EXECUTIVE SUMMARY
Introduction
Cortes is a town northwest of Tagbilaran City, created 1891 in honor of the Spanish
Conquistador Hernando Cortes. The place is located along the coastal area of the province with
a total land area of 3,298.76 hectares and is composed of fourteen (14) barangays. The means of
livelihood of its people are fishing and farming.
Highlights/Major Functions /Mission/Purpose
The agency’s goals and objectives are to protect, govern and serve the constituents
towards national progress.
Pursuant to the Republic Act 7160, the Municipality, unlike the other local government
units provided with policies, seeks to institutionalize democracy at the local level to complete the
initial process of empowering the people through direct participation in the affairs of the
government by allowing them the opportunity to decide and to develop /explore the best of
themselves.
Organizational Set-up
LGU Cortes, Bohol is a service-oriented agency headed by its local chief executive ,
Hon. Apolinaria H. Balistoy with the able assistance of the honorable members of the Legislative
Body composed of eleven(11) elected officials ,41 appointed/permanent employees and 136 job
order/casual employees serving on an intermittent basis and assigned to the different offices
with different projects undertaken by the municipality.
Significant Findings and Recommendations
1.The Municipal Mayor failed to appoint for the past five (5) years a Municipal Accountant
which is a mandatory position in the local government unit contrary to Section 474 of the Local
Government Code of 1991, thus, impaired the prompt preparation and submission of accurate
financial and other reports and the breakdown of the internal control system of the agency.
Recommendations:
1. The municipal mayor should give priority and immediately hire a full pledged Municipal
Accountant, a CPA to occupy the mandatory position of the LGU.
2. Advertise the immediate hiring of a CPA for the position of the Municipal Accountant
giving priority residents of the municipality.
3.Strictly comply Section 474 of the Local Government Code of 1991 in order to
provide/submit a complete, accurate and reliable reports of the agency, and to enforce
compliance with the existing internal control system.
4.Submit explanation/justification of the deferment / non-hiring of a CPA which is a
mandatory position of the LGU of which is attributed to the breakdown on internal control
and the failure to submit an accurate/complete reports for the year.
2.The designated Municipal Accountant failed to submit paid disbursement vouchers/payrolls
and official receipts issued together with the related financial reports of the General, Special
Education and Trust Funds to the Office of the Auditor within the prescribed period, contrary to
Section 107 of the Government Auditing Code of the Philippines and the pertinent provisions of
COA Circular Nos. 95-006, 96-007 and 96-011 and Volumes I and II of the NGAS Manual,
resulting to the delay in the review and verification on the propriety and validity of the
transactions recorded in the books and preparation/submission of the annual audit report for CY
2011.
Recommendations:
We recommend that Management:
1.Adhere to the prescribed time frame for the submission of monthly accounts and
financial reports to the Office of the Auditor pursuant to Section 107 of the Government
Auditing Code of the Philippines and the pertinent provisions of COA Circular Nos. 95-006, 96007 and 96-011 as well as the pertinent provisions of Volumes I and II of the NGAS Manual.
2.Direct the Municipal Accountant-Designate to submit the monthly accounts to the
Office of the Auditor promptly after these are recorded/posted in the General and Subsidiary
ledgers so that the Auditor could conduct the required review and verification of the transactions
recorded in the books and render the necessary audit decisions on these transactions as well as
validate the propriety of the account balances per books at any particular month or period.
3.Submit justifications on the non-submission of the above-mentioned reports to COA,
which hinders the auditor to prepare/submit promptly the Annual Audit Report (AAR) on the
prescribed period.
3.Appropriation for Peace and Order Program for CY 2011 was not provided in the approved
appropriation ordinance/annual budget from which the Intelligence/Confidential funds of P
230,000.00 was sourced while the previous amount granted were not liquidated contrary to
DILG Circular NO. 99-65, resulting to the overstatement of assets and understatement of
expenses.
Recommendations:
We recommend that Management:
a.)Adhere strictly to the provisions of DILG Memorandum Circular No. 99-65 dated April 23,
1999 and effect the liquidation immediately by forwarding the documents to COA, Central
Office, copy furnished this office with the transmittal letter duly stamped received by COA,
Central Office.
b.)Exercise fiscal restraint in the handling of public funds. Limit all expenditures to allowable
appropriations.
c.)The Accountant Designate should submit justification on the granting of the cash advance
prior to the liquidation of the previous amount granted for intelligence fund.
4.Cash advances granted to the officials and employees totalling P 1,284,674.73 under Account
Due from Officers and Employees (123) amounting to P 468,851.73 and Advances to Officers
and Employees (148) of P 815,823.00 remained outstanding in the books for the period ranging
from 6 months to five years due to the failure of management to enforce compliance on the grant
and utilization of cash advances contrary to COA Circular 97-002, resulted to the overstatement
of assets and government equity.
