NOTES TO THE FINANCIAL STATEMENTS

1 General Agency Profile

The Municipality of Casiguran was founded on June 13, 1609. It was created by virtue of Republic Act No. 649 dated June 14, 1951. Its territorial jurisdiction is composed of 24 barangays. It is abound by forest, mountains and surrounded by the sea and classified as a 2nd class municipality. Pursuant to Republic Act No. 7160 known as the Local Government Code of 1991, the Municipality of Casiguran, like any other local government units enjoy total independence in managing, deciding and planning its own administrative, fiscal and development affairs in conformity with the national governments thrust for sustainable social and economic growth. The Municipality is under the able stewardship of the Municipal Mayor, Honorable Reynaldo T. Bitong. 2 Basis of Financial Statements Presentation

The financial statements have been prepared in conformity with generally accepted accounting principles and reflect amounts that are based on the best estimates and informed judgment of management with appropriate consideration of materiality. 3 Summary of Significant Accounting Policies 3.1 3.2 3.3 The municipality uses the accrual basis of accounting. All expenses were recognized when incurred and reported in the financial statements in the period to which they relate. Income is on modified cash basis. Property, Plant and Equipment are carried at historical cost. Infrastructure under Construction In Progress are valued following the construction period theory. The straight line method of depreciation is used. A residual value equivalent to then percent (10%) of the cost shall be set-up and depreciation shall start on the second month after purchase/completion of the property, plant and equipment. Public infrastructure shall not be charged any depreciation. Petty Cash Fund account is maintained under the Imprest System. All replenishment are directly charged to appropriate expense account.

3.4

Correction of Fundamental Errors Fundamental errors of prior years are corrected by using the Prior Years Adjustment account. Errors effecting current years operations are charged to the current years account.

Cash and Other Cash Accounts This account consists of the following:
Cash in Vault Cash Disbursing Officer Cash in Bank - LCCA Total P Dec. 31, 2010 664,256.72 P 2,151,078.06 17,457,963.27 20,273,298.05 P Dec. 31, 2008 1,146,580.73 1,933,752.56 29,632,102.36 32,712,435.65

Cash in Vault amounting to P664,256.72 represents undeposited collections in the General Fund, Special Education Fund and Trust Fund. Cash Disbursing Officer amounting to P1,933,752.56 represents unliquidated balances of cash advances granted to Accountable Officer for the payment of maintenance and other operating expenses. Cash in BankLocal Currency, Current Account this account is composed of funds for the settlement of LGUs current obligations in the General Fund, Special Education Fund and Trust Fund. 6 Receivables This account consists of the following:
Dec. 31, 2010 Dec. 31, 2009 3,734,268.40 P 1,366,479.82 5,511,706.14 4,456,438.84 13,865,623.03 275,335.04 14,265,400.14 675,111.71 397,977.31 652,193.07 9,518.84 9,518.84 62,056.28 88,199.87 2,000,000.00 3,000.00 875,245.87 60,163.32 P 40,721,796.01 P 7,586,440.51
P

Due from Officers and Employees Loans Receivables RPT Receivables SET Receivables Interest Receivables Due from NGAs Due from LGUs Due from Other Funds Other Receivables Totall

The account Due from Officers and Employees amounting to P3,734,268.40 were cash advances granted to various officers and employees for traveling expenses, purchase of supplies and for various MOOE which remained unliquidated at year-end. Loan Receivable amounting to P5,511,706.14 were loans granted to constituents for self-employment assistance projects on installment basis.

