Republic of the Philippines

COMMISSION ON AUDIT
Offiice of the Team Leader
LGS-B Audit Team No. R12-03
Sultan Kudarat Province
Municipality of Bagumbayan, Esperanza and Senator Ninoy Aquino

STATEMENT OF AUDIT OBSERVATIONS AND RECOMENDATIONS

Prior Years
CY 2016 and below
As of December 31,2018
(For Discussion Purpose Only)

Brgy. Chua
Audit Observations Recommendations Ref. Management's Comments Auditor's
Rejoinder
1. The validity, existence and accuracy Therefore, we recommended the following: Finding  The management will conduct
of the Property, Plant and Equipment No. 1 immediate accounting of PPE and
account amounting to P1,110,227.27  Conduct an Immediate and through BAAR- designated one of the Barangay
cannot be ascertained due to the non- physical count of PPE by designating 2015 Kagawad to do the activity.
conduct of physical count and non- personnel, who is not handling cash  The management will do Sticker
preparation of Report on the Physical transactions, to do the activity; tagging of all Barangay
Count of Property, Plant Equipment  Provide property numbers on physically properties.
(RPCPPE) hence un-supportive of the counted assets for identity of the  The Management will issue ARE
PPE balances as presented in the properties; on all properties .
Financial Statement, rendering the  Issue ARE on all properties counted,  The management will do
balances to be doubtful thus which were in the hands of accountable reconciling of RPCPPE with the FS
unreliable. officers. and adjusting the necessary
 Reconcile the RPCPPE and the FS adjustment with proper
balances and make the necessary documents.
adjustment supported with proper  The management will transfer to
documents. other accounts all unserviceable
 Transfer to Other Assets account all properties.
 unserviceable properties.

2. The management of the Barangay Therefore, we recommended that the Barangay Finding
failed to recognize depreciation on Record Keeper should do the following: No. 1.2
Property, Plant and Equipment which
makes the balances of total asset, equity,  Adhere to Accounting System Manual for BAAR-  The Management is sticking to
and net income to be overstated and the Barangay for proper valuation of PPE’s 2015 the Accounting System Manual for
total expenses to be understand thereby and present fairly the agency’s financial Barangay in evaluating the PPEs.
rendering the accounts to be unreliable condition and performance by providing
which is not pursuant to existing laws and depreciation on PPE accounts other than
regulations. Land.  The management will be
 Coordinate with the Committee on coordinating with the Committee
Inventory to retrieve the date of on Inventory for Retrieving the
acquisition of the properties to provide date of acquisition of all PPEs for
depreciation on previously acquired proper and correct adjustment of
assets and make necessary adjusting depreciation.
entries to correct the balance of prior
period accounts affected.
3. Validity of the Due from LGUs account Therefore, we recommended the following to Finding
amounting to P18,969.88 cannot be support the balances of the account as No. 2
ascertained due to the non-maintenance presented in the Financial Statement; BAAR-  The Management will be has
of subsidiary ledgers which is not pursuant  Exert effort to secure the necessary 2015 securing necessary documents
to item 1.1 (b.i) of International Public documents and reconstruct the other and reconstructing the subsidiary
Sector Accounting Standards (IPSAS) 37 receivable accounts subsidiary ledger; ledger for receivable accounts.
and Section 111 of PD 1445  Confirm the amount of the reconstructed  The Management will be
receivables with the identified debtor to confirming the amount of
validate which of the receivables are still reconstructed receivables with
legitimate receivable of the Barangay. the identified to validate which of
 Make necessary adjustments in the books the receivables are still legitimate
of accounts if proven to be without receivable of the Barangay.
existing debtor for an accurate  The Management will be doing
presentation of the other receivable the necessary adjustment on the
account in the Financial Statements Books of Accounts regarding with
supported with complete documents. these parameters.

