Lala2017 Audit Report

Republic of the Philippines
COMMISSION ON AUDIT
OFFICE OF THE SUPERVISING AUDITOR
Region 10, Cagayan de Oro City
February 23, 2018
HON. ALLAN J. LIM

Municipal Mayor
Lala, Lanao del Norte
Sir:
We are pleased to transmit the report on the results of the audit on the accounts
and operations of the Municipality of Lala, Lanao Del Norte for the Calendar Year ended
December 31, 2017, pursuant to Section 43 of Presidential Decree No. 1445, otherwise
known as the Government Auditing Code of the Philippines, and in line with the
Commission’s effort towards informing management on how fiscal responsibility has
been discharged.
The audit was conducted in accordance with the Philippine Public Sector
Standards on Auditing, and we believe that it provides reasonable bases for the results of
audit.
We rendered a qualified opinion on the fairness presentation of the financial

statements of the Municipality due to deficiencies which have material exceptions noted
that would affect fair presentation of the financial position as well as the financial
performance of the Municipality during the year.
The significant observations and recommendations that need immediate action are
as follows:
1. Financial Assistance totaling P350,000 granted to National Government

Agencies (NGAs) and Non-Government Organizations (NGOs) / People’s
Organizations (POs) were directly charged as Subsidy to LGUs and Other
Maintenance and Operating Expense under the General Fund contrary to
Section 4 of Presidential Decree No. 1445 and Section 3 of COA Circular No.
2012-001, hence, proper accountability and transparency in the use of
government funds were not achieved.
Recommendation:
a. Require the concerned Barangays, NGAs and NGOs/POs to submit the

following documentary requirements, where applicable, as prescribed under
Section 3.0 of COA Circular No. 2012-001 dated June 14, 2012:
1. Fund utilization reports, indicating the summary of expense and the status
report of accomplishments, certified by the accountant, approved by the
Local Chief Executive/Head of the receiving parties and verified by the
internal auditor or equivalent official of the Municipality;
2. Pictures of implemented projects/programs/activities, if any;
3. Inspection reports and certificates of project completion issued by the
Municipal Engineer Officer’s authorized representative, if any;
4. Lists of beneficiaries with their signatures signifying their
acceptance/acknowledgment of the projects/funds/goods/services
received;
5. Proof of verification by the city official of the validity of the documents
submitted by the receiving parties;
6. Copies of the Official Receipts issued by the receiving parties
acknowledging receipt of funds transferred;
7. ORs issued by the Municipal Treasurer acknowledging return by the
receiving parties of any unutilized/excess amount of the funds released;
and
8. Liquidation Reports.
b. Subsequently, correcting entries should be effected on the recording of funds

released to the various Barangays, NGAs and NGOs/POs. Hence, the
accounts Due from LGUs, Due from NGAs and Due from NGOs/POs should
be debited to record the release of funds to the said Barangays, NGAs and
NGOs/POs for the implementation of projects/programs/activities, and credit
these accounts for the liquidation of the subject funds.
c. Review all liquidation reports to ensure that funds are spent for its intended
public purpose only. The rationale of the provision is to ensure that public
funds will not be paid/used for private purposes or for purposes not within the
intention of the source agency.
d. Refrain from incurring unnecessary expenditure of government funds to

preclude loss of wastage thereof and limit expenses to those which are
essential and supportive of the implementation of the objectives and mission
of the LGU.
2. The accrual of liability for the earned leave benefits of the employees was
understated by P 34,110,217 as of December 31, 2017. Hence, employee’s
benefits were not properly accounted for and disclosed in the Financial
Statements, disregarding the prescribed and proper use of Chart of Accounts
for the Local Government Units under the Manual on the New Government
Accounting System (NGAS) Volume III Section 263 (Terminal Leave
Benefits).
We have recommended to the Local Chief Executive the following:
a) Require the Head of the Human Resource Officer to furnish a copy of the
Accumulated Leave Credits in the Master List Personnel in the LGU to the
Accounting Office.
b) Direct the Budget Officer to appropriate every year the appropriation for
the accrued payable on terminal leave benefits earned by each employee
even on a staggered basis depending on the availability of funds.
c) Direct the Municipal Accountant to make the necessary adjustments to

record the accrued leave payable after ensuring the correctness of the
accumulated leave credit balances of employees as of December 31, 2017.
d) Direct the Municipal Accountant to set up a special fund for the purpose.
3. The school assistance released by the Municipality of Lala to five (5) schools
in the amount of P 70,000 each during the 2017 Araw ng Lala were not
supported with the documentary requirements enumerated under Section 4.6
of P. D. 1445 and COA Circular No. 2012-001 thus, casting doubt on the
validity and propriety of the said transactions.
We recommended to the Local Chief Executive:
a. To require the Municipal Accountant to submit the required supporting

documents as embodied in the Audit Observation Memorandum issued by
the Audit Team for review and validation.
b. To comply with the submission of necessary supporting documents to

ensure that all claims and payments were properly substantiated and
validated.
4. The Municipality was not able to submit monthly monitoring reports

pertaining to the programs/projects/activities (PPAs) implemented contrary
to Section 3.1 and Section 3.2 of COA Circular No. 2013-004.
We recommended that:
a) The Municipal Engineer comply with the requirement on notification and

publicity of PPAs so that the public may be regularly informed of the
projects being implemented by the Municipality; and
b) The implementing departments/offices/units submit the monthly
monitoring reports for projects for validation by the Auditor.
5. The Approved Budget for the Contract (ABC) duly approved and signed by
the Head of the Procuring Entity of the 6 completed/ongoing projects of the
Municipality for 2017 has not been prepared and submitted to the Office of
the Team Leader as required in the Schedule of Requirements in the Bidding
Documents contrary to Section 17, Article VI of R.A. 9184 also known as
Government Procurement Reform Act.
We have recommended to the Local Chief Executive to direct the

Municipal Engineer to include in the submission of Bidding Documents, the
Approved Budget for the Contract as mandated under the Revised IRR of RA
9184 for review to the Office of the Audit Team Leader.
6. Expenses charged to the Special Education Fund amounting P 11,298 are not
among those authorized and/or enumerated under the Revised Guidelines on
the Use of the Special Education Fund with reference to Joint Circular (JC)
No. 1, s. 2017 issued by the Department of Education (DepEd), Department
of Budget and Management (DBM), and Department of Interior and Local
Government (DILG).
We have recommended the following:
a. The Local School Board should consider expenditures to be included in the

budget those that were authorized and enumerated under the Revised
Guidelines on the Use of the SEF, Joint Circular NO. 1, S. 2017 issued by
DepED, DBM and DILG.
b. Stop the charges and payment of expenditures for the operation of the district
office and schools which are not directly attributable to the use and purpose of
Special Education Fund.
7. Development projects under the 20% Local Development Fund remained

unimplemented amounting to P 6,728,742 at year end, hence, programs and
projects for socio-economic development and environment management were
not implemented thus, depriving the constituents of its intended beneficiaries.
We recommended to the Local Chief Executive the following:
1) Give priority in implementing projects under the 20% development fund

to attain the project objectives of the programs/projects/activities of the
Annual Investment Program so as to achieve desirable socio-economic
development and environment outcomes for the general public in
accordance with Section 287 of the Local Government Code.
2) The Local Development Council and Municipal Planning and
Development Officer should closely monitor and vigorously pursue the
timely and full implementation of all the programs/activities embodied in
the 20% Development Fund
8. The Ecological Solid Waste Management was not fully implemented, as

