EXECUTIVE SUMMARY

Introduction

The City of Tayabas, Province of Quezon, consists of 66 barangays with an area of about
23,095 hectares. It was founded in the year 1578 by the Franciscan Missionaries. For 131
years (1779-1910), it was the “Cabecera” of Tayabas Province (now Quezon). Under
Republic Act (RA) No. 9398 dated July 24, 2006, Tayabas was converted into a city and
was subsequently declared as a component city after the plebiscite held on July 14, 2007.

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

The City maintains General, Special Education and Trust Funds. It operates economic
enterprises such as the public market, slaughterhouse, cemetery, Silungang Bayan,
Ecological Park, Tayabas Integrated Farm and Research Center (TIFARC) and the
commercial lot adjacent to the public market.

The Organizational Structure of the City of Tayabas is as follows:

a. Key Officials

City Mayor Honorable Ernida A. Reynoso

City Vice-Mayor Honorable Manuel Victorio D.T. Maraig

Members of the Sangguniang Panlungsod 1. Hon. Dino M. Romero

2. Hon. Julius Jay F. Luces
3. Hon. Sergio C. Caagbay, Jr.
4. Hon. Janne Phaula A. Nadres
5. Hon. Priscilla O. Glorioso
6. Hon. Marfeo Daniel Jacela
7. Hon. Farley L. Abrigo
8. Hon. Luzviminda B. Cuadra
9. Hon. Mercedita C. Reyes
10. Hon. Filemon P. Villanueva, Jr.

City Treasurer Renato P.Calupig

City Accountant Dolores Carina N.Jalbuena

b. No. of Personnel Complement

Permanent 462
Temporary 2
Elective Officials 14
Coterminous 15
Total Personnel Complement 493

i
Financial Highlights

For Calendar Year (CY) 2021, the City collected a total income of P824,207,130.08 from
local taxes, service and business income, Internal Revenue Allotment and other sources of
income. Total appropriations for the year amounted to P2,577,369,606.00, of which,
P1,633,037,061.00 was expended. Unexpended balance in Capital Outlay was retained as
continuing appropriation for the ensuing year.

The City’s comparative financial position and results of operations for CYs 2021 and 2020
are summarized below and shown in detail in the attached audited financial statements:

2021 2020 Increase/(Decrease)

Total Assets P3,245,975,919.67 P2,757,249,703.54 P488,726,216.13
Total Liabilities 716,734,281.06 414,387,186.14 302,347,094.92
Net Assets/Equity 2,529,241,638.61 2,342,862,517.40 186,379,121.21
Total Income 824,207,130.08 773,897,868.20 50,309,261.88
Personnel Services 198,331,719.43 174,939,335.28 23,392,384.15
Maintenance and
Other Operating
Expenses 313,162,942.46 309,469,205.07 3,693,737.39
Non-Cash Expenses 54,778,791.80 37,581,218.69 17,197,573.11
Transfer, Assistance
and Subsidy To (70,263,246.90) 16,402,128.98 (86,665,375.88)
Net Income 187,670,429.49 268,310,238.14 (80,639,808.65)

Scope and Objectives of the Audit

The audit covered the accounts and operations of the City of Tayabas for the period January
1 to December 31, 2021. 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.

Auditor’s Opinion on the Financial Statements

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

1. The existence, accuracy and valuation of the Property, Plant and Equipment (PPE)
accounts with gross balance totaling P735 million as of December 31, 2021 could not
be ascertained due to (a) non-reconciliation with the Report on Physical Count of PPE
(RPCPPE); (b) discrepancy between the balance reflected in the financial statements
and the Accounting Schedule and (c) inclusion of PPEs with no description and quantity
recorded in lump sum amounts in the RPCPPE and the Accounting records, contrary to
Section 114 of the Manual on the New Government Accounting System (MNGAS) for
Local Government Units (LGUs), Volume I.

ii
2. The existence and valuation of the inventory accounts and the related expenses
accounts totaling P48.204 million and P18.834 million, respectively, could not be
ascertained due to (a) non-conduct of physical count of inventory of supplies and
materials, (b) non-submission of the Report of the Physical Count of Inventories (RPCI)
and Summary of Supplies and Materials Issued (SSMI) by the City General Services
Office (CGSO) and (c) non-maintenance of Supplies Ledger Cards (SLCs) for each
commodity/stock by the City Accountant, contrary to Sections 114, 121 and 124 of the
Manual on the New Government Accounting System (MNGAS) for Local Government
Units (LGUs), Volume I.

For the exceptions cited above, the Auditor recommended that:

1. The Management require the CGSO and the City Accountant to provide the details of
the PPE recorded in lump sum amounts totaling P23.595 million and P19.238 million,
respectively; reconcile their records and submit to the Audit Team the proof of
reconciliation and any adjustments, if warranted.

Henceforth, ensure that ledger cards/schedules maintained by the City Accountant and
property cards by the CGSO contain the details of the PPE in compliance with Section
114 of MNGAs for LGUs, Volume I.

