EXECUTIVE SUMMARY

I- Introduction

The Municipality of Pitogo, Zamboanga del Sur was created under the virtue of Republic
Act No. 6490 by the late President Ferdinand E. Marcos on May 8, 1972.

Pursuant to Republic Act 7160, known as the Local Code of 1991, the Municipality of
Pitogo like other local government unit enjoys total independence in managing, deciding and
planning its own administrative, fiscal and development affairs in conformity with the national
government’s thrust for suitable social and economic growth.

LGU-Pitogo is a 5th class municipality, with 15 barangays and belonged to the 2nd district
of Zamboanga del Sur. The municipality has a total land area of approximately 9,549 hectares
and a population of about 25,231 as of CY 2007 census. Fishing is the main source of livelihood
because its coast precedes the famous Maligay Bay which is one of the rich fishing grounds of
Mindanao.

The objectives of the municipality are the development of infrastructures, like

maintenance and rehabilitation of Water System Level III and maintenance of street lights,
increased agricultural products, upliftment of the living condition of the populace through
livelihood projects, construction and rehabilitation of market and bagsakan center, maintenance of
municipal and barangay roads and the reforestation of mangroves for the productivity of the
coastal or fresh water, habitat and anti-illegal fishing and piracy.

For Calendar Year 2013, the Municipality of Pitogo collected an income of

₱56,956,806.02 which is higher by ₱4,367,343.33 than the targeted collection of ₱52,589,462.69
as embodied in the Annual Budget for the year.

The municipality’s assets, liabilities and residual equity as of December 31, 2013 were
₱74,322,389.88, ₱34,821,590.56 and ₱39,500,799.12 respectively.

The total assets for the year increased by 7.65% while liabilities decreased by 3.23% and
government equity increased by 19.48% over that of last year.
SCOPE OF AUDIT

An annual comprehensive audit was conducted on the operation and financial

transactions of the municipality of Pitogo, Zamboanga del Sur, for calendar year ended
December 31, 2013. The objectives/aimed of the audit were to ascertain the fairness and
reliability of the municipality’s financial position and results of operation and to determined
whether the plans, programs and projects, and activities for the year were attained in an efficient,
economical, and efficient manner. We also conducted compliance audit and checked the validity
and propriety of transactions in accordance with generally accepted and prescribed government
auditing standards and included such techniques as interviews, verification, inspection, selective
tests and other procedures as we considered necessary under circumstances.

Auditors Opinion on the Financial Statements

The auditor rendered a qualified opinion of the fairness of the presentation of the
financial statements of the Municipality of Pitogo, Zamboanga del Sur, as the financial statement
present fairly, the financial position of the municipality as of December 31, 2013 and the results
of its operations for the year then ended in accordance with applicable laws, rules, and
regulations and in conformity with generally accepted accounting principles.

Summary of Significant Findings and Recommendations:

The following are the significant findings and the corresponding recommendations:

1. Collections were not reported and turned over by collectors daily and regularly as
required in Section 65 of COA Circular No. 91-368 dated December 19, 1991 resulting
to the understatement of cash and income accounts for a given period of time and
exposing funds to misuse.

Require the collectors to turn over their collections daily and regularly to the Municipal
Treasurer to preclude the misuse of cash in their possession thereby ensuring the availability of
cash for the smooth operations of the Municipality. The Liquidating Officer must ascertain that
all accountable forms issued to each collectors must be reflected in the Report of Collection and
Deposit in each and every liquidation to be made. Also, the collections shall be reported
regularly as income to come up with a fair presentation of the financial statements and accurate
financial condition and results of operations of the Municipality for a given period of time.

2. Collections as remitted to the Liquidating Officer were not deposited on the required
period but allowed to be accumulated for a period of time contrary to Sec. 30 and 32 of
NGAS exposing money to misuse and/or loss.
 The Municipal Treasurer should require his Liquidating Officer to remit the collections
daily as soon as remittance has been received from various collectors together with her own
collections. This must be turned-over to the Municipal Treasurer intact so he can deposit the
same to the bank on the next banking day.

3. Collections were used by collectors to pay various expenses and vales of LGU officials
contrary to the provision of Section 29 of NGAS which resulted to delayed remittance
and turn over to the liquidating officer withholding such collection to be accounted as
income for the period and also result to the incurrence of cash shortages by the
concerned collectors.

