EXECUTIVE SUMMARY
Introduction
The Municipality of Dinas, Province of Zamboanga del Sur was formally created on
November 9, 1950 by virtue of Executive Order No. 362, Series of 1950, signed by then
President of the Philippines, Elpidio Quirino.
It is a 4th class municipality with 30 barangays and belongs to the 2nd district of
Zamboanga del Sur. The municipality has a total land area of approximately 16,187.32
hectares and a population of about 33,738 with a total household of 6,033 as of CY 2007
census. Fishing is the main source of livelihood because it lies in the western shore of a
portion of land proceeding Baganian Peninsula.
The objectives of the municipality are the development of infrastructures, like rehabilitation
of various barangay roads, installation of street lights, procurement of submersible pumps
for the waterworks system, construction of military barracks, repainting of offices,
increased agricultural productivity, upliftment of the living condition of the populace through
livelihood projects and construction and repair of school buildings.
Audit Objective
The objectives of the audit are to (a) ascertain the fairness of presentation of the financial
statements; (b) ascertain the propriety of financial transactions and compliance with
prescribed rules and regulations; (c) recommend agency improvement opportunities; and
(d) determine the extent of implementation of prior years’ audit recommendations.
Performance audit was likewise conducted with the objective of informing management
where improvement can be instituted in the field of revenues, expenditures and
management of resources.
Audit Methodology
The Commission has been implementing risk-based audit in the conduct of its audit
services. However, to meet the evolving developments in public governance and fund
management, the results-based approach in audit was incorporated.
Scope of Audit
An audit was conducted on the accounts and operations of the Municipality of Dinas,
Zamboanga del Sur for 2021. The audit consisted of review of operating procedures,
evaluation of the LGU’s programs and projects, interview of concerned government
officials and employees, verification, reconciliation and analysis of accounts, and such
other procedures considered necessary.
Financial Highlights
The financial condition and results of operation of the LGU as at December 31, 2021 with
comparative figures for 2020 are summarized as follows:
i
In Thousands of Pesos
Accounts
431,026
122,024
309,002
143,445
73,641
392,562
107,303
285,259
132,489
69,595
Increase/
(Decrease)
38,464
14,721
23,744
10,956
4,046
38,698
2,369
16,104
37,021
2,514
10,274
1,677
(145)
5,830
482
10,867
(10,385)
6,003
7,112
1,023
22,929
4,981
(15,817)
2021
Assets
Liabilities
Equity
Revenue
Personnel Services
Maintenance and Other
Operating Expenses
Financial Expenses
Non-Cash Expenses
Transfers,
Assistance
Subsidy From
Transfers,
Assistance
Subsidy To
Net Surplus/(Deficit)
2020
and
and
Independent Auditor’s Report on the Financial Statements
We rendered a qualified opinion on the fairness of the presentation of the FS for the year
then ended, taking exception to the effects of the following:
•
Receivable accounts totaling P9.939 million remained outstanding as of December
31, 2021, of which 28.41 per cent or P2.824 million remained non-moving for more
than ten (10) years, affecting its fair valuation. Moreover, several accounts have
abnormal/negative balances totaling P225,873.76, affecting its accuracy;
•
Accuracy and completeness of the reported balances of Real Property Tax (RPT)
and Special Education Tax (SET) Receivable accounts are doubtful due to: a)
recorded RPT and SET Receivables were not based on a certified list of taxpayers
showing the amount of tax due and collectible for the year; b) periodic
reconciliations were not undertaken by the Municipal Accountant and the Municipal
Treasurer, thus, balances of RPT and SET Receivable per books of accounts and
the balances per master list of RPT delinquencies showed a variance of P35.695
million; and c) abnormal/negative balance of RPT receivable amounting to
P386,674.11;
•
The accuracy, existence and condition of Property, Plant and Equipment (PPE)
accounts reported at a total carrying amount of P321.406 million as of December
31, 2021 could not be ascertained due to the (a) non-conduct of physical count of
PPE, (b) non-maintenance of PPE Ledger Cards and Property Cards, (c)
unrecorded parcel of land with market value of P2.250 million, and (d) unidentified
balances of Construction in Progress accounts amounting to P14.049 million;
•
Road Networks with gross costs amounting to P85.173 million as of December 31,
2021 could not be ascertained due to non-compliance with the accounting and
reporting guidelines as prescribed under COA Circular No. 2015-008;
•
Other Land Improvements with a reported balance of P1.414 million as of
December 31, 2021 were not subjected to depreciation, resulting to the
overstatement of the affected asset accounts and understatement of the
corresponding expense accounts;
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•
Fuel, Oil and Lubricants Inventory and Breeding Stocks with reported balances of
P70,877.20 and P260,400.00 are still recorded in the LGU’s books of accounts
despite its non-existence, affecting the fair presentation of accounts in the financial
statements;
•
Accounts Payable with reported balance of P7.190 million includes payables to
various officers and employees, barangays, other government agencies and other
funds amounting to P2.269 million, thereby overstating the Accounts Payable and
understating other liability accounts; and
•
The accuracy of the Due to National Government Agencies (NGAs) account with
reported balance of P60.017 million as of December 31, 2021 could not be
ascertained due to (a) inclusion of various non-moving accounts for five (5) years
or more, for which some of these balances may refer to unutilized balances of
completed projects subject for return to source agencies; (b) unreconciled
balances between the LGU’s book balances and the balances of source agency;
and (c) incomplete details and information of account balances.
