EXECUTIVE SUMMARY

Introduction

Miagao is a first class municipality in the Province of Iloilo. It holds the

distinction of being the largest municipality in the country with a total of 119
barangays and envisions to become the economic frontier in Southern Iloilo and a
major destination in the province. It is approximately 40 kms southwest of Iloilo
City.

Miagao became an independent municipality in 1716. It used to be part or

arrabal of several towns in the First District of Iloilo. It is a beautiful place you will
not miss to drop by when visiting the City and Province of Iloilo. It is the place of the
famous Miagao Church, a national shrine by virtue of Presidential Decree 260 and
included in the World Heritage List of the UNESCO. The Miagao Church stands as a
living legacy of the culture and way of life of the people of Miagao, more than 200
years ago, anchored in a strong foundation of Christian faith. Miagao is also the seat
of the University of the Philippines Visayas (UPV), the symbol of academic
excellence and growth in the region.

Financial Highlights

The financial condition of the Municipality of Miagao as of December 31,

2014 with comparative figures of last year’s performance is shown below:

2014 2013 Increase/(Decrease)

Asset 241,195,450.71 215,288,250.67 25,907,200.04
Liabilities 71,820,276.60 74,453,576.56 (2,633,299.96)
Government Equity 169,375,174.11 140,834,674.11 28,540,500.00

The financial position of the Municipality for the year ended December 31,
2014 is presented below with comparative data for CY 2013.

2014 2013 Increase/(Decrease)

Income 129,511,774.67 114,328,368.88 15,183,405.79
Expenses 95,101,681.01 98,918,628.96 (3,816,947.95)
Net Income 30,432,933.35 12,903,558.35 17,529,375.00

The Municipality of Miagao’s comparative appropriation/allotment/obligation

for the General Fund andSpecial Education Fund for Calendar Years 2014 and 2013
are presented as follows:

General Current Appropriation Continuing Appropriation

Fund CY 2014 CY 2013 CY 2014 CY 2013
Appropriation 141,671,622.88 171,777,314.03 50,468,162.25 12,580,679.24
Allotment 141,249,522.88 171,546,414.03 50,468,162.25 12,580,679.24
Obligation 111,253,844.23 121,534,181.41 16,365,091.48 2,172,144.42
Balance 30,417,778.65 50,243,132.62 34,103,070.77 10,408,534.82
 Special Current Appropriation Continuing Appropriation
Education Fund CY 2014 CY 2013 CY 2014 CY 2013
Appropriation 4,570,000.00 3,069,800.00 720,234.21 263,922.21
Allotment 4,570,000.00 3,069,800.00 720,234.21 263,922.21
Obligation 2,005,303.62 2,435,100.58 238,142.00 10,141.00
Balance 2,564,696.38 634,699.42 482,092.21 253,781.21

Scope of Audit

The audit covered the accounts and operations of the Municipality of Miagao
in the Province of Iloilo for the year ended December 31, 2014. The audit was
conducted to determine the reliability of the LGU’s 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 LGU’s transactions were made in accordance with
existing laws, rules and regulations.

Auditor’s Opinion on the Financial Statements

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

the financial statements since the existence and correctness of the balances of the
Property, Plant and Equipment accounts valued at P138,385,885.55 as of December
31, 2014 are doubtful due to the failure in the submission of the report on the annual
physical inventory. Also, depreciation was not provided for PPE accounts totaling
P59,098,559.20. Likewise, the book and bank balances of Cash in Bank-LCCAs
totaling P64,696,381.99 were not reconciled.

Significant Findings and Recommendations

For the above exceptions, the Auditor recommended that the Municipal
Mayor:

1. Direct the Inventory Committee and Head of General Services Office to

submit the Report on the Physical Count of Property, Plant and Equipment for
properties totalling P138,385,885.55.

2. Instruct the Municipal Accountant to reconcile the RPCPPE with PPELC

maintained in the Accounting Department.

3. Instruct the Municipal Accountant to provide the corresponding allowance for

depreciation for properties valued at P59,098,559.20.

4. Direct the Municipal Accountant to submit Bank Reconciliation Statements

for the fifteen (15) bank accounts.
 The other significant findings are discussed below together with the
corresponding recommendations:

1. Productivity Enhancement Incentive (PEI) at P25,000.00 per employee, or a

total of P4,055,000.00 was paid by the municipality despite deficiency in PS
Cap due to error in the interpretation of existing rules and regulations.

