EXECUTIVE SUMMARY

Introduction

The Municipality of Rosario was the only town established by the Augustinian Missionaries.
It was reorganized on June 9, 1902 by a council of town citizens and acknowledged by the
American Civil Government in Act No. 958 enacted on October 23, 1903.

The Municipality is situated in the fourth district of Batangas having a total land area of
22,526 hectares comprising of 48 barangays. It was considered a first class municipality on
January 28, 2002 under Memorandum Circular No. 01- (M) 12 issued by the Department of
Finance.

The Municipality maintains books for the General Fund, Special Education Fund and Trust
Fund. It operates market, slaughterhouse and cemetery for its economic enterprise.

The Municipality of Rosario, Batangas has the following Mission and Vision:

Mission

To improve the quality of life of the people of the Municipality of Rosario, Batangas, through
sustainable development with equity.

Vision

The Municipality of Rosario, the premiere center of Eastern Batangas for commerce, agri-
industry, sustainable forest management, agri-eco-tourism, and agricultural production with
God-loving and empowered community, dynamic and self-reliant economy, enjoying viable
natural environment and livable human settlements with sufficient infrastructure governed by
the principle of sustainable development with equity.

The organizational structure of the Municipality of Rosario is as follows:

a. Key Officials

Municipal Mayor Hon. Leovigildo K. Morpe

Municipal Vice Mayor Hon. Atanacio G. Zara

Members of the Sanggunian Hon. Edward B. Aguilar

Hon. Marciano S. Aquino
Hon. Albino M. Altura
Hon. Joaz Martin De Veyra
Hon. Angel B. Alvarez
Hon. Teodoro Karr C. Luansing
Hon. Jose M. Galicha
Hon. Darius M. Aguado
Hon. Isagani C. Laroza
(ABC President)
Hon. Herman Paolo G. Castillo
(SK Federation President)

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 Municipal Accountant Ms. Guilliane B. Arias

Municipal Treasurer Ms. Carina A. Sulit

b. Number of Personnel Complement

As of the December 31, 2022, the number of personnel complement of the Municipal
Government of Rosario is as follows:

Elective Officials 12
Permanent 176
Job Order 246
Co-terminous 8
Temporary 1
Total 443

Audit Objectives

The objectives of the audit are to (a) verify the assurance that may be placed on
Management’s assertions on the financial statements; (b) recommend agency improvement
opportunities; (c) determine compliance with existing laws, rules and regulations; and (d)
determine the extent of implementation of prior year’s audit recommendations.

Scope of Audit

The audit covered the accounts and operations of the Municipal Government of Rosario for
the period January 1 to December 31, 2022.

Financial Highlights

For the Calendar Year (CY) 2022, the Municipal Government of Rosario, Batangas
generated revenue of P568,627,876.33 sourced from local taxes, Internal Revenue
Allotment (IRA), service, business and other source of income. Total current appropriations
for the year was P592,559,612.33 of which P424,861,933.07 or 70.86% was obligated
during the year, thus leaving an unexpended balance of P174,697,679.26 or 29.14%. While
continuing appropriations was P111,637,694.55 of which P50,329,917.49 was obligated with
a balance of P61,307,777.06.

The total assets, liabilities, equity, income and expenses of the Municipality for CYs 2022
and 2021 are as follows:
Increase
CY 2022 CY 2021
(Decrease)
Financial Position
Assets P1,068,451,366.75 P 893,164,968.38 P 175,286,398.37
Liabilities 210,449,890.72 151,609,224.14 58,840,666.58
Equity 858,001,476.03 741,555,744.24 116,445,731.79

Results of Operation
Revenue 568,627,876.33 434,789,486.17 133,838,390.16

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 Increase
CY 2022 CY 2021
(Decrease)
Expenses:
Personnel Services 135,181,247.30 119,893,799.31 15,287,447.99
Maintenance and
Other
Operating Expenses 229,384,010.41 181,707,992.04 47,676,018.37
Non-Cash Expenses 77,742,992.74 78,615,349.22 (872,356.48)
Financial Expenses 66,600.00 0.00 66,600.00
Transfer, Assistance
4,350,198.63 0.00
and Subsidy From 4,350,198.63
Transfer, Assistance 12,845,228.07
and Subsidy To 1,586,112.44 11,259,115.63
Surplus (Deficit) 117,757,996.44 52,986,233.16 64,771,763.28