RPT Receivable and SET Receivables of P13,865,623.03 and P14,265,400.14 respectively, were accumulated uncollected Real Property Tax and Special Education Tax Receivable set-up at the beginning of the year.. Interest Receivables of P397,977.31 represents uncollected interest for loans granted to different beneficiaries on Self-employed Assistance Projects. The account Due from LGUs of P62,056.28 represents the share of the Municipality from RPT/SET collections of the Province, which is still uncollected as of the balance sheet date. 7 Property, Plant and Equipment This account consists of the following:
Balance Dec. 31, 2009 Land and Land Improvements Electrification, Power Structures Building & Other Structures Equipment, Furn. & Fixtures, etc. Machineries and Equipment Transportation Equipment Other PPE Public Infrastructure Construction in Progress P 26,077,857.04 P 776,529.50 12,181,987.85 5,824,879.11 7,853,062.10 8,585,153.76 867,134.00 7,034,239.21 12,531,647.00 81,732,489.57 P Net Addition/ (Reduction) 15,000.00 P 56,745.00 3,988,011.00 2,339,332.89 14,765,347.41 640,745.00 (5,313,516.51) (8,329,027.80) 8,162,636.99 P Balance Dec. 31, 2009 26,092,857.04 776,529.50 12,238,732.85 9,812,890.11 10,192,394.99 23,350,501.17 1,507,879.00 1,720,722.70 4,202,619.20 89,895,126.56 21,099,075.70 68,796,050.86

Total PPE P Less: Accumu,ated deprerciation Total PPE (Net)

The major addition to this account were the cost of purchased Furniture and Fixtures, Machineries and Equipment, Transportation Equipment and infrastructure projects by the municipality which are still in progress at the end of the year while the reduction are the cost of depreciation charged to equipment furniture and fixtures, machineries and equipment, transportation equipment and other asset subject to depreciation.

Current Liabilities 8

This account consist of the following:

Accounts Payable Due to BIR Due to GSIS Due to Pagibig Due to PHILHEALTH Due to NGAs Due to Other LGUs Guaranty Deposit Payable Performance/Bidders/Bail Bond Payable Loan Payables Domestic Other Payables Total P Dec. 31, 2010 2,943,155.91 739,917.52 451,661.81 P Dec. 31, 2009 1,918,657.08 830,909.54 418,866.93 86,319.65 29,500.00 129,286.56 253,566.29 3,040.29 182,226.35 632,633.67 4,485,006.36

123,541.56 55,906.03 3,040.29 222,226.35 191,794.72 497,783.20 5,229,027.39 P

Accounts Payable amounting to P2,943,155.91 represents the unsettled obligations to various suppliers and creditors as of December 31, 2010. The account Due to BIR of P739,917.52 represents amount payable to BIR for taxes withheld on purchases and projects implemented of which were remitted as of January 2009 same with GSIS. Due to NGAs represent funds received from the National Government Agencies intended for developmental projects amounting to P123,541.56. Due to Other LGUs represents funds held in trust for 24 Barangays of Casiguran, Aurora and Provincial Government of Aurora from the share of RPT/SET collections amounting to P55,906.03. The amount of P222,226.35 represent Performance/Bidders/Bail bonds deposit for safekeeping in the Municipal Treasury. Other Payables in the amount of P497,783.20 is composed of unremitted loan amortizations of officials and employees of the LGU to DBP and LBP.

Deferred Credits This account includes the following:

Deferred RPT Tax Deferred SET Tax Other Deferred Credits Total P Dec. 31, 2010 13,865,623.03 14,265,400.14 1,028,958.21 29,159,981.38 P Dec. 31, 2009 275,335.04 675,111.71 1,672,799.62 2,623,246.37

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Government Equity This account includes the following:

Government Equity, Beginning Balance Add/Deduct: Retained Operating Surplus Current Operation Prior Year's Adjustment Transfer to Registry Government Equity, Ending Balance Breakdown General Fund Special Education Fund Trust Fund Total P Dec. 31, 2010 115,954,640.85 P 7,245,646.28 (7,907,123.85) (19,679,882.11) 95,613,281.17 P Dec. 31, 2009 100,982,704.52 13,605,257.22 1,366,679.11 115,954,640.85

91,125,359.93 P 635,261.68 3,852,659.56 95,613,281.17 P

112,590,202.81 592,721.81 2,771,716.23 115,954,640.85

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Income Account

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This account consists of:

L ocal In e com Perm and L ses it icen Service In e com B siness Incom u e Other In e com T otal P D 31, 2010 ec. 2,708,838.75 587,866.52 208,163.10 1,435,361.04 85,888,277.58 90,828,506.99 P D 31, 2009 ec. 2,519,938.08 583,093.14 198,858.16 1,090,323.75 80,841,585.00 85,233,798.13

The details are as follows:

Professional T ax B sin T u ess ax Com unity T m ax Occu pation T ax R Property T eal ax Special E ducation T ax Oth L er ocal T axes Fines and Penalties-L ocal T axes Fees on W eights and M res easu Perm Fees it R egistration Fees Oth Perm and L er it icenses Clearance and Certification Fees G arbage Fees Inspection Fees M edical D tal and L en aboratory Fees Incom fromCem e etery Operations Incom fromM e arkets Incom fromSlau hterhou e g ses Incom fromW e aterw orks System s L anding and Parking Fees R Incom ent e Interest Incom e Intern R al even A ue llotm t en M iscellaneous Incom e Oth Fines an Pen er d alties Prior Y ears adjustm ent T otal P D 31, 2010 ec. 490.00 1,088,823.72 254,055.16 21,311.50 494,205.06 468,940.32 381,012.99 11,854.88 282,003.45 235,754.89 58,253.30 156,422.00 15,350.00 25,921.00 10,470.10 16,130.00 133,941.25 47,353.00 882,213.55 80,981.00 26,280.00 248,462.24 85,749,707.00 136,970.58 1,600.00 90,828,506.99 D 31, 2009 ec. P 1,132,283.10 193,249.75 19,780.00 380,070.76 468,940.32 325,614.15 16,165.00 274,695.40 213,317.50 78,915.24 146,808.16 15,290.00 25,775.00 10,985.00 16,620.00 120,934.00 42,860.75 759,458.00 94,476.00 55,975.00 81,591,746.00 71,861.00 (822,022.00) 85,233,798.13

12.

Expense Account

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Salaries and Wages - Reguilar Salaries and Wages - Casual Salaries and Wages - Contractual Personnel Economic Relief Alloweance Additional Compensation Representation Allowance Transportation Allowance Clothing/Uniform Allowance Subs./Laundry and Quarter Allowance Productivity Incentive Allowance Other Bonuses and Allowance Honoraria Hazard Pay Longevity Pay Cash Gift Year End Bonus Life & Ret. Ins. Contribution PAG-IBIG Contribution PHILHEALTH Contribution ECC Contribution Terminal Leave Benefits Health Workers Benefits Other Personnel Benefits Total

2010 15,882,870.50 P 1,399,782.98 3,176,639.18 539,000.00 1,461,000.00 1,409,340.00 1,409,340.00 340,000.00 183,550.00 168,000.00 4,761,649.00 957,240.00 1,881.42 19,883.34 442,000.00 1,372,354.00 1,900,520.40 103,700.00 192,412.50 95,837.29 802,415.00 496,181.75 1,309,732.90 38,425,330.26 P

2009 14,372,241.21 1,267,512.98 3,214,694.00 445,230.00 1,551,680.00 1,349,762.50 1,349,762.50 348,000.00 190,100.00 188,000.00 1,553,638.00 913,300.00 8,592.03 35,000.00 430,000.00 4,656,288.00 2,724,166.24 103,500.00 172,687.50 94,829.55 841,580.19 455,160.00 1,050,346.99 37,316,071.69

