REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
Regional Office No. VII, Cebu City

ANNUAL AUDIT REPORT

ON

BARANGAY AWIHAO LOAY

TOLEDO CITY, CEBU

For the Year Ended December 31, 2017For the

Years Ended December 31, 2017 and 2016
 Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. VII
Cebu City

August 6, 2018

Honorable Erlinda Canillo

Punong Barangay
Barangay Awihao
Toledo City

Dear Punong Barangay Canillo:

We are pleased to transmit the Annual Audit Report on the audit of the
Barangay of Awihao, Toledo City Province of Cebu for Calendar Year
2017, prepared by our Audit Team headed by Ms. Esperanza L. Obatay
as Team Leader, in compliance with Section 2, Article IX-D of the
Philippine Constitution and Section 43 of Presidential Decree No.
1445, otherwise known as the Government Auditing Code of the
Philippines.

Our audit was made to (a) ascertain the level of assurance that may
be placed on management assertions on the financial statements; (b)
recommend agency improvement opportunities; and (c) determine the
extent of implementation of prior years’ unimplemented audit
recommendations.

We expressed a qualified opinion on the fairness of the presentation

of the financial statements of Barangay Awihao for the years ended
2017 and 2016 due to the following as discussed in Part II and III of
this report:

Unreliable balance of the Property, Plant and Equipment (PPE)

accounts for CY 2017 and 2016 amounting to P1,170,706.01 and
P1,187,713.41, respectively, due to the non-conduct of physical
inventory, non preparation of Subsidiary Ledgers by the Accounting
Section; and no turn-over of property records from the previous to the
current officials.
Unreliable Cash in Bank account balance owing to the difference of
P10,000.00 between the balances of the accounting record and the
bank as of December 31, 2017 due to non-submission of the monthly
Bank Reconciliation Statements (BRS) of the Barangay to the Auditor
within the prescribed period.

The above and other audit observations, together with the

recommended courses of action which were communicated to you
and your Staff through Audit Observation Memoranda are discussed
in detail on Part II and III of the report.

We request that the recommended remedial measures be immediately

implemented and we will appreciate being informed of the action(s)
taken thereon by submitting the duly accomplished Agency Action
Plan and Status of Implementation (form attached) within 60 days
upon receipt hereof.

We acknowledge the support and cooperation that you and your Staff
extended to the Audit Team which facilitated the completion of this
Report.

Very truly yours,

CYMBELINE CELIA CHIONG-UY

Supervising Auditor

Copy furnished:

The City Mayor

Sangguniang Barangay
Bureau of Local Government Finance
The National Library (soft copy)
The University of the Philippines, Law Center (soft copy)
COA Commission Central Library (soft copy)
 EXECUTIVE SUMMARY

INTRODUCTION

Barangay Awihao, which name was derived from a tree, is one of

the midland barangays of Toledo City. This can be reached by
two feeder roads from the national highway: the Bato-Awihao
road, which was built before the outbreak of the Second World
War; and the Awihao-Cabitoonan road. Both roads have an
average distance of not less than 4 kilometers starting from the
hearth of the barangay down to either two end places of the
coastal barangays of Bato and Cabitoonan.

Organizational Set-up:

Barangay Awihao, Toledo City has a total personnel of Ten (10)

as of December 31, 2015, broken down as follows:

Nature of
Appointment to Quantity
Office
Elective Officials 8
Appointive Officials 2

FINANCIAL HIGHLIGHTS

Comparative analysis of the Balance Sheet as graphically

illustrated showed an increase in its Assets, Liabilities and
Equity. On the other hand, the Statement of Income and
Expenses exhibit an increase in income and a decrease in
expenses. For the year 2015, Barangay Awihao generated a total
income of P3,217,981.21, an increase of P250,086.87 compared
to prior year’s income of P2,967,894.34 from all sources.

i
The following graph illustrates the increase of Appropriations,
Allotments and and a decrease in Expenditures during the year:

SCOPE OF AUDIT

A financial and compliance audit was conducted on the

accounts of Barangay Awihao, Toledo City for the calendar years

ii
2017 and 2016. The objectives of the audit were to ascertain the
fairness of presentation and reliability of the financial reports,
financial position and results of operations, to determine
whether the programs, projects and activities for the year were
attained in an efficient, economical and effective manner. We
also conducted compliance audit to check the validity and
propriety of the transactions and adherence to pertinent laws,
rules and regulations.

AUDITOR'S OPINION ON THE FINANCIAL STATEMENTS

We rendered a qualified opinion on the fairness of presentation

of the financial statements of Barangay Awihao for the years
ended 2017 and 2016 due to the following as discussed in Part II
and III of this report:

Unreliable balance of the Property, Plant and Equipment (PPE)

accounts for CY 2017 and 2016 amounting to P1,170,706.01 and
P1,187,713.41, respectively, due to the non-conduct of physical
inventory, non preparation of Subsidiary Ledgers by the
Accounting Section; and no turn-over of property records from
the previous to the current officials.

Unreliable Cash in Bank account balance owing to the difference

of P10,000.00 between the balances of the accounting record
and the bank as of December 31, 2017 due to non-submission of
the monthly Bank Reconciliation Statements (BRS) of the
Barangay to the Auditor within the prescribed period.

SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

The following are the summary of significant observations and

recommendations in the audit and/or evaluation of the
operations of Barangay Awihao for the years ended 2017 and
2016. These and other observations are fully discussed in Part II
of this report:

Cash advances amounting to P23,680.00 remained unliquidated

as of December 31, 2017 due to non-liquidation of cash

iii
 advances within the prescribed period and the absence of
a proper turnover from the former accountable officer to
the new Barangay Treasurer (BT). Also, the barangay did
not institute sanctions provided for under COA Circular
No. 97-002 or implement other measures to require
settlement thereof.

We recommend that the Punong Barangay:

1) Ensure that the accountable officer as well as the other

officials of the barangay liquidate cash advances
granted within the prescribed period as stated in COA
Circular No. 97-002 and Section 89 of P.D. No. 1445;

2) Enforce proper turnover when there are transfer of

accountabilities of Accountable Officers to properly
safeguard the assets of the barangay; and

3) Notify the previous BT through the issuance of demand

letters for the liquidation or settlement of his/her
obligations with the barangay. File appropriate legal
action, if warranted after exhausting all appropriate
means to recover the resources of the barangay and no
liquidation is effected.

4) Furnish our office of the copy of the demand letters

sent to the accountable officer/s with unliquidated cash
advances.

2. Properties of the barangay with insurable risk totaling

P2,895,906.39 are not insured with the Property Insurance
Fund of the Government Service Insurance System (GSIS)
contrary to the provision of the Systems and Procedures
Manual on the Management of Barangay Funds and
Property, thus the barangay will not be indemnified of the
value of the properties in case of loss due to fire and other
fortuitous events.

We recommend that the barangay allocate funds for the

insurance of their properties with insurable risks and

iv
 insure these properties with the Property Insurance Fund
of the Government Service Insurance System (GSIS).

The unexpended balance of the Due to LGU’s (418) account

representing unused balances of aid and financial
assistance from different local government agencies
totaling P384,159.64 remained in the Barangay’s books of
accounts as of December 31, 2017 due to the failure of the
management to assess any further need of these funds.
These were not implemented nor remitted to source
agency and no request for their subsequent use was
initiated by the Barangay, contrary to COA Circular 94-013
dated December 13, 1994.

We recommend that the barangay officials should

immediately implement projects funded from fund transfer
of other local government units. Further, evaluate the need
for these unexpended balances of aid/ financial assistance
from different other local government agencies. Should
these funds prove to be no longer needed, the funds
therefore, should be remitted back to source agencies as
required under COA Circular No. 94-013 or revert to the
Unappropriated Surplus of the General Fund if the financial
assistance is not required by law by contractual agreement
to be returned to the source agency as provided Section
122 of GAAM, Volume I. If needed, management, however,
should request approval from the source agency to use the
money for other projects or purpose of the barangay.

4. Out of eleven (11) Projects/Programs/Activities embodied

in the Annual Investment Plan of Barangay Awihao for CY
2017 totaling P660,699.00, only six (6) projects costing
P242,537.25 were implemented hence, its intended
recipients were not fully benefited.

We recommend that the barangay implement the projects

embodied in the AIP and identify the reasons for the non-
implementation of the programs and consequently make
the necessary actions to facilitate the implementation of
the programs/projects/ activities.

v
 SETTLEMENT OF ACCOUNTS

There were no suspensions and disallowances that remained

unsettled as of December 31, 2017.