Independent Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion, except for the effects of the matters described in
the Bases for Qualified Opinion section of our report, the accompanying financial statements
present fairly in all material respects, the financial position of the Municipal Government of
Rosario, Batangas as at December 31, 2022, and its financial performance, its cash flows,
and its comparison of budget and actual amount for the year then ended in accordance with
International Public Sector Accounting Standards (IPSAS).

Bases for Qualified Opinion

The Auditor rendered a qualified opinion on the fairness of presentation of the financial
statements of the Municipality of Rosario, Batangas due to the following:

1. The Municipality is yet to adopt the guidelines and procedures on inventory taking,
recognition of those found at station and disposition of non-existing/missing items for
the One-Time Cleansing of Property, Plant and Equipment (PPE) account balances,
contrary to COA Circular No. 2020-006 dated January 31, 2020, hence casting doubt on
the reliability of the Property, Plant and Equipment account balances in the financial
statements amounting to P957,647,471.28, at cost.

2. Moreover, total unaccounted discrepancies of P8,991.09 for Cash in Local Treasury and
P14,326,852.48 for Cash in Bank-Local Currency, Current Account are noted between
balances per General Ledger and Cashbook of the Municipality contrary to Section 111
of Presidential Decree (P.D.) No. 1445, thus resulted to unreliable balances of the said
accounts at year-end.

For the exceptions cited above, we recommended that the Municipal Mayor:

a. Instruct the duly created Inventory Committee, the Municipal General Services Officer
and Municipal Accountant to strictly follow the general guidelines, procedural guidelines,
reconciliation of inventory count per RPCPPE with property and accounting records,
disposition procedures for non-existing/missing PPEs, procedures in the derecognition of
non-existing/missing PPEs without available records of accountability, applicable
accounting entries and required disclosure in the Notes to the Financial Statements

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 required under COA Circular No. 2020-006 in the conduct of inventory taking for one-
time cleansing of PPE.

b. Hire additional job order personnel, if necessary, to be included in the members of the
Inventory Committee or replace the members of the committee who will be relieved of all
their regular duties to ensure that the Inventory Committee will devote their full time in
the conduct of the physical inventory taking until the same is completed and not to
hamper the operations of the Municipality during inventory taking.

c. Instruct the Municipal Budget Officer to provide budgetary requirements to cover the
necessary expenses in the conduct of inventory taking.

d. Instruct the Municipal Treasurer and the Municipal Accountant to conduct immediate
reconciliation of the individual balances of the Cash in Local Treasury and Cash in Bank-
Local Currency, Current Account balances with the respective cashbook/s and make the
necessary adjustment/s thereon.

e. Require the Municipal Treasurer to send written notice to the payees of the existence of
the stale checks for replacement, if applicable, and comply with the procedures in the
handling of stale/spoiled checks as stated in Section 59 of the New Government
Accounting System (NGAS) Manual Volume III.

Other Significant Audit observations and Recommendations

Hereunder are the other significant observations and corresponding recommendations

contained in the report:

1. The accounting and reporting procedures of the Municipality on the Local Roads Asset
Management System (LRAMS) have not been fully complied with, contrary to COA Circular
No. 2015-008 dated November 25, 2015, hence affecting the fair presentation of the
Infrastructure-Road Networks account amounting to P83,758,115.79, gross, in the financial
statements as of year-end.

We reiterated the following previous years’ recommendations that the:

a. Municipal Engineer to provide the Municipal Accountant and GSO with complete
description and cost segregation of road components for all road projects;

b. General Service Officer to: render Road Map; keep a complete and updated Local Road
Network Property Card (LRNPCs) for all roads and its components; and submit Report
on Local Road Networks;

c. Municipal Accountant to: prepare and maintain Local Road Network Ledger Cards
(LRNLCs); keep and maintain subsidiary records for roads and road components for
every road network; and disclose in the Notes to the Financial Statements the required
information; and

d. Inventory Committee to conduct inventory count of all the Municipality’s Road Network
Systems and accordingly submit a Report on the Physical Count of the Road Network
System as of the end of the year.

