PART II - OBSERVATIONS AND RECOMMENDATIONS

FINANCIAL AND COMPLIANCE AUDIT

Undisposed unserviceable properties P2,433,716.20

1. Unserviceable equipment amounting to P2,433,716.20 remained undisposed

due to the absence of a Disposal Committee contrary to Section 79 of
Presidential Decree No. 1445, thus exposing said property and equipment to
further deterioration, wear and tear, possible loss and reduction in value and
deprived the LGU of additional revenue from the sale thereof.

1.1 This is a reiteration of prior years audit recommendation in view of the

failure of management to dispose the unserviceable equipment of the
LGU.

1.2 Verification of the Inventory and Inspection Report of Unserviceable

Property (IIRUP) disclosed various PPE costing P1,758,002.08 which
became unserviceable during the year in addition to unserviceable
property of P675,666.11 in CY 2014 or a total of P2,433,668.20 as of
December 31, 2015. (Appendix E)

1.3 Inspection conducted also disclosed that these assets were exposed to
further deterioration and risk of loss since these were stored at congested
and unsecured storerooms of the municipality. The continued non-disposal
of the unserviceable equipment also deprived the municipal government of
additional income that can be derived from the sale thereof.

1.4 We recommended that the Local Chief Executive:

a) create a disposal committee to effect the prompt disposal of all

unserviceable properties in accordance with Section 79 of PD No.
1445, to prevent further deterioration and decline in their value; and

b) require the Acting Property Officer to prioritize the preparation of

the necessary documents for the disposal as required under Section 79
of P.D. 1445 and other existing rules and regulations.

1.5 It was explained during the exit conference that a Disposal Committee was
already created upon receipt of our AOM. Inventory taking for
unserviceable equipment is on-going and they are still in the process of
updating their records and preparing the documents necessary for disposal.

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Low utilization rate of the 20% Development Fund

2. The Municipality registered a low utilization rate of 14.81% in the utilization of

its allocated budget for 20% development fund of P15,355,818.00. Out of the
54 programs/projects and activities, 28 development projects or 51.85% were
not implemented during the year, thus the Municipalitys constituents were
deprived of the of the benefits that could be derived therefrom. Moreover,
allocated fund for SWM project was utilized despite exclusion from the
approved budget and not in consonance with DILG-DBM Joint Memorandum
Circular No. 2011-1 dated April 11, 2011.

2.1 DILG-DBM Joint Memorandum Circular No. 2011-1 dated April 11, 2011
provides for the guidelines on the appropriation and utilization of the 20%
Internal Revenue Allotment enumerating the general policies under Section
2, to wit:
o In accordance with Section 287 of the Local Government Code,
every LGU shall appropriate in its annual budget no less than twenty
percent (20%) of its annual internal revenue allotment for
development projects.
o It may be utilized to finance the priority development projects and
programs, as embodied in the duly approved local development plan
that directly support the Philippine Development Plan, the Medium
Term Public Investment Program and the Annual Investment
Program.
o All projects to be funded shall contribute to the attainment of
desirable socio-economic development and environmental
management outcomes and shall partake the nature of investment or
capital expenditures.

2.2 For CY 2015, the Municipality received its Internal Revenue Allotment
(IRA) amounting to P76,779,090.00 wherein it appropriated P15,355,818.00
or 20% thereof for development projects.

2.3 Review and verification of accomplishment report of the Municipality vis--

vis the major programs and projects, revealed a low percentage in the
implementation of the development projects. Out of the 54
programs/projects and activities funded out the 20% development fund,
eight (8) projects or 14.81% were completed, eighteen (18) or 33.33% were
on-going; while twenty eight (28) or 51.85% of projects were not
implemented or started during the year. Details are shown below:
Program/Project/Activity Appropriation Utilized Balance
SOCIAL DEVELOPMENT
1 Procurement of Sanitation
Equipment & Materials P 60,000.00 - P 60,000.00

