Executive Summary

A. Introduction

The Local Government Unit (LGU) of Binalonan is a first class municipality

comprising of twenty-four (24) barangays. It belongs to the 5th District of Pangasinan and
is geographically located in the eastern part of the province of Pangasinan. The
municipality is bordered on the north by the municipalities of Pozorrubio and Sison, on
the south by Urdaneta, on the east by San Manuel and Asingan and on the west by Laoac.

According to historians, the town's name is an evolution of the Ilocano term

“balon”, which means "packed lunch", or in Tagalog, baon. In a traditional story, which
now plays an important role in the town's history, the area was originally owned by a
Spaniard named Don Salvador. Time came when Don Salvador offered his pastureland to
several immigrants from Ilocos. When they asked Don Salvador how they were going to
find the said land, the owner answered: "It is the place where people bring their balon to
eat". Hence the term Binnalonan, which in Ilocano means “a place where people bring
and eat their baon”, was born. At present, the town is called Binalonan while its people
are known as Binalonians.
The municipality's total land area, estimated at 8,400 hectares (84 km2), is
classified as alienable and disposable land.

Its vision is that by 2020, Binalonan is a university town that is anchored on a

virtuous citizenry with a mission to provide the necessary business infrastructure and
create an investment-friendly environment to harness the town’s potential for economic
growth and development that ultimately redounds to the benefit and protection of the
interest of its people.

Organizational Set – up

The Municipality of Binalonan, Pangasinan is spearheaded by Mayor Ramon N.

Guico, Jr. and the Sangguniang Bayan presided by Municipal Vice Mayor Melicio F.
Patague, II. The total work force as of year-end was four hundred thirty-eight (438)
personnel, broken down as follows:

Elective 12
Regular 94
Contractual 39
Job-Order 293
Total 438
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B. Financial Profile

The financial conditions and results of operations of the municipality for the
calendar year 2019 compared with that of the last year’s are presented as follows:

Increased Percentage
CY 2019 CY 2018
(Decreased) (%)
Assets 729,237,087.33 610,179,275.12 119,057,812.21 19.51%
Liabilities 178,983,962.99 127,915,505.69 51,068,457.30 39.92%
Government Equity 535,320,279.91 482,263,769.43 53,056,510.48 11%
Income 236,592,582.77 207,618,449.73 28,974,133.04 13.96%
Expenses 200,848,612.18 161,656,359.28 39,192,252.90 24.24%

C. Operational Highlights

The major and significant accomplishments of the Municipality of Binalonan are

as follows:

Program/Projects/Activities Cost Status

Construction of New North Central Elementary School
Completed
Building 27,995,900.67
Development of Binalonan Heritage Museum and
On going
Amphi-Theater (Construction of Visitor's Center) 20,928,799.03
Development of Binalonan Heritage Museum and
On going
Amphi-Theater (Construction of Gabaldon I) 18,266,687.77
Development of Binalonan Heritage Museum and
Completed
Amphi-Theater (Construction of Amphi-Theater) 11,262,468.21
Development of University of Eastern Pangasinan
Completed
Grounds 10,794,528.85
Construction of Binalonan South Central School Sports
8,808,039.98 Completed
Center (Phase I)
Construction of One (1) Storey Building (5 Classrooms
8,541,095.06 Completed
with Common Toilet)
Rehabilitation/Upgrading of of Local Access Road at
7,122,382.05 On-going
Sitio Palapad, Barangay San Felipe Central
Construction of Road Shoulder, Drainage, Sidewalk and
5,997,775.35 Completed
Box Culvert
Construction of Drainage Canal at Paterno St., Brgy.
5,986,447.09 On-going
Poblacion
Construction of Concrete Drainage Canal at Mendoza
5,977,311.10 Completed
St., Brgy. Poblacion
Rehabilitation/Upgrading of Local Access Road at
4,459,813.88 On going
Paterno St., Brgy. Poblacion
Concreting of Road Shoulder at Tavera St., Brgy. Sto.
3,247,420.07 Completed
Niño
Construction of Drainage at W.Taft St., Brgy. Poblacion 2,498,352.09 Completed
LGU Awards

The Municipality of Binalonan received the following awards:

1. For two (2) consecutive years, Department of Interior and Local Government (DILG)
conferred to LGU Binalonan the illustrious Seal of Good Local Governance (SGLG).
The LGU is one of the 207 municipalities who passed the test of local governance in
2017 while one of the 359 municipalities in 2018.

2. 2017 Seal of Child-Friendly Local Governance (SCFLG) awarded by the Council for
the Welfare of Children (CWC).