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2. The Municipality’s non-preparation of the Report on the Physical Count of Property, Plant
and Equipment (RPCPPE) for Biological Assets, non-maintenance of Work, Other Animals
and Breeding Stocks Ledger Card and Property Cards and non-disclosure of the nature,
description and existence of the Biological Assets on the Notes to Financial Statements
violates the Manual on New Government Accounting System (NGAS) for Local Government
Units (LGUs) and International Public Sector Accounting Standards (IPSAS) 27, thus the
Biological Assets amounting to P5,914,741.50 presented in the financial statements as of
year-end was doubtful.

We recommended that the Municipal Mayor direct the:

a. General Services Officer and Inventory Committee in coordination with the Municipal
Agriculturist Office to determine the existence of the Breeding Stocks by conducting a
comprehensive inventory of the Biological Assets recorded in the books;

b. General Services Officer and the Municipal Accountant to prepare the required property
stock cards and ledger cards, respectively, upon determination of the assets’ existence;

c. Municipal Accountant to coordinate with the General Services Officer in reconciling the
books of accounts with the results of physical inventory; and

d. Municipal Accountant to properly evaluate the nature of the transfer to MBA Livelihood
Association, Inc. aggregating P3,463,000.00 and accordingly revert the debit made to
Biological Assets account.

3. Cash advances totaling P40,622,150.50 were not liquidated within the prescribed timeline,
with delays ranging from 1-72 calendar days, contrary to Item 1.2 of COA Circular No. 2012-
001 while various cash advances were continuously granted to one disbursing officer
despite non-liquidation of previous cash advance in violation of Section 89 of Presidential
Decree (PD) No. 1445, thus exposing government funds to risk of loss and/or improper
utilization due to overlapping of cash advances on hand.

We recommended that the Municipal Mayor:

a. Direct the disbursing officer to strictly liquidate cash advances granted to them within the
prescribed timeline.

b. Instruct the Municipal Accountant to immediately issue demand letters enjoining the
concerned officials and employees with unliquidated cash advance to immediately
liquidate the same.

c. Cause the withholding of salary of the Accountable Officers (AOs) who failed to
settle/liquidate their cash advances despite the issuance of demand letters in
accordance with Section 5.9 of COA Circular No. 97-002.

d. Direct the Municipal Accountant to refrain from processing disbursement vouchers for a
new cash advance of an employee until their previous cash advance has been settled.

e. Designate additional disbursing officers for cash advance to prevent granting of various
cash advance to a one disbursing officer only.

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4. Real Property Tax (RPT) Receivables and Special Education Tax (SET) Receivables at
year-end of P46,101,766.11 and P29,760,152.16, respectively, registered a difference of
P16,341,613.95 and neither of the accounts tally with the Municipal Treasurer’s total
delinquent taxes of P22,797,717.41 per fund as of December 31, 2022, contrary to
Paragraph 27 of the International Public Sector Accounting Standards (IPSAS) 1, thereby
affecting the fair presentation of the accounts in the financial statements.

We reiterated our prior year’s recommendations that the Municipal Mayor require the:

a. Municipal Accountant to investigate thoroughly the difference noted between the above
receivable accounts and effect the necessary adjustments; and

b. Municipal Accountant and Municipal Treasurer to reconcile the balances of RPT and
SET Receivables with total delinquency tax and effect the necessary adjustments
thereof.

5. The Municipality is yet to implement the capitalization threshold provided under Sections 4.1
and 4.2 of COA Circular No. 2022-004, thus property, plant and equipment (PPE) accounts
have not yet been reclassified to their proper accounts affecting their fair presentation in the
CY 2022 financial statements.

We recommended that the Municipal Mayor require the Municipal Accountant to implement
the provisions of Sections 4.1 and 4.2 of COA Circular No. 2022-004. Henceforth, use the
new capitalization threshold in recording similar assets.

