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Executive Summary

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Executive Summary EXECUTIVE SUMMARY Municipality of Barotac Viejo Profile The Municipality of Barotac Viejo was founded in 1754 and its first settlers were the families from Cebu. The name Barotac came from the Spanish words “Barro” and “Lutak” which mean “boat in mud”. It became an independent town with 34 barangays by virtue of Executive Order No. 84 issued on January 1, 1918. On June 21, 1969, the number of barangays decreased to 26 when Barangay San Rafael, one of its barangays, became a municipality. Barotac Viejo is a 3rd class Municipality under the fifth district of the Province of Iloilo, and is located about 52 kilometers north-east of Iloilo City. The Municipality is headed by Municipal Mayor Niel C. Tupas III. It has a total of 239 employees composed of the following: Permanent 79 Temporary/Casual/Contractual 149 Elected 11 Total 239 For Calendar Year (CY) 2016, the Municipality of Barotac Viejo has accomplished five (5) infrastructure projects. Scope of Audit The audit covered the accounts and operations of the Municipality of Barotac Viejo for the Calendar Year ended December 31, 2016. The objectives of the financial and compliance audit were to determine the reliability of the LGU’s accounts and to express an opinion on the fairness of presentation of the financial statements as well as to determine whether or not the LGU’s transactions were made in accordance with existing government laws, rules and regulations. Financial Highlights (in Totals) Highlights of the financial position and results of operations of the Municipality of Barotac Viejo in CY 2016 are the following: Increase/ 2016 2015 (Decrease) Financial Position Total Assets P223,543,678.67 P351,346,340.43 P(127,802,661.76) Total Liabilities 92,002,665.42 260,727,827.33 (168,725,161.91) Government Equity 131,541,013.25 90,618,513.10 40,922,500.15 i Increase/ 2016 2015 (Decrease) Results of Operations Total Income P115,547,236.28 P 104,434,137.24 P11,113,099.04 Total Expenses 94,796,706.95 92,662,237.14 2,134,469.81 Excess of Income over Expenses 20,750,529.33 11,771,900.10 8,978,629.23 Independent Auditor’s Report on the Financial Statements The Auditor rendered a qualified opinion on the fairness of presentation of the financial statements due to the following: 1. The correctness and existence of the Property, Plant and Equipment amounting to P61,522,367.59 could not be ascertained because the Municipality was not able to conduct physical inventory of its properties. 2. Disbursement Vouchers and supporting documents for Calendar Year 2016 amounting to P27,505,331.76 were not submitted to the Office of the Auditor, hence propriety and validity of transactions could not be ascertained. 3. Cash advances amounting to P23,940,423.01 remained unliquidated/unsettled as of December 31, 2016, thus may overstate the asset and government equity accounts and understate the concerned expense accounts for cash advances which might have been actually incurred but were not reported due to non-submission of liquidation reports. 4. Cash – Local Treasury amounting to P5,126,451.28 remained undeposited as of December 31, 2016, thus rendered the correctness of the account doubtful and may expose government funds to possible loss or misapplication. Significant Audit Observations and Recommendations The following are several significant audit observations and recommendations: 1. Disbursement Vouchers and supporting documents for expenditures charged to the 20% Development Fund totaling to P4,068,653.89 were not submitted to the Auditor, while disbursements of P213,794.11 were not supported with complete documentation, thus verification on the propriety and compliance of transactions with the provisions of DILG- DBM Joint Memorandum Circular No. 2011-1 could not be undertaken, rendering doubts on whether the fund has been utilized for the intended socio-economic development and environmental management programs. We recommended that the LCE, as Chairman, and all the other members of the Municipal Planning and Development Council, observe the guidelines of DILG-DBM JMC No. 2011-1 in formulating PPAs to be funded out of the 20% DF. The fund must be strictly utilized according to the guidelines in order to achieve the maximum benefits for the LGU’s constituents. We also recommended that the LCE direct the Municipal Accountant and OIC-Municipal Treasurer to submit all the DVs and complete supporting documents for expenditures charged against the 20% DF to the COA Auditor. ii 2. The Annual School Board Budget for the Special Education Fund of P2,500,000.00 was not prepared in accordance with Sections 99 and 100 of RA No. 7160; and expenses charged to the SEF of P186,848.00 are not among the allowable expenditures, contrary to Section 1 of RA No. 5447, thereby deprived the school children in the Municipality of the benefits had the fund been used for its intended purpose. We recommended that the LSB prepare the ASB Budget, supported by PPAs, and the Municipality disburse the SEF pursuant to the provisions of Sections 99 and 100 of RA No. 7160 and Section 1 of RA No. 5447. Likewise, we recommended that the budget be prepared following the prescribed format under the Budget Operations Manual for LGUs. We also recommended that the LSB focus the utilization of the SEF in providing adequate facilities and resources in the delivery of quality education by public elementary and secondary schools in the Municipality. 