EXECUTIVE SUMMARY

Introduction

Tigbauan is a second class Municipality in the Province of Iloilo, Philippines.

It has fifty-two (52) component barangays, nine (9) of which are situated in the
poblacion and the rests are scattered around the poblacion and spread up to the
boundaries of the Municipalities of Oton, San Miguel, Tubungan, Leon and Guimbal.
Tigbauan ranks as one of the leading Municipalities of Iloilo in fish
production. The ten coastal barangays are Barroc, Atabayan, Baguingin, Namocon,
Tan Pael, Brgy. No. 8, Brgy. 9, Parara Norte, Parara Sur and Buyu-an.

Highlights of Financial Operations

Comparative financial highlights of the Municipality for Calendar Years 2013

and 2012 are computed as follows:

Accounts
Assets
Liabilities
Equity

CY 2013
195,708,032.50
55,050,930.66
140,657,101.84

CY 2012
170,018,914.87
45,512,836.95
124,506,077.92

Increase/
(Decrease)
25,689,117.63
9,538,093.71
16,151,023.92

% Increase/
(Decrease)
15.11
20.96
12.97

The Municipalitys total operating income For CY 2013 is P 95,382,860.98, of

which 83.81% comes from the Internal Revenue Allotment and the rest are derived
from local taxes, permits and licenses, service income, business income and other
income.

Sources of Funds
Local Taxes
IRA
Permits & Licenses
Service Income
Business Income
Other Income

CY 2013
7,048,299.59
79,939,836.00
1,354,724.66
1,117,928.84
5,908,228.98
13,842.91

CY 2012
5,975,895.65
69,581,100.00
1,529,237.16
1,021,668.16
4,934,130.50
50,369.00

Increase/
% Increase/
(Decrease)
(Decrease)
1,072,403.94
17.95
10,358,736.00
14.89
(174,512.50)
(11.41)
96,260.68
9.42
974,098.48
19.74
(36,526.09)
(72.52)

Out of the P66,568,105.53 CY 2013 operating expenses, 71.91 % was used for
Personal Services and 28.09% for Maintenance and Other Operating Expenses.

Application of
Funds
Personal Services
MOOE

CY 2013
47,867,003.11
18,701,102.42

CY 2012
40,571,755.10
21,177,621.16

Increase/
% Increase/
(Decrease)
(Decrease)
7,295,248.01
17.98
(2,476,518.74)
(11.69)

Comparative financial ratios of the Municipality for Calendar Years 2013 and
2012 are computed as follows:
Financial Ratios
Current Ratio
Quick Asset Ratio or
Quick Ratio
Debt-to-Equity Ratio

Formula
Current Assets
Current Liabilities
Cur Assets - Invty
Current Liabilities
Long Term Liab
Equity

CY 2013

CY 2012

Increase/
(Decrease)

3.08

2.67

0.41

2.98

2.60

0.38

0.11

0.14

(0.03)

Scope of Audit
The audit covered the accounts and operations of the Municipality of
Tigbauan in the Province of Iloilo for the year ended December 31, 2013. The audit
was conducted to determine the reliability of the LGUs accounts in order to express
an opinion on the fairness of the presentation of the financial statements as well as to
determine whether or not the LGUs transactions were made in accordance with
existing laws, rules and regulations.
Auditors Opinion on the Financial Statements
The Auditor rendered a qualified opinion on the 2013 financial statements due
to the possible effects of adjustments had the LGU conducted a physical count of its
Property, Plant and Equipment and had they provided allowance for depreciation for
its depreciable Property, Plant and Equipment.