Significant Observations and Recommendations
In addition to the above-noted deficiencies, below are the significant audit observations
and recommendations which were noted in the course of the audit:
1. Absence of proper monitoring and maintenance of accounts resulted in
abnormal/negative balances of Cash Local Treasury, Due to Pag-IBIG, Due to
PhilHealth and Due to BIR accounts, thus, casting doubts on the accuracy of the
reported balances.
We recommended the following:
a) Management established strong internal controls in the handling of cash
particularly the collections and remittances from the Collectors to the Municipal
Treasurer, and the collections and deposits made by the Municipal Treasurer to
the AGDB, to prevent further incurrence of unrecorded collections and/or overdeposit of collections, which resulted to abnormal/negative balances of the Cash
Local Treasury account;
b) The Municipal Accountant make representations with concerned government
agencies relative to the refund of erroneous or over-remittances made. In case
refund is not granted and no other course of action can be taken, the Municipal
Accountant refund the said amounts;
c) The Municipal Accountant exert effort in identifying the forwarded negative
balances of Due to PhilHEALTH account under the General Fund and Economic
Enterprise; and
d) The Municipal Accountant properly monitor the withholding and remittance of
mandatory contributions so as to avoid under/over-remittance of contributions;
and review thoroughly the schedule of payables due to concerned agencies
during the month and that remittance shall be based on actual contributions visa-vis payroll deductions.
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2. The Calendar Year (CY) 2020 corresponding figures presented in the CY 2021
Financial Statements (FS) were not restated to reflect prior year’s errors and
adjustments, which is not in compliance with Paragraphs 46 to 54 of
International Public Sector Accounting Standard (IPSAS) 3 – Accounting
Policies, Changes in Accounting Estimates and Errors.
We recommended that the Municipal Accountant properly present prior period errors
and adjustments by restating the prior year balances of the affected accounts shown
as corresponding figures for the current year FS in compliance with the requirements
under Paragraphs 46 to 54 of IPSAS 3.
3. Management did not take full opportunity on the application of COA Circular No.
2020-006, particularly on the prescribed guidelines and procedures for the onetime cleansing of property, plant and equipment (PPE) balances of the LGU.
We recommended that Management take full opportunity on the application of the
prescribed guidelines and procedures set forth in COA Circular No. 2020-006,
particularly the conduct of physical count of PPE, the recognition of PPE items found
at station, and disposition for non-existing/missing PPE items, if any, for the purpose
of one-time cleansing of PPE account balances of the LGU.
We further recommended that the Inventory Committee prepare the Physical Inventory
Plan, to be approved by the local chief executive and submit the same to the Office of
the Auditor within the prescribed period, and to comply with the prescribed unique
property number indicated in the property stickers used for inventory tagging.
4. Several projects funded out of the current year’s appropriations and continuing
appropriations under the 20% Development Fund (DF) were not fully
implemented as of December 31, 2021, thus, intended beneficiaries were
deprived of the benefits and vital services that are expected from the completed
projects.
We recommended that Management optimize the utilization and implementation of the
20% Development Fund through proper planning of project including timing of
execution; coordinate action of LGU officials for better result; and strict monitoring of
project implementation to ensure timely accomplishment of the project. We
recommended further that the MPDC in coordination with the Municipal Development
Council (MDC) ensure that the identified projects to be included in the AIP for the 20%
Development Fund are properly selected, planned and evaluated.
5.
The LGU did not identify and incorporate in their CY 2021 Local Disaster Risk
Reduction
Management
Fund
Investment
Plan
(LDRRMFIP)
programs/projects/activities (PPAs) to be funded from the Previous Years'
Unexpended Local Disaster Risk Reduction Management Fund (LDRRMF), in
contravention to the mandate under COA Circular No. 2012-002.
We recommended that Management:
a) Effect the full utilization of the LDRRMF in order to strengthen the LGU’s disaster
preparedness; and
b) Direct the LDRRMO together with the members of the LDRRMC to identify and
incorporate in the LDRRMFIP the PPAs to be funded from the previous years'
unexpended QRF and DRRMF-MOOE which were transferred to the Special
Trust Fund.
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6.
The percentage of completion of the Construction of Proposed Two (2) Storey
Standard PAGCOR Multi-Purpose/Evacuation Center, with contract cost of
P49.993 million and target date of completion on December 15, 2021, is found
to be below fifty per cent (50%), thus, expected benefits from the project are yet
to be realized.
We recommended that Management:
a) Initiate measures and discuss with the contractor effective strategies to fast track
the completion of the project; and
b) Consider imposing sanctions against the contractor for the delays incurred in the
completion of the project such as, but not limited to, liquidated damages and
termination of the contract, if warranted.
Summary of total suspensions, disallowances and charges as of year-end
The reported audit suspensions, disallowances and charges of the LGU as at December
31, 2021 were as follows:
Particulars
Notice of Suspension
Notice of
Disallowance
Notice of Charge
Total
Beginning
Balance
(As of
12/31/2020)
This period
January 1 to December
31, 2021
Ending
Balance
(As of
12/31/2021)
9,765,310.11
NS/ND/NC
NSSDC
(35,002.81) 1,630,397.60
8,099,909.70
335,989.79
0.00
10,101,299.90
0.00
0.00
0.00
0.00
(35,002.81) 1,630,397.60
335,989.79
0.00
8,435,899.49
Status of Implementation of Prior Years’ Audit Recommendations
Of the forty-two (42) prior years’ recommendations, twenty-six (26) were implemented and
sixteen (16) were unimplemented as of December 31, 2021. Six (6) audit
recommendations appearing the CY 2020 Audit Report were revised/restated and
included in Part II of this Report.
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