Other Structures account upon
completion.

5.5. Review of the detailed Statement of Financial Position for the year ended
December 31, 2022 disclosed that the Barangay reported Construction in
Progress - Land Improvements, Construction in Progress - Infrastructure
Assets and Construction in Progress- Buildings and Other Structures
amounting to P319,019.00, P3,343,405.05 and P866,500.46, respectively.
These amounts were not reclassified to the appropriate Infrastructure Assets
accounts despite submission of Certificate of Completion to every completed
project.

5.6. We recommended that Management, through the Municipal Accountant

and the Barangay Bookkeeper, immediately evaluate the details and status
of these projects aggregating to P4,528,924.51 and reclassify the completed

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 projects to the appropriate Infrastructure Assets accounts to come up with
more reliable information in the financial statements.

Cash advances still unliquidated at year-end

6. Cash advances totaling P23,984.00 remained unliquidated at year-end contrary

to Section 89 of Presidential Decree (P.D.) No. 1445 and the guidelines in the
granting, liquidation and utilization of cash advances set forth under COA
Circular No. 97-002 dated February 10, 1997.

6.1 Section 89 of PD No. 1445 provides the following:

Limitations of cash advance. No cash advance shall be given unless for a

legally authorized specific purpose. A cash advance shall be reported on and
liquidated as soon as the purpose for which it was given has been served. No
additional cash advance shall be allowed to any official or employee unless the
previous cash advance given to him is first settled or a proper accounting
thereof is made.

6.2 Moreover, pertinent provisions of COA Circular 97-002 dated February 10,
1997 provide the following guidelines in the granting, utilization and
liquidation of cash advances:

4.1.2 No additional cash advances shall be allowed to any official or

employee unless the previous cash advance given to him is first settled
or proper accounting thereof is made.

4.1.3 A cash advance shall be reported as soon as the purpose for which it
was given has been served.

5.1 The Accountable Officer shall liquidate his cash advance as follows:

5.1.1 Salaries, Wages, etc. – within 5 days after each fifteen (15)
day/end of the month pay period.

5.1.2 Petty Operating Expenses and Field Operating Expenses – within

twenty (20) days after the end of the year; subject to replenishment
as frequently as necessary during the year.

5.1.3 Official Travel – within sixty (60) days after return to the
Philippines in case of foreign travel or within thirty (30) days after
return to his permanent official station in the case of local travel,
as provided for in EO 248 and COA Circular No. 96-004.

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 Failure of the AO to liquidate his cash advance within the
prescribed period shall constitute a valid cause for the
withholding of his salary … (emphasis supplied)

5.7 When a cash advance is no longer needed or has not been used for a
period of two months, it must be returned or refunded immediately to the
Collecting Officer.

5.8. All cash advances shall be fully liquidated at the end of each year.
Except for petty cash fund, the Accountable Officer shall refund any
unexpended balance to the Cashier/Collecting Officer who will issue the
necessary official receipt. (emphasis supplied)

6.3 Review of the Notes to Financial Statements of the barangay disclosed

outstanding cash advances totaling P23,984.00 as at year-end hence, it can be
construed that Management has not strictly complied with the above-cited
regulation thereby exposing the limited funds of the Barangay to the risk of
misappropriation. Details are as follows:

Account Title 2022

Advances
Advances for Payroll 13,900.00
Advances for Officers and Employees 10,084.00
Total 23,984.00

6.4 We recommended that Management strictly observe the rules on proper

granting and liquidation of cash advances and henceforth require the full
liquidation of cash advances at the end of each year as set out in COA
Circular No. 97-002 dated February 10, 1997 and Section 89 of PD 1445.

Non-preparation of RIS and non-submission of photographs

7. The issuance of supplies and materials to the end-users aggregating to

P944,492.80 were not properly documented through preparation of Requisition
and Issuance Slips (RISs) and photographs contrary to Item 6.1.11, Chapter VI
of the Manual on Financial Management for Barangays and Section 4(6) of PD
No. 1445.

7.1. Section 4(6) of PD No. 1445 requires that: “Claims against government funds
shall be supported with complete documentation.”

7.2. In connection, Item 6.1.11, Chapter VI of the Manual on Financial

Management for Barangays provides that, “Issuance of supplies shall be
supported by an approved Requisition and Issue Slip (RIS) as shown in Annex
20. At the end of the month, the BT shall submit a Summary of Supplies and
Materials Issued (SSMI) - Annex 32 supported by the RIS to the C/M
Accountant as basis for recording the expense account.”