Significant Findings and Recommendations

1. Physical inventory of property, plant and equipment was not conducted
by the agency resulting in the non-submission of the corresponding
inventory report contrary to COA Circular No. 80-124, Section 490 of
Government Accounting and Auditing Manual (GAAM), Vol. I and
Section 124 of the Manual on New Government Accounting System
(MNGAS) for Local Government Units, Vol. I, thus, the correctness,
existence and reliability of the asset account as presented in the
financial statements cannot be ascertained.
a.
The Municipal Mayor should create an Inventory Committee to
conduct physical inventory of property, plant and equipment annually at year
end to prove their existence, determine the condition and update their
valuation. The required physical inventory report as reconciled with the
general ledger should be prepared and copies should be submitted to the
Office of the Auditor.
b.
Property, Plant and Equipment Ledger Card (PPELC) for each
category of property, plant and equipment which shall record the acquisition,
description, custody, estimated useful life, rate of depreciation, disposal and
other obligations incurred should be maintained.
2. The Municipality failed to provide Allowance for Depreciation of
acquired property, plant and equipment contrary to Section 04(o) of the
Manual on NGAs for LGUs, Volume I, thus understating expenses and
Accumulated Depreciation and overstating the Government Equity
account.
We recommend that the Municipal Accountant provide Allowance for
Depreciation for depreciable Property, Plant and Equipment acquired
effective Calendar Year 2002 by using the straight-line method of
depreciation. Likewise, she should prepare journal entries to adjust the
accounts affected by the provision for depreciation on Property, Plant and
Equipment for previous and current years.
3. The OIC-Municipal Accountant failed to submit the required Bank
Reconciliation Statements contrary to Section 3.2 and 3.4 of COA
Circular No. 96-011, thus the validity and propriety of the Cash in Bank
accounts amounting to P61,464,324.73 could not be ascertained.
We recommend that the OIC-Municipal Accountant strictly comply
with Section 3.2 and 3.4 of COA Circular No. 96-011. Any discrepancy
between the bank statements and the agency records should be immediately
reconciled and adjusted or be brought to the attention of the depository bank
for timely correction and/ or confirmation.

4. Cash advances granted to officers and employees totaling P3,075,246.30

remain outstanding and unliquidated as of December 31, 2013 contrary
to Section 89 of PD 1445, Sections 4.1.2, 5.1.3 and 8 of COA Circular
No. 97-002 and Item 9.1 of COA Circular No. 2012-004 thus, exposing
government funds to risks of misapplication and resulting to the
understatement of expenses and over-statement of assets.
We recommend that the Local Chief Executive require all concerned
officers and employees to liquidate their long outstanding cash advances.
Cash advances for travel should be liquidated within thirty (30) days after
completion of the said travel.
We also recommend the immediate refund of all unliquidated cash
advances, otherwise, withhold the salaries of all officers and employees with
outstanding cash advances until the amounts involved are fully restituted.
5. Disbursements amounting to P 309,600.24 from January to
November 2013 were charged against the Special Education Fund which
were not in accordance with the provisions of Republic Act No. 5447,
Sections 99, 100, and 272 of the Local Government Code and DECSDBM-DILG Joint Circular Nos. 01-A and 01-B.
We recommend that the Municipality of Tigbauan stop providing
funds for projects/activities that cannot be charged against the Special
Education Fund pursuant to the pertinent provisions of Republic Act
No. 7160 and Republic Act No. 5447.
We further recommend that the Local School Board should see to it
that disbursements charged against the SEF are in accordance with the rules
and regulations of the above-cited laws and DECS-DBM-DILG joint
circulars.
6. Monthly Report of Official Travels, Monthly Report of Fuel
Consumption of government motor vehicles and serially numbered and
properly accomplished drivers trip tickets were not submitted contrary
to COA Circular No. 75-6, dated November 7, 1975, and the Manual for
Audit of Fuel Consumption prescribed under COA Circular No. 77-61,
dated September 26, 1977.
Require the concerned officials or its equivalent to strictly observe the
provisions of COA Circular No. 75-6, dated November 7, 1975 and the
Manual for Audit of Fuel Consumption prescribed under COA Circular No.
77-61, dated September 26, 1977, on the submission of mandatory reports,
relative to the use of government vehicles.
7. Failure of the Municipal Disaster Risk Reduction and Management
Officer (MDRRMO) to submit a monthly Report on Sources and
Utilization of Disaster Risk Reduction Management Fund (DRRMF),
contrary to the provision of COA Circular 2012-002, prevented the

