executive summary introduction · 2020. 9. 1. · executive summary introduction the municipality...

EXECUTIVE SUMMARY

Introduction

The Municipality of Baras is a fourth-class Municipality in the Province of Rizal. Under the leadership of Leopoldo Digma, the town became independent Municipality through Executive Order No. 57 dated November 24, 1920.

The town is politically subdivided into ten Barangays namely: Evangelista, Rizal, San Jose, San Salvador, Santiago, Concepcion, San Juan, San Miguel, Mabini and Pinugay.

The Organizational Structure of the Municipality is as follows:

a. Key Officials

Municipal Mayor Hon. Kathrine B. RoblesVice Mayor Hon. Wilfredo C. Robles

Members of the Sanggunian Hon. Hector M. Robles Hon. John Wilmer R. Elago Hon, Vergil F. Robles Hon. Armingol DL Pilapil, Jr.Hon. Roberto M. Cabandong Hon. Emmanuel R. Olano Hon. Mario P. Mendoza Hon. Renato M. LiagasHon. Ray An C. Tesoro (Liga ng Brgy. President) Hon. Pauline C. Arimado (SK Federation President)

OIC-Municipal Accountant Municipal Treasurer

Mr. Almario N. Matawaran Mr. Jaime M. San Marcos

b. No. of Personnel Complement

Elective OfficialsPermanentCo-TerminusCasualJob OrderTotal

12852

6138

198

Financial, compliance and value for money audits were conducted on the accounts and operations of the Municipality of Baras, Rizal for Calendar Year 2019. The audits were conducted to ascertain the fairness of the presentation of the Financial Statements, determine compliance of the Municipality with laws, rules and regulations, as well as the economical, efficient and effective utilization of resources.

Financial Highlights

For the year 2019, the Municipality generated a total revenue of P199,236,868.39, including subsidies from other funds, an increase of P17,835,395.43 or 9,83 percent as compared with last year’s revenue of P181,401,472.96. The significant increase in the revenue of the LGU is attributable to the increase in Internal Revenue Allotment of the LGU and Service and Business Income. The total expenses reached P182,455,607.03, including subsidies to other funds and donations, an increase of P33,456,777.08 or 22.46 percent from last year’s level of P148,998,829.95. The surplus for the year amounted to £16,781,261.36 or a decrease of P15,621,381.65 or 48.21 percent from that of last year’s amount of P32,402,643.01 due to the significant increase of expenses.

Total assets, liabilities and equity as of December 31, 2019 amounted to P407,157,082.10, P186,521,136.13 and P220,635,945.97, respectively. The total assets of the Municipality increased by P51,157,277,35 while total liabilities increased by P15,898,793.22. Consequently, total equity increased by P35,258,484.13.

Total current appropriations under the General Fund and Special Education Fund amounted to R218,171,497.05 and P12,956,700 of which -P204,690,747.76 and P10,274,009.85, respectively, were the reported expenditures during the year.

The Municipality’s total assets, liabilities, equity, income and expenses as of December 31, 2019 are as follows:

Accounts 2019 2018 Increase/ DecreaseAssets P407,157,082.10 P355,999,804.75 P-51,157,277.35Liabilities 186,521,136.13 170,622,342.91 15,898,793.22Equity 220,635,945.97 185,377,461.84 35,258,484.13Income 199,236,868.39 181,401,472.96 17,835,395.43Expenses 182,455,607.03 148,998,829.95 33,456,777.08

Operational Highlights

During CY 2019, the Municipality received the following awards and recognitions from the Department of the Interior and Local Government:

• CY 2019 Good Financial Housekeeping• Passed 4 key areas of Seal of Good Local Governance

a. Environment Managementb. Business Friendliness and Competitivenessc. Peace and Orderd. Tourism, Culture and the Arts

• Provincial Environmental Compliance Assessment Silver Awardee• Provincial Environmental Compliance Assessment Clean-up Awardee

The Auditor rendered a qualified opinion on the fairness of the presentation of the FinancialStatements of the Municipality of Baras, Rizal due to the following:

1. As in previous years, the recorded balance of the Cash in Bank-Local Currency, Current Account (LCCA) account amounting to P110,249,926.24 as at year-end is doubtful due to existence of various book reconciling items aggregating P6,978,248,44 in different funds of the Municipality and the submitted Bank Reconciliation Statements (BRS) were again not supported with bank statements, debit/credit memoranda and paid checks, contrary to Section 111 of Presidential Decree (PD) No. 1445 and COA Circular No. 96-011 dated October 2, 1996.

2. The correctness, existence and validity of the recorded balances of the Property, Plant and Equipment (PPE) accounts with carrying amount of P233,559,638.85 or 57.36 percent of the total assets of the Municipality at year-end could not be ascertained due to: (a) incomplete and unreliable inventory report, contrary to Section 124 of the Manual on New Government Accounting System (MNGAS) for LGUs, Volume I; (b) incomplete PPE Ledger Cards, Property Cards and Acknowledgement Receipt for Equipment (ARE) being maintained by the Accounting Office and General Services Offices, respectively; (c) inclusion of unaccounted beginning balance of P9,230,949.88 under Construction In Progress-lnfrastructure Asset account in the Trust Fund books; (d) non-preparation and maintenance of the required report for Local Road Network; and (e) non-disclosure of total road network system in the Notes to Financial Statements, contrary to Item VI of COA Circular No. 2015-008 dated November 25, 2015.

3. The accuracy of the year-end balances of Real Property Tax (RPT) Receivables and Special Education Tax (SET) Receivables accounts amounting to P25,575,103.92 and P27,819,768.25, respectively, could not be determined due to discrepancies of P(1,914,562.30) and P(2,230,095.99), respectively, with its reciprocal accounts Deferred RPT and Deferred SET, contrary to Sections 111 and 112 of Presidential Decree (PD) No. 1445.

4. Despite prior years’ recommendation, the reciprocal accounts Due from Other Funds and Due to Other Funds remained unreconciled with a difference totaling P12,432,211.49 at year-end, contrary to Sections 111 and 112 of Presidential Decree (PD) No. 1445, thus casting doubt on the accuracy of the said accounts and affecting the fair presentation of the financial statements.

For the exceptions cited above we reiterated/recommended that the Municipal Mayor directthe:

1. OIC Municipal Accountant to verify and evaluate the accuracy of the reconciling items reflected in the BRS and exert effort to trace the supporting documents of the unidentified reconciling items in order to make necessary adjusting entries to ensure the correct balance of the Cash in Bank-LCCA account appearing in the Municipality’s financial statements;

OIC-Municipal Accountant and the Municipal Treasurer to closely coordinate with each other regarding the accumulation of stale checks which should have been adjusted either

Independent Auditor’s Report on the FS

as liability account or a prior year’s adjustment provided that an evidence should be presented to support the same; and

OIC-Municipal Accountant to submit the monthly BRS with complete supporting documents.

2. Inventory Committee to conduct a complete physical inventory of all the PPE including the Road Network System of the Municipality and prepare and submit the required report thereon, in proper form, summarized according to type of PPE and properly accomplished in all particulars, in accordance with Section 124 of MNGAS for LGUs, Volume I and Item VI of COA Circular No. 2015-008. Any discrepancies between the inventory report and the accounting and property records should be investigated and make the necessary adjustments where the error was committed;

OIC-GSO and the OIC-Municipal Accountant to maintain a complete and updated PCs and PPELCs, respectively, and issue ARE to pinpoint accountability based on the reconciled inventory report of PPE;

OIC-Municipal Accountant to conduct a detailed review of the CIP-lnfrastructure Asset account in the Trust Fund books so that the dormant balance of P9,230,949.88 can be adjusted accordingly to its correct account.

OIC-GSO to maintain Local Road Inventory and Road Map and keep a complete LRNPC for all roads and its components; and

OIC-Municipal Accountant to disclose in the Notes to Financial Statements the total road network system of the Municipality at year-end.

3. OIC-Municipal Accountant to make a detailed review of the accounts and investigate/determine the causes of the unreconciled amounts. Thereafter prepare the required adjusting journal entries in the books of accounts to present the correct balances of the said accounts in the Municipality’s financial statements.

4. OIC-Municipal Accountant to continue exerting extra efforts in retrieving the JEV or other related documents and conduct thorough analysis of the accounts to determine the cause/s of the difference in the reciprocal accounts; and thereafter, make the necessary adjusting entry to correct the records.

The following are the other significant observations and recommendations:

1. The year-end balance of Accounts Payable account totaling P16,226.627.40 was overstated by P13,684,714.66 payables without supporting documents/records to substantiate the balance and remained outstanding for two years or more, contrary to Section 157 of Government Accounting and Auditing Manual (GAAM), Volume I and Section 98 of Presidential Decree (P.D.) No. 1445, respectively.

We recommended that the Municipal Mayor direct the OIC-Municipal Accountant to request for an authority for the reversion of those payables without valid documentation that have been outstanding for two years or more, to the Sangguniang Bayan. Thereafter, make the necessary journal entry to revert the said long outstanding

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obligations to Government Equity so that the Municipality can use the available funds for other priority projects that would uplift the living condition of its constituents.

2. Receipt of funds amounting to P1,000,000.00 in CY 2003 from the Presidential Social Fund for the Dindo is Life project under One Town One Product (OTOP) program as provided in the Executive Order (E.O.) No. 176 dated February 11, 2003 was erroneously recorded as Loans Payable - Domestic account in the Trust Fund instead of Due to National Government Agencies (NGAs), thereby resulted in the overstatement/understatement of the balances of such accounts by the same amount in the financial statements.

We recommended that the Municipal Mayor direct the:

a. OIC-Municipal Accountant prepare necessary reclassification entry to correct the error committed in the books in order to reflect the correct amount of the outstanding obligation of the Municipality;

b. OIC-Municipal Accountant to send Demand Letters to the concerned accountable officers to liquidate immediately their outstanding cash advances pertaining to the “Dindo is life” program. If proven futile, Management should hold accountable the official/s who signed their clearance for the payment of the same; and

c. Municipal Treasurer and the OIC-Municipal Accountant to coordinate with the source agency to secure related documents regarding the funds received for the implementation of the OTOP program of the Municipality.