D. Scope of Audit

The audit covered the operations of the Municipality of Binalonan, Pangasinan for
the calendar year 2019. The types of audit employed consist of financial and compliance
audit to ascertain the fairness of presentation of the financial statements of the
Municipality in adherence to the International Public Sector Accounting Standards and to
check agency’s compliance with existing laws, rules and regulations. Likewise, a Value
For Money Audit was conducted on selected areas to ascertain whether management had
attained its goals and objectives in an economical, efficient and effective manner.

The audit included analysis of accounts, review of transactions, test of compliance

with existing laws, rules and regulations, review of operating procedures, inspection of
programs and projects, interview of officials and employees and such other procedures
considered necessary under the circumstances.

The audit focus and audit thrust areas for the local government sector provided in
the Unnumbered Memorandum dated July 3, 2019 of Assistant Commissioner Joseph B.
Anacay and specific audit instructions contained in unnumbered Memorandum dated July
18, 2019 of Regional Director Michael R. Bacani were observed and looked into in
addition to the thrust areas identified in the audit team’s risk assessment.

E. Auditor’s Opinion on the Financial Statements

We rendered a qualified opinion on the fairness of the presentation of the

Financial Statements of the Municipality of Binalonan, Pangasinan for CY 2019
because the reliability, existence and condition of the Property, Plant and Equipment
(PPE) with a net amount of P490,685,349.11 could not be ascertained due to the
inability of the municipality to conduct complete physical count of properties. Further,
the accuracy of the carrying amount of the Road Network account totaling
P122,399,230.01 could not be ascertained and its existence could not be established due
to failure of the Municipality to (a) conduct physical count and submit the Report on the
Physical Count of the Road Network System, (b) maintain a Local Road Inventory and
Road Map, and (c) keep a complete Local Road Network Property Card. Furthermore, the
inadequacy of the municipality’s records relative to the account did not enable us to
undertake alternative procedures to validate the correctness of the year-end account
balance.

F. Significant Findings and Recommendations

1. The validity, existence and accuracy of the account Property, Plant and
Equipment (PPE) with a net book value totaling to P490,685,349.11 cannot be
ascertained due to the non-conduct of physical inventory. Thus, no Report of the
Physical Count of Inventories (RPCI) could be submitted as mandated under
Section 124 of the Manual of the New Government Accounting System, Volume
I.

We have recommended that the inventory committee should immediately conduct

and submit duly reconciled required report on physical count of all the property,
plant and equipment of the municipality as prescribed under Section 124 of the
NGAS, Volume I of the LGU to ascertain the accuracy and validity of the
presented PPE amount in the financial statement.

2. The recorded amount of Road Networks account totaling P122,399,230.01 could

not be ascertained and its existence could not be established due to management’s
failure to comply with the requirements set under COA Circular No. 2015-008
dated November 23, 2015 on fair presentation of Infrastructure Assets. Thus,
affecting the fair presentation of road network account in the Financial
Statements.

In view of the above observations, we have recommended the following: (a)

Require the Municipal Accountant to identify the existence of the Registry of
Public Infrastructure which includes all local road networks implemented by the
Municipality prior to the implementation of IPSAS; (b) Create an Inventory
Committee who shall be responsible in the conduct of physical inventory of local
road networks funded by the Municipality; (c) Require Municipal Engineer to
prepare a list of road inventory and its vicinity map for easy identification during
and after the physical inventory and; (d)Ensure that road components (road lot,
pavements, drainage and slope, etc.) are indicated in the road network ledger and
property cards maintained by the Municipal Accountant and Municipal Engineer.

3. The total amount of P26,125,580.00 which was earmarked as the 20%

Development Fund of the municipality was not fully utilized. Hence, depriving
the townspeople of the maximum benefits that they could have derived had the
priority development projects as stated in the municipality’s Annual Investment
Program been implemented.

We have recommended that the municipal officials concerned should endeavor to

regularly monitor the full the implementation of the programs/projects of the
Municipality as listed in the Annual Investment Program to give the townspeople
 the maximum benefits they could derived and to strictly adhere to the provisions
of DILG and DBM Joint Circular No. 2011-1.

4. The propriety and accuracy of the Other Maintenance and Operating Expenses
(OMOE) account with an accumulated amount of P45,318,040.70 reported in the
Financial Statements cannot be ascertained due to incorrect and improper use of
the account.

We have reiterated our previous recommendation that the Municipal Budget

Officer and the Municipal Accountant observe correct and proper use of account
relative to the expenses incurred especially in the recording of expenses to reflect
the accurate amount of OMOE as reported in the Financial Statement.

The foregoing and other findings were discussed in detail in Part II of this report.

G. Status of Implementation of Prior Year’s Recommendations

Out of the twenty (20) audit recommendations contained in the CY 2018 Annual
Audit Report, seven (7) were fully implemented, ten (10) were partially implemented and
three (3) were not implemented.