EXECUTIVE SUMMARY

The Municipality of Moalboal, Cebu has been classified as a fourth (4th) class
Municipality based on the latest classification of municipalities issued by the Department
of Finance.

Pursuant to RA No. 7160, known as the Local Government Code of 1991, the
municipality like other local government units, enjoys total independence in managing,
deciding, and planning its own administrative, fiscal and development affairs in
conformity with the national government’s thrust for sustainable social and economic
growth.

HIGHLIGHTS OF FINANCIAL OPERATIONS

The agency appropriated the total amount of ₱220,065,030.00 for the year which
is 73% higher than that of CY 2017 of ₱127,470,220.00. On the other hand, obligations
during the year amounted to ₱111,698,028.20 an increase of ₱5,905,275.63 or 54%
compared to previous years’ expenditure of ₱72,568,690.58.

Comparative Appropriation and Obligation for CY 2018 and 2017 is shown below:

Annual Budget

250,000,000.00

200,000,000.00

150,000,000.00 2018
2017
100,000,000.00

50,000,000.00

-
Appropriations Obligations

During the year, the agency realized a total gross operating income of
₱157,612,301.63 from its share of the Internal Revenue Allotment, collections of real
property and business taxes, other taxes and licenses which showed an increase of
₱24,529,064.40 or 18.48% as compared to last year’s income of ₱132,751,458.93. Total
operating expenses amounted to ₱141,777,094.73 an increase of ₱7,047,764.31 or 5.23%
compared to prior years’ ₱134,729,330.42.

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 Financial Performance

160,000,000.00
155,000,000.00
150,000,000.00
145,000,000.00 2018
140,000,000.00
2017
135,000,000.00
130,000,000.00
125,000,000.00
120,000,000.00
Income Expenses

The LGU’s assets, liabilities and government equity are ₱319,816,448.26,

₱61,512,818.64 and ₱258,303,629.62 which are 16.83%, 0.68% and 19.19% higher
than the previous years of ₱273,754,848.79, ₱57,049,266.61 and ₱216,705,582.18
respectively.

Financial Position
350,000,000.00
300,000,000.00
250,000,000.00
200,000,000.00 2018
150,000,000.00 2017

100,000,000.00
50,000,000.00
-
Assets Liabilities Equity

SCOPE OF AUDIT

An audit was conducted on the accounts and operations of the Municipality of

Moalboal, Cebu for the calendar year ended December 31, 2018. The audit was made

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to ascertain the regularity of disbursements, the reliability of financial reports and the
adequacy of accounting records and to determine whether plans, programs and
activities for the year were attained in an efficient, economical and effective manner.

AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The auditor rendered a qualified opinion on the financial statements due to the
non-preparation and submission of updated inventory reports of Property, Plant and
Equipment (PPE) totaling ₱181,016,059.12 or 56.59% of the total asset, rendering the
existence and condition doubtful. The inadequacy of property records did not allow
application of alternative audit procedures.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

The following are the significant findings and the corresponding

recommendations:

1. The municipality of Moalboal failed to comply with the requirement of the

Joint Circular No. 2015-01 of the Commission on Audit (COA), the
Department of Budget and Management (DBM), the Department of the
Interior and Local Governance (DILG), the Governance Commission for
GOCCs (GCG) and Department of National Defense (DND), which provides
that the certification of the peace and order situation in the locality should be
signed by its Chief PNP.

We recommend that management comply with the required certification on

the peace and order situation in the locality signed by the Chief PNP as set
forth in the COA-DBM-DILG-GCG-DND Joint Circular No. 2015-01 on the
granting of cash advance for Confidential Fund.

2. Delayed submission of the 2018 year-end financial reports, reports of

financial transactions and supporting documents in violation of the provisions
of COA Circular 2010-001, Section 70 of the Manual on the New
Government Accounting System for Local Government Units, Volume I and
Section 6.05 of COA Circular 95-006, resulted in the delayed auditorial
review of agency reports and transactions.