3. The Municipality has complied with the requirement on deducting the correct premium contributions/loan deductions from employees’ compensation as well as the withholding of taxes on government money payments and employees’ monthly compensation. However, funds withheld due to Bureau of Internal Revenue (BIR), Government Service Insurance System (GSIS), Pagtutuiungan sa Kinabukasan: Ikaw, Bangko, Industria at Gobyerno (Pag-IBIG) and Philippine Health Insurance Corporation (PhilHealth) recorded under Inter-Agency Payables accounts were again not remitted in full to the concerned government agencies, which in effect, may result in the imposition of surcharges, interests and penalties in the case of taxes, may cause forfeiture of claims/benefits due to the respective members/employees of the Municipality and deprived the concerned agencies of the timely use of the funds due them. Also, abnormal balances of Inter-Agency Payables in the Special Education totaling ■P(24,649.33) remained unadjusted as of year-end due to continued failure of the Municipal Accounting Office to determine its details, thus rendering the correctness and validity of the balances of the said accounts doubtful.


a. OIC-Municipal Accountant and the Municipal Treasurer to reconcile the above subject accounts, and remit whatever balance due to the agencies concerned to avoid incurrence of penalties, surcharges and inconveniences to the employees concerned. Strictly remit in full the withheld taxes, premium contributions and loan amortizations to the respective government agencies in accordance with the cited regulations; and

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b. OIC-Municipal Accountant in coordination with the Human Resource Management Office (HRMO) to conduct a thorough analysis of the abnormal balances of the Inter- Agency Payables totaling P(24,649.33) under the SEF and make necessary adjusting entry thereof.

4. The recorded balance of Cash Local Treasury account under the Special Education Fund (SEF) books amounting to P948.308.71 as of year-end is doubtful due to the unreconciled difference in the account’s balances between Accounting and Treasury records amounting to P57,858.34, contrary to Section 181(c) of the Government Accounting and Auditing Manual (GAAM), Volume I.


a. OIC-Municipal Accountant to prepare the necessary reclassification entry to correct the error committed in the books in recording the stale check amounting to P57,657.99 in the SEF books; and

b. OIC-Municipal and the Municipal Treasurer to immediately identify the cause of the unaccounted difference of P200.35 between their respective records; and thereafter, make the necessary adjustments to reconcile their books.

5. Despite previous year’s recommendation, the subsidiary ledger balances of Due from and Due to Local Government Units (LGUs)-Province accounts in all funds totaling P2,250,231.53 and P9,798,330.22, respectively, are unreliable due to unreconciled differences of P(1,934,838,01) and P(5,646,902.37), respectively, with the reciprocal accounts in the books of the Provincial Government of Rizal, thereby affecting the fair presentation of those accounts in the Municipality’s financial statements.

We reiterated our recommendation that the Municipal Mayor direct the OIC-Municipal Accountant and the Municipal Treasurer to coordinate with the OlC-Provinciai Accountant and Provincial Treasurer to verify the discrepancies of P(1,934,838.01) and P(5,646,902.37) between the recorded balances of Due from and Due to LGUs accounts of the Municipality and their reciprocal accounts Due to and Due from LGUs reflected in the books of the Province; and subsequently prepare the required adjusting journal entries to present the correct balances of the said accounts in the Municipality’s financial statements.

6. The Municipality was not compliant with certain procedural requirements provided for under the 2016 Revised Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No. 9184 for various procurement of goods and infrastructure projects aggregating to P31,832,400.72, thus transparency and competitiveness of the procurement process were not assured.

We recommended that the Municipal Mayor:

a. require the Bids and Awards Committee to send written invitations to the representative of the COA and at least two other observers; ensure that such invitations are received at least five calendar days before the date of the procurement stage/activity to enhance the transparency of the process; and

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b. instruct the BAC Secretariat through the BAG Chairman to strictly comply with the posting requirement in the PhilGEPS website of Notice of Award and Notice to Proceed together with the approved contracts for the procurement of goods, infrastructure projects and services as required under Sections 37.1.6 and 37.4.2 of the 2016 Revised IRR of R.A, No. 9184 to improve transparency in the government.

7. Submission of accounts and financial reports to the Office of the Auditor for CY 2019 was not within the reglementary period prescribed by Section 7.1 of COA Circular No. 2009-006 dated September 15, 2009, Sections 70 and 72 of the Manual on the New Government Accounting System (MNGAS), Volumes I, and Section 6.05 of COA Circular No. 95-006 dated May 18, 1995, thus prevented the Audit Team from conducting the timely review of the financial transactions of the Municipality and verification of the accounts’ balances presented in the financial statements.

We strongly reiterated our recommendation that the Municipal Mayor instruct the OIC- Municipal Accountant to submit within the prescribed period all their accounts and financial reports to the Office of the Auditor pursuant to the abovementioned regulations, to facilitate timely review/post-audit of the financial transactions of the Municipality.

8. Despite prior year’s recommendation, the Bids and Awards Committee failed anew to submit the Procurement Monitoring Reports for the 1st and 2nd semesters of CY 2019 to the Government Procurement and Policy Board (GPPB) as required under Section 12.2 of the 2016 Revised Implementing Rules and Regulations (IRR) of Republic Act No, 9184, thus the promotion on public monitoring of procurement process and implementation of awarded contracts was not undertaken.

We reiterated our previous recommendation that the Municipal Mayor direct the BAC to submit the approved Procurement Monitoring Report to the GPPB in printed and electronic format within the prescribed period in accordance with the provision of the 2016 Revised IRR of RA No. 9184.

9. The Municipality was not compliant with the reporting requirement on the information and publicity of all ongoing projects, programs and activities and those are to be implemented during the year, contrary to Commission on Audit (COA) Circular No. 2013-004 dated January 30, 2013, thus timely verification and validation of the same could not be undertaken by the Audit Team.

We recommended that the Municipal Mayor direct the concerned officials to prepare and submit to the Audit Team the reports containing all the information required under the said COA Circular to promote transparency and accountability regarding the PPAs undertaken by the Municipality, and to facilitate the validation and verification of the same by the Audit Team.

10. The Municipality was not able to furnish the Auditor copies of perfected contracts and each and every supporting document for review within five working days from issuance thereof, contrary to Section 3.1.1 of COA Circular No. 2009-001, thus timely review of the transactions could not be undertaken and any defects/deficiencies noted could not be communicated immediately for appropriate corrective action.

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We recommended that the Municipal Mayor direct the concerned officials to strictly adhere with the above cited provision of COA Circular No. 2009-01 for timely and objective evaluation of the same by the Audit Team, so that the Municipality could be immediately notified of any defects/deficiencies noted thereon.

11. The utilization for “Environmental Protection Program” totaling P8,509,296.55 charged against 20% Development Fund (DF) did not partake the nature of investment or capital expenditures, contrary to Item 2.3 of the Department of the Interior and Local Government (DILG) and Department of Budget and Management (DBM) Joint Memorandum Circular (JMC) No. 2017-1 dated February 22, 2017, thereby defeating the primary purpose for which the fund was established.

We recommended that the Municipal Mayor direct the Municipal Budget Officer and concurrent OIC Municipal Accountant to strictly adhere to the guidelines in the appropriation and utilization of the 20% DF, pursuant to the DILG-DBM JMC No. 2017- 01 dated February 27, 2017 in order to ensure proper utilization of the said fund and to avoid disallowance in the future.

12. Project funded under Potable Water Supply Local Government Support Fund-Sagana at Ligtas na Tubig sa Lahat (LGSF-SALINTUBIG) amounting to P9,950,432.98 was not fully completed as of year-end, contrary to Items 6.5,6.1 and 6.6 of the Department of the Interior and Local Government (DILG) Memorandum Circular No. 2018-47 dated April 5, 2018, thereby indicating inadequate planning and lack of monitoring that redound to depriving the intended beneficiaries of the immediate access to potable water.

We recommended that the Municipal Mayor direct the Municipal Engineer to strictly monitor the immediate completion of the above-cited project for the benefit of the intended beneficiaries.

13. The Municipality underutilized its Local Councils for the Protection of Children (LCPC) Budget for CY 2019 with a low utilization rate of 38.19 percent or P613,400.00 out of the total appropriation of P1,606,000 due to inadequate monitoring on the implementation of identified programs, projects and activities (PPAs), contrary to Section 15 of Republic Act No. 9344 and DILG Memorandum Circular No. 2012-120 dated July 4, 2012, thus the purpose of LCPC as an institutional mechanism in the Municipal level that advocates child rights, plans and initiates/recommends interventions and monitors children’s programs and projects in the Municipality was not fully achieved.

We recommended that the Municipal Mayor direct the LCPC Focal Person to regularly monitor the implementation of the identified PPAs in order to optimally utilize the allocated LCPC Fund to identified PPAs as stated in the aforesaid DILG Memorandum Circular to ensure proper protection of the children’s rights welfare.

14. The Municipality was unable to establish its Gender and Development (GAD) Database to serve as basis for gender-responsive planning, programming and policy formulation as required under Section 37 (D) of the Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No. 9710 and Section 4.1.B of the Philippine Commission on Women-Department of Interior and Local Government-Department of Budget and Management-National Economic and Development Authority (PCW-DILG-DBM-NEDA)

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Joint Memorandum Circular (JMC) No. 2013-01, as amended by PCW-DILG-DBM- NEDA JMC No. 2016-01, thus gender gaps and/or differences within the Municipality could not be fully analyzed.

We recommended that the Municipal Mayor require the Municipal Planning Office along with the GAD Focal Point System to establish GAD Database with adequate and systematically gathered GAD information to include gender statistics and sex- disaggregated data which will provide the bases for gender analysis and effective gender-responsive planning, programming and policy formulation.

