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EXECUTIVE SUMMARY

The Municipality of San Francisco is located northeast of Cebu Province with an approximate distance of 38 nautical miles from the City of Cebu, the largest among the four municipalities of the Island of Camotes with a total land area of 10,596.87 hectares. The town was recognized by the Spanish Government in Manila in 1863 with Apolonio Navarro as its first Capitan.

Memorandum Circular No. 01-M(25)-08 dated November 18,2008 reclassified San Francisco to third class municipality effective July 29, 2008 consisting of fifteen (15) barangays.

Pursuant to RA 7160, known as the Local Government Code of 1991. the municipality like other local government unit enjoys total independence in managing, deciding and planning its own administrative, fiscal and development affairs in conformity with the national government’s thrust for sustainable social and economic growth.

As of December 31, 2015, it has a personnel complement of:

Nature of Appointment to Office

Quantity

Elective Officials

11

Permanent Positions

58

Casuals

32

Contractual

53

Job Orders

250

FINANCIALHIGHLIGHTS

Comparative analysis of the Statement of Financial Position showed an increase

On the other hand, the Statement of Financial

Performance showed an increase in both income and expenses and decrease in

surplus.

in Assets, Liabilities and Equity.

Performance showed an increase in both income and expenses and decrease in surplus. in Assets, Liabilities

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The municipality’s appropriation for CY 2015 is P127,227,207.00 which is higher by P 24,680,884.93 or

The municipality’s appropriation for CY 2015 is P127,227,207.00 which is higher by P24,680,884.93 or 24.07% compared to last year’s P102,546,322.07. On the other hand, total expenditures during the year amounted to P198,257,246.94. There was an increase of P145,875,809.48 or 278.49% as compared with that of the previous year totaling P52,381,437.46 as shown below:

 

2015

2014

General Fund

91,489,021.99

51,998,974.27

Special Education Fund

352,591.08

382,463.19

Trust Fund

106,415,633.87

-

Total

198,257,246.94

52,381,437.46

The increase in expenditures was due to the inclusion of the Trust Fund in CY 2015 which was not considered in the previous years.

SCOPE OF AUDIT

An audit was conducted on the accounts and operations of the Municipality of San Francisco for the calendar year ended December 31, 2015. The audit was made to ascertain the regularity of disbursement, the reliability of financial reports and the adequacy of accounting reports.

AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

The auditor rendered a qualified opinion on the financial statements as the balance of the Property, Plant and Equipment (PPE) account totaling P119,958,309.37 as of December 31, 2015 did not reconcile with the amount per physical inventory of P14,877,638.67 or a difference of P105,080,671.06.

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Also, the agency failed to maintain the subsidiary ledger/cards and the depreciation per item of the PPE.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

1. Cash advance for Intelligence Fund (IF) for the first and second quarter of CY 2015 were not supported with the required documents contrary to Section 6.1.7 and 6.1.8.3 of Joint Circular 2015.01. Further, the Accountant failed to submit within seven (7) days the cash advance vouchers to COA for post audit.

We recommend that the concerned Municipal Mayor and Municipal Accountant strictly follow the provision of the Joint Circular 2015-01 in the grant of cash advance for confidential and/or intelligence fund and submit written explanation on the failure to submit the cash advance vouchers within seven (7) days after release of check.

2. Cash advance of the Municipal Mayor for Confidential Fund (CF) for the 2 nd half of CY 2015 amounting to P500,000.00 was beyond the three months requirement, contrary to Section 6.1.5 of Joint Circular No. 2015- 01 of COA, DBM, DILG, DND and Governance Commission for GOCCs dated January 8, 2015.

We recommend that the Municipal Mayor should limit the amount of cash advances for Confidential Fund to three months requirement pursuant to the provisions stated in the Joint Circular 2015-01.

3. Approved fidelity bond of the Disbursing Officer amounting to P500,000.00 for the maximum accountability of P1,000,000.00 is inadequate .

We recommend that the fidelity bond of the Disbursing Officer be increased in accordance with the increase in her maximum accountability in order to protect government funds.

4. Remittances / turnover of collections of the Revenue Collection Clerks of the municipality to the Municipal Treasurer were not done daily contrary to the provisions of Section 29 and 32 of the NGAS, thus exposing the government funds to the risk of loss, possible misuse and/or misappropriation.