Recommendation:
a.)
Require the immediate liquidation of outstanding cash advances and after due
notice/demand, if these cash advances remain unliquidated, deduct the outstanding cash advance
from whatever amounts due from the concerned Officers and employees.
b.)
Direct all concerned officials responsible in the grant, utilization and liquidation of cash
advances to strictly adhere to the provisions of COA Circular 97-002 particularly in the prompt
liquidation of cash advances.
c.)
Stop the practice of granting additional cash advances unless the previous cash advance
are liquidated and require that all cash advances be liquidated at the end of every year as soon as
the purpose have been served.
d.)
Retrieve/secure the supporting documents of all cash advances to establish the validity
and propriety of the same, particularly the beginning balance P 429,262.00.
5. Approved copies of Contracts/Purchase Orders (POs) and their supporting documents were
not furnished/submitted to the Office of the Auditor within the required period as required under
COA Circular No. 2009-001 dated February 12, 2009 and COA Circular No. 2009-002 dated
May 18, 2009. This precluded the auditor to conduct timely review and evaluation of the
contracts and POs and inspection of the items to establish physical existence and condition of the
deliveries.
Recommendation:
1.We recommend that the management submit to the Auditor completely filled up copies of the
Purchase Orders/contracts and its supporting documents within five (5) days from issuance of
execution thereof and ensure that all the needed data are indicated therein. Likewise, furnish
copies of delivery documents within twenty four (24) hours after acceptance of deliveries of
goods and services.
6.Thirty Five (35) Disbursement Vouchers (DV’s) totalling P 304,663.77 are reported
missing and the amounts not recorded in the books for CY 2011 contrary to Section 48 of
GAAM Volume III, Section 111 P.D. 1445 and Sec (e) of RA 6713 thus, resulted to the
misstatement of the financial reports as of the end-of-the-year and the non-availability of the
documents to the end-users and the public.
Recommendations:
1.) Request the Municipal Mayor who is on leave of absence for the whereabouts of the
reported missing disbursement vouchers and require the immediate submission of the
same.
2.) The municipal treasurer and accountant should coordinate, make a thorough search and
trace in the logbook for the concerned personnel who had the last handled the
disbursement vouchers to pinpoint responsibility.
3.) The municipal treasurer should closely monitor the trail of the disbursement vouchers
being the person accountable of the said documents.
4.) Henceforth, the Municipal Treasurer should:
a.)Strictly impose proper releasing of the checks, that should be undertaken at his office.
b.) Regularly, prepare and maintain Check Register as an internal control measure in
monitoring issued checks.
5.) If and when the missing Disbursement Vouchers will not be sub mitted after the lapsed of
a reasonable time send a demand letter to the Municipal Mayor and concerned staff and
file appropriate charges against these officials and employees.
7.Existence, validity and correctness of the municipality’s equipment, furniture and fixtures
amounting P 21,514,747.24 could not be established for failure to conduct physical inventory
taking for the past several days and non-preparation of inventory report, likewise
Acknowledgement Receipt for Equipment (ARE’s) were not prepared/renewed contrary to
Section 119 and 124 of the Manual on the New Government Accounting System for LGUs,
Volume I, as well as Section 42 of the NGAS Manual, Volume II thus reliability of the account
balances is very doubtful as of the year-end.
Recommendation:
1. The agency head should require the concerned personnel to immediately conduct
physical inventory taking and submit the report to COA for review and validation.
2. Property officer/Municipal Treasurer should prepare individual Property Cards/ARE for
every property issued and renew the records every 3 years thereafter pursuant to Section
42 of the NGAS manual, to easily pinpoint responsibility and accountability.
3. Transfer of property from one personnel to another should be monitored, and issuance of
the ARE will be immediately prepared after the cancellation of the previous receipt
issued.
4. Physical Inventory Report should be prepared after the physical inventory taking has
been completed.
5. Maintain Property Ledger Cards of all PPE accounts to facilitate Identification,
monitoring and validation of items/units reflected in the inventory report.
6. Require that supporting documents are available to support adjustments of accounts to
ensure correct account balances.
8.Expenses totaling P 2,851,410.00 were spent for the implementation of the Gender and
Development (GAD) activities however, the programs and projects were not related to the
issues and concerns to address to the equality of men and women of the municipality contrary to
Joint Circular No. 2004-1 of the Department of Budget and Management (DBM), National
Economic and Development Authority (NEDA) and the National Commission on the Role of
Filipino Women (NCRFW).
