EXECUTIVE SUMMARY
A. INTRODUCTION
The town of Mexico was said to have been founded in the year 1581. But
according to Augustinian records, the town was probably founded earlier than 1581
or 10 years after colonizers entered Manila Bay. It was originally named Novo
Mexico or New Mexico.
Mexico is classified as a first class municipality. It is composed of forty three
(43) barangays with a total land area of fifteen thousand three hundred thirty nine
(15,339) hectares. The municipality is strategically located at the nucleus of the
province of Pampanga by geographical factor or by economic reason. It is bisected
by major routes of trade, making it sit on the crossroads of major arteries. The
agency’s vision is to be a highly urbanized city.
B. FINANCIAL HIGHLIGHTS
The following comparative data shows the financial condition, results of
operations and sources and application of funds of the Municipality of Mexico for the
calendar years 2012 and 2011.
Financial Statements
Assets
Liabilities
Government Equity
Results of Operations
Income
Expenses
Excess of Income over
Expenses
Sources and Application of
Funds
Allotment
Obligations
Balances
252,525,852.28 P
25,827,800.52
226,698,051.76
Increase
(Decrease)
236,138,736.53 P
16,387,115.75
38,841,623.41
(13,013,822.89)
197,297,113.12
29,400,938.64
267,382,211.95
220,247,349.01
245,099,866.56
191,373,539.08
22,282,345.39
28,873,809.93
47,134,862.94
53,726,327.48
(6,591,464.54)
270,760,927.02
253,803,791.26
16,957,135.76
263,014,715.36
249,685,342.78
13,329,372.58
7,746,211.66
4,118,448.48
3,627,763.18
2011
2012
P
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C. OPERATIONAL HIGHLIGHTS
The municipality’s major accomplishments vis-à-vis targets for calendar year
2012 are as follows:
PARTICULARS
a) Removing, hauling and disposal of collected
residual waste at MRF
b) Expansion/Improvement of the MRF Suclaban
c) Procurement Mechanical or Hydraulic Baller
Compactor for residual/non-biogradable
d) Partial rehab of open dumpsite Suclaban
e) Improvement/Construction of
Parian-Sto. Cristo Cementery Road
f) Development Projects at various barangays
g) Rehabilitation with raising of grade of
Tinajero Road at San Antonio
h) Desilting with hauling and disposal of
spoils of San Carlos Creek
i) Acquisition of lot at Suclaban as site for
warehouse mechanical dryers, rice mill
and shellers
j) Restoration to original capacity of
Parian-Lagundi Creek
k) Provision for streetlighting, beautification
and clean up drive
l) Desilting and rechaneling of the Abacan
River at Culubasa and Cawayan
m)Desilting and rechanneling of Abacan River
at San Jose Malino/repair of Irrigation facility
n) Construction of concrete slope protection
of Aling Nena Creek at San Jose Malino
o) Concreting of brgy road at San Jose Malino
p) Improvement of Interior road at Laug
q) Improvement of San Vicente brgy road
GRAND TOTAL
Approp.
Allotment
Obligation
Balances
25,838.00 474,162.00
1,500,000.00
600,000.00
276,345.00 323,655.00
500,000.00
1,500,000.00
500,000.00
1,500,000.00
600,000.00
600,000.00
600,000.00
600,000.00
5,000,000.00
2,150,000.00
5,000,000.00
2,150,000.00
4,999,587.34
2,100,000.00
412.66
50,000.00
1,000,000.00
1,000,000.00
896,454.11
103,545.89
400,000.00
400,000.00
384,731.63
15,268.37
1,250,000.00
1,250,000.00
1,237,720.00
12,280.00
3,000,000.00
3,000,000.00
2,991,941.10
8,058.90
1,000,000.00
1,000,000.00
994,781.20
5,218.80
4,000,000.00
4,000,000.00
3,993,037.85
6,962.15
4,000,000.00
4,000,000.00
3,989,385.09
10,614.91
2,500,000.00 2,500,000.00 2,499,433.91
566.09
525,676.80
525,676.80
525,676.80
250,000.00
250,000.00
249,997.16
2.84
605,329.60
605,329.60
536,665.51
68,664.09
28,881,006.40 28,881,006.40 25,701,594.70 3,179,411.70
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D. SCOPE OF AUDIT
The audit covered the financial transactions and operations of the
Municipality of Mexico for CY 2012. The objectives of the audit were to: a)
ascertain the degree of reliance that may be placed in management’s assertions on the
fairness of presentation of the financial statements; b) recommend agency
improvement opportunities; and c) determine the extent of implementation of prior
year’s audit recommendations.
