EXECUTIVE SUMMARY

A. Introduction

1. The Municipality Jabonga is a third-class municipality in the province of

Agusan del Norte. It was established in 1853 by a group of missionaries sent by
Fr. Saturnino Urios. Jabonga traces its origin to a village known as “Celopan”,
a name derived from the bamboos growing along the bank of the river that were
made into smoking pipes. Celopan was renamed Habongan which later became
Jabonga.

2. It became a regular and independent town by virtue of Executive Order No. 18

dated April 25, 1921 and conferred by Acting Governor General
Charles E. Yeater.

3. The Municipality of Jabonga is headed by Mayor Napoleon M. Montero, MD

together with his Acting Vice Mayor and 10 Members of the Sangguniang
Bayan.

4. Personnel Compliment as of December 31, 2021

Status of Appointment No. of Personnel

Permanent Employees 56
Co - Terminous 1
Temporary Employees 0
Casual/Plantilla 0
Job Orders 291*
Total 348

*Only Job Orders working within Municipality were accounted.

5. In CY 2021, the Municipality completed the following projects:

• Construction of RCPC Drainage Structure

• Concreting of 350 L.M. Poblacion
• Concreting of NRJ Baleguian to Punta Grasya FMR
• Construction BHS Colorado
• Establishment of MRF – DENR EMB
B. Financial Highlights

a) Comparative Financial Position and Results of Operations

Particulars 2021 2020 Increase/

(Decrease)
Assets ₱410,075,249.71 ₱287,154,282.46 ₱122,920,967.25
Liabilities 261,452,964.96 160,287,381.15 101,165,583.81
Government
Equity 148,622,284.75 126,866,901.31 21,755,383.44
Income 152,969,473.17 138,569,303.30 14,400,169.87
Expenses 132,328,501.01 116,416,094.89 15,912,406.12
Net Income 19,423,684.66 29,655,180.21 (10,231,495.55)

b) Comparative Sources and Application/s of Funds

Particulars 2021 2020 Increase/

(Decrease)
Appropriations ₱238,740,407.08 ₱238,883,567.49 (₱143,160.41)
Allotment 238,731,338.07 238,883,567.49 (152,229.42)
Obligations 209,343,186.30 128,901,079.58 80,442,106.72
Fund Received
from other
agencies 11,665,401.85 2,965,000.00 8,700,401.85

C. Scope of Audit

6. The audit was conducted in accordance with with International Standards of

Supreme Audit Institutions (ISSAIs). Those standards require that we plan and
perform the audit to obtain a reasonable basis for our conclusions.

7. The audit covered the accounts and operations of the Municipality for Calendar
Year 2021 and was aimed at ascertaining the propriety of financial transactions,
management’s compliance to prescribed rules and regulations and the fairness
of the presentation of the financial statements. Financial and compliance audit
was conducted on the audit of Covid-19 pandemic expenditures. Performance
audit was also conducted in the implementation of Programs, Projects and
Activities (PPAs) funded out of the 20% development fund, fund transfers from
the National Government Agencies, Fund Transfers to Non-Government
Organizations/People’s Organizations (NGOs/POs) and/or Other LGUs and
Local Disaster Risk and Reduction Management Fund to determine whether the
objectives of the PPAs were attained in the most efficient, effective and
economical manner.
D. Audit Opinion

8. The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the Municipality of Jabonga, Agusan del Norte for CY
2021 due to the following exceptions:

a. The beginning balances of various asset and liability accounts presented in

the submitted Financial Statements (FS) totaling ₱100.015 million and
₱35.737 million, respectively were still unreconciled or forwarded balances
without any details and source documents, thus, the accuracy and valuation
of these accounts in the FS could not be ascertained.

b. The existence, condition and accountability of the Property, Plant and

Equipment (PPE) accounts carried in the books totaling ₱294,121,802.23
cannot be verified due to non-conduct of the one-time cleansing of PPE
Accounts of the Municipality of Jabonga inconsistent with COA Circular
No. 2020-006.