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 Program/Project/Activity Appropriation Utilized Balance
2 Procurement of Dental 20,000.00 - 20,000.00
Equipment
3 Provision of Health Equipment 120,000.00 61,660.00 58,340.00
4 Provision of Height Measure 65,000.00 64,350.00 650.00
Stand
ECONOMIC SERVICES
5 Provision of Corn Subsidy 75,000.00 - 75,000.00
6 Livestock genetic improvement
& materials 60,000.00 60,000.00 -
7 Provision of animal dewormer &
vitamins 100,000.00 97,571.00 2,429.00
8 Improvement of Upstream Side
Slope Protection 171,408.60 - 171,408.60
9 Provision of Natural Feed
Processing Equipment 87,525.00 - 87,525.00
10 High Value Crops Integrated
Farming Program 76,327.50 - 76,327.50
11 Development of Screen House
and Potting Shed 50,000.00 - 50,000.00
12 Provision of Boat and Fishing
Materials 96,000.00 - 96,000.00
13 Rehabilitation/Restoration of
Cultural/Historical Sites 250,000.00 201,373.00 48,627.00
14 Development of Identified &
Potential Tourism Sites 250,000.00 - 250,000.00
15 Repair/Improvement of
Pasalubong Center 200,000.00 14,440.00 185,560.00
16 Counterpart Fund for Local
Poverty Reduction Action 2,542,763..65 848,645.87 1,694,117.78
Projects
17 Repair/Improvement of Public
Market Facilities 200,000.00 - 200,000.00
18 Repair of Canopy, Public Market 200,000.00 156,788.00 43,212.00
19 Completion/Improvement &
Repair of Center Island Electric 150,000.00 136,050.00 13,950.00
Lighting
20 Demolition of Old
Administrative Office and 200,000.00 - 200,000.00
Construction of Stalls
21 Repair/Improvement of Fishport
Building and Premises 200,000.00 16,350.00 183,650.00
22 Installation/Construction of
Water System 150,000.00 86,052.84 63,947.16
23 Repair/Improvement of Fishport
Building and Facilities 150,000.00 121,699.00 28,301.00
24 Construction/Improvement of
Amenities for Tourism 200,000.00 - 200,000.00
25 Rehab/Improvement of
Slaughterhouse Facilities 250,000.00 56,875.00 193,125.00

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 Program/Project/Activity Appropriation Utilized Balance
26 Procurement of 1 set Fiber Glass
Basketball Court 25,000.00 - 25,000.00
27 Rehabilitation of Sports
Complex(Centro Baler) 350,000.00 - 350,000.00
28 Rehabilitation/Improv. Of
Drainage Canal-Terminal 150,000.00 - 150,000.00
29 Construction of Canopy-Central
Terminal 250,000.00 - 250,000.00
30 Marine Protected Area
Management 100,000.00 - 100,000.00
31 Coastal Resource Assessment &
Monitoring of Water Facility 60,000.00 - 60,000.00
32 Delineation & Mapping of
Mangrove Protected Area 50,000.00 - 50,000.00
33 Construction of Forest Nursery
and Guard House 200,000.00 - 200,000.00
34 Procurement of Forest and Fruit
Tree Bearing Tree Seedlings 100,000.00 - 100,000.00
35 Procurement of Collection 100,000.00 -
Vehicle
36 Procurement/Upgrading of
ESWM Machine & Equipment 150,000.00 - 150,000.00
37 IEC-Balik Basura Palit Gamit sa
Eskwela Project 100,000.00 32,800.00 67,200.00
38 Rehabilitation of MRF-Main
Sorting Area 360,000.00 - 360,000.00
39 Local Investment Promotion 100,000.00 74,400.00 25,600.00
GENERAL PUBLIC SERVICES
40 Streetlighting and Public Areas
Lighting using LED and Solar
Power System 385,000.00 379,668.25 5,331.75
41 Electrical materials for
Alternative Learning System 15,000.00 14,126.50 873.50
42 Electrification/Replacement of
Worn-out Streetlights 100,000.00 91,239.28 8,760.72
43 Improvement of Municipal
Building 180,000.00 59,762.00 120,238.00
44 Construction of Evidence
Storage Room, Baler Police 20,000.00 18,782.75 1,217.00
Station
45 Improvement of Municipal
Plaza/Construction of Parking 200,000.00 - 200,000.00
Areas with Landscaping
46 Repair/Improvement of Water
System 250,000.00 8,310.00 241,690.00
47 Repair/Improvement of Roads,
Streets & Drainage 291,793.25 - 291,793.25
48 Acquisition/Procurement of
Standby Power Generator 1,000,000.00 989,000.00 11,000.00