4. The Management did not transfer the Therefore, we recommended the following for Finding
unexpended/unobligated balance of the transparency and No. 3
Quick Response Fund (QRF) and DRRMF-  Strict compliance with COA Circular 2012- BAAR-  The management will comply with
MOOE to the Special Trust Fund contrary 02 dated September 11, 2012 on 2015 COA Circular 2012-02 on
to COA Circular 2012-02 dated September Accounting and Reporting Guidelines for accounting and reporting
11, 2012, Moreover, no disclosure was the LDRRMF of LGUs specifically on the guidelines for LDRRMF and MOOE
made by the agency in its Notes to transfer of the unexpended/un-obligated and will open an special trust fund
Financial Statements of the details and balance of the QRF and DRRMF-MOOE to for the said purpose.
amount of the unexpected balance of the Special Trust Fund under the account
Local Disaster Risk Reduction “Trust Liability-DRRM’(Code 438) in the
Management Fund (LDRRMF) thereby, Trust Fund books;  The management will disclose the
affecting the reliability of the affected  Disclose the amount of unexpected amount of unexpected balances
accounts in the Financial Statements. balance in the Notes to Financial in the notes to Financial
Statements; Statements.
 Submit the monthly report on Sources  The management will submit
and utilization of DRRMF to COA. monthly report on the sources
and utilization of DRRMF to COA.

5. Collections were not deposited promptly Therefore, we recommended the following: Finding
and intact within the period which is not in  Cause the strict compliance by the No. 4  The management will direct the
consonance to prescribed rules and Barangay Treasurer of the requirements BAAR- Barangay treasurer to comply the
regulations under the new Systems and on the frequency of deposits of barangay 2015 with the prescribe rules and
Procedures Manual on the Management of collections that the same should be regulations regarding the
Barangay Funds and Property, leaving deposited intact daily or not later than management of Barangay funds
huge cash balance in the hands of the the next banking day with the Authorized and property and deposit all
barangay treasurer, thereby exposing Government Depository Bank (AGDB) as collections promptly as provided
government funds to risks of provided for under the New Systems and under the New Systems and
misappropriations, theft/loss. Procedures Manual on the Management of procedure manual.
Barangay Funds and Property.  The management will not allow
 Stop the practice of using collections to using the collection to defray
defray barangay expenses. Barangay expenses.

6. Regular Cash Advances were used not Therefore, we recommended the following Finding
only to defray payroll expenses but other inconsonance to COA Circular 97-002: No. 5
regular expenses as well which was not  Use the cash advances made by the BAAR-  The management will use the
pursuant to item 4.3.1 and 4.3.2 of COA Disbursing Officer solely for salaries and 2015 cash advances solely for salaries
Circular No. 97-002 dated February 10, wages, commutable allowances, and special and wages , commutable
1997 thereby exposing the funds to cash advances with explicit authority of the allowances, and special cash
possible misuse. Head of the Agency for other legally advances .
authorized purpose;
 Subject all other expenses to regular  The Management will subject all
procurement/payment to ensure withholding other expenses to regular
of taxes; procurement/ payment to ensure
 Cash advances for travel must be made by withholding of taxes.
the concerned official or employee and not  The Management will ensure that
through the Barangay Treasurer’s account. If all cash advances for travel will
travel is for reimbursement, secure all be made direct by the concern
necessary documents and payment must be official or employee. And for the
made by check; reimbursement of travel expenses
the management will ensure that
it will be by check.

 Establish Petty Cash Fund defray

immediately needed expenses, Payments  The management will make a
out of the cash advance shall be allowed petty cash fund to defray
only for amounts not exceeding P4,000.00 immediately needed expenses,
for each transaction (Section 39 (13) of RA and all monetary transaction will
7160,except when a higher amount is be based on legality.
allowed by law and/or specific authority by
the Commission on Audit.

