Executive Summary
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EXECUTIVE SUMMARY INTRODUCTION Tomas Oppus is a fifth class municipality in the province of Southern Leyte, Philippines. The Municipality of Tomas Oppus occupies an area of 56.11 square kilometers, and the home of 15,807 residents according to the 2010 National census. Politically, Tomas Oppus is subdivided into twenty nine (29) barangays namely: Anahawan, Banday, Biasong, Bogo (Pob.), Cabascan, Camansi, Cambite, Canlupao, Carnaga, Cawayan, Higosoan, Hinagtikan, Hinapo, Hugpa, Iniguihan, Looc, Luan, Maanyag, Mag-ata, Mapgap, Maslog, Ponong, Rizal, Sana Agustin, San Antonio, San Isidro, San Miguel, San Roque, Tinago. The Municipality of Tomas Oppus is headed by Honorable Mayor Agustin R. Escaño, Jr. and is supported by Honorable Vice Mayor Nicanor F. Tahup and eight (8) members of Sangguniang Bayan. Scope of Audit An audit was conducted on the accounts and operations of the Municipality of Tomas Oppus, Southern Leyte for calendar year 2015 in accordance Philippines Public Sector Accounting Standard. The audit included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. The audit covered the transactions for the period January 1 to December 31, 2015. HIGHLIGHTS OF FINANCIAL OPERATIONS Sources and Application of Funds Income The Municipality of Tomas Oppus collected total revenue of P 52,329,138.05 from various sources, as shown below: Sources of Revenue 2015 Tax Revenue P1,723,945.95 Share from Internal revenue 48,216,749.00 Collection Other share from National Taxes 0.00 Service and Business Income 2,388,443.10 Shares, Grants and Donations 0.00 Gains 0.00 Other Income 0.00 Total P52,329,138.05 Appropriations Appropriations for the current year amounted to P 57,664,166.00. There was an increase by P 8,851,648.93 or 18.13% as of last year’s appropriation of P 48,812,517.07, as presented below: Function/Program/Project 2015 (In Pesos) General Public Services 31,712,326.64 Education 344,000.00 Health, Nutrition and Population Control 5,521,655.80 Labor and Employment 0.00 Housing and Community 0.00 Social Services and Social Welfare 1,819,872.96 Economic Services 2,673,929.60 Other Purposes Debt Service 4,675,966.25 Financial Expenses 0.00 LDRRMF 2,599,612.00 20% Development Fund 4,967,381.75 Share from National Wealth 0.00 Allocation for Senior Citizens and PWD 0.00 Other 3,349,421.00 Total 57,664,166.00 Expenditures Out of the Appropriations for the current year, the agency incurred expenditures of P 50,779,291.61. There was an unobligated/unexpended balance of P 6,884,874.39 or 11.94% of total appropriations. Presented below are the expenditures incurred according to function/program/project/activities: Function/Program/Project 2015 (In Pesos) General Public Services 28,302,238.53 Education 340,116.82 Health, Nutrition and Population Control 4,456,643.23 Labor and Employment 0.00 Housing and Community 0.00 Social Services and Social Welfare 1,280,149.82 Economic Services 2,225,492.86 Other Purposes Debt Service 5,749,573.17 Financial Expenses 2,056,211.49 LDRRMF 986,259.30 20% Development Fund 3,811,284.50 Share from National Wealth 0.00 Allocation for Senior Citizens and PWD 0.00 Other 1,571,321.89 Total 50,779,291.61 Financial Position Account 2015 Total Assets P94,511,107.52 Total Liabilities & Deferred Credits 49,808,853.89 Total Government Equity P44,702,253.63 OPINION OF THE AUDITOR ON THE FAIRNESS OF PRESENTATION OF FINANCIAL STATEMENTS The Auditor rendered a qualified opinion on the fairness of the presentation of the financial statements due to the effects of adjustments on the accounts as discussed in Part II of this report as well as the unimplemented prior year’s audit recommendations contained in Part III of the same report. SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS The significant observations with the corresponding recommendations are as follows. 1. The validity of the Property, Plant and Equipment (PPE) account per the LGU’s financial statements totaling P65,218,476.98 for CY 2015 cannot be ascertained due to the failure of concerned LGU officials to conduct a physical count of the recorded property, plant and equipment in violation of Sections 375 and 376 of Republic Act 7160. We recommended that the Local Chief Executive cause the constitution of an Inventory Committee composed of the Municipal Treasurer or/her representative and two (2) management officials that will be responsible in conducting the physical count and prepare Inventory Report of all Property, Plant and Equipment of the local government unit. The Report on the Physical Count of Property, Plant and Equipment (RPCPPE) shall be submitted to the Auditor concerned not later than January of each year. Updated Property Ledger Cards (PLC) and Property Cards shall be maintained by the municipal bookkeeper and treasurer, respectively, and both records should be reconciled regularly. 