Moalboal Executive Summary 2014

EXECUTIVE SUMMARY
The Municipality of Moalboal, Cebu has been classified as a fourth (4th) class
Municipality based on the latest classification of municipalities issued by the Department
of Finance.
Pursuant to RA No. 7160, known as the Local Government Code of 1991, the
municipality like other local government units, enjoys total independence in managing,
deciding, and planning its own administrative, fiscal and development affairs in
conformity with the national government’s thrust for sustainable social and economic
growth.
HIGHLIGHTS OF FINANCIAL OPERATIONS
During the year, the agency realized a total gross operating income of
P94,949,186.85 from its share of the Internal Revenue Allotment, collections of real
property and business taxes, other taxes and licenses which showed an increase of P
7,033,895.33 or 8% as compared to last year’s income of P 87,915,291.52. Total
operating expenses amounted to P68,224,355.53 an increase of P 1,733,098.53 or 1.15%
compared to prior years’ P 66.491,257.00 The agency appropriated the total amount ofP
101,747,929.01 which is 4% higher than that of CY 2013 of P 97,637,030.10. On the
other hand, total obligations amounted to P 87,691,211.46 or a decrease of P
11,462,497.67 or 15% to that of last years’ P 76,228,713.79.
The LGU’s assets, liabilities and government equity are P 175,493,181.77,

P32,053,124.18andP 130,633,845.27 which are 22.82%, 125% and 14.9% higher (lower)
than the previous years of P142,876,325.77P 14,227,502.92 and P 113,610,357.55
respectively.
It has also implemented several infrastructure projects financed from its local
funds and financial assistance based on the report submitted to us as of December 31,
2014 (Annex 3).
SCOPE OF AUDIT
An audit was conducted on the accounts and operations of the Municipality of

Moalboal, Cebu for the calendar year ended December 31, 2014. The audit was made to
ascertain the regularity of disbursements, the reliability of financial reports and the
adequacy of accounting records and to determine whether plans, programs and activities
for the year were attained in an efficient, economical and effective manner.
AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS
The auditor rendered a qualified opinion on the financial statements due to non
submission of MWD budget to LGU budget officer for inclusion in the annual budget and
the conflict between the former MWD Board of Directors and General Manager with the
Municipal Mayor, and the various improper disbursement of government funds.
SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS
The following are the significant findings and the corresponding

recommendations:
A. Financial and Compliance Audit
CASH
1. Cash in Vault (101) account balance with substantial amount remained
undeposited as of September 30, 2014 contrary to Section 32 of the New
Government Accounting System (NGAS) Manual Volume I, and Section
134 of the Government Accounting and Auditing Manual (GAAM)
Volume I.
We recommend that the Municipal Treasurer deposit all collections in

her possession to the authorized government depository bank daily or not later
than the next banking day pursuant to Section 32 of the NGAS Manual
Volume 1 and Section 134 of the GAAM Volume I to avoid misappropriation,
borrowing, or loss thru robbery or theft.
RECEIVABLE
2. Uncollected Water fees totaling P 3.2 M were not recorded in the books
as of December 31, 2014 contrary to Section 106, Chapter 6 of NGAS
Manual for LGUs thereby understating the asset and income of the LGU
water system.
We recommend that Management should enforce the collection of

water fee and disconnect those with material amount of unpaid water
consumption. Also, require the Accountant to book up all receivables and
recognize income to arrive a correct and reliable financial information.
3. Out of P3.2 M uncollected water fee of Moalboal Water System (MWS)

formerly Moalboal Water District (MWD), 38% or P1,211,937.01 were
over 90 days due to lack of monitoring, weak internal control and
conflict between MWD and MWS.
We recommend the following:
1. That Mayor should assign a personnel to conduct an inventory and

inspection of all active water consumers and their respective water meters
to determine if their water meters are in good condition and the
consumption are properly reported and initiate action to settle the more
than 10 years conflict with MWD;
2. Require the general manager to explain the incurrence of material amount