mandated by R.A 9003, otherwise known as Ecological solid Waste
Management Act of 2000, thus the purpose of ensuring the protection of
public health and environment should have been given priority to be
accomplished.
a) That the 10 year plan of the Solid Waste Management of the Municipality
shall be properly reviewed and updated in accordance with the National Solid
Waste Management Council as required under Section 16 of RA 9003.
b) That a Sanitary landfill shall be established and the controlled dumpsite shall
be closed.
c) To ensure efficiency and effectiveness of the program, we also recommended

the following:
 Established a Multi-Purpose Environment Cooperatives or Associations.
 Discouraged the use of cellophanes by all business owners/operators and
replaced it with paper bags.
 Both the residents and the owners of commercial establishments should
segregate the waste as to biodegradable and non-biodegradable before
pick up by the garbage bags.
 Receptacles should be properly labeled as to biodegradable and non-
biodegradable wastes.
 Imposed strict compliance as to collection of biodegradable and non-
biodegradable rather.
The other audit findings together with the recommended courses of action
which were discussed by the Audit Group with concerned Management officials
and staff during the exit conference conducted on March 02, 2018 are discussed in
detail in Part II of the report.
We request that the recommended remedial measures be immediately

implemented and we appreciate being informed of the action plan and status of
implementation taken thereon within 60 days from receipt thereof using the Agency
Action Plan and Status of Implementation Form to be submitted to the Audit Group for
validation.
We acknowledge the support and cooperation that you and your staff extended to
the Audit Team, thus facilitating the submission of the report.
Very truly yours,
By Authority of the Chairman
MARILOU C. MAMPAO
State Auditor IV
Supervising Auditor
Copy Furnished:
The Secretary, Sangguniang Bayan, Municipality of Lala

The Secretary, Department of Interior and Local Government
The Bureau of Local Government Finance
University of the Philippines (UP) Law Center
National Library (soft copy)
COA Commission Central Library (soft copy)
COMMISSION ON AUDIT
Lanao del Norte Audit Group F - Team 7
OFFICE OF THE AUDIT TEAM LEADER
February 26, 2018
MARILOU C. MAMPAO
State Auditor IV
Supervising Auditor-OIC
Audit Group F
Iligan City
Madam:
In compliance with Section 2, Article IX-D of the Philippine Constitution and

Section 43 of Presidential Decree No., 1445, we conducted a financial and compliance
audit on the accounts and operations of the Municipality of Lala, Lanao del Norte for the
year ended December 31, 2017.
The audit was conducted to ascertain the propriety of financial transactions and
the extent of compliance by the agency with prescribed rules and regulations. It was also
made to ascertain the accuracy of financial records and reports, as well as the fairness of
the presentation of financial statements.
Our attached report consists of four parts, Part I contains Audited Financial
Statements. Part II discusses in details our significant findings and recommendations,
which were discussed with concerned management officials and staff on
March 02, 2018. Part III summarizes the status of prior year’s recommendations and Part
IV contains the Annexes.
In our opinion, except for the effect of any adjustment, which might have
been made by the agency, the financial statements referred to above present fairly,
in all material respects, the financial position of the Municipality of Lala, Lanao
del Norte, as of December 31, 2017, and the financial performance and its
analysis of cash for the year then ended in accordance with applicable laws, rules
and regulations, and in conformity with generally accepted accounting principles.
Very truly yours,
MACRINA M. GENTILES
State Auditor IV
Audit Team Leader
COMMISSION ON AUDIT
Commonwealth Avenue
Quezon City
ANNUAL AUDIT REPORT

ON THE
MUNICIPALITY OF LALA
Province of Lanao del Norte
For the Period Ended December 31, 2017

EXECUTIVE SUMMARY
Introduction
The Municipality of Lala is a vast plain within the Kapatagan Valley and having
an area of 14,025 hectares. It was classified as first class municipality with twenty-seven
(27) component barangays. It is the richest and urbanized municipality of the Province of
Lanao del Norte in terms of income and its level of urbanization. It becomes a regular
municipality on March 22, 1949 by virtue of Executive Order No. 208 issued by
President Elpidio Quirino.
The Municipality of Lala is envisioned to be a livable, productive municipality

where people are healthy, peaceful, happy, well-educated, God-fearing, living in a safe,
clean environment with nationally competitive economy and with transparent,
accountable and participatory local government.
The Municipal Government of Lala performs varied functions and services which
are in the following areas: public works, health services, agricultural extension services,
social welfare services, environmental services, economic services (specifically public
economic enterprise), cooperatives development and security, law and order. On the other
hand, the LGU’s general administrative functions covers: planning, budgeting, office
management, accounting and auditing, revenue generation and resource mobilization and
human resource management, the manner of which the functions and services are being
delivered and governed by the LGU’s existing systems and procedures.
Lala is the most densely populated municipality of the province and has four (4)
urban barangays namely; Maranding, Abaga, Lanipao and Lala Proper (the old
Poblacion). Its population is largely rural, which is more or less 70% of the total
population.
A. Organizational Set-up
The Municipal Government of Lala is manned by a total of 289 personnel with 11

elective officials, 111 holding permanent positions, 166 job orders and 1 co-terminus.
Presently, Hon. Allan J. Lim as the Mayor, headed the municipal government of Lala
with Hon. Almario S. Guzman as Vice Mayor.
Like other local government units, the municipality enjoys genuine and
meaningful local autonomy to enable it to attain its fullest development as self-reliant
community and make it more effective partners in the attainment of national goals.
Financial Highlights
B. Financial Position
The municipality’s assets, liabilities and equity as of December 31, 2017, were
P433,952,176, P 166,664,066 and P 267,288,110 respectively, which correspondingly
increased by 41%, -1% and by 93% over that of last year, summarized as follows:
Calendar Calendar Increase/ % Increase/

Year 2017 Year 2016 (Decrease) (Decrease)
Assets 433,952,176 307,023,078 126,929,098 41%
Liabilities 166,664,066 168,196,013 -1,531,947 -1%
Government Equity 267,288,110 138,827,065 128,461,045 93%
C. Financial Performance
For calendar year 2017, the Auditee was able to realize an income of P
186,048,309 representing 108% of the estimated revenue of P 171,402,346. To carry out
its program and activities for the year, the municipality appropriated P 171,402,346 of
which the amount of P 137,317,545 was actually expended.
CY 2017 CY 2016 Increase/(Decrease)

Income 186,048,309 P168,082,341 P17,965,968
Expenditures 141,938,735 137,317,545 4,621,190
Net Operating
Income 90,816,025 P42,328,135 P48,487,890
D. Sources & Application of Funds
2017 2016
1. Current Appropriation
Personal Services 68,158,760 58,988,528
MOOE 61,576,079 54,548,463
Capital Outlay 6,280,000 3,620,000
Financial Expenses (Non-Office) 51,608,856 54,245,355
2. Obligations
Personal Services 55,404,425 53,829,585
MOOE 58,792,253 48,855,032
Capital Outlay 1,022,808 880,460
Financial Expenses (Non-Office) 39,064,904 41,514,911
E. Scope of the Audit