c. The accuracy, validity and reliability of the balance of Road Network

account amounting to ₱4,754,503.24 as of December 31, 2021 could not be
ascertained and its existence cannot be established due to the absence of an
actual count and/or non-submission of a Report on the Physical Count of
Local Road Network and non-maintenance of records required under COA
Circular No. 2015-008 and the New Government Accounting Systems
(NGAS) for LGUs.

d. The Cash in Bank account balance in the CY 2021 Statement of Financial

Position totaling to ₱80,112,603.00 did not reconcile with the cash in bank
balance recorded in the Treasury books with a difference of ₱5,332,414.83
due to the non-conduct of quarterly reconciliation between the accounting
books and cashbooks, rendering the Cash in Bank account doubtful and
unreliable.

e. The unexpended Local Disaster Risk Reduction and Management Fund

(LDRRMF) as disclosed in the Notes to Financial Statements for CY 2021
and Previous Years amounting ₱1,560,983.86 and ₱7,022,469.11,
respectively, were not adjusted using the actual regular income as basis for
its appropriation reported at year-end contrary to Section 27 of International
Public Sector Accounting Standard (IPSAS) 1, thus, affect the fair
presentation of the amount disclosed in the Notes to Financial Statement.
9. For the above-mentioned audit observations which have caused the issuance of
a qualified opinion, we recommended that the Management:

a. Strictly observe honest, accurate, consistent and transparent recording in its

books of accounts by exerting effort on the retrieval of records/reports from
respective files that would establish the details of transactions in order to
reclassify to its appropriate accounts.

b. Considering the amount involved, make it as a top priority to create a

taskforce who will be relieved from their regular duties to devote their full
time in the retrieval of documents and/or hire additional manpower and
submit a timetable showing the schedule of activities in retrieving the
documents, reconciling reports and adjusting the unreconciled beginning
balances to its appropriate accounts for an accurate and reliable financial
reporting; and putting into consideration the following:

• In the case of receivables, exhaust all possible means to collect the

receivables. Otherwise, request for write-off in accordance with the
provisions of COA Circular No. 2016-005;

• In the case of Property, Plant and Equipment, conduct physical count of

the LGU’s properties. Provide adjusting entries to transfer completed
projects and request for disposal of unserviceable properties;

• In the case of payables, exhaust all possible means to pay off the LGU’s
accounts. Otherwise, request for write-off in accordance with the
provisions of the COA Circular 2016-005;

• In the case of fund transfer (due to and due from), coordinate with the
partner agencies with whom the funds were transferred and liquidate it.

• Create an Inventory Committee, who are temporarily relieved of all

regular duties, to complete the physical inventory in three (3) months or
less

c. If practicable, hire additional man-power to be part of the Inventory

Committee in the meantime and appoint a full-pledged GSO to take charge
in the recording and safekeeping of the municipality’s properties.

d. Ensure full implementation of the “One-time cleansing of PPE accounts” as

provided for in COA Circular No. 2020-006 and undertake the following:
 ▪ The Inventory Committee assigns a unique Property Number for each
PPE item following the required code format in the numbering system
as provided in Section 5 of the Circular.

▪ The Inventory Committee shall prepare a Physical Inventory Plan (PIP)

and submit the same to the COA Audit Team at least ten calendar days
before the scheduled start of inventory taking activities in compliance
with the pertinent provisions of Section 5 of the Circular.

▪ Each office of the LGU fills up the Inventory Count Form and submit
the same to the Property Unit for verification. The form will then be use
by the Inventory Committee as basis in the preparation of its PIP and
will be consider as part of their inventory working paper.

• Moreover, the Inventory Committee records/documents the physical

count daily using the ICF per PPE sub-major account group and will be
the basis in the preparation of RPCPPE after the physical count.

• The Property Unit prepares a List of PPEs Found at Station (Annex B of

the Circular) and List of Non-Existing/Missing PPEs (Annex C of the
Circular) during physical inventory and submit these lists to the
Accounting Unit for recording in the books of accounts of the LGU to
establish the existence and proper accountability of the PPE accounts.