timely verification of the correctness and proper utilization of the

Municipal Disaster Risk Reduction Fund for CY 2013.
We recommend that management adhere strictly with the provision of
Item 5.1.5 of COA Circular 2012-002 dated September 12, 2012 and submit
regularly to the COA Audit Team of the Municipality the monthly Report on
Sources and Utilization of the Municipal Disaster Risk Reduction
Management Fund on or before the 15th day after the end of each month
through the Municipal Disaster Risk Reduction Management Council and
the Municipal Development Council.
8. Contracts and Purchase Orders entered into by the Municipality were
not submitted to Commission on Audit (COA), contrary to COA
Circular 2009-001 dated February 12, 2009 and COA Circular No. 96010, dated August 15, 1996, thereby, hindering the review, inspection
and evaluation processes.
We recommend that the Municipality implement strictly the provisions
of COA Sections 3.1.1 and 3.1.2 of COA Circular 2009-001 dated
February 12, 2009 and COA Circular No. 96-010 dated August 15, 1996.
Strict adherence thereto will minimize and may eventually eliminate
suspensions and disallowances during the conduct of post audit. Also,
immediate corrective measures can be done for all deficiencies noted in the
course of review, evaluation and inspection.
9. The Municipality failed to submit the financial reports and paid
disbursement vouchers with supporting documents for Calendar Year
2013 for post-audit purposes in violation of the provisions of Section 122
of Presidential Decree No. 1445, thus precluding timely post-audit and
issuance of Audit Observation Memorandum (AOM) for any deficiency
that maybe noted.
We recommend that the Municipal Accountant submit financial
reports, paid disbursement vouchers and supporting documents to the
Auditors Office within 10 days of each month after these are recorded in the
books of accounts.
10. Disbursement Vouchers and its supporting documents were not
stamped PAID contrary to Section 2(Q) of COA Circular No. 92-389,
dated November 3, 1992, thus indicating weak internal control.
It is recommended that the Cashier stamp PAID all Disbursement
Vouchers including their supporting documents pursuant to Section 2(Q) of
COA Circular No. 92-389 to prevent the possibility of being used for new
claims.
11. The Municipality granted Productivity Enhancement Incentive in the
amount of P3,730,150.00 for CY 2013 despite incurring excess over
Personal Services (PS) limitation as outlined in Section 325 (a) of
Republic Act No. 7160 resulting to an imbalanced allocation of funds.

We recommend that the Municipality cause the refund of the PEI

amounting to P3,730,150.00 in excess of its PS limitation granted to its
employees since it is contrary to the provisions of Section 325 (a) of
RA 7160 and Local Budget Circular No. 98.
We also recommend that the LGU management initiate and optimize
the generation of resources and revenues, and ensure that all taxes and other
revenues of the LGU are collected in order to increase the allowable PS
level.
Pertinent thereto, the Sangguniang Bayan should enact the
corresponding ordinances levying taxes, fees and charges and prescribe the
rates thereof and should come up with judicious and holistic evaluation of
the reasonableness of projected revenues and other receipts.
We likewise recommend that the Municipal Finance Committee should
set realizable collection targets in order to arrive at a doable budget that
would respond to the actual need of the Municipality instead of creating
more unnecessary positions that may not redound to the betterment of the
LGU.
12. The following are prior years findings and recommendations that
remain unimplemented:
12.1 2012 AAR Finding No. 1:
The Municipality hired personnel as job hires of which 48%
were performing clerical and administrative functions contrary to
Section 1 (b) of Civil Service Commission (CSC) Resolution No.
021480 as embodied in CSC Memorandum Circular No. 24, s.
2002, thereby incurring an additional expense of P1,423,623.00
which could have been used on developmental projects most
beneficial to uplift the lives of its constituents.
We recommend that the agency head should:
1. Reduce the number of job hires especially those performing clerical
and administrative functions. Hiring of personnel should be made
as actual need arises and be deployed only to offices that needed
their services the most.
2. Require the rendition of overtime services by regular employees in
the exigency of the service and to meet reports on deadlines.
3. Adopt merit and incentive award strategies to motivate all personnel
and to enhance their potentials in performing their functions.
4. Regular job rotation should be made to place the right person on the
right job to deliver the services required.