A financial and compliance audit was conducted on the accounts and operations
of the Municipality of Lala, Lanao del Norte for the year ended December 31, 2017. The
audit consisted of review of operating procedures, evaluation of the agency’s program
and projects, interview of concerned government officials and employees, observation of
agency activities/operations, verification, reconciliation, and analysis of accounts and
such other procedures considered necessary.
F. Auditor’s Opinion on the Financial Statements
A qualified opinion was rendered on the fairness of the presentations of the

financial statements of the Municipal Government of Lala, Lanao del Norte as of
December 31, 2017, due to failure to record the accrued liability for the earned leave
benefits of the employees totaling P 34,110,217 as of December 31, 2017 of the agency
resulted to overstatement of the net income, understatement of liabilities and
overstatement of the government equity accounts of the Auditee.
G. Significant Findings and Recommendations

Recommendation:
a. Require the concerned Barangays, NGAs and NGOs/POs to submit the

1. Fund utilization reports, indicating the summary of expense and the status
report of accomplishments, certified by the accountant, approved by the
Local Chief Executive/Head of the receiving parties and verified by the
internal auditor or equivalent official of the Municipality;
received;
5. Proof of verification by the city official of the validity of the documents
submitted by the receiving parties;
receiving parties of any unutilized/excess amount of the funds released;
and
b. Subsequently, correcting entries should be effected on the recording of funds

released to the various Barangays, NGAs and NGOs/POs. Hence, the accounts
Due from LGUs, Due from NGAs and Due from NGOs/POs should be
debited to record the release of funds to the said Barangays, NGAs and
c. Review all liquidation reports to ensure that funds are spent for its intended
funds will not be paid/used for private purposes or for purposes not within the
intention of the source agency.
d. Refrain from incurring unnecessary expenditure of government funds to

of the LGU.
Statements, disregarding the prescribed and proper use of Chart of
Accounts for the Local Government Units under the Manual on the New
Government Accounting System (NGAS) Volume III Section 263 (Terminal
Leave Benefits).
a. Require the Head of the Human Resource Officer to furnish a copy of the
Accumulated Leave Credits in the Master List Personnel in the LGU to the
Accounting Office.
b. Direct the Budget Officer to appropriate every year the appropriation for
c. Direct the Municipal Accountant to make the necessary adjustments to
record the accrued leave payable after ensuring the correctness of the
accumulated leave credit balances of employees as of December 31, 2017.
d. Direct the Municipal Accountant to set up a special fund for the purpose.
a) To require the Municipal Accountant to submit the required supporting

b) To comply with the submission of necessary supporting documents to

ensure that all claims and payments were properly substantiated and
validated.

a. The Municipal Engineer comply with the requirement on notification and

b. The implementing departments/offices/units submit the monthly

We have recommended to the Local Chief Executive to direct the

Municipal Engineer to include in the submission of Bidding Documents, the
Approved Budget for the Contract as mandated under the Revised IRR of RA
9184 for review to the Office of the Audit Team Leader.
Government (DILG).
a. The Local School Board should consider expenditures to be included in the

budget those that were authorized and enumerated under the Revised
b. Stop the charges and payment of expenditures for the operation of the district
office and schools which are not directly attributable to the use and purpose of
Special Education Fund.

not implemented thus, depriving the constituents of its intended
beneficiaries.
1. Give priority in implementing projects under the 20% development fund

2. The Local Development Council and Municipal Planning and


accomplished.
a. That the 10 year plan of the Solid Waste Management of the Municipality
shall be properly reviewed and updated in accordance with the National Solid
Waste Management Council as required under Section 16 of RA 9003.
b. That a Sanitary landfill shall be established and the controlled dumpsite shall
be closed.
c. To ensure efficiency and effectiveness of the program, we also recommended

the following:
1. Established a Multi-Purpose Environment Cooperatives or Associations.

2. Discouraged the use of cellophanes by all business owners/operators and
replaced it with paper bags.
3. Both the residents and the owners of commercial establishments should
segregate the waste as to biodegradable and non-biodegradable before
pick up by the garbage bags.
4. Receptacles should be properly labeled as to biodegradable and non-
5. Imposed strict compliance as to collection of biodegradable and non-
H. Status of Implementation of Prior Year’s Audit Recommendations
Out of six (6) audit recommendations embodied in the 2016 Annual Audit Report,
four (4) were fully implemented, and two (2) were partially implemented.
TABLE OF CONTENTS
Description Page
Part I FINANCIAL STATEMENTS

Independent Auditor’s Report 1-2
Statement of Management Responsibility for Financial Statements 3
Consolidated Statement of Financial Position 4
Consolidated Statement of Financial Performance 5
Consolidated Statement of Condensed Cash Flows 6-7
Consolidated Statement of Changes in Net Assets/Equity 8
Statement of Comparison of Budget and Actual Amounts 9-12
Notes to Financial Statements 13-35
Part II COMMENTS AND OBSERVATIONS

Detailed Findings and Observations 36-56
Part III STATUS OF IMPLEMENTATION OF PRIOR YEAR’S

AUDIT RECOMMENDATIONS 57-75
Part IV ANNEXES
Financial Assistance granted to NGAs/NGOs/POs 76
Total Earned Leave Credits 77
School Assistance released by the Municipality 78
No Approved Budget for the Contract 79
Financial Statements by Fund 80-93
Statement of Appropriations, Allotment and Obligations, CY 2016 94-114
PART I – FINANCIAL STATEMENTS
COMMISSION ON AUDIT
Region X, Cagayan de Oro City
OFFICE OF THE AUDIT TEAM LEADER
________________________________________________________________________
INDEPENDENT AUDITOR’S REPORT
February 23, 2018
The Municipal Mayor

Lala, Lanao del Norte
We have audited the accompanying financial statements of the Municipality of

Lala, Lanao del Norte, which comprise the Statement of Financial Position as of
December 31, 2017, and the Statements Financial Performance, Statement of Changes in
Net Assets/ Equity, Statement of Comparative Budget and Actual and Statement of Cash
Flows for the year then ended, and a summary of significant accounting policies and
other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these

financial statements in accordance with the Philippine Public Sector Accounting
Standards and for such internal control as management determines is necessary to enable
the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on

our audit. We conducted our audit in accordance with Philippine Public Sector Standards
on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the

amounts and disclosures in the financial statements. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant of the entity’s preparation and fair
preparation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting
1
estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide basis for our qualified opinion.
Basis for Qualified Opinion
As discussed in detail in Part II of this report:
The accrual of liability for the earned leave benefits of the employees was
understated by P 34,110,217 as of December 31, 2017. Hence, employee’s benefits were
not properly accounted for and disclosed in the Financial Statements, disregarding the
prescribed and proper use of Chart of Accounts for the Local Government Units under
the Manual on the New Government Accounting System (NGAS) Volume III Section
263 (Terminal Leave Benefits).
Qualified Opinion
In our opinion, except for the effects or possible effects of the matter/s described
in the Basis for Qualified Opinion paragraph, the combined financial statements present
fairly, in all material respects, the financial position of the Municipality of Lala, Lanao
del Norte as of December 31, 2017, and its financial performance and its cash flows for
the year then ended in accordance with the Philippine Public Sector Accounting
Standards.
COMMISSION ON AUDIT
By:
MACRINA M. GENTILES
State Auditor IV
Audit Team Leader
February 23, 2018
2
STATEMENT OF MANAGEMENT RESPONSIBILITY
FOR FINANCIAL STATEMENTS
The management of the Local Government Unit of Municipality of Lala, Lanao

del Norte is responsible for all information and representations contained in the
accompanying Statement of Financial Position as of December 31, 2017 and the related
Statement of Financial Performance, Statement of Cash Flows, Statement of Comparison
of Budget and Actual Amounts, Statement of Changes in Net Assets/Equity and the
Notes to Financial Statements for the year then ended. The financial statements have
been prepared in conformity with the Philippine Public Sector Accounting
Standards and generally accepted state accounting principles, and reflect amounts
that are based on the best estimates and informed judgment of management with an
appropriate consideration to materiality.
In this regard, management maintains a system of accounting and reporting which

provides for the necessary internal controls to ensure that transactions are properly
authorized and recorded, assets are safeguarded against unauthorized use or disposition
and liabilities are recognized.
3
Municipality of Lala
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the Year Ended December 31, 2017
(With Comparative Figures for CY 2016)
ASSETS Notes 2017 2016