• Ensure that the guidelines and procedures in the conduct of physical

count of PPE as provided in COA Circular 2020-006 is strictly observed
to facilitate the one-time cleansing of PPE account balances.

e. Direct the Municipal Accountant, the Designated General Services Officer

and the Inventory Committee to comply with the following duties and
responsibilities as prescribed under COA Circular No. 2015-008, which
provides among others:

▪ Municipal Accountant – to obtain the necessary data from the Municipal

Engineer’s Office, then prepare and maintain subsidiary ledger cards for
Local Road Network;

▪ Designated General Services Officer – to maintain Local Road Inventory

and Road Map, to keep a complete Local Road Network Property Card,
as well as prepare Report on the Physical Count of Local Road Network
as part of its duties and responsibilities; and
 ▪ Inventory Committee – to promptly conduct an inventory of the road
network system and submit the Report on the Physical Count of the Road
Network System.

f. Direct the Municipal Accountant to expedite the preparation of the Bank

Reconciliation Statements.

g. Direct the Municipal Accountant and the Treasurer to reconcile the Cash in
Bank account balances with the Treasurer’s cashbooks by determining the
transactions that caused the net difference of ₱5,332,414.83.

h. Looking forward, conduct quarterly reconciliation of such balances so that

the adjustments made or errors detected either by the Treasury or
Accounting Office will be adjusted and posted in their respective books.

i. Direct the OIC-Municipal Budget to adjust the unexpended balance of the

LDRRMF using the actual recurring regular income of the Municipality
realized on CY 2021 and for the Prior Years.

j. Since no entries have been made yet to take up the transfer of unexpended
LDRRMF from GF to TF, direct the Municipal Accountant to draw an entry
to take up the transfer of unexpended LDRRMF from GF to TF using the
adjusted unexpended balance of the LDRRMF for CY 2021 and Prior Years
prepared by the OIC-Municipal Budget Officer.

k. Moving forward, adjust the appropriations for LDRRMF at year-end using

the actual recurring regular income realized by the Municipality for the
calendar year in computing for the unexpended LDRRMF to be disclosed in
the Notes to Financial Statements and comply with entries and reports
required as provided in COA Circular No. 2012-02.

E. Summary of Significant Observations and Recommendations

10. In addition, the following is a summary of significant findings and

recommendations in the audit of the operations of the Municipality of Jabonga
for CY 2021. These and other observations and recommendations are fully
discussed in Part II of this Report.

a. Outstanding Cash Advance (CA) aged one (1) month to fifty-one (51)
months granted to officers and employees for traveling expenses amounting
to P278,940.00, the purpose of which had been served, remained
unliquidated as of December 31, 2021 contrary to COA Circular No. 97-
002 dated February 10, 1997 and Civil Service Commission (CSC)
Memorandum Circular No. 23, s. 2019.
 We recommended and Management committed to:

In order to avoid the maximum sanctions in case the Accountable Officers

fail to liquidate their cash advances, increase efforts in strengthening the
controls in the grant, liquidation and monitoring of cash advances by:

• Requiring the concerned officers and employees to immediately

liquidate their outstanding cash advance and for this purpose, submit a
timetable when to liquidate the outstanding cash advances; and

• Strict monitoring of the liquidation of cash advance by sending

demanding letters regularly, particularly to the accountable officers and
employees; and in case failure to liquidate the same despite the demand,
withholding of the payment of any money due to them such as from their
payroll after considering ₱5,000.00 minimum net pay or from their
bonuses/allowances.

• Ensure the proper implementation of COA Circular No. 97-002 dated

February 10, 1997 and CSC Memorandum Circular No. 23, s. 2019 in
relation to the liquidation of cash advances.

b. The Municipality spent ₱3,994,400.00 and conducted activities that may

encourage mass gatherings during the celebration of 100th Adlaw ng
Habongan contrary to the provisions of DILG Memorandum Circular 2021-
050 dated May 5, 2021.

We recommended and Management committed to:

1. Submit a narrative report indicating the health protocols being

observed by the LGU during the held events together with the status
report of covid cases during the period covered as requested.

2. Direct Management to provide an answer/ valid justification on the

deficiencies noted per contract review communicated last October 14,
2021.