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 7.3. Audit of disbursement vouchers disclosed that the BLGU procured and issued
various supplies and materials aggregating to P 944,492.80 for CYs 2020-
2022. However, the issuances were not properly supported with Requisition
and Issuance Slips (RISs) and photographs, thus proper accounting was not
facilitated.

7.4. We recommended that Management henceforth prepare and submit the

Requisition and Issuance Slips (RISs), attach photographs of all supplies
and materials delivered, and ensure completeness of supporting
documents pursuant to Section 4(6) of PD No. 1445 and Item 6.1.10,
Chapter VI of the Manual on Financial Management for Barangays.

Non-withholding of 5% VAT on payments to NUVELCO

8. The BLGU did not deduct the five percent (5%) withholding tax on its
payments of electricity expenses to NUVELCO for CYs 2020-2022 totaling
P365,355.78 contrary to BIR Revenue Memorandum Order No. 23-2014, hence
depriving the government of the accrual and use of its rightful income.

8.1. BIR Revenue Memorandum Order (RMO) No. 23-2014 was issued to clarify
and consolidate the obligations of the public sector as withholding agents on its
transactions as a customer (on its purchases of goods and services). The said
RMO provides the following pertinent rules and regulations:

II. OBLIGATION TO WITHHOLD ON PURCHASES OF GOODS AND

SERVICES

All government offices including government-owned or controlled

corporations (such as but not limited to the Bangko Sentral ng Pilipinas,
Metropolitan Waterworks and Sewerage System, Philippine Deposit
Insurance Corporation, Government Service Insurance System, Social
Security System), as well as provincial, city and municipal governments are
constituted as withholding agents for purposes of the creditable tax required
to be withheld on the following:

a. Withholding of Creditable Income Tax…

b. Withholding Tax on Government Money Payments-
On purchases of goods and services from VAT registered suppliers/payees
– Five percent (5%) of the gross payment…

VI. PERSONS RESPONSIBLE FOR WITHHOLDING

c) For Office of the Municipal Government-municipalities- the Chief

Accountant, Municipal Treasurer and the Mayor;

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 VII. PENALTY PROVISION
In case of non-compliance with their obligation as withholding agents, the
abovementioned persons shall be liable for the following sanctions:
A. Failure to Collect and Remit Taxes (Section 251, NIRC)

Any person required to withhold, account for, and remit any tax imposed by
this Code or who willfully fails to withhold such tax, or account for and remit
such tax, or aids or abets in any manner to evade any such tax or the payment
thereof, shall, in addition to other penalties provided for under this Chapter,
be liable upon conviction to a penalty equal to the total amount of the tax not
withheld, or not accounted for and remitted.

C. Violation of Withholding Tax Provisions (Section 272, NIRC)

Every officer or employee of the Government of the Republic of the

Philippines or any of its agencies and instrumentalities, its political
subdivisions, as well as government-owned or controlled corporations,
including the Bangko Sentral ng Pilipinas (BSP), who is charged with the duty
to deduct and withhold any internal revenue tax and to remit the same is
guilty of any offense herein below specified shall, upon conviction for each act
or omission be punished by a fine of not less than Five thousand pesos
(P5,000) but not more than Fifty thousand pesos (P50,000) or suffer
imprisonment of not less than six (6) months and one (1) day but not more
than two (2) years, or both:

1. Failing or causing the failure to deduct and withhold any internal revenue
tax under any of the withholding tax laws and implementing rules and
regulations; or …

8.2. Audit disclosed that for the years 2020-2022, the BLGU reported in its
financial statements, electricity expenses totaling to P365,355.78, however,
review of disbursement vouchers disclosed that the BLGU failed to deduct
from these payments the corresponding withholding tax of five (5) percent on
purchases of services from VAT registered suppliers.

8.3. It should be noted that Nueva Vizcaya Electric Cooperative (NUVELCO), the
Barangay’s electric service provider, although CDA registered, is no longer
exempt from paying VAT under Section 108 of the National Internal Revenue
Code (NIRC), as amended by RA 10963, which provides, inter alia, that sales
of electricity by generation companies, transmission by any entity, and
distribution companies, including electric cooperatives shall be subject to
VAT.

8.4. The Audit Team obtained a photocopy of NUVELCO’s Certificate of

Exemption issued by the BIR and our reading thereof disclosed an enumeration
of tax exemptions and incentives entitled to the cooperative, however,

26
 exemption from payment of VAT is not part of those enumerations. Thus, all
money payments made by the BLGU to NUVELCO should have been
subjected to a five percent (5%) withholding tax on VAT.
8.5. The BLGU’s failure to withhold the five percent (5%) tax on payments of
electricity expenses deprived the government of the accrual of its rightful
income which could have been used to augment its scarce financial resources.

