Republic of the Philippines

COMMISSION ON AUDIT
Regional Office No. VIII

AUDIT REPORT

ON

BARANGAY HINABAY
(Barangay)

INOPACAN
(Municipality)

LEYTE
(Province)

For the Years Ended December 31, 2020 to December 31, 2022
 Republic of the Philippines
COMMISSION ON AUDIT
LGS C - Leyte II & Biliran Province
Office of the Supervising Auditor
New City Hall, Ormoc City

July 17, 2023

HON. GERSON C. OLANTIGUE

Punong Barangay
Barangay Hinabay
Inopacan, Leyte

Dear Punong Barangay Olantigue:

We are pleased to transmit the report of our Auditor on the results of his audit on
the accounts and operations of Barangay Hinabay, Inopacan, Leyte, for the years ended
December 31, 2020, 2021 and December 2022 pursuant to Section 2, Article IX-D of the
Constitution of the Philippines, and Section 43(2) of Presidential Decree (PD) No. 1445,
otherwise known as the Government Auditing Code of the Philippines.

The audit was conducted to ascertain the propriety of financial transactions and
compliance of the barangay to prescribed rules and regulations. It was also made to
ascertain the accuracy of the financial records and reports, as well as the fairness of the
presentation of the financial statements.

The Auditor render a qualified opinion on the fairness of the presentation of the
financial statements due to the audit exceptions noted as indicated in the Independent
Auditor’s Report.

We request that the recommendations contained in Part II and those which remain
unimplemented in Part III of the attached report be acted upon immediately. We will
appreciate being informed of the action(s) taken thereon by submitting the duly
accomplished Agency Action Plan and Status of Implementation report.
 We acknowledge the cooperation and support extended to the Audit Team during
the audit by the officials and staff of Barangay Hinabay and the Municipal Accountant’s
Office of Inopacan, Leyte.

Very truly yours,

For the Commission On Audit

By:

SANTIAGO P. SEÑASE
State Auditor IV
OIC-Supervising Auditor

Copy furnished:

The Honorable Mayor, Inopacan, Leyte

The Sangguniang Bayan, Inopacan. Leyte
The Regional Director, COA, Region VIII, Candahug, Palo, Leyte
 Barangay Hinabay
Municipality of Inopacan
Province of Leyte

AGENCY ACTION PLAN and STATUS OF IMPLEMENTATION

Audit Observations and Recommendations
For Calendar Year 2022 and Prior Years
As of ________________

Agency Action Plan Reason

Target for
Action
Implementation Status of Partial /
Audit Persons Taken /
Audit Date Imple Delay /
Ref Recommend- Action / Dept. Action
Observations ment- Non-
ations Plan Responsi To Be
ation Implem
-ble From To Taken
ent-
ation

Agency Signing Officer: Date __________________

________________________________
Punong Barangay

Note: Status of Implementation may either be (a) Fully Implemented, (b) On-going, (c) Not Implemented,
(d) Partially Implemented, or (e) Delayed
 EXECUTIVE SUMMARY

Introduction

Barangay Hinabay is an upland barangay of Municipality of Inopacan, Leyte

located 16 kilometers from the town itself. It is inhabited by 605 people form 147
household. It has a total area of 1,900 hectares with population density of 0.3 hectares or
3/10 hectares. Its main source of livelihood is agriculture.

An audit was conducted on the accounts and operations of Barangay Hinabay,

Inopacan, Leyte, for CY 2020, CY 2021, and CY 2022 with particular emphasis on cash
and property, plant and equipment accounts, utilization of the 20% Development Fund,
Barangay DRRM Fund and fund transfers and compliance with laws and regulations.

The audit was conducted in accordance with laws and applicable generally
accepted auditing standards. 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. Verification, analysis of
accounts, and such other procedures considered necessary were conducted by the team
during the audit.

Financial Highlights

The barangay’s assets, liabilities and equity as of December 31, 2022 and income
and expenses, in comparison with that in CYs 2020 and 2021, are as follows:

Account 2022 2021 2020

Assets 5,048,114.72 3,770,734.59 3,869,705.94
Liabilities 1,197,510.24 673,542.65 11,793.50
Equity 3,850,604.48 3,097,191.94 3,857,912.44
Income 2,455,695.73 1,855,685.99 1,725,796.00
Expenses 1,496,436.81 1,173,570.24 1,247,825.04

Appropriations, obligations and the remaining balances for calendar year 2022 in
comparison with CYs 2021 and 2020 are tabulated hereunder:

Particulars 2022 2021 2020

Appropriations 2,455,695.73 1,855,685.99 1,725,796.00
Allotments 2,455,695.73 1,855,685.99 1,725,796.00
Obligations 1,351,624.03 1,068,049.84 1,247,825.04
Balance 1,104,071.70 787,636.15 477,970.96
Funds Received from Other Agencies
NGAs
 LGUs 510,000.00 500,000.00
Independent Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the accompanying financial

statements of the Barangay Hinabay, Inopacan, Leyte as of December 31, 2022 due to the
exceptions as stated in the Independent Auditor’s Report and as discussed in Part II of the
report.

Summary of Significant Observations and Recommendations:

In addition to the exceptions cited above, the significant audit observations with
the corresponding recommendations were as follows:

1. The disclosure in the Notes to Financial Statements pertaining to the

LDRRMF lacks the necessary details and not in the prescribed format
provided in COA Circular No. 2012-002 dated September 12, 2012, thus
significant information of value to users of financial statements was not
provided.

We recommended that the Barangay Bookkeeper and Municipal Accountant

disclose in the succeeding Notes to Financial Statements balances of the
LDRRFM using the format provided in annex D of COA Circular 2012-002.

2. Prior year’s unexpended DRRMF were not transferred to the Special Trust
Fund nor was included in the LDRRMF Investment Plan for CYs 2020, 2021,
and 2022, contrary to Sections 4.4 and 5.1.2 of COA Circular 2012-002, thus,
the funds were left idle in the bank and the objectives of providing the fund
for its purpose may not have been attained.

We recommended that the Barangay Kagawad who is the Chairman of the

Committee on Appropriation (CCA), provide breakdown of the ₱252,795.01
BRRM Fund unexpended balance as of December 31, 2022 which should only
include the unexpended balances for the past 5 years.

We also recommended that the Municipal Accountant thru her Designated

Bookkeeper record the prior year’s unused BDRRM Fund as Trust Liabilities
under Special Trust Fund, based on the amount provided by the CCA.
Further, we recommend that the Punong Barangay, as Chairman of the LDRRM
Council, identify the project/s to be funded from the unexpended BDRRM Fund
of previous years, incorporate the same in the LDRRMF Investment Plan and
implement the project/s to fully equip the Barangay and its residents in times of
disasters.

3. The 70% Mitigation Fund of the Barangay Disaster Risk Reduction

Management Fund (BDRRMF) for CY 2021 to CY 2022 totaling ₱149,369.50
were not utilized while the CY 2019 BDRRMF was utilized for PPAs
amounting ₱43,435.00 not identified in the BDRRMF Investment Plan, thus,
 the fund was not fully maximized to respond and address the existing state of
calamity and the capability of the barangay and its residents to cope with
adverse effects of disasters was neither strengthened nor enhanced.

We recommended that the Punong Barangay and the Barangay Disaster Risk
Reduction Management Officer:

a. Monitor and evaluate the Programs/Projects/Activities incorporated in the

BDRRMFIP to avoid duplication of programs and make room to projects
that can address the current state of calamity or any calamity that may
possibly arise. Revise the Plan, if necessary, and still indicate specific
timeframes;

b. Utilize the current year’s 5% LDRRM Fund in accord with the approved
BDRRM Investment Plan to ensure that their utilizations are well-planned
and duly authorized by the BDRRM Council; and

c. Implement the projects, programs and activities (PPAs) identified in the

BDRRMF Investment Plan during the year to ensure full utilization of the
BDRRM Fund.

4. Balances from prior years completed programs and projects totaling

₱71,415.45 were not reverted and re-appropriated in CY 2022, hence, the
Barangay was deprived of additional funding for other important PPAs
while constituents were deprived of the benefits that could have been derived
had the amount was re-appropriated.

We recommended that the Punong Barangay and Barangay Treasurer re-

appropriate the balances of completed projects amounting ₱120,049.05 as of
December 31, 2022, to other PPAs so that funds are utilized to its optimum to
help achieve the desirable socio-economic development and environmental
outcomes of the LGU.

5. Programs and activities to address the concerns of Senior Citizens and

Persons with Disabilities (PWDs) were not implemented, thus the Barangay
was not able to support the needs of the elderly and person with disabilities
in their locality.

We recommended that the Punong Barangay include in its annual programs,

activities that will benefit the well-being of Elderly Persons and PWDs in the
Barangay, the cost of which should be at least one percent (1%) of their respective
budget and ensure its implementation.
Summary of Total Suspensions, Disallowances and Charges
The Barangay has no unsettled suspension, disallowance and charges as of
December 31, 2022.