Current Assets
Cash and Cash Equivalents 4 113,629,851 83,489,197
Investments - -
Receivables 5 1,189,739 208,269
Inventories - -
Prepayments and Deferred Charges 5 1,498,132 2,406,389
Total Current Assets 116,317,722 86,103,855
Non-Current Assets
Investments - -
Receivables 5 4,707,081 4,707,081
Investment Property - -
Property, Plant and Equipment 6 312,927,373 216,212,143
Biological Assets - -
Intangible Assets - -
Total Non-Current Assets 317,634,454 220,919,224
Total Assets 433,952,176 307,023,079
LIABILITIES
Current Liabilities
Financial Liabilities 7 21,644,718 12,373,524
Inter-Agency Payables 7 64,036,116 75,555,547
Intra-Agency Payables 7 4,054,790 4,317,585
Trust Liabilities 7 18,162,020 18,216,546
Deferred Credits/Unearned Income 7 247,597 351,305
Total Current Liabilities 108,145,241 110,814,507
Non-Current Liabilities
Deferred Credits/Unearned Income - -
Provisions - -
Other Payables - -
Total Non-Current Liabilities 58,518,825 57,381,507
4
Total Liabilities 166,664,066 168,196,014
NET ASSETS/EQUITY
Government Equity 26 267,288,110 138,827,065
Total Liabilities and Net Assets/Equity 433,952,176 307,023,079
(See Accompanying Notes to Financial Statements
5
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

Notes 2017 2016

Revenue
Tax Revenue 9 19,935,847 16,902,607
Share from Internal Revenue
Collections 9 142,226,870 129,328,896
Other Share from National Taxes - -
Service and Business Income 10 23,491,320 21,464,876
Shares, Grants and Donations 11 166,732 249,963
Gains - -
Other Income 13 227,540 136,000
Total Revenue 186,048,309 168,082,342
Less: Current Operating Expenses
Personnel Services 14 62,974,280 57,769,151
Maintenance and Other Operating 15/16/17/
Expenses 19/20/21 65,739,253 66,411,456
Non-cash Expenses 24 8,936,558 9,313,052
Financial Expenses 22 4,288,643 3,823,886
Current Operating Expenses 141,938,735 137,317,545
Surplus (Deficit) from Current
Operation 44,109,574 30,764,796
Add (Deduct):
Transfers, Assistance and Subsidy
From 12 49,040,614 12,070,622
To 18 (3,113,567) (2,777,647)
Surplus(Deficit) for the period 90,036,622 40,057,771
(See Accompanying Notes to Financial Statements)
5
CONSOLIDATED STATEMENT OF CONDENSED CASH FLOWS

Notes 2017 2016

Cash Flows from Operating Activities
Cash Inflows
Collection from taxpayers 9 P 19,722,096 16,567,368
Share from Internal Revenue 9 142,226,870 129,328,89
Allotment 6
Receipts from business/service 10 23,377,710 21,465,891
income
Interest Income 10 113,610 90,536
Dividend Income - -
Other Receipts 102,929,587 95,378,948
Total Cash Inflows P 288,369,873 262,831,639
Cash Outflows
Payment of expenses - -
Payments to suppliers and creditors 15/16/17/2 54,227,585 47,637,370
1
Payments to employees 14 59,648,605 56,085,926
Interest Expense 22 4,204,951 3,717,036
Other Expenses 18/19/20
75,761,158 54,883,838
Total Cash Outflows P 193,842,299 162,324,170
Net Cash Flows from Operating P 94,527,574 100,507,469
Activities
Cash Flows from Investing Activities
Cash Inflows
Proceeds from Sale of Investment
Property
Proceeds from Sale/Disposal of PPE
Proceeds from Sale of Non-Current
Investments
Collection of Principal on loans to other
entities
Total Cash Inflows P - -
Cash Outflows
6
Purchase/Construction of Investment
Property
Purchase/Construction of PPE 6 66,451,402 84,434,197
Investment
Purchase of Bearer Biological Assets
Purchase of Intangible Assets
Grant of Loans
Net Cash Flows from Investing P (66,451,402) (84,434,197)
Activities
Cash Flows from Financing Activities

Cash Inflows
Proceeds from Issuance of Bonds
Proceeds from Loans 16,728,343 21,369,822
Cash Outflows
Payment of Long-Term Liabilities
Retirement/Redemption of debt
securities
Payment of loan amortization 14,663,861 13,337,901
Net Cash Flows from Financing P 8,031,92
Activities 2,064,482 1
Total Cash Provided by Operating, 24,105,19
Investing and Financing Activities P 30,140,654 2
Add: Cash at the Beginning of the 59,384,00
Year, January 1 83,489,197 5
Cash Balance at the End of the Year, P 83,489,19
December 31 113,629,851 7
7
8
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS/EQUITY

2017 2016
Balance at January 1 P 138,827,065 98,771,148
Add (Deduct)
Change in Accounting Policy - -
Prior Period Errors 33,000 (1,854)
Restated Balance P 138,860,065 98,769,294
Add (Deduct) Changes in net assets/equity
during the year
Adjustment of net revenue recognized
directly in net assets/equity 38,391,443 12,070,622
Surplus (Deficit) for the period 90,036,622 27,987,149
Total recognized revenue and expenses for P
the period 128,428,045 40,057,771
Balance at December 31 P 267,288,110 138,827,065
9
LOCAL GOVERNMENT SECTOR - MUNICIPALITY OF LALA
Statement of Comparison of Budget and Actual Amounts
(absolute amount)

LGU
Difference Difference
Budgeted Amounts Original and Actual Final Budget
Particulars Original Final Final Budget Amounts and Actual
Revenue
Beginning
Cash Balance
6,572,994 6,572,994 0 6,572,994 0
A. Local
Sources

1. Tax
Revenue
a. Tax
Revenue-
Property 2,781,555 2,781,555 0 2,764,358 17,197
b. Tax
Revenue –
Goods and
Services 11,985,023 11,985,023 0 12,842,265 -857,242
c. Other
Local Taxes - - 0 873,776 -873,776
Total Tax
Revenue 14,766,578 14,766,578 0 16,480,399 -1,713,821
2. Non-Tax
Revenue

a. Service
Income 10,531,710 10,531,710 0 5,358,511 5,173,199
b. Business
Income 13,128,718 13,128,718 0 18,128,912 -5,000,194
c. Other
Income and
Receipts - - - 227,540 -227,540
Total Non-
Tax Revenue 23,660,428 23,660,428 0 23,714,962 -54,534
B. External
Sources
1. Share
from the
National
Internal
Revenue
Taxes (IRA) 142,623,695 142,623,695 0 142,226,870 396,825
10
2. Share
from GOCCs
3. Other
Shares from
National Tax
Collections
a. Share
from Ecozone

b. Share
from EVAT
c. Share
from National
Wealth
d. Share
from Tobacco
Excise Tax
4. Other
Receipts( Share
from PCSO)
139,752 -139,752
a. Grants
and Donations
(In-Kind) 26,980 -26,980
b. Other
Subsidy
Income 49,040,614 -49,040,614
5. Inter-
local Transfer
6. Capital
/Investment
Receipts
a. Sale of
Capital Assets
b. Sale of
Investments
c. Proceeds
from
Collections of
Loans
Receivable
C. Receipts
from
Borrowings 0 16,728,343 -16,728,343
Total
Revenues and
Receipts 187,623,695 187,623,695 0 254,930,915 -67,307,220
Expenditures
General
Public
Services