7. The validity, propriety and legality of Therefore, we recommended that the Finding
various disbursements totaling management should adhere to the principle of No. 6 The Management will surely adhere to
P1,583,129.03 cannot be established due transparency, accountability, equity, efficiency BAAR- the principle of transparency,
to lack of minimum supporting and economy in the disbursement of 2015 accountability, equity, efficiency and
documentary requirements which is government funds by the attaching all economy in the disbursement of
contrary to existing COA rules and necessary documents to support the above government funds by attaching all
regulations thereby affecting the reliability claims/expenses, otherwise, these shall be necessary supporting documents.
of the affected accounts in the financial suspended or disallowed in audit. Henceforth,
statements. the management should ensure complete
documentation of every transaction and adhere
to the rules and regulations as provided above
before payment is made to the payee in
consonance with pertinent rules and
regulations.
8. Sampled travel claims amounting to Therefore, we recommended that Management Finding The management will comply the
P152,720.00 for period covering April 24, comply with the aforementioned guidelines on No. 7 proper documents needed for travel
2014 to December 31, 2015 were travel claims/liquidations and to ensure that the BAAR- claims amounting to P152,720.00 for
paid/liquidated without proper guidelines for the prevention and disallowance 2015 the period April 24, 2014 to
documentations which is not in of irregular, unnecessary, excessive, December 31, 2019.
accordance with Executive Order no. 298 extravagant and unconscionable expenditures
dated March 3, 2004 and COA Circular No. are observed pursuant to COA Circular 2012-003
2012-001 dated June 14, 2012, which may dated October 29, 2012.
result to audit suspension and/or
disallowance pursuant to COA Circular No.
2012-003 or the Updated Guidelines for
the prevention and disallowance of
irregular, unnecessary, excessive,
extravagant, and unconscionable
expenditure.

9. The guidelines and principles on the use Therefore, we recommended that Finding The management will comply with the
of Reimbursement Expenses Receipt (RER) Management strictly comply with the guidelines No. 8 guidelines and principles with regards
as stipulated under COA Circular No. and principles on the use of RER as provided for BAAR- to the use of RER as provided for
20014-026 dated September 9, 2014 were under COA Circular No. 2004-006 dated 2015 under COA Circular No. 2004-006.
not strictly followed due to the laxity in September 9, 2004
the acceptance of evidence of receipt in
the payment of various expenses , thus
said transactions were not subjected to
tax, denying the government of additional
revenues.

10. The Actual Expenditures for Personnel Therefore, we recommended that expenses for Finding The management will assure that the
Services of the Barangay for CY 2015 Personal Services must be strictly in accord with No. 9 Personal Services will be in
exceeded the 55% limitation as provided the limitations set in Section 325 of RA 7160 BAAR- accordance with the limitations set in
under Section 331 (b) of Republic Act No. and control the expenses of the Barangay within 2015 section 325.
7160 by P5,326.54. the approved annual budget to ensure that
budget for another purposes will not be affected
and the carrying out of such activity will be
possible.
11. The Chairman on Committee on Therefore, in the light of the new Systems and Finding The management will direct the
Appropriations (CCA) and Barangay Procedures Manual on the Management of No. 10 Committee on Appropriations and the
Record Keeper failed to maintain Registry Barangay Funds and Property (Volumes I, II and BAAR- Barangay record keeper to maintain a
of Appropriations and Commitments II) and to prevent overspending, we recommend 2015 registry of appropriations and
contrary to Systems and Procedures that Chairman on Committee on Appropriations commitments and closely monitor
Manual on the Management of Barangay and the Barangay Record Keeper should the use of appropriations.
Funds and Property (Volumes I, II and II) maintain the Registry of Appropriations and
Commitments to properly monitor the use of
appropriated fund of the barangay.

