Further, inventories totaling ₱7,173,567.76 were recognized as expenses for the audited
year, instead of remaining in inventory, and prior year expenditures amounting to
₱2,305,292.13 were erroneously recorded as current year expenses, therefore overstating
the expenses by an aggregated amount of ₱9,478,859.89.
In addition to the above financial information, the accuracy of the cash balance reported
for the 20 percent development fund cannot be determined, because there is a substantial
discrepancy amounting to ₱36,807,717.53, between the reported balance in the financial
statements and the financial data reported in the status of appropriations, allotments, and
obligations, which is yet to be reconciled.
Significant Audit Observations and Recommendations
In addition to the above-noted deficiencies, below are the significant audit
observations and recommendations noted in the course of the audit:
1. Only 20 out of the 62 projects programmed under the 20 percent Development
Fund (DF) were implemented because of the unavailability of heavy equipment,
non-prioritization of development projects, among others, thus not achieving
optimum efficiency in providing basic facilities and services to the constituents.
We recommended that the Municipal Engineer evaluate the feasibility and closely
monitor the implementation of the various PPAs according to the approved
development plan. In addition, we recommended that Management consider all possible
limitations, including the availability of equipment, during the planning stage.
2. Management does not maintain a separate bank account for its 20 percent
Development Fund (DF) special account, making it difficult to determine, in a
timely manner, the availability of actual cash backup of the unutilized balance of
₱261,520,856.29 as of December 31, 2024, which consists of current and continuing
appropriations for the implementation of development projects.
We recommended that the Municipal Accountant and the Municipal Budget Officer
reconcile their reports and determine the actual funds available for ongoing and/or
unimplemented projects under the 20 percent DF. We further recommended that
Management, upon the authorization of the Sanggunian, open a separate bank account
in the General Fund for the 20 percent DF, to which the Municipal Accountant and
Municipal Treasurer transfer the determined or reconciled balance of the said account.
3. Defects in the procurement process for the rehabilitation of Barangay roads and
the purchase of construction materials and office supplies totaling ₱17,975,445.24,
particularly in the observance of proper timelines and compliance with the
procurement procedures, compromised the integrity of these transactions,
creating potential inefficiencies and additional costs to the government.
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