8.6. We recommended that Management strictly comply with the provisions of

BIR Revenue Memorandum Order No. 23-2014 on the withholding of
taxes to help the government in generating revenues to meet its
appropriation requirement and to avoid penalties and legal action against
the erring withholding agents from the BIR.

Procured construction materials directly recorded as CIP and/or Repairs

9. Construction materials procured by the BLGU amounting to P1,281,360.00

were directly recorded as debit to various Construction in Progress and Repairs
accounts despite absence of supporting documents that would establish that the
materials were already issued to the project and the project was already on-
going contrary to Section 4(6) of PD 1445.

9.1. Section 4(6) of PD 1445, otherwise known as the State Audit Code of the
Philippines, provides that, “Claims against government funds shall be
supported with complete documentation.”

9.2. Moreover, Page 17, Annex B of COA Circular No. 2015-009 dated December
1, 2015 provides that Construction Materials Inventory is credited only
whenever these are issued to projects, transferred, or for other disposal
contrary to an ordinary office supply which is credited whenever issued to the
end-user.

9.3. It shall be noted that construction materials must be treated differently from
ordinary office supplies since they are either converted into a new asset,
improve or extend the life of the asset in which they are utilized.

9.4. Audit disclosed the following Barangay transactions:

Reference
Gross Account Used in
Check Payee Particulars Net Amount
Date Amount Recording
No.
Payment of Materials for the
Benson's 74K
construction of MP drying
817233 01-09-2020 Construction 43,960.00 41,605.00 Trust Liabilities
Pavement (materials-41960, Bagger
Supply
mixer rent- 2000)
Payment of Materials for the
Benson's 74K
construction of MP drying
817236 01-14-2020 Construction 43,960.00 41,605.00 Trust Liabilities
Pavement (materials-41960, Bagger
Supply
mixer rent- 2000)
817239 01-20-2020 Benson's 74K Payment of Materials for the 43,960.00 41,605.00 Trust Liabilities

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 Reference
Gross Account Used in
Check Payee Particulars Net Amount
Date Amount Recording
No.
construction of MP drying
Construction
Pavement (materials-41960, Bagger
Supply
mixer rent- 2000)
Payment of Materials for the
Benson's 74K
construction of MP drying
817246 01-27-2020 Construction 43,960.00 41,605.00 Trust Liabilities
Pavement (materials-41960, Bagger
Supply
mixer rent- 2000)
Benson's 74K
Materials for the Improvement of CIP- Infrastructure
817260 03-09-2020 Construction 8,310.00 7,864.82
MRF Assets
Supply
Allmighty
880721 05-12-2021 Industrial Materials- installation of street lights 15,710.00 15,395.80 Power Supply
Trading
Bensons 74k
Materials- concreting of FMR pk CIP Infrastructure
880722 05-27-2021 Construction 33,840.00 32,027.15
west Assets
Supply
Bensons 74k
Materials- concreting of FMR pk CIP Infrastructure
880723 05-27-2021 Construction 33,840.00 32,027.15
tabla Assets
Supply
Bensons 74k
Materials- concreting of FMR allay CIP Infrastructure
880724 05-27-2021 Construction 33,840.00 32,027.15
rd Assets
Supply
Bensons 74k
Materials- concreting of FMR CIP Infrastructure
880725 05-27-2021 Construction 33,840.00 32,027.15
gracia/bansing rd Assets
Supply
Bensons 74k
Materials- concreting of FMR pk CIP Infrastructure
880726 05-27-2021 Construction 33,840.00 32,027.15
nangkalapan Assets
Supply
Bensons 74k
Materials- concreting of FMR pk CIP Infrastructure
880727 05-27-2021 Construction 33,840.00 32,027.15
proper Assets
Supply
Bensons 74k Repairs & Maint-
880728 05-27-2021 Construction Materials- improvement of MPH 49,930.00 47,255.19 Buildings & Other
Supply Structure
Bensons 74k
Materials- construction of hanging CIP Infrastructure
880729 05-27-2021 Construction 21,575.00 20,419.21
bridge (allay) Assets
Supply
Bensons 74k
Materials- construction of MP shed CIP Buildings &
880760 07-13-2021 Construction 21,060.00 19,931.78
pk salicpan Other Structures
Supply
Bensons 74k
Materials- concreting of foot trail pk CIP Land
880761 07-13-2021 Construction 28,020.00 26,518.93
salicpan Improvement
Supply
Bensons 74k Repairs & Maint-
Materials- for rehabilitation of pk
880762 07-13-2021 Construction 17,195.00 16,273.84 Buildings and
MP Shed
Supply Other Structures
Bensons 74k
Materials- construction of MP shed CIP Buildings &
880768 07-22-2021 Construction 5,460.00 5,167.50
pk salicpan Other Structures
Supply
Almighty Repairs & Maint-
880773 07-26-2021 Industrial Materials- rehabilitation of st lights 14,255.00 13,969.90 Infrastructure
Trading assets
Almighty Repairs & Maint-
Materials- rehabilitation of st lights
880784 08-19-2021 Industrial 14,604.00 14,311.92 Infrastructure
(continuation)
Trading assets
Almighty
Materials- installation of deepwell CIP Infrastructure
880789 09-02-2021 Industrial 41,476.00 40,646.48
water system Assets
Trading