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S

RECOMMENDATIONS

Of the twelve (12) audit recommendations embodied in the 2015

Barangay Annual Audit Report, one (1) was fully implemented
and eleven (11) were not.

vi
 TABLE OF CONTENTS

Part Page
I Audit Financial Statements
-Independent Auditor's Report 1-2
-Statement of Management's
3
Responsibility
-Financial Statements
- Comparative Balance Sheet for the
years ended
December 31, 2017 and 2016 4-5
- Comparative Statement of Income and
Expenses for
the years ended December 31, 2017
6-7
and 2016
- Comparative Statement of Changes in
Government Equity for the years 8
ended December 31, 2017 and 2016
- Comparative Statement of Cash flows
for the years ended December 31, 2017 9
and 2016
- Notes to Financial Statements 10-13
Detailed Observations and
II 14-26
Recommendations
Status of Implementation by the Auditee of
III 27-33
Prior Years Audit Recommendations
IV Annexes
Schedule of Purchases Made Thru Alternative
34
Method of Procurement
 Republic of the Philippines
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City

INDEPENDENT AUDITOR’S REPORT

Honorable Erlinda Canillo

Punong Barangay
Barangay Awihao, Toledo City

Report on the Financial Statements

We have audited the accompanying financial statements of

Barangay Awihao, Toledo City which comprise the Balance
Sheet as at December 31, 2017 and 2016, and the Statement of
Income and Expenses, Statement of Cash Flow and Statement of
Changes in Government Equity for the years then ended, and a
summary of significant accounting policies and other
explanatory information.

Management’s Responsibility for the Financial Statements

The management of the Barangay Awihao, Toledo City is

responsible for the preparation and fair presentation of these
financial statements in accordance with state accounting
principles, 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.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in
accordance with the state auditing standards. Those standards
require that we comply with ethical requirements and plan and

i
perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of
the financial statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our qualified audit
opinion.

Basis for Qualified Opinion

We expressed a qualified opinion on the fairness of the

presentation of the financial statements of Barangay Awihao for
the years ended 2017 and 2016 due to the following as
discussed in Part II and III of this report:

Unreliable balance of the Property, Plant and Equipment (PPE)

accounts for CY 2017 and 2016 amounting to P1,170,706.01 and
P1,187,713.41, respectively, due to the non-conduct of physical
inventory, non preparation of Subsidiary Ledgers by the
Accounting Section; and no turn-over of property records from
the previous to the current officials.

Unreliable Cash in Bank account balance owing to the difference

of P10,000.00 between the balances of the accounting record
and the bank as of December 31, 2015 due to non-submission of

ii
the monthly Bank Reconciliation Statements (BRS) of the
Barangay to the Auditor within the prescribed period.

Qualified Opinion

In our opinion, except for the effects or possible effects of

matter described in the Basis for Qualified Opinion paragraph,
the financial statements present fairly, in all material respects,
the financial position of Barangay Awihao, Toledo City as at
December 31, 2017 and 2016, and its financial performance and
its cash flows for the years then ended in accordance with State
accounting principles.

COMMISSION ON AUDIT

By:

ESPERANZA L. OBATAY
State Auditor IV
Audit Team Leader

August 3, 2018
Date

iii
 NOTES TO FINANCIAL STATEMENTS

Note 1 – Agency Profile

Barangay Awihao, which name was derived from a tree, is
one of the midland barangays of Toledo City. This can be
reached by two feeder roads from the national highway: the
Bato-Awihao road, which was built before the outbreak of
the Second World War; and the Awihao-Cabitoonan road.
Both roads have an average distance of not less than 4
kilometers starting from the hearth of the barangay down to
either two end places of the coastal barangays of Bato and
Cabitoonan.

Note 2 - Summary of Significant Accounting Policies

The Financial Statements have been prepared in accordance
with the generally accepted state accounting principles and
standards. Systems and procedures Manual on the
Management of Barangay Funds and Property (Volume I, II
and III), Accounting System Manual for Barangay (Volume
IV) and COA Circular No. 2010 dated March 2, 2010 were
also observed in the preparation of the financial reports.

Barangay transactions were analyzed and journalized in the

Journal Entry Voucher (JEV) which will be compiled at the
General Journal and posted in the General Ledger,
Philippine Peso is the monetary denomination used in
recording.

Fundamental errors of prior year’s corrected using the Prior

Year’s Adjustment account, while errors affecting the
current year’s operation are affected in the current year
accounts.

Cash
Imprest system has been observed in the handling of the
cash. All collections were deposited to the bank intact and
all payments were made of checks.

Receivables

xxvii
Advances to the Officers and Employees represents cash
advaces granted to barangay officials.

Due from the Local Government Unit represents barangay

share in Real Property Tax (RPT) and Community Tax and
Community Tax which is still in the city awaits for
remittance to the barangay. RPT income is recognized when
it is collected.

Inventories
All requisitions are released directly to the requesting
offices.

Prepayments
The barangays does not practice prepayments to suppliers
or contractors. It will be paid only if the supplies have been
received or construction of work has been done.

Property Plant and Equipment

All cost incidental to the acquisition of property are
considered part of the cost of the property. The barangay
does not provide depreciation for construction in progress.
However, straight-line method of depreciation has been
applied in the computation of the depreciation for all
depreciable assets. Computation of depreciation will
commence on the month following of purchase.

Liabilities
Financial assistance received from Local/ National
Government is considered liability until it has been
liquidated. Withholding taxes (Due to BIR) were remitted on
or before the 10th day of the following month of withholding.
Performance bond deposited by the contractor will be
released only after the expiration of warranty periods and
proper presentation of receipt and demand for payment.

Government Equity
Current year’s result of operations (income/loss) and Prior
Year’s Adjustments are closed to government equity
account. Public Infrastructure and reforestation projects

xxviii
during the year were transfer to respective registry which
causes a reduction in Government Equity account.

Income and Expenses

Modified accrual is applied in the recognition of income and
expenses. But most of the time, it was on cash basis.

Note 3 – Cash
2017 2016
Cash in Vault P - P
360.00
Cash in Bank 3,625,360.87 2,921,240.41
Total Cash P3,625,360.87 P2,921,600.41

Cash in Bank – Local Currency in the amount of

P3,625,360.87 represents current account deposit at the
Land Bank of the Philippines (LBP) Toledo Branch which
bears Current Account Number 3642-1006-44.

Note 4 – Receivables
2017 2016
Accounts Receivables P 2,200.00 P 2,200.00
Due from LGUs 1,278.79 1,278.79
Advances to Officers & 23,680.00 23,680.00
Employees
Other Receivables 62.08 62.08
Total Receivables P27,220.87 P27,220.87

Accounts Receivables in the amount of P2,200.00

represents service charge from the depository bank.
Due from LGUs in the amount of P1,278.79 represents
barangay share in Real Property Tax and Community Tax
which is still in the City awaits for remittance to the
barangay.

The barangay has no receivables pledge or assigned as

security for liabilities and no write-off during the year.

xxix
Advances to Officers and Employees in the amount of
P23,680.00 represents unliquidated cash advances of
barangay officials.

Note 5 – Property, Plant and Equipment

2017 2016
Land P P
377,000.00 377,000.00
Land Improvements 65,509.86 78,755.25
Electrification, Power &
Energy Structures 159,689.86 215,416.29
Office Buildings 68,414.43 83,112.01
Other Structures 106,818.18 124,651.02
Office Equipment 8,777.00 8,777.00
Furniture & Fixtures 190,344.62 161,151.58
IT Equipment and Software 52,313.66 59,786.58
Library Books 4,190.00 4,190.00
Communication Equipment 9,588.08 15,653.54
Motor Vehicles 18,550.00 18,550.00
Other Transportation
Equipment 629.70 629.70
Other Property, Plant and
Equipment 108,880.62 40,040.44
Total Property, Plant and
Equipment P1,170,706.01 P1,187,713.41

Straight-line method of depreciation is being applied.

Likewise, computation of depreciation will commence the
following month after asset acquisition.

Note 6 – Current Liabilities

2017 2016
Accounts Payable P 47,571.12 P 47,571.12
Due to BIR 2,670.75 898.16
Due to LGUs 384,159.64 372,359.64
Other Payables 3,638.27 3,638.27
Total Current Liabilities P397,858.04 P281,185.29

xxx
Accounts Payable in the amount of P47,571.12 represents
unpaid obligation of the barangay at the end of the year.

Due to LGUs in the amount of P384,159.64 represents

unliquidated financial assistance from the Local
Government Unit.

Other Payables in the amount of P3,638.27 represents the

under payment to supplier.

Due to BIR in the amount of P2,670.75 represents tax

withheld to be remitted on the following month.