Recommendation:
a. Evaluate each program included in GAD Program/Projects/Activities (PPAs) and
identify specifically the target beneficiaries and focusing on the needs of women and
gender inequality.
b. Plan and implement GAD programs that will recognize the need to remove the biases
against women and special attention to women through affirmative action.
c. Management should strictly implement GAD identified activities pursuant to Joint
Circular No. 2004-1 of the Department of Budget and management (DBM), National
Economic and Development Authority (NEDA) and the national Commission on the
Role of Filipino Women (NCRFW provide funds for the implementation of GAD
activities and programs.
d. Prepare GAD Accomplishment Report in accordance with the format (Annex H) of
DBM-NEDA-NCRFW Joint Circular No. 2004-01 dated April 5, 2004.
9.The Municipal Treasurer failed to maintain Check Registers as a tool in ensuring that checks
issued for any particular date are immediately recorded in chronological sequence, including
cancelled checks, and the release of checks to the rightful claimants are duly acknowledged and
dated contrary to Section 42 of the NGAS Manual for LGUs, Volume I thus exposing risk of
payment to unrightful claimants.
Recommendation:
We recommend that Management will instruct the Municipal Treasurer to keep and
maintain a check register where all checks drawn for the day are immediately recorded in
chronological sequence and where the rightful claimants are required to acknowledge receipt
of the check thereon, pursuant to Section 42 of the NGAS Manual for LGUs, Volume I, as a
tool of management in detecting possible irregularities and avoiding possible claim disputes.
11.Cash advances totalling P341,000.00 for the LGU’s operating expenses were granted and
disbursed by the Municipal Mayor while its liquidation were taken up in the books without the
Credit Notice contrary to C0A Circular 2009-002 and Sec.4.1.4 of COA Circular 97-002, that
may result to doubtful, irregular and improper disbursements.
Recommendations:
1. Immediately stop granting cash advances to the Local Chief Executive except for
travelling expenses.
2. Strictly adhere to COA Circular Nos. 97-002 dated February 10, 1997 in the granting,
utilization and liquidation of cash advances, and COA Circular 2009-002 dated May 18,
2009 on the Pre-Audit guidelines.
3. Require the immediate liquidation/refund of the non-liquidated balance of P50,431.00.
4. Assign the disbursing function of paying the LGU’s operating expenses to the Disbursing
Officer of the municipality.
5. Strictly implement compliance to the sound internal control system of the agency.
12.Supporting documents on the partial liquidation of cash advances amounting to P290,569.00
are incomplete/inaccurate. Likewise, several disbursements were excessive and irregular
contrary to Sections 163, 164, 165 and 168 (c) of the Government Accounting and Auditing
Manual (GAAM), Volume I and COA Circular No. 85-55 rendering the validity and regularity of
the expenses doubtful.
Recommendations:
1. Submit the complete and pertinent documents to support the claims for travelling
expenses such as the original copies of the travel order, Appendix B and original copy of
the certificate of appearance.
2. Secure travel order from the office of the governor prior to the actual trip to ensure the
regularity of the travel expenses claimed.
3. Submit original copies of all supporting documents to establish the validity of car rental
expenses including car rental contracts and purchase request.
4. The Accountant Designate or the OIC Accountant should review the completeness of
supporting documents submitted for liquidation prior to recording in the books.
5. Submit explanation for BAC resolution recommending the alternative mode of
procurement.
6. Submit original copies of all supporting documents to establish the validity of car rental
expenses and travelling expenses.
7. Submit complete supporting documents and justification for the excessive use of
cellcards.
Henceforth, please observe strictly the provision of Sections 163, 164, 165 and 168 (C) of the
GAAM, Volume I to ensure the validity and propriety of all claims.
13.Payments of travelling, trainings and seminar expenses incurred by two (2) municipal
officials totaling P105,000.00 were not authorized, supporting papers incomplete and majority
of documents are photocopies contrary to Section 96 (b) of RA 7160, COA Circular No. 96-004,
Section 168 (c) of GAAM and Section 4 (c) of PD 1445 resulting to apparently irregular, not
valid and very doubtful claims.
Recommendations:
It is recommended that management specifically the claimant should immediately
submit the following:
1. Original copies of the supporting documents as follows:

Travel Order duly issued from the Office of the Governor and the Office of the
Mayor for SB Balistoy upon recommendation of the Vice Mayor

Itinerary of Travels for Module 1-4 trainings and seminars in Manila

Appendix B – Certificate of Travel Completed

Used plane tickets, terminal fee tickets, boarding passes

Certificates of Appearance
2. Invitation from the UKP-AWNGAD the organizing group for the attendance of the said
seminar and training.
3. Approval/Authority from the DILG to attend the Module 1-4 seminar using LGU funds
for two (2) participants.
4. Justifications and explanations of the following activities:
 Module 1–Seminar attended by Mayor Balistoy and SB Balistoy on May 27-28, 2010
using LGU funds during the training period he was not yet an SB member, while Mayor
Balistoy was at DAR, Cebu City.