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 Program/Project/Activity Appropriation Utilized Balance
49 Land Acquisition, Survey,
Validation and Titling 3,500,000.00 - 3,500.000.00
50 Provision of Computerized
Network System for Executive 500,000.00 - 500,000.00
Supervision
51 Provision/Acquisition of Multi-
Purpose Sound System 320,000.00 98,000.00 222,000.00
52 Book Collection Development 100,000.00 67,900.00 32,100.00
53 Establishment of Computerized
Legislative Tracking System 150,000.00 68,126.00 81,874.00
(SIS)
54 Support to Barangay
Development Programs and 325,000.00 245,195.00 79,805.00
Projects
TOTAL 15,355,818.00 4,069,164.49 11,286,653.51

2.4 Post-audit of disbursements under 20% development fund also revealed

that programs under Solid Waste Management namely: Conduct of
Environment Contest and Information Education Campaign were
implemented despite exclusion from its annual budget as embodied in the
SP Resolution No. 103 dated September 22, 2015. The amount of
P168,450.00 was utilized for the payment of prizes for the Best Solid Waste
Implementor, and meals and snacks for assessment and training. The said
projects were not in consonance with DILG-DBM JMC No. 2011-1 dated
April 11, 2011.

2.5 We recommended that the Local Chief Executive: (a) instruct the
Municipal Planning Development Officer (MPDO) to abide strictly with
the guidelines on the planning and implementation of the projects/
activities funded under the 20% Development Fund in accordance with
DILG-DBM Joint Memorandum Circular No. 2011-1 dated April 11,
2011 for the benefit of its constituents; and (b) require the Municipal
Budget Officer and other concerned municipal officials to explain/
justify the use of P168,450.00 despite exclusion thereof from its annual
budget.

2.6 It was explained during the exit conference that the low utilization of the
20% development fund was due to improper scheduling of procurement in
the Annual Procurement Plan by the implementing office concerned and
also partly affected by the implementation of various Bottoms Up Budgeting
funded projects which requires numerous documentary requirements by the
respective source agencies. Meanwhile, for SWM project which was
utilized despite exclusion from the approved budget and not in consonance
with DILG-DBM Joint Memorandum Circular No. 2011-1 dated April 11,
2011, it was explained that the said expenditures were disbursed prior to the
issuance of the review action of the Sangguniang Panlalawigan. Moreover,

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 the MENRO who implemented the SWM activities pointed out that the
conduct of Environment Contest was one of the important components of
Ecological Solid Waste Management Program, thus maybe charged against
the 20% development fund.

Solid Waste Management

3. The Municipality failed to establish a Sanitary Landfill Facility which was

included in their ten-year Ecological Solid Waste Management Plan (2007-
2016) formulated in July 2007. Moreover, local ordinances on the no
segregation, no collection policy and no littering policy were not effectively
enforced and implemented as evidenced by unsorted wastes collected at the
MRF and garbage found in some tourist destinations, hence the total protection
of the environment and general welfare of the constituents has not been
substantially attained.

3.1 The Implementing Rules and Regulations (IRR) of R.A. No. 9003 or the
Solid Waste Management Act of 2000 prescribes that all local government
units shall coordinate efforts and implement at their level the following
regulations:

a.) Mandatory segregation of wastes at source;

b.) No segregation/No collection rule;
c.) Establishment of a functional Materials Recovery Facility or MRF;
d.) Operation of a disposal facility; and
e.) No littering mandate of law

3.2 Section 16 of the same Act prescribes that the province, city or municipality,
through its local solid waste management boards, shall prepare its respective
10-year solid waste management plans consistent with the national solid
waste management framework.