Withholding Tax is computed as follows:

Beginning balance P898.16
Documentary Stamp Tax (DST) 1,515.00
Withholding tax 257.59
Total P2,670.75

Note 7 – Government Equity

2017 2016
Government Equity, P3,712,067.50 P2,930,907.15
beginning
Retaining Operating Surplus
Net Income 673,180.47 929,088.35
Prior Years’ Adjustments - -
Total 4,385,247.97 3,859,995.50
Transfer from/ (to)
Projects to Registry Public - -
Infrastructures
Artesian Wells, Reservoirs,
Pumping Stations (99,070.00)
Waterways, Aqueducts and (48,858.00)
Seawalls
Government Equity, end P4,385,247.97 P3,712,067.50

xxxi
 PART II

DETAILED OBSERVATIONS AND RECOMMENDATIONS

FINANCIAL AND COMPLIANCE

The unexpended balance of Local Disaster Risk Reduction and

Management Fund (LDRRMF) amounting to P182,724.75
was not transferred to the special trust fund in CY 2017,
contrary to Section 21 of Republic Act (R.A.) No. 10121
dated July 2009, known as the Philippine Disaster Risk
Reduction and Management Act of 2010, thus, funds
intended for the disaster risk reduction and management
activities of the Local Disaster Risk Reduction and
Management Council (LDRRMC) within the next five years
were not retained.

Section 21 of R.A. No. 10121 states, among others, that:

“The present of Local Calamity Fund shall henceforht be

known as the Local Disaster Risk Reduction and Management
Fund (LDRRMF). Not less than five percent (5%) of the estimated
revenue from regular sources shall be set aside as the LDRRMF
to support disaster risk management activities such as, but not
limited to, pre-disaster preparedness programs including
training, purchasing life-saving rescue equipment, supplies and
medicines, for post-disaster activities, and for the payment of
premiums on calamity insurance. Xxx...

Of the amount appropriated for LDRRMF, thirty percent

(30%) shall be allocated as Quick Response Fund (QRF) or
stand-by fund for relief and recovery programs in order that
situation and living conditions of people in communities or
areas stricken by disasters, calamities, epidemics, or complex
emergencies, may be normalized as quickly as possible.

Unexpended LDRRMF shall accrue to a special trust fund

solely for the purpose of supporting disaster risk reduction and

xxxii
management activities of the LDRRMC within the next five (5)
years. Any such amount still not fully utilized after five (5) years
shall revert back to the general fund and will be available for
other social services identified by the local sanggunian.”

Examination of the annual budget of the barangay

disclosed that they have appropriated the amount of P182,724.75
for Disaster Risk Reduction and Management for CY 2017, as
shown below:

Appropriat
Program/Project/Activity
ed Fund
A. Disaster Prevention and
Mitigation Program 60,000.00
Command center office equipment
or uniforms 20,000.00
Rescue Training
20,000.00
Contingency Planning
10,000.00
Information Driving
10,000.00
B. Risk Reduction & Climate Change
Adoptation 60,000.00
Greening Program
15,000.00
Planting of Trees
15,000.00
Integrated Open Drainage
Rehabilitation 30,000.00
C. Disaster Preparedness, Response
& Recovery Program 62,724.75
Relief / Operation Supplies
20,000.00
Communication System Installation
10,000.00
Establish Post Damage Analysis
Need Assessment and Feedback 2,724.75

xxxiii
 Appropriat
Program/Project/Activity
ed Fund
Mobilizationm of all operation
team, medical, search & rescue,
20,000.00
relief & law enforcement
Maintenance of emergency
equipment 10,000.00
Total
182,724.75

The amount set up as LDRRMF complied with the

requirement of Section 21 of R.A. 10121 of not less than 5% of
the estimated revenue from regular sources, as shown below:

Total Estimated 3,654,

Revenue from Regular 495.00
Sources
5%
Required appropriation 182,7
24.75
Appropriated Amount 182,7
24.75
Difference
-

Review of the Status of Appropriations, Commitments

and Balances (SACB) for CY 2017 showed that there was only
one commitments charged to the above appropriations, thus
said big portion of the appropriation remained unexpended as of
December 31, 2017. However, the said amount was not
transferred to a Special Trust Fund (STF) as required in R.A.
10121.

Further, under the Manual on Financial Management for

Barangays which was prescribed to be used by COA Circular
No. 2015-011 dated December 1, 2015 provides under Chapter IX,
Item No. 11.1.5 thereof that, “any unspent balance from the

xxxiv
appropriation for the current year appropriation of LDRRMF
shall at the end of the year be transferred to the STF”.

This audit observation has been communicated to the

barangay through AOM No. 2018-001(2016/17) dated June 13,
2016.

We recommend that the Barangay transfer the unexpended

balance of Local Disaster Risk Reduction and Management Fund
to the Special Trust Fund solely for the purpose of supporting
disaster risk reduction and management activities of the
LDRRMCs within the next five (5) years pursuant to Section 21 of
Republic Act No. 10121.

2. Cash advances amounting to P23,680.00 remained

unliquidated as of December 31, 2017 due to non-
liquidation of cash advances within the prescribed period
and the absence of a proper turnover from the former
accountable officer to the new Barangay Treasurer (BT).
Also, the barangay did not institute sanctions provided for
under COA Circular No. 97-002 or implement other
measures to require settlement thereof.

P.D. No. 1445 otherwise known as The State Audit Code of

the Philippines provides:

“Section 89.Limitation on cash advance. No cash advance

shall be given unless for a legally authorized specific purpose.
A cash advance shall be reported on and liquidated as soon as
the purpose for which it was given has been served. No
additional cash advance shall be allowed to any official or
employee unless the previous cash advance given to him is first
settled or a proper accounting thereof is made.”

Item 5.1, COA Circular No. 97-002 dated February 10, 1997
states that the prescribed periods that an accountable officer
shall liquidate his cash advance depending on the nature and
purpose as follows:

xxxv
 “5.1.1Salaries, Wages, etc. – within five days after each
fifteen (15) day/end of the month pay period.

5.1.2 Petty Operating Expenses and Field Operating

Expenses – within twenty (20) days after the end of the
year.

5.1.3Official Travel – within 60 days after return to the

Philippines in the case of foreign travel or within 30
days after return to his permanent official station in the
case of local travel.

Failure of the AO to liquidate his cash advance within

the prescribed period shall constitute a valid cause for
withholding of his salary and the instruction of other
sanctions as provided for under paragraphs 9.2 and 9.3
hereof.”

Meanwhile, COA Circular No. 2012-004 dated November 28,

2012 was issued requiring the Agency Officials to demand the
immediate liquidation and settlement of all cash advances as of
December 31, 2011 as provided for under Item 6.0 of said
Circular.

Further, Item 2.0 of said Circular provides:

“A cash advance is settled and liquidated either by

returning the money advanced if unspent, or by the
presentation of regularly accomplished vouchers,
giving satisfactorily detail of the items thereon paid
which must be in accordance with the purpose for
which the cash advance was granted, and further
supported by proper receipts and other evidence of
payment.”

Also provided in the Barangay Manual are the following

procedures when there are transfers of accountabilities:

xxxvi
All cash held shall be refunded/account closed and any unused
accountable forms shall be surrendered and property
accountabilities returned;

The Property Acknowledgement Receipt (PAR) and Inventory

Custodian Slip (ICS) shall be cancelled by the BT upon return of
the items;

The AOs shall likewise transfer/submit/surrender all documents

supporting the entries in the registers submitted to the
City/Municipal Accountant and any records in their possession
to the incoming officers;

All AOs shall seek clearance from the Punong Barangay (PB);

The PB shall seek clearance from the City/Municipal Mayor; and

The approved clearance shall serve as one of the supporting

documents to the last claim for salaries/honoraria of the
officials.

Financial statements showed that as of December 31, 2017

the balance of Advances to Officers and Employees (Code 148)
stands at P23,680.00 which represents unliquidated cash
advances as follows:

Date
Name of Grante Che Amo
Debtor d ck # unt Purpose
Jacinta 02/11/2 395 4,0 Prizes for Socio-
Letegio 013 41 00.00 Cultural Activities
Jacinta 02/11/2 395 4,0 Prizes for Socio-
Letegio 013 42 00.00 Cultural Activities
Jacinta 02/11/2 395 5,0 Prizes for Socio-
Letegio 013 43 00.00 Cultural Activities
Prizes for Socio-
Jacinta 02/14/2 395 3,0 Cultural Activities-
Letegio 013 50 00.00 PWD
Jacinta 09/24/2 589 3,8 Year-End Evaluation

xxxvii
 Letegio 013 36 40.00
Gina 09/24/2 589 3,8
Gacang 013 37 40.00 Year-End Evaluation
23,68
0.00

It is evident that concerned barangay officials did not

strictly monitor whether the existing regulation on the
liquidation of cash advance are faithfully complied with as
evidenced by the accumulated cash advances of the previous
BT which remains unliquidated to date, exposing barangay
funds to misapplication/misappropriation.

On the other hand, the procedures when there are transfers

of accountabilities outlined in the barangay manual were not
also adhered to resulting to the unliquidated cash advances of
the previous BT. The liquidation/settlement of said advances
could not be immediately required since the accountable officer
is no longer connected with barangay operations.

This audit observation has been communicated to the

barangay through AOM No. 2018-002(2016/17) dated June 11,
2016.