E. AUDITOR’S REPORT
The Auditor rendered a qualified opinion on the fairness of presentation of the
financial statements of the Municipality of Mexico, Province of Pampanga for the
year ended December 31, 2012 because (a) Total Receivables which constitute 1.19%
of Total Assets were understand due to non-set up of RPT/SET Receivables at the
beginning of the year which also resulted in the understatement of the Deferred
Charges accounts (Observation No.10)
Moreover, management was unable to establish the existence and correctness
of the balances of the accounts under the Property, Plant and Equipment (PPE)
totaling P178,637,216.57, which constitute 70.74% of Total Assets because of the
failure of the General Services Office to conduct the physical inventory of PPE and
the Accounting Office to maintain the PPE Ledger Cards and Property Cards.
(Observation No.08). Errors and accounting deficiencies affecting financial
statements are discussed in detail in Part II of this Report and summarized as follows:
AOM
Nature of Error
No.
I. Errors affecting asset accounts
1
Unsubstantiated Land account
Total Errors affecting asset accounts
Total Assets
% Total Assets
II. Errors affecting liability accounts
2
Error in classification of accounts
Total Errors affecting liability accounts
Total Liabilities
% Total Liabilities
III. Errors affecting equity accounts
3
Error in classification of accounts
Total Errors affecting equity accounts
Total Government Equity
% Tota Equity
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Accounts Affected
Land-PPE
Subsidy from NGAs
Due to LGU
Due to NGAs
Due to Philhealth
Effect on the FS
Under (Over)
(858,523.38)
(858,523.38)
252,525,852.28
(0.34%)
2,000,000.00
559,145.00
(4,433,763.39)
4,994,908.39
(1,998,000.00)
25,827,800.52
(7.74%)
1,998,000.00
1,998,000.00
0.88%
AOM No.
1
2
Accounting Deficiencies
Failure to record RPT/SET
Receivables, resulting in
understatement of receivables
and
deferred
charges
accounts.
Unreliable PPE accounts due
to management’s failure to
conduct year-end physical
inventory
and
nonmaintenance of PPE Ledger
Cards and Property Cards by
the Accounting Office and
General Services Section.
Accounts Affected Amount Involved
Receivables and Amount
not
Deferred Charges determined
PPE
178,637,216.57
For the errors and accounting deficiencies, we recommended that
management:
For unsubstantiated Land account:
a) require the Municipal Treasurer and Municipal Assessor to make proper
representations with concerned agencies such as the Bureau of Lands,
Register of Deeds, and Bureau of Internal Revenue, to facilitate the
processing of titles to convey real ownership of land in the name of the
Municipality; and
b) require the Municipal Accountant to ensure that proper documentation is
attached to the claim before payment, pursuant to the provisions of COA
Circular No. 2012-001 which prescribes the documentary requirements for
government transactions.
For errors in classification of accounts:
a) require the Municipal Accountant to strictly adhere to the provisions of the
NGAS Manual for LGUs, in order to record the transactions in the
appropriate accounts, for a fair presentation in the financial statements; and
b) require the Municipal Accountant to make the necessary adjustments in the
books to fairly present the accounts in the financial statements.
