EXECUTIVE SUMMARY

INTRODUCTION
The City of Malaybalay is located at the central part of the province and is the
capital city of the Province of Bukidnon. It was made the first component city of the
Province of Bukidnon by virtue of Republic Act 8490 which was finally passed by the
House of Representatives and the Senate on January 12, 1998 and January 9, 1998,
respectively, and approved and signed by then Pres. Fidel V. Ramos on February 11,
1998. It has a total land area of approximately 108,259 hectares which covers 13% of the
total land area of Bukidnon. The City is composed of 46 barangays, 18 of which are
either urbanized and urbanizing areas while the rest are classified as rural areas.

The City’s manpower complements are assigned to and its growing financial
resources are allocated to and expended for its priority programs, projects and activities
undertaken to uplift the socio-political and economic conditions of its constituents. It has
a manpower complement of 3,003 personnel composed of 502 permanent employees, 15
elective officials, 297 casual employees, and 2,189 contractual/co- terminus/job orders
personnel.

The City Government is committed to provide accessibility to all basic needs and
services; encourage the growth of business enterprises and increase agricultural
productivity; expand employment opportunities to the urban poor residents; enhance the
delivery of health care services; maintain ecological balance; and, promote social justice
and ensure effective management and utilization of its natural resources.

FINANCIAL HIGHLIGHTS
Comparative analyses of the Statement of Financial Position and Performance of
the agency for the years 2021 and 2020 are as tabulated below.

Financial Position

Increase/
Particulars 2021 2020
(Decrease)
Assets 4,973,813,757.32 4,578,586,773.18 395,226,984.14
Liabilities 1,041,421,820.42 808,462,304.76 232,959,515.66
Government Equity 3,932,391,936.90 3,770,124,468.42 162,267,468.48

Financial Performance

Increase/
Particulars 2021 2020
(Decrease)
Income 1,793,072,903.12 1,815,650,587.51 (22,577,684.39)
Expenses 1,503,008,664.49 1,461,356,409.07 41,652,255.42
Net Income 290,064,238.63 354,294,178.44 (64,229,939.81)

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OPERATIONAL HIGHLIGHTS
For CY 2021, the incomes were derived from all sources including shares from
Internal Revenue Allotment (IRA) and grants and donations. Of the said amount,
approximately 89% represents the receipt of the IRA amounting to P1,601,721,721.00.
The total revenue declined by 1% percent totaling P22,577,684.39 in CY 2021 due to a
lower IRA received by the City in the said year as compared to that in CY 2020 having a
difference of P17,284,652.00.

SCOPE OF AUDIT
The audit covered the financial transactions and operations of the City
Government of Malaybalay for the calendar year December 31, 2021, with emphasis to
the COVID-19 fund receipts, allocation, and utilization. The objectives of the audit were
to: (a) ascertain the fairness of presentation and reliability of the financial position and
results of operations, and (b) determine whether the programs, projects and activities for
the year were attained in an efficient, economical and effective manner. A compliance
audit was also conducted to check the validity and propriety of the transactions and
adherence to pertinent laws, rules and regulations.

INDEPENDENT AUDITOR’S REPORT

The Auditor rendered a qualified opinion on the fairness of presentation of the
financial statements of the City Government of Malaybalay as of December 31, 2021,
due to the following exceptions:

1. The Statement of Comparison of Budget and Actual Amounts (SCBAA) and its
corresponding disclosures was submitted beyond deadline and was not supported
with the necessary reports such as the List of Not Yet Due and Demandable
Obligations, among others, contrary to Section 4.1 of COA Circular No. 2010-001
dated March 2, 2010 and Section 3.5 of COA Accounting Circular No. 2007-02,
thereby, affecting the fair representation of the figures reported.

2. Balances of the accounts recorded under the Property, Plant and Equipment
totaling P456,168,046.40 with insufficient accounting and property records were
still found recorded in financial records of the City, contrary to Section 14(a) of
IPSAS 17, as a result of the delayed reconciliation between the City Accounting
and the City General Services Office, thereby overstating the said account in the
financial statements.

3. The ‘Subsidy to NGA’ and ‘Subsidy to Other Local Government Units’ accounts
of the City totaling P51,810,017.72 in CY 2021 was lumped under the
‘Maintenance and Other Operating Expense (MOOE)’ line item instead of
presenting it in the ‘Transfers, Assistance, and Subsidy To’ line item in the face of
the Statement of Financial Performance, contrary to COA Circular No. 2016-004

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 dated September 30, 2016 and Sections 104 and 105 of IPSAS 1, thereby,
affecting the fair presentation of the financial statements.

4. The balances of Intra-agency accounts “Due from Other Funds” and “Due to
Other Funds” at year-end in the amount of P59.856M and P48.822M,
respectively, still showed a total difference of P11.034M, a non-compliance to
paragraph 27 of IPSAS 1, thereby casting doubt on the correctness and reliability
of the balances in the financial statements.

SUMMARY OF SIGNIFICANT FINDINGS AND

RECOMMENDATIONS
Other than the bases for qualified opinion, the following are the other significant
observations with corresponding recommendations in the audit of the operations of the
City Government of Malaybalay for the year 2021 which need immediate action. These
and other audit observations and recommendations are fully discussed in Part II of this
Report.