Personnel
Services 43,323,555 41,316,049 2,007,506 36,397,433 4,918,615
11
Maintenance
and Other
Operating
Expenses
55,558,079 56,661,906 -1,103,827 53,411,095 3,250,811
Capital Outlay
5,970,000 5,888,733 81,267 840,344 5,048,389
Health,
Nutrition and
Population
Control -
Personnel
Services 8,386,248 8,104,670 281,578 7,543,013 561,657
Maintenance
and Other
Operating
Expenses 79,000 79,000 - 72,500 6,500
Capital Outlay -
Social
Services and
Social
Welfare
Personnel
Services 3,380,202 2,982,860 397,342 2,581,664 401,196
Maintenance
and Other
Operating
Expenses 2,779,000 2,549,257 229,743 2,510,857 38,400
Capital Outlay 100,000 100,000 - 24,000 76,000
Economic
Services -
Personnel
Services 13,068,755 10,530,665 2,538,090 8,882,314 1,648,351
Maintenance
and Other
Operating
Expenses 3,160,000 2,862,438 297,562 2,797,801 64,636
Capital Outlay 210,000 210,000 - 158,464 51,536
Other
Purposes:
20%
Development
Fund
28,524,739 28,445,374 79,365 23,034,526 5,410,848
LDRRMF 9,381,185 9,128,099.15 253,085.85 7,219,854 1,908,245
Aid to
Barangays 27,000 27,000 - 27,000 0
Discretionary
Fund 39,592 39,592 - 0 39,592
Disable 150,000 150,000 - 145,550 4,450
Allocation for
Senior
Citizens and
PWD 450,000 450,000 - 449,448 552
12
Gender and
Development 10,210,103 10,210,103 - 7,291,691 2,918,412
Local Council
for the
Protection of
Children 1,426,237 1,426,237 896,835 529,402
Acquired
Immune
Deficiency
Syndrome 100,000 100,000 0 100,000
Local Climate
Change Action
Fund 1,300,000 1,300,000 0 1,300,000
Capital Outlay
Others
Personnel
Services
Maintenance
and Other
Operating
Expenses
Capital Outlay
Continuing
Appropriations
(Capital
Outlay)
General Public
Services
Education
Health,
Nutrition and
Population
Control
Labor and
Employment
Housing and
Community
Development
Social
Services and
Social Welfare
Economic
Services
Total 187,623,695 182,561,983 5,061,712 154,284,390 28,277,593
Surplus
(Deficit) for
the period - 5,061,712 -5,061,712 100,646,524 -95,584,812
13
NOTES TO FINANCIAL STATEMENTS

(All amounts in Philippine Pesos)
December 31, 2017
Note I - Profile
The Municipality of Lala was created as regular municipality with the passage
of Executive Order No. 208 dated March 22, 1949. It is a vast plain within the
Kapatagan Valley consisting of 14,025 hectares. It was classified as first (1 st)
class municipality with twenty-seven (27) component barangays, the most
progressive municipality of the province of Lanao del Norte, in terms of
income.
The LGU is envisioned to be livable, productive municipality where people are

healthy, peaceful, happy, well-educated and God-Fearing, living in safe, clean
environment with nationally competitive economy and with a transparent,
accountable and participatory local government.
The LGU was awarded the Seal of Good Housekeeping in the years 2012,
2013 and 2014 then the Seal of Good Local Governance in the years 2015 and
2017 by the Department of Interior and Local Government (DILG) due to its
good and exemplary performance in Financial Housekeeping, Social
Protection, Disaster Preparedness, Environmental Management, Business
friendliness and competitiveness and Peace and Order.
Like other local government units, the municipality enjoys genuine and
meaningful local autonomy to enable it to attain its fullest development as self-
reliant community and make it more effective partners in the attainment of
national goals.
Note 2 - The consolidated financial statements of the Municipality of Lala have been
prepared in accordance with and comply with the Philippine Public Sector
Accounting Standards (PPSAS). The consolidated financial statements are
presented in pesos, which is the functional and reporting currency of the
LGU.
Note 3 - Summary of significant accounting policies
14
3.1 Basis of accounting
The [consolidated] financial statements are prepared on an accrual basis in

accordance with the Philippine Public Sector Accounting Standards
(PPSAS).
3.2 Consolidation
The consolidated financial statements are a consolidation of the General

Fund, Special Education Fund & Trust Fund. As of the year ended, the
LGU have not yet maintained special accounts under the General Fund for
the following economic enterprises it operates: Market Administration,
Slaughterhouse, Operation of Cemetery and Water System. Starting
January, 2018 maintenance of special accounts under the General Fund of
these economic enterprises shall be made.
3.3 Revenue Recognition
The LGU availed of the 5 – year transitional provision for the recognition
of Tax Revenue- Real Property and Special Education Tax. For the first
year, there will be no change in policy for the recognition of the
aforementioned tax revenue. Share from the Internal Revenue Collections,
Real Property Taxes and all other taxes, fees, charges and other revenues
were recorded under accrual method.
3.4 Correction of Fundamental Errors
Fundamental errors of prior years are corrected using the Prior Years’
Adjustments account while errors affecting the current year’s operations
are affected to the current year accounts.
3.5 Property, plant and equipment
All property, plant and equipment are stated at cost less accumulated
depreciation. Cost includes expenditure that is directly attributable to the
acquisition of the items. When significant parts of property, plant and
equipment are required to be replaced at intervals, the LGU recognizes
such parts as individual assets with specific useful lives and depreciates
them accordingly. Likewise, when a major inspection is performed, its
cost is recognized in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied.
Depreciation on assets is charged on a straight-line basis over the useful

life of the asset.
Depreciation is charged at rates calculated to allocate cost or valuation of
the asset less any estimated residual value over its remaining useful life.
15
Public Infrastructures were not previously recognized in the books. The
LGU availed of the 5-year transitional provision for the recognition of the
Public Infrastructure. For the first year of implementation of the PPSAS,
the LGU did not recognize the Public Infrastructure in the books of
accounts.
3.6 Financial instruments
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 are classified as

financial liabilities at fair value through surplus or deficit or loans and
borrowings, as appropriate. The LGU determines the classification of its
financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case
of loans and borrowings. The LGU Group’s financial liabilities include
accounts payables and bank loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are

subsequently measured at amortized cost using the effective interest
method. Gains and losses are recognized in surplus or deficit when the
liabilities are derecognized as well as through the effective interest method
amortization process.
Amortized cost is calculated by taking into account any discount or

premium on acquisition and fees or costs that are an integral part of the
effective interest rate.
When an existing financial liability is replaced by another from the same

lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and the recognition of a new
liability.
16
3.7 Cash and cash equivalents
Cash and cash equivalents comprise cash in bank and cash-local treasury
of Mrs. Mercelita A. Baran. For the purpose of the consolidated statement
of cash flows, cash and cash equivalents consist of LGU’s current account
deposits and cash-local Treasury of Mrs. Mercelita A. Baran.
3.8 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy

retrospectively. The effects of changes in accounting policy are applied
prospectively if retrospective application is impractical. The LGU
recognizes the effects of changes in accounting estimates prospectively by
including in surplus or deficit.
3.9 Borrowing costs
Borrowing costs are capitalized against qualifying assets as part of

property, plant and equipment.Such borrowing costs are capitalized over
the period during which the asset is being acquired or constructed and
borrowings have been incurred. Capitalization ceases when construction
of the asset is complete. Further, borrowing costs are charged to the
statement of financial performance.
3.10 Related parties
The LGU regards a related party as a person or an entity with the ability to
exert control individually or jointly, or to exercise significant influence
over the LGU, or vice versa. Members of key management are regarded as
related parties and comprise the Mayor, Vice-Mayor, Sangguniang Bayan
Members, Committee Officials and Members, Accountant, Treasurer,
Budget Officer, General Services Officer and all other Heads of
Departments.
3.11 Budget information
The annual budget is prepared on the modified cash basis, that is, all
planned costs and income are presented in a single statement to determine
the needs of the LGU. As a result of the adoption of the Modified cash
basis for budgeting purposes, there are basis, timing or entity differences
that would require reconciliation between the actual comparable amounts
and the amounts presented as a separate additional financial statement in
the statement of comparison of budget and actual amounts. Explanatory
comments are provided in the notes to the annual financial statements;
first, the reasons for overall growth or decline in the budget are stated,
followed by details of over spending or under spending on line items.
17
3.12 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, management

has made judgments, which have the most significant effect on the
amounts recognized in the consolidated financial statements.
Estimates and assumptions

The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The LGU
based its assumptions and estimates on parameters available when the
consolidated financial statements were prepared. However, existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control of the
LGU. Such changes are reflected in the assumptions when they occur.
Useful lives and residual values
The useful lives and residual values of assets are assessed using the
following indicators to inform potential future use and value from
disposal:
a) The condition of the asset based on the assessment of experts

employed by the LGU;
b) The nature of the asset, its susceptibility and adaptability to

changes in technology and processes;
c) The nature of the processes in which the asset is deployed; and
d) Changes in the market in relation to the asset
Fair value estimation – financial instruments
Where the fair value of financial assets and financial liabilities recorded in
the statement of financial position cannot be derived from active markets,
their fair value is determined using valuation techniques including the
discounted cash flow model. The inputs to these models are taken from
observable markets where possible, but where this is not feasible,
judgment is required in establishing fair values. Judgment includes the
consideration of inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions about these factors could affect the reported fair
value of financial instruments.
18
Fair value hierarchy
The LGU uses the following hierarchy for determining and disclosing the
fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets

or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e., as price) or
indirectly (i.e., derived from prices);
Level 3: Techniques which use inputs that have a significant effect on the
recorded fair value that are not based on observable market data
Cash and cash equivalents
The LGU limits its exposure to credit risk by investing cash and cash
equivalents with only reputable financial institutions that have a sound
credit rating, and within specific guidelines set in accordance with the
Sanggunian’s approved investment policy. Consequently, the LGU does
not consider there to be any significant exposure to credit risk.
Liquidity risk
Liquidity risk is the risk of the LGU not being able to meet its obligations
as they fall due. The LGU’s approach to managing liquidity risk is to
ensure that sufficient liquidity is available to meet its liabilities when due,
without incurring unacceptable losses or risking damage to the LGU’s
reputation.
The following are contractual liabilities of which interest is included in

borrowings:
2017 On
3-12
deman > 3 months 1-5 years
months
d
Liabilities
Borrowings - 4,904,643 13,473,757 58,518,825
Payables - - - -
Total - 4,904,6423 13,473,757 58,518,825
Liabilities
19
Note 4. Cash and Cash Equivalents
Trust Fund
2017 2016
Cash in Bank-LCCA Acct.# 0802-1051-18 1,506,444 943,486
Cash in Bank-LCCA Acct.# 0802-1055-09 12,365,317 6,034,109
Cash in Bank-LCCA Acct.# 0802-1075-60 2,443,653 442,858
Cash in Bank-LCCA Acct.# 0802-1084-19 0 15,100
Cash in Bank-LCCA Acct.# 0802-1091-48 15,300 193,578
Cash in Bank-LCCA Acct.# 0802-1160-12 15,000 1,174,651
Cash in Bank-LCCA Acct.# 0802-1160-39 15,000 2,665,631
Cash in Bank-LCCA Acct.#0805-0712-06 15,135 15,009
Cash –Local Treasury-(Mercelita A. Baran) 475,968 -
Totals-- - - - - - - - -- 48,263,374 42,804,433
2017 2016
General Fund

Cash in Bank-LCCA Acct.#0820-016253- 48,745 315,633
0301
Cash- Local Treasury (Mercelita A. Baran) 82 44,667
Totals - - - - - - - - - - - - 62,383,794 39,041,521
Special Education Fund

Cash in Bank-LCCA Acct.#0802-1047-58 2,982,682 1,643,242
20
Cash in banks earns interest based on the prevailing bank deposit rates.
2017 2016
General Fund- 62,383,794 39,041,521
Special Education Fund 2,982,682 1,643,242
Trust Fund 48,263,374 42,804,433
Totals 113,629,851 83,489,197
Note 5 – Receivables
General Fund
The management maintained a subsidiary ledger for each receivable account. Due from
Other Funds amounted to P 95,644 is an amount receivable from S.E.F. and Trust Fund
which consists of w/holding taxes from employees and suppliers to be transferred during
the month of January, 2018. Advances for Payroll amounted to P 306,957 are the
unliquidated balance of cash advances of the Disbursing Officer-Mrs. Mercelita A. Baran
for payment of payrolls for salaries and wages. Advances for Officers and Employees
in the amount of P 7,734 represents unliquidated cash advances of officials and
employees for TEV’s and municipal activities to be liquidated on January, 2018.
Accounts Receivable amounted to P 225,000 is an equipment rental income recorded
last December, 2013 not yet collected from a contractor- Icalina Builders and
Construction Supply. Due from National Government Agencies in the amount of P
69,900 is a receivable from COMELEC which was long overdue. Due from Local
Government Units is a receivable from beneficiaries of loan granted by MSWDO in the
amount of P 231,794 which was also long overdue, hence management wants to request
for the write-off of said amounts. Other Receivables in the amount of P 3,110,713
includes receivable from previous municipal treasurers (retired) and municipal official
(deceased).
Receivables (Current) 2017 2016

Due from Other Funds 95,644 130,975
Advances for officers and Employees 7,734 55,309
Advances for Operating Expenses - 6,800
Advances for Payroll 306,957 15,185
Totals 410,335 208,269
Receivables (Non-current) 2017 2016

Accounts Receivable 225,000 225,000
Notes Receivable 509 509
Due from National Government Agencies 69,900 69,900
Due from Local Government Units 231,794 231,794.06
Other Receivables 3,110,713 3,110,713
Totals 3,637,916 3,637,916
21
Prepayments 2017 2016
Advances to Contractors - 2,406,389
The management maintained a subsidiary ledger for the Advances for officers and
Employees account in the amount of P 53,695 for TEV’s and other school activities.
Other Receivables amounted to P 621,012 includes receivable from previous (retired)
municipal treasurers and retired DepEd officials.