We recommend that the Municipal Mayor advise all municipal

officials and employees to refund the excess amount of Productivity
Enhancement Incentive for CY 2014 totaling P3,772,045.81.

We also recommend that the concerned Municipal Officials see to it

that payments for allowances and other personnel benefits should be based on
laws, rules and regulations authorizing such payments to avoid suspensions/
disallowances in audit.

2. Various disbursements totalling P1,441,846.14 and P753,221.54 for CYs 2013

and 2014, respectively, charged against the Special Education Fund are
considered improper and contrary to the provisions of Republic Act No. 5447,
DECS-DBM-DILG Joint Circular Nos. 01-A and 01-B dated March 14, 2000
and June 25, 2001, respectively, which should have been used for more
important projects for various schools of the municipality.

We recommend that the Local School Board stop the practice of hiring
teachers assigned to regular classes of public schools of the municipality. We
also recommend submission of the following: 1) Certification of the Division
Superintendent of the necessity and urgency of establishing extension classes;
2) Recommendation of the Regional Director, Department of Education
(DepEd), Regional Office No. VI; and 3) Approval of the Secretary of the
Department of Education on the recommendation of the DepEd Regional
Director, for the hiring of the teachers, all appointed as contractual employee
of the municipality with the position Teacher I and basic salary of P14,353.00
per month, enumerated below:

Name of Teacher

1. Hyreen D. Modesto (Secondary Grades)

2. Jocelyn C. Roque (Secondary Grades)
3. Anna Lissa A. Moleno (Secondary Grades)
4. Marlyn F. Morata (Elementary Grades)
5. Marilou M. Novilla (Elem. Grades)
6. Jean N. Mitra (Elementary Grades)
7. Nanjen P. Nieles (Elementary Grades)

We also recommend that the Chairman of the Local School

Board/Local Chief Executive stop the practice of charging expenditures to
the Special Education Fund contrary to the provisions of RA 5447, DECS-
 DBM-DILG Joint Circular Nos. 01-A and 01-B dated March 14, 2000 and
June 25, 2001, respectively, to avoid suspensions/disallowances in audit.

3. Hazard Allowance totalling P318,716.90 was paid for CY 2014 which

included erroneous claims amounting to P51,491.25 contrary to Section 21 of
Republic Act 7305 also known as The Magna Carta of Public Health Workers,
thus rendering part of the claims as illegal and creating the risk that balances
recorded in the financial statements may not be fairly presented.

We recommend that the Municipal Mayor instruct the Municipal

Accountant to see to it that payments for allowances and other personnel
benefits should be based on laws, rules and regulations authorizing such
payments to avoid suspensions/ disallowances in audit.

We also recommend that the Municipal Health Officer and the Rural
Health Physician refund the excess amount of Hazard Allowance for CY 2014
totaling P51,491.25.

4. Operations of the local economic enterprises showed a consolidated net loss

of P1,189,864.04 for CY 2014 despite augmentation of financial subsidies
totalling P7,792,197.00 due to unsatisfactory performance by those manning
these enterprises.

We recommend that Municipal Employees assigned to the local

economic enterprises exert more efforts so as to result in an improved
consolidated net income without financial subsidy from the General Fund
inorder to sustain the financial viability of these economic enterprises.

5. Disbursements totalling P11,251,058.41 paid to various payees were made

without complete documentation due to error in the appreciation of existing
rules and regulations.

We recommend that the Municipal Mayor instruct the Municipal

Accountant to strictly adhere with Section 4 (sub-sections 1-2, 4 and 6) of the
Government Auditing Code of the Philippines (P.D. No. 1445). It is
emphasized that before the check is prepared, supporting papers should
already be on hand since the non-submission of requisite documents would
delay the processing and issuance of the check.
Summary ofTotal Suspensions, Disallowances and Charges

The total audit suspensions, disallowances and charges found in the audit of
various transactions of the Municipality as of December 31, 2014 is P 2,877,241.61
as summarized below:

Total Suspensions P 167,141.61

Total Disallowances 2,710,100.00
Total Charges 0.00
Total Settlements 0.00
P 2,877,241.61
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Status of Implementation of Prior Years’ Recommendations

Of the twenty seven (27) prior years audit recommendations, nine (9) were
fully implemented, while twelve (11) were partially implemented and seven (7) were
not implemented.