15. The Municipality was unable to comply with the accounting and reporting guidelines for the Local Disaster Risk Reduction Management Fund (LDRRMF), prescribed under Commission on Audit (COA) Circular No. 2012-002 dated September 12, 2012 due to:a) inability to prepare a comprehensive Local Disaster Risk Reduction and Management Fund Investment Plan (LDRRMFIP) for CY 2019; and b) copy of the monthly Report on Sources and Utilization of DRRMF were not submitted to the Office of the Civil Defense (OCD) and the Department of the Interior, Local Government-Local Government Operations Office (DILG-MLGOO) and the Commission on Audit within the prescribed period, thus rendering the evaluation of LDRRMF plan, accomplishments and fund utilization difficult.

We reiterated that the Municipal Mayor direct the:

a. MDRRMO to prepare a comprehensive LDRRMFIP which will be integrated in the AIP of the Municipality; and furnish the OCD and the DILG-MLGOO a copy of the same in accordance with COA Circular No. 2012-002; and

b. OIC-Municipal Accountant to submit the monthly Report on the Sources and Utilization of the LDRRMF through the LDRRMC and LDC to the Audit Team and furnish the OCD and DILG-MLGOO in accordance with the period prescribed by the above-cited regulations.

16. Ten-Year Municipal Solid Waste Management Plan (MSWMP) for the Calendar Years (CYs) 2015-2025 was not revised/updated by the Municipal Solid Waste Board (MSWB) despite their average daily residual waste in cubic meters for CY 2019 had increased significantly to at least 71.084 as compared with CY 2015 projected data of 2.689, contrary to Section 12(7) of Republic Act (R.A.) No. 9003, thus may result in rising issues concerning the Municipality’s environment and sanitation that could affect the general welfare of its constituents.

We recommended that the Municipal Mayor instruct the MSWB to create a Technical Working Group who will contribute their expertise and will assist the Board in the immediate revision/update of the MSWMP to effectively and efficiently address the above-cited solid waste management problems.

Management views and reactions were appropriately incorporated in this report.

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Summary of Suspensions, Disallowances and Charges

As of December 31, 2019, the Municipality has an outstanding disallowance amounting to P1,195,000,00 and zero suspensions and charges based on their Statement of Audit Suspensions, Disallowances and Charges,

Status o f Implementation of Prior Year’s Audit Recommendations

Of the 25 audit recommendations embodied in the CY 2018 Annual Audit Report, three were fully implemented, 13 were partially implemented and nine were not implemented by the Municipality.

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TABLE OF CONTENTS

PART SUBJECT PAGE

I Audited Financial Statements

• independent Auditor’s Report 1• Statement of Management’s Responsibility

for Financial Statements 3• Statement of Financial Position 4• Statements of Financial Performance 5• Statements of Changes in Net Assets/Equity 6• Statements of Cash Flows 7• Statement of Comparison of Budget and Actual Amounts 8• Notes to Financial Statements 10

II Observations and Recommendations

• Financial and Compliance Audit 28• 20% Development Fund 50• Compliance with Tax Laws 54• Unsettled Suspensions, Disallowances and Charges 55• Gender and Development 55• Local Disaster Risk Reduction Management Fund 56• Solid Waste Management 58• Official Development Assistance (ODA) Funded Projects 59

III Status of Implementation o f Prior Year’s Audit Recommendations 60

IV Annexes

Annex A - Statement of Financial Position (By Fund) 71

Annex B - Statements of Financial Performance (By Fund) 74

Annex C - Statements of Changes in Net Assets/Equity (By Fund) 77

Annex D - Statement of Cash Flows (By Fund) 78

Annex E - Schedule of Stale Checks 79

Annex F - Confirmation Reply from the Land Bank of the Philippines 81

Annex G Schedule of Sampled Procurement of Goods andInfrastructure Projects 82

Annex H - Monitoring of Submission of Accounts/Reports 83

Annex I - Schedule of Sampled Perfected Contracts for InfrastructureProjects 85

PART I - AUDITED FINANCIAL STATEMENTS

COMMISSION ON AUDITRegional Office No. IV-A

Commonwealth Avenue, Quezon City

INDEPENDENT AUDITOR’S REPORT

Hon. KATHRINE B. ROBLESMunicipal Mayor Municipality of Baras, Rizal

Qualified Opinion

We have audited the accompanying combined financial statements of the Municipal Government of Baras, which comprise the statement of financial position as of December 31, 2019 and the statements of financial performance, statement of changes in net assets/equity, statement of cash flows and statement of comparison of budget and actual amounts for the year then ended, and notes to financial statement, including a summary of significant accounting policies.

In our opinion, except for the effects of the matter described in the Bases of Qualified Opinion section of our report, the accompanying financial statements present fairly in all material respects, the financial position of the Municipal Government of Baras as at December 31, 2019, and its financial performance, its cash flows, and its statement of comparison of budget and actual amounts for the year then ended in accordance with the Philippine Public Sector Accounting Standards (PPSAS).

Bases for Qualified Opinion

The Municipal Government of Baras’ recorded balance of the Cash in Bank-Local Currency, Current Account (LCCA) account amounting to P110,249,926.24 as at year-end is doubtful due to existence of various book reconciling items aggregating P6,978,248.44 in different funds of the Municipality and the submitted Bank Reconciliation Statements (BRS) were again not supported with bank statements, debit/credit memoranda and paid checks. Also, the correctness, existence and validity of the recorded balances of the Property, Plant and Equipment (PPE) accounts with carrying amount of P233,559,638.85 or 57.36 percent of the total assets of the Municipality at year-end could not be ascertained due to: (a) incomplete and unreliable inventory report; (b) incomplete PPE Ledger Cards, Property Cards and Acknowledgement Receipt for Equipment (ARE) being maintained by the Accounting Office and General Services Offices, respectively; (c) inclusion of unaccounted beginning balance of P9,230,949.88 under Construction In Progress-lnfrastructure Asset account in the Trust Fund books; (d) non-preparation and maintenance of the required report for Local Road Network; and (e) non-disclosure of total road network system in the Notes to Financial Statements. Moreover, the accuracy of the year-end balances of Real Property Tax (RPT) Receivables and Special Education Tax (SET) Receivables accounts amounting to P25,575,103.92 and P27.819,768.25, respectively, could not be determined due to discrepancies of P(1,914,562,30) and P(2,230,095.99), respectively, with its reciprocal accounts Deferred RPT and Deferred SET. Finally, the reciprocal accounts Due from Other Funds and Due to Other Funds remained unreconciled with a difference totaling

P12,432,211.49 at year-end, thus casting doubt on the accuracy of the said accounts and affecting the fair presentation of the financial statements.

We conduct our audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs), Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the agency in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Key Audit Matters

Except for the matter described in the Bases for Qualified Opinion section, we have; determined that there are no other key audit matters to communicate in our report.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Public Sector Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Those charged with governance are responsible for overseeing the Municipal Government of Baras’ financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

COMMISSION ON AUDIT

NOEMI D. RAGANDAPAudit Team Leader

10 August 2020

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Republic of the Philippines Province of Rizal

MUNICIPALITY OF BARAS TIN-000-648-388

Statement of Management’s Responsibility For Financial Statements

The Management of the Municipal Government of Baras, Rizal is responsible for all information and representation contained in the Consolidated Statement of Financial Position as of December 31, 2019 and related Consolidated Statement of Financial Performance, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Net Assets/Equity and the Statement Comparison of Budget and Actual Amounts for the year then ended. The financial statements have been prepared in conformity with the Philippine Public Sector Accounting Standards (PPSAS) and reflect amounts that are based on best estimates and informed judgment of management with an appropriate consideration of materiality.

In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguard against unauthorized use or disposition and liabilities

New Municipal Hall Bldg., J.P. Rizal St., Sitio Soro-Soro, Barangay Santiago Baras, Rizal Telefax 653-3909 / Trunkline Nos.: 570-2915/571-0739/571-0992/584-1339

Email Address - [email protected]“Kaunlaran ng Communidad ng Baras ang pRayoridad"

mailto:[email protected]

Municipality of Baras, Rizal Statement of Financial Position

As at December 31, 2019 (With Comparative Figures for CY 2018)

ASSETS Current Assets

Cash and Cash Equivalents Investments Receivables Inventories

Total Current Assets

Note 2019

4 P 112,093,323.255 310,197.996 60,333,660.377 860,261.64

173,597,443.25

2018

129,120,595.19184,840.00

47,270,725.41860,261.64

177,436,422.24

Non-Current AssetsProperty, Plant and Equipment, net

Total Assets

LIABILITIES Current Liabilities

Financial Liabilities Inter-Agency Payables Intra-Agency Payables Trust LiabilitiesDeferred Credits/Unearned Income Other Payables

Total Current Liabilities

233,559,638.85

407,157,082.10

9 P 16,867,048.7210 24,647,827.6311 13,055,527.6412 70,123,630.4713 57,879,142.7014 200,916.15

182,774.093.31

178,563,382.51

P 355,999,804.75

18,181,452.1926,396,435.2413,670,135.6661,782,278.8945,738,629.41

645,711.06168,414,642.45

Non-Current LiabilitiesFinancial Liabilities

Total Liabilities

NET ASSETS/EQUITYGovernment Equity

Total Liabilities and Net Assets/Equity

15 3,747,042.82186,521,136.13

220,635,945.97

407,157,082.10

4,207,700.46170,622,342.91

185,377,461.84

P 355,999,804.75

(See accompanying Notes to Financial Statements)

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Municipality of Baras, Rizal Statement of Financial Performance

For the Year Ended December 31, 2019 (With Comparative Figures for CY 2018)

Note 2019 2018

RevenueTax Revenue 16 P 26,818,334.28 P 27,405,736.12Share from Internal Revenue Collections 17 160,379,722.00 145,880,811.00Other Share from National Taxes 18 32,035.40 59,201.89Service and Business Income 19 9,638,164.69 7,771,034.02Shares, Grants and Donations 20 206,903.97 186,579.93Other Income 21 115,900.00 98,110.00

Total Revenue 197,191,060.34 181,401,472.96

Less: Current Operating ExpensesPersonnel Services 22 58,401,616.80 42,651,809.76Maintenance and Other Operating Expenses 23 97,510,490.52 86,984,454.52Financial Expenses 25 306,682.73 501,691.41Non-Cash Expenses 24 13,251,179.56 7,221,958.30