We recommend that the Municipality and the designated responsible

personnel to prepare the mandatory reports, observe strictly the provisions of
COA Circular No. 2010-001 and Section 6.05 of COA Circular 95-006 and
Section 70 of the NGAS Manual for LGU, Volume I. Otherwise, we shall
recommend for the imposition of the provisions of Section 122 of PD 1445
on the suspension of payment of salaries of concerned officials.

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3. Contrary to Section 474 of RA 7160, the mandatory position of the Municipal
Accountant remains vacant for several years. Moreover, the designated
personnel may not possess the necessary qualifications for the position of
Accountant under the Civil Service Commission (CSC) 2017 Omnibus Rules
on Appointments and Other Human Resource Actions, which could hinder
effective performance of his official functions.

We recommend the immediate hiring of a Municipal Accountant who

possesses the necessary training and experience to be able to effectively
perform the responsibilities required of this position. Likewise, publication
and posting of list of vacant positions should be undertaken by the
municipality in accordance with the 2017 CSC Omnibus Rules on
Appointments and Other Human Resource Actions.

4. The management revised its budget in the General Fund to appropriate funds
to Gender and Development Deficiency for CY 2018, the purpose of which is
vague as it does not specify the expenditures to be charged contrary to Section
336 of Republic Act No. 7160, otherwise known as “the Local Government
Code of 1991”

We recommend that management itemize or specify the expenditures relating

to Gender and Development Activities where the fund would be appropriated
and to refrain from using general terms in the particulars or purpose of its
supplemental budget.

5. Monetization of leave credits on February 2018 totaling ₱1,318,981.80 were

paid to various officials and employees without regard to the requirements set
under Section 22 of Omnibus Rules on Leave, Rule XVI of the Omnibus
Rules Implementing Book V of Executive Order No. 292 thus rendering the
propriety of paid claims doubtful.

We recommend that management adhere to Section 22 of Omnibus Rules on

Leave, Rule XVI of the Omnibus Rules Implementing Book V of Executive
Order No. 292 and rules and regulations related thereto in the payment of
monetization of accumulated leave credits.

6. Lack of proper monitoring and reconciliation of accounts resulted to abnormal

negative balances of asset and liability accounts, thus casting doubts on the
accuracy and reliability of the affected accounts in the financial statements.

We recommend that the Municipal Accountant – designate review and

analyze the transactions pertaining to the affected asset and liability accounts
with negative balances and effect the necessary adjustments so that reliable
balances of the accounts will be presented in the financial statements.

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 7. The balance of Intra-Agency Receivable Account Due from Other Funds in
the amount of ₱419,522.57 did not reconcile with the balance of reciprocal
Payable Account, Due to Other Funds amounting to ₱133,080.84, thus
rendering both accounts unreliable.

We recommend that the Municipal Accountant be directed to review, verify

and reconcile reciprocal accounts from the subsidiary ledgers and source
documents and effect the appropriate adjustments to correct the account
balances.

8. Purchases amounting to ₱553,807.50 were made through Shopping instead of

Small Value Procurement or through Public Bidding and were not supported
with documentary requirements provided in Item II of Appendix A in relation
to Items IV.F and V.D.8.b.ii of Annex “H” and other pertinent provisions of
the Revised IRR of RA 9184, and Section 9.2 of COA Circular No. 2012-
001.

We recommend that the management submit the supporting documents such

as PhilGEPS Registration, Statement of the Prospective bidder that it is not
blacklisted, and Sworn affidavit, Mayor’s/Business Permit, PhilGEPS
Registration Number, Income/Business Tax Return, and Omnibus Sworn
Statement required in Appendix A and COA Circular 2012-001 to avoid
disallowance in audit.

UNSETTLED DISALLOWANCES, SUSPENSION AND CHARGES

As of December 31, 2018, the Municipality has an unsettled audit suspension

amounting to ₱384,240.71 and unsettled audit disallowances amounting to
₱4,627,012.52 in the Statement of Audit Suspensions, Disallowance and Charges
(SASDC).

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Of the twenty-three (23) recommendation contained in our prior years’ Annual

Audit Report, seven (7) were overtaken by subsequent events, (10) were fully
implemented and six (6) were not implemented.