3. The Municipality did not formulate the Gender and Development (GAD) Plan and Budget (GPB) in accordance with the prescribed processes and was not able to institutionalize GAD Database; and the GPB and GAD Accomplishment Report were not submitted and approved by the DILG, contrary to Joint Memorandum Circular No. 2013- 01 of the PCW, DILG, DBM and NEDA. Likewise, the Municipality utilized only P1,794,113.75 or 32.04% of the appropriated budget of P5,600,000.00 for CY 2016; and expended P1,675,704.75 for PPAs that are not attributable towards the attainment of a gender-responsive governance that promotes women’s empowerment, gender equality and gender development, thus defeated the purpose of the program and deprived the constituents of the benefits had the fund been used for its intended purpose. We recommended that the LCE, as the Chairman, and other members of the GFPS, undertake GAD planning in accordance with the provisions of PCW/DILG/DBM/NEDA JMC No. 2013-01, to ensure that appropriate gender issues are identified and are the existing concerns/problems in the municipality, and see to it that the relevant LGU PPAs and GAD activities will address/respond to such gender issues identified. We also recommended that the GFPS observe the proper implementation of the PPAs and optimize the utilization of the GAD budget as planned to meet/attain the objectives of GAD set by the government. Further, we recommended the following: a. Set-up and maintain a GAD Database that will serve as basis for gender-responsive planning, programming and policy formulation; b. Prepare the GAD AR in accordance with the procedures and format provided in the JMC No. 2013-01 and support it with the necessary documents; c. Ensure submission of the Annual GPB and GAD AR to the DILG Regional Office VI for review and approval to ascertain compliance with the guidelines. 4. Disbursements amounting to P432,072.00 were charged to the Local Disaster Risk Reduction and Management Fund (LDRRMF) contrary to JMC No. 2013-1 of the NDRRMC, DBM and DILG, thereby defeated the purpose of using the fund for its intended programs, projects and activities. Likewise, the LDRRMF Investment Plan and iii Monthly Reports on Sources and Utilization of the LDRRMF were not submitted as required under COA Circular Nos. 2012-002 and 2014-002. We recommended that the LCE direct the Municipal DRRMO and the Municipal Accountant to prepare and submit the LDRRMFIP and Monthly Report on Sources and Utilization of the LDRRMF, following the prescribed forms required in COA Circular Nos. 2012-002 and 2014-002 to the NDRRMC through the Office of the Civil Defense and to the COA Auditor. We also recommended that the LCE, as Chairperson, together with the other members of the LDRRM Council, observe the guidelines of the NDRRMC, DBM and DILG JMC No. 2013-1 in formulating PPAs to be funded out of the LDRRMF. The fund shall be strictly utilized according to the guidelines in order to achieve the maximum benefits for its constituents. Further, we recommended that the LCE direct the Municipal Accountant and Designated Municipal Treasurer to submit all the DVs and supporting documents charged against the LDRRMF to the COA Auditor. 5. The Municipality failed to: a) strictly implement and enforce the mandatory segregation of solid waste at source; b) comply with the requirements for collection and transfer of solid waste; and c) create the Solid Waste Management (SWM) Board, and prepare the SWM Plan, thus deprived the constituents of the protection of public health and environment. We recommended that the LCE direct the concerned officials and employees in- charge/assigned in the implementation of the SWM Program in the Municipality to adhere strictly to the provisions of RA No. 9003. We also recommended the following: a. Require the strict implementation of waste segregation at source; b. Implement the separate collection schedules for specific types of wastes, and ensure that such shall cover all the barangays in the Municipality; c. Observe the use of separate compartment/container with cover for specific types of wastes to ensure the containment of solid wastes while in transit; d. Coordinate with Barangay Officials regarding information dissemination/ campaign on proper segregation and disposal of wastes to be implemented in the barangay; e.
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