We further recommend that the agency head should revisit the

guidelines set forth in CSC MC No. 24, s. 2002 on the hiring of job
hires. Judicious use of government funds must be considered so that
savings derived could be used on developmental projects most
beneficial in uplifting the lives of its constituents
12.2 2012 AAR Finding No. 2:
Traveling expenses amounting to P1,665,000.00 were incurred
by the municipality for the Capacity Development of its employees
at Cebu City on September 27-30, 2012, contrary to COA Circular
No. 77-55, as amended by COA Circular No. 2012-003, dated
October 29, 2012, Funds expended for said activity could have
been productively used instead to finance programs and projects
for the municipalitys economic development.
We recommend that the Local Chief Executive observe judicious
use of government resources being advocated by COA Circular No.
77-55 as amended by COA Circular No. 2012-003, dated October 29,
2012.
We also recommend that inasmuch as the expenditure is
considered excessive, unnecessary and extravagant as defined in the
cited COA Circular, the officials and employees concerned should
refund the cash advances given them.
12.3 2011 AAR Finding No. 1:
The Municipality did not hold the July 12-24, 2011 capability
building & interfacing towards codification of laws in Iloilo instead
celebrated it at Cagayan de Oro and Camiguin, contrary to COA
Circular No. 77-55 as amended by COA Circular No. 85-55-A
dated September 8, 1985, thus incurred additional cost of
P846,670.00 for traveling expenses.
We recommend that the Local Chief Executive observe economic
and judicious use of resources being advocated by COA Circular No.
77-55 as amended by COA Circular No. 85-55A dated September 18,
1985.
12.4 2011 AAR Finding No. 2:
The Municipality incurred expenses amounting to P740,443.56
for attendance to trainings and seminars of employees, contrary to
DILG Memorandum Circular No. 2010-139 dated December 2,
2010 and LGU Memorandum Circular No. 001, thus funds spent
for it could have been used to finance capital expenditures for its
economic development.

We recommend that the Local Chief Executive observe the

limitations imposed by DILG Memorandum Circular No. 2010-139
dated December 2, 2010 and LGU Memorandum Circular No. 001.
Attendance of personnel to trainings and seminars should be
properly controlled and reviewed and that, only those that are relevant
to their duties and functions should be allowed. Trainings and
seminars involving large amount for registration and traveling
expenses, should be discouraged. Likewise, immediate liquidations of
cash advances for travel should be enforced after completion of travel.
12.5 2009 AAR Finding No. 4:
Calamity Fund of P200,000 from the Province of Iloilo
intended specifically for 2008 Typhoon Frank victims was
diverted for procurement of school bags of 1,159 students contrary
to Section 324(d) of RA 7160 as amended by RA 8185, thereby
depriving the typhoon victims of the necessary financial assistance.
We recommend that Trust Fund be used only for the specific
purpose for which it was created and for which it came into the
possession of the local government unit. As a Calamity Fund, RA
8185 guideline for its disbursement should be strictly complied with.
12.6 2007 AAR Finding No. 1:
Payables accumulated to P162,707.56 in violation of Section 98
of Presidential Decree No. 1445, the amount of which if reverted to
unappropriated surplus of the General Fund can be a source of
fund for priority projects of the Municipality.
The Municipal Accountant was advised to ascertain validity of
claims and those found with incomplete documentation be reverted to
the General Fund and taken up as Miscellaneous Income.
Representation with the Municipal Mayor and Sangguniang
Bayan should be made for them to request for waiver of interests and
surcharges from National Electrification Administration since they
were tolerant in not sending collection letter for more than 40 years.
Status of Implementation of Prior Years Audit Recommendations
Of the fifteen (15) audit recommendations embodied in the prior years
Annual Audit Reports, two (2) were fully implemented; three (3) were
partially implemented and ten (10) were not implemented.