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 Reference
Gross Account Used in
Check Payee Particulars Net Amount
Date Amount Recording
No.
Four Kids Repairs & Maint-
Materials- riprapping of FMR pk
958609 10-26-2021 Construction 47,700.00 46,746.00 Infrastructure
proper
Supply Assets
Four Kids
Materials- concreting of FMR pk CIP Infrastructure
958610 10-26-2021 Construction 46,440.00 45,511.20
tabla Assets
Supply
Repairs & Maint-
Don Joreen E.
958613 10-26-2021 Materials- improvement of MPH 29,290.00 27,720.58 Buildings & Other
Bautista
Structures
Four Kids Repairs & Maint-
Materials- improvement of MPC pk
958614 10-26-2021 Construction 49,720.00 48,725.60 Buildings & Other
Malong
Supply Structures
Four Kids Repairs & Maint-
Materials- rip rapping FMR Pk
958675 02-21-2022 Construction 32,980.00 32,320.04 Infrastructure
Proper
Supply Assets
Four Kids
Materials- concreting of FMR pk CIP- Infrastructure
958757 08-24-2022 Construction 44,720.00 42,324.28
Allay Assets
Supply
Four Kids
Materials- concreting of FMR pk CIP- Infrastructure
958758 08-24-2022 Construction 47,060.00 44,538.93
West Assets
Supply
Four Kids
Materials- concreting of FMR pk CIP- Infrastructure
958759 08-24-2022 Construction 48,100.00 45,523.22
Nangkalapan Assets
Supply
Four Kids
Materials- concreting of FMR pk CIP- Infrastructure
958760 08-24-2022 Construction 49,140.00 46,507.50
Proper Assets
Supply
Four Kids
Materials- concreting of FMR pk CIP- Infrastructure
958761 08-24-2022 Construction 49,400.00 46,753.57
Graban Assets
Supply
Repairs & Maint-
Mary Rose Materials- improvement of
958764 08-31-2022 44,660.00 42,267.50 Buildings & Other
Castillo Evacuation center
Structures
Repairs & Maint-
Mary Rose Materials- improvement of comfort
958765 08-31-2022 23,220.00 21,976.07 Buildings & Other
Castillo room
Structures
Four Kids Repairs & Maint-
Materials- improvement of Daycare
958770 08-31-2022 Construction 19,980.00 18,909.65 Buildings & Other
Center pk Salicpan
Supply Structures
Four Kids Repairs & Maint-
Materials- rehabilitation of water
958783 09-23-2022 Construction 44,980.00 42,570.35 Infrastructure
systme pk Proper
Supply Assets
Four Kids Repairs & Maint-
Materials- continuation of MP
958787 10-06-2022 Construction 33,170.00 31,393.03 Buildings & Other
Community Center pk Malong
Supply Structures
Four Kids Repairs & Maint-
958788 10-06-2022 Construction Materials- improvement of MRF 14,740.00 13,950.35 Buildings & Other
Supply Structures
Repairs & Maint-
Allmighty
958792 10-06-2022 Materials- maintenance of st lights 39,585.00 37,464.37 Infrastructure
Instrial Trading
Assets
   Total 1,281,360.00 1,221,540.51  

9.5. We recommended that Management henceforth ensure completeness of

documents and submit the following documents:

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 1. Request and Issuance Slips;
2. Accomplishment Report for the completed project;
3. Program of Work;
4. Annual Procurement Plan;
5. Photographs of the implemented project (before, during and after
implementation);
6. Inspection Report; and
7. Certificate of Completion issued by the Punong Barangay.

9.6. Also, we recommended that the Municipal Accountant record purchase of

construction materials as Construction Materials Inventory and recognize
the appropriate Infrastructure Assets account or Repairs and Maintenance
account only when these are actually issued to projects and the foregoing
enumerated documents are submitted, in line with 12.1 Section 4(6) of PD
1445.