Advances for officers and Employees 53,695 53,6945
Other Receivables 621,012 621,012
Totals 674,706 674,706
Trust Fund
Other receivables in the amount of P 394,459 includes receivable from a previous

municipal treasurer(retired) amounting to P 343,069 and P51,390 represents the KKK
account collectible from farmer members which are long overdue and hopefully be
written off. Due from Other Funds amounted to P 779,404 is the balance of DRRMF-
30% for the year 2017 to be transferred from the General Fund on January, 2018.
Advances to Contractors amounting to P 1,498,132 includes 15% mobilization of the
various Infra projects of this municipality from Contractors-Dicon Builders and Prime
Haus Builders.
Receivables (Current) 2017 2016

Due from Other Funds 779,404 -
Prepayments 2017 2016

Advances to Contractors 1,498,132 -

Other Receivables 394,459 394,459
Receivables ( Current-Consolidated)
2017 2016
General Fund 410,335 208,269
Special Education Fund - -
Trust Fund 779,404 -
Totals 1,189,739 208,269
22
Prepayments (Consolidated)
2017 2016
General Fund - 2,406,389
Trust Fund 1,498,132 -
Totals 1,498,132 2,406,389
Receivables ( Non-Current-Consolidated)
2017 2016
General Fund 3,637,916 3,637,916
Special Education Fund 674,706 674,706
Trust Fund 394,459 394,459
Totals 4,707,081 4,707,081
Note 6 - Property, Plant and Equipment
General Fund
This account consists of:
Balance Net/Additio Balance

Account Title n/ Dec. 31,
Dec. 31, 2016
(Reduction) 2017
Land 1,335,287 38,391,423 39,726,710
Other Land improvements 21,287 - 21,287
Road Networks 9,070,82 50,469,785 59,540,613
7
Water Supply - 844,852 844,852
Power Supply System 65,80 - 65,800
0
Parks, Plazas and Monuments 2,999,79 - 2,999,795
5
Buildings 14,040,68 4,092,457 18,133,141
4
Hospitals & Health Centers 3,951,56 - 3,951,562
2
Markets 56,294,31 - 56,294,311
1
Other Structures 38,033,62 853,069 38,886,695
6
Machinery 22,40 - 22,405
5
Office Equipment 4,677,36 107,000 4,784,365
5
Information & Communication Equipment 5,593,85 1,384,196 6,978,048
3
Agricultural & Forestry Equipment 2,668,70 3,350,000 6,018,706
6
Communication Equipment 1,172,84 - 1,172,844
4
23
Construction & Heavy Equipment 31,940,31 - 31,940,310
0
Disaster Response & Rescue Equipment 2,729,66 154,625 2,884,287
2
Military, Police & Security Equipment 1,755,35 - 1,755,352
2
Medical Equipment 480,07 - 480,071
1
Technical & Scientific Equipment 19,99 - 19,995
5
Other Machinery Equipment 320,94 68,890 389,936
6
Motor Vehicles 5,560,31 1,578,000 7,138,313
3
Furniture & Fixtures 831,03 533,694 1,364,726
2
Books 2,700 - 2,700
Const. in Progress – Infrastructure Assets 34,594,87 14,771,299 49,366,175
7
Const. in Progress – Buildings & Other
Structure - 10,054,492 10,054,492
Other Property, Plant & Equipment 21,30
0 - 21,300
Total 218,204,908 126,653,781 344,858,689
Accumulated Depreciation 52,645,972 8,702,625 61,348,597
165,558,93
NET AMOUNT 6 117,951,156 283,510,091
Balance Net/Addition Balance

Dec. 31, 2016 / (Reduction) Dec. 31, 2017
Other Land improvements 15,800 - 15,800
School Buildings 147,133 - 147,133
Office Equipment 620,897 77,000 697,897
Info.& Communication Technology 1,239,598 19,278 1,258,876
Equipment
Communication Equipment 85,597 - 85,597
Medical Equipment 20,000 - 20,000
Other Machinery Equipment 118,828 - 118,828
Motor Vehicles 260,000 - 260,000
Furniture & Fixtures 126,549 - 126,549
Books 9,128 - 9,128
Other Property, Plant & Equipment 15,000 - 15,000
Total 2,658,529 96,278 2,754,807
Accumulated Depreciation 1,762,027 233,933 1,995,960
(137,655
NET AMOUNT 896,503 ) 758,847
24
CONSTRUCTION IN PROGRESS- INFRASTRUCTURE ASSETS
GENERAL FUND
Name of Project Amount Status

1.Construction of Commercial Plaza Arcade 48,242,513 on-going
2.Maranding-Manlosa-Yap Road Concreting
Project 332,312 on-going
3.Rebe Potable Water System-LGU Equity 99,900 completed-for final billing
4.Pinuyak Hanging Bridge 691,450 completed-for final billing
Total 49,366,175
CONSTRUCTION IN PROGRESS- BUILDING AND OTHER STRUCTURES
GENERAL FUND
1. Pacita Community Fish Landing-
LGU
Equity 493,100 on-going
2. Lala Centralized Evacuation Center- 9,316,477.7
(Completion) 1 on-going
3. Women Crisis Center Fencing 244,914 completed-for final billing
Total 10,054,492
CONSTRUCTION IN PROGRESS-BUILDINGS AND OTHER STRUCTURES
TRUST FUND

1. Construction of Community Fish Landing 2,282,133 on-going
2. Construction of Faculty Room- Lala Proper 900,771 on-going
Total 3,182,904
CONSTRUCTION IN PROGRESS- INFRASTRUCTURE ASSETS
TRUST FUND

1. Rebe Potable Water Supply System 900,000 completed-for final billing
2. Concreting of San Isidro Lower FMR 822,130 on-going
3. Municipal Food Terminal-Bagsakan Center 896,405 completed-for final billing
4. Rice Processing Center II 11,609,568 completed- for final billing
5. Rehabilitation of Diversion Dam 1,817,162 completed- for final billing
6. Construction of Rebe-Pendulonan Road 9,430,267 on-going
Total 25,475,531
Property, Plant and Equipment (Non-Current-Consolidated)
25
2017 2016
General Fund 283,510,091 165,558,936
Trust Fund 28,658,435 49,756,705
Totals 312,927,373 216,212,143
Note 7 – Liabilities
GENERAL FUND
Accounts Payable amounted to Php 2,451,550 includes payable to various suppliers and
salaries of newly appointed employees to be paid on January, 2018. Due to Officers &
Employees amounted to Php 53,323 is an amount deducted from J.O. salaries Dec.16-
31, 2017 for payment of their 1st Valley Bank Loan to be remitted on January, 2018.
Leave Benefits Payable in the amount of Php 5,214,095 represents terminal leave
benefits of officials and of employees who are scheduled to retire for the calendar year
2018. The Loans Payable are balances of domestic loans granted by the Land Bank of
the Philippines (LBP) in the amount of Php 72,293,870 which were used to finance the
Construction of Lala Integrated Bus Terminal, Construction of Lala Wet Market and
Stalls, procurement of Heavy Equipments, Site Development of Lala Public Market and
the Construction of Commercial Plaza Arcade. Due to GSIS amounting to Php 112,973
is the unremitted GSIS premiums of newly appointed employees to be remitted on
January, 2018. Due to Other Funds in the amount of Php 779,404 is the fund balance of
the DRRM-30% to be transferred to the special trust fund account on January, 2018.
Guaranty/Security Deposits Payable amounted to P 5,750,186 consists of 10%
Retention Money from a contractor-Rudhil Construction Ent., Inc. deducted from the
progress billings of the projects-Construction of Centralized Evacuation Center
(Completion) and the Construction of Plaza Arcade and warranty deposits of various
contractors. Deferred Real Property Tax in the amount of P 110,043 represents RPT
income for CY 2018 collected in advance during the month of Dec., 2017.
Financial Liabilities-(current) 2017 2016
Accounts Payable 2,451,550 126,216