12. An inventory of the accounts Therefore, we recommend that the Municipal Finding The management will direct the
submitted to the Office of the Auditor Account, Barangay Record Keeper and Barangay No. 11 Barangay Record Keeper and
indicates the delayed submission of Treasurer and other concerned officials submit BAAR- Barangay Treasurer to submit
Financial Statements, Disbursement regularly the required reports/official 2015 regularly all required reports/ official
Vouchers and related supporting receipts/disbursement vouchers and their receipts/ disbursement vouchers with
documents, Report of Collection and supporting documents to the Office of the proper supporting to the office of the
Deposits and non-submission of Auditor to facilitate timely verification and auditor as required by law.
Accomplishment Report of Collection and analysis of the accounts affected/appearing in
Deposits and non-submission of the financial statements and to affirm the
Accomplishment Report for 20% reliability of management’s assertions of
Development Fund, Barangay Disaster existence, occurrence, validity, accuracy and
Risk and Reduction Management Fund, completeness of the recorded transactions. Non-
Sangguniang Kabataan Fund, Senior submission of these documents is sanctioned by
Citizens Fund and other Funds hence, the Article 218 of the Revised Penal Code.
validity and accuracy of the balances of
the accounts affected could not be
ascertained.
13. The Barangay Government failed to Require the inventory committee to conduct F#1 The management directed the
conduct annual physical inventory of complete physical inventory of fixed assets, BAAR inventory committee to conduct
Property, Plant and Equipment (PPE) and prepare and submit the RPCPPE indicating all 2012 completely physical inventory of all
record the same in the Property Plant and the vital information pursuant to policies and and fixed assets, and submit RPCPPE and
Equipment Register (PPEReg) as required procedures of reporting Property, Plant and Prior reconcile the amounts recorded in the
under New System and Procedures Manual Equipment, Public Infrastructures and Year Barangay record keeper and
on the Management of Barangay Fund and Reforestation Projects Reconcile the amounts F#2 Municipal Accountant's ledger book of
Property, Volume I-III, thus validity and recorded in the Barangay Record Keeper and BAAR accounts.
accuracy of the Property, Plant and Municipal Accountant’s ledger book accounts. 2009
Equipment accounts of the Barangay as of
December 31, 2012 amounting to
P1,903,705.24 become doubtful.
14. The Barangay treasurer failed to remit Require the Barangay Treasurer to remit to the F#2BAA The management will direct the
to the Bureau of Internal Revenue taxes BIR taxes withheld within the reglementary R 2012 Barangay Treasurer to remit to the
withheld totaling P37,328.65 at year end, period to avoid misuse of these collections and and BIR taxes withheld with in the
thus exposing collections to possible to avoid penalties and administrative case. Prior reglementary period to avoid misuse
misuse or loss in violation to COA Years of these collection and avoid
Memorandum No. 91692 dates January 21, F#3 penalties.
1991. BAAR
2009
15.The Implementing Rules and We recommended that the Barangay Officials F#3 The management will conduct
Regulation of Government Procurement reorient on the Government Procurement Act BAAR orientation to the officers concern
Act (RA9184) were not implemented and and its IRR. Strictly comply with the governing 2012 regarding the Government
the principles of transparency, policies, rules and regulation on public Procurement Act to comply with the
accountability and economy were not procurement in order to achieve transparency, governing policies, rules and
adhered to thereby casting doubt on the accountability, efficiency and economy in the regulations on public procurement
agency’s procurement. procurement process. for transparency, accountability,
efficiency and economy in the
procurement process.
16. The Barangay Officials failed to adhere Require the barangay officials to strictly comply F#4 The management will direct all
to the guidelines in COA Accounting with the reporting procedures on the BAAR Barangay officials to comply all
Circular 2006-002 requiring the use of the management of the Barangay Funds and 2012 necessary report on the Barangay
Systems and Procedures Manual On the property so the Municipal Accountant can funds and property to Municipal
Management of Barangay Funds and prepare and submit the financial statement on Accountant.
resulting in delayed preparation and time.
submission of the financial statement.

17. Ownership of Land acquired by way of Secure a deed of donation from the donor of the F#5 The management will secure the
donation cannot be ascertained due to the land Appropriate funds necessary for the BAAR deed of donation from the donor of
absence of legal documents the same to transfer of ownership of the land in favor of the 2012 the land and allocate/ appropriate
prove ownership of the same, contrary to Barangay. funds necessary for the transfer of
Sec 39 (2) of PD 1445 Moreover, the fate ownership of the land in favor of the
of land improvements valued at Barangay.
P220,799.20 buildings and other
structures in the amount of P771,578.74
erected on the property could be put into
jeopardy should a legal dispute on the
ownership of the land arise.

