EXECUTIVE SUMMARY

A. INTRODUCTION

The Municipality of Pamplona is a fourth-class Municipality with a total land area

of 8,052 hectares and composed of 17 barangays. Consistent with RA 7160, otherwise
known as the “Local Government Code of 1991”, the Municipality, like other local
government units, enjoys the genuine local autonomy to enable them to attain their fullest
development as self-reliant communities and make them more effective partners in the
attainment of national goals. It exercises total independence in in managing, deciding
and planning its own administrative, fiscal and social growth and economic development,
in line with the thrust of the National Government.

Audit Methodology and Scope of Audit

The Financial and Compliance audits and Project Evaluation conducted covered
the accounts and operations of the Municipality of Pamplona, Camarines Sur for all
Funds for the period January 1 to December 31, 2020.

The audit was done on a sampling basis and various techniques were used like
verification/confirmation, observation, interview with concerned officials and employees,
evaluation of control system/s, and other auditing procedures and techniques considered
necessary under the circumstances.

The audit was focused on the different audit thrusts/areas prescribed by the Local
Government Sector of the Commission.

B. FINANCIAL HIGHLIGHT

B.1 Financial Position and Performance

In Philippine Peso
% of Increase
Particulars Increase/
2020 2019 (Decrease)
(Decrease)
Financial Position
Total Assets 345,900,787.67 310,125,210.96 35,775,576.71 11.54
Total Liabilities 94,901,828.54 82,580,202.28 12,321,626.26 14.92
Government Equity 250,998,959.13 227,545,008.68 23,453,950.45 10.31
Financial Performance
Total Income/Subsidies 138,783,718.34 111,979,522.75 26,804,195.59 23.94
Total Expenses/Subsidies 135,978,201.88 87,681,674.32 48,296,527.56 55.08
Net Surplus 2,805,516.46 24,297,848.43 (21,492,331.97) (88.45)

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 B.2 Sources and Application of Funds

In Philippine Peso % of
Particulars Increase/ Increase
2020 2019
(Decrease) (Decrease)
General Fund
Allotments 252,897,806.64 131,055,351.35 121,842,455.29 92.97
Obligations 137,946,250.12 95,229,385.88 42,716,864.24 44.86
Balance 114,951,556.52 35,825,965.47 79,125,591.05 220.86
Special Education Fund
Allotments 1,000,000.00 1,400,000.00 (400,000.00) (28.57)
Obligations 779,309.50 1,239,332.65 -460,023.15 -37.12
Balance 220,690.50 160,667.35 60,023.15 37.36

B. 3 Major Program/Projects/Activities undertaken in CY 2020

Some of the major projects implemented by LGU Pamplona during the year are
shown in the table below:

Project/Program/Activity Qty. Cost (₱)

Road Network 1 4,989,550.00
Water Supply System 3 16,957,026.62
Building 3 5,468,763.90
Total 27,415,340.52

Completed projects of the LGU were not validated as to existence by the Audit
Team due to time constraint. Our audit was limited only to available records and
documents submitted to the Office of the Auditor.

C. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

We rendered a qualified opinion on the fairness of presentation of the financial

statements of the Municipality because the Report on the Physical Count of Property,
Plant and Equipment (RPCPPE) did not reconcile with accounting records by ₱24.45
million, or 7.07 per cent of the total assets, thus rendering the account balance of PPE
account amounting to ₱207.37 million unreliable.

D. SUMMARY OF SIGNIFICANT OBSERVATIONS AND

RECOMMENDATIONS

For the exceptions cited above, we recommended that Management create a

committee composed of one personnel each from General Services and Accounting

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Office who shall reconcile their respective records of PPE on a full time basis and at the
same time maintain updated and complete PPE Ledger Cards and Property Cards and in
ensuing years, ensure that the conduct of physical count of PPE was in accordance with
COA Circular No. 2020-006 dated January 31, 2020, prescribing the guidelines and
procedures in the conduct of physical count of PPE, recognition of PPE items found at
station, and disposition for non-existing/missing PPE items, for the one-time cleansing of
PPE account balances of government agencies.

The Audit Team has communicated the observations and recommendations with
the Auditee through the issuance of Audit Observation Memorandum (AOMs) and
discussed them with the agency officials during the exit conference conducted on
May 6, 2021. Their comments and explanations were incorporated in the report, where
appropriate.

The following are the significant observations together with the corresponding
recommendations:

1.) The year-end balance of the Cash in Bank-Local Currency Current Account
(LCCA) totaling ₱136.14 million varies by a net amount of ₱9.11 million with
the confirmed bank balances amounting to ₱145.25 million thus, affecting the
fair presentation of the financial statements and casts doubt on the accuracy
and reliability of the said account.

We recommended that Management direct the Municipal Accountant to

reconcile the balances of Cash in Bank-LCCA account per books and per
bank and effect the necessary adjustments and prepare adjusting entries for all
identified reconciling items in the books and for long outstanding and/or stale
checks; Henceforth, record immediately the reconciling items after
preparation of the Bank Reconciliation Statement/s.

