Kabugao Executive Summary 2013

EXECUTIVE SUMMARY
A. INTRODUCTION
The Municipality of Kabugao is the oldest among the seven municipalities of

the Province of Apayao. It was formally created in 1914 when Lieutenant-
Governor Blas Villamor of the American government appointed Manuel Rugrug
as the first president of Kabugao. Pursuant to Act No. 1876, it became the sub-
provincial capital of the sub-province of Apayao in 1916 and was created into a
regular municipality by virtue of Executive Order No. 42 dated June 25, 1963 by
President Diosdado Macapagal. It is composed of 21 barangays and classified as
a 1st class Municipality . It is presently under the leadership of Honorable
Joseph C. Amid who is on his second term as Municipal Mayor.
The Municipality of Kabugao envisions to be the prime eco-tourism

destination of the north, cultural heritage capital of the far-north and Apayao’s
watershed cradle with empowered, hospitable and God-fearing people, living in a
competitive, rich and progressive economy in a safe and sound environment
inspired by competent, dynamic and kind-hearted leaders.
.
B. FINANCIAL HIGHLIGHTS
The Municipality is maintaining three (3) funds, namely: General Fund,

Special Education Fund and Trust Fund.
For the year 2013, the Municipality had a total allotment of P115,715,131.57
and incurred an obligation of the same amount leaving no balance at the end of
the year. Total assets as of December 31, 2013 amounted to P 193,658,791.04.
On the other hand, total liabilities and government equity amounted to
P57,185,503.84 and P136,473,287.20, respectively.
C. OPERATIONAL HIGHLIGHTS
The table below shows the status of projects programmed during the year in
line with the municipality’s Annual Investments Plan.
Program/Project/Activity Expenditure Unexpended

Balance
A. Implemented 20% Development Fund
1. LGU Special Projects P 3,827,295.00 P 16,787.44
i
Balance
1. Improvement of RHU building 100,000.00 0.00
2. Const./Rehab of Kalyat-Gugoban FMR. 675,500.00 12,500.00

B. On-going 20% Development Fund
1. Regreening/Sanitation & anti-pollution 291,720.00 318,280.00
Program
2. Const./Rehab. Of barangay footrails 1,081,715.00 118,285.00

3. Rehab. Of Luttuacan-Magabta FMR 488,000.00 12,000.00
4. Purchase of tractor-LGU counterpart 140,000.00 160,000.00
5. Imprvt. Of Marquez street 774,050.00 25,950.00
C. Not Yet Implemented 20% Development

Fund
1. Const./Repair of multi-purpose
building 0.00 800,000.00
2. Imprvt./Maint. Of waste disposal site
0.00 1,500,000.00
3. Const. of Poblacion flood control
project (Phase III) 0.00 1,000,000.00
4. Const.& Rehab. Of barangay water
supply project 0.00 1,061,179.76
5. Const./repair of daycare center 0.00 800,000.00
6. Const./repair of barangay health 0.00 200,000.00
stations
7. Livelihood Projects 0.00 200,000.00
8. Rehab. Of Irrigation Facilities 0.00 1,000,000.00
9. Const./Repair of MPDPs 0.00 1,000,000.00

10. Const. of Madduang-Dagara-Maragat
FMR 0.00 1,000,000.00
11. Imprvt.of Agunos St.(Phase II) 0.00 1,500,000.00
12. Refo. & Urban re-greening Project 0.00 1,000,000.00
13. Purchase of I unit bulldozer 0.00 1,500,000.00

14. Counterpart to KALAHI-CIDSS
program 0.00 1,667,650.00
ii
Balance
15. Const. of Karagawan Flood control
project 0.00 105,982.20
D. SCOPE OF AUDIT
The audit covered the transactions and operations of the Municipality of

Kabugao for the Calendar Year 2013. The audit was aimed are to ascertain the
fairness and reliability of the Municipality’s financial position and results of
operations and to determine whether plans, programs, projects and activities for
the year were attained in an efficient, economical and effective manner.
E. INDEPENDENT AUDITOR’S OPINION
The auditor rendered a qualified opinion due to the unrecorded disbursements

amounting to ₱21,854,289.63 that overstated the Cash in Bank and Equity
accounts.
F. SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS
Financial and Compliance Audit
1. Disbursements amounting to ₱21,854,289.63 remained unrecorded and

unaccounted due to continued failure to submit covering vouchers and
supporting documents resulting in the overstatement of the Cash in Bank
and Government Equity accounts and rendering the transactions irregular.
We have recommended that:
a. The Municipal Treasurer submit valid and duly supported

disbursements vouchers, otherwise, same will be disallowed in audit;
b. The Municipal Treasurer ensure timely submission of all paid

vouchers to the Municipal Accountant for recording in the books; and
c. The Municipal Accountant ensure that all prior years’ adjustments

taken up in the books are valid, authorized and duly supported with
documents.
2. Procurement of equipment and supplies totaling ₱3,320,774.01 were made

through “Shopping and Direct Contracting”, contrary to the Revised IRR
of RA No. 9184, thus depriving the government of obtaining the most
advantageous price.
iii
We have recommended that management:
a. Limit the procurement of goods through shopping, unless the

circumstances warrant its application.
b. Require the department heads to submit their Project Procurement