Status of Implementation of Prior Years’ Unimplemented Audit Recommendations

Of the 25 audit recommendations contained in the CY 2017-2019 and prior years’

Audit Report on Barangay, 14 were fully implemented while 11 remained not
implemented.
 TABLE OF CONTENTS

Page
No.
PART I - Audited Financial Statements

Independent Auditor’s Report 1

Statement of Management’s Responsibility for 3
Financial Statements
Statement of Financial Position 4
Statement of Changes in Net Assets/Equity 6
Statement of Financial Performance 7
Statement of Cash Flows 8
Statement of Comparison of Budget and Actual Amounts 11
Notes to Combined Financial Statements 16

PART II - Audit Observations and Recommendations 21

PART III - Status of Implementation of Prior Years’ Audit

Recommendations 36
 Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. VIII
Candahug, Palo, Leyte

INDEPENDENT AUDITOR’S REPORT

Hon. Gerson C. Olantigue

Punong Barangay
Barangay Hinabay
Inopacan, Leyte

Qualified Opinion

We have audited the financial statements of Barangay Hinabay, Inopacan, Leyte which
comprise the Statement of Financial Position as of December 31, 2020, December 31,
2021 and December 2022 and the Statements of Financial Performance, Statement of
Changes in Net Assets/Equity, Statement of Cash Flows and Statement of Comparison of
Budget and Actual Amounts for the years then ended, and notes to the financial
statements including a summary of significant accounting policies.

Basis for Qualified Opinion

Fully implemented projects with corresponding Fund Utilization Reports (FURs) sourced
from Financial Assistance given by the Municipality of Inopacan was not recognized as
income and not deducted from the Due to Local Government Unit (LGU) account, thus,
the Due to LGU account was overstated by ₱500,000,00, while income was understated
by ₱496,604.83. Cost of completed project still remained in Construction in Progress
(CIP) – Infrastructure Assets and were erroneously not recorded as PPE amounting to
₱361,995.00 and ₱48,175.00 respectively, thus the affected account balances in the
financial statements are deemed unreliable. The distribution of various relief goods to the
families/household affected by calamities charged to the Local Disaster Risk Reduction
Management Fund amounting to ₱66,635.00 were erroneously recorded as Food Supplies
Expense instead of Welfare Goods for Distribution upon initial recording and Welfare
Goods Expense upon distribution, thus, the propriety of the program could not be
ascertained while the accounts Welfare Goods Expense and Food Supplies Expense were
misstated as at year end.

We conducted our audit in accordance with the International Public Sector Standards of
Auditing (IPSSA). Our responsibility under those standards are further described in the

1
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the agency in accordance with the ethical requirements that are
relevant to our audit of the financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.

Responsibilities of Management and those Charged with Governance for the Financial
Statements

Management is responsible for the preparation and fair presentation of these financial
statements in accordance with generally accepted 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.

Those charged with governance are responsible for overseeing the barangay’s financial
reporting process.

Auditor’s Responsibilities for the Audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free of material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will
always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.

For the Commission On Audit

By:

MA. SHIELA T. ELMIDO

State Auditor II
OIC- Audit Team Leader

July 17, 2023

2
3
 Republic of the Philippines
Barangay Hinabay
Inopacan, Leyte
Combined Statement of Financial Position
As at December 31, 2022
(With the Comparative Figures for CY 2020and2021 )

2022 2021 2020

ASSETS
CURRENT ASSETS
Cash and Cash 3,1 2,02 1,99
Equivalents 27,199.79 2,974.50 2,233.32
Investments
RECEIVABLES
Receivables 85,742.64 517,856.34 618.41
Inventories
Prepayments and
Deferred Charges
Total Current
3,212,942.43 2,540,830.84 1,992,851.73
Assets
NON-CURRENT ASSETS
Investments
Receivables
Investment
Property
Property, Plant and 1,8 1,22 1,87
Equipment 35,172.29 9,903.75 6,854.21
Biological Assets
Intangible Assets
Total Non-Current 1,8 1,22 1,87
Assets 35,172.29 9,903.75 6,854.21
TOTAL ASSETS 5,048,114.72 3,770,734.59 3,869,705.94

LIABILITIES
CURRENT LIABILITIES
Financial 1,1 67
Liabilities 74,102.14 4,102.14 4,584.00
Inter-Agency

4
 Payables 1,408.80 (559.49) 7,209.50
Intra-Agency
Payables
Trust Liabilities
Deferred
Credits/Unearned
Income
Total Current 1,1 67 1
Liabilities 75,510.94 3,542.65 1,793.50
NON-CURRENT
LIABILITIES
Financial
Liabilities
Other Payables
21,999.30
Total Non-Current
Liabilities - -
TOTAL LIABILITIES 1,197,510.24 673,542.65 11,793.50
NET ASSETS/EQUITY
Total Net 3,850,604.4
3,097,191.94 3,857,912.44
Assets/Equity 8
TOTAL LIABILITIES AND 5,0 3,77 3,86
EQUITY 48,114.72 0,734.59 9,705.94

5
 Republic of the Philippines
Municipality of Inopacan,Province of Leyte
BARANGAY HINABAY
STATEMENT OF CHANGES IN NET ASSETS/EQUITY
For the Period Ended December 31, 2022
(With the Comparative Figures for CY 2021 and 2020)

GENERAL FUND - 100

Accumulated Accumulated Accumulated

Surpluses/(De Surpluses/(Deficits Surpluses/(De
ficits) ) ficits)
2022 2021 2020
Balance at January 1, 2021 3,097,191.94 3,857,932.44 3,379,941.48
Add (Deduct)
Change in Accounting
Policy
Prior Period Errors ( 1,200.00)
Restated Balance 3,095,991.94 3,857,932.44 3,379,941.48
Add (Deduct) Changes in
net assets/equity during the
year
Adjustment of net revenue
recognized directly in net
assets/equity 227,881.32 ( 1,442,856.25)
Surplus (Deficit) for the 526 68 477,
period ,731.22 2,115.75 970.96
Total recognized revenue 754 477,
and expenses for the period ,612.54 ( 760,740.50) 970.96
Balance at December 31, 3,09 3,857,
2022 3,850,604.48 7,191.94 912.44

6
V Republic of the Philippines
Barangay Hinabay
Inopacan, Leyte
Combined Statement of Financial Performance
For the Year Ended December 31, 2022
(With Comparative Figures for CY 2020&2021)

REVENUE 2022 2021 2020

Tax Revenue 38,342.73
Share from Internal 1,815 1,696,17
Revenue Collections (IRA) 2,368,071.00 ,133.00 6.00
Other Share from National
Taxes
Service and Business
Income
Shares, Grants and
Donations
Gains
Other Income 49,282.00 40,552.99 29,620.00
Total Revenue 2,455,695.73 1,855,685.99 1,725,796.00

Less: Current Operation

Expenses
Personal Services 1,066,428.64 884,503.00 759,123.19
Maintenance and Other 183 488,70
Operating Expenses 285,195.39 ,546.84 1.85
Financial Expenses
Total Direct Costs
Non- Cash Expenses 144,812.78 105,520.42 0.00
Current Operating 1,173 1,247,82
Expenses 1,496,436.81 ,570.24 5.04
Surplus(Deficit) from Current 682 477,97
Operation 959,258.92 ,115.75 0.96
Add (Deduct) :
Total Transfers,
Assistance and Subsidy
from -
Total Transfers, 0.0
Assistance and Subsidy to 432,527.70 0.00 0

7
Surplus (Deficit) for the period 526,731.22 682,115.75 477,970.96
Total Gains
Net Other Non- Operating 0.0
Income/(Losses) 0.00 0.00 0
Surplus(Deficit) for the period 526,731.22 682,115.75 477,970.96

8
 Republic of the Philippines
Municipality of Inopacan, Province of Leyte
Barangay Hinabay

COMBINED CASH FLOW STATEMENT

For the Period Ended December 31, 2022
(With the Comparative Figures for CY 2020 &2021)

GENERAL FUND - 100

Note 2022 2021 2020

Cash Flows from
Operating Activities
Cash Inflows
Collection from 38,342.73
taxpayers
Share from Internal 1,815 1,696
Revenue Allotment 2,368,071.00 ,133.00 ,176.00
Receipts from 40 29
business/service income 49,282.00 ,552.99 ,620.00
Interest Income
Dividend Income
Other Receipts 49,153.59
Total Cash Inflows 2,504,849.3 1,855,685.99 1,725,796.00
2
Cash Outflows
Payment of expenses
Payments to suppliers and 183 1,247
creditors 285,195.39 ,546.84 ,825.04
Payments to employees 1,066,428.6
4 884,503.00 759,123.19
Interest Expense
Other Expenses
Total Cash Outflows 1,351,624.0 1,068,049.84 2,006,948.23
3
Net Cash Flows from 1,153,225.2 787,636.15 ( 281,152.23)
Operating Activities 9

