EXECUTIVE SUMMARY

Highlights of Financial Operation

For the calendar year 2013, the municipality generated a total income of
P88,314,002.65 which is 9.43% higher than last year’s collections of
P80,703,005.50. Service Income of P 3,196,112.96 increased by P 534,312.44 or
20.07%. On the other hand, other income of P 67,682,358.18 increased by
P6,499,862.44 which is 10.62% higher than the previous year’s P 61,182,495.74.

Total expenditures for Calendar Year 2013 amounted to P 66,112,644.50,

an increase of P 6,808,610.86 or 11.48% higher compared to last year’s
P59,304,033.64. Net income increased by P 1,611,871.19 or 7.11% higher
compared to last year’s P22,675,811.86.

Scope of Audit

The audit covered the accounts and operations of the Municipality of

Dingle in the Province of Iloilo for the year ended December 31, 2013. The audit
was conducted to determine the reliability of the LGU’s accounts in order to
express an opinion on the fairness of presentation of the financial statements as
well as to determine whether or not the LGU’s transactions were made in
accordance with existing laws, rules and regulations.

Auditor’s Opinion on the Financial Statements

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

the financial statements due to the effects of the noted deficiencies on some
account as discussed in detail I Part II of the Report.

Significant Findings and Recommendations

1. Prize received from the Department of Interior and Local Government

amounting to P1million intended for the Construction of Public Market of
the municipality was taken up as Subsidy Income from the National
Government – Account 651 instead of Due to Other National Government
Agencies – Account 416 in violation of COA Circular No. 2003-001 and
2004-002, dated June 17, 2003 and April 19, 2004, respectively thereby
rendering both accounts not fairly presented in the financial statements.

We recommend that amount received from other national

government agencies for the implementation of specific programs/projects
subject to liquidation should be classified as Due to Other National
Government Agencies – Account 416 so that both accounts will be fairly
presented in the financial statements.
2. Fund Transfer from the Municipality of Anilao amounting to P300,000.00
intended for the Program - Financial Assistance to Individuals in Crisis
Situation was taken up as Subsidy Income from Other National
Government Agencies – Account 652 instead of Due to Other National
Agencies – Account 416 in violation of COA Circular No. 2003-001 and
2004-002, dated June 17, 2003 and April 19, 2004, respectively thereby
rendering both accounts not fairly presented in the financial statements.

We recommend that amount received from other national

government agencies for the implementation of specific programs/projects
subject to liquidation be classified as Due to Other National Government
Agencies – Account 416 so that both accounts will be fairly presented in
the financial statements.

3. Payment for Personnel Enhancement Incentive (PEI) amounting to

P1,613,850.00 was taken up as Cash Gift – Account 724 instead of Other
Personnel Benefits – Account 749 in violation of COA Circular No. 2003-
001 and 2004-002, dated June 17, 2003 and April 19, 2004, respectively
thereby rendering both accounts not fairly presented in the financial
statements.

We recommend that Payment for Personnel Enhancement

Incentive (PEI) amounting to P1,613,850.00 be taken up as Other
Personnel Benefits – Account 749 instead of Cash Gift – Account 724 in
compliance with COA Circular No. 2003-001 and 2004-002 dated June
17, 2003 and April 19, 2004, respectively for fair presentation of both
accounts in the financial statements.

4. The Municipality of Dingle hired an average of 51Job Order (JO) workers

per month for the period January 1 to June 30, 2013 performing clerical,
administrative, extension of health services and janitorial functions
contrary to Section 1(a) and (b) of Civil Service Commission (CSC)
Resolution No. 021480 as embodied in CSC Memorandum Circular No.
24, s. 2002 and as repealed by CSC MC No. 01, s. 2007, thereby incurring
additional expense amounting to P1,710,750.60 which could have been
used instead to finance developmental projects to uplift the lives of the
constituents.

We recommend that the Local Chief Executive (LCE) reduce the

number of job hires and contractual workers especially those performing
clerical, administrative, janitorial and health service extenders. Hiring of
 workers should be made only as the need arises and be deployed only to
offices where their services are needed most. We also recommend that the
regular employees be required to render overtime services to meet report
deadlines, or as the exigencies of the service warrant. The LGU should
adopt merit and incentive awards strategy to motivate all personnel and
implement regular job rotation, if possible, to discover their potentials so
that the right person could be assigned on the right job thus maximizing
their efficiency.

We further recommend that the LCE should revisit the guidelines

set forth in CSC MC No. 01, s. 2007 on the hiring of job hires and
contractual workers. Judicious use of government funds must be
considered so that savings derived could be utilized to finance
developmental projects that could uplift the lives of the constituents.

5. A total amount of P 8,500.00 for the period January 1 to June 30, 2013,
was paid by the Municipality of Dingle for the professional services of a
private lawyer to handle cases involving the municipality, contrary to
COA Circular No. 2012-003, COA Circular 98-002 and COA Circular No.
97-004, thus rendering the claims irregular and illegal.

We recommend that the Local Chief Executive seek the services of

the Provincial Legal Officer or Provincial Prosecutor in the absence of the
Municipal Legal Officer to attend to its legal affairs, including
representation in court. Likewise we recommend that refund should be
effected for the disallowed payments.