We recommend that the Punong Barangay:

Ensure that the accountable officer as well as the other officials

of the barangay liquidate cash advances granted within the
prescribed period as stated in COA Circular No. 97-002 and
Section 89 of P.D. No. 1445;

Enforce proper turnover when there are transfer of

accountabilities of Accountable Officers to properly safeguard
the assets of the barangay; and

Notify the previous BT through the issuance of demand letters

for the liquidation or settlement of his/her obligations with the
barangay. File appropriate legal action, if warranted after
exhausting all appropriate means to recover the resources of the
barangay and no liquidation is effected.

xxxviii
Furnish our office of the copy of the demand letters sent to the
accountable officer/s with unliquidated cash advances.

3. The existence and correctness of the recorded fixed assets

with a net book value of P1,170,706.01 could not be
ascertained as the Barangay did not to conduct the
physical inventory of its properties contrary to Item 3 of
the policies and procedures on Supplies and Materials,
Property, Plant and Equipment, Public Infrastructure and
Reforestation Projects of the Systems and Procedures
Manual on the Management of Barangay Funds and
Property, Volume I.

Item 3 of the Policies and Procedures on Supplies and

Materials, Property, Plant and Equipment (PPE), Public
Infrastructures and Reforestation Projects of the Systems and
Procedures Manual on the Management of Barangay Funds and
Property, Volume I provides the following:

3. Physical Count of Property, Plant and Equipment

A physical inventory of all Barangay property shall be

conducted at least once a year and the result on the
physical inventory shall be reported in the Report on
the Physical Count of Property, Plant and Equipment
(RPCPPE);

A Committee headed by the Barangay Treasurer (BT) or

his authorized representative shall conduct the
physical count of PPE owned by the Barangay;

The report approved by the Punong Barangay shall be

submitted to the Barangay Record Keeper (BRK) and
the City/Municipal Accountant for reconciliation with
the recorded PPE;

Any unrecorded PPE shall be booked up at appraised cost; and

xxxix
Any unaccounted PPE shall be verified and in case of loss, the
AO shall be held accountable.

As of December 31, 2017, the Balance Sheet of the

Barangay showed Fixed Assets with a net book value of
P1,170,706.01. However, physical existence, valuation as well as
correctness of the account balances could not be ascertained
because the Barangay Treasurer did not to conduct the physical
count of all Barangay properties, much less submit the required
inventory report and reconcile with the records of the City
Accountant as of December 31, 2017 as follows:

Account Accum. Net Book

Title Cost Depreciation Value
Land 37 37
7,000.00 - 7,000.00
Land
Improveme 14 6
nts 7,171.00 81,661.14 5,509.86
Electrificati
on, Power 61 4 15
& Energy 9,182.57 59,492.71 9,689.86
Office 48 4 6
Buildings 9,919.33 21,504.90 8,414.43
Other 59 4 10
Structures 4,428.09 87,609.91 6,818.18
Office 8
Equipment 7,770.00 78,993.00 8,777.00
Furniture
and 35 1 19
Fixtures 0,143.20 59,798.58 0,344.62
IT
Equipment
and 9 5
Software 9,638.80 47,325.14 2,313.66
Library 4
Books 1,900.00 37,710.00 4,190.00
Communica 6
tion 7,394.00 57,805.92 9,588.08

xl
Equipment
Motor 18 1 1
Vehicles 5,500.00 66,950.00 8,550.00
Other
Transportat
ion
Equipment 6,297.00 5,667.30 629.70
Other
Property,
Plant and 39 2 10
Equipment 2,062.40 83,181.78 8,880.62
3,45 2,2 1,17
Totals 8,406.39 87,700.38 0,706.01

The Systems and Procedures Manual on the Management

of Barangay Funds and Property, provides that a physical count
of all Property, Plant and Equipment (PPE) shall be conducted
by an inventory committee headed by the Punong Barangay (PB)
as chairman or his authorized representative and Barangay
Treasurer (BT) as member at least once a year. Upon completion
of the physical inventory, a Report on the Physical Count of
Property, Plant and Equipment (RPCPPE) shall be prepared by
the inventory team. The report shall be submitted to the
Barangay Record Keeper and the City Accountant for
reconciliation with the recorded Property, Plant and Equipment.

The inventory-taking is an indispensable procedure for

checking the integrity of property custodianship. The non-
conduct of an inventory on properties caused difficulty in
ascertaining the correctness and existence of the assets taken
up in the Barangay books kept by the City Accounting Office, as
well as in determining their physical condition and whereabouts.
Any addition, which may be through donations, etc., or loss
thereof could not be detected; hence appropriate action thereon
could not be acted upon immediately.

The barangay did not submit a report of physical count of

PPE due to non- conduct of physical inventory of PPE items
owned by the barangay contrary to the stipulations set forth in
the barangay and NGAS manuals.
xli
 This audit observation has been communicated to the
barangay through AOM No. 2018-003(2016/17) dated June 11,
2016.

We recommend that the barangay inventory committee

conduct the physical inventory-taking of all barangay properties
as of the year-end and submit the required inventory report
pursuant to Item 3 of the Policies and Procedures on Supplies
and Materials, Property, Plant and Equipment, Public
Infrastructures and Reforestation Projects of the Systems and
Procedures Manual on the Management of Barangay Funds and
Property, Volume I, to ascertain the correctness, validity and
existence of the recorded fixed assets.

4. Properties of the barangay with insurable risk totaling

P2,895,906.39 are not insured with the Property Insurance
Fund of the Government Service Insurance System (GSIS)
contrary to the provision of the Systems and Procedures
Manual on the Management of Barangay Funds and
Property, thus the barangay will not be indemnified of the
value of the properties in case of loss due to fire and other
fortuitous events.

Item 6 of the Policies and Procedures on Supplies and

Materials, Property, Plant and Equipment, Public Infrastructures
and Reforestation Projects of the Systems and Procedures
Manual on the Management of Barangay Funds and Property,
Volume 1 provides the following:

“All PPE with insurable risk shall be insured with the

Property Insurance Fund of the Government Service
Insurance System (GSIS).”

As of December 31, 2017, the barangay did not insure the

buildings and other physical assets totaling 2,895,906.39 with
the Property Insurance Fund of the Government Service
Insurance System (GSIS) as enumerated below:

xlii
 Account Title Amount
14
Land Improvements
7,171.00
Electrification, Power 61
& Energy 9,182.57
48
Office Buildings
9,919.33
59
Other Structures
4,428.09
8
Office Equipment
7,770.00
Furniture and 35
Fixtures 0,143.20
IT Equipment and 9
Software 9,638.80
4
Library Books
1,900.00
Communication 6
Equipment 7,394.00
Other Transportation
Equipment 6,297.00
Other Property, Plant 39
and Equipment 2,062.40
2,89
Totals 5,906.39

The non-compliance with the requirement denies the

government adequate and reliable protection against damage to
or loss of its properties or assets and interests due to fire,
earthquake, storm, or other fortuitous events/casualty.

This audit observation has been communicated to the

barangay through AOM No. 2018-004(2016/17) dated June 11,
2016.

We recommend that the barangay allocate funds for the

insurance of their properties with insurable risks and insure
these properties with the Property Insurance Fund of the
Government Service Insurance System (GSIS).

xliii
5. The barangay did not utilized the seventy percent (70%)
component of the Local Disaster Risk Reduction and
Management Fund (LDRRMF) amounting to P127,907.33 for
disaster preparedness defeating the purpose of
establishing the fund as set under Section 1 and 2 of Rule
18 of RA 10121 or the Philippine Disaster Risk Reduction
and Management Act of 2010, thereby depriving the
barangay of the strengthened capacity in addressing
disaster risk to the detriment of its constituents.

Rule 18 of the Implementing Rules and Regulations of

Republic Act 10121 provides as follows:

Section 1. Utilization of the LDRRMF – “The present

Local Calamity Fund shall henceforth be known as the
Local Disaster Risk Reduction and Management Fund
(LDRRMF). Not less than five percent (5%) of the
estimated revenue from regular sources shall be set
aside as the LDRRMF to support disaster risk
management activities, such as but not limited to, pre-
disaster preparedness programs including training,
purchasing life-saving rescue equipment, supplies and
medicines, for post-disaster activities, for the payment
of premiums on calamity insurance and construction
of evacuation centers. . .”

Section 2. Quick Response Fund – Of the amount

appropriated for LDRRMF, thirty percent (30%) shall be
allocated as Quick Response Fund (QRF) or standby
fund for relief and recovery programs in order that
situation and living conditions of people in
communities or areas stricken by disasters, calamities,
epidemics or complex emergencies, may be
normalized as quick as possible.

Verification of the Barangay Budget for the CY 2017

disclosed that the barangay has appropriated P182,724.75 for

xliv
LDRRMF. The requirement set forth under Section 1, Rule 18 of
Republic Act 10121 that “not less than five percent (5%) of the
estimated revenue from regular sources shall be set aside as the
LDRRMF to support disaster risk management activities” was
found to have been complied with. Of this amount, P54,817.42
or 30% is necessarily allocated as the Quick Response Fund
(QRF) pursuant to Section 2, Rule 18 of the Implementing Rules
and Regulations of Republic Act 10121 while P127,907.33 or 70%
is for the implementation of disaster preparedness programs.