2.) Real Property Tax (RPT) Receivables and Special Education Tax (SET)
Receivables accounts reflected the same amount of ₱9.15 million and ₱8.84
million, respectively with that of last year, due to the non-setting up of
receivables at the beginning of the year contrary to Section 20 of the Manual
of the New Government Accounting System (NGAS), Volume I, thus,
rendering these accounts unreliable.

We recommended that Management direct the: a) Municipal Treasurer to

coordinate with the Municipal Assessor to make the necessary update on the
RPTAR to reflect the true and correct amount of RPT and SET Receivables
of the LGU; b) Municipal Treasurer to monitor regularly the RPTAR and
effect the collections and advance payments collected to determine the
outstanding receivables as at year-end; c) Municipal Treasurer to submit to
the Accounting Office at the beginning of the calendar year a list showing the
name of the taxpayers and the amount due and collectible for the year which
will be the basis in setting up the RPT and SET Receivables; and d)

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 Municipal Accountant to effect adequate recording under Real Property Tax
Receivable/Special Education Tax Receivable and Deferred Real Property
Tax Income/Deferred Special Education Tax Income accounts and provide
and maintain and updated subsidiary ledgers of the accounts.

3.) The LGU was not able to accrue liability for the earned leave benefits of
employees by approximately ₱14.89 million as at December 31, 2020 not in
accordance with Section 65, Chapter 3, Volume I of the New Government
Accounting System (NGAs) for Local Government Units (LGUs) thereby,
understating liability and overstating government equity accounts.

We recommended that Management: a) allocate budget for the ₱14.89 million

accrued payable for the terminal leave benefits earned by its employees; b)
include in the Annual Budget every year the appropriation for the accrued
payable on vacation and sick leave benefits earned by each employee per year
to ensure that employee benefits are properly accounted for; c) set-up a
special fund for the accrued earned leave of employees to defray expenses of
employees’ benefits in the future; and d) direct the Municipal Accountant to
make the necessary adjusting entries to record the accrued liability pertaining
to the earned leave benefits of the employees after ensuring the correctness of
the accumulated leave credit balances of employees as of December 31, 2020.

4.) Various deficiencies were noted in the distribution and release of the Social
Amelioration Program (SAP) to beneficiaries, not in consonance with DSWD
Memorandum Circular No. 04, Series of 2020 thus gave doubts on the validity
and propriety of the payments made.

We recommended that Management through the Municipal Social Welfare

and Development Office: a) submit the lacking documents; and b) ensure that
all documentary requirements are complied with before release/distribution of
SAP to avoid audit sanctions.

5.) Donated equipment amounting to ₱306,030.00 was not supported with

Memorandum of Agreement (MOA) between the LGU and the Department of
Education (DEPEd), thus there is no assurance that the donated equipment
was recorded in the books of account of the latter and may result to loss of
government property.

We recommended that Management enter into a MOA with the DEPEd to

ensure that the donated equipment are recorded in the books of account and
accountability to the asset is established.

6.) Repairs and maintenance amounting to ₱1.51 million of motor vehicles were
not supported with documents indicating the history of repair of specific
motor vehicle, contrary to Circular No. 2012-001, thus may result to
unnecessary expenditure.

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 We recommended that Management require the Municipal Accountant to
reconstruct the maintenance/repair record of individual motor vehicle owned
by the LGU so as to guide Management on arriving at a decision whether it’s
still economical to maintain subject vehicle/s continuously repaired.

7. The Municipality was not able to fully implement the 20% Local
Development Fund (LDF) for CY 2020 totaling ₱21.54 million inconsistent
with DILG-DBM Joint Memorandum Circular (JMC) No. 2017-1, thus
opportunity of the residents/beneficiaries of timely benefit from the
projects/programs had been lost. Further, Pera sa Basura Program with an
appropriation amounting to ₱0.60 million did not fall within the purview of
socio-economic development under the 20% Local Development Fund in
contravention with the above-cited JMC.

We recommended that Management: a) allocate development fund to projects

that will partake the nature of investment or capital expenditures; and b)
strategically plan and implement its developmental projects within the target
period of accomplishment to ensure that the 20% of the IRA is optimally
utilized in the prompt implementation of programs and projects to achieve the
desirable socio-economic development, as prescribed under DILG-DBM
Joint Memorandum Circular Nos. 2017-1.

E. STATUS OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES

AMOUNT in ₱
Particulars Balance January Balance, December
Issued Settled
1, 2020 31, 2020
Notice of Suspensions 21,560.53 0.00 0.00 21,560.53
Notice of Disallowance 550,452.58 0.00 0.00 550,452.58
Notice of Charge 0.00 0.00 0.00 0.00
Total 572,013.11 0.00 0.00 572,013.11

F. STATUS OF IMPLEMENTATION BY THE MUNICIPALITY OF PRIOR

YEARS’ AUDIT RECOMMENDATIONS

A review of the management action on our prior years’ audit recommendations

disclosed that out the 50 audit recommendations 16 were fully implemented, 22 were
partially implemented and the remaining 12 are for implementation, as of December 31,
2020.