Delays in the submission of accounts

10. Timely submission of barangay accounts and other pertinent records was not
strictly adhered to contrary to Section 12.5, Chapter 12 of the Manual on the
Financial Management of Barangays, thus causing delay in the audit and
verification of financial transactions by the Audit Team.

10.1. Section 12.5, Chapter 12 of the Manual on Financial Management for

Barangays provides the following rules on the rendition of accounts:

12.5.1 The PB and BT shall be responsible for the timely submission of the
reports and accounts to the C/M Accountant. Observance to the
provision of Article 218 of the Revised Penal Code which states that
“Any public officer, whether in the service or separated there from by
resignation or any other cause, who is required by law or regulations to
render account to the Insular Auditor,* or to a Provincial Auditor and
who fails to do so for a period of two months after such account shall be
rendered shall be punished by prison correccional in its minimum
period, or by a fine ranging from 200 to 6,000, or both”. (*now
Commission on Audit)

12.5.2 The BT shall submit the RCDs, LR, ORs/DVs/Payrolls and Monthly
RAAF to the C/M Accountant on or before the 5th day of the succeeding
month.

12.5.3 The C/M Accountant shall submit to the COA Auditor concerned the
collections and disbursements accounts of each month on or before the
10th working day of the succeeding month.

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 10.2. Monitoring of submission of barangay accounts disclosed that disbursements
vouchers were not submitted on time despite our prior years’ issuance of
similar audit findings. Details are as follows:
Deadline of No. of Days
Period Covered Date of Submission
Submission Delayed
January 2022 February 10, 2022 November 7, 2022 270
February 2022 March 10, 2022 November 7, 2022 242
March 2022 April 10, 2022 November 7, 2022 211
April 2022 May 10, 2022 November 7, 2022 181
May 2022 June 10, 2022 November 7, 2022 150
June 2022 July 10, 2022 November 7, 2022 120
July 2022 August 10, 2022 November 7, 2022 89
August 2022 September 10, 2022 November 7, 2022 58
September 2022 October 10, 2022 November 7, 2022 28
October 2022 November 10, 2022 March 31, 2023 141
November 2022 December 10, 2022 March 31, 2023 111
December 2022 January 10, 2023 March 31, 2023 80

10.3. The non-submission of disbursement vouchers within the prescribed period

precludes the conduct of timely review and audit thereof.

10.4. We recommended that the Barangay Treasurer submit all barangay

accounts and other pertinent records to the Barangay Bookkeeper for
recording and the Office of the Auditor for review and evaluation within
the period prescribed under the Manual on Financial Management for
Barangays to enable timely and more effective review of the Barangay’s
financial transactions and evaluation of its operations.

Non-submission of required reports and documents

11. Disbursements charged against the 20% Development Fund, 5% Gender and
Development, 10% SK Fund, and 5% LDRRMF could not be readily evaluated
due to incomplete submission of needed documents.

11.1. Section 106 of the Local Government Code provides that each Local
Government Unit shall have a comprehensive Multi-Sectoral development plan
to be initiated by its development council and approved by its Sanggunian.

11.2. In the case of the barangay, the Barangay Development Council shall be
headed by the Punong Barangay, the Sangguniang Barangay, where the SK
Chairman serve as an ex-officio member, NGO representative operating in the
barangay, and a representative of the Congressman as members.

11.3. Review of submitted accounts disclosed that the barangay has disbursements
that could be attributed to 20% development fund, 10% SK Fund, 5% GAD
fund, and 5% LDRRMF.

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 11.4. Projects under the 20% Development Fund, 10% SK Fund, 5% LDRRMF and
5% GAD Fund, however, could not be readily evaluated due to the incomplete
submission of the needed documents, as follows:

a. Annual barangay budget;

b. Annual Investment Plan;
c. Registries to show if expenses still fall within the allowed amount and if
these are in-line as programmed in the Annual Investment Plan;
d. Accomplishment Report pertaining to 20% Development Plan and 5%
LDRRMF;
e. Accomplishment Report submitted for the 10% SK Fund programmed for
youth development; and
f. GAD Plan and GAD Accomplishment Report.

11.5. We recommended that the Punong Barangay, as the Chief Executive of

the BLGU, enforce the implementation of all projects and activities that
were approved by the Barangay Development Council and assure that
these are in line with the rules and regulations set forth for the said
programs. Further, we require the Barangay to furnish all needed reports
(Budgets, AIP, PPMP and others) to the Office of the Audit Team Leader
for appropriate review and evaluation.

11.6. Likewise, we recommended that the SK Chairperson together with the

rest of the SK officials, formulate the Comprehensive Barangay Youth
Investment Program and prepare and implement the Annual Barangay
Youth Investment Program (ABYIP). Item b and c, Section 13 of R.A. No.
10742 particularly provides the Powers and Functions of the SK
Chairperson.