3.3 Interview with the Municipal Environment and Natural Resources Officer
(MENRO) and validation thereof with available documents disclosed that
the LGU had formulated its ten-year Solid Waste Management Plan (2007-
2016) in July 2007. The said plan was conditionally approved by the
National Solid Waste Management Commission (NSWMC) in 2014 and to
be deemed approved upon submission of the LGU of the completed/updated
plan based on the Annotated Outline for LGU SWM Plans required by the
said Commission. Nevertheless, except for the establishment and operation
of the Category 1 Sanitary Landfill with a target year of completion of 2009
onwards, the LGU has gradually complied with the plan, as follows:

Organized a multi-sectoral SWM body to implement the SWM

Programs;

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 Strengthened the office of the MENRO to attend to various solid waste
concerns;
Improved the central Material Recovery Facility (MRF) located at
Brgy. Pingit and facilitated the establishment of MRFs in the 13
barangays of Baler;
Organized and trained IEC teams at barangays, institutions,
establishments and hospitals;
Facilitated the integration of SWM concepts in the academic curricula
of all public and private schools;
Enforced SWM ordinances and other relevant policies; and
On-going conduct of waste analysis and characterization (WACS)

3.4 As of this date, the LGU is still in the process of negotiation with the land
owners for possible acquisition of proposed road going to the sanitary
landfill site. Currently, the Municipality still operates a temporary Residual
Containment Area as its disposal facility for residual wastes coming from
varied sources though a sanitary landfill is advisable under the Act, which is
more environment-friendly.

3.5 It is worth mentioning that the LGU had already passed local ordinances for
environmental protections such as the mandatory segregation of solid
wastes; the no segregation, no collection policy; establishment of Material
Recovery Facility (MRF); regulating the use and sale of plastic bags,
cellophane, Styrofoam and styropor as bagging and packing materials; and
prohibition for the use of advertisement and propaganda materials made of
polyethylene (plastic). However, these ordinances, specifically the no
segregation, no collection and the no littering policies were not strictly
enforced and implemented based on the unsorted wastes collected at the
MRF everyday and garbage found in public places and some tourist
destinations. Also, no visible signages were found in some public places to
remind the citizenry on its implementation and the sanctions that may be
imposed to violators.

3.7 We recommended that the Local Chief Executive and the MENRO:

a) exert effort to expedite the establishment and completion of the

Category 1 Sanitary Landfill;

b) involve closely the Barangay officials in the strict implementation on

the existing environmental laws and intensify the information
campaign on the no segregation, no collection policy and the no-
littering policy among the residents and tourists;

c) seek the help of private companies/organizations in the conduct of a

more aggressive and intensive information campaign on the proper
segregation of waste and no littering policies; and

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 d) exercise strong political will to implement the environmental laws on
preserving and protecting the environment as mandated under
Republic Act No. 9003.

3.7 The LGU management explained that the titling of the proposed site of a
Sanitary Landfill was still in process and requires documents from national
agencies, which is beyond their control. As much as they want to expedite
the establishment of a Sanitary Landfill, they could not act on it due to some
legal impediments. The MENRO also justified that information campaign
relative to the above mentioned environmental laws were already done
through dialogue/ meetings with the barangay officials and DEPED people,
and even through radio airing. There were also Solid Waste Management
Officers deputized by the Municipality who are authorized to apprehend
violators of existing environmental laws and ordinances. She also explained
that the 100% implementation of the waste management ordinances could
not be done due to lack of manpower and insufficient fund; and also
attributed to lack of discipline among the citizens in the community.

Special Education Fund

4. Various expenses totaling to P442,950.03 charged in the Special Education

Fund (SEF) were not in accordance with the provisions of Republic Act No.
5447, Sections 100 and 272 of R.A. No. 7160, Deped-DBM-DILG Joint
Circular Nos. 01, s. 1998 dated April 14, 1998, and No. 01-A, March 14, 2000.
Moreover, accountability over assets procured out of SEF was not adequately
monitored which may result in losses or non-traceability of government issued
property.

4.1 The assistance or support of local government units to education

department is aptly assigned by law to and implemented by the local
school board (LSB). Primarily, Title IV of RA 7160 defines the
composition, functions, and duties of its members. Section 99 thereof
provides that the LSB is tasked to determine the annual supplementary
budgetary needs, in accordance with the criteria set by the DepEd for the
operation and maintenance of public schools within the LGU. This
statement only confirms that the needs of the schools with reference to the
DepEd criteria are the paramount consideration in the SEF budgeting
process.