Total Current Operating Expenses 169,469,969,61 137,359,913.99

Surplus/(Deficit) from Current Operation 27,721,090.73 44,041,558.97Add/(Deduct):

Transfers, Assistance and Subsidy From 2,045,808.05 0.00Transfers, Assistance and Subsidy To 26 (12,985,637.42) (11,638,915.96)

Surplus/(Deficit) for the period P 16,781,261.36 P 32,402,643.01


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Municipality of Baras, Rizal Statement of Changes in Net Assets/Equity

FortheYearEnded December 31, 2019 (With Comparative Figures for CY 2018)

2019 2018

Balance at January 1 P 185,377,461.84 P 127,228,559.50Add (Deduct)

Prior Period Errors/Adjustments (414,034.04) (837,126.30)Restated Balance 184,963,427.80 126,391,433.20Add (Deduct) Changes in net assets/equity during the yearSurplus/(Deficit) for the period 16,781,261.36 32,402,643.01Total recognized revenue and expenses for the period 16,781,261.36 32,402,643.01Others:

Transfer of PPE/completed projects from Trust Fund 18,891,256.81 26,583,385.63Balance at December 31 P 220,635,945.97 P 185,377,461.84

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Municipality of Baras, Rizal Statement of Cash Flows

For the Year Ended December 31, 2019 (With Comparative Figures for CY 2018)

Cash Flows from Operating Activities

Cash Inflows:Collection from taxpayers Share from Internal Revenue Allotment Receipts from business/service income interest Income Other Receipts Total Cash Inflows

Cash Outflows:Payment of expenses:

Payments to suppliers and creditors Payments to employees Interest Expense Other Expenses Total Cash Outflows

Net Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Outflow:

Purchase/Construction of Property, Plant and Equipment Total Cash Outflows

Net Cash Flows from Investing Activities

Cash Flow from Financing Activities Cash Outflow:

Payment of Long-Term Liabilities Net Cash Flows from Financing Activities Total Cash Provided by Operating, Investing and

Financing Activities Add: Cash at the Beginning of the Year Cash Balance at the End of the Year

Note 2019 2018

30,361,574.22 P 33,668,599.68160,379,722.00 145,880,811.00

19,775,506.54 15,790,950.0784,429.79 93,609.60

70.014,327.68 63,166,840.85280,615,560.23 258,600,811,20

97,346,833.30 60,084,360.4558,058,130.43 41,168,056.41

304,382.67 346.842.8699,720,796.49 98,854,538.13

255,430,142.89 200,453,797.8525,185,417.34 58,147,013.35

41.804,009.35 23,191,715.4241,804,009.35 23,191,715.42

(41,804,009.35) (23,191,715.42)

408,679.93 363,723.70(408,679.93) (363,723.70)

(17,027,271.94) 34,591,574.23129,120,595.19 94,529,020.96

4 P 112,093,323.25 P 129,120,595.19


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Municipality of Baras, Rizal Statement of Comparison of Budget and Actual Amounts

For the Year Ended December 31, 2019

ParticularsBudgeted Amounts

Original Final

Difference Original and Final Budget Actual Amounts

Difference Final Budget and

ActualGeneral Fund Revenue

A. Local Sources 1. Tax Revenue

a. Tax Revenue - Propertyb. Tax Revenue - Goods and Servicesc. Other Local Taxes

P 13,000,000.00 P 0.00

17,560,000.00

13.000.000.00 P 0.00

17.560.000.00

0.00 P0.000.00

6,364,127.4110,242,836.601,391,042.21

F 6,635,872.59 (10,242,836.60) 16,168,957.79

Total Tax Revenue 30,560,000.00 30,560,000.00 0.00 17,998,006.22 12,561,993.782. Non-Tax Revenue

a. Service Income 3,950,000.00 3,950,000.00 0.00 5,050,577.75 (1,100,577.75)b. Business Income 14,050,000.00 14,050,000.00 0.00 4,577,495.09 9,472,504.91c. Other Income and Receipts 553,155.00 553,155.00 0.00 115,900.00 437,255.00

Total Non-Tax Revenue 18,553,155.00 18,553,155.00 0.00 9,743,972.84 8,809,182.16B. External Sources

1. Share from the National Internal Revenue Taxes 160,586,845.00 160,586,845.00 0.00 160,379,722.00 207,123.002. Share from GOCCs 200,000.00 200,000.00 0.00 0.00 200,000.003. Other Shares from National Tax Collections

Share from National Wealth 100,000.00 100,000.00 0.00 238,939.37 (138,939.37)Total Revenue and Receipts 210,000,000.00 210,000,000.00 0.00 188,360,640.43 21,639,359.57Current Appropriations Expenditures

General Public ServicesPersonnel Services 41,728,849.10 40,077,818.94 1,651,030.16 40,567,350.59 (489,531.65)Maintenance and Other Operating Expenses 54,696,965.96 53,015,275.08 1,681,690.88 57,668,844.39 (4,653,569.31)Capital Outlay 14,405,000.00 7,232,897.06 7,172,102.94 7,232,897.06 0.00

EducationMaintenance and Other Operating Expenses 3,820,000.00 3,816,009.40 3,990.60 3,816,009.40 0.00

Health, Nutrition and Population ControlPersonnel Services 5,501,868.73 5,153,743.48 348,125.25 5,197,374.93 (43,631.45)Maintenance and Other Operating Expenses 3,172,000.00 3,156,603.20 15,396.80 3,156,603.20 0.00Capital Outlay 878,000.00 760,650.00 117,350.00 760,650.00 0.00

Social Services and Social WelfarePersonnel Services 4,819,425.71 4,414,020.74 405,404.97 4,429,020.74 (15,000.00)Maintenance and Other Operating Expenses 10,417,278.05 10,094,339.54 322,938.51 10,094,339.54 0.00Capital Outlay 570,000.00 489,950.00 80,050.00 489,950.00 0.00

Economic ServicesPersonnel Services 8,675,783.05 8,207,870.54 467,912.51 8,207,870.54 0.00Maintenance and Other Operating Expenses 21,220,777.45 15,143,573.83 6,077,203.62 15,143,573.83 0.00Capital Outlay 1,173,180.00 645,100.00 528,080.00 645,100.00 0.00

Other Purposes:Debt Service

Financial Expenses 475,000.00 408,679.93 66,320.07 408,679.93 0.00LDRRMF

Maintenance and Other Operating Expenses 4,600,000.00 477,325.00 4,122,675.00 477,325.00 0.00Capital Outlay 5,900,000.00 4,395,280.00 1,504,720.00 4,395,280.00 0.00

20% Development FundMaintenance and Other Operating Expenses 12,017,369.00 11,090,268.16 927,100.84 11,090,268.16 0.00Capital Outlay 24,100,000.00 17,010,058.02 7,089,941.98 17,010,058.02 0.00

OthersCapital Outlay 0.00 0.00 0.00 13,899,552.43 (13,899,552.43)

Total Current Appropriations 218,171,497.05 185,589,462.92 32,582,034.13 204,690,747.76 (19,101,284.84)Surplus/(Deficit) for the period P (8,171,497.05) P 24,410,537.08 P (32,582,034.13) P (16,330,107.33) P 40,740,644.41

Special Education Fund Revenue

1. Tax RevenueTax Revenue - Property P 12,956,700.00 P 12,956,700.00 P 0.00 P 8,820,328.06 P 4,136,371.94

2. Non-Tax RevenueOther Income and Receipts 0.00 0.00 0.00 10,091.85 (10,091.85)

Total Revenue and Receipts 12,956,700.00 12,956,700.00 0.00 8,830,419.91 4,126,280.09ExpendituresCurrent Appropriations

EducationMaintenance and Other Operating Expenses 10,282,700.00 8,627,832.34 1,654,867.66 8,891,034.42 (263,202.08)Capital Outlay 2,674,000.00 1,529,675.46 1,144,324.54 1,382,975.43 146,700.03Total Current Appropriations 12,956,700.00 10,157,507.80 2,799,192.20 10,274,009.85 (116,502.05)

Total Appropriations 12,956,700.00 10,157,507.80 2,799,192.20 10,274,009.85 (116,502.05)Surplus/(Deficit) for the period P 0.00 P 2,799,192.20 F (2,799,192.20) F (1,443,589.94) F 4,242,782.14

NOTES TO FINANCIAL STATEMENTS

The Municipality was created by virtue of Executive Order No. 57 dated November 24, 1920. Baras became an independent Municipality from being a barrio of Tanay, Rizal. Baras is a fourth class municipality composed of ten barangays.

Vision

Baras as a center of natural farming with God-loving and empowered citizenry who live in a friendly, balanced environment led by committed and dynamic leaders.

Mission

> To alleviate poverty by providing opportunities for personal growth and the improvement of the standard of living through a natural resource based livelihood and skills training programs.

> To arrest the continuing environmental degradation gaining prevalence in the municipality through sustainable methods of farming and providing continuing restoration and protection of natural resources.

> To create critical and necessary infrastructure support system as development linkages in support of social mobility and economic productivity.

> To develop a new brand of political leadership and improve bureaucratic efficiency through the inclusion of proper work attitude and acquisition of skills to enable the municipal government to deliver effectively basic public services to its constituency.

> To integrate ecological agriculture, cultural, socio-economic and trade programs under a holistic development approach which shall benefits directly the people of Baras in the short and in the long term.

> To enhance a responsive and human social service program which appreciate, timely and relevant to the needs of the people.

> To attain fiscal discipline and responsible management of assets and resources with accurate and reliable records within a sound accounting system which is fully compliant existing rules and procedures.

Note 1 - Profile

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Note 2 - Statement of Compliance and Basis of Preparations of Financial Statement

The consolidated financial statements of the Municipality of Baras have been prepared in accordance with and comply with the Philippine Public Sector Accounting Standards (PPSAS). The consolidated financial statements are presented in pesos, which is the functional and reporting currency of the Municipality. The accounting policies have been applied starting the year 2015.