For the understatement of RPT/SET Receivables:
a) require the Municipal Treasurer to exert effort in updating the Real Property
Tax Account Register (RPTAR) which is necessary in setting up the
RPT/SET Receivables at the beginning of the year; and
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b) require the Municipal Accountant to recognize/set up at the beginning of the
year RPT/SET Receivables based on the RPTAR/Taxpayer’s Index Card
pursuant to Section 20 of the Manual on NGAS in order to ensure collection
of taxes and increase collection efficiency.
For Property, Plant and Equipment accounts:
a) create an inventory committee to conduct the physical inventory of property
to determine actual existence of properties and submit the appropriate
inventory report on the RPCPPE.
b) consider assigning a personnel from each department/office to act as property
custodian/officer who will be in charge of the annual inventory-taking of all
PPE assigned to the department.
c) require the Municipal Accountant to maintain PPELC for each category of
assets and the General Service Officer or the Municipal Treasurer to maintain
Property Cards per category of Property, Plant and Equipment; and
d) require the Inventory Committee to reconcile the results of the count with the
property and accounting records.
F. OTHER SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS
Summarized below are the other significant audit observations noted during the
year and the corresponding recommendations which are discussed in detail in Part II of
this report:
1. Specific duties were not stipulated in the appointment of casual personnel, while
services to be performed by job order personnel were not also clearly indicated in
the contract, except for contractual and job order personnel assigned at the
Mexico Community Hospital, contrary to Section 1 of CSC Resolution No.
020790, thus, measurement of desired work output versus actual output was not
determined by the Municipality.
We recommend that Management:
a)
assess the actual need for additional manpower per office, taking into
consideration the costs and benefits attached to the job; and
b)
request for the creation of additional regular plantilla positions to avoid
assignment of job order personnel to regular plantilla positions.
2. Receipt of funds transferred by DSWD Region III amounting P559,1455.00 was
erroneously classified as Due to LGU, contrary to Sections 153 and 154 of the
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NGAS Manual for LGUs, resulting in misclassification of accounts in the
financial statements.
We recommend that the Municipal Accountant be guided by the applicable
provisions of the NGAS Manual, particularly on trust liability accounts, for a
proper recording of transactions in the appropriate accounts, and make the
necessary adjustment in the books for a fair presentation of the accounts in the
financial statements.
3. Advances granted to officers and employees for salaries, wages, petty cash, and
official travels totaling P402,154.97 remained unliquidated as of December 31,
2012, contrary to Section 4 and 5 of COA Circular No. 97-002 dated February
10, 1997.
We recommend that management strictly adhere to the provisions of COA
Circular No. 97-002 which specifically prescribes the period within which all cash
advances granted to officers and employees be liquidated.
4. Parcels of land acquired by the Municipality totaling P858,523.38 as of December
31, 2012 were not supported with legal documents of ownership, contrary to
Section 39 of P.D. 1445, while a parcel of lot costing P1,237,720.00 was already
registered under the name of the LGU, but lacked some documents to support the
validity of the claim, contrary to provisions of COA Circular No. 2012-001 dated
June 1, 2012.
We recommend that the:
a)
Municipal Treasurer and Municipal Assessor make proper representations
with concerned agencies such as the Bureau of Lands, Register of Deeds
and Bureau of Internal Revenue to facilitate the processing of titles to
convey real ownership of land in the name of the Municipality; and
b)
Municipal Accountant ensure that proper documentation is attached to the
claim before payment, pursuant to the provisions of COA Circular No.
2012-001 which prescribes the documentary
Other audit observations not included in this summary are contained in Part II of
this report. An exit conference was held on February 27, 2013, wherein all findings and
recommendations were discussed to agency officials. Management’s comments were
incorporated in the report, where appropriate.
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G.
IMPLEMENTATION OF PRIOR YEAR’S RECOMMENDATIONS
Of the fifteen recommendations contained in the 2011 Annual Audit Report,
four were fully implemented, seven were partially implemented, and four were not
implemented.
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