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MOOE Travelling Expenses - Local Travelling Expenses - Foreign Training Expenses Scholarship Expenses Office Supplies Expense Accountable Form Expense Animal/Zoological Expense Food Supplies Expense Drugs and Medicines Expense Medical, Dental Laboratory Expense Gasoline, Oil and Lubricant Agricultural Supplies Expense Other Supplies Expense Water Expense Electricity Expense Telephone Expense - Mobile Cable, Satelite Expense Printing and Binding Expense Transportation and deliveryb Expense Membership Dues and Contributions Rent Expense Subscription Expenses Survey Expense Legal Service Expense Other Professional Service Consultancy Services Repair & Maint.-Electricity, Power Repair & Maint.-Office Building Repair & Maint.-School Building Repair & Maint.-Hosp./Health Center Repair & Maint.-Market and Slaught. Repair & Maint.-Other Structures Repair & Maint.-Office Equipment Repair & Maint.-Furniture and Fixtures Repair & Maint.-Software and Equip. Repair & Maint.-Agri-Fishery/Forestry Eq Repair & Maint.-Comm. Equipment Repair & Maint.-Const & Heavy Equip. Repair & Maint.-Other Mach./Equip. Repair & Maint.-Motor Vehicles Repair & Maint.-Watercrafts Repair & Maint.-Other PPE Repair & Maint.-Road, Highways, Bridg Repair & Maint.-Parks, Plazas, Mon. Repair & Maint.-Ports, Harbors Repair & Maint.-Artesian Wells, Reserv Repair & Maint.-Irrigation Canals Repair & Maint.-Waterways, Aqueduct Repair & Maint.-Other Public Infra Sub-total

2010 3,813,883.83 7,200.00 1,052,470.94 229,891.00 1,206,111.00 18,460.00 48,448.00 8,451.00 2,447,060.10 262,000.00 4,507,928.99 51,221.88 106,000.00 2,435.00 402,812.13 665,765.95 178,000.00 9,650.00 40,490.00 700.00 51,563.00 18,020.00 50,000.00

2009 2,893,899.55 46,706.00 180,795.00 57,000.00 1,046,697.07 24,286.50 2,287,514.23 77,210.00 3,047,016.35 183,353.34 88,967.00 413,286.72 734,709.45 356.00 3,700.00 2,000.00 40,613.00 3,026.34 16,000.00 243,500.00 59,779.65 268,806.32 83,407.50 4,992.00 168,053.00 238,155.55 16,550.00 32,125.00 24,007.20 6,500.00 1,300,173.10 13,232.00 2,334,523.89 23,515.00 21,668.00 1,369,918.18 338,010.95 911,881.62 170,560.00 180,846.00 147,996.00 19,105,337.51

731,900.34 217,431.00 175,158.00 854,204.85 13,647.50 3,857.00 27,170.00 75,274.00 982,124.00 30,700.00 2,131,617.11

1,957,254.31 338,534.00 12,236.00 1,819,610.82 374,010.00 22,211.00 298,480.65 25,243,983.40

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Donations Intelligence Expense Misc. Expense Taxes Fidelity Bond Premium Insurance Expense Discount on Real Property Taxes Discount on Special Education Taxes Other Maint. And Optng Expenses Bank Charges Dep. Expense-Office Equipment Dep. Expense-Furniture & Fixtures Dep. Expense-IT Equipment Dep. Expense-Library Books Dep. Expense-Agricultural Equip. Dep. Expense-Comm. Equipment Dep. Expense-Other Mach. & Equip. Dep. Expense-Motor Vehicles Dep. Expense-Watercrafts Dep. Expense-Other PPE Sub-Total Sub-total page 13 Total MOOE Total Personal Services, p 11 Total Expenses

2010 1,604,987.12 298,345.00 517,678.20 38,792.45 14,606.25 77,351.86 64,421.82 63,239.96 14,420,463.99 7,000.00 186,056.09 121,838.42 174,749.45 6,178.64 119,753.27 189,396.73 114,098.01 1,672,559.43 72,814.33 149,216.03 19,913,547.05 25,243,983.40 45,157,530.45 38,425,330.26 83,582,860.71 P

2009 1,559,806.09 424,100.00

10,764.00 35,416.24 63,239.96 63,239.96 14,050,565.46 16,207,131.71 19,105,337.51 35,312,469.22 36,316,071.69 71,628,540.91

13.

Others Account are classified to conform to the New Chart of Accounts prescribed under the Manual on the New Government Accounting System as amended by GAFMIS Accounting Circular No. 2004-008 and 2007-002 dated September 20, 2004 and February 19, 2007, respectively.

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