6. Unaccomplished works totaling P1,552,507.99 with corresponding liquidated damages of

P1,220,797.76 were still noted by the COA Technical Audit Specialists (TAS) during the re-
inspection of two infrastructure projects implemented by the Municipality contrary to Item
9.1, Annex “E” of the 2016 Revised Implementing Rules and Regulations (IRR) of Republic
Act (RA) No. 9184, hence may result to loss of government funds if not immediately acted
upon by the management and contractor.

In lieu of the re-evaluation made by the COA TAS, we recommended that the Municipal
Mayor make final demand to the contractor for the unaccomplished works totaling
P1,552,507.99 and liquidated damages of P1,220,797.76; otherwise, concerned officials can
be held personally liable for the said amount for failing to take necessary measures to
ensure that the project is implemented in accordance with the approved plans and
specifications.

Henceforth, we recommended that the Municipal Mayor instruct the Municipal Engineer to
strictly monitor the implementation of projects in accordance with the approved plans and
specifications within the time frame specified in the contract agreement.

7. Funds totaling P10,938,332.61 recorded under the Due to National Government Agencies
(NGAs) account remained idle as of year-end due to non-remittance to respective source
agencies of balances from completed and/or discontinued projects contrary to Section 4.9 of
COA Circular No. 94-013 dated December 13, 1994 thus, delaying benefits for the intended
users of the project and for the source agencies to whom the balances are due.

We recommended that the Municipal Mayor instruct the Municipal Accountant to:

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 a. Conduct confirmation among identified source agencies to confirm the balances due to
them and facilitate the return of the remaining unutilized/unused fund. Otherwise, if there
is still a need, the Municipality may make a written representation to the source agencies
to request the use of money for other projects or purpose of the Municipality; and

b. Ensure that all subsequent unused balance of funds received shall be returned
immediately after the completion of the project pursuant to COA Circular No. 94-013 and
to disclose in the Notes to Financial Statements those unutilized balances for which the
Municipality has valid reasons for non-remittance for fair presentation.

8. Out of the 50 projects from the current and continuing appropriations under 20%
Development Fund, 17 projects were not implemented while 10 projects are still ongoing
implementation as of December 31, 2022 due to insufficient funding, conflict with Deed of
Donation of land, and realignment of projects near the end of the year, contrary to Section
3.2.3 of Joint Memorandum Circular (JMC) No. 1, s. 2020 of the Department of Budget and
Management (DBM), Department of Finance (DOF) and Department of the Interior and
Local Government (DILG), thereby attainment of desirable socio-economic development
and environmental outcomes was not fully realized.

We recommended that the Municipal Mayor direct the:

a. MPDC, in coordination with the former MPDC, to submit detailed explanation/reasons for
the delayed and non-implementation of projects under the current and continuing
appropriations;

b. Local Development Council to:

• Ensure optimal and timely utilization of 20% Development Fund in the succeeding
period by including development projects that are well-planned and procurement-
and-implementation-ready.

• Provide a realistic ranking of the to be included priority projects in the Annual

Investment Plan to avoid or minimize revisions of the projects to be implemented
during the year to ensure immediate implementation and completion of projects
within the target date.

• Assess the unimplemented projects from the continuing appropriation of the 20%
Development Fund as well as the balances from completed projects and determine if
these can be realigned to priority implementable projects so that idle funds will be
reduced and put to use for the ultimate benefit of the Municipality’s constituents.

9. The Municipality was able to prepare the Local Development Investment Program (LDIP) for
Calendar Years (CY) 2020-2022 while the Comprehensive Development Plan (CDP) for
CYs 2021-2025 has not been completed and yet to be approved by the Sanggunian as of
December 31, 2022, contrary to Section 106 of Republic Act (RA) No. 7160 and the DILG
Memorandum Circular No. 2008-156 entitled Guide to Comprehensive Development Plan
Preparation for Local Government Units; thus, the programs and projects presented in the
LDIP may not be aligned with the CDP once approved.