Note 3 - Summary of Significant Accounting Policies

3.1 Basis of accounting

The consolidated financial statements are prepared on an accrual basis in accordance with the Philippine Public Sector Accounting Standards (PPSAS).

3.2 Consolidation

The controlled entities (funds) are all those over which the controlling entity has the power to govern the financial and operating policies.

3.3 Revenue Recognition

Revenue from Non-Exchange Transactions

Taxes, Fees and Fines

The Municipality recognizes revenues from taxes and fines when the event occurs and the asset recognition criteria are met. To the extent that there is a related condition attached that would give rise to a liability to repay the amount, liability is recognized instead of revenue. Other non-exchange revenues are recognized when it is improbable that the future economic benefit or service potential associated with the asset will flow to the entity and the fair value of the asset can be measured reliably.

Transfers from Other Government Entities

Revenues from non-exchange transactions with other government entities are measured at fair value and recognized on obtaining control of the asset (cash, goods, services and property) if the transfer is free from conditions and it is probable that the economic benefits or service potential related to the asset will flow to the Municipality and can be measured reliably.

The Municipality availed of the 5 - year transitional provision for the recognition of Tax Revenue - Real Property and Special Education Tax. For the first year, there will be no change in policy for the recognition of the aforementioned tax revenue.

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3.4 Property, Plant and Equipment

All property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. When significant parts of property, plant and equipment are required to be replaced at intervals, the Municipality recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in surplus or deficit as incurred. Where an asset is acquired in a non-exchange transaction for nil or nominal consideration the asset is initially measured at its fair value.

Depreciation on assets is charged on a straight-line basis over the useful life of the asset.

Depreciation is charged at rates calculated to allocate cost or valuation of the asset less any estimated residual value over its remaining useful life. The assets’ residual values and useful lives are reviewed, and adjusted prospectively, if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount, or recoverable service amount, if the asset’s carrying amount is greater than its estimated recoverable amount or recoverable service amount. The Municipality derecognizes items of property, plant and equipment and/or any significant part of an asset upon disposal or when no future economic benefits or service potential is expected from its continuing use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the surplus or deficit when the asset is derecognized.

Public Infrastructures were not previously recognized in the books. The Municipality availed of the 5-year transitional provision for the recognition of the Public Infrastructure. For the first year of implementation of the PPSAS, the LGU will not recognize the Public Infrastructure in the books of accounts.

3.5 Financial Liabilities

Initial Recognition and Measurement

Financial liabilities within the scope of IPSAS 29 are classified as financial liabilities at fair value through surplus or deficit or loans and borrowings, as appropriate. The Municipality determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings.

The Municipality Group’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings.

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Subsequent Measurement

The measurement of financial liabilities depends on their classification.

Loans and Borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Gains and losses are recognized in surplus or deficit when the liabilities are derecognized as well as through the effective interest method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability.

3.6 Cash and Cash Equivalents

Cash and Cash Equivalents comprise cash on hand and cash at bank, deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and shortterm deposits as defined above, net of outstanding bank overdrafts.

3.7 Inventories

Inventory is measured at cost upon initial recognition. To the extent that inventory was received through non-exchange transactions (for no cost or for a nominal cost), the cost of the inventory is its fair value at the date of acquisition.

Inventories are recognized as an expense when deployed for utilization or consumption in the ordinary course of operations of the Municipality,

3.8 Changes in Accounting Policies and Estimates

The Municipality recognizes the effects of changes in accounting policy retrospectively. The effects of changes in accounting policy are applied prospectively if retrospective application is impractical.

The Municipality recognizes the effects of changes in accounting estimates prospectively by including in surplus or deficit.

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3.9 Borrowing Costs

Borrowing costs are capitalized against qualifying assets as part of property, plant and equipment. Such borrowing costs are capitalized over the period during which the asset is being acquired or constructed and borrowings have been incurred. Capitalization ceases when construction of the asset is complete. Further, borrowing costs are charged to the statement of financial performance.

3.10 Related Parties

The Municipality regards a related party as a person or an entity with the ability to exert control individually or jointly, or to exercise significant influence over the Municipality, or vice versa. Members of key management are regarded as related parties and comprise the Governors, Vice-Governors, Mayors, and Vice-Mayors, Sangguniang Members, Committee Officials and Members, Accountants, Treasurers, Budget Officers, General Services and all Chiefs of Departments/Divisions.

3.11 Budget Information

The annual budget is prepared on the modified cash basis, that is, all planned costs and income are presented in a single statement to determine the needs of the Municipality. As a result of the adoption of the Modified cash basis for budgeting purposes, there are basis, timing or entity differences that would require reconciliation between the actual comparable amounts and the amounts presented as a separate additional financial statement in the statement of comparison of budget and actual amounts.

3.12 Significant Judgments and Sources of Estimation Uncertainty

Judgments

In the process of applying the Municipality’s accounting policies, management has made judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements.

Useful Lives and Residual Values

The useful lives and residual values of assets are assessed using the following indicators to inform potential future use and value from disposal:

a) The condition of the asset based on the assessment of experts employed by the Municipality;

b) The nature of the asset, its susceptibility and adaptability to changes in technology and processes;

c) The nature of the processes in which the asset is deployed; and

d) Changes in the market in relation to the asset.

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Note 4 - Cash and Cash Equivalents

This account consists of the following:2019 2018

General FundCash on Hand

Cash Local Treasury P 895,088.30 P 370,812.13Cash in Bank-Local Currency, Current Account

Cash in Bank-LCCA - LBP 29,732,089.74 46,868,581.28Cash in Bank-LCCA - DBF 10.014.787.26 10.006,668.26Sub-total 40,641.965.30 57.246.061.67

Special Education FundCash on Hand

Cash Local Treasury 948,308.71 328,773.16Cash in Bank-Local Currency, Current Account

Cash in Bank-LCCA - LBP 10,487,394.62 14,039,961.68Sub-total 11,435,703.33 14,368,734.84

Trust FundCash on Hand

Cash Local Treasury 0.00 (10,000.01)Cash in Bank-Local Currency, Current Account

Cash in Bank-LCCA - LBP 60,015,654.62 57,515,798.69Sub-total 60,015.654.62 57.505.798.68

Total Cash and Cash Equivalent P 112.093.323.25 P 129.120.595.19

4.1 Cash in Bank accounts represent the deposits made to the Land Bank of the Philippines and the Development Bank of the Philippines.

Note 5 - Investments

This account consists of the following:

2019 2018General FundFinancial Assets at Fair Value through Surplus or Deficit

Financial Assets Held for Trading P 130,840,00 P 130,840.00Financial Assets - Others

Guaranty Deposits 54,000.00 54,000.00Sub-total 184.840.00 184.840.00

Special Education FundFinancial Assets - OthersGuaranty Deposits 125,357.99 0.00Total Investments P 310.197.99 P 184.840.00

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5.1 The Financial Assets Held for Trading account consists of security and meter amount from Financial Assets Held for Trading to Guaranty Deposit was not made in CY 2019 because no supporting documents provided by Meralco.

5.2 The Guaranty Deposit account represents the deposit made to Gazz Up, Inc. in order to avail their credit facility and for Special Education Fund (Baras Senior High School) Extension Lines consists of security and deposits in Manila Electric Company (Meralco).

Note 6 - Receivables

This consists of the following:2019 2018

Loans and Receivable Accounts - GFAccounts Receivable P 116,238.22 P- 116,238.22Real Property Tax Receivable 25,575,103.92 18,718,169.12Sub-total 25,691,342.14 18,834,407.34

Loans and Receivable Accounts - SEFAccounts Receivable 163,450.73 163,450.73Special Education Tax Receivable 27.819.768.25 20.379.943.43Sub-total 27.983.218.98 20.543.394.16

Inter-Agency Receivables - GFDue from National Government Agencies 98,406.11 98,406.11Due from Local Government Units 1.347.046.82 1.559.153.58Sub-total 1.445,452.93 1,657.559.69

Inter-Agency Receivables - SEFDue from Local Government Units 903.184.71 1.066.496.78

Inter-Agency Receivables - TFDue from GOCCs 30.00 30.00

Intra-Agency Receivables - GFDue from Other Funds 623,316.15 635,713.62

Intra-Agency Receivables - TFDue from Other Funds 0.00 43,230.00

Advances - GFAdvances for Operating Expenses 185,500.00 478,500.00Advances for Payroll 1,000.02 376,060.02Advances for Officers and Employees 466,027.04 579,595.40Sub-total 652,527.06 1,434,155.42

Advances - SEFAdvances for Payroll 2,750.00 0.00Advances for Officers and Employees 32,500.00 32.500.00Sub-total 35,250.00 32.500.00

Advances - TFAdvances for Operating Expenses 218,140.00 218,140.00Advances for Officers and Employees 0.00 0.00Sub-total 218,140.00 218.140.00

Other ReceivablesOther Receivables - GF 1,178,773.38 1,187,173.38Other Receivables - SEF 448,663.20 464,163.20Other Receivables - TF 1,153,761.82 1,153,761.82Sub-total 2,781,198.40 2,805,098.40

Total Receivables P60.333.660.37 P47.270.725.41

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As of December 31, 2019, the aging analysis of current exchange receivables is as follows:

General Fund

Account TotalAging

Less than 30 Days

31 to 60 Days

More than 60 Days

Accounts Receivable P 116,238.22 P 0.00 P 0.00 P 116,238.22Real Property Tax Receivable 25,575,103.92 0.00 0.00 25,575,103.92Due from NGAs 98,406.11 0.00 0.00 98,406.11Due from LGUs 1,347,046.82 96,362.99 42,659.14 1,208,024.69Due from Other Funds 623,316.15 0.00 0.00 623,316.15Due from Officers and Employees 652,527.06 1,000.00 0.00 651,527.06Other Receivables 1,178,773.38 0.00 0.00 1,178,773.38

Total P29,591,411.66 P 97,362.99 P42,659.14 P29,451,389.53

Special Education Fund

Account TotalAging

Less than 30 Days

31 to 60 Days

More than 60 Days

Accounts Receivable P 163,450.73 P 0.00 P 0.00 P 163,450.73Special Education Tax Receivable 27,819,768.25 0.00 0.00 27,819,768.25Due from LGUs 903,184.71 0.00 0.00 903,184.71Due from Officers and Employees 35,250.00 0.00 0.00 35,250.00Other Receivables 448,663.20 0.00 0.00 448,663.20

Total P 29,370,316.89 P 0.00 P 0.00 P29,370,316.89

Trust Fund

Account TotalAging

Less than 30 Days

31 to 60 Days

More than 60 Days

Due from GOCCs P 30.00 P 0.00 P 0.00 P 30.00Due from Officers and Employees 218,140.00 0.00 0.00 218,140.00Other Receivables 1,153,761.82 0.00 0.00 1,153,761.82

Total P 1,371,931.82 P 0.00 P 0.00 P 1,371,931.82

Note 7 - Inventories


Inventory Held for Consumption General Fund

Office Supplies Inventory P 327,809.76 P- 327,809.76Accountable Forms, Plates and Stickers 61,695.00 61,695.00Medical, Dental and Laboratory Supplies Inventory 86,849.88 86,849,88Other Supplies and Materials Inventory 134,007.00 134,007.00Sub-total 610.361.64 610.361.64


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Office Supplies Inventory Total Inventories

249.900.00 249.900.00P 860.261.64 P- 860.261.64

No inventory items were pledge as security during the current or prior financial year.

