EXECUTIVE SUMMARY

A. INTRODUCTION

The Municipality of Manaoag, a town known and formed based on an apparition calling
for an erection of a church for the Our Lady of Rosary, some 400 years ago, was more
familiarly known and regarded as the religious center of Central and Northern Luzon or
as they call it “MECCA” of the North.

Manaoag, is one of the oldest town in the province of Pangasinan is strategically located
at the central part of the province. The town has an area of 5,716.24 hectares divided into
26 barangays and a population of approximately 70,000 inhabitants.

B. OPERATIONAL HIGHLIGHTS

The significant projects/accomplishments of the Municipality as of December 31, 2020

are as follows:

Programs/ Projects Amount Status

Construction of New BOSS Building 18,542,364.29 100% Completed
(3 storey)
Concreting of Farm to Market Roads within 8,037,363.48 100% Completed
26 Barangays of this Municipality
Purchase of 22 units Duplicating Machines 3,172,400.00 100% Completed
for Public Schools

C. FINANCIAL HIGHLIGHTS
(Financial data were presented in Philippine Peso)

The financial position, financial performance, source and utilization of funds,

appropriations and obligations of the Municipality of Manaoag for calendar year (CY)
2020, with corresponding figures for CY 2019 are as follows:

Increase (Decrease)
Accounts 2020 2019 (Restated)
Amount Percent
Assets 518,003,161.77 510,730,432.64 7,272,729.13 1.42
Liabilities 45,506,087.98 49,909,111.20 (4,403,023.22) (8.82)
Government
472,497,073.79 460,821,321.44 11,675,752.35 2.53
Equity
Income 228,254,395.58 228,756,871.66 (502,476.08) (0.22)
Expenses 216,578,643.23 162,562,442.38 54,016,200.85 33.23
Appropriations 292,653,787.49 227,751,683.05 64,902,104.44 28.50
Obligations 209,115,108.78 161,216,899.86 47,898,208.92 29.71
 Detailed financial statements presented by fund are attached in Annexes A – D.

D. SCOPE OF AUDIT

The audit covered the operation of the Municipality of Manaoag for CY 2020. It was
conducted to ascertain the fairness of presentation of the financial statements, check
compliance with existing rules and regulations and determine whether management in the
implementation of its programs, projects and activities has attained its goals and
objectives in an economical, efficient and effective manner.

The audit included analysis of accounts, review of transactions, test of compliance with
existing laws, rules and regulations, review of operating procedures, inspection of
programs and projects, interview of officials and employees and such other procedures
considered necessary under the circumstances.

E. AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS

A qualified opinion was rendered on the fairness of the presentation of the financial
statements of the Municipality of Manaoag, Pangasinan for CY 2020 for the reason that
the Property, Plant and Equipment (PPE) of the LGU with a total cost of
₱478,985,252.44 as of December 31, 2020 remained unaccounted and unreconciled with
the Report on the Physical Count of Property, Plant and Equipment (RPCPPE) due to, as
among other factors, the incomplete accounting and property records which is contrary to
Section 269, Volume I, Government Accounting Manual (GAM) for LGUs; thus,
rendering the assertions of Management as to the accuracy, existence and reliability of
PPE account doubtful contrary to IPSAS 1.

F. SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

The following are the significant observations and recommendations contained in the
report which were discussed with the management. Management comments were
incorporated in the report where appropriate.

1. The accuracy of the carrying amount of the Road Networks account totaling
₱224,857,227.35 could not be ascertained and its existence could not be
established due to failure of management to: (a) conduct physical count and
submit the Report on the Physical Count of the Road Network System; (b)
maintain a Report of the Local Road Network and Road Map; (c) keep a
complete Local Road Network Property Card for all roads and its components;
and (d) disclose in the Notes to Financial Statements the total road network
system contrary to COA Circular No. 2015-008 dated November 23, 2015.
 We recommended that Management strictly comply with the accounting and
reporting guidelines on the Local Roads Asset Management System prescribed in
COA Circular No. 2015-008 dated November 23, 2015. We further recommend the
following courses of action:

a. Require the Municipal Accountant to maintain subsidiary records for roads

and road components for every road network, and disclose in the Notes to
Financial Statements the total road network system;
b. Require the Municipal Treasurer, in the absence of General Services Officer,
to maintain a Report of the Local Road Network and Road Map, and keep a
complete Local Road Network Property Card for all roads and its
components;
c. Create an inventory committee to conduct the physical count and prepare the
Report on the Physical Count of the Road Network System.