2. The Municipal Treasurer collected only 73.18% or P 1,688,350.94out of its collection target of P2,307,145.28 covering Real and Special Education taxes, depriving the LGU of significant amount of funds to finance its various needs including the payment of obligations. We recommended that the Local Chief Executive direct the Municipal Treasurer to send demand letters to delinquent taxpayers and in coordination with the Municipal Assessor to create strategies to intensify collection of RPT taxes. Further, notification letter should also be sent to the Provincial Treasurer to request for the enforcement of possible remedies against delinquent taxpayers. 3. The Special Education Fund amounting to P108,000.00 was utilized for expenditures other than those authorized by regulation resulting in the reduced budget for priority projects, programs and activities such as construction and repair of school buildings that is most urgently needed by the LGU’s public elementary and secondary schools. We recommended that the Local Chief Executive remind the Local School Board to refrain from charging non-related expenses to the SEF and henceforth should strictly observe the provisions of Section 272 of LGC, Article 363 of its Implementing Rules and Regulations and Item 4 of Joint Circular No. 01, S. 1998 of the DECS, DBM and DILG in the utilization of the Special Education Fund. 4. The LGU’s Job Order (JO) contracts of employment did not contain statements of duties and responsibilities or equivalent terms contrary to governing rules of the Civil Service Commission (CSC) and the Commission on Audit (COA), thus, for lack of written information as to nature of their role in the agency, service rendered are unascertained as to effectiveness, efficiency and necessity while the funds spent for claimed wages in the amount of P 2,564,357.50 is not assured on whether or not reasonable or economical. We recommended that contracts of job order workers should contain statements of duties and responsibilities or equivalent term to serve as standard with which to base the accomplishment. 5. The Municipal Accountant failed to submit the required MDRRMF Utilization Report contrary to pertinent provisions of the IRR of RA 10121 and COA Circular 2012-002, thus, hinting absence of focus towards the appropriate management of the fund. We recommended that the Local Chief Executive strictly impose on the Municipal Accountant-Designate and the Municipal Disaster Risk Reduction Management Officer for the preparation of the Report on Sources and Utilization of DRRMF. 6. The failure to submit the DILG approved Gender and Development Plan and Budget for FY 2015 and FY 2014 GAD Accomplishment Report to the COA precluded the timely evaluation of the programs and activities carried out as to whether they have addressed gender issues and women empowerment in accordance with Memo Circular 2014-02. We recommended that the Local Chief Executive cause the submission of the GAD Plan and Budget and other necessary reports to COA. 7. The conduct of seminar-workshop outside of the province and held in an expensive hotel costing the LGU the amount of P 89,000.00 was extravagant contrary to COA Circular No. 2012-003 dated October 29, 2012-Annex E and DILG Memorandum Circular Nos. 2011-059 and 2004-130. We recommended that the Municipal Vice-Mayor exercise prudence in spending government funds, specifically: a. Seminars/trainings where participants come from the province should be conducted within the province in order to minimize the cost of the conduct of these activities and save funds for other relative projects. b. Send participants only to seminars who are directly in charge for the agenda of the conference called for. c. Make representation with the Office of the PCL to conform with the regulations on seminars/trainings as mandated by COA and DILG 8. The ICO-Municipal Treasurer retained a cash balance on hand of P401,367.81 as of December 31, 2015 consisting of undeposited collections contrary to Section 69 of PD 1445 and Section 8 of COA Circular No. 92-382, thus, exposing government funds to risk of possible loss or misappropriation while with the said officer. We recommended that the Local Chief Executive direct the ICO-Municipal Treasurer to strictly adhere to Sec. 69 of PD 1445 & Sec. 8 of COA Cir. No. 92- 382 to ensure that government funds are properly accounted for and safeguarded against loss or misuse. 9. The Other Payables Account in the General Fund has a negative balance of P(9,001.95). We recommend that the Municipal Accountant must analyze the cause of the abnormal balances and draw a Journal Entry Voucher to adjust the affected accounts in order to reflect the correct balances in the books of the agency.