Require the collectors to limit the performance of their functions within the prescribed
duties and responsibilities. The disbursement function is not within their responsibilities hence,
they could not be allowed to pay any disbursement voucher that may be presented to them for
payment. Also, the Municipal Treasurer shall see to it that the frequency of turn-over of
collection shall be made daily and regularly and all accountable forms are complete as issued to
them to preclude the accumulation of huge cash in the possession of the collectors thereby
minimizing the possibility of misappropriating government funds.

4. Cash advances amounting to Php876,855.00 remained unliquidated as of December 31,

2013 for failure to demand the same upon lapse of the required period as provided for
in COA Circular No. 97-002, dated February 10, 2007 thus understating the actual
expenses incurred.

Require the Municipal Accountant to demand full liquidation of cash advances as soon as
the purpose has been rendered. Limit the granting of cash advance to what has been allowed by
law as provided under COA Circular No. 97-002 dated February 10, 2007. Appropriate actions
should be instituted against all accountable officers who failed to liquidate their cash advances
within the prescribed period

5. Special Trust Fund Account was not provided solely for the unexpended LDRRM Fund
for the years ending 2010, 2011 and 2012 contrary to the provision of Sec. 21 of RA
10121exposing funds for misuse and depriving the officials for easy retrieval of the fund
status if not fully utilized within the next five years.

Local Officials concerned must exert extra effort to facilitate the opening of a
Special Trust Fund Account solely for the unexpended LFRRMF which had already
accumulated for the last three years beginning 2010 to 2012. A latest issuance per Joint
Memorandum Circular No. 2013-1 dated March 25, 2013 by NDRRMC, DBM and DILG
has been issued for LGUs on the Allocation and Utilization of the LDRRMF.
6. The Local Chief Executive (LCE) grants Representation and Transportation Allowance
(RATA) for the LGU Officials for the period under audit which was basically not in
accordance with the DBM Local Budget Circular No. 103 dated May 15, 2013 thus
incurring an irregular expense.

Require the Local Chief Executive, to observe prudence in any grant of RATA,
implement DBM LBC No. 103 properly and require the refund of any undue payments received
by the officials and employees concerned.

7. All disbursement documents pertaining to payments for the Special Education fund
were not certified by the district supervisor concerned contrary to Section 91 of NGAS
for LGU which neglects participation of legally delegated official to determine the
status of claim as to its validity, propriety and legality.

Require the certification of the District Supervisor on all vouchers or payrolls as to

validity, propriety and legality of the claims involved for Special Education Fund.

8. The teaching personnel hired to temporarily handle extension classes for elementary
and secondary schools did not met the qualification requirement provided under Joint
Circular No. 01-A dated March 14, 2000 of DECS, DBM & DILG which defeated the
purpose of setting standards and deprived deserving teachers.

The concerned officials must comply strictly with the requirements provided under Joint
Circular No. 01-A dated March 14, 2000 of DECS, DBM & DILG on the hiring of
teachers who temporarily handle the extension classes to be a successful passer of the
Licensure Examination for Teachers.

9. Release of checks were not recorded in a Check Registry and correspondingly

acknowledged by concerned payees contrary to Sec. 42 NGAS for LGU, Vol. 1 which
exposes loss of checks and tolerance to claimants other than legal owner or payee of
checks.

Instruct the Municipal Treasurer to maintain a Check Register and require all claimants
of checks to acknowledge the claimed checks by signing in the Check Register. The required
format of the Check Register is provided as Annex 39 of Vol. 2 of NGAS for LGU. An In
charge for the releasing of checks may be delegated by the municipal treasurer as he may opt to.
10. The budget as prepared on the Special Education Fund was not in accordance with the
requirements of Art. 184 (f) of the IRR of RA 7160. This was not approved by the
majority of all members of the local school board creating irregular transactions.

Require the Local School Board to prepare a budget duly approved by majority of all
members of the local school board. No disbursement shall be made unless approval of the
budget as required has been complied.

11. The OIC-Municipal Treasurer failed to prepare and record the daily transactions in his
official cashbook for all accounts and fund contrary to Section 26, 27 and 28 of NGAS
for LGU offering unnecessary obstruction to the completion of the audit examination
and information on its financial/cash status.

The Municipal Treasurer must comply strictly with the mandate of his position and the
requirements associated to it. Cashbook must be prepared as provided for under Section 26, 27
and 28 of NGAS for LGU and Sec. 181 (c) of GAAM Vol. 1.