 Module 2–Seminar attended by Mayor Balistoy and SB Balistoy on July 2, 2010 which
contradicts the affidavits of the Vice Mayor and other SB members that a meeting was
called by the Mayor on July 2, 2010 (Friday) while Mayor Balistoy was allegedly in Digos,
Davao del Sur.
 On Module 3-Mayor Balistoy& SB Balistoy attended seminar dated August 2-3, 2010 in
Manila, however, at the same date he was present in the regular SB session of SB Cortes,
Bohol as per minutes of the regular session in Cortes, Bohol while Mayor was also in Manila
attending NWCR convention.
 Module 4 – Submit correct/valid documents and name of the person who actually
attended the seminar that will reconcile per billing statement and official receipts issued by
the organizer.

For the E – Agri Seminar, submit the Itinerary of Travel (Appendix A), travel order, used
plane tickets, boarding pass, terminal fee tickets, Certificate of Appearance, Certificate of
Travel Completed (Appendix B) and DILG approval/authority to attend the seminar with
the use of LGU funds as well as travel authority from the Office of the Governor.
14.Purchases of materials/equipment totalling P2.711M for a waterworks project were procured
through 14 shoppings and one (1) bidding and split into 15 requisitions and purchase orders
despite there was only one supplier of the project contrary to Sections 52 of RA 9184 resulting to
irregular/dubious payments. Likewise, supporting documents attached were either missing and/or
incomplete contrary Section 168 (c) of the Government Accounting and Auditing Manual
(GAAM), Volume 1 hence, highly irregular, doubtful and appear very disadvantageous to the
LGU.
Recommendations:
1. Submit explanation/justification why public bidding was not conducted and instead
shopping was pursued. Henceforth, the LGU should strictly comply with Section 52 of the
IRR of RA 9184 and Section 168 (c) of the Government Accounting and Auditing Manual
(GAAM), Volume 1.
2. Require the immediate submission of complete and original documents to support all
claims as follows:
a. Original copies of purchase requests and purchase orders, duly numbered, dated and
the specific purpose indicated.
b. Delivery Receipts duly filled up by the supplier as to the detailed specifications
particularly the Serial Numbers of the items delivered.
c. Inspection and acceptance report by the agency personnel indicating the date of
acceptance/inspection and the detailed specification of the items delivered
specifically the Serial Numbers of the Goulds Submersible Pumps and Franklin
Motor units. Indicate whether items accepted/received were complete or partial and it
items delivered were in accordance with specifications and quantities required.
d. Bill of Lading from the shipping firm where the units/items purchased from Cebu was
actually shipped to Bohol.
e. Accomplishment report of the mechanic who supervised the actual installation of the
pumps.
f. Photocopy of the Product Warranty of the eleven (11) Goulds submersible pumps and
Franklin Motor units.
3. Submit explanation/justification for the splitting of requisitions. Require the Accountant
to verify that all supporting documents are proper, valid and complete.
4. Prepare and submit waste material report for ocular inspection.
5. Submit justification on the two (2) units of submersible pumps purchased for Barangay
Patrocinio considering that Barangay Patrocinio has only (1) pumping unit station.
14 .Expenses not related to the intended purpose of the Special Education Fund (SEF)
amounting to P220,320.00 was incurred by the municipality despite incomplete
documentation/data contrary to DECS, DBM & DILG Joint Circular Nos. 01, 01-A and 01B, series of 1998, 2000 and 2001 and Section 4 (6) of PD 1445, thus resulting to the irregular
and improper utilization of the SEF.
Recommendations:
1. To immediately submit the following:
a. Properly/completely filled up purchase request, purchase order, Special Power of
Attorney (SPA)
b. Delivery receipts, inspection and acceptance report
c. Resolution/request from the school board of the urgency and necessity of the
purchase and a certification that the amount was included in the school board budget
for SY 2010-2011
d. Certification from the school heads that no major projects to be undertaken and other
lined-up projects that needs financial assistance school year 2010-2011
e. Listing and actual names of the students/recipients who received the items, T-shirts
and bags duly certified by respective teachers and principal
2. Strictly follow the implementing guidelines on the proper utilization of the Special
Education Fund as embodied in Joint Circular Nos. 01, 01-A and 01-B of the DepEd, the
DBM and the DILG in order to optimally utilize the fund.
3. Exercise prudence in the disbursement of SEF funds in order to assure that these will
benefit the programmed projects and activities contained in the School Board Budget.
Status of Implementation of Prior Years' Audit Recommendations:
Out of the twenty six (26) recommendations embodied in the 2009 annual Audit Report, two (2)
were partially implemented, seventeen not implemented however, only seven major
recommendations were reiterated in this report.