of unpaid water fee.
3. Enforce the immediate disconnection of all water consumers with unpaid

water bill from 90 days and beyond.
4. The General Manager of the Moalboal Water System failed to submit

budget proposals to the Local Chief Executive for its operating
expenditures and capital outlay, contrary to Sections 305 and 317 of R.A.
7160 on the Local Government Code of the Philippines.
We recommend that the Head of the Waterworks System to submit to

the Local Chief Executive the budget proposals to include the operating
expenditures and capital outlay of its office in the preparation and
maintenance of the executive budget for the ensuing fiscal year in accordance
with the provisions of R.A. 7160.
5. Registration fee of various seminars, trainings, and convention attended

by MWS employees totalingP208,600.00 conducted by non-government
or private organization are in excess of allowable registration fee of
P1,200.00 per day in violation to National Budget Circular (NBC) no.
486 dated March 26, 2003.
We recommend that the management to enforce the ceiling of

P1,200/day set for seminar, conventions etc. sponsored by non-government
and private organization to prevent disallowance in future transactions.
6. Computer-generated Official Receipts were named under the not

operatingMoalboal Water District (MWD) after the full automation of
their operations totalling P811,884.98 in payment for the installation of
computerized system and hardware equipment, in violation to Section 2
and Section 68 of P.D. 1445
We recommend Management to explain the reason why the name of
their official receipts was still Moalboal Water District instead of Moalboal
Water System and to take necessary measures to fully maximize the use of the
automation system. We further recommend that proper authorization for the
issuance of computer-generated official receipts must be secured from
appropriate government agency.
Compliance with R.A. 9184 an act providing for the modernization,

standardization and regulation of the procurement activities of the government
and for other purposes should be strictly observed and conform their
operations to the Local Government Unit in accordance with the RTC Court
Order CEB-BAR no. 415 and dissolution of the MWD per BOD Resolution
No. 49 s. 2005.
7. Several Municipal and Barangay Officials organized a tour and paid

Explore More Travel, Inc. a total of P522,000.00with incomplete
documentation, contrary to the provision of Section 4(6) of Presidential
Decree 1445 and Par. 4.1 of COA Circular 2012-03.
We recommend that concerned officials submit to the office the

complete liquidation of their cash advances, public bidding documents and
justification for the procurement of services by a travel agency. Also, require
the concerned officials to duly support their claims for seminars, conventions
and similar non-training gatherings with authorization from proper governing
bodies.
We further recommend strict compliance with COA Circular No.

2012-003 and Sec. 4(6) of Presidential Decree 1445. Likewise, encourage
the advisory per DILG Memo Circ. 2007-83 on the exercise of prudence on
the use of resources and maximize the same for more worthwhile projects.
8. Five purchase orders (POs) for RSB Marketing for the acquisition of
Medical Supplies out of Philhealth capitation fund totalling P292,514.00
did not undergo public bidding contrary to section 54 of RA 9184.
We recommend that the Chairman of BAC should follow strictly

Section 54 of RA 9184 and explain the intentional non conduct of public
bidding.
9. Medical supplies totalingP245,424.00 could not be accounted due to the

failure of the Accountant to record the medical, dental and laboratory
supplies inventory (150) and the supplies expenses (850) contrary to
section 46 and 287 of the New Government Accounting System Manual
for LGU.
The Accountant is required to record all supplies purchased and issued

in an inventory account, to determine the balances at the end of the month and
to account all purchases and issuances. Also, the Accountant is required to
adjust the medical supplies purchased from Jan-March 2014 as follows:
1. Medical, Dental, Laboratory supplies Inventory (150)-245,424.00

Due to Other NGAS, 416- 245,424.00
To adjust the purchase of supplies debited to due to other NGAS (annex 1)
2. Medical supplies expenses -