However, examination of the Status of Appropriations,

Commitments and Balances (SACB) for CY 2017 revealed that
the management failed to utilize the fund for the implementation
of disaster preparedness programs.

Section 3 of the Implementing Rules and Regulations of

Republic Act 10121 states that:

Declaration of Policy – It is the policy of the State to:

(k) Recognize the local risk patterns across the country
and strengthen the capacity of LGUs for disaster risk
reduction and management through decentralized
powers, responsibilities and resources at the regional
and local levels;
(l) Recognize and strengthen the capacities of LGUs
and communities in mitigating and preparing for,
responding to, and recovering from the impact of
disasters;
As declared in the foregoing policies, one of the objectives
of the State in establishing the LDRRMF is increased capacities
of LGUs in mitigating and preparing for disasters. However, with
the non-utilization of the funds allocated for disaster mitigation
and preparation in CY 2017, the purpose of its establishment
was defeated to the detriment of the barangay and its
constituents.

xlv
 This audit observation has been communicated to the
barangay through AOM No. 2018-005(2016/17) dated June 11,
2016.

We recommend that management should optimally utilize

the 70% allocation for disaster preparedness of the LDRRMF
through the timely implementation of the projects and programs
covered by the fund.

The Local Disaster Risk Reduction and Management Fund

Investment Plan (LDRRMFIP) and the Report on Sources
and Utilization of Disaster Risk Reduction and
Management Fund (DRRMF) as of December 31, 2017 were
not prepared and submitted by the Barangay contrary to
the provision of COA Circular No. 2012-002 dated
September 12, 2012, thus, projects/activities funded by
LDRRMF could not be evaluated and monitored.

Section 5.1.2 of COA Circular No. 2012-002 dated

September 12, 2012 provides that Local Disaster Risk Reduction
and Management Fund Investment Plan (LDRRMFIP) shall be
prepared annually. It shall present the 30% allocation for QRF in
lump-sum and the allocation for disaster mitigation, prevention
and preparedness with details as to projects and activities to be
funded. The LDRRMFIP shall also include under a separate
caption, the list of projects and activities charged to the
unexpended LDRRMF of previous years. A sample format of the
LDRRMFIP as provided in the said COA Circular is shown in
Annex A.

Further, Section 5.1.5 of the same circular requires the

Local Accountant to prepare a Report on Sources and Utilization
of DRRMF using the format in Annex B. The Local Disaster Risk
Reduction and Management Officer (LDRRMO) shall submit the
report on or before the 15th day after the end of each month
through the LDRRMC and Local Development Council to the
COA auditor of the LGU.

xlvi
 The LDRRMFIP and the Report on Sources and Utilization
of DRRMF shall also be submitted to the Office of the Civil
Defense (OCD) and the Department of Interior and Local
Government – Local Government Operations Office (DILG-
LGOO) as per Section 5.1.6 of the above-cited circular.

Records showed that the Barangay did not prepare and

submit the LDRRMFIP and the Report on Sources and Utilization
of DRRMF as of December 31, 2017 which precluded the COA
from determining whether or not the projects/activities funded
by LDRRMF were carried out as programmed.

This audit observation has been communicated to the

barangay through AOM No. 2018-006(2016/17) dated June 11,
2016.

We recommend that the management prepare and submit

the Local Disaster Risk Reduction and Management Fund
Investment (LDRRMFP) as required under COA Circular No.
2012-002 dated September 12, 2012 indicating the 30% allocation
of QRF and the allocation for disaster mitigation, prevention and
preparedness with details as projects and activities to be
funded.

Likewise, we recommend that the Barangay, through the

City Accountant, to prepare the Report on Sources and
Utilization of DRRMF using the prescribed format in COA
Circular No. 2012-002 on a monthly basis and require the Local
Disaster Risk Reduction and Management Officer (LDRRMO) to
submit such report on or before the 15th day after the end of
each month through the LDRRMC and the Local Development
Council to the COA Auditor.

We also recommend that henceforth, the financial reports

and related reports/ documents be submitted to COA within 60
days after the 31st of December.

7. Out of eleven (11) Projects/Programs/Activities embodied

in the Annual Investment Plan of Barangay Awihao for CY

xlvii
 2017 totaling P660,699.00, only six (6) projects costing
P242,537.25 were implemented hence, its intended
recipients were not fully benefited.

Section 287 of RA 7160 states that “Local Development

Projects – Each local government unit shall appropriate in its
annual budget no less than twenty percent (20%) of its annual
internal revenue allotment for development projects”

As general policies, it is the responsibility of every local

government units to ensure that the 20% of the IRA is optimally
utilized to help achieve desirable socio-economic development
and environmental outcomes.

The Barangay Awihao allocated P660,699.00 in its local

development fund to deliver services to the constituents that
would redound with their socio economic and environmental
activities. However, Barangay’s CY 2017 Annual Investment
Plan failed to categorize the proposed developmental projects
into three (3) major components pursuant to DILG and DBM
Joint Memorandum Circular (JMC) No 1, s. 2005, namely:

a. Social Development
b. Economic Development
c. Environmental Management

Review of the programs/projects/activities embodied in the

Annual Investment Plan disclosed that only six (6) of these
projects was implemented for CY 2017 thus depriving its target
beneficiaries of these plans, programs and projects. It was
revealed that the reason for this non-implemented P/P/A is
attributed to the lack of specific plan and Program of Works
(POWs) to execute them on time. The Chairman, Committee of
the Infrastructure of the barangay is responsible to overview
that the programmed project/programs funded from 20%
Development Fund (LDF) are implemented during the year, as
follows:

xlviii
 Appropriat Commit Balanc
Program/Project/Activity
ed Fund ments e
Renovation of street light
49, 3
wirings at ADA & Lower
50,000.00 700.00 00.00
Awihao
Renovation of street light 49,700.
50,000.00 300.00
wirings at Proper Awihao 00
Renovation of street light
28, 21,9
wirings at RANA and 50,000.00
100.00 00.00
Mojon
Drainage (marfe Macalos- 50,000
50,000.00
Lower Awihao .00
Hanging Bridge at Sitio 50,000
50,000.00
Mojon .00
Open Canal (Ditch Orge 49,948.0
50,000.00
Residence) 0 52.00
Open Canal (William 49,978.0
50,000.00
Rosalit-Lower Awihao) 0 22.00
200,00
Spillway at Lower Awihao 200,000.00
0.00
Repair Waiting Shed at 15, 24,8
40,000.00
Sitio Mojon 111.25 88.75
Extension Water System 40,000
40,000.00
at Sitio Sun-ok .00
Landscaping at Awihao 30,699
30,699.00
Brgy. Hall .00
242,537. 418,1
Total 660,699.00
25 61.75

The non-implementation of appropriated and programmed

projects/programs embodied in approved Annual Investment
Plan (AIP) deprived the intended beneficiaries of the benefits
that can be derived from its implementation thereof.

This audit observation has been communicated to the

barangay through AOM No. 2018-007(2016/17) dated June 11,
2016.

xlix
 We recommend that the barangay implement the projects
embodied in the AIP and identify the reasons for the non-
implementation of the programs and consequently make the
necessary actions to facilitate the implementation of the
programs/projects/ activities.

8. The unexpended balance of the Due to LGU’s (418)

account representing unused balances of aid and financial
assistance from different local government agencies
totaling P384,159.64 remained in the Barangay’s books of
accounts as of December 31, 2017 due to the failure of the
management to assess any further need of these funds.
These were not implemented nor remitted to source
agency and no request for their subsequent use was
initiated by the Barangay, contrary to COA Circular 94-013
dated December 13, 1994.

COA Circular No. 94-013 dated December 13, 1994 was

issued to ensure that:

the transfer of funds is properly taken up in the books of both

agencies;
the transferred funds are used only for the intended purpose;
and
proper accounting and reporting is made on the utilization of
funds.

Paragraph 6.7 of the above mentioned circular which

prescribed the rules, regulations in the grant, utilization and
liquidation of funds transferred to Implementing Agencies (IA)
provides that the IA shall return to the Source Agency (SA) any
unused balance and refund of disallowance upon completion of
the project.