11.7. Moreover, we recommended that the SK observe the DILG, DBM and
NYC issued Joint Memorandum Circular (JMC) No. 1, series of 2019
dated January 23, 2019 prescribing the guidelines on the appropriation,
release, planning and budgeting process for SK funds.

Non-preparation of Registry of Trust Fund

12. The Barangay did not maintain Registry of Trust Fund as required under
Section 1.2, Chapter I of the Manual on the Financial Management of
Barangays hence, trust liability accounts are not separately recognized in the
books of the barangay.

12.1. Section 1.2, Chapter I of the Manual on the Financial Management of

Barangays provides the following general policies to be observed in accounting
for barangay funds and property as follows:

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 1.2.6 Funds granted to barangays for specific purpose shall be recognized as
Special Trust Fund (STF).

1.2.7 Subsidies and grants for specific purpose shall be accounted for as Trust
Liability. Once conditions are met, the portion of the grant
corresponding to the expenditure incurred shall be recognized as
income and the expenditure as expense or asset as the case may be.

1.2.8 Unspent Local Disaster Risk Reduction and Management Fund

(LDRRMF) and the share of the Sangguniang Kabataan (SK) shall be
recorded as STF.

1.2.9 Registry of Special Trust Fund (RSTF) shall be maintained for each
STF.

12.2. As per our monitoring, the Municipal Accountant through the Barangay
Bookkeeper did not maintain Registry of Special Trust Fund such as those
enumerated above. Consequently, prompt verification of the transactions
cannot be conveniently made and trust liability accounts are not separately
recognized in the books of the barangay.

12.3. We recommended that the Barangay Bookkeeper and the Municipal

Accountant create and maintain Registry of Special Trust Fund on the
unspent budgetary items of 5% Calamity Fund, 10% SK Fund, and other
trust fund accounts as required under the Manual on the Financial
Management of Barangays and properly recognize the balances as Trust
Liabilities in the books of the barangay.

Non-submission of Report on Sources and Utilization of BDRRMF

13. The BLGU did not submit the monthly Report on Sources and Utilization of
BDRRMF which is not in accordance with Section 5.1.5 of COA Circular No.
2012-002 dated September 12, 2012, thus monthly monitoring of transactions
undertaken by the BLGU was not attained.

13.1. Section 5.1.5 of COA Circular No. 2012-002 dated September 12, 2012
provides that, “A Report on Sources and Utilization of DRRMF using the
format in Annex B shall be prepared and certified correct by the Local
Accountant. The Local Disaster Risk Reduction and Management Officer
(LDRRMO) shall submit the report on or before the 15th day after the end of
each month through the LDRRMC and Local Development Council (LDC) to
the COA auditor of the LGU.”

13.2. Review of the accounts of the barangay disclosed that the BLGU failed to
submit monthly Report on the Sources and Utilization of the BDRRMF. This
required report serves as a monitoring tool on the charges against the

33
 BDRRMF thus, the non-submission of which precluded monthly review of the
utilization of the fund.

13.3. In the case of the Barangay, the Report on Sources and Utilization of DRRMF
shall be prepared by the Barangay Treasurer and certified correct by the
Punong Barangay. Such report shall be submitted by the designated LDRRMO
which is usually the Punong Barangay or any other official duly designated
thereto, on or before the 15th day after the end of each month to the COA
Auditor of the Barangay.

13.4. We recommended that the Punong Barangay and the Barangay Treasurer
comply with the monthly submission of Report on Sources and Utilization
of DRRMF using the format prescribed under COA Circular No. 2012-
002 dated September 12, 2012.

Internal control measures not sufficiently implemented

14. Disbursement vouchers and its supporting documents were not stamped
“PAID” upon payment, contrary to Section 2.Q of COA Circular No. 92-389
dated November 3, 1992, hence exposing the corresponding documents for
possible reuse.

14.1. Section 2.Q of COA Circular No. 92-389 dated November 3, 1992 provides
that, “Paid vouchers including its supporting documents shall be perforated
and conspicuously stamped “PAID” by the Cashier.”

14.2. Review of disbursement vouchers (DVs) of the barangay as well as inspection

of its supporting documents disclosed that these were not stamped “PAID” by
the Barangay Treasurer after the payment was made.

14.3. The non-stamping of documents or non-marking of checks and supporting

documents immediately after it was paid provides a way of reusing the same,
thereby posing the possibility of double payment.