6. A total amount of P 130,784.93 for the period January 1 to June 30, 2013
was paid by the Municipality of Dingle for the Subsistence and Laundry
Allowance of Public Health Workers (PHW) and P 21,960.00 for
Subsistence Allowance of Job Order Hires contrary to DBM and DOH
Joint Circular No. 1, S. 2012 and COA Circular No. 97-004, thus
rendering the claims irregular and illegal.

We recommend that management refer to the guidelines of DBM

and DOH Joint Circular No. 1, S. 2012, dated November 29, 2012
regarding Rules and Regulation on the Grant of Compensation-Related
Magna Carta Benefits to Public Health Workers (PHWs), specifically on
the computation of Subsistence and Laundry Allowance and the authority
on granting Subsistence Allowance to Public Health Workers. Likewise,
we recommend that refund should be effected for the disallowed
payments.
7. Unexpended LDRRMF amounting to P1,066,175.39 as of December 31,
2012 was not transferred to a special trust fund contrary to Section 21,
paragraph 3 of Republic Act No. 101211 and Section 4.4 of COA
Circular No. 2012-002, dated September 12, 2012 thereby creating a
possibility of having the cash back up for the fund misappropriated

We recommend that the unexpended LDRRMF amounting to

P1,066,175.39 as of December 31, 2012 be transferred to a special trust
fund pursuant to Section 21, paragraph 3 of Republic Act No. 101211
and Section 4.4 of COA Circular No. 2012-002, dated September 12,
2012.

8. Monthly net take home salaries of some municipal employees were less
than Four Thousand Pesos (₱ 4,000.00) contrary to Sec. 37 General
Provisions of General Appropriations Act (GAA) of 2013, thereby
reducing their financial capability which could affect their work efficiency
in the LGU by taking other jobs in order to generate extra income.

We recommend that management comply or adjust accordingly

deductions from affected employees’ salaries in line with Sec. 37 of GAA
2013 on the suggested minimum of employee’s monthly net take home
pay of ₱ 4,000.00. To realize this, management should prioritize
deductions as mandated by law and must first review the credit standing of
the employees before allowing them to avail of additional loans.

9. The Municipality disbursed a total amount of ₱200,871.40 for various

expenses which were not among those chargeable under Sec. 1 of
Republic Act 5447, otherwise known as Special Education Fund, and Sec.
100 of RA 7160, thus defeating the purpose the fund was created and
depriving the students and teachers of the benefits derived therefrom.

We recommend that management discontinue the payment of

expenses such as office supplies, gasoline, and utilities like water,
electricity and telephone out of the Special Education Fund.

Moreover, we recommend that the Local School Board should

prepare the budget for the Special Education Fund in accordance with the
rules and regulations set forth in RA 5447 and Sec. 100 of RA 7160 so
that funds will be spent for the intended purpose in order to benefit the
students and teachers alike.
10. Collections amounting to ₱1,350,895.21 were not deposited intact in
violation of Section 32 of Manual on the NGAS (MNGAS) for Local
Government Units, Volume I, thus, resulting in undue accumulation of
cash at risk of improper use or possible loss.

Require the Municipal Treasurer to remit collections promptly and

intact with the authorized depository bank daily or not later than the next
banking day. The practice of retaining part of the collections as a cash
reserve should be discontinued to avoid exposing them to risk of improper
use or possible loss.

11. Monthly Report of Fuel Consumption were not accomplished and

submitted to the Auditor as required under Section B of COA Circular No.
77-61, dated September 26, 1977, prescribing the “Manual on Audit for
Fuel Consumption of Government Motor Vehicles” thus, the
reasonableness of gasoline, fuel and oils consumed for the period January
1 to December 31, 2013 in the total amount of ₱2,891,058.20 could not be
ascertained.

We recommend that the Monthly Report of Fuel Consumption for

period January 1 to December 31, 2013 be submitted to enable the Auditor
to determine the reasonableness of fuel consumption.

We also recommend that henceforth all Driver’s Trip Tickets be

accomplished properly to likewise prove the correctness/accuracy of fuel
consumed.

12. Payment of Productivity Enhancement Incentive (PEI) at P16,000.00 or

proportionate thereof per employee for a total of ₱1,731,200.00 was
contrary to Section 1.3 of Budget Circular No. 2013-3, dated November
21, 2013 and No. 3.15.1 of Annex “B”, Section 3.3 of COA Circular No.
2012-003, dated October 29, 2012, thereby incurring illegal expenditures
amounting to ₱ 1,190,200.00 which could have been used instead to fund
priority projects that are beneficial to its constituents.

We recommend the refund of the excess amount of Productivity

Enhancement Incentive for CY 2013 totaling P1,190,200.00 paid to
municipal officials and personnel.

We also recommend that management see to it that payments for

allowances and other personnel benefits should be based on laws, rules
 and regulations authorizing such payments to avoid the suspension and
disallowance of the amount.

Status of Implementation of prior year’s Audit Recommendations

Out of the three (3) audit recommendations embodied in the previous

year’s Annual Audit Report, one (1) was fully implemented, one (1) was partially
implemented, and one (1) was not implemented.