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 We recommended that:

a. LDC provide justifications for non-compliance with the timely preparation and update of
CDP;

b. The members of the LDC to update the CDP in time for the LDIP linkage to serve as
guide in the selection, prioritization and screening of projects, programs and activities to
be included in the LDIP; and

c. The planning team of the LDC to consider the preparation of CDP in multiples of three-
year term to coincide with their prepared LDIP as well as the term of the elective local
officials as suggested/preferred in the Guide to CDP Preparation for Local Government
Units.

10. Three development projects in the Annual and Supplemental Budget for Calendar Year (CY)
2022 with appropriations totalling P85,000,000.00 were not among the programs/projects
listed in the Local Development Investment Program for CYs 2020-2022 contrary to Items
4.24 and 8.8 of the Department of the Interior and Local Government (DILG), National
Economic and Development Authority (NEDA), Department of Budget and Management
(DBM) and Department of Finance (DOF) Joint Memorandum Circular (JMC) No.1 series of
2016 dated November 18, 2016 and Section 3.2.1 of the DBM, DOF and the DILG JMC No.
1 dated November 4, 2020, thus the implementation of these projects may not be aligned
with the medium-term and long-term development goals of the Municipality.

We recommended that the Local Development Council ensure that the development
program/ projects/activities (PPAs) contained in the Annual Investment Program and its
supplemental plan be aligned with those that are included in the Local Development
Investment Program towards the realization of the Municipality’s development targets.

11. The Municipality registered a 43 per cent utilization rate amounting to P13,968,474.18 of the
Local Disaster Risk Reduction and Management Fund (LDRRMF) under the Current Year’s
70 per cent Mitigation Fund (MF), Continuing Appropriations and Special Trust Fund not in
keeping with Sections 2(e) and 12 of Republic Act (RA) No. 10121, thus the desired goals of
reducing disaster risk and enhancing disaster preparedness and response capabilities may
not be optimally achieved by the Municipality.

We recommended that the Municipal Mayor require the Municipal Disaster Risk Reduction
and Management Office (MDRRMO) to implement the programs and projects under Current
and Continuing Appropriation and under the Special Trust Fund account, within the intended
time to avoid delay in the delivery of its benefits to the constituents. Conduct thorough
planning and analysis to ensure that those identified PPAs to be included in the LDRRM
Plan are those that can be implemented and completed within the target period.

Henceforth, we recommended strict compliance to Sections 2(e) and 12 of RA No. 10121 to

strengthen the capacity of the Municipality to build a disaster resilient community.

12. The Local Disaster Risk Reduction and Management Office of the Municipality has not been
fully institutionalized and organized contrary to Joint Memorandum Circular (JMC) No. 2014-
1 dated April 4, 2014, thus reducing its efficiency and effectiveness.

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 We recommended that the Municipal Mayor institutionalize and organize the Local DRRM
Office in accordance with law by assigning full-time permanent employees thereat to
maximize its efficiency and effectiveness.

13. Salaries of Job Order (JO) and Contract of Service (CoS) personnel were paid on a cash
basis through cash advances made by Special Disbursing Officer contrary to Sections 2 and
123 of Presidential Decree (PD) No. 1445 which does not promote sound internal control
system and thereby increase the risk of loss through theft or robbery to the disadvantage of
the government. Moreover, payroll claims were not supported with complete documentation
as required under Item 1.2.1 of COA Circular No. 2012-001, thus casted doubts in the
validity and propriety of the disbursements.

We recommended that the Municipal Mayor require the:

a. Municipal Treasurer and Human Resource Management Officer to stop the practice of
payment through cash advance and adopt the use of ATM payroll system for the
payment of salaries of JOs and CoS personnel; and

b. Municipal Treasurer and Municipal Accountant to:

• Pending adoption of ATM payroll system, ensure that payrolls are claimed by the
proper claimant with their appropriate signature and require submission of
authorization letter and photocopy of ID in case of release of payment through
representative; and

• Ensure complete documentation before payment of claims of JOs and CoS

personnel.

14. One hundred ninety-six (196) out of 258 Job Order (JO) personnel of the Municipality were
paid below the established minimum wage rate contrary to DOLE Wage Order Nos. IVA-18
and IVA-19 effective December 31, 2020 and June 30, 2022, respectively, thus JOs were
not compensated according to the wages considered to be responsive to the present
economic condition.