14.4. We recommended that the Barangay Treasurer henceforth stamp “PAID”

all payrolls, DVs and its supporting documents after payment is made to
prevent the possible re-use of the same on similar future transactions in
line with COA Circular No. 92-389 dated November 3, 1992.

Rentals of equipment in the implementation of infrastructure projects by administration

15. The rentals of equipment in the implementation of infrastructure projects by

administration were not sanctioned by GPPB Resolution No. 18-2006 dated
December 6, 2006, as amended by GPPB Resolution No. 07-2009 dated
September 30, 2009 and GPPB Resolution No. 20-2020 dated October 22, 2020.

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 15.1. It shall be noted that GPPB Resolution No. 18-2006 dated December 6, 2006,
as amended by GPPB Resolution No. 07-2009 dated September 30, 2009 and
GPPB Resolution No. 20-2020 dated October 22, 2020, provides the Revised
Guidelines for the Implementation of Infrastructure Projects by Administration.
Section 3.0 of the said amended GPPB Resolution, states that:

3.0 Conditions and Requirements for the use of “By Administration”

3.1. Projects undertaken by Administration shall be included in the

approved Annual Procurement Plan (APP) of the Procuring Entity
concerned, as well as the procurement of the different project
components, i.e. tools and construction equipment covered under
sub-item No. 3.5. Any change to the APP shall be in accordance with
Section 7.4 of the 2016 Revised IRR of RA No. 9184.

3.2. To undertake projects by administration, the implementing agencies

must:

a. have a track record of having completed, or supervised a project,

by administration or by contract, similar to and with a cost of at
least fifty percent (50%) of the project at hand; and

b. own the tools and construction equipment to be used or have

access to such tools and equipment owned by other government
agencies. (emphasis ours)

15.2. Based on the foregoing regulations, the ownership of necessary tools and
construction equipment to be used in the project or the access to such tools and
equipment owned by other government agencies is an indispensable
condition/requirement otherwise the implementing agencies such as BLGU
Salinas may not undertake projects by administration.

15.3. Audit disclosed that the BLGU paid for the rentals of equipment as presented
below:

Reference
Payee Particulars Gross Amount Net Amount
Check No. Date
Benson's 74K Construction
817233 01-09-2020 Supply
Bagger mixer rental 2,000.00 1,875.00
Benson's 74K Construction
817236 01-14-2020 Supply
Bagger mixer rental 2,000.00 1,875.00
Benson's 74K Construction
817239 01-20-2020 Supply
Bagger mixer rental 2,000.00 1,875.00
Benson's 74K Construction
817246 01-27-2020 Supply
Bagger mixer rental 2,000.00 1,875.00
   Total 8,000.00 7,500.00

15.7 We recommended that the Punong Barangay and the Barangay Treasurer
strictly observe efficiency, economy and effectiveness in all its official

35
 transactions and refrain from entering into transactions which constitute
an unnecessary expenditure in view of COA Circular No. 2012-003 dated
October 29, 2012.

Non-submission of cancelled checks

16. Twenty-three (23) cancelled checks were not attached in the submitted Report
of Checks Issued (RCI), contrary to Section 59, Chapter 3 of the LGU- New
Government Accounting System (NGAS), Volume I.

16.1 Section 59 of NGAS Volume I prescribes that:

Sec. 59. Spoiled and Stale Checks. – Checks may be cancelled when they
become spoiled or stale. A check is considered spoil when, it is torn,
mutilated, defaced or with erasures/errors affecting the genuineness of any
material information contained therein.

It is stale, if it has been outstanding for over six months from date of issue or
as prescribed by the depository bank. At least one month before a check
becomes stale, the Treasurer shall send a written notice to the payee of the
existence of the check.

A spoiled or stale check shall be marked cancelled on its face and reported as
follows:

1. For spoiled checks which are immediately cancelled and for which the
Report of Checks Issued (RCI) has not yet been prepared, the cancelled
check shall be attached to the RCI and reported chronologically with the
other checks issued and the word “Cancelled” shall be indicated on the
report.

2. For stale checks which have been unclaimed and thus, the original DV
and supporting documents are still with the Treasurer, the cancelled check
shall be presented in the RCI after the last check issued for the period
indicated in the report. The original DV and supporting documents shall
be returned to the Accountant who shall prepare a JEV to record the
transaction as Accounts Payable.

3. For checks which became spoiled or stale in the hands of the payee and
which require replacement, a new check may be issued upon submission of
the spoiled or stale check to the Treasurer. A certified copy of the DV
shall be requested from the Auditor for presentation to the
Administrator/Local Chief Executive who shall countersign the check.
The cancelled check shall be reported and attached to the RCI prepared

36
 at the period of cancellation. The replacement check shall also be
reported chronologically in the RCI.