4.3 The followings laws and regulations enumerates the transactions and
activities to be the items of SEF priority spending:

Section 1, RA No. 5447

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a) the organization and operation of such number of extension classes
as may be needed to accommodate all children of school age
desiring to enter Grade I, including the creation of positions of
classroom teachers, head teachers and principals for such extension
classes, which shall not exceed the standard requirements of the
Bureau of Public Schools;
b) the programming of the construction and repair of elementary
school buildings, acquisition of sites, and the construction and
repair of workshops and similar buildings and accessories thereof
to house laboratory, technical and similar equipment and apparatus
needed by public schools offering practical arts, home economics
and vocational courses, giving priority to elementary schools on
the basis of the actual needs and total requirements of the country;
c) the payment and adjustment of salaries of public school teachers
under and by virtue of Republic Act Numbered Five thousand one
hundred sixty-eight and all the benefits in favor of public school
teachers provided under Republic Act Numbered Four thousand six
hundred seventy;
d) the preparation, printing and/or purchase of textbooks, teachers'
guides, forms and pamphlets, approved in accordance with existing
laws to be used in all public schools;
e) purchase and/or improvement, repair and refurbishing of
machinery, laboratory, technical and similar equipment and
apparatus, including spare parts needed by the Bureau of
Vocational Education and secondary schools offering vocational
courses;
f) establishment of a printing plant to be used exclusively for the
printing needs of the Department of Education and the
improvement of regional printing plants in the vocational schools;
g) purchase of teaching materials such as workbooks, atlases, flip
charts, science and mathematics teaching aids, and simple
laboratory devices for elementary and secondary classes;
h) the implementation of the existing program for citizenship
development in barrio high schools, folk schools and adult
education classes;
i) undertaking of education research, including that of the Board of
National Education;
j) granting of government scholarships to poor but deserving
studentsi under Republic Act Numbered Four thousand ninety; and
k) promotion of physical education, such as athletic meets.

Section 100, RA No. 7160

a) Construction, repair, and maintenance of school buildings and

other facilities of public elementary and secondary schools;

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 b) Establishment and maintenance of extension classes where
necessary; and
c) Sports activities at the division, district, municipal, and barangay
levels.

Section 272, RA No. 7160

a) operation and maintenance of public schools

b) construction and repair of school buildings
c) facilities and equipment
d) educational research
e) purchase of books and periodicals
f) sports development

Department of Education (DepEd), Department of Budget and

Management (DBM) and Department of Interior and Local (DILG)
Joint Circular No. 1, s. 1998 dated April 14, 1998 and Joint Circular
No. 01-A, dated March 14, 2000

a) operation and maintenance of public schools, including

organization of extension, non-formal, remedial and summer
classes and payment of salaries and other authorized
allowances of public school teachers;
b) construction, repair and maintenance of school buildings, and
facilities;
c) other needed capital outlays such as the purchase, titling and
improvement of school sites;
d) educational research;
e) acquisition/procurement of books, instructional materials, and
periodicals;
f) acquisition of equipment, including information technology
resources; and
g) expenses for school sports activities at the national, regional,
division, district, municipal and barangay levels including
DepEd related activities and co-curricular activities;
h) salaries and authorized allowances of teachers hired to handle
new extension classes of public elementary and secondary
schools.

4.4In the post-audit of disbursements for CY 2015, we established that

expenditures totaling to P442,950.03 charged against SEF do not fall
within the primary purpose of the fund. Details are as follows:

Particulars Amount
Regular school maintenance
expenses/agency expenditures (including

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 internet, electricity, communication and P128,570.03
office supplies)
Traveling/training expenses for
teachers/school heads or principals/etc. 125,380.00
Salaries and allowances of non-teaching 147,000.00
personnel
TOTAL P442,950.03

4.6 The above disbursements were not among those enumerated in the above
mentioned laws and regulations. Similarly, the electricity, internet and
supplies expenses could have been charged to funds downloaded for
MOOE allocation of each school as stipulated in the DepEd regulations.

4.7 Verification of the inventory report of property also disclosed that neither
the LGU nor the LSB controls/monitors the chain of accountability for
property procured from SEF. Although Acknowledgement Receipt for
Equipment were issued to DepEd personnel, the LGU who keeps the
property records did not monitor the transmissions or transfers of
accountability after initial recording thereof. As a consequence, the LGU,
due to DepEd personnel movement, fails to update the property
records, obviously caused by:

lack of information of DepEd personnel movement (including

termination, retirement, reassignment or resignation;
absence of coordination with concerned DepEd Property Office
and Human Resource Office (HRMO) which manage the issuance
of property clearance of their personnel

4.8 This practice negates concrete assignment of liability in case of losses or

impairment of property through the fault of the possessor. Furthermore,
the possessors may be cleared of their accountability without surrendering
the possession of the subject property at the disadvantage of the
government.