Due from Officers and Employees 53,323 55,338
Leave Benefits Payable 5,214,095 2,211,123
Loans Payable 13,775,045 9,970,942
Totals 21,494,013 12,363,619
Inter-Agency Payables 2017 2016
Due to NGA’s (LGSF) - 1,200,000

Due to GSIS 112,973 -
Intra-Agency Payables
26
Due to Other Funds 779,404 -
Trust Liabilities
Guaranty/Security Deposits Payable 5,750,186 3,920,906
Deferred Credits/Unearned Income 2017 2016

Deferred Credits
Deferred Real Property Tax 110,043 156,135
Financial Liabilities (non-current) 2017 2016

Loans Payable- Domestic 8,518,825 57,381,507
SPECIAL EDUCATION FUND
Financial Liabilities 2017 2016
Accounts Payable 140,800 -
27
Intra-Agency Payables 2017 2016
Due to Other Funds 26,465 23,080
Deferred Credits/Unearned Income 2017 2016

Deferred Credits
Deferred Special Education Tax 137,554 195,169
TRUST FUND
Accounts Payable amounted to P 9,905 is an amount payable to a contractor-Rudhil

Construction Ent.,Inc. Due to Other National Government Agencies amounting to P
59,225,940 consists of funds from PHIC, DOLE, DOH, DSWD, and from DA-RFU-X
for various infrastructure projects of which are still on-going and not yet completed. Due
to LGU’s in the amount of P 4,697,203 includes LGU equity for KALAHI CIDSS
project and funds for the operating & maintenance of ARCP projects. Due to Other
Funds amounted to P 3,248,921 consists of funds for LGU Equity of various on-going
Infrastructure - BUB, DA RFU-X projects and w/holding taxes from various suppliers to
be transferred to the General fund account during the month of January, 2018.
Financial Liabilities 2017 2016

Accounts Payable 9,905 9,905
Inter-Agency Payables 2017 2016

Due to Other NGA’s 59,225,940 68,255,971
Due to LGU’s 4,697,203 6,099,576
Totals 63,923,143 74,355,547
Intra-Agency Payables 2017 2016

Due to Other Funds 3,248,921 4,294,506
Trust Liabilities 2017 2016

Guaranty/Security Deposits Payable 3,202,773 6,007,951
Bail Bonds Payable 377,568 235,600
Trust Liabilities- Disaster Risk Reduction and
Management Fund 8,831,492 8,052,089
Totals 12,411,834 14,295,640
Financial Liabilities (Current-Consolidated)
2017 2016
General Fund 21,494,013 12,363,619
Special Education Fund 140,800 -
Trust Fund 9,905 9,905
Totals 21,644,718 12,373,524
28
Inter-Agency Payables (Current-Consolidated)
2017 2016
General Fund 112,973 1,200,000
Trust Fund 63,923,143 74,355,565
Totals 64,036,116 75,555,547
Intra-Agency Payables (Current-Consolidated)
2017 2016
General Fund 779,404 -
Trust Fund 3,248,921 4,294,506
Totals 4,054,790 4,317,585
Trust Liabilities (Current-Consolidated)
2017 2016
General Fund 5,750,186 3,920,906
Trust Fund 12,411,834 14,295,640
Totals 18,162,020 18,216,546
Deferred Credits/Unearned Income (Current-Consolidated)
2017 2016
General Fund 110,043 156,135
Trust Fund - -
Totals 247,597 351,305
Note 8. Local Disaster Risk Reduction Management Fund (LDRRMF)
The LDRRMF represents the amount set aside by the LGU to support its disaster risk
management activities pursuant to R.A.# 10121 otherwise known as the “Philippine Risk
Reduction and Management Act of 2010.” The amount available and utilized during the
year totaled P 11,249,987 and P 8,562,339 respectively, broken down as follows:
AMOUNT
Particulars
Available Utilized Balance
Continuing Appropriation- 2016
Capital Outlay 2,121,888 2,121,888 -
Calamity Fund – Actual CY 2017
Quick response Fund – 30% 2,738,430 1,959,026 779,404
Mitigation Fund – 70% 6,389,669 4,481,425 1,908,245
29
MOOE - 4,214,425 -
Capital Outlay - 267,000 2,820,978
TOTAL 11,249,987 8,562,339 2,687,649
Continuing Appropriation: TRUST LIABILITY – DRRM Account

Special Trust Fund Utilized Balance
CY – 2012 2,848,222 - 2,848,222
CY – 2013 1,700,272 - 1,700,272
CY – 2015 3,584,042 - 3,584,042
CY – 2015 3,780,670 - 3,780,670
CY – 2016 2,270,364 - 2,270,364
CY – 2017 779,404 - 779,404
TOTAL 14,962,975 - 14,962,975
Less: CY 2015 - 6,131,482 6,131,482
Net Total 14,962,975 6,131,482 8,831,492
Note 9 – Tax Revenue
2017 2016
Tax Revenue – Individual and Corporation
Community tax 552,431 578,937
Tax Revenue-Property
Real Property Tax – Basic 2,764,358 2,318,147
Tax Revenue-Goods and Services
Business Tax 12,812,327 10,867,295
Tax on Sand, Gravel and Other Quarry 29,938 91,551
Products - -
Tax on Delivery Trucks and Vans - -
Tax Revenue-Fines and Penalties-Property
Tax Revenue- Fines and Penalties-Other Taxes 321,345 148,993
Totals 16,480,399 14,004,923
Share from National Taxes

Share Internal Revenue Collection 142,226,870 129,328,896
Tax Revenue-Property 2017 2016

Special Education Tax 3,455,448 2,897,684
Tax Revenue (Consolidated)
2017 2016
General Fund 16,480,399 14,004,923
Trust Fund - -
Totals 19,935,847 16,902,607
30
Note 10– Service and Business Income
General Fund 2017 2016

Service Income
Permit Fees 2,472,796 2,235,664
Registration Fees 1,291,812 606,304
Clearance and Certificate Fees 929,564.86 807,561
Inspection Fees 152,385 132,820
Occupation Fees 333,093 214,910
Fishery Rental, Fees and Charges 63,500 247,737
Fees for Sealing and Licensing of Weights 94,215 14,550
and Measures
Fines and Penalties-Service Income 2,400 -
Other Service Income 18,745 11,510
Business Income
Rent Income 2,137,617 2,528,350
Road and Network Fees 397,547 254,355
Waterworks System Fees 507,180 292,068
Parking Fees 1,788,472 1,758,230
Receipts from Market Operations 8,671,559 7,888,487
Receipts from Slaughterhouse Operation 2,383,497 1,661,242
Receipts from Cemetery Operations 84,390 148,658
Garbage Fees 705,410 604,979
Hospital Fees 979,768 1,436,840
Interest Income 109,712 87,370
Other Business Income 363,760 530,077
Totals 23,487,422 21,461,709
Special Education Fund 2017 2016

Interest Income 3,898 3,166
Service and Business Income (Consolidated)
2017 2016
General Fund 23,487,422 