We recommend that the Collecting Officers and Municipal Treasurer strictly observe daily turnover of collections, pursuant to the provisions of Section 29 and 32 of the NGAS to safeguard the fund of the municipality.

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5.

Unutilized balance of the Local Disaster Risk Reduction (LDRR) as of December 31, 2014, amounting to P3,821,129.30 remained in the General Fund contrary to Section 5.1.10 of COA Circular 2012-002.

We recommend that the Municipal Accountant transfer the unutilized balance of the LDRRMF to the Special Trust Fund under the account “Trust Liability – DRRM using the following entries:

Particulars

 

General Fund

Trust Fund

Transfer unexpended balance

of

DR Subsidy to Other Fund

DR - Cash

CR

-

Cash

CR - Trust Liability DRRM

6. The 20% Development Fund was used as Financial Assistance to the Liga ng mga Barangay in the amount of P500,000.00 without specific program/project identified, thus determination on the effective use of the fund cannot be achieved. The release of the fund lacks Sanggunian Resolution authorizing the Municipal Mayor to enter into contract with the Liga.

We recommend that the concerned Municipal Mayor see to it that financial assistance released to the Liga which is sourced from the development fund be duly supported with specific projects/programs for proper utilization and implementation thereof. There should be a resolution from the Sanggunian Bayan for the Mayor to enter into contract with the Liga for the implementation of the projects pursuant to G.R. No. 175527 of the Supreme Court.

7. Procurement of ammunition amounting to P99,400.00 was made through shopping and lacked documentary requirements contrary to Section 52(a) of the IRR of RA 9184 and Section 9 of COA Circular 2012-001, respectively.

We recommend that the members of the BAC and personnel involved in the procurement to strictly observe the provisions of the Revised IRR of RA 9184 to achieve transparency in the procurement process. Also require the submission of the proof of ownership of the firearms and the certification on the peace and order situation of the municipality to support that the issuance of the firearms and procurement of ammunition is necessary.

Henceforth, see to it that taxes will be withheld and remitted for all the procurements of the municipality to avoid the burden of the liability to pay the deficiency tax.

8. Repairs and maintenance of construction and heavy equipment and motor vehicles amounting to P1,897,876.00 and P1,767,232.60 respectively,

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were not adequately supported with documents in violation to Section 4(6) of PD 1445 thus, validity and propriety thereof could not be established.

We recommend that the Municipal Mayor direct the Municipal Treasurer to see to it that all expenditures for repairs be supported with complete documentation and ensure proper observance of the procedures and to avoid incurrence of excessive expenditures. Further, require the personnel in charge at the motor pool to initiate the maintenance of the individual records of the equipments and adopt measures to protect the equipments and motor vehicles of the municipality.

9. The Special Education Fund amounting to P72,591.50 was used for payments of expenses contrary to the provisions of Section 272 of Local Government Code of 1991.

It is recommended that Special Education Fund be utilized for expenses that are authorized in accordance with the Local Government Code and the Joint Circular No. 01 s. 1998 of the Department of Education, Culture and Sports, Department of Budget and Management and the Department of Interior and Local Government.

10. Expenses of the municipality for the period ending November 30, 2015 totaling P1,658,205.23 were charged to the 20% Development Fund in violation of Section 4 of the Joint Memorandum Circular No. 2011-1 of the Department of the Interior and Local Government and the Department of Budget and Management.

We recommend that management should use the 20% Development Fund for those expenditure items in accordance with the provision of Joint Memorandum Circular No. 2011-1 dated April 13, 2011 of the Department of the Interior and Local Government and the Department of Budget and Management.

Unsettled Disallowances/Charges/Suspension

Notice of Suspension in the total amount of P4,315,586.57 including issued during the year in the total amount of P1,469,600.00 remained unsettled as of December 31, 2015. There was no Notice of Disallowance and Notice of Charge issued during the year.

STATUS

RECOMMENDATIONS

OF

IMPLEMENTATION

OF

PRIOR

YEARS

AUDIT

Out of last year’s thirty five (35) recommendations, five (5) were implemented, twelve (12) were partially implemented, and eighteen (18) were not implemented.

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