2. The Management require the:

a. CGSO to:

• complete the conduct of physical count of all supplies and materials inventory
of the City every semester; prepare and render a complete Report on Physical
Count of Inventory (RPCI) and submit to the Audit Team not later than July 31
and January 31 of each year for first and second semesters, respectively;

• prepare and submit monthly SSMI based on the RIS to the City Accounting
Office in support to the JEV recognizing the issued materials as expenses.
Also, the City Accountant to submit to the Audit Team the SSMI for issued
materials for verification;

b. City Accountant to:

• submit to the Audit Team the SSMI for issued materials for verification;

• maintain Supplies Ledger Cards (SLCs) for each commodity/stock to facilitate

the reconciliation and for verification of the year-end balances; and

c. CGSO and the City Accountant to coordinate for the periodic reconciliation of their
records and make the necessary adjustments in their respective records, if
warranted.

iii
Other Significant Audit Observations and Recommendations

The following is the summary of the other significant audit observations and
recommendations in the audit of the City of Tayabas for the year 2021:

1. Trust Fund received by the City from the National Government Agencies intended for
specific purpose totaling P11.822 million remained unutilized for more than a year and
unexpended balance of P0.786 million were not fully liquidated to the source agency
despite fulfillment of the purpose for which these funds were received, contrary to
Section 4 of the Commission on Audit (COA) Circular No. 94-013, thus depriving the
intended beneficiaries of immediate use and enjoyment of the project and the source
agencies of resources that could be used in other projects or by other agencies needing
assistance, respectively.

We recommended that the Managementinstruct the:

a. City Accountant to seek or locate the Memorandum of Agreement entered into with
the Source Agencies or any documents stating the purpose of the fund transfer and
the provision of the requirements in implementing and reporting of the unutilized
PPAs totaling P12.608 million;

b. City Planning and Development Office to facilitate the implementation of the

specific projects with funds received from NGAs totaling P11.822 million since the
resources are readily available, and in order not to deprive the City of the
projects/programs/activities where the funds are intended for;

c. City Treasurer to remit the unexpended fund balance of P0.786 million to the
source agencies so that it could be used in other projects or by other agencies
needing assistance; and

d. City Accountant to immediately liquidate the outstanding fund transfers from

national government agencies upon completion of the project or fulfillment of the
purpose for which the fund is intended for, in accordance with Section 4 of COA
Circular No. 94-013.

2. Notices to Proceed (NTPs) for the 12 infrastructure projects implemented by the City
during Calendar Year (CY) 2021 with total contract amount of P86.277 million were
received late by the contractors/winning bidders ranging from 14 to 84 days of delay
after the perfection of contracts contrary to Section 37.4.1 of the 2016 Revised
Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184, thereby
causing delay in the start of the construction of the infrastructure projects of the City.
Also, the NTP for contracts executed during CY 2021 were not attached to the submitted
copies of contract.

We reiterated our recommendation that the Management require the Bids and Awards
Committee (BAC) to ensure that the prospective contractor/winning bidder receive the
Notice to Proceed within seven days upon approval/issuance of the contract in
accordance with Section 37.4.1 of the 2016 Revised IRR of RA No. 9184 to avoid delays
in the implementation of the projects of the City.

iv
 Also, submit to the Audit Team copies of NTPs for all the contracts executed during CY
2021 for further review and evaluation.

3. Fifty-two (52) out of 64 programmed projects with total appropriations of P187.197

million under the 20 percent Development Fund (DF) for Calendar Year (CY) 2021 were
not fully implemented and completed during the year, as well as the 32 projects with total
appropriation of P263.635 million under the same fund planned in the previous years’
were also not fully completed, hence the optimum utilization of the 20 percent DF as
required under Item 5 of the Department of the Interior and Local Government (DILG)
and Department of Budget and Management (DBM) Joint Memorandum Circular (JMC)
No. 2017-1 was not achieved, thus depriving the intended beneficiaries/constituents and
the public of the immediate and timely use of the programmed projects.

We reiterated our recommendations that the Management instruct the:

a. Bids and Awards Committee (BAC) and the City Engineer to properly plan and
make a schedule/timeline of all procurement activities pertaining to development
projects for their timely implementation and completion;

b. City Planning and Development Officer (CPDO) to strategize and coordinate with
all concerned Departments to improve the planning and programming of projects.
Also, to fast track and prioritize the full implementation of the development projects
as embodied in the 20 percent Development Fund Plan within the year these were
programmed in pursuance of the law and ensure that allocated funds are timely
and optimally utilized for projects identified in accordance with existing guidelines,
and regularly monitor and evaluate the projects funded under the 20 percent DF in
order to minimize the number of projects not implemented;

c. City Engineer to develop other procedures and method in order to facilitate the
preparation of plans and technical design of all projects to be implemented.

d. City Accountant to impose Liquidated Damages against the contractor for the
projects with delayed completion.

The above observations and recommendations contained in the Report were communicated
to the City Mayor and other key officials under various Audit Observation Memoranda and
discussed in the exit conference conducted on May 11, 2022. Management’s views and
comments were considered in the Report, where appropriate.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 47 audit recommendations embodied in the CY 2020 Annual Audit Report (AAR), 23
were fully implemented, 14were partially implemented and 10 were not implemented by the
City.