Medical Supplies Invty.-
To record the medical supplies issued from Jan-April, 2014 based on monthly
report of medical supplies issued RHU.
10. Concreting of Municipal Road Projects awarded to HOPPER’S

BUILDERS out of 20% Economic Development Fund amounting to
P499,424.70 was not posted in PHILGEPS contrary to section 8.2.1 (a) of
RA 9184.
We recommend that the Chairman of BAC to submit copy of

PHILGEPS posting and explain why the notice to proceed was delayed.
11. One unit of HematologyAnalyzer purchased from BIOCARE HEALTH

RESOURCES out of Philhealth capitation fund costing P975,000.00 was
not recorded in the books due to the failure of the Accountant to take up
the asset account 233 and no copy of Philgeps posting contrary to
Sections 50 of NGAS Manual Vol. 1 and 8.2.1(a) of RA 9184.
We recommend that the Chairman of BAC should submit explanation

why no representative from RHU in the technical working group, submit
copy of PHILGEPS posting and require the Accountant to record the
equipment in Medical and Laboratory Equipment account 233 to be included
in the Property, Plant and Equipment (PPE) report.
12. Cellphone load allowance were granted to ten selected personnel of

Moalboal Water System from June to December 2013 at P 200.00 per
month based on Board of Director Resolution No. 15 contrary to Local
Government Unit (LGU) operation.
We recommend that the cellphone load allowance should be
authorized by proper person. Unauthorized claim would result to illegal
disbursement of government funds, thus disallowed in audit.
13. Daily Time Record (DTR) of the General Manager of Moalboal Water
System is verified by the Chairman of the Board of closed Moalboal
Water District (MWD) contrary to the order of RTC, Barili Judge
allowing the takeover by LGU the water operation.
We recommend that the daily time record of the general manager be

signed by his supervisor, in this case, the Municipal Mayor.
STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS
Of the thirteen (13) recommendations contained in our prior years’ Annual

Audit Report, four (4) were fully implemented, six (6) were partially implemented
and three (3) were not implemented.

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EXECUTIVE SUMMARY

HIGHLIGHTS OF FINANCIAL OPERATIONS

The LGU’s assets, liabilities and government equity are P 175,493,181.77,

An audit was conducted on the accounts and operations of the Municipality of

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

The following are the significant findings and the corresponding

A. Financial and Compliance Audit

We recommend that the Municipal Treasurer deposit all collections in

We recommend that Management should enforce the collection of

3. Out of P3.2 M uncollected water fee of Moalboal Water System (MWS)

1. That Mayor should assign a personnel to conduct an inventory and

2. Require the general manager to explain the incurrence of material amount

3. Enforce the immediate disconnection of all water consumers with unpaid

4. The General Manager of the Moalboal Water System failed to submit

We recommend that the Head of the Waterworks System to submit to

5. Registration fee of various seminars, trainings, and convention attended

We recommend that the management to enforce the ceiling of

6. Computer-generated Official Receipts were named under the not

Compliance with R.A. 9184 an act providing for the modernization,

7. Several Municipal and Barangay Officials organized a tour and paid

We recommend that concerned officials submit to the office the

We further recommend strict compliance with COA Circular No.

We recommend that the Chairman of BAC should follow strictly

9. Medical supplies totalingP245,424.00 could not be accounted due to the

The Accountant is required to record all supplies purchased and issued

1. Medical, Dental, Laboratory supplies Inventory (150)-245,424.00

To adjust the purchase of supplies debited to due to other NGAS (annex 1)

2. Medical supplies expenses -

10. Concreting of Municipal Road Projects awarded to HOPPER’S

We recommend that the Chairman of BAC to submit copy of

11. One unit of HematologyAnalyzer purchased from BIOCARE HEALTH

We recommend that the Chairman of BAC should submit explanation

12. Cellphone load allowance were granted to ten selected personnel of

We recommend that the daily time record of the general manager be

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

Of the thirteen (13) recommendations contained in our prior years’ Annual

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