We recommended that the Municipal Mayor and the Sangguniang Bayan in coordination
with the Municipal Budget Office to review existing appropriations for fund availability and
consider the update of daily minimum wage rate of Job Order workers in accordance with
Wage Order No. IVA-19 issued by the DOLE.

15. Six (6) individuals hired by the Municipality under contract of service were made to perform
functions pertaining to regular positions and two (2) of them were designated to positions
exercising control over regular personnel contrary to Section 133, Rule XII (Prohibitions) of
Civil Service Commission (CSC) Memorandum Circular No. 14, s. 2018, thus may result in
conflict in the workplace and demoralization of the said regular employees, which prejudice
public service, in general.

We recommended that the Municipal Mayor:

a. Refrain from hiring Contract of Service personnel whose functions pertain to regular
positions;

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 b. Refrain from designation of personnel under contract of services to positions exercising
control or supervision over regular and career employees;

c. Designate regular employees instead to perform the tasks of the above positions or if
none is available, create additional plantilla items with concurrence of the Sangguniang
Bayan; and

d. Desist from designating Public Information Officer position to a Contract of Service

personnel and if the position is determined as necessary by the management, employ
the said officer under coterminous term and in adherence with the required qualifications
for the position.

16. The receipt and utilization of the allocated 11,294 vials of Coronavirus Disease 2019
(COVID-19) vaccines from various government agencies in Calendar Year (CY) 2022 were
not recorded in the books of accounts contrary to Paragraph 9 of International Public Sector
Accounting Standards (IPSAS) 12 and COA Circular No. 2015-009 thus, the completeness
of accounting and reporting of the receipt and distribution of the vaccines and ancillary
supplies received could not be confirmed.

We recommended that the Municipal Mayor instruct the:

a. Municipal Health Officer to obtain from the source agencies the necessary information
as to the unit cost and quantities of the COVID-19 vaccines received by the Municipality;

b. Municipal Health Officer to render a monthly report to the Municipal Accounting Office on
the receipt, issuance and balances of vaccines and other inventories directly received
from outside source; and

c. Municipal Accountant in coordination with the MHO, to determine and recognize in the
books the full cost of the ending inventory of vaccines as at year-end.

Henceforth, comply with the provisions of Paragraph 9 of IPSAS 12 and COA Circular No.
2015-009 dated December 01, 2015 regarding the proper recording of receipt and utilization
of allocated COVID-19 vaccines, other medicines and ancillary supplies, if any, from the
DOH and other government agencies.

17. Two (2) projects with total contract cost of P6,996,179.00 charged under the 20%
Development Fund (DF) of the Municipality for CY 2022 were doubtful as to proper
implementation due to incomplete/improper documentary requirements, denial/non-
acknowledgement of actual receipt of items upon confirmation with recipients who signed in
the Acceptance and Inspection Report (AIR) and non-presentation of accomplished projects
upon inspection, contrary to Section 4(6) of P.D. 1445 and COA Circular 2012-001, thereby
casted doubts on propriety and existence of the accomplished project.

We recommended that the Municipal Mayor require the:

a. Municipal Engineer in cooperation with barangay officials to submit project brief or work
program, accomplishment reports pertaining to the CY 2022 potable water supply
system and sanitation program (comfort room) with the distribution list, copy of
identification card or cedula of the recipients if the items were distributed individually and

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 the pictures of “before”, “during” and “after” project implementation to validate the
propriety of the expenditures, otherwise, the transactions shall be suspended;

b. Local Development Council to strictly refrain from inclusion in the 20% Development
Projects Investment Plan of those projects which are not for the general welfare of the
constituents; and

c. Municipal Accountant to verify the existence of the Water Supply System and Other
Structures (for the Comfort Room for the Sanitation Program) and to make necessary
adjustments if warranted.

Likewise, we recommended the Office of the Municipal Mayor to provide explanation/

justification on the denial of the barangay officials on their signatures and acknowledgement
of the materials appearing in the Acceptance and Inspection Reports, as well as the
discrepancy for the distributed materials for Potable Water Supply System, to validate the
propriety and legality of the transactions, otherwise, expenditures incurred shall be
disallowed in audit and appropriate action be taken against erring officials.