1. The payment of Rice Subsidy Allowance, COVID-19 Employee Financial

Assistance to employees, Incentives for being consistent passer of Good Financial
Housekeeping, and Barangay Incentives totaling P19,272,796.53,
P19,643,000.00, and P4,000,000.00, and P11,726,083.00, respectively, in CY
2021 are granted without legal basis and recorded under MOOE, contrary to Item
II of COA Circular No. 2013-003 dated January 30, 2013, Section 6 of RA 11466,
and Joint Resolution No. 4 dated June 17, 2009, thereby affecting the legality of
the said payments.

We recommended to the Head of the Agency to submit written justification for

the above disbursement and submit legal basis or bases to support the same.
Henceforth, exercise prudence in the disbursement of government funds.
Discontinue granting similar allowances, incentives, and benefits to individuals in
the absence of any legal or statutory basis.

2. The payment of COVID-19 Employee Financial Assistance totaling

P46,183,862.50 to the City’s job order personnel recorded under the MOOE is
bereft of legal basis contrary to Item 1, Section 4 of PD 1445, thereby affecting
the validity of the payments.

We recommended to the Head of the Agency to submit written justification for

the above disbursement and submit legal basis or bases to support the same.
Henceforth, exercise prudence in the disbursement of government funds.
Discontinue granting similar allowances, incentives, and benefits to individuals in
the absence of any legal or statutory basis, especially to those employed without
an employee-employer relationship.

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 3. The payment of cash loyalty incentives, gold rings, and gold-plated loyalty pins
totaling P830,000.00, P781,840.00, and P21,000, respectively, to officers and
employees in government service, were (1) recorded in the Other Maintenance
and Other Operating Expenses (MOOE), contrary to COA Circular 2018-001
dated February 1, 2018, and (2) gold rings and loyalty pins were granted to
employees contrary to the City’s Program on Awards and Incentives for Service
Excellence (PRAISE), the guidelines and policies prescribed under Section 33 of
Presidential Decree No. 807 of the “Civil Service Decree”, and Civil Service
Commission (CSC) Memorandum Circular No. 01 s. 2001, thereby, affecting the
validity and propriety of the disbursements involved, and overstating the Other
Maintenance and Other Operating Expense Account of the City.

We recommended to the Management the following:

1. Strictly adhere and comply with the existing guidelines in the proper
recording of loyalty Incentives;
2. Provide written valid justification of the inconsistencies and irregularities in
the procurement of gold rings incentives instead of silver rings which is
inconsistent with its approved PRAISE, otherwise said payment shall be
disallowed in audit;
3. Justify variances noted in the list of recipients of gold ring incentives and
provide a list of recipients of gold-plated loyalty pins, otherwise, said portion
shall be disallowed in audit; and

4. Funeral cost in relation to the ‘Management of the Dead – Burial and Other
Expenses’ under the LDRRM PPA1 for 117 COVID-19 related deaths totaling
P2.16M was shouldered by the City (1) without verifying the financial capability
of the surviving spouse or nearest kin and (2) an explicit MOA as to the cost and
the services to be rendered, contrary to Items 4 and 5 of DILG-DOH Joint
Memorandum Circular No. 01 Series of 2020 dated April 16, 2020, thus, validity
and propriety of the payment could not be ascertained.

We recommended to the Head of the Agency the following:

1. Revise the existing MOA to specifically state therein the coverage of the
funeral services and the fixed cost involved;
2. Require the CSWD to conduct a case study or equivalent on the families
granted with free cost of funeral services. Determine appropriateness of the
grant and require the reimbursement of the cost of funeral services for those
who are unqualified.
3. Require the CDRRMO to submit the death certificates as well as the
barangay, city health and/or hospital certification stating therewith that the
deceased was a suspected/confirmed COVID-19 patient.

1 Local Disaster Risk Reduction Management Program/Project/Activities

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 4. Henceforth, ensure compliance to existing laws, rules, and regulations
pertaining the payment of the cost of funeral services in relation to the
COVID-19 pandemic.

STATUS OF AUDIT SUSPENSIONS, DISALLOWANCES AND

CHARGES
As of December 31, 2021, based on the Status of Suspensions, Disallowances and
Charges (SASDC) issued to the City Government of Malaybalay pursuant to COA
Circular No. 2009-006 dated September 15, 2009, prescribing the Rules and Regulations
on Settlement of Accounts (RSSA), total suspensions, disallowance, charges, are
summarized in the table below.

Balance CY 2021 CY 2021 Balance

Particulars
12/31/2020 Issuances Settlement 12/31/2021
Suspensions 15,093,621.32 15,093,621.32
Disallowances 3,010,067.91 3,010,067.91
Charges - -
Total 18,103,689.23 18,103,689.23

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS
There were 13 audit recommendations embodied in Annual Audit Reports of the
immediately preceding year 2020; of which, 7 were fully implemented and 6 were
partially implemented, of which 3 are reiterated in part II hereof. For the years 2015
through 2019, of the 15 audit recommendations which were found partially implemented
as of prior year’s Annual Audit Report, 2 were found fully implemented and 13 were still
found partially implemented as of December 31, 2021. Of the 13 partially implemented, 3
were reiterated in Part II of this report.