Audit as of December 31, 2017 disclosed that the Barangay

still has an outstanding balance in the Due to LGUs account
(Code 418) totaling P384,159.64 for various projects as shown
below.

l
 Amount
Amount Liquidate
Date Particular Received d Balance
Beginning
CY Balance 22 227,359.6
2014 (unidentified) 7,359.64 4
Nov. Aid from the 1
2015 City 5,000.00 15,000.00
Amount
Amount Liquidate
Date Particular Received d Balance

Dec. Aid from the 10 100,000.0

2015 Province 0,000.00 0
Dec. Aid from the 3
2016 City 0,000.00 30,000.00
Feb. Aid from the 3 3
2017 City 0,000.00 0,000.00 -
Sept. Aid from the 3 3
2017 City 0,000.00 0,000.00 -
Oct. Aid from the 1 1
2017 City 0,000.00 0,000.00 -
Dec. Aid from the 1
2017 City 1,800.00 11,800.00
3
Total 84,159.64

Moreso, this practice also deprives the City and other

source agency on the use of the remaining balance of the
financial assistance for other priority projects of the local
government. Furthermore, the Barangay will be deprived on the
grant of additional financial assistance by the City Government
and other source agency for other projects unless the previous
cash advance granted are first settled.

Likewise, Section 122 of GAAM, Volume I stipulates that

unexpended balances of cash proceeds of trust receipts not
required by law or contractual agreement to be returned to the
trustor of or after completion of the projects/purpose for which

li
said trusts were received, shall be reverted to the Unapproriated
Surplus of the General Fund.

This audit observation has been communicated to the

barangay through AOM No. 2018-008(2016/17) dated June 11,
2016.

We recommend that the barangay officials should

immediately implement projects funded from fund transfer of
other local government units. Further, evaluate the need for
these unexpended balances of aid/ financial assistance from
different other local government agencies. Should these funds
prove to be no longer needed, the funds therefore, should be
remitted back to source agencies as required under COA
Circular No. 94-013 or revert to the Unappropriated Surplus of
the General Fund if the financial assistance is not required by
law by contractual agreement to be returned to the source
agency as provided Section 122 of GAAM, Volume I. If needed,
management, however, should request approval from the
source agency to use the money for other projects or purpose
of the barangay.

Accounts Payable (401) totaling P47,571,12 were not supported

with list of valid claimants and remained outstanding for
five years but were not reverted to the Unappropriated
Surplus, contrary to Section 98 of P.D. 1445 and
paragraphs 3.1 and 3.3 of DBM-COA Circular No. 99-6, thus
the validity, existence and correctness of the balance
cannot be relied upon.

Section 98 of P.D. 1445 provides, Reversion of unliquidated

balances of accounts payable. The Commission, upon notice to
the head of the agency concerned, may revert to the
unappropriated surplus of the general fund of the x x x x x x x x,
any unliquidated balance of accounts payable in the books x x x
x x x which has been outstanding for two years or more and
against which no actual claim, administrative or judicial, has
been filed or which is not covered by perfected contracts on
record. This section shall not apply to unliquidated balances of

lii
accounts payable in trust funds as long as the purposes for
which the funds were created have not been accomplished.

Moreover, paragraph 3.1 of DBM-COA Joint Circular No. 99-

6 provides that all documented Accounts Payable which remain
outstanding for two (2) years shall be reverted to the Cumulative
Result of Operations – Unappropriated (CROU), except ongoing
capital outlays projects. Paragraph 3.3 thereof provides that all
undocumented Accounts Payable, regardless of the year they
were incurred shall immediately be reverted to CROU.

Further, paragraph 2, Section 111 of Presidential Decree

No. 1445 provides that:

“The highest standards of honesty, objectivity and

consistency shall be observed in the keeping of accounts to
safeguard inaccurate or misleading information.”

The Trial Balance for CY 2013 – 2017 showed that the

Accounts Payable account (Code 401) amounting to P47,571.12
remained unchanged for the period of five years and were not
supported with complete list of creditors for which the payables
are due.

This audit observation has been communicated to the

barangay through AOM No. 2018-009(2016/17) dated June 13,
2016.

We recommend that the barangay observe strictly the

pertinent provisions of the NGAS Manual with regards to
recognition, monitoring and control of payable accounts.

We further recommend that the barangay instruct the City

Accountant to effect the necessary accounting entries to revert
prior years’ accounts payable where no actual claims, whether
administrative or judicial, has been filed. No obligation should
be certified to accounts payable unless it is funded on a valid
claim that is properly supported by sufficient evidence and
unless there is proper authority for its incurrence pursuant to

liii
Section 4(s) Volume 1 of NGAS Manual and Section 157 Volume
1 of the GAAM.

Due to BIR (Code 412) totaling P2,670,75 cannot be relied upon

due to some over/underremittance recorded during the
year amounting P3,680.17, thus affecting the fairness of its
presentation in the financial statements.

Section 111 of Presidential Decree (P.D.) 1445 otherwise

known as the Government Auditing Code of the Philippines
provides that “the highest standards of honesty, objectivity and
consistency shall be observed in the keeping of accounts to
safeguard against inaccurate or misleading information.”

Review of the tax withheld and remitted for each month

showed the following:

Month Compen Suppl Remit Balan

Withheld sation iers DST Total ted ce
-
CY 2016 898.1 3,099 2,201.
Balance 6 .18 02
3,591.6 7,585 1,725 12,90 12,90
January 4 .86 .00 2.50 2.50 0.00
3,591.6 255.7 1,215 5,062. 5,077
February 4 3 .00 37 .37 -15.00
3,591.6 4,528 1,545 9,665. 9,665
March 4 .49 .00 13 .13 0.00
3,591.6 1,061 1,065 5,718. 5,718
April 4 .50 .00 14 .14 0.00
-
3,591.6 2,183 1,665 7,439. 8,859 1,419.
May 4 .12 .00 76 .71 95
3,591.6 3,332 1,290 8,214. 8,259
June 4 .55 .00 19 .19 -45.00
3,591.6 6,457 1,605 11,65 11,65
July 4 .05 .00 3.69 3.69 0.00
August 3,591.6 6,191 1,200 10,98 10,98 0.00

liv
 Month Compen Suppl Remit Balan
Withheld sation iers DST Total ted ce
4 .97 .00 3.61 3.61
Septemb 3,591.6 2,606 1,275 7,473. 7,472
er 4 .63 .00 27 .47 0.80
3,591.6 2,944 1,290 7,826. 7,826
October 4 .76 .00 40 .40 0.00
Novembe 3,591.6 1,950 1,215 6,757. 6,757
r 4 .41 .00 05 .05 0.00
Decembe 3,591.6 1,799 960.0 6,350. 6,350.
r 4 .28 0 92 0.00 92
43,099. 40,89 16,05 100,9 98,27 2,670.
Totals 68 7.35 0.00 45.19 4.44 75

As can be gleaned from the above there were

over/underremittance in the following months which causes the
tax withheld in the month of December to be reduced by
P3,680.17 as shown below:

(2,20
CY 2016 Balance 1.02)
(15.0
February 0)
(1,41
May 9.95)
(45.0
June 0)
September 0.80
Total
(Over)/Underre (3,68
mittance 0.17)
6,350
December .92
Balance shown 2,670
in the FS .75

The above listed discrepancies need to be seriously

addressed to identify cause/s thereof as these may affect the

lv
fairness of the presentation of the account in the financial
statements of the barangay.

As of January, 2018, total remittance amounting to

P6,350.92 was made by the Barangay Treasurer on the
aforementioned withheld taxes

This audit observation has been communicated to the

barangay through AOM No. 2018-010(2016/17) dated June 13,
2016.

We recommend that the barangay investigate the cause of

these over/underremittance of the tax withheld and the
substantial balance of prior periods and install proper control to
prevent these from recurring.

We further recommend that the Punong Barangay direct

the Barangay Treasurer to remit all taxes withheld to the BIR.

The balance of Cash in Bank account (Code 111) per Financial

Statement differs by P10,000.00 from the Bank Statement
thus casting doubt on the accuracy, validity and existence
of the said balance contrary to Section III of Presidential
Decree (P.D.) No. 1445.

Section III of Presidential Decree (P.D.) No. 1445 provides:

Keeping of Accounts:

The accounts of an Agency shall be kept in such details

as necessary to meet needs of the Agency and at the
same time be adequate to furnish 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 or
misleading information.

lvi
 Review of the Trial Balance showed a Cash in Bank
balance of P3,625,360.87 while perusal of the Bank Statement
from Land Bank of the Philippines showed a balance as of
December 31, 2017 of P3,615,360.87 resuting in a variance of
P10,000.00.

Further, it was also noted that balance per Bank

Reconciliation Statement was P3,614,609.72 which added to its
unreliability.

This audit observation has been communicated to the

barangay through AOM No. 2018-011(2016/17) dated June 13,
2016.

We recommend that the City Accountant be directed to

reconcile the said difference between the balance per bank
records and the balance per accounting records to prevent
presenting inaccurate or misleading information in the financial
statements.
Concerned Barangay Officials did not observe strictly the
conduct of Inventory and Turn-over of all Barangay
Properties, Financial Records, Documents (BPFRDs) and
Money Accountabilities within the timelines contrary to
DILG Memorandum Circular No. 2018-12 dated February 1,
2018 which could affect the realization of systematic
transition from the outgoing barangay officials to the
incoming newly elected barangay officials.