12. Recording of Check Disbursements were not made in compliance with Section 41 of
NGAS Vol. 1 instead posted in totals monthly in the Cashbook Cash-in-Bank creating
doubts on the reliability of the transaction made for the period covered being without
details.

The Municipal Treasurer must record all transactions covering checks issued including
cancelled checks chronologically in the Cashbook-Cash in Bank as provided for under Section
41 NGAS for LGU Vol. 1. The recording made by the designated disbursing officer in a
separate cashbook is no longer needed. However, she could be designated as releasing officer
for all checks issued which will be recorded and acknowledged by payees in the Check Register.

13. Accountable forms issued were not properly controlled, updated and monitored by
the issuing officer causing unreported accountable forms which were already consumed
that contributed to cash shortage of collectors upon cash examination contrary to Sec.
30 of NGAS for LGU Vol. 1.

Require the Municipal Treasurer to apply strategies to properly control, update and
monitor the issuances of accountable forms and verification of its collection. The liquidating
officer must be instructed to comply strictly the verification process on collection and
accountable forms as provided under Sec. 30 of NGAS for LGU Vol. 1.

14. The Municipal Accountant failed to submit the Post-closing Trial Balances and the
Year-end Financial Statements due not later than the fourteenth day of February after
 the end of the calendar year depriving information on the financial conditions and
financial status of the municipality affecting the preparation of the annual audit report
for the municipality.

Require the Municipal Accountant, to submit the trial balances with its financial
statements according to the provisions of Section 76 of the New Government Accounting
System (NGAS), Volume I, to facilitate the immediate submission of the required reports
considering that the deadline set had already lapsed.

Also, explanation must be submitted by the concerned official why no administrative

and/or criminal sanction could be taken against him for failure to comply with the
requirements of law.

15. Receipts and disbursement records with all paid vouchers and documents evidencing
the transactions were not submitted within the prescribed period as mandated under
Section 7.3 of COA Circular No. 94-006 dated February 17, 1994 causing delay in the
verification of transactions and hinder early detection of errors and will be a reason for
the qualification in the auditor’s opinion.

Require the Municipal Accountant to adhere strictly the provision provided under Section
7.3 of COA Circular No. 94-006 dated February 17, 1994. He must submit all transaction
documents within the reglementary period so not to obstruct the early action of the Auditor on
those transactions.

16. Report of Checks Issued (RCI) was not prepared by the Municipal Treasurer instead
by Municipal Accountant contrary to Section 55 of Volume II of the Manual on the
New Government Accounting System resulting to the delay in its submission and
recording in the books of accounts and precluded early verification and post-audit by
the Auditor.

Require the Cashier/Municipal Treasurer to prepare the Report of Checks Issued (RCI)
daily and submit the original copy together with the disbursement vouchers to the Office of the
Auditor thru the Municipal Accountant in accordance with the guidelines set forth in Section 55
of the Manual on New Government Accounting System.

Require both the Municipal Treasurer and Municipal Accountant to adhere to their
respective functions and responsibilities.

17. The municipality failed to submit GAD plan and budget to DILG for review
as provided for under IRR of RA 9710, which renders their GAD activity doubtful and
will result to the suspension of the cost of its activity.
 Require the agency to submit the GAD plan and budget to DILG to comply with the
provisions of law as provided for under the IRR of 9710. Joint Memorandum Circular No. 2013-
01 of the Philippine Commission on Women, DILG, DBM and NEDA provides the Guidelines
on the Localization of the Magna Carta of Women.

18. Purchase orders and perfected contracts were not submitted within five (5) days after
execution in violation of COA Circular No. 2009-001 dated February 12, 2009 depriving
early verification and audit action which may subject the transaction to suspension and
officials concerned to disciplinary action.

Require the Municipal Engineer/GSO to strictly adhere with the provision of COA
Circular Nos. 96-010 and 76-34 on the submission of purchase orders and contracts within five
(5) days after perfection to ensure the timely and objective evaluation of the same.

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S

RECOMMENDATIONS

Out of the twenty-seven (27) recommendations embodied in CY 2012, fourteen (14) were
implemented, two (2) were partially implemented and eleven were unimplemented. For CY 2011
Annual Audit Report, three (3) were partially implemented and two (2) were unimplemented.
For 2010 two (2) were partially implemented while four (4) remain unimplemented. For CY
2009 three (3) remain unimplemented.