9
Cash Flows from Investing
Activities
Cash Inflows
Proceeds from Sale of
Investment Property
Proceeds from
Sale/Disposal of Property,
Plant and
Equipment
Proceeds from Sale of
Non-Current Investments
Collection of Principal
on loans to other entities
Total Cash Inflows
- -
Cash Outflows
Purchase/Construction of
Investment Property
Purchase/Construction of
Property, Plant and 49,000.00 756
Equipment ,894.97
Investment
Purchase of Bearer
Biological Assets
Purchase of Intangible
Assets
Grant of Loans
Total Cash Outflows 49,000.00 756,894.97
Net Cash Flows from (756,
Investing Activities (49,000.00) 894.97)
Cash Flows from
Financing Activities
Cash Inflows
Proceeds from Issuance
of Bonds
Proceeds from Loans
Total Cash Inflows
Cash Outflows
Payment of Long-Term
Liabilities
Retirement/Redemption
of debt securities

10
 Payment of loan
amortization
Total Cash Outflows
Net Cash Flows from
Financing Activities -
Total Cash Provided by
Operating, Investing and
Financing Activities 1,104,225.29 30,741.18 ( 281,152.23)
Add: Cash at the
Beginning of the year 2,022,974.50 1,992,233.32 2,273,385.55
Cash Balance at the End 3,127,199.7 2,022,974.50 1,992,233.32
of the Year 9

11
 Republic of the Philippines
PROVINCE OF LEYTE
Municipality of Inopacan
Barangay Hinabay

Statement of Comparison of Budget and Actual Amounts

For the Year Ended December 31, 2022
(In thousands of Pesos)

Difference
Difference
Actual Final
No Budgeted Amounts Original and
Particulars Amounts Budget and
tes Final Budget
Actual
Original Final
Revenue
A. Local Source
1. Tax Revenue
38,
a. Tax Revenue-Property 7,000.00 7,000.00 -
342.73 31,342.73
Tax Revenue-Goods
b.
and Services
c. Other Local Taxes
38,
Total Tax Revenue 7,000.00 7,000.00 -
342.73 31,342.73
2. Non-Tax Revenue
a. Service Income
b. Business Income
Other Income and 49,
38,000.00 38,000.00 -
Receipts 282.00 11,282.00
49,
Total Non-Tax Revenue 38,000.00 38,000.00 -
282.00 11,282.00
B. External Sources
Share from the National
1. 2,200,000.00 2,200,000.00 2,368,071.00 168,071.00
Internal Revenue
2. Share from GOCCs
Other Shares from
3.
National Tax
a. Share from Ecozone
b. Share from EVAT
Share from National
C.
Wealth
Share from Tobacco
d.
Excise Tax
4. Other Receipts
a. Grants and Donations

12
 Difference
Difference
Actual Final
No Budgeted Amounts Original and
Particulars Amounts Budget and
tes Final Budget
Actual
Original Final
b. Other Subsidy Income
5. Inter-Local Transfer
Capital/ Investment
6.
Receipts
a. Sale of Capital Assets
b. Sale of Capital Assets
Proceeds from
c.
Collections Loans
Receipts from
C.
Borrowings
Total Revenues and
2,245,000.00 2,245,000.00 - 2,455,695.73 210,695.73
Receipts Expenditures
General Public Services
Personnel Services 954,303.64 1,038,303.64 84,000.00 1,037,628.64 675.00
Maintenance and Other 618, 317, 3
Operating Expenses 160.16 618,160.16 - 158.58 01,001.58
Capital Outlay
- - - -
Education
Personnel Services
Maintenance and Other
Operating Expenses
Capital Outlay
Health, nutrition and
Population Control
Personnel Services
Maintenance and Other
Operating Expenses
Capital Outlay
Labor and Employment
Personnel Services
Maintenance and Other
Operating Expenses
Capital Outlay
Housing and Community
Development
Personnel Services
Maintenance and Other
Operating Expenses
Capital Outlay
Social Services and Social
Welfare

13
 Difference
Difference
Actual Final
No Budgeted Amounts Original and
Particulars Amounts Budget and
tes Final Budget
Actual
Original Final
Personnel Services
Maintenance and Other
Operating Expenses
Capital Outlay
Economic Services
Personnel Services
Maintenance and Other
Operating Expenses
Capital Outlay
Other Purposes:
Debt Service
Financial Expenses
Amortization
112, 8,403 1
LDRRMF
250.00 120,653.40 .40 20,653.40
Maintenance and Other
Operating Expenses
Capital Outlay
440, 33,613 378,
20% Development Fund
000.00 473,613.60 .60 914.00 94,699.60
Maintenance and Other
Operating Expenses
Capital Outlay
Share from National Wealth
Maintenance and Other
Operating Expenses
Capital Outlay
Allocation for Senior Citizens
and PWD
Maintenance and Other
Operating Expenses
Capital Outlay
Others
Personnel Services
Maintenance and Other
Operating Expenses
Capital Outlay
Continuing
Appropriations(Capital
Outlay)
General Public Services

14
 Difference
Difference
Actual Final
No Budgeted Amounts Original and
Particulars Amounts Budget and
tes Final Budget
Actual
Original Final
Education
Health, Nutrition and
Population Control
Labor and Employment
Housing and Community
Development
Social Services and Social
Welfare
Economic Services
Total 2,124,713.80 2,250,730.80 126,017.00 1,733,701.22 517,029.58
Surplus (Deficit) for
2,124,713.80 (5,730.80) (126,017.00) 721,994.51 (306,333.85)
the period

15
 Republic of the Philippines
Province of Leyte
MUNICIPALITY OF INOPACAN
Barangay Hinabay
-o0o-

NOTES TO FINANCIAL STATEMENTS

I- General/Agency Profile
> Barangay Hinabay is an upland barangay of Inopacan located 16
kilometers from the town itself . It has inhabited by 605 people from 147
household. It has total land area of 1,900 hectares with a population density
of 0.3 hectares or 3/10 hectares. It main source of livelihood is
agricultural/farming.

Basis of Financial
II -
Statement Presentation

> The financial statements have been prepared in accordance with the
Generally Accepted State Accounting Principles and Standards.

III Significant Accounting

- Policies
> The agency uses the accrual basis of Accounting. All expenses incurred
are reported in the Financial Statements in the period to which they relate.
Income is on accrual basis except for transaction where accrual basis is
impractical or when other methods are required.

> Payable account are recognized and recorded in the book of accounts
only upon acceptance of goods/inventory/other assets and rendition of services to
the agency.

> Accounts were reclassified to conform with the Revised Charts of

Accounts prescribed under the New Government Accounting System which was
implemented effective January 1, 2003 per COA Circular No. 2003-001 dated
June 17, 2003.

16
IV
Correction of Fundamental Errors
-
> Fundamental errors of prior years are corrected using the prior Year's
adjustment account, errors affecting the current year's operations are corrected to
the current year's accounts.

V- CASH

> This account is

broken down as follows:

CASH 2022 2021 2020

Cash Local Treasury
585.00 (122.00)
Petty Cash Fund
1,000.00
Cash in Bank- Local
Currency, Current Account 3,126,614.79 2,023,096.50 1,991,233.32
TOTAL
3,127,199.79 2,022,974.50 1,992,233.32

Receivables
CASH 2022 2021 2020
Real Property Tax
Receivables 618.41 618.41 618.41
Due from Other Funds
432,527.70 432,527.70
Payroll Fund
82,310.23 82,310.23
Advances to Officers and
Employees 2,814.00 2,400.00
TOTAL
518,270.34 517,856.34 618.41

VI PLANT, PROPERTY
- AND EQUIPMENT

PLANT, PROPERTY
2022 2021 2020
AND EQUIPMENT
Land 130,000.0 130,000.0 130,000.0

17
 0 0 0
1,267,367.8
Buildings 1,267,367.85 1,267,367.85
5
Accumulated (1,252,159.4 (1,203,999.4
Depreciation-Buildings 4) 6)
117,434.4 117,434.4 117,434.4
Office Equipment
4 4 4
Accumulated
(24,430.1 (227,881.3
Depreciation-Office
2) 2)
Equipment
122,971.9 74,751.9
It Equipment & Software 74,751.92
2 2
Accumulated (40,844.6 (17,480.0
Depreciation-ICT 6) 0)
1,188,884. 763,904.8 267,300.0
Road Networks
83 3 0
Accumulated
(86,712.5 (49,064.5
Depreciation-Road
3) 1)
Networks
49,000.0
Furniture and Fixtures
0
Accumulated
(9,310.0
Depreciation-Furniture and
0)
Fixtures
Other Property, Plant and 20,000.0 20,000.0
Equipment 0 0
Accumulated
Depreciation-Other (9,025.0 (7,125.0
Property Plant and 0) 0)
Equipment
Construction in Progress- 361,995.0 361,995.0
Infrastructure Assets 0 0
1,229,903.7
TOTAL 1,835,172.29 1,856,854.21
5