DILG Memorandum Circular No. 2018-12 dated February 1,

2018 provides the following:

“xxxx all Punong Barangays and concerned barangay

officials ar required to prepare the necessary
documents, to include inventory of all barangay
financial records, reports, finances and properties that
were issued, assigned, entrusted or under the custody
of all concerned barangay officials from the start of
their terms of office up to the present.

lvii
 To sustain transparent and accountable local governance
at the barangay level, and to further ensure that all
concerned barangay officials exercise due diligence as
regards proper use, care utilization and safekeeping of
all government properties, barangay funds, financial
records and documents.

It provides specific activities and timelines to be

undertaken by concerned local officials in the conduct
of inventory and turnover of all BPFRDs and money
accountabilities.

Creation of Barangay Inventory Team (BIT).

Duties and Functions – The Punong Barangay / BIT shall

undertake the following activities within the prescribed period
such as:
Activity OPR Timeline
Issue an Executive Order on Punong Not later than
the creation of BIT Barangay February 23, 2018
Convene members of the BIT (PB)

Furnish the DILG City BIT Not later than

Director of the February 26, 2018
City/Municipal Local
Government Operations
Officer a copy of the
Executive Order
Conduct and Initial Inventory BIT Not later than
of all BPFRDs using March 9, 2018
Inventory and Turnover
Form No. 1
Furnish the the BIT Not later than
City/Municipal March 12, 2018
Accountant; local COA
and the concerned DILG
CD/C/MLGOO copy of the
Inventory and Turnover
Form No. 1
Conduct the final inventory BIT Not later than May
of BPFRDs and Money 30, 2018
Accountabilities using
Inventory and Turnover
Form No. 2

lviii
Furnish the City/Municipal BIT Not later than June
Accountant; local COA; 3, 2018
and the concerned DILG
CD/C/MLGOO copy of the
Inventory and Turnover
Form No. 2
Post the Final Inventory and PB Upon approval of
Turnover Form No. 2 the C/MATT
approved by the C/MATT
in three (3) conspicuous
places within the
barangay premises and/or
in the barangay’s official
website or facebook
account, if any, and shall
always be made available
to the public.
Plan and organize the PB Not later than 12
conduct of formal noon of June 30,
Turnover Ceremony 2018
Notify the City/Municipal
Mayor, local officials; local
COA; the DILG City
Director or C/MLGOO; and
the newly elected
barangay officials for the
conduct of turnover
ceremony.
Conduct the Turnover
Ceremony

Ensure the completeness of all BPFRDs, to include

legislative and administrative records, transcript or
minutes of meetings, list and status of complaints filed
before the Lupong Tagapamayapa, updated Registry of
Barangay Inhabitants (RBIs), list of inventory of
current local or international development assisted
projects, if any, and all other documents and/or
logbooks containing barangay transactions, and

See to it that all properties of the barangay, supplies,

finances/money that are in actual possession or
entrusted to the concerned barangay officials and
employees, including reports on damaged or lost items
or repairs made to properties are properly accounted,

lix
 turned over and listed in the prescribed Inventory and
Turnover Forms.

Per our monitoring, the timelines required in the above-

mentioned activities from Activity 1 to 7 were not strictly
observed by the Punong Barangay and the BIT. Thus, the
required accomplished Inventory and Turnover Reports using
the prescribed forms were not provided / submitted to COA
office. Further, the expected systematic transition from the
outgoing barangay officials to the incoming newly elected
barangay officials could not be attained.

This audit observation has been communicated to the

barangay through AOM No. 2018-012(2016/17) dated June 13,
2016.

We recommend that the concerned barangay officials fast

tract the conduct of inventory and turnover of all barangay
properties, financial records, documents (BPRDs) and money
accountabilities to avoid legal consequences thereof pursuant
to DILG Memorandum Circular No. 2018-12 dated February 1,
2018.

PART III - STATUS OF IMPLEMENTATION BY THE AUDITEE OF

PRIOR YEARS’ AUDIT RECOMMENDATIONS

AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
Fully Implemented
1. Procurement of goods BAAR Management had While not all
totaling P180,744.30 made 2015 submitted all the of the
under the alternative mode documents. documents
of procurement were paid were
without proper submitted,
documentation. there is a
substantial
We recommend that the compliance
Punong Barangay direct the with the audit
Barangay Treasurer for the recommendati
immediate submission of the on

lx
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
required supporting
documents otherwise all
those who authorized the
payment thereof shall be
held personally liable for the
amount paid.
2. The City Accountant did not BAAR The Chief There is
submit all the Financial 2012 Accountant have already a
Statements and schedules already submitted prompt
required under Accounting all the required submission of
System Manual for financial reports.
Barangay, Volume IV, thus documents.
all necessary financial
information were not
disseminated to the users of
the financial statements.

Require the City Accountant

to submit all the required
Financial Statements and
schedules as enumerated in
Accounting System Manual
for Barangay.
3. The City Accountant did not BAAR Based on the new With the
transfer at the end of the 2012 guidelines the implementatio
year the Public requirement is no n of the
Infrastructures account to longer applicable. PPSAS, there
the respective Registry of is no longer a
Public Infrastructure need to
contrary to the provision of transfer the
the Systems and completed
Procedures Manual on the infrastructure
Management of Barangay projects to
Funds and Property, Volume registries.
IV, thus resulted to the
overstatement of the total
asset and understatement of
Government Equity by
P125,470.00, adversely
affecting the fair
presentation in the Balance
Sheet.

Transfer the completed

public infrastructures and
reforestation projects during
the year to their respective

lxi
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
registries at yearend.

4. The Monthly Report of BAAR The Barangay While there is

Accountability for 2015 Treasurer is now still some
Accountable Forms (RAAF) regularly submitting errors in the
were not prepared and the Monthly RAAF. monthly
submitted by the Barangay, RAAF,
thus information as to nevertheless
inventory, receipts and their
issuances of accountable submission
forms at any given month are now
could not be immediately timely, thus
ascertained. there is
substantial
We recommend that compliance
management direct the with the
collecting officer to prepare recommendati
the Monthly Report of on.
Accountability for
Accountable Forms (RAAFs)
to facilitate reconciliation
and to monitor the
movement of the
accountable forms in the
hands of the accountable
officer.

5. Purchase Orders for BAAR Management have There is a

lxii
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
supplies and materials 2012 already filled-up substantial
lacked important/necessary completely the compliance
information such as date, necessary data in with the audit
number, and term/conditions the purchase orders recommendati
as prescribed under the on even if
Systems and Procedures there are
Manual on the Management some
of Barangay Funds and purchase
Property thus delayed orders which
deliveries of items lacks the
purchased could not be required data.
ascertained.

Instruct the barangay

treasurer to indicate or fill-up
all desired information in the
issuance of purchase order.
Require the treasurer to
strictly follow the provisions
of the Systems and
Procedures Manual on the
Management of Barangay
Funds and Property.

lxiii
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
6. The barangay incurred BAAR The land is now The trial
expenses for land 2012 recorded in the balance
improvements, books already
electrification, power and showed the
energy, office buildings and Land account.
other structures despite the
doubtful existence and
ownership of land. Losses
may be incurred by the
government if ownership of
the land where the
improvements and building
were situated, remain
unresolved.
Secure the necessary
documents that legalize
ownership by the barangay
of the lot where the
improvements and building
were situated. In case of
donation, the appraisal
value of the lot shall be
recorded in the books and
the following entries shall be
made:

Land
xxx
Income from Grants and
And Donations Or Prior
xxx
Year’s Adjustment (as the
case may be)

lxiv
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
7. The treasurer failed to BAAR The amount has The said
deposit/remit collections 2012 already been amount has
amounting to P36,659.11, deposited to the already been
contrary to Section 69 of PD barangay’s account. included in
1445, Section 21 of NGAS the
Manual Volume I and succeeding
Section 2(a) on Policies and deposits of
Procedures for the receipts the Barangay.
and deposits of collections
of the System and
Procedures Manual on the
Management of Barangay
Funds Volume I, thus
exposing the funds to
possible loss and/ or
misuse.

Require the treasurer to

deposit/remit his collections
with the authorized
government depository bank
intact daily or not later than
the next banking day and or
as prescribed under section
2(a) of the Systems and
Procedures Manual on the
Management of Barangay
Funds Volume 1.
Not Implemented
1. The existence of the PPE BAAR Management did There is no
accounts amounting to 2015; not make a physical physical
P1,136,44.27 could not be 2012 count of their count
ascertained due to the non- properties nor conducted by
conduct of physical submitted a report. the barangay.
inventory, non-preparation
of Subsidiary Ledgers by the
Accounting Section; and no
turn-over of property
records from the previous to
the current officials.

We recommend that the

custodian adhere to the
guidelines on the Operating
Procedures on the
Management of Barangay
Funds and Property, Volume

lxv
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
I and conduct the actual
physical inventory and
submit the report thereon.