Note 8 - Property, Plant and Equipment

AccountBalance as of December 31,

2018

Addition(Reduction)

AccumulatedDepreciation

Carrying Amount as of December 31,

2019Land P 23,883,650.13 P 9,634,302.05 P 0.00 P 33,517,952.18Land Improvements, Aquaculture

Structures 762,055.25 0.00 0.00 762,055.25Other Land Improvements 2,240,653.42 2,867,867.58 655,316.20 4,453,204.80Road Networks 16,075,358.16 10,923,942.18 3,621,909.70 23,377,390.64Flood Control Systems 0.00 595,348.00 23,565.86 571,782.14Water Supply Systems 8,406,132.32 407,986.24 966,213.76 7,847,904.80Parks, Plazas and Monuments 210,416.67 207,583.33 99,718.33 318,281.67Communication Networks 37,258.67 12,641.33 17,381.83 32,518.17Other Infrastructure Assets 34,710,186.28 11,139,926.35 515,165.16 45,334,947.47Buildings 15,634,508.65 17,506,694.33 1,015,480.82 32,125,722.16Markets 397,815.37 0.00 0.00 397,815.37Other Structures 3,266,538.00 37,810.08 151,240.31 3,153,107.77Office Equipment 7,523,925.35 3,828,358.12 2,056,917.16 9,295,366.31Information and Communication

Technology Equipment 18,790,205.75 16,120,481.79 17,795,393.06 17,115,294.48Agricultural and Forestry

Equipment 744,067.90 154,628.10 319.130.10 579,565.90Communication Equipment 498,537.67 63,162.33 116,523.83 445,176.17Disaster Response and Rescue Equipment 600,628.45 1,101,521.55 170,963.36 1,531,186.64Military, Police and Security

Equipment 161,868.63 162,551.37 177,130.07 147,289.93Medical Equipment 278,920.35 105,239.65 193,392.05 190,767.95Sports Equipment 1,330.74 0.00 0.00 1,330.74Other Machinery and Equipment 624,878.53 1,891,595.47 1,956,912.97 559,561.03Motor Vehicles 18,061,332.49 13,063,542.64 6,596,411.13 24,528,464.00Watercrafts 35,545.00 0.00 0.00 35,545.00Furniture and Fixtures 5,653,360.90 3,588,669.99 1,955,053.98 7,286,976.91Library Books 1,795.70 0.00 0.00 1,795.70Other Property, Plant and

Equipment 1,818,236.19 1,175,589.22 1,613,959.03 1,379,866.38Construction in Progress -

Infrastructure Assets 9,232,949.88 8,440,921.30 0.00 17,673,871.18Construction in Progress -

Buildings and Other Structures 8,911,226.06 (8,016,327.95) 0.00 894,898.11Total PPE P178,563,382.51 P 95,014,035.05 P 40,017,778.71 P233,559,638.85

Note 9 - Financial Liabilities - Current Liabilities

This account consists of the following;

2019 2018General FundAccounts Payable £15,193,458,72 £17,076,473.16Due to Officers and Employees 87,328.56 87,328.56

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Loans Payable - Domestic 459,192.76 408,679.93Sub-total 15,739,980.04 17,572.481.65

Special Education FundAccounts Payable 1,033,168.68 515,070.54Due to Officers and Employees 93.900.00 93.900.00

Sub-total 1.127.068.68 608.970.54Total Financial Liabilities - Current P16.867.048.72 P18.181.452.19

9.1 Loans Payable-Domestic with an outstanding balance of P4,206,235.58 as of year-end consists of current portion amounting to P459,192.76 and non- current also amounting to P3,747,042.82.

Note 10 - Inter-Agency Payables


2019 2018Inter-Agency Payables - GF

Due to BIR P 3,836,899.69 P 3,352,868.19Due to GSIS 924,442.58 763,740.31Due to Pag-IBIG 488,540.39 201,407.96Due to PhilHealth 175,609.78 114,557.79Due to NGAs 1,652,275.73 1,653,753.28Due to LGUs 5,959,330.14 7,362,687.51Sub-total 13,037,098.31 13,449,015.04

Inter-Agency Payables - SEFDue to BIR 50,515.82 16,751.45Due to GSIS (18,479.57) (18,479.57)Due to Pag-IBIG (5,719.76) (5,719.76)Due to PhilHealth (450.00) (450.00)Due to NGAs 100,144.81 100,144.81Due to LGUs 3.232.054.41 4.462.265.67Sub-total 3.358,065.71 4.554.512.60

Inter-Agency Payables - TFDue to BIR 1,464,336.71 1,596,027.75Due to NGAs 6,181,381.23 6,189,934.18Due to LGUs 606,945.67 606,945.67Sub-total 8,252,663.61 8,392,907.60

Total Inter-Agency Payables P24.647.827.63 P26.396.435.24

10.1 The Due to BIR, Due to GSIS, Due to Pag-IBIG and Due to PhilHealth accounts represent the amount deducted from the salaries of officials and employees and is remitted to the respective government agencies immediately on the month following the month from which these were deducted.

10.2 The Due to NGAs and Due to LGLJs accounts represent the balances of funds received by the Municipality for specific purposes.

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Note 11 - Intra-Agency Payables


Due to Other FundsGeneral Fund Special Education Fund Trust FundTotal Due to Other Funds

2019

P (589,530.00) (3,636.50)

13,648,694.14

2018

i 12,680.55 (3,636.50)

13,661,091.61P13.055.527.64 P13.670.135.66

Note 12 - Trust Liabilities


Trust FundTrust Liabilities P54,525,418.53 P49,495,555.04Trust Liabilities - Disaster Risk ReductionManagement Fund 13,460,936.96 11,120,794.90Bail Bonds Payable 869,374.85 957,894.65Guaranty/Security Deposits Payable 1,267.900.13 206.034.30Total Trust Liabilities P70.123.630.47 P61.782.278.89

Note 13 - Deferred Credits/Unearned Income


2019 2018Deferred Real Property/Special Education TaxGeneral Fund P27,489,666.22 P21,743,494.86Special Education Fund 30.049.864.24 23.655.522.31

Sub-total 57,539.530.46 45,399,017.17Other Deferred CreditsGeneral Fund 85,294.79 85,294.79Special Education Fund 254.317.45 254.317.45

Sub-total 339.612.24 339.612.24Total Deferred Credits/Unearned Income P57.879.142.70 P45.738.629.41

Note 14 - Other Payables

This account consists of the following

Other PayablesGeneral Fund Trust FundTotal Other Payables

2019 2018P (91,619.94) P 353,174.97

292.536.09 292.536.09P 200.918.15 P S45.711.06

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Note 15 - Financial Liabilities - Non-Current Liabilities

This account pertains to Loan Payable-Domestic amounting to £3,747,042.82 classified as Non-Current Liabilities.

Note 16 - Tax Revenue


2019 2018General FundTax Revenue - Individual and Corporation

Community Tax £ 685,301.65 £ 641,536.76Tax Revenue - Property

Real Property Tax - Basic 6,533,461.63 7,873,777.14Discount on Real Property Tax - Basic (169,334.22) (241,017.86)

Tax Revenue - Goods and ServicesBusiness Tax 10,221,586.60 8,064,301.90Amusement Tax 21,250.00 49,223.75

Tax Revenue - Fines and PenaltiesTax Revenue - Fines and Penalties - Property Taxes 705.740.56 656,491.10Sub-total 17.998.006.22 17.044.312.79

Special Education FundTax Revenue - Property

Special Education Tax 8,153,113.36 9,842,081.77Discount on Special Education Tax (211,667.80) (301,272.32)

Tax Revenue - Fines and PenaltiesTax Revenue - Fines and Penalties - Property Taxes 878,882.50 820,613.88Sub-total 8,820,328.06 10,361,423.33

Total Tax Revenue P26.818.334.28 £27.405.736.12

Note 17 - Share from Internal Revenue Collections

This account represents the share of the Municipality from the Internal Revenue Collection in the General Fund in the amounts of £160,379,722.00 and £145,880,811.00 in CYs 2019 and 2018, respectively.

Note 18 - Other Share from National Taxes

This account represents share of the Municipality from the proceeds derived by Laguna Lake Development Authority in the amount of £32,035.40 and £59,201.89 in CYs 2019 and 2018 respectively.