VII CURRENT
- LIABILITIES

LIABILITIES 2022 2021 2020

Due to Officers and
Employees
1,408.8 (559.49
Due to BIR 7,209.50
0 )

18
 674,102.1
Due to LGUs 1,174,102.14 4,584.00
4
Performance/Bidders/Bail
Bond
21,999.3
Other Payables
0
673,542.6
TOTAL 1,197,510.24 11,793.50
5

VII GOVERNMENT
I - EQUITY

GOVERNMENT
2022 2021 2020
EQUITY
a. Portion of Property, 1,835,172. 1,229,903.7 1,856,854.2
Plant and Equipment 29 5 1
b. Equity set aside to
finance capital projects
with
appropriations
provided in the previous
years-
(Continuing
Appropriations)
c. Portion of reciprocal
account of inventories
d. Portion of reciprocal
account of Receivables- 518,270.3 517,856.3 618.4
Disallowances and 4 4 1
Charges
e. Equity allocated to 673,542.6
1,197,510.24 11,793.50
settle existing obligations 5
504,297.9 2,118,745.4
f. Available for Operation 1,510,675.36
9 3
g. Prior Years' 227,881.3 (1,442,856.23
477,970.96
Adjustments 2 )
3,097,191.9
TOTAL 4,283,132.18 3,857,912.44
4

IX
INCOME
-

19
 TAX REVENUE 2022 2021 2020
Real Property Tax-Basic
38,342.73
TOTAL

GENERAL INCOME 2022 2021 2020

Clearance and 1,550.0 2,175.0
8,459.00
Certification Fees 0 0
32,375.0 22,030.0
Waterworks System Fees 19,500.00
0 0
11,500.0 10,800.0
Permit Fees
0 0
3,857.0 5,547.9
Other Business Income 1,661.00
0 9
49,282.0 40,552.9
TOTAL 29,620.00
0 9

OTHER GENERAL
2022 2021 2020
INCOME
Miscellaneous Income
Internal Revenue 1,815,133.0
2,368,071.00 1,696,176.00
Allotment 0
1,815,133.0
TOTAL 2,368,071.00 1,696,176.00
0

X- EXPENDITURES

PERSONAL SERVICES 2022 2021 2020

Productivity Incentive 55,000.0 55,000.0
Allowance 0 0
Other Bonuses and 85,700.6
Allowances 4
779,499.0 750,274.0
Honoraria 654,656.50
0 0
55,000.0
Cash Gift 52,473.99
0
91,229.0 79,229.0
Year End Bonus 51,992.70
0 0
Philhealth Contributions
TOTAL 1,066,428.64 884,503.0 759,123.19

20
 0

MAINTENANCE AND
OTHER OPERATING 2022 2021 2020
EXPENSES
64,250.4 40,500.0
Traveling Expenses 31,310.00
0 0
27,000.0
Training Expenses 2,000.00
0
19,990.0 31,352.0
Office Supplies Expenses 21,249.00
0 0
30,213.9 34,920.7 10,120.1
Electricity Expenses
9 6 7
Membership Dues and
4,000.0 4,000.0
Contribution to 4,000.00
0 0
Organizations
Accountable Forms 6,600.0 1,800.0 600.0
Expenses 0 0 0
1,000.0 1,000.0
Auditing Services 1,000.00
0 0
41,164.0 38,400.0
Food Supplies Expenses 59,985.00
0 0
Medical, Dental and
14,995.0
Laboratory Supplies
0
Expense
Drugs and Medicine 5,000.0
Expenses 0
Agricultural and Marine 17,937.0
Supplies Expense 0
Other Supplies and 2,965.0
54,250.00
Materials Expense 0
Repair & Maintenance 21,150.0
Infrastructure 0
Repair & Maintenance
34,500.0
Electrification, Power &
0
Energy Structures
218,240.0
R and M - Other Structure
0

21
Repair & Maintenance
Artesian wells, Reservoir
& Pumping Stations
Repair & Maintenance - 23,730.0
Office Building 0
Repair & Maintenance
Office Equipment
Repair and Maintenance- 2,975.0
Land Improvements 0
Repair and Maintenance-
Sports Equipment
Repair & Maintenance
Road, highways and
Bridges
2,547.0 3,300.0
Fidelity Bond Premiums 2,338.50
0 0
Other Maintenance and 31,383.0 20,299.0
25,379.18
Operating Expenses 0 8
432,527.7
Subsidy to other funds
0
717,723.0 183,546.8
TOTAL 488,701.85
9 4

NON FINANCIAL
2022 2021 2020
EXPENSES
Depreciation-Infrastructure
Assets 37,648.02 24,190.32
Depreciation-Buildings
and Other Structure 48,159.98 48,159.98
Depreciation-Machinery
and Equipment 47,794.78 31,270.12
Depreciation-Other
Property,Plant and
1,900.00 1,900.00
Equipment
Depreciation-Furniture and
Fixtures 9,310.00
TOTAL
144,812.78 105,520.42

22
 FINANCIAL
2022 2021 2020
EXPENSES
Bank Charges
TOTAL

Notes to Local Disaster Risk Reduction Management Fund (LDRRMF)

The LDRRMF represents the amount set aside by the Barangay Local
Government Unit to support it's disaster risk management activities pursuant to
R.A No.10121, otherwise known as the Philippine Disaster Risk Reduction and
Management Act of 2010.The amount available and utilized as December
31,2022 totaled P 299,484.74 and 66,635 utilization, respectively,broken down
as follows

Particulars Amount
2020 2021 2022
252,795.0 295,659.7 364,991.3
Beginning Balance
1 5 5
86,099.7 92,731.6 120,653.4
Current Appropriation
4 0 0
43,235.0 23,400.0
Actual Expenses
0 0
295,659.7 364,991.3 485,644.7
Balance as of year-end
5 5 5

List of Expenses
Expenses 2020 2021 2022
41,690.8
Food Supplies
9
1,544.1
bir
1
Alde's Store
22,698.00
bir
468.00
bir
234.00

TOTAL 23,400.00 0.00

23
43,235.00

24
 PART II

AUDIT OBSERVATIONS AND RECOMMENDATIONS

A.Financial Audit

Overstatement of Due to LGU

1. Fully implemented projects with corresponding Fund Utilization Reports

(FURs) sourced from Financial Assistance given by the Municipality of
Inopacan was not recognized as income and not deducted from the Due to
Local Government Unit (LGU) account, contrary to contrary to Section 111
(2) of Presidential Decree (P.D.) No. 1445 and COA Circular No. 94-013 thus,
the Due to LGU account was overstated by ₱500,000,00, while income was
understated by ₱496,604.83.
1.1. Section 111 (2) of PD 1445 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.

1.2. COA Circular No. 2015-009 dated December 1, 2015 prescribed the Revised
Chart of Accounts for LGUs to conform with the adoption of the Phil. Public
Sector Accounting Standard (PPSAS).

Due to LGUs
2-02-01-070
Credit

This account is used to record the receipt of funds for delivery of

goods/services as authorized by law, fund transfers from LGUs for the
implementation of specific programs or projects, share in LGU income and
other inter-agency transactions. Debit this account for delivery of
goods/services, liquidation of funds received, receipt of share in LGU
income and settlement of liabilities.

1.3. Review of the Due to LGUs account of the Barangay revealed that it has a general
ledger balance of ₱1,174,102.14 as of December 2022. Part of this amount was
financial assistance of ₱500,000.00 coming from the Municipality of Inopacan.

1.4. The audit of transactions for CY 2020 to 2022 disclosed that projects funded out
of the Financial Assistance from the Municipality of Inopacan totaling
₱496,604.83 were already fully implemented and with corresponding Fund
Utilization Reports (FURs) submitted to the source agency as follows:

25
 Table 1. Fully Implemented Projects charged to FA with corresponding FURs
Financial Disbursements PPE/to be
Source Assistance Project recognized
Particulars Amount
Amount as income
LGU ₱250,000.00 Construction of Materials and ₱247,558.40 ₱247,558.40
Inopacan Pathways (Going Labor
to Sitio Bairan) Returned FA 2,441.60
LGU 250,000.00 Construction of Materials and 249,046.43 249,046.43
Inopacan Pathways (Going Labor
to Sitio Pandong Returned FA 953.57
Bato)
Total ₱500,000.00 ₱500,000.00 ₱496,604.83

1.5. Since the purpose for which the funds were received has been completed or
implemented and a corresponding FUR for the same was already submitted to
the source agency (Municipality), income should be recognized and the
corresponding Financial Assistance (FA) should be deducted from the Due to
LGUs account.

1.6. Due to the noted deficiency, the Due to LGUs account was overstated by
₱500,000.00 while income was understated by ₱496,604.83, thus adversely
affecting the fair presentation of the year-end financial statements.

1.7. We recommend that the Municipal Accountant make a correcting entry to

deduct the amount of ₱500,000.00 from the Due to LGUs account and
recognize income of ₱496,604.83 representing the completed projects with
the corresponding FUR already submitted to the source agency.

