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Annual Audit Report on the Municipality

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Annual Audit Report on the Municipality EXECUTIVE SUMMARY A. Introduction Dangcagan used to be an abode of Manobos under the leadership of Datu DANGAAN meaning (“to praise”) a prominent chieftain ruler known for his courage and affluence. The Manobo was then a little sitio of Maramag. As the Christian settlers from Luzon and Visayas began to flock and settle in the area, Datu Dangaan's followers ran and hid their families in the forest and returned to their homes only when they knew the settlers were not around. This led the settlers to call the natives “Dagandagan”. It took ample time for the settlers to befriend the natives. When the natives and the Christian settlers finally united, they made representation to the Municipal Government of Maramag to form a regular barrio within the territory of Datu Dangaan. They agreed to call the barrio DANGCAGAN in honor of the natives. On July 01, 1931, Acting Governor General Butte issued Executive Order 306 separating nine barrios from Maramag and organizing these nine barrios into an independent municipal district known as Kibawe. One of these barrios was DANGCAGAN. On August 29, 1961, President Carlos P. Garcia, though the Executive Order No. 444 created the municipality of Dangcagan, consisting 19 barangays. However, the creation of additional two municipalities namely; Kitaotao and Quezon reduced the number of Barangays under Dangcagan to only 14 barangays with a land area of 42,269 has. B. Financial Highlights Financial Condition 2014 2013 Increase/ (Decrease) Assets P84,443,091.33 P74,419,849.64 P10,023,241.69 Liabilities 20,667,956.84 22,472,528.57 (1,804,571.73) Government Equity P63,775,134.49 P51,947,321.07 P11,827,813.42 Results of Operation 2014 2013 Increase/ (Decrease) Income P94,404,648.43 P82,569,545.33 P11,835,103.10 Expenses 82,667,858.03 79,284,553.70 3,383,304.33 Net Income P11,736,790.40 P 3,284,991.63 P 8,451,798.77 Appropriations The Municipality of Dangcagan appropriated the total amount P93,804,868.00 in the General Fund for calendar year 2014, as follows: A. Personal Services P 32,726,397.00 B. Maintenance and Other Operation Expenses 36,477,722.00 C. Capital Outlay 3,245,000.00 D. 20% Development Fund 16,870,999.00 E. 5% LDRRMF 4,432,750.00 F. Barangay Development Fund 52,000.00 TOTAL P 93,804,868.00 In addition, the Special Education Fund (SEF) appropriated the amount of P743,865.00 for Maintenance and Other Operating Expenses. C. Operational Highlights The Municipality of Dangcagan, Bukidnon reported the following accomplishments: Percentage of Major Activities Completion (%) 1. Installation and Maintenance of Street Lights 14.44 2. Housing Program/Site Development .50 3. Development Services for Heavy Equipment 98.92 4. Rehabilitation of: a. Municipal Road-Pescadero St. 81.60 b. Municipal Road-Noblefranca St. 85.26 c. Municipal Road-Sammy Tellow St. 84.31 d. Municipal Road-V. Cabiling St. 65.49 e. Barangay Roads 29.85 f. ARC Road .20 g. Water System 41.29 h. Lucky 9 Resort 93.00 5. LPRAT-NAPC Counterpart 100.00 D. Scope of Audit The audit covered the financial transactions and operations of the Municipality of Dangcagan, Province of Bukidnon for the year ended December 31, 2014. E. Independent Auditor’s Report on the Financial Statements The Auditor rendered a qualified opinion on the fairness of the presentation of the financial Statements as of December 31, 2014 for reasons stated in Part II of the report. F. Summary of Significant Findings And Recommendations The significant audit findings and recommendations that need immediate action are as follows: 1. Failure of the management to strictly monitor the granting and liquidation of cash advances resulted in unliquidated balances of the Advances to Officers and Employees account as of December 31, 2014 in the aggregate amount of P4,446,694.97 due to granting of cash advances to elected officials other than for official traveling expenses, granting of cash advance without specific purpose, and granting additional cash advance even if the previous ones were not yet settled, contrary to Section 89 of P.D. 1445 and COA Circular No. 97-002. We have recommended that the Acting Municipal Accountant should: a. Implement the “No Liquidation, No Cash Advance” policy. Refrain from granting additional cash advance unless the previous cash advance shall first be settled or a proper accounting thereof shall be made. b. Cause deduction from payroll of employees with unliquidated cash advances. c. Require immediate refund of excess cash advances. d. Monitor overdue accounts. Send reminders in accordance with COA Circular No. 96-004 at their last known address for at least three times. After exhausting all remedies, management may request write-off of dormant accounts from the Commission on Audit, with letters and tracers as supporting documents. 