We recommend that the City

Accounting Office maintain
subsidiary property ledger
cards, duly supported with
complete documents, for all
PPE and Other Supplies
Inventory accounts to
substantiate balances in the
financial statement and to
facilitate reconciliation of
balances between
accounting and barangay
records.

Further, we recommend that

the Barangay require the
turn-over of all records on
cash and property everytime
there is a turn-over of
accountabilities from the
outgoing to an incoming
official pursuant to the
policies and procedures on
the transfer of
accountabilities in the
Systems and Procedures
Manual on the Management
of Barangay Funds and
Property, Volume I.
2. Cash advances amounting BAAR Management did There is no
to P23,680.00 remained 2015; not sent demand liquidation
unliquidated as of 2012 letters to the made for the
December 31, 2015 due to accountable said amount.
the non-liquidation of cash officers.
advances by the
accountable officer within
the prescribed period and
the absence of a proper
turnover from the former to
the current Barangay
Treasurer (BT). Also, the
barangay did not institute
sanctions provided for

lxvi
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
under COA Circular No. 97-
002 or implement other
measures to require
settlement thereof.

We recommend that the

Punong Barangay ensure
that the accountable officer
as well as the other officials
of the barangay liquidate
cash advances granted
within the prescribed period
as stated in COA Circular
No. 97-002 and Section 89 of
P.D. No. 1445. Also, enforce
proper turnover when there
are transfer of
accountabilities of
Accountable Officers to
properly safeguard the
assets of the barangay;and
notify the previous BT
through the issuance of
demand letters for the
liquidation or settlement of
his/her obligations with the
barangay. File appropriate
legal action, if warranted
after exhausting all
appropriate means to
recover the resources of the
barangay and no liquidation
is effected.
3. Balances totaling BAAR No action made by The barangay
P95,250.00 of completed 2015 management. did not
projects from various submit any
financial assistance documents to
received by the Barangay support the
were not returned to the transfer of
source agency, the City of fund to the
Toledo. Source
Agency.
We recommend that the
Punong Barangay require
the concerned officials to
submit the required
documents to establish the

lxvii
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
validity and regularity of the
funds transferred and their
adherence to the provision
of COA circular 94-013

We recommend that the City

Accountant and Barangay
Bookkeeper reconcile their
records and effect the
necessary adjustments thus
present the correct financial
condition of the agency.

Likewise, strict compliance

with the guidelines on the
granting, utilization and
liquidation of financial
assistance pursuant to COA
Circular No. 94-013 is hereby
enjoined.
4. Out of sixteen (16) BAAR Management have There were
Projects/Programs/Activities 2015; not submitted any still many
embodied in the Annual 2012 plan for the unimplemente
Investment Plan of implementation of d projects in
Barangay Awihao for CY the projects in the CY 2016 and
2015 totaling P523,291.40, AIP. 2017, thus the
only two (2) projects recommendati
costing P57,870.00 were on were not
implemented hence, its yet observed.
intended recipients were not
fully benefited.

We recommend that the

barangay implement the
projects embodied in the AIP
and identify the reasons for
the non-implementation of
the programs and
consequently make the
necessary actions to
facilitate the implementation
of the programs/projects/
activities.

lxviii
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
5. The year-end financial BAAR The management There is still
statements of the Barangay 2015 had not submitted delay in the
were not timely submitted to the supporting submission of
the Auditor due to the reports and the year-end
delayed or non-submission documents financial
of registers, disbursement necessary for the statements.
vouchers and supporting preparation of the
documents by the Barangay year end financial
to the City Accounting statements.
Office.

We recommend that
Management submit the
required registers, reports,
disbursement vouchers and
supporting documents
within the prescribed period
stated in the Accounting
System Manual for
Barangays and COA Circular
No. 2012-005. Otherwise, we
recommend that salaries of
responsible officials be
withheld pursuant to Section
127 of P.D. 1445.

We also recommend that

henceforth, the financial
reports and related reports/
documents be submitted to
COA within 60 days after the
31st of December.
6. Copies of perfected BAAR No action made by The Barangay
contracts, purchase orders 2015 the Barangay did not
and their supporting submit any
documents and notices of perfected
Deliveries/ Inspection and contracts or
Acceptance Reports were purchase
not submitted to the Auditor orders.
within five (5) working days
from its issuance and within
twenty-four (24) hours from
receipt of goods,
respectively, thereby
preventing the immediate
review thereof and the
Barangay for acting on any

lxix
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
deficiency that may be
noted.

We recommend that the

Barangay Officials comply
with the requirement on the
submission of perfected
contracts and purchase
orders irrespective of
amount and their supporting
documents within five (5)
working days from issuance
thereof pursuant to COA
Circular Nos. 2009-001 and
2009-002 for validation and
appropriate action.

7. The preparation and BAAR Management had The GAD Plan

submission of the 2015 already submitted and Budget
Barangay’s GAD Plan and GAD Plan and submitted
GAD Accomplishment Budget. was still not
Report were not in in conformity
conformity with Joint with the
Memorandum Circular requirement
(JMC) No. 2013-01 of in the
Philippine Commission on guidelines.
Women (PCW), Department
of the Interior and Local
Government (DILG),
Department of Budget and
Management (DBM) and
National Economic and
Development Authority
(NEDA). Likewise, there
was a delay in the
submission of a copy of
GAD Plan and the
corresponding
Accomplishment Report to
the Audit Team.

We recommend that
management require the
Barangay GAD Focal Point
System (GFPS) to spearhead
the preparation and
submission of the annual

lxx
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
and performance based
GAD Plan and Budget (GPB)
as well as the corresponding
GAD Accomplishment
Report (GAD AR) following
the prescribed form and
procedures pursuant Joint
Memorandum Circular No.
2013-01.

8. Properties of the barangay BAAR No action made by The

with insurable risk totaling 2012 management properties of
P911,197.50 are not insured the Barangay
with the Property Insurance were still not
Fund of the Government yet insured
Service Insurance System with the GSIS
(GSIS) contrary to the Property
provision of the Systems Insurance
and Procedures Manual on Fund.
the Management of
Barangay Funds and
Property, thus the barangay
will not be indemnified of
the value of the properties
in case of loss due to fire
and other fortuitous events.

Allocate funds for the

insurance of their properties
with insurable risks and
insure these properties with
the Property Insurance Fund
of the Government Service
Insurance System (GSIS).

lxxi
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
9. Disbursement vouchers and BAAR No action made by The
payrolls together with its 2012 the Barangay disbursement
supporting documents were vouchers and
not marked/stamped “PAID’ payrolls with
upon payment in violation of its supporting
COA Circular No. 92-389 documents
dated November 3, 1992 and were still not
Section 124 of P.D. 1445, marked/stamp
thus subjecting them to ed “PAID”.
possible re-use or double
payment.

Require the disbursing

officer and cashier to
mark/stamp “PAID” on the
face of all paid
vouchers/payrolls and its
supporting documents to
prevent possible re-use of
the same in consonance
with COA Circular No. 92-
389 and Section 124 of PD
1445.
10. Contrary to the provisions BAAR The management There is still
of the Accounting System 2012 had already tried to delay in the
Manual for Barangay, Vol IV get hold of the submission of
Bank Reconciliation monthly bank the monthly
Statements were not statements from the Bank
submitted to the COA bank to prepare the Reconciliation
Auditor for verification bank reconciliation Statements.
within the prescribed period statements but the
thus accuracy of the bank were delayed
monthly balances of the in furnishing them
Cash In Bank account could copy of the said
not be readily ascertained. bank statements.
Reconciliation of the cash
balance per books and per
bank is done only at the end
of the year thus reconciling
items could not be promptly
acted.

Direct the barangay

bookkeeper and the city
accountant to regularly
secure bank statements,
prepare and expedite the

lxxii
 AUDITOR’S
AUDIT OBSERVATIONS AND ACTION TAKEN BY
REF. VALIDATION
RECOMMENDATIONS MANAGEMENT
RESULTS
reconciliation of balances
between the books and the
bank accounts monthly and
submit the monthly bank
reconciliation statements
promptly together with the
pertinent documents relative
thereto. Further require the
city accountant to record in
the books all reconciling
items so as to present
accurate Cash in Bank
account balance.
11. Delayed remittance of taxes BAAR The management There is still
withheld to the Bureau of 2012 had remitted timely delay in the
Internal Revenue amounting the withholding remittances of
to P5,332.63 was contrary to taxes. taxes.
Section 29 (1) of P.D. 1445
and the rules and
regulations of the National
Internal Revenue Code, and
exposed the fund to
possible mismanagement.

Immediately remit all taxes

withheld to avoid
unnecessary penalties.

Strictly comply with all BIR

Regulations on the
remittance of withholding
taxes.

Monitor the due dates of

these remittances to avoid
penalties.

lxxiii