Overstatement of Construction in Progress (CIP)

2. Cost of completed project still remained in Construction in Progress (CIP) –

Infrastructure Assets and were erroneously not recorded as PPE amounting
to ₱361,995.00 and ₱48,175.00 respectively, contrary to COA Circular No.
2015-009 dated December 1, 2015, and Philippine Public Sector Accounting
Standards, thus the affected account balances in the financial statements are
deemed unreliable.
2.1. COA Circular No. 2015-009 dated December 1, 2015 prescribed the Revised
Chart of Accounts for LGUs to conform with the adoption of the Phil. Public
Sector Accounting Standard (PPSAS).

Construction in Progress-Infrastructure Assets

1-07-10-020
Debit

26
 This account is used to record the accumulated cost or other appropriate
value of infrastructure assets which are still in the process of construction or
acquisition. Credit this account for reclassification to the appropriate
Infrastructure Asset account upon completion.

2.2. The Philippine Application Guidance (PAG) to Philippine Public Sector

Accounting Standards (PPSAS) 17 provides the guidelines on the recognition of
depreciation, methods of depreciation, determination of depreciable amount,
residual value and useful life of PPE. PAG 3 provides the following guidelines on
initial recognition of depreciation: Depreciation of an asset begins when it is
available for use as when it is in the location and condition necessary for it to be
capable of operating in the manner intended by management. For simplicity and
to avoid proportionate computation, depreciation shall be for one month if the
PPE is available for use on or before the 15 th of the month. However, if the PPE is
available for use after the 15th of the month, depreciation shall be for the
succeeding month.

2.3. Review of implementation of projects funded by LGU revealed that of the project
already completed with a total amount of ₱410,170.00, the amount of
₱361,995.00 still remained under CIP - Infrastructure Assets and were not
reclassified to its proper PPE account while the amount of ₱48,175.00 were
erroneously not recorded as PPE. Details shown in table 2.

Table 2. List of completed projects with amounts that remained in CIP and not recorded as PPE
Amount
not
Project Date Particulars Recoded as recorded Total
CIP as PPE
Account
Rehabilitation of 5/20/2021 Labor ₱48,175.00 ₱ 48,175.00
Water System (20% Materials ₱361,995.00 361,995.00
DF)
TOTAL ₱361,995.00 ₱48,175.00 ₱410,170.00

2.4. Since the aforementioned completed projects which still form part of the CIP
accounts at year end were not reclassified to the appropriate PPE accounts and
some capitalizable cost were not recorded as PPE, depreciation expense was not
also recognized during the years these were utilized. Depreciation needs to be
provided because an asset is bound to undergo wear and tear over a period of
time. The working capacity and effectiveness of the asset is reduced due to
passage of time.

27
2.5. The above-noted omissions of the Municipal Accountant resulted in
misstatements of some PPE accounts and Depreciation Expenses, thus, affecting
their fair presentation in the financial statements as of December 31, 2022.

2.6. We recommend that the Municipal Accountant prepare the Journal Entries
to reclassify the noted CIP - Infrastructure Assets to its proper PPE account
and to record as PPE the unrecorded costs of the completed project.

2.7. Moving forward, we recommend that the Municipal Accountant recognize

the appropriate depreciation expense of the LGU’s assets from the time these
are acquired or completed.

Erroneous recording for Distribution of Relief/Welfare Goods

3. The distribution of various relief goods to the families/household affected by

calamities charged to the Local Disaster Risk Reduction Management Fund
amounting to ₱66,635.00 were erroneously recorded as Food Supplies
Expense instead of Welfare Goods for Distribution upon initial recording and
Welfare Goods Expense upon distribution, contrary to Sections 2 and 4 of
Presidential Decree (P.D.) No. 1445 and COA Circular No. 2015-009 dated
December 1, 2015, thus, the propriety of the program could not be
ascertained while the accounts Welfare Goods Expense and Food Supplies
Expense were misstated as at year end.
3.1 Section 2 of P.D. 1445 states that:

“It is the declared policy of the State that all resources of the government
shall be managed, expended or utilized in accordance with law and
regulations, and safeguard against loss or wastage through illegal or
improper disposition, with a view to ensuring efficiency, economy and
effectiveness in the operations of government. The responsibility to take
care that such policy is faithfully adhered to rests directly with the chief or
head of the government agency concerned.”

3.2 While Section 4 of P.D. 1445 provides, that financial transactions and operations
of any government agency shall be governed by certain fundamental principles.
Paragraph 6, thereof, states that claims against government funds shall be
supported with complete documentation.

3.3 Moreover, COA Circular No. 2015-009 dated December 1, 2015 prescribed the
Revised Chart of Accounts for LGUs to conform with the adoption of the Phil.

28
 Public Sector Accounting Standard (PPSAS). On recording of expenses, the
following accounts were prescribed to be used by LGUs:

Welfare Goods for Distribution

1-04-02-020
Debit

This account is used to record the cost of goods for distribution to people
affected by calamities/disasters/ground conflicts such as canned goods,
blankets, mats, kitchen utensils, flashlights and other similar items. Credit this
account for issuance to end-users, transfers or write-down.
Welfare Goods Expenses
5-02-03-060
Debit

This account is used to record the cost of goods issued/distributed to people

affected by calamities/disasters/ground conflicts such as canned goods,
blankets, mats, kitchen utensils, flashlights and other similar items. This also
includes the cost of food served to people affected by
calamities/disasters/ground conflicts.
Food Supplies Expense
5-02-03-050
Debit

This account is used to record the cost of food issued to hospital/rehabilitation

patients, jail inmates and the like.

3.4 Audit of disbursements in CYs 2020-2022 disclosed that the Barangay procured a
total of ₱66,635.50 goods for distribution paid from the BDRRMF. Details on the
purchase of various relief goods in response to COVID-19 and victims of
Typhoon Odette charged to the Local Disaster Risk Reduction Management Fund
are as follows:

Table 3. Food Items and Other Relief Goods

Check
Date Relief Goods Amount
No.
0493742 3/18/20 10 Sacks of Rice- P19,450.00; ₱43,235.00

5 boxes of noodles (beef)- P3,275.00;

5 boxes of young’s Town- P9,450.00;

3 boxes of Kopiko Coffee-

P8,600.00; and

29
 Check
Date Relief Goods Amount
No.

3 boxes of sabon (Champion)-

P2,460.00
0556066 12/24/21 8 sacks of Rice- P16,800.00; ₱23,400.00

200 pcs of Tinapa/sardines-

P4,000.00; and

4 boxes of noodles- P2,600.00

GRAND TOTAL ₱66,635.00

3.5 Perusal of the entries made by the bookkeeper on the issuances of the above
transaction revealed that they were erroneously recorded as Food Supplies
Expense instead of Welfare Goods for Distribution upon initial recording and
Welfare Goods Expense upon distribution.

3.6 The erroneous entry of expense resulted in an overstatement of Food Supplies

Expense by ₱66,635.00 and an understatement of the Welfare Goods Expense by
the same amount.

3.7 We recommend the Bookkeeper to record issuances of relief goods not as

Food Supplies Expense but as Welfare Goods Expense.

Disclosure of LDRRMF to the Notes to FS

4. The disclosure in the Notes to Financial Statements pertaining to the

LDRRMF lacks the necessary details and not in the prescribed format
provided in COA Circular No. 2012-002 dated September 12, 2012, thus
significant information of value to users of financial statements was not
provided.
4.1. COA Circular 2012-002 dated September 12, 2012 was issued to prescribe
accounting and reporting guidelines for the LDRRMF of LGUs (including
BLGUs) and NDRRMF given to LGUs and Receipts from other sources.

4.2. Whereas, Section 5.1.16 of the same Circular states “The amount and details of
the unexpended balance of LDRRMF shall be discussed in the Notes to Financial
Statements”. A sample of disclosure was attached as Annex D of the same
circular as shown below:

Annex D

30
 Notes to the Financial Statements

Note____. Local Disaster Risk Reduction Management Fund (LDRRMF)

The LDRRMF represents the amount set aside by the LGU to support it's
disaster risk management activities pursuant to R.A No.10121, otherwise known
as the Philippine Disaster Risk Reduction and Management Act of 2010.The
amount available and utilized during the year totaled ₱_________ and
₱_________ , respectively, broken down as follows:

Amount
Particulars
Available Utilized Balance
Current Year Appropriation:
Quick Response Fund
₱ ₱ ₱
(QRF)
Mitigation Fund (MF)
MOOE
Capital Outlay
Total
Continuing Appropriation: ₱ ₱ ₱
Special Trust Fund
CY 20___ ₱ ₱ ₱
CY 20___
CY 20___
CY 20___
CY 20___
Total
Total ₱ ₱ ₱

4.3. Review on disclosure made on the Notes to Financial Statements of the LDRRMF
of the barangay disclosed that it was not in the prescribed format as provided in
Annex D of COA Circular No. 2012-002 as it only shows in lump-sum the
available, utilized and balances from previous years unexpended and current
appropriations.