3. Immediately submit the cash advance liquidations relevant to the

conduct of centennial celebration;
 4. Practice frugality and prudence to ensure that municipal funds are
sufficient to meet the needs and demands of its operations through this
pandemic.

5. Looking forward, strictly comply with the IATF’s mandates as regards

the prevention of COVID-19.

c. The HRMO failed to strictly adhere to the provisions of Section 22 of the

Civil Service Commission (CSC) Omnibus Rules on Leave on the grant of
monetization, resulting to erroneous deductions in the earned sick leaves.

We recommended and Management committed to:

1. Direct Management to revisit the provisions of CSC Omnibus Rules on

Leave;

2. If possible, invite some CSC personnel to assist in the re-orientation

pertaining to the relevant guidelines on monetization and leave; and

3. Direct each department head to assign personnel to make a summary

of total absences, leaves, and tardiness in each department, to be
consolidated by the HRMO at month end, in order to ensure that
individual employees leave cards are promptly and accurately recorded
in the ledger.

d. Inadequate control of personnel leave credits contributed to the unreliability

of leave credit balances contrary to the provision of sound internal control,
thus, casting doubt on the accuracy of the accumulated leave credits granted
that could result to loss of government funds.

We recommended and Management committed to:

1. Determine that the proper recording of leaves and attendance records

are adequate, the following controls shall be observed and adopted:

a. Sufficient evidence of attendance like Daily Time Record (DTR)

shall be maintained to trace man-hours lost and a corresponding
monthly report or summary of tardiness, undertimes and absences
shall be prepared;

b. Individual leave records for all personnel shall be maintained and

regularly updated by the Human Resource and Management Office;
 c. Leave earned and taken shall be properly documented and recorded
in the PLLC; and

d. Tardiness, undertimes and absences shall be recorded/deducted

from the leave credits of the LGU personnel.

2. Direct those employees who did not submit their DTRs for the
immediate submission.

3. Direct the HRMO to revisit the computation of the leave balances of

the LGU personnel.

4. Direct the HRMO to expedite the preparation of the unsubmitted

Personnel Leave Ledger Cards.

e. Contract for the procurement of Emergency Response Vehicle for

Barangays amounting to ₱5,744,971.66 was awarded to the sole bidder who
did not meet the Single Largest Completed Contract (SLCC) eligibility
requirement in violation of Section 23.4.1.3 of the Revised IRR of 9184,
thus, validity and propriety of the awarded contract is doubtful.

We recommended and Management committed to ensure strict compliance

with the eligibility requirements for bidders as stipulated in the above-cited
provision of the revised IRR of RA 9184.

F. Audit on the funds transferred to or received by the Philippine Red Cross

11. The Municipality certified that they have no transfer of funds to/from the
Philippine Red Cross for the period January, 2016 to September, 2021.

G. Summary of total Suspensions, Disallowances, and Charges

12. Audit suspensions and disallowances amounting to ₱9,795,756.49 and

₱1,699,734.76, respectively, remained unsettled contrary to Sections 9.4, 10.4
and 7.1.1 of COA Circular No. 2009-006 dated September 15, 2009:

Ending
Beginning Balance
Audit Action Issued Settled
Balance December 31,
2021
Suspensions ₱ 9,795,756.49 0.00 0.00 ₱ 9,795,756.49
Disallowances 1,699,734.76 0.00 0.00 1,699,734.76
Charges 0.00 0.00 0.00 0.00
 We recommend that Management strictly follow the provisions of Section 9.4
and 10.4 of COA Circular 2009-006 to take immediate action and require the
concerned personnel to settle their audit suspensions and disallowances.

H. Statement on the quantity/number of recommendations implemented,

partially implemented and not implemented for the current year.

13. Out of the forty-five (45) audit recommendations for the nineteen (19) audit
observations contained in the CY2019-2020 Annual Audit Reports, 27 were
fully implemented, 6 were partially implemented, and 12 were not implemented.
Out of the six partially implemented, one was reiterated. Out of the 12 not
implemented, three were reiterated. Detail is shown in Part III of this report.