21

Note 19 - Service and Business Income


2019 2018General FundService Income

Permit Fees P2,459,185.32 P1,961,829.23Registration Fees 283,119.00 272,745.00Registration Plates, Tags and Stickers Fees 328,959.50 292,450.00Clearance and Certification Fees 261,860.00 252,163.36Supervision and Regulation Enforcement Fees 146,600.00 275,430.00Inspection Fees 608,504.00 571,102.54Verification and Authentication Fees 126,600.00 126,400.18Processing Fees 89,015.00 89,637.50Occupation Fees 620,852.93 496,895.00Fees for Sealing and Licensing of Weights and Measures 125.882.00 109.807.50Sub-total 5,050,577.75 4.448,460.31

Business IncomeWaterworks System Fees 777,178.00 872,487.00Receipts from Market Operation 412,420.57 766,061.00Receipts from Slaughterhouse Operation 2,848,008.62 1,165,685.11Receipts from Cemetery Operation 49,275.00 49,586.00Garbage Fees 350,850.00 318,050.00Hospital Fees 44,360.00 57,095.00Interest Income 95.402.90 85.158.30Sub-total 4.577.495.09 3.314.122.41

Special Education FundBusiness Income

Interest Income 10.091.85 8.451.30Total Business and Service Income P9.638.164.69 P7.771.034.02

Note 20 - Shares, Grants and Donations

This account represents the share from PCSO of the Municipality in the amount of P206.903.97 and P186,579.93 in CYs 2019 and 2018, respectively.

Note 21 - Other Income


Miscellaneous IncomeGeneral FundSpecial Education FundTotal Miscellaneous Income

2019

P115,900.00 0.00

P115.900.00

2018

P93.850.004.260.00

P98.H0.00

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Note 22 - Personnel Services


2019 2018General FundPersonnel Services

Salaries and Wages - Regular P28,649,858.52 P26,038,124.70Salaries and Wages - Casual/Contractual 5,687,643.05 0.00

Other CompensationPersonal Economic Relief Allowance (PERA) 3,463,000.00 2,134,666.66Representation Allowance (RA) 1,732,500.00 1,695,937.50Transportation Allowance (TA) 1,732,500.00 1,695,937.50Clothing/Uniform Allowance 873,000.00 445,000.00Subsistence Allowance 144,000.00 153,000.00Laundry Allowance 14,400.00 15,300.00Hazard Pay 523,577.40 498,675.90Year End Bonus 2,986,179.12 2,153,375.00Cash Gift 740,500.00 438,500.00Other Bonuses and Allowances 2,837,960.00 2,594,579.00

Personnel Benefit ContributionsRetirement and Life Insurance Contributions 4,004,613.48 2,974,378.68Pag-IBIG Contributions 172,600.00 106,000.00PhilHealth Contributions 373,028.01 294,596.34Employees Compensation Insurance Premiums 155,827.02 98,688.47

Other Personnel BenefitsTerminal Leave Benefits 2,120,430.20 1,164,850.01Other Personnel Benefits 2.190.000.00 0.00Sub-total 58.401.616.80 42.501.609.76

Special Education FundOther Compensation

Honoraria 0.00 150,200.00Total Personnel Services P58.401.616.80 P42.651.809.76

Note 23 - Maintenance and Other Operating Expenses


2019 2018Travelling ExpensesTravelling Expenses - Local -P 12,916.00 P 40,151.00

Training and Scholarship Expenses Training Expenses 2,660,344.94 2,766,785.63

Supplies and Materials ExpensesOffice Supplies Expenses 3,234,920.33 3,248,317.53Accountable Forms Expenses 436,487.50 188,829.50Non-Accountable Forms Expenses 1,520.00 64,235.00Animal/Zoological Supplies Expenses 277,100.00 6,490.00Welfare Goods Expenses 158,130.00 0.00Drugs and Medicines Expenses 976,907.10 960,418.60Medical, Dental and Laboratory Supplies

Expenses 403,098.00 223,659.00

23

2019 2018Fuel, Oil and Lubricants Expenses 6,787,345.82 6,399,394.07Agricultural and Marine Supplies Expenses 0.00 19,180.00Textbooks and Instructional Materials

Expenses 5,995,00 101,850.00Military, Police and Traffic Supplies Expenses 0.00 149,100.00Chemical and Filtering Supplies Expenses 180,000.00 219,600.00Other Supplies and Materials Expenses 6,458,337.11 6,682,669.36

Utility ExpensesWater Expenses 2,465,178.61 928,161.31Electricity Expenses 5,906,472.95 5,071,017.18

Communication ExpensesPostage and Courier Service 106,731.33 55,720.42Telephone Expenses 1,475,454.95 1,111,244.10Internet Subscription Expenses 545,989.17 331,757.38Cable, Satellite, Telegraph, and Radio

Expenses 32,200.00 35,593.31Awards/Rewards and Prizes

Awards and Rewards Expenses 447,590.00 232,637.00Prizes 907,120.54 620,848.00

Survey, Research, Exploration andDevelopment ExpensesSurvey Expenses 48,000.00 266,775.00

Confidential, Intelligence and ExtraordinaryExpenses

Extraordinary and Miscellaneous Expenses 0.00 188,250.00Professional Services

Legal Services 7,950.00 300.00Consultancy Services 332,800.00 265,000.00Other Professional Services 96,000.00 96,000.00

General ServicesEnvironment/Sanitary Services 6,057,600.00 2,331,090.00Security Services 1,494,174.53 1,262,479.72

Repairs and MaintenanceRepairs and Maintenance - Infrastructure

Assets 3,697,239.61 4,873,242.96Repairs and Maintenance - Buildings and Other

Structures 1,196,149.40 1,509,843.04Repairs and Maintenance - Machinery and

Equipment 425,783.60 299,725.00Repairs and Maintenance - Transportation

Equipment 2,165,442.10 1,757,569.64Repairs and Maintenance - Furniture and

Fixtures 300.00 1,000.00Taxes, Insurance Premiums and Other FeesTaxes, Duties and Licenses 6,397,00 14,660.30Fidelity Bond Premiums 127,878.75 111,375.00Insurance Expense 72,955.00 108,465.07

Other Maintenance and Operating ExpensesAdvertising Expenses 213,635.00 100,230.00Printing and Publication Expenses 3,350,912.18 1,532,882.50Representation Expenses 10,519,371.18 10,016,471.15Transportation and Delivery Expenses 34,230.00 24,605.00

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2019 2018Rent Expenses 2,613,692.60 2,190,873.90Membership Dues and Contributions to

Organizations 562,395.50 749,881.05Subscription Expenses 0,00 2,430.00Donations 18,039,758.40 14,706,985.75Other Maintenance and Operating Expenses 12,967,986.32 15,116,661.05

Total Other Maintenance and OperatingExpenses P97.510.490.52 P86.984.454.52

Note 24 - Non-Cash Expenses


2019 2018General FundDepreciation and Amortization

Depreciation - Investment Property P 113,430.23 P 37,810.08Depreciation - Land Improvements 461,778.83 193,537.46Depreciation - Infrastructure Assets 4,570,589.76 607,375.58Depreciation - Buildings and Structures 747,619.42 222,979.81Depreciation - Machinery and Equipment 4,390,732.41 3,344,831.69Depreciation - Transportation Equipment 1,385,747.88 1,385,747.88Depreciation - Furniture, Fixtures and Books 557,025.95 409,565.93Depreciation - Other Property, Plant and

Equipment 291.767.56 212,171.42Sub-total 12.518.692.04 6.414,019.85

Special Education FundDepreciation - Infrastructure Assets 4,693.81 0.00Depreciation •• Machinery and Equipment 459,006.81 552,546.56Depreciation - Transportation Equipment 20,620.61 23,470.63Depreciation - Furniture, Fixtures and Books 57,164.04 40,919.06Depreciation - Other Property, Plant and

Equipment 191,002.25 191.002.20Sub-total 732,487.52 807,938.45

Total Non-Cash Expenses P13.251.179.56 P7.221.958.30

Note 25 - Financial Expenses


General FundInterest Expenses Other Financial Charges Total Financial Expenses

2019

£305,682.731,000.00

2018

£346,842.86154,848.55

P306.682.73 P501.691.41

25

Note 26 - Transfers, Assistance and Subsidy


2019 2018General FundSubsidy to National Government Agencies -R 1,824,280.00 P 1,408,312.00 Subsidy to Local Government Units 3,732,548.00 3,178,426.00Subsidies - Others 2,794,107.00 2,695,484.00Transfers of Unspent Current Year DRRMFunds to the Trust Fund 4,356,693.96 4,356,693.96Transfers for Project Equity Share/LGUCounterpart 278,008.46 _0.00Total Transfers, Assistance and Subsidy P12.985.637.42 P11.638.915.96

Note 27 - Local Disaster Risk Reduction Management Fund (LDRRMF)

The LDRRMF represents amount set aside by the Municipality to support its disaster risk management activities pursuant to R.A. No. 10121 otherwise known as the “Philippine Disaster Risk Reduction and Management Act of 2010”. The amount available and utilized during the year totaled P10,500,000.00 and P4,872,605.00, respectively, broken down as follows:

Particulars Available AmountUtilized BalanceCurrent Year Appropriation:Quick Response Fund (QRF) P3,150,000.00 P 0.00 P3,150,000.00Mitigation Fund (MF)

MOOE 1,450,000.00 477,325.00 972,675.00Capital Outlay 5.900,000.00 4.395.280,00 1.504,720.00

Total 10.500.000.00 4.872.605.00 5.627.395.00

Continuing Appropriation: 3,094,710.00 0.00 3,094,710,00Special Trust FundCY 2014 1.484.670.68 0.00 1.484.670.68

QRF 943,944.54 0.00 943,944,54MF-MOOE 540,726.14 0.00 540,726,14

CY 2015 1.963.334.96 0.00 1.963.334.96QRF 1,150,620.99 0.00 1,150,620,99MF-MOOE 812,713.97 0.00 812,713.97

CY 2016 2.285.317.87 0.00 2.285.317.87QRF 1,530,000.00 0.00 1,530,000.00MF-MOOE 755,317.87 0.00 755,317,87

CY 2017 3.499.793.34 0.00 3.499.793.34QRF 2,217,500.00 0.00 2,217,500.00MF-MOOE 1,282,293.34 0.00 1,282,293.34

CY 2018 4.385.950.11 0.00 4.227.820.11QRF 2,442,716.00 0.00 2,442,716.00MF-MOOE 1.943.234.11 158,130.00 1.785.104.11

Total 13.619.066.96 158.130.00 13.460.936.96Grand Total P27.213.776.96 P 5.030.735.00 P22.183.041.96

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Total General Fund ~ , ®Pec'a*Education Fund

Note 28 - Reconciliation of Net Cash Flows from Operating Activities

Trust Fund

Surplus/(Deficit) P16,781,261.36 P17,574,363.39 {P793,102.03) P 0.00Non-cash transactionsDepreciation 13,251,179.56 12,518,692.04 732,487.52 0.00(lncrease)/Decrease inreceivables (13,188,292.95) (5,842,402.21) (7,389,120.74) 43,230.00(lncrease)/Decrease inpayables 8,784,196.86 669,614.44 5,647,956,48 2,466,625.94Prior Period Adjustments (442.927.49) (626.613.48) 183.685.99 ________0JD0Net Cash fromOperating Activities P25.185.417.34 P24.293.654.18 *P 1.618.092.781 P2.509.855.94

Note 29 - Reconciliation between actual amounts on a comparable basis as presented in this statement and in the Statement of Financial Performance for the Year Ended December 31, 2019

Reconciliation between actual amounts on a comparable basis as presented in this statement and in the Statement of Financial Performance for the Year Ended December 31, 2019.