16.2 Verification of the submitted RCIs showed that the cancelled checks were not
attached in the said report. Details as to the count are as follows:

Year Check Number Quantity

2020 817244, 817245, 817279, 880606, 880647, 880655 6
880736, 880759, 958607, 958633, 958636, 958642,
2021 7
958648
958693, 958705, 958714, 958733, 958756, 958782,
2022 10
958793, 1041321, 1041336, 1041352
Total 23

16.3 We recommended that the Barangay Treasurer immediately submit to the

Audit Team the 42 cancelled checks for validation and henceforth ensure
that all the cancelled checks are attached to the RCI and DVs.

Non-submission of AAPSI

17. The BLGU did not accomplish the required Agency Action Plan and Status of
Implementation (AAPSI) contrary to Section 97 of the General Provisions of
Republic Act No. 11639, otherwise known as the General Appropriations Act
for FY 2022, hence precluded the auditor in its timely review, monitoring, and
evaluation of actions taken by Management on previous years’ audit findings
and recommendations.

17.1 Section 97 of the General Provisions of Republic Act No. 11639, otherwise
known as the General Appropriation Act of 2022, provides that:
Report on Commission on Audit Findings and Recommendations. Within
sixty (60) days from receipt of the COA Annual Audit Report, agencies
concerned shall submit to the COA, either in printed form or by way of
electronic document, a status report on the actions taken on said audit findings
and recommendations using the prescribed form under COA Memorandum No.
2014-002 dated March 18, 2014. They shall likewise furnish the DBM, the
Speaker of the House of Representatives, the President of the Senate of the
Philippines, the House Committee on Appropriations and the Senate
Committee on Finance, either in printed form or by way of electronic
document, a copy of said reports.

17.2 Monitoring on the submission of reports disclosed that the Barangay still has
not submitted the accomplished Agency Action Plan and Status of
Implementation (AAPSI) hence, the status of compliance on Management’s
actions on the prior years’ audit findings and recommendations were not
properly reported and evaluated.

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 17.3 We recommended that the BLGU strictly comply with Section 97 of the
General Provisions of Republic Act No. 11639, otherwise known as the
General Appropriations Act of 2022, on the submission of AAPSI to
facilitate timely validation of the actions taken by the BLGU on COA
audit findings and recommendations.

Non-preparation of accounting entries in the DV

18. The accounting entries portion of the Disbursement Vouchers (DVs) which shall
serve as the basis for recording transaction in the books of accounts were not
supplied by the Municipal Accountant thus, the proper recording of
transactions cannot be readily verified.

18.1 Annex 12 of the Manual on the Financial Management of Barangays prescribes

the format and instructions in accomplishing the Disbursement Voucher (DV).
Box D of the DV requires that the Municipal Accountant shall prepare the
necessary accounting entries for the particular transaction. Columns for
account title, account code and the debited and credited amounts shall be filled
up by the accountant.

18.2 Audit of the submitted Disbursement Vouchers disclosed that the Municipal
Accountant has not complied with the above regulation thus, the proper
recording of transactions cannot be readily verified.

18.3 We recommended that the Municipal Accountant accomplish Box D of the

Disbursement Vouchers in compliance with Annex 12 of the Manual on
the Financial Management of Barangays to monitor the proper recording
of transactions.

19. The approved Purchase Orders do not indicate the following details: Supplier,
Address, Date of Delivery, Place of Delivery, Payment Term, PO Amount and
the date of conforme by the supplier contrary to Section 117, Chapter 7 of the
MNGAS for LGUs and Annex 24 of the Manual on the Financial Management
of Barangays.

19.1 Annex 12 Section 117, Chapter 7 of the MNGAS for LGUs states that
Immediately after the LGU has performed all the required procedures adopting
a particular mode of procurement, a purchase/letter order or contract shall be
issued.

19.2 Annex 24 of the Manual on the Financial Management of Barangays prescribes

the format and instructions in accomplishing the Purchase Order (PO). The
said Annex requires that information such as the Supplier, Address, Date of
Delivery, Place of Delivery, Payment Term, PO Amount and the date of
conforme by the supplier shall be properly accomplished.

38
19.3 However, the said details were noted in audit to be unaccomplished contrary to
the above regulation. These details are important in the determination of the
terms of conditions of the procurement and in verifying whether delays are
incurred which may warrant the computation and imposition of corresponding
liquidated damages.

19.4 We recommended that the Barangay Treasurer and the Punong Barangay
supply all the required information in the Purchase Orders in compliance
with Annex 24 of the Manual on the Financial Management of Barangays.

39