2. The existence, propriety and valuation of the land account as recorded in the
books of accounts of the Municipality with a total amount of ₱39,407,750.00 as
of December 31, 2020 could not be ascertained due to the absence of reliable
basis of valuation and non-submission of inventory list of parcels of land and
absence of Transfer Certificates of Titles (TCT) or its equivalent in the name of
the Municipal Government of Manaoag which is not in conformity with Section
39 of PD 1445 and Section 449, Volume 1 of Government Accounting and
Auditing Manual (GAAM).

We recommended that the Local Chief Executive –

a. Instruct the Municipal Assessor to provide this Office a photocopy of land

titles of parcels of land to ascertain the legality of LGU’s ownership over
these parcels of land.
b. Exhaust all possible means to document the legality of ownership on untitled
lots through a Transfer Certificate of Title (TCT) in the name of the Municipal
Government of Manaoag pursuant to Section 39 of PD 1445 and Section 449,
Volume 1 of Government Accounting and Auditing Manual in order to protect
the interest of the LGU for any adverse claims by third parties.
c. Require the Municipal Budget Officer to appropriate funds which shall cover
the expenses on the registration of parcels of land.

3. Real Property Tax and Special Education Tax Receivables are set up in the
books based on estimates of the Municipal Accountant instead of the duly
certified list of taxpayers prepared and signed by the by the Municipal
Treasurer. The practice resulted in the zero balances of RPT and SET accounts
as the accounts are adjusted to record actual collection. Thus, actual amount of
collectible for RPT were not reflected in the books, understating therefore the
receivable of the LGU contrary to Section 42 of Government and Accounting
Manual (GAM) for Local Government Units (LGUs) and Paragraph 27 of
International Public Sector Accounting Standard (IPSAS) 1.
 We recommended that the Local Chief Executive instruct the Municipal Treasurer in
coordination with the Municipal Assessor to prepare and furnish the Municipal
Accountant a duly certified list of taxpayers showing the names and the amount due
and collectible based on RPTAR/Taxpayer’s index card to provide an accurate and
reliable basis in setting-up of receivables for real property taxes and special education
taxes at the beginning of the year for fair presentation of the accounts in the financial
statements.

We further recommended that the Municipal Accountant has to reconcile with the
Municipal Treasurer relative to the amount of delinquent local taxes and disclosed the
correct amount in the financial statements.

4. Uncollected rent income from delinquent stallholders amounting to ₱252,306.50

was not recognized in the books of accounts as of December 31, 2020 which is not
in accordance with Paragraph 19 of International Public Sector Accounting
Standards (IPSAS) 9 and Section 47, Volume I of Government Accounting
Manual (GAM) for Local Government Units (LGUs); thus, affecting the
reliability of the accounts in the financial statements.

We recommended that Management:

a. Direct the Market Supervisor to regularly prepare the monthly billing

statements for the delinquent stallholders and regularly submit a summary of
the delinquent stallholders to the Municipal Treasurer and to furnish the
Municipal Accountant, who will then take up the unpaid balances as a debit to
Operating Lease Receivable and credit to Rent Income; and

b. Instruct the Municipal Accountant to adhere with the accrual method of

accounting by properly recognizing the uncollected balances from the
delinquent stallholders, as prescribed under Paragraph 19 of IPSAS No. 9 and
pertinent provision of GAM for LGUs.

5. Receivables totaling ₱175,513.67 which remained non-moving in the books for

seventeen (17) years and have no records on file, were not acted upon to
facilitate the proper write-off thereof, resulting in the overstatement of agency
assets due to inclusion of accounts with doubtful existence.

We recommended that Management strictly adhere with the guidelines relative to the
monitoring and analysis of receivable accounts to ensure that these are collected when
become due and demandable. Strict compliance with the procedures in the write-off
of dormant accounts as prescribed in COA Circular No. 2016-005 is further
recommended to avoid overstatement of agency assets due to inclusion of accounts
with doubtful existence.
G. SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND CHARGES
AS OF YEAR-END

As of December 31, 2020, the Statement of Suspensions, Disallowances and Charges

showed the following balances:

Notice of Suspensions ₱ -
Notice of Disallowances 46,908.55
Notice of Charges -

H. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Of the 79 audit recommendations embodied in the 2019 Annual Audit Report, 38 were
Fully Implemented (FI) and 41 were Not Implemented (NI) by the Municipality, thus
reiterated in this report.