EXECUTIVE SUMMARY

A. INTRODUCTION

The Municipality of Sta. Barbara was created by virtue of Governor General

Decree/Order dated October 30, 1741. When a substantial number of its residents
were converted to Christianity, the Dominican missionaries built a church and named
the place Sta. Barbara De Tolong in 1741. In the course of time, its residents dropped
its native name Tolong and Sta. Barbara got its name after its Patron Saint.

At present, it is classified as first-class Municipality located west of Urdaneta

City, consisting of 29 barangays with a total land area of approximately 6.548 square
kilometers and a total population of 87,792. The Municipality is headed by the
Municipal Mayor, Honorable Joel F. Delos Santos, supported by 12 elected officials,
195 permanent employees, 2 co-terminous, 10 contractuals and 458 job orders.

B. OPERATIONAL HIGHLIGHTS

The Municipal Government of Sta. Barbara implemented major infrastructure

projects and programs funded out of the appropriation of the agency and from outside
sources which have been completed or accomplished at year-end that boosted its
social, agricultural and economic growth and delivery of basic services. Among the
major projects of the agency that were accomplished and completed during the year
are the following:

Name of Project/Program/Activity Total Cost (₱) Remarks

1. Rehabilitation/Improvement of Barangay 8,978,075.07 Completed
Road, Barangay Cablong, Sta. Barbara,
Pangasinan
2. Construction of Farm to Market Road 7,398,066.15 Completed
Botao-Minien West Roadline (Phase I),
Barangays Botao-Tebag East-Minien West,
Sta. Barbara, Pangasinan
3. Construction of Municipal Isolation 6,996,409.79 Completed
Facility Building (Phase I) Barangay
Poblacion Sur, Sta. Barbara, Pangasinan
4. Construction of One Storey Commercial 6,523,848.63 Completed
Stall, Poblacion Norte, Sta. Barbara,
Pangasinan
5. Concreting of barangay roadline (Sitio 5,246,929.24 Completed
Pegley) Barangays Malanay and Nilombot,
Sta. Barbara, Pangasinan

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C. FINANCIAL HIGHLIGHTS

The financial position, financial performance, and sources and utilization of

appropriations and obligations of the agency for calendar year (CY) 2021, with
corresponding figures for CY 2020 are as follows:

Increase
2021 2020 % of
Account (Decrease)
(₱) (₱) Change
(₱)
Assets 1,047,992,503.74 811,361,662.45 236,630,841.29 29.16
Liabilities 284,753,131.13 124,355,422.39 160,397,708.74 128.98
Equity 763,239,372.61 687,006,240.06 76,233,132.55 11.10
Revenue 298,869,378.41 298,756,022.55 113,355.86 0.04
Expenses 227,190,653.81 233,551,598.57 (6,360,944.76) (2.72)
Surplus 71,678,724.60 65,204,423.98 6,474,300.62 9.93
Appropriations 443,598,897.10 448,174,725.47 (4,575,828.37) (1.02)
Allotments 443,598,897.10 448,174,725.47 (4,575,828.37) (1.02)
Obligations 350,639,431.83 288,024,540.40 62,614,891.43 21.74
Balances 92,959,465.27 160,150,185.07 (67,190,719.80) (41.95)

D. SCOPE OF AUDIT

The audit covered the operation of the Municipality of Sta. Barbara for CY
2021. It was conducted to ascertain the fairness of presentation of the financial
statements, check compliance with existing rules and regulations and determine
whether management in the implementation of its programs, projects and activities
has 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, inspection of programs and
projects, review of operating procedures, interview of officials and employees and
such other procedures considered necessary under the circumstances.

E. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements due to inclusion of settled salaries and bonuses of officials and
employees of the Municipality in the Accounts Payable (AP) balance and non-
deduction thereof from the balance of Cash in Bank account in the amount of
₱11,165,222.67 resulting in the overstatement of the balances of both accounts by the
same amount.

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F. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND
RECOMMENDATIONS

Part II of the report contains audit observations and recommendations which

were discussed with the Management during the exit conference conducted on April
26, 2022. Management comments were incorporated in the report, where
appropriate. The most significant of which are as follows:

1. Real Property Tax (RPT) Receivable and Special Education Tax (SET) Receivable
accounts in an aggregate amount of ₱13,331,703.25 did not coincide with the
Certified List of Delinquent Real Properties of the Municipality as of December 31,
2021 totaling ₱1,641,857.02, thus, the accuracy of the accounts and the
corresponding deferred income accounts could not be relied upon.

We recommended that Management:

a. Require the Municipal Assessor to update the Report on Real Property

Assessment and copy thereof be furnished to the Municipal Treasurer to update
the RPTAR;

b. Instruct the Municipal Treasurer to furnish the Municipal Accountant a copy of

the updated RPTAR to be used for reconciliation of RPT and SET receivables
presented in the financial statements;

c. Direct the Municipal Accountant and Municipal Treasurer to reconcile the

difference noted, and the result of which be the basis of the Municipal
Accountant to prepare adjusting journal entries to correct the balances of RPT
and SET Receivables and its corresponding deferred income accounts; and

d. Require the Municipal Treasurer to revise and update his report on Certified
List of Tax Delinquencies based on the result of reconciliation with the
Accounting Office to reflect the actual amount for transparency.

2. Disposed properties of the Municipalities through public auction were not

derecognized from the books of accounts which is not in accordance with Section
82 of IPSAS 17, hence, overstated the balances of PPE and equity accounts
presented in the financial statements as at December 31, 2021.

We recommended that Management direct the Municipal Accountant to determine

the amount to be derecognized and immediately drop from the books of accounts
to present the accurate balances of PPE and equity accounts in the financial
statements.

3. Construction in Progress (CIP) account was overstated by ₱5,867,411.68 due to

non-transfer of completed projects to the appropriate Property, Plant and
Equipment (PPE) accounts and error in recording of progress payments also

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 resulted in the understatement of the affected PPE accounts amounting to
₱6,584,121.19 and Accounts Payable (AP) account by ₱716,709.51. Likewise,
non-recognition of completed project amounting to ₱2,075,514.33 resulted in the
understatement of PPE and AP accounts by the same amount.

We recommended that Management:

a. Instruct the Municipal Accountant to prepare adjusting and correcting entries

on the aforementioned transactions to reflect the correct balances of the affected
accounts as at December 31, 2021;

b. Direct the Municipal Engineer to furnish the Municipal Accountant of the

Quarterly Reports on Government PPAs to inform the Municipal Accountant
of the existence and status of work accomplished of all on-going infrastructure
projects;

c. Instruct the Municipal Accountant to thoroughly record the financial

transactions in the accounting records to present correct balances of accounts to
be presented in the financial statements; and

d. Require the Municipal Accountant to ensure that all on-going infrastructure

projects are recognized as CIP and that all completed infrastructure projects are
recognized in the appropriate PPE accounts.

G. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Of the 42 audit recommendations embodied in the 2020 Annual Audit Report

(AAR), 15 were implemented and 27 were not implemented. In view of their
significant effects in the financial statements and operations of the agency, the
unimplemented recommendations were reiterated in this report.

H. STATUS OF SETTLEMENT OF AUDIT SUSPENSIONS, DISALLOWANCES

AND CHARGES

As of December 31, 2021, the suspensions, disallowances and charges of the

Municipality have zero balances.

Issuances for
Balance, Balance,
CY 2021
Notices January 1, 2021 December 31, 2021
NS/ND/NC NSSDC
(₱) (₱)
(₱) (₱)
Suspensions - - - -
Disallowances - - - -
Charges - - - -
Total - - - -

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