General Fund

Income PersonnelServices

Maintenance and Other Operating Expenses

FinancialExpenses Capital Outlay

Comparison Statement of Budget and Actual P188,360,640.43 1*58,401,616.80 P101,446.963.52 P 408,679.93 P44,433,487.51Basis Differences: 0.00 0.00 (12,985,637.42) (101,997.20) (44,433,487.51)Budgetary items not considered as expenses 0.00 0.00 0.00 0.00Interest Expenses capitalized (101,997.20)Capital Expenditures 0.00 0.00 0.00 0.00 (44,433,487.51)Others:Subsidy to NGAs/LGUs/Others 0.00 0.00 (12,985,637.42) 0.00 0.00Per Statement of Financial Performance P188,360,640.43 P 58,401,636.80 P 88,461,326.10 P306,682.73 P 0.00

Reconciliation between actual amounts on a comparable basis as presented in this statement and in the Statement of Financial Performance for the Year Ended December 31, 2019.


Income PersonnelServices

Maintenance and Other Operating Expenses

FinancialExpenses Capital Outlay

Comparison Statement of Budget and Actual P8,830,419.91 PO.OO P8,891.034.42 PO.OO P1,382,975.43Basis Differences: 0.00 0.00 0.00 0.00 (1,382,975.43)Budgetary items not considered as expenses 0.00 0.00 0.00 0.00Interest Expenses capitalized 0.00Capital Expenditures 0.00 0.00 0.00 0.00 (1,382,975.43)Per Statement of Financial Performance P8,830,419.91 PO.OO P8,891,034.42 PO.OO P 0.00

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PART II - AUDIT OBSERVATIONS AND RECOMMENDATIONS

PART M-OBSERVATIONS AND RECOMMENDATIONS

A. FINANCIAL AND COMPLIANCE AUDIT

1. As in previous years, the recorded balance of the Cash in Bank-Local Currency, Current Account (LCCA) account amounting to P110,249,926.24 as at year-end is doubtful due to existence of various book reconciling items aggregating P6,978,248.44 in different funds of the Municipality and the submitted Bank Reconciliation Statements (BRS) were again not supported with bank statements, debit/credit memoranda and paid checks, contrary to Section 111 of Presidential Decree (PD) No. 1445 and COA Circular No. 96-011 dated October 2, 1996.

Section 111 of P.D. No. 1445 provides that the accounts of the agency shall be kept in such detail as is necessary to meet the needs of the agency and at the same time be adequate to furnish the information needed by fiscal or control agencies of the government. The highest standards of honesty, objectivity and consistency shall be observed in the keeping of accounts to safeguard against inaccurate of misleading information.

Moreover, COA Circular No. 96-011 dated October 2, 1996 requires, among others, that the Local Accountants shall within ten (10) days from receipt of the Bank Statements (BS), reconcile the same with the General Ledger (GL) balances and prepare the BRS in five copies. The accountant shall draw journal vouchers to record all valid reconciling items that require adjustment and correction in the GL.

Also, Section 3.4 of the same Circular states that “The duplicate and quadruplicate copies of the BRS including the paid checks, original copies of debit/credit memos, shall be submitted to the Auditor concerned for verification within ten (10) days from receipt after the end of each month.”

The financial statements of the Municipality at year-end reflected a Cash in Bank- LCCA account’s balance of P110,249,926.24, the details of which are shown below:

General Fund P-39,746,877.00Special Education 10,487,394.62FundTrust Fund 60.015.654.62

Total P110.249.926.24

Review and verification of the submitted BRS for all funds as of December 31, 2019 revealed that there were various unadjusted book reconciling items such as stale checks, unrecorded deposits, unrecorded disbursements and unidentified reconciling items totaling P6,978,248.44, broken down as follows:

Fund/Bank Account Total Stale Checks (Annex E)

UnrecordedDeposits(Returns)

UnrecordedDisbursements

UnidentifiedReconciling

ItemsGeneral FundLBPAcct. # 1142-1030-24 P1,601,273.99 P 733,767.04 P 916.75 P 140,318.71 P 726,271.49LBP Acct. # 1142-1002-62 4,789,932.77 1,918,330.07 0.00 1,685,662.79 1,185,439.91

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Fund/Bank Account Total Stale Checks (Annex E)

UnrecordedDeposits(Returns)

UnrecordedDisbursements

UnidentifiedReconciling

ItemsSpecial Education FundLBPAcct. # 1142-1030-32 499,141.68 261,477.49 (7,558.07) 106,691.04 138,531.22Trust FundLBPAcct. #1142-1010-99 87,900.00 6,000.00 0.00 0.00 81,900.00

Total P6,978,248.44 P2,920,074.60 P(6,641.32) R1,932,672.54 P2,132,142.62

Based on the above table, reconciling items consist mostly of stale checks and unidentified reconciling items totaling £2,920,074.60 and £2,132,142.62, respectively. The said checks were issued from CYs 2013 to 2017 which should have been reverted to Cash in Bank-LCCA account, with the appropriate set-up of liability account or reverted directly to Government Equity account thru Prior Year’s Adjustment. Moreover, the Municipal Accounting personnel who is in-charge in the preparation of the BRS averred that the unidentified reconciling items were only discovered when he started to prepare the said report sometime in the last quarter of CY 2018.

In addition, the submitted BRS were not supported with copies of debit/credit memoranda and paid checks contrary to the aforementioned regulation.

Due to the foregoing deficiencies, the balance of Cash in Bank-LCCA account as of December 31, 2019 is unreliable.

We strongly reiterated our prior year’s recommendation that the Municipal Mayor direct the:

a. OIC Municipal Accountant to verify and evaluate the accuracy of the reconciling items reflected in the BRS and exert effort to trace the supporting documents of the unidentified reconciling items in order to make necessary adjusting entries to ensure the correct balance of the Cash in Bank-LCCA account appearing in the Municipality’s financial statements;

b. OIC-Municipal Accountant and the Municipal Treasurer to closely coordinate with each other regarding the accumulation of stale checks which should have been adjusted either as liability account or a prior year’s adjustment provided that an evidence should be presented to support the same; and

c. OIC-Municipal Accountant to submit the monthly BRS with complete supporting documents.

Management’s Comment:

The OIC-Municipal Accountant promised to submit the monthly BRS with complete supporting documents starting in September 2020 and he stated that he will coordinate with the Municipal Treasurer regarding the accumulation of stale checks.

29

2. The correctness, existence and validity of the recorded balances of the Property, Plant and Equipment (PPE) accounts with carrying amount of P233,559,638.85 or 57.36 percent of the total assets of the Municipality at year- end could not be ascertained due to: (a) incomplete and unreliable inventory report, contrary to Section 124 of the Manual on New Government Accounting System (MNGAS) for LGUs, Volume I; (b) incomplete PPE Ledger Cards, Property Cards and Acknowledgement Receipt for Equipment (ARE) being maintained by the Accounting Office and General Services Offices, respectively;(c) inclusion of unaccounted beginning balance of R9,230,949.88 under Construction In Progress-lnfrastructure Asset account in the Trust Fund books;(d) non-preparation and maintenance of the required report for Local Road Network; and (e) non-disclosure of total road network system in the Notes to Financial Statements, contrary to Item VI of COA Circular No. 2015-008 dated November 25, 2015.

This is a reiteration of previous years’ audit observations.

Section 124 of the MNGAS for LGUs, Volume I states that physical count of property, plant and equipment by type shall be made annually and reported on the Report on the Physical Count of Property, Plant and Equipment (RPCPPE). This shall be submitted to the Auditor concerned not later than January 31 of each year.

Despite repeated recommendations, the accounting and property records of the Municipality pertaining to property management showed that most of the deficiencies noted in prior years were not yet corrected, thus the balances of the Property, Plant and Equipment (PPE) accounts with carrying value £233,559,638.85 or 57.36 percent of the total assets of the Municipality at year-end remained unreliable. Among these deficiencies which remain to be corrected are as follows:

a. Incomplete and unreliable inventory report

The Statement of Financial Position of the Municipality showed a balance of PPE accounts in all funds at year-end totaling P233,559,638.85. Details are shown below:

Particulars GF SEF TF TotalCost P235,032,670.27 P 8,186,249.66 P31,093,255.04 ■P274,312,174.97AccumulatedDepreciation 37.594.662.86 3,157,873.26 0.00 40.752,536.12Carrying Amount P197.438.007.41 P5.028.376.40 P31.093.255.04 P233.559.638.85

Verification of the submitted Report on the Physical Count of Property, Plant and Equipment (RPCPPE) revealed that the physical inventory of Municipality’s property conducted by the Inventory Committee was incomplete. Only Office Equipment, Communication Equipment and Furnitures and Fixtures were inventoried

Likewise, the RPCPPE contained only the list of items purchased in CY 2019. The said report did not indicate whether the items counted are und

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