7.11 A key audit finding from the barangay audit in CY 2019 highlighted that the
Barangays transferred their 20% Development Fund to the City. This arrangement
was intended to facilitate the City's support in implementing infrastructure
projects under this initiative, thereby accounting for assets sourced from the 20%
Barangay Development Fund (BDF). Subsequently, these infrastructure projects
should have been recorded under the books of the respective barangays.
7.12 Similarly, the assets funded by the BUB-LGSF, which represents 4.84 per cent of
the subject assets, should have been recognized under the barangay’s books. The
BUB – LGSF program is designed to enhance governance by directly supporting
barangays, promoting inclusive and sustainable development at the barangay
level, and ensuring the efficient and effective utilization of resources.
7.13 While the City may have funded and/or implemented the construction and
procurement of the aforementioned properties, it does not retain beneficial
ownership or control over these assets, as they are directly utilized by the
respective barangays. Notably, although a barangay is the smallest administrative
unit within the government, it maintains its own books of accounts and is
responsible for accurately recording any properties that meet the asset recognition
criteria. These properties are currently utilized by various barangays to serve their
constituents, and the economic benefits derived from their use contribute to
achieving the barangay’s objectives.
7.14 Moreover, additional expenses related to the control and management of these
assets must be considered, including maintenance costs resulting from wear and
tear, fuel consumption (if applicable), and property insurance, as mandated by
Section 2 of Republic Act No. 65611.
7.15 Given the above, it is important to fully determine the rightful owner of these
buildings and the land on which the infrastructure assets are situated. Once
ownership of these assets, including movable properties, is confirmed,
Management may then consider facilitating the proper recording of these accounts
in their respective books of accounts. Any such transfer must comply with the
provisions of Section 381 of RA No. 7160, which mandates that the transfer of
property no longer needed may be made without cost to another local government
unit, subject to the approval of the concerned local sanggunian and the head of
the office, agency, subdivision, instrumentality, or local government unit
receiving the property. This process will ensure that the officer in actual
possession or accountability is held responsible for the proper utilization,
maintenance, and insurance of the properties, in accordance with Section 101(1)
of PD No. 1445, which states that “Every accountable officer of any government
agency whose duties permit or require the possession or custody of government
funds or property shall be accountable therefor and for the safekeeping thereof in
conformity with law.”
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“in order to indemnify or compensate the Government as defined in this Act for any damage to, or loss of its
properties due to fire, earthquake, storm, or other casualties, there is hereby established the “Property Insurance Fund”,
which shall consist of all moneys resulting from the liquidation of the insurance constituted in section three hundred
forty of the Revised Administrative Code and from premium of other incomes.” – Section 2 of RA No. 656 otherwise
known as the Property Insurance Law
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