4.4. The Notes failed to discuss in detail the balances under current years
appropriations under 30%QRF and 70%Mitigation Fund and the detailed
breakdown of the unexpended prior years balances which should have given
additional value to the financial statements.

31
4.5. We recommend that the Barangay Bookkeeper and Municipal Accountant
disclose in the succeeding Notes to Financial Statements balances of the
LDRRFM using the format provided in annex D of COA Circular 2012-002.

4.6. Commenr

Incomplete LDRRMF Investment Plan

4. Prior year’s unexpended DRRMF were not transferred to the Special Trust
Fund nor was included in the LDRRMF Investment Plan for CYs 2020, 2021,
and 2022, contrary to Sections 4.4 and 5.1.2 of COA Circular 2012-002, thus,
the funds were left idle in the bank and the objectives of providing the fund
for its purpose may not have been attained.
5.1. Section 4.4 of COA Circular 2012-002 states “The unexpended LDRRMF shall
accrue to a special trust fund solely for the purpose of supporting disaster risk
reduction and management activities of the Local Disaster Risk Reduction
Management Council (LDRRMC) within the next five years. The LDRRMCs
shall decide on the use of the unexpended balance of LDRRMF which shall
be incorporated in the Local Disaster Risk Reduction Management Fund
Investment Plan.”

5.2. Whereas, Section 5.1.2 of the same circular states, “A LDRRMFIP for the DRRM
program 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 a separate caption, the list of projects and
activities charged to the unexpended LDRRMF of previous years.”

5.3. Upon examination of the LDRRMF Investment Plan attached to the Annual
Budget, it was observed that the LDRRMF Investment Plan only included the
items/activities intended to be undertaken/procured out of the current year’s
budget. Also, it was noted that in every Supplemental Budget, a separate
LDRRMF Investment Plan was prepared to identify how the additional funds will
be used, but none was made for the unexpended balances of prior years.

5.4. The Barangay Local Government had a balance of ₱252,795.01 out of its prior
year’s LDRRM as of December 31, 2019 but the Statement of Financial Position
of the barangay showed a Trust Liabilities balance of zero denoting that the
portion of ₱252,795.01 which represented the unused 70% Mitigation Fund-
MOOE and 30% QRF was not recorded under Trust Liability – DRRM and was
not transferred to the Special Trust Fund. The same observations were noted for

32
 CYs 2020, 2021, and 2022. Consequently, the unexpended balances of prior
years’ cannot be used in the absence of the LDRRMFIP which should have
indicated the PPAs for which said prior years’ balances will be used for.

5.5. While it is true that the BDRRM Council will decide on the use of the
unexpended balance of LDRRMF, the same should be reflected in the
LDRRMFIP. Moreover, the continued non-utilization of the unexpended
LDRRMF from previous years left the funds idle in the bank instead of using the
fund to improve the LGU’s capability on disaster mitigation, prevention and
preparedness.

5.6. We recommend that the Barangay Kagawad who is the Chairman of the
Committee on Appropriation (CCA), provide breakdown of the ₱252,795.01
BRRM Fund unexpended balance as of December 31, 2022 which should
only include the unexpended balances for the past 5 years.

5.7. We also recommend that the Municipal Accountant thru her Designated
Bookkeeper record the prior year’s unused BDRRM Fund as Trust
Liabilities under Special Trust Fund, based on the amount provided by the
CCA.

5.8. Further, we recommend that the Punong Barangay, as Chairman of the

LDRRM Council, identify the project/s to be funded from the unexpended
BDRRM Fund of previous years, incorporate the same in the LDRRMF
Investment Plan and implement the project/s to fully equip the Barangay and
its residents in times of disasters.

Minimal Utilization of 70% Mitigation of 5% BDRRMF

6. The 70% Mitigation Fund of the Barangay Disaster Risk Reduction Management
Fund (BDRRMF) for CY 2021 to CY 2022 totaling ₱149,369.50 were not utilized
while the CY 2019 BDRRMF was utilized for PPAs amounting ₱43,435.00 not
identified in the BDRRMF Investment Plan, contrary to Section 2 (e) of RA
10121, thus, the fund was not fully maximized to respond and address the
existing state of calamity and the capability of the barangay and its residents to
cope with adverse effects of disasters was neither strengthened nor enhanced.

6.1. Section 2 (e) of RA 10121 provides:

SEC. 2 Declaration of Policy. – It shall be the policy of the State to:

xxx

33
 (e) Develop, promote, and implement a comprehensive National
Disaster Risk Reduction and Management Plan (NDRRMP) that
aims to strengthen the capacity of the national government and
the local government units (LGUs), together with partner
stakeholders, to build the disaster resilience of communities, and'
to institutionalize arrangements and measures for reducing
disaster risks, including projected climate risks, and enhancing
disaster preparedness and response capabilities at all levels;

6.2. Item 4.0, paragraph 2 of NDRRMC, DBM, and DILG Joint Memorandum
Circular No. 2013-1 dated March 25, 2013 states that the LDRRMF shall cover
the thirty percent (30%) lump-sum allocation for Quick Response Fund (QRF)
and the seventy percent (70%) allocation for disaster prevention and mitigation,
preparedness, response, rehabilitation and recovery.

6.3. COA Circular No. 2012-002 on Accounting and Reporting Guidelines of the
Local Disaster Risk Reduction and Management Fund (LDRRMF) of the Local
Government Units dated September 12, 2012 provides these relevant provisions,
to wit:

5.1.2 A LDRRMFIP for the DRRM program 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.

xxx

6.4. Barangay Hinabay appropriated annually 5% of its estimated revenue from

regular sources for disaster risk management activities in CYs 2020-2022 in
accordance with Section 21 of Republic Act No. 10121. The composition of the
BDRRMF for the said period is shown in Table 4.
Table 4. BDRRMF for CY 2019-2022
PPA CY 2020 CY 2021 CY 2022
30% QRF 25,829.92 27,819.48 36,196.02
70% Mitigation Fund 60,269.82 64,912.12 84,457.38
Total BDRRM Fund 86,099.74 92,731.60 120,653.40
Utilization:
30% QRF (23,400.00)
70% Mitigation Fund (43,235.00)
Balance 42,864.74 69,331.60 120,653.40

6.5. The 30% QRF were rightfully utilized in CY 2021 in response to the incurrence
of Typhoon Odette.

34
6.6. Our audit showed that the BDRRM Fund Investment Plan (BDRRMFIP) was
prepared for CYs 2020, 2021 and 2022. However, there was no monitoring made
by the BDRRM Council on the programs and projects to be implemented for
BDRRM. This resulted in the non-implementation of projects, programs and
activities identified in the BDRRMFIP. There was also no evaluation on the
implementation of the PPAs included in the BDRRMFIP if these were still
implementable on the year they were proposed.

6.7. The Audit Team also noted that the 70% Mitigation Fund for CY 2019 was
utilized for the procurement of relief goods for Covid-19 response amounting
₱43,235.00 which is not among the identified PPAs of the BDRRMFIP. The
BDRRMFIP was also not revised during the year. On the other hand, the CY 2021
and 2022 70% mitigation Fund totaling ₱149,369.50 were not utilized.

6.8. With the foregoing conditions it is clear that the lack of monitoring and evaluation
on the implementation of the BDRRM Plan, contributed to the low utilization and
implementation of projects in the 5% BRRM Fund. Thus, the 5% BRRM Fund
was not fully maximized to respond and address the existing state of calamity due
to COVID-19 and the capability of the barangay and its residents to cope with
adverse effects of disasters was not strengthened nor enhanced.

6.9. We recommend that the Punong Barangay and the Barangay Disaster Risk
Reduction Management Officer:

d. Monitor and evaluate the Programs/Projects/Activities incorporated

in the BDRRMFIP to avoid duplication of programs and make room
to projects that can address the current state of calamity or any
calamity that may possibly arise. Revise the Plan, if necessary, and
still indicate specific timeframes;

e. Utilize the current year’s 5% LDRRM Fund in accord with the

approved BDRRM Investment Plan to ensure that their utilizations
are well-planned and duly authorized by the BDRRM Council; and

f. Implement the projects, programs and activities (PPAs) identified in

the BDRRMF Investment Plan during the year to ensure full
utilization of the BDRRM Fund.

20% Development Fund

7. Balances from prior years completed programs and projects totaling ₱71,415.45
were not reverted and re-appropriated in CY 2022, contrary to Section 322 of

35
 Republic Act No. 7160, hence, the Barangay was deprived of additional funding
for other important PPAs while constituents were deprived of the benefits that
could have been derived had the amount was re-appropriated.

7.1. Section 322 of the Philippine Local Government Code provides:

SECTION 322. Reversion of Unexpended Balances of Appropriations,

Continuing Appropriations. - balances of appropriations authorized in the
annual appropriations ordinance shall revert to the surplus of the general fund
at the end of the fiscal year and shall not thereafter be available for
expenditure except by subsequent enactment. However, appropriations for
capital outlays shall continue and remain valid until fully spent, reverted or
the project is completed. Reversions of continuing appropriations shall not be
allowed unless obligations therefor have been fully paid or otherwise settled.