Moreover, we recommended that the Municipal Mayor ensure the effective implementation
and monitoring of the project in coordination with the Municipal Engineering Office.

18. The Municipality granted additional funds totaling P32,200,000.00 to May Bukas na
Aagapay (MBA) Livelihood Association Inc. in Calendar Year (CY) 2022 despite non-
compliance to the requisites for entitlement to government funds enumerated in Paragraph
4.4 and absence of duly executed Memorandum of Agreement (MOA) between the
Municipality and MBA Livelihood Association Inc. as laid out in Paragraph 4.5.3, both of
COA Circular No. 2007-001, violating Paragraph 4.5.6 of the same Circular, thereby casted
doubts on the propriety of the current fund transfers and the status of previous fund
transfers.

We reiterated our prior year’s recommendation that the Municipal Mayor in coordination with
the previous administration to provide explanation/justification for additional transfers made
to MBA in spite of the absence of proof of the legitimacy of the said NGO and lack of MOA
executed between the two parties.

19. Several deficiencies were noted in the audit of the CY 2022 Confidential Expenses
amounting to P900,000.00 contrary to the provisions of Joint Circular No. 2015-01 dated
January 8, 2015 of the Commission on Audit (COA), Department of Budget and
Management (DBM), Department of the Interior and Local Government (DILG), Governance
Commission for GOCCs (GCG) and Department of National Defense (DND), thereby
rendering the validity of the grant of cash advance doubtful.

Therefore, we recommended that the Municipal Mayor require the:

a. Municipal Accountant to submit to the Audit Team the succeeding Disbursement

Voucher for the grant of cash advance for Confidential Expenses, together with all the
required and proper supporting documents, within seven working days upon release of
check.

b. Municipal Accountant, Municipal Budget Officer, and other local officials concerned to:

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 1. Strictly observe Item 6.1.5 of the Joint Circular in the preparation of Physical and
Financial Plan wherein cash advances should be limited to three-month
requirements only;

2. Indicate in the Minutes of the Meeting the number of votes garnered for the approval
of POP and release of CF and the names of those who voted for such; and

3. Justify the receipt of Certification from PNP after the release of the above cash
advance.

Henceforth, we recommended that the Municipal Mayor ensure compliance with the above
noted deficiencies.

20. Government projects undertaken by the Municipality in CY 2022 whether funded from their
local budget or financial assistance or grants from other national agencies were not properly
reported to the Audit Team as required in Sections 2.1 and 3.1 of COA Circular No. 2013-
004 dated January 30, 2013, thus impeding proper monitoring and validation of the projects
implemented.

We reiterated that the Municipal Mayor to require the Municipal Engineer and other
concerned officials, in the succeeding period, to:

a. Provide the Audit Team at the beginning of the year the list of all ongoing
projects/programs/activities (PPA) and those that are to be implemented during the year
with the required details; and

b. Submit to the Audit Team information and evidence that appropriate signboards and/or
public notices were already posted ten (10) days after the award of the infrastructure
project or before the start of PPA.

21. The Municipality is yet to organize Internal Audit Service (IAS) contrary to Administrative
Order No. 278 s. 1992 as reiterated by Administrative Order No. 70 s. 2003 to improve and
strengthen internal control systems for the efficient and effective fiscal administration and
performance of the Municipal Government.

We recommended that the Municipal Mayor make representation with the Sangguniang
Bayan for the creation and establishment of the IAS directly under the Office of the
Municipal Mayor in compliance with AO Nos. 278 and 70 in order to improve and strengthen
the internal control systems for an efficient and effective fiscal administration and
performance of the Municipal Government.

22. Retention moneys aggregating P4,338,617.47 were not deducted from payments with a total
gross amount of P69,497,590.80 made to contractors of 10 infrastructure projects contrary
to Section 6.1, Annex E of the Revised Implementing Rules and Regulations (IRR) of
Republic Act (RA) No. 9184, thus exposing the Municipality to possible losses from
uncorrected discovered defects and third-party liabilities which may occur while the project is
on-going until its final acceptance.