2. The balance of Loans Payable-Domestic per books as of December 31, 2014 in the total amount of P2,866,152.83 did not reconcile with LBP records in the amount of P5,583,383.00, thus understating the accounts by P2,717,230.17. Likewise, subsidiary ledger balances totaling P4,164,170.09 did not tally with the General Ledger, thus making the reported balance of the account unreliable. We have recommended that the Acting Municipal Accountant should review further the Subsidiary Ledger and always reconcile with the General Ledger balance in order to establish the accurate and reliable balance of the loans payables. 3. Prior year’s balance of the LDRRMF totaling P3,818,442.48 were recorded as Due to Other Funds (Account 424) instead of Trust Liability – DRRM (Account 438) contrary to provisions of PD 1445 and COA Circular No 2012-002, thus resulting to inaccurate presentation of the account in the financial statement. We have recommended that the Acting Municipal Accountant should reclassify the prior year’s balance of the LDRRMF totaling P3,818,442.48 which were recorded as Due to Other Funds (Account 424), to Trust Liability - DRRM (Account 438) for correct presentation of the financial statements at year-end. Likewise, Subsidiary Ledgers shall be maintained for transfers of agency’s unutilized DRRMF by year of transfer. 4. Due to LGUs Account (Code 418) under the Trust Fund disclosed that eight (8) subsidiary ledger accounts showed abnormal balances totaling P456,128.38, thus affecting the fair presentation of the account in the financial statement. We have recommended that the Acting Municipal Accountant should review each account with abnormal balances and if warranted, effect the necessary adjusting entry. 5. Special accounts in the General Fund for public utilities and economic enterprises and 20% Development Fund were not maintained, and separate year- end reports were not prepared by the Municipal Accountant, hence, the information on the results of operations and the financial capabilities of the economic enterprises of the Municipality which are needed by management for monitoring and decision-making purposes, are not readily available. We have recommended that: a. The Municipal Accountant shall set-up special accounts for the public utilities and economic enterprises, and 20% Development Fund, and maintained through the use of complete subsidiary ledger; b. Profits derived from the operation of economic enterprises, after deduction of the cost of improvement, repair and other related expenses of the economic enterprises concerned, shall first be applied to the return of the advances or loans taken out therefor, any excess shall form part of the General Fund; and c. Post-closing Trial Balance shall be prepared for each special account. Year-end financial statements, such as Balance Sheet, Statement of Income and Expenses and Statement of Cash Flows shall be likewise prepared. These reports form part of the schedules of the General Fund. 6. Submissions by management of copies of purchase orders and contracts for review along with related documents are partial and incomplete, which in effect precluded proper review of procurement transactions, contrary to the provisions of COA Circular No. 2009-001 dated February 12, 2009. We reiterate the prior year recommendation that management shall submit copies of the contracts and purchase orders within five days from issuance as required under COA Circular 2009-001. 7. Amount appropriated for six (6) projects/programs/activities under 20% Development Fund totaling P3,804,944.04 remained unimplemented / unutilized, in violation of the provision of Section 18 of Republic Act No. 7160, hence the objective to provide efficient and effective basic services and facilities were not attained. We reiterate the prior year recommendation to require the Municipal Engineer and other officers concerned to implement the projects and ensure their completion on their targets set. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S RECOMMENDATIONS There were six (6) recommendations embodied in the CY 2013 Annual Audit Report. Three (3) recommendations were fully implemented, one (1) was partially implemented, while 2 were not implemented. .
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