The balances of continuing appropriations shall be reviewed as part of the

annual budget preparation and the Sanggunian concerned may approve, upon
recommendation of the local chief executive, the reversion of funds no longer
needed in connection with the activities funded by said continuing
appropriations subject to the provisions of this Section. (emphasis supplied)

7.2. Evaluation of the Annual and Supplemental Budgets of Barangay Hinabay,

Inopacan, Leyte disclosed that the Barangay appropriated the total amount of
₱1,265,799.05 as 20% Development Fund for CYs 2020-2022. Breakdown of the
appropriation is shown in Table 5.

Table 5. 20% DF Appropriation for CYs 2020-2022

Calen Appropriation
Program/ Project
dar Annual Supplemental
Activity/ Description Total
Year Budget Budget
Rehabilitation of Brgy. ₱310,000.00 ₱ (283,201.05) ₱ 26,798.95
Road
2020 Food Supplies Expense ₱ 0.00 ₱75,000.00 ₱75,000.00
Other Supplies and 85,000.00 85,000.00
Materials Expense
Isolation Rooms 150,000.00 150,000.00
2021 Rehabilitation of Water 330,000.00 124,786.50 454,786.50
System
2022 Rehabilitation of Brgy. 440,000.00 33,613.60 473,613.60
Road (Sitio Bud)
TOTAL ₱1,080,000.00 ₱ 185,199.05 ₱1, 265,199.05

7.3. Further, review of the project implementation and utilization of the same fund, the
Audit Team positively noted that the four identified projects of the barangay as
priority projects for CYs 2020-2022 were all implemented as of December 31,
2021. Out of the ₱1,265,199.05 appropriation, only ₱1,053,389.90 was utilized

36
 hence, leaving a savings of ₱120,049.05 out of the 6 projects. Details of
utilization and implementation are shown in Table 6 while comparison of
appropriation and disbursements are shown in Table 7.
Table 6. Utilization of 20% DF in CY 2018-2021
Check Check Gross Check
Payee Project
Date No. Amoun Amount
Supplies and
Hilongos Installation materials for
06/25/202 121,681. 115,162.
0493759 Pacific General Rooms installation of
0 00 37
Merchandise Isolation
Room
Labor for
06/25/202 Georgia O. Installation of 20,150. 20,150.
0493763
0 Paco Isolation 00 00
Room
Materials for
Hilongos
06/25/202 Kitchen Tools Installation of 76,408. 72,315.
0493762 Pacific General
0 for Isolation Isolation 90 16
Merchandise
Room Room
Labor for
05/18/202 Georgia O. Rehabilitatio 48,175. 48,175.
0555975
1 Paco Rehabilitation n of Water 00 00
of Water System
System Materials for
Hilongos
05/20/202 Rehabilitatio 361,995. 342,602.
0555980 Pacific General
1 n of Water 00 40
Merchandise
System
Labor payroll
of concreting
10/19/202 Georgia O. 101,500. 101,500.
0613463 Concreting of of Brgy.
2 Paco 00 00
Brgy. Road Road (Sitio
(Sitio Bod) Bod)
Materials for
Hilongos
11/02/202 concreting of 323,480. 306,150.
0613469 Pacific General
2 Brgy. Road 00 72
Merchandise
(Sitio Bod)
₱1,053,389.9 ₱1,006,055.6
GRAND TOTAL
0 5

Table 7. Appropriation vs. Project Cost

Calendar Project Cost/
Project Appropriation Savings Remarks
Year Utilization
Food Supplies
₱75,000.00 ₱75,000.00 Unutilized
Expense
2020 Other Supplies
and Materials ₱85,000.00 ₱76,408.90 ₱8,591.10 Unutilized
Expense

37
Calendar Project Cost/
Project Appropriation Savings Remarks
Year Utilization
Isolation
₱150,000.00 ₱141,831.00 ₱8,169.00 Unutilized
Rooms
Rehabilitation
of Water
System ₱26,798.95 ₱26,798.95 Unutilized
(Supplemental
Budget)
Reappropriated to
Rehabilitation of
Sub-Total (2020) ₱336,798.95 ₱218,239.90 ₱118,559.05 Water System for CY
2021 amounting to
₱91,760.10
Rehabilitation ₱330,000.00 ₱330,000.00 ₱0.00 Utilized
2021
of Water ₱91,760.10 ₱80,170.00 ₱11,590.10 Unutilized
System ₱33,026.40 ₱33,026.40 Unutilized
No reappropriation
Sub-Total (2021) ₱454,786.50 ₱410,170.00 ₱44,616.50 for CY 2022 (Savings
as of December 2021)
Rehabilitation 440,000.00 424,980.00 ₱15,020.00 Unutilized
2022 of Brgy. Road
33,613.60 ₱33,613.60 Unutilized
(Sitio Bud)
Sub-Total (2022) 473,613.60 424,980.00 ₱48,633.60

Reappropriation for
Savings for CY 2020 ₱118,559.05 ₱91,760.10 ₱26,798.95 CY 2021 amounting to
₱91,760.10
Savings for CY 2021 ₱44,616.50 ₱44,616.50
Savings for CY 2022 ₱48,633.60 ₱48,633.60
Total Savings ₱211,809.15 ₱91,760.10 ₱120,049.05

7.4. As can be seen in Table 7, savings totaling ₱71,415.45 was made out of the
implementation of the three completed priority projects under 20% Development
Fund as of December 31, 2021. Since the projects are already completed, the
amount of ₱71,415.45 could have been reverted/re-appropriated in CY 2022 to
other 20% DF PPAs.

7.5. Since balances from previously completed projects was not re-appropriated and
remained unutilized, the Barangay was deprived of additional funding for other
important PPAs while constituents were deprived of the benefits that could have
been derived had the amount was appropriated.

7.6. We recommend that the Punong Barangay and Barangay Treasurer re-
appropriate the balances of completed projects amounting ₱120,049.05 as of
December 31, 2022, to other PPAs so that funds are utilized to its optimum to

38
 help achieve the desirable socio-economic development and environmental
outcomes of the LGU.

8. Programs and activities to address the concerns of senior citizens and

persons with disabilities were not implemented, as required in DBM-DSWD
Joint Circular No. 2003-01, thus the Barangay was not able to support the
needs of the elderly and person with disabilities in their locality.

8.1. DBM-DSWD Joint Circular No. 2003-001 dated April 28, 2003 was issued to
prescribe guidelines for the implementation of Section 29 of the General
Appropriations Act of 2003 which states that the plans, programs and projects
intended to address the concerns of senior citizens and persons with disability
shall be integrated in the regular activities of the agencies. Sections 4.2 and 4.3
thereof directs all government agencies, departments, bureaus, offices,
commissions and state universities and colleges to allocate at least one percent
(1%) of their respective budget to be utilized in the implementation of
programs/projects/activities/services which will address the needs of older
persons and persons with disabilities (PWDs).

8.2. Our perusal of the Annual Budgets of the barangay disclosed that there was no
appropriation for Senior Citizens and PWDs for CY 2020 while a total of
₱38,500.00 were appropriated for programs and activities for CY 2021 & CY
2022 as shown in Table 8.
Table 8. Fund for Senior Citizens and PWDs Programs/Projects
Appropriation (should be
Year Estimated IRA
1% of IRA)
2020 1,580,000.00 -
2021 1,650,000.00 16,500.00
2022 2,200,000.00 22,000.00
Total 38,500.00

8.3. However, review of the disbursements of the Barangay in CY 2020 to CY 2022

disclosed that no expenses were made for the implementation of the programs,
projects, activities and services intended for the elderly persons and PWDs.
Consequently, during these periods, the concerns of the total well-being of elderly
persons and PWDs were not provided.

8.4. We recommended that the Punong Barangay include in its annual programs,
activities that will benefit the well-being of Elderly Persons and PWDs in the
Barangay, the cost of which should be at least one percent (1%) of their
respective budget and ensure its implementation.

39
8.5. Comment

40
 PART III

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ UNIMPLEMENTED

AUDIT RECOMMENDATIONS

Of the 25 audit recommendations embodied in the previous Audit Reports of the

Barangay, 15 were fully implemented, seven were partially implemented and 14 are still
not implemented.