We recommended that the Municipal Mayor direct the Municipal Accountant to submit
justification or explanation on why retention moneys were not deducted from contractors’
claims/billings.

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 Henceforth, we recommended that the Municipal Mayor instruct the strict adherence to
Sections 6.1 and 6.2, Annex E of the Revised IRR of RA No. 9184 on the imposition of
retention money.

23. The validity period guaranteed by Performance Bonds submitted by the winning bidders of
Municipality’s infrastructure projects began only from the date of completion of contract and
not prior to the signing of the same, contrary to Section 39.1 of the Revised Implementing
Rules and Regulations (IRR) of Republic Act (RA) No. 9184, thus exposed the Municipality
to risk of loss from non-performance of the winning bidder of the terms and conditions
embodied in the contract.

We recommended that the Municipal Mayor direct the BAC to require future contract
awardees for the submission of performance bond with proper period of coverage/validity
pursuant to Section 39.1 and 39.4 of the Revised IRR of RA No. 9184.

Likewise, we recommended that the Municipal Mayor instruct the BAC to require from the
concerned contractor the correction of the expiration/validity period of performance bond for
the contract, Supply of labor & materials for the Construction of Municipal Hall Building
(Annex 1), Phase IV, Brgy. B, Poblacion, Rosario, Batangas and submit revised/corrected
bond with consideration for any contract extension for the project.

24. Certificate of Final Acceptance for completed Infrastructure Projects were issued on the
same day or up to four days after issuance of Certificate of Completion contrary to Section
62.2 of the Revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No.
9184, hence putting the Municipality at risk of not being able to recoup any expenses in
case repair works were done on the project within the defects liability period.

We recommended that the Municipal Mayor direct the Municipal Engineer to regularly
conduct actual inspection of the project for any damage within the one-year defects liability
period and accordingly recommend the issuance of Certificate of Final Acceptance for
completed Infrastructure Projects after such period.

25. Warranty securities were not required from the contract awardee after the defects liability
period for the procurement of Infrastructure Projects and after acceptance of delivery for
Procurement of Goods contrary to Sections 62.1 and 62.2, respectively, of the Revised
Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184, hence deprived
the Municipality of the assurance that repair expenses incurred due to Structural Defects
and Failures and losses due to manufacturing defects will be corrected/replaced at the
contractor’s expense.

We recommended that the Municipal Mayor direct the:

a. Municipal Engineer to require contractors to post warranty securities for Structural

Defects and Failures after the one-year defects liability period for Infrastructure Projects
in the form prescribed in the Section 62.2.3.3 of the Revised IRR of RA No. 9184; and

b. General Services Officer to require suppliers to post warranty securities for

manufacturing defects after acceptance by the Municipality of delivery for procurement
of Goods in the form prescribed in the Section 62.1 of the Revised IRR of RA No. 9184.

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Summary of Total Suspensions, Disallowances and Charges

As of December 31,2022, the total outstanding audit suspensions, disallowances and

charges of the Municipal Government of Rosario based on the Notice of Suspensions (NS),
Notice of Disallowances (ND), Notice of Charges (NC) and Notice of Settlement of
Suspensions, Disallowances and Charges (NSSDC) issued by this Commission totaled
P8,405,385.13, detailed as follows:

Particulars Notice of Notice of Notice of Total

Suspension Disallowance Charge
Beginning Balance,
January 1, 2022 P 0.00 P8,667,965.13 P 0.00 P8,667,965.13
Add: Issuances 257,554.90 0.00 0.00 257,554.90
Less: Settlements 246,334.90 273,800.00 0.00 520,134.90
Ending Balance,
December 31, 2022 P 11,220.00 P8,394,165.13 P 0.00 P8,405,385.13

Status of Implementation of Prior Years’ Audit Recommendations

Of the 164 audit recommendations embodied in the Calendar Year (CY) 2021 and prior
years’ Annual Audit Reports, 61 were fully implemented, 33 were partially implemented and
the remaining 70 were not implemented by the Municipality of Rosario.

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