Management Plans (PPMP) for consolidation by the Bids and Awards
Committee in the Annual Procurement plan of the municipality in
accordance with Section 7, Rule II of the Revised IRR.
3. The inadequacy and inconsistencies of supporting documents contrary to

the provisions of Section 4 of PD 1445 as reiterated under COA Circular
No. 2012-001 dated June 14, 2012 casted doubt on the validity and
veracity of transactions in the total amount of ₱1,527,953.75.
We have recommended that the Accounting/Internal Control Unit require

adequate as well as consistent documentation of claims before processing
payment thereof.
4. The amount of ₱100,000.00 funded from the 20% Development Fund was
granted for the repairs and improvement of a Multi-Purpose Building
owned by a private institution in violation of Section 335 of RA 7160.
We have recommended that management submit valid justification for the

financial assistance given to the private school and stop the practice of
granting or appropriating moneys to private entities.
5. Traveling allowances were erroneously claimed resulting in excessive

expenditures in the total amount of ₱14,400.00.
We have recommended that management:
a. Adhere properly with the provisions of EO 298 to avoid excessive

expenditures.
b. Direct the officials and personnel concerned to refund the excess

amounts claimed for travel expenses.
6. Unexpended balance of the LDRRM fund as of December 31,2013

amounting to ₱1,511,899.53 was not transferred to the Special Trust Fund
account contrary to Section 6.4 of NDRRMC, DBM and DILG Joint
Memorandum Circular No. 2013-1.
iv
We have recommended that management transfer to the Special Trust
Fund account the unexpended balance of LDRRM fund amounting to
₱1,511,899.53.
Value for Money Audit
7. The Municipality had implemented only 33% of its allocation for 20%
Development Fund for CY 2013, thus desired development outcomes were
not fully attained.
We have recommended that management direct the implementing offices

to exert more effort to fast track the implementation of its plans and
programs funded from the 20% development fund.
G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS
Out of the 18 recommendations in prior years, four were fully implemented,

nine were partially implemented and five were not implemented.

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EXECUTIVE SUMMARY

The Municipality of Kabugao is the oldest among the seven municipalities of

The Municipality of Kabugao envisions to be the prime eco-tourism

The Municipality is maintaining three (3) funds, namely: General Fund,

Program/Project/Activity Expenditure Unexpended

1. LGU Special Projects P 3,827,295.00 P 16,787.44

1. Improvement of RHU building 100,000.00 0.00

2. Const./Rehab of Kalyat-Gugoban FMR. 675,500.00 12,500.00

2. Const./Rehab. Of barangay footrails 1,081,715.00 118,285.00

C. Not Yet Implemented 20% Development

9. Const./Repair of MPDPs 0.00 1,000,000.00

11. Imprvt.of Agunos St.(Phase II) 0.00 1,500,000.00

12. Refo. & Urban re-greening Project 0.00 1,000,000.00

13. Purchase of I unit bulldozer 0.00 1,500,000.00

The audit covered the transactions and operations of the Municipality of

E. INDEPENDENT AUDITOR’S OPINION

The auditor rendered a qualified opinion due to the unrecorded disbursements

F. SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

Financial and Compliance Audit

1. Disbursements amounting to ₱21,854,289.63 remained unrecorded and

We have recommended that:

a. The Municipal Treasurer submit valid and duly supported

b. The Municipal Treasurer ensure timely submission of all paid

c. The Municipal Accountant ensure that all prior years’ adjustments

2. Procurement of equipment and supplies totaling ₱3,320,774.01 were made

a. Limit the procurement of goods through shopping, unless the

b. Require the department heads to submit their Project Procurement

3. The inadequacy and inconsistencies of supporting documents contrary to

We have recommended that the Accounting/Internal Control Unit require

We have recommended that management submit valid justification for the

5. Traveling allowances were erroneously claimed resulting in excessive

We have recommended that management:

a. Adhere properly with the provisions of EO 298 to avoid excessive

b. Direct the officials and personnel concerned to refund the excess

6. Unexpended balance of the LDRRM fund as of December 31,2013

Value for Money Audit

We have recommended that management direct the implementing offices

G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

Out of the 18 recommendations in prior years, four were fully implemented,

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