Status of
Manage Implementation
Ref. Audit Observations Recommendations ment and Reason for
Action Partial/Non-
Implementation
CY The existence and valuation We recommended that the
2017- of the Property, Plant and Punong Barangay:
2019 Equipment (PPE) account (1) Request the Barangay (1)Not
ARB amounting to ₱1,800,854.21 Bookkeeper and the Implemented
Part IIas of December 31, 2019 Municipal Accountant, to
No. 1 could not be ascertained due provide the Inventory
to unreconciled difference of Committee with the
CY ₱840,903.40 between the detailed list of properties
2015- RPCPPE and accounting recorded in the books so
2016 records and absence of that the latter can reconcile
ARB property records, contrary to the same with their
Observ COA Circular No. 92-386 RPCPPE. Any variance
ation thus, the Property, Plant and that will remain should be
No. 1 Equipment account as of located, otherwise, the
December 31, 2019 remain barangay officials shall be
unreliable. held liable for losses of
properties. (2)Not
(2) Require the Designated Implemented
Barangay Property (3)Not
Custodian to prepare (3) Implemented
and maintain Property
Cards (PCs) of all PPEs to
include data on the
quantity, condition, date of
acquisition, and acquisition (4)Not
cost and; Implemented
(4) Request the Barangay
Bookkeeper and the
Municipal Accountant to
maintain the Property

41
 Status of
Manage Implementation
Ref. Audit Observations Recommendations ment and Reason for
Action Partial/Non-
Implementation
Ledger Cards and reconcile
the same with the PCs of
the Designated Barangay
Property Custodian.
CY Depreciation of assets under We recommended that the
2017- Property, Plant and Municipal Accountant (5) (5)Not
2019 Equipment (PPEs) compute the Accumulated Implemented
ARB amounting to ₱1,670,854.21 Depreciation for each
Part II were not computed and depreciable asset of the
No. 2 deducted from the cost of the Barangay from date of
assets, contrary to Philippine acquisition to current year
Public Sector Accounting by preparing a lapsing
(6)Not
Standard (PPSAS) 17 thus, schedule and (6) prepare
Implemented
the carrying value of the PPE the necessary correcting
and the report non-cash entries.
expenses in the financial
statements of the Barangay
as of December 31, 2019
were not accurately
presented.
CY The balance of Cash in We recommended that the
2017- Treasury account as of Barangay Treasurer and the
2019 December 31, 2019 in the Municipal Accountant (7) (7)Not
ARB books of the Municipal reconcile their respective Implemented
Part II Accountant was not records in order to detect
No. 3 reconciled with the records errors and (8) effect the (8)Not
of the Barangay Treasurer, necessary corrections to Implemented
CY contrary to Section 111(2) of arrive at a reliable and
2015- PD 1445, thus errors were correct balance of the Cash
2016 not detected and the accuracy in Treasury account.
ARB of the reported balance is
Observ unreliable.
ation
No. 2

CY The Barangay’s local income (9) We recommended that (9)Not

2017- barely increased in Calendar the Punong Barangay and Implemented
2019 Years 2017 to 2019 due to other Barangay Officials
ARB the inaction of the officials to enact ordinances that will

42
 Status of
Manage Implementation
Ref. Audit Observations Recommendations ment and Reason for
Action Partial/Non-
Implementation
Part II enact ordinances to increase barangay revenues
No. 4 maximize their revenue and (10) monitor its (10)Not
raising power as mandated in implemented in order to Implemented
the Republic Act No. 7160, collect more funds for the
thus, funds to finance various Barangay.
activities/programs for
development of the Barangay
and its operational needs
were not enhanced.
CY The Barangay disbursed only We recommended that the
2017- 37% or ₱49,789.00 out of Punong Barangay (11) (11)Not
2019 ₱135,135.00 LDRRMF implement fully the Implemented
ARB Mitigation Fund appropriated activities in LDRRMFIP
Part II in CY 2017, 2018 and 2019 and (12) utilize the 70% (12)Not
No. 5 due to non-implementation mitigation fund in Implemented
of programs listed in the accordance with the
LDRRM Investment Plan, purpose in order to equip
contrary to Section 21 of RA the Barangay Officials and
101211, thereby limiting the its constituents the skill
readiness of the Barangay to and knowledge to prepare
safeguard its constituents in and manage disasters.
times of calamity.
CY The utilization of 10% We recommended that the
2017- Sangguniang Kabataan Fund SK Chairperson (13) (13)Not
2019 for Calendar Years 2017, prepare a comprehensive Implemented
ARB 2018 and 2019 amounted list of activities/programs
Part II only to for development youth and
No. 6 ₱93,130.00 or 24% of the (14) submit the same to the (14)Not
total appropriations of Barangay Council for Implemented
₱386,100.00 which directed appropriation of the SK
mainly on leadership training Fund.
and socio-cultural and sports
development activities,
contrary to Section 1 and 2
of Rule 5, Implementing
Rules and Regulations of RA
No. 10632 and RA No.9340,
thereby other equally
important youth development

43
 Status of
Manage Implementation
Ref. Audit Observations Recommendations ment and Reason for
Action Partial/Non-
Implementation
programs and projects were
not given equal priority.
CY Disbursements for the We recommended that the
2017- implementation of Punong Barangay and
2019 infrastructure projects in Barangay Treasurer: (15) (15)Not
ARB Calendar Years 2017, 2018 submit the necessary Implemented
Part II and 2019 totaling supporting documents for
No. 7 ₱926,095.00 were not each Disbursement
supported with the necessary Voucher for infrastructure
supporting documents, projects to avoid audit
(16)Not
contrary to Section 4 of PD suspensions and (16)
Implemented
1445 and Section 9.1.1 of coordinate with the
COA Circular 2012-001, Municipal Engineer for the
thus, validity of the submission of the said
transactions, verification of documents to the Audit
the status of the project and Team.
its completion could not be
confirmed.
CY The barangay officials did We recommended that the
2015- not strive to increase Punong Barangay and
2016 collection of revenues thru other barangay officials (17)Not
ARB enactment of ordinances (17) discuss, (18) plan and Implemented;
Observ using their revenue raising (19) design (18)Not
ation powers as mandated in the activities/programs that Implemented;
No. 5 Republic Act No. 7160, thus, will increase barangay (19)Not
funds to finance various revenues, (20) enact Implemented;
activities/programs for appropriate ordinances and (20)Not
development of the barangay (21) monitor its Implemented;
and its operational needs implementation in order to and
were not enhanced. collect more funds for the (21)Not
barangay. Implemented

The same
observation is
discussed in
Part II of this
audit report.
CY The Barangay Bookkeeper (22) We recommend that (22)Not
2015- was not able to prepare and Municipal Accountant

44
 Status of
Manage Implementation
Ref. Audit Observations Recommendations ment and Reason for
Action Partial/Non-
Implementation
2016 submit the Bank submit the same to the Implemented
ARB Reconciliation Statements, Audit Team.
Observ required under Section 74 of Bank
ation PD 1445 and Section 3.2 of Reconciliations
No. 7 COA Circular No. 96-011, were prepared;
thereby the accuracy and however, such
reliability of the Cash in reports were not
Bank balance in the submitted
Financial Statements of the monthly to the
Barangay amounting to ₱ Audit Team.
767,259.04 as of December
31, 2016 could not be
ascertained.
CY The Local Disaster Risk We recommended that the The fund (23)Not
2015- Reduction Management Barangay Officials through was Implemented
2016 Fund Investment Plan the Punong Barangay (23) utilized.
ARB (LDRRMFIP) was not As of CY 2022,
utilize the LDRRM fund in
Observ prepared and activities for only a minimal
ation the use of the LDRRM Fund accordance with the amount of the
No. 9 were not identified such that prescribed guidelines. fund was
the LDRRMF for the past utilized by the
two years were not fully Barangay.
utilized, contrary to COA
Circular 2012-002, and The same
DILG Memorandum Circular observation is
No. 2012-73 thereby limiting discussed in
the capacity and readiness of Part II of this
the barangay in responding audit report.
to disasters and in assisting
the constituents in times of
calamity.
CY Some Disbursement The Barangay Captain, (24)Not
2012- Vouchers were not Treasurer and other Implemented
2014 adequately supported with designated barangay
ARB required documents thus, personnel should (24)
Part II validity of claims was properly evaluate and
doubtful. review all
transactions/claims as to
complete supporting

45
 Status of
Manage Implementation
Ref. Audit Observations Recommendations ment and Reason for
Action Partial/Non-
Implementation
documents and signatories
to ensure the validity,
propriety and legality of
claims before payment.
Failure to do so will mean
the suspension of the
transactions upon audit and
the issuance of COA
auditor’s Advice to
suspend encashment of
checks of the Barangay to
its Authorized Government
Depository Bank (AGDB)
of the Barangay.
CY The barangay paid the We recommended that the
2012- amount of ₱10,000.00 for the Barangay (25) submit (25)Not
2014 Liga ng mga Barangay authority from the National Implemented
ARB Annual Dues in excess of the Executive Board for the
Part II amount set by the National ₱10,000.00 annual dues in
Liga Executive Board of excess of the prescribed
₱2,000.00 per year as amount of ₱2,000.00 found
prescribed in article XIII, in the Constitution and By-
Section 2 of the New Laws of the Liga ng mga
Constitution and By-Laws of Barangay sa Pilipinas.
the Liga ng mga Barangay sa Non-submission of the
Pilipinas. same will result to
disallowance in post-audit,

46