4.9 The lack of proper monitoring for SEF property runs contrary to Section
340 of RA No. 7160 which states: Any officer of the local government
unit whose duty permits or requires the possession or custody of local
government funds shall be accountable and responsible for the
safekeeping thereof xxx. Other local officers who, though not
accountable by the nature of their duties, may likewise be similarly held
accountable and responsible for local government funds through their
participation in the use or application thereof.

4.10 We recommended that the Local Chief Executive:

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a) instruct the members of the Municipal Local School Board to prepare and cause the
approval of the annual School Board Budget for SEF by prioritizing programs,
projects and activities as stipulated in Section 1, Republic Act No. 5447, Sections 100
and 272 of R.A. No. 7160, Deped-DBM-DILG Joint Circular Nos. 01, s. 1998 dated
April 14, 1998, and No. 01-A, March 14, 2000;

b) Stop the practice of utilizing the fund for payment of MOOE of the DepEd Office
and other expenses not related to or included in the list of prioritized expenses
chargeable against SEF; and

c) instruct the Property Custodian to coordinate with the DepEd Property Office and
HRMO to strengthen the controls on property accountability and to monitor the
clearances of DepEd personnel who are retiring, resigning, reassignment or
terminating their employment.

4.11 In response to our AOM, the DepEd official concerned

enumerated the following justifications:

- the amount of P128,570.03 were expenses incurred in support to the

District Office of Baler including the ALS because it has no direct
funds coming from the Department of Education;

- traveling and expenses for teachers/school heads were necessary in the

enhancement of their competencies for better teaching-learning
performance;

- salaries and allowances of non-teaching personnel calls for its

necessity since the multifarious consolidation of reports cannot be
done by the alone by the PSDS, hence the hiring was approved thru
board resolution and was given appropriation; and

- With regards to the property and equipment, she assured that transfer
of accountability shall be strictly monitored.

4.12 The LGU management however, assured the Audit Team that the audit
recommendations shall be complied with in the ensuing year.

Local Disaster Risk Reduction Management Fund

5. Receipts and issuances/distribution of in-kind aids/donations from public

and private sectors for the victims of typhoon Lando and Nona with
undetermined amount were not properly accounted and reported by the
concerned officials of the Municipality in accordance with Section Nos. IV-
C(1-2,7-8), V-B, VI-2 and VII of COA Circular No. 2014-002 dated April 15,
2014, thus precluding the Audit Team from determining whether these
goods/items were duly received and distributed to intended beneficiaries.

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5.1 Section No. IV-C of COA Circular No. 2014-002 dated April 15, 2014
on the Accounting and Reporting Guidelines on the receipt and
utilization of National Disaster Risk Reduction Management Fund
(NDRRMF) cash and in-kind aids/donations from local and foreign
sources provides the following:

1. Acknowledgement Receipt for In-kind Donations for DRRM

(Annex D) shall be issued by the Head of the Agency or his
authorized representative for the receipt of in-kind donations;

2. Issuances of donated relief foods for distribution to intended

beneficiaries/end-users shall be supported with Issuance Form
for In-Kind Donations-DRRM (Annex E);
xxxx

7. In-kind donations other than PPE shall not be recognized in the

books of accounts but shall be recorded in the Registry of
Donated Relief Goods for DRRM to be prepared and
maintained by the Property and Supply Unit for each kind of
relief goods using the prescribed format shown in Annex G.

8. Donated relief goods shall be sorted, inventoried/counted and

recorded upon receipt and before repacking. The distribution
shall be made immediately, especially the perishable goods/
items.

5.2 Section V-B of the same circular also provides that, The Donee-Agency
shall prepare monthly reports on the receipt and distribution/
utilization/issuance of in-kind donations. Separate Reports (Annexes N
and O) shall be prepared for relief goods and PPE based on the Registry of
Donated Relief Goods for DRRM and Property Cards, respectively. The
reports shall be submitted to the OCD, copy furnished the COA Auditor,
on or before the 10th day of the ensuing month until all donations are fully
consumed/utilized.