18. Failure of the barangay government to Intensify tax campaign and collections F#6 The management will conduct strictly
maximize its taxing powers as authorized authorized under the Local Government Code in BAAR and intensify tax campaign and
under Article IV, Book of RA 7160 made order to generate much needed income to 2012 collections authorized under the
the barangay totally dependent on the finance effective and efficient delivery of basic Local Government Code more
Internal Revenue Allotment (IRA) from the services, as well as finance more development particularly on CTC, Business taxes,
National Government, thus failing to projects. Refrain from being totally dependent Real Property taxes and etc. in order
generate much needed funds to finance on the Internal revenue Allotments. to generate much needed income to
its developmental projects and other basic finance effectively and efficiently the
services to their constituents. basic services and development
projects .

19. Failure of the Chairman, Committee on The Barangay Kagawad, designated as F#7 The management will direct the
Commitment and Appropriation and the Chairman, Committee on Commitments and BAAR committee on appropriation to
Barangay Bookkeeper to strictly monitor Appropriation should strictly follow and monitor 2012 strictly follow and monitor the policies
the utilization of appropriated funds the policies and procedures on the and procedures on the appropriation
resulted to a negative balance of appropriation and commitments. He or/and with and commitments. The management
P121,219.01 in the financial statements as committee concerned should monitor approved will also direct
of December 31, 2011, in violation to the appropriation and charges against the General
appropriation policies and procedures of 20% calamity, SK and GAD funds thru its
the Manual on the Management of respective RACs and sees to it that charges
Barangay Funds and Property, Volume I. against the appropriated funds be based on the
commitments made by the barangay.
20 The Barangay Treasurer failed to Deposit intact all collections within five(50 days Prior The management directed the
deposit cash collection amounting to upon receipt in accordance with Policies and years barangay treasurer to strictly follow
P8,687.33 AS OF December 3, 2009 Procedures on receipts and Deposit of the F# 1 the policies and procedure regarding
contrary to the policies and Procedures on system and manual on the Management of BAAR the management of collections.
receipts and Deposits of the System and Barangay Funds and Property to preclude 2009
procedure Manual on the Management of misuse or loss of government funds.
Barangay Funds and Property, thereby
exposing government funds to the risk of
misappropriation or loss.
21. The Barangay Chairman and Barangay We recommended that the Barangay Chairman Prior The management will renew the
Treasurer were not covered with Fidelity and the Barangay Treasurer should renew their years fidelity bond of Barangay chairman
bond in violation of Section 101 of PD fidelity bonds yearly with the Bureau of Treasury F# 4 and barangay treasurer.
1445 and Treasury Order No. 01-95, thus, pursuant to Section 101 PD 1445 and Bureau of BAAR
exposing government funds and property Treasury Order No. 01-95 in order to protect the 2009
to risks interest of the government.
22. The validity of actual balances in the Require the municipal accountant to prepare Prior The management will request the
cashbook and bank could have been Bank Reconciliation Statement in accordance years municipal accountant for the bank
determined had bank reconciliation
with the provisions of the Accounting System F# 5 reconciliation statement in
statements been prepared and submitted Manual for the Barangays (Volume IV) pages 61 BAAR accordance with the provisions
monthly to the local auditor. no preclude casting doubt on the validity of the 2009
Cash in Bank Account.
23. The Barangay Treasurer failed to Require the Barangay Treasurer, Barangay Prior
prepare Monthly Report to Accountability Record Keeper (BRK) to prepare and submit the years The management directed the
for Accountable Forms pursuant to Volume Monthly Report of Accountability for F# 6 Barangay Treasurer & the BRK to
III-Reporting Procedures in the Accountable Forms(RAAF) for proper control, BAAR prepare & submit the monthly report
Management of Barangay Funds and verification of accountable forms pursuant to 2009 accountability for accountable Forms
Property, thereby accountability or Volume III of Reporting Procedures in the
accountable forms could not be readily Management of Barangay Funds and Property.
established.