5.3 Section VI-2 thereof further requires that The Property Officer shall
prepare and maintain an inventory list of all procured and donated items
(Annexes P, P-1 and P-2) based on the updated Stock Cards and Property
Cards xxx while Section VII provides the accounting entries and
disclosures of information pertaining to DRRM which are not evident on
the face of the financial statements.

5.4 Interview and verification of accomplishment report of the Municipal

Social Welfare and Development Office disclosed that the Municipality
received various in-kind donations from DSWD Region III during the last
quarter of 2015 intended for victims of Typhoon Lando and Nona that hit
the Province of Aurora in October and December 2015, as follows:

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 7,600 packs - Family Foods Packs
700 pcs. Tarpaulin
400 pcs. - Hygiene Kit

5.5 Verification revealed that these in-kind donations/aids were received

directly from DSWD Region III and distributed by the personnel of the
receiving office and were no longer coursed to the Property Office.
Accordingly, the accounting and reporting requirements prescribed by
COA Circular No. 2014-002 for disaster risk reduction management and
operations such as Acknowledgement Receipt for In-Kind Donations,
Issuance Form for In-Kind Donations were not prepared and Registry of
Donated Relief Goods for DRRM were not maintained. Monthly reports
and Inventory List thereof as required in Sections IV-B and VI-2 of the
said circular were not prepared and submitted to concerned government
agencies/offices and to the Audit Team for verification and audit.

5.6 We recommended that the Local Chief Executive direct the acting
Property Officer to coordinate with the Municipal Social Welfare and
Development Office for the submission of necessary documents
relative to the receipt and distribution of the relief goods such as RIS,
Invoice Receipt and Relief Distribution Sheets to facilitate the
recording, accounting, preparation and submission of the required
reports and the Municipal Accountant to comply with Section VII on
the proper accounting and/or disclosure to the financial statements on
cash and in-kind donations for DRRM pursuant to pertinent
provisions of COA Circular No. 2014-002.

5.7 In response to our AOM issued, the MDSWDO explained that the
Distribution Sheet was submitted to the DSWD Region III and to the
International Organization for Migration (IOM) as they were required to
do so, while the donations from private donors were directly distributed to
the typhoon victims by the donors. The LGU personnel only assisted
them to the affected areas and in the actual distributions. The Municipal
Accountant also explained that the reports on the receipt and
distribution/utilization/issuance of in-kind donations and non-disclosures
in the financial statements was not done due to non-submission of the
necessary documents and reports relative thereto by the MSDWDO and
the acting Property Officer. They, however, assured the Audit Team to
comply with the above mentioned regulations in the future.

Gender and Development (GAD)

6. The municipality had appropriated the amount of P200,000.00 instead of the

required five percent (5%) of its annual budget for the implementation of GAD
activities/programs/projects contrary to Section 36 of R.A. No. 9710, thus
resulting to limited programs, activities and projects addressing gender issues.

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 6.1 This is a reiteration of prior years audit recommendation in view of the
failure of the LGU officials to provide appropriations of at least 5% for
CY 2015 in the implementation of GAD related programs and projects.

6.2 For CY 2015, only P200,000.00 was appropriated for GAD. It was
explained that funds for GAD were provided by way of attribution to
different GAD related programs/projects and activities of the LGU.

6.3 We reiterated that management appropriate at least 5% from its

annual budget for the implementation of programs/projects/activities
of Gender and Development in accordance with Section 36 of RA No.
9710.

Compliance with tax laws

7. The Municipal Accountant of Baler had complied strictly with the regulations
on the withholding and remittance of taxes due on compensation and all money
payments to suppliers, contractors and other creditors, as shown below:

Due to BIR Taxes Taxes Due to BIR

(beginning) Withheld Total Remitted (ending)
(1) (2) (3) (4) (5) (6)
January P 426,138.71 P 290,446.56 P 739,173.71 P 421,037.91 295,547.36
February 295,547.36 288,318.54 583,865.90 574,235.39 9,630.51
March 9,630.51 333,644.20 343,274.71 284,612.32 58,662.39
April 58,662.39 348,447.36 407,109.75 405,205.66 1,904.09
May 1,904.09 314,198.87 316,102.96 237,618.25 78,484.71
June 78,484.71 334,979.03 413,463.74 348,642.08 64,821.66
July 64,821.66 332,966.83 397,788.49 340,437.22 57,351.27
August 57,351.27 382,714.22 440,065.49 155,318.08 284,747.41
September 284,747.41 357,566.91 642,314.32 318,974.69 323,339.63
October 323,339.63 420,486.09 743,825.72 525,211.45 218,614.27
November 218,614.27 480,431.34 699,045.61 510,874.06 188,171.55
December 188,171.55 493,731.36 681,902.91 497,074.30 184,828.61
Total P4,804,070.02 P4,619,241.41

7.1 The balance of P184,828.61 was remitted in January 11, 2016 as per OR
Nos. 67813, 14718,75792 and 11538.

Compliance with Government Service Insurance System (GSIS) Law

8. During the CY 2015, the Municipality deducted from its employees salaries and
wages the mandatory insurance premiums and due loan amortizations totaling
P6,427,759.44 and remitted to the GSIS the amount of P6,416,999.52
comprising collections from employees and employers share leaving a balance
of P22,178.81 as of year-end.

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 8.1 Section 5 (c) of R.A. No. 8291 provides that it shall be mandatory and
compulsory for all employers to include the payment of contributions in
their appropriations. Penal sanctions shall be imposed upon employers
who fail to remit the accurate/exact amount of contributions on time or
delay the remittance of premium contributions to the GSIS.

8.2 Further, Section 6, supra, provides that each employer shall remit directly
to the GSIS the employees and employers contributions within the first
ten days of the calendar month following the month to which the
contributions apply. The remittance by the employer of the contribution to
the GSIS shall take priority over and above the payment of any and all
obligations, except salaries and wages of its employees.

8.3 Review of the SLs and GLs recorded under account Due to GSIS for CY
2015 showed the following data/information:
Beginning Ending
Month Withheld Total Remitted
Balance Balance
January P 11,418.89 P 535,196.02 P546,614.91 P 421,037.91 546,614.91
February 546,614.91 537,040.77 1,083,655.68 574,235.39 12,310.14
March 12,310.14 333,644.20 543,823.16 284,612.32 543,823.16
April 543,823.16 348,447.36 1,067,296.34 405,205.66 13,606.34
May 13,606.34 314,198.87 552,397.55 237,618.25 552,397.55
June 552,397.55 334,979.03 1,082,285.21 348,642.08 546,877.01
July 546,877.01 332,966.83 1,076,969.61 340,437.22 547,081.95
August 547,081.95 382,714.22 1,069,818.46 155,318.08 539,725.78
September 539,725.78 357,566.91 1,076,458.22 318,974.69 541,990.44
October 541,990.44 420,486.09 1,073,360.04 525,211.45 544,546.50
November 544,546.50 480,431.34 1,109,396.21 510,874.06 580,578.05
December 580,578.05 493,731.36 1,126,654.77 497,074.30 22,178.81
Total P6,439,178.41 P6,416,999.52

8.4 The balance of P22,178.89 as of year-end was remitted in January 2016.

8.5 We recommended that the Municipal Accountant and Municipal

Treasurer to continuously comply with and adhere to the existing
rules and regulation on withholding GSIS due from employees,
remitting the same including mandatory employers share and
performing the required reportorial functions.

Status of Audit Suspensions, Disallowances and Charges

9. Audit suspensions totaling P1,135,400.47 were all settled during the year. The
Municipal Accountant exerted effort to ensure that all payments are supported
with complete and valid documents as required in COA Circular No. 2012-001
dated June 14, 2012, to avoid suspension and/or disallowance in audit.

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9.1 During the year, Notices of Suspension amounting to P1,135,400.47
issued due to disbursements paid with incomplete supporting documents
were all settled. Details shown in the table below:

Beg.Balance This period January 1 to Ending Balance

(As of Dec. December 31, 2015 (As of Dec. 31,
31, 2014) NS/ND/NC NSSDS 2015)
Notice of P1,135,400.47 P 0.00 P1,135,400.47 P 0.00
Suspension
Notice of 0.00 0.00 0.00 0.00
Disallowance
Notice of Charge 0.00 0.00 0.00 0.00
Total P1,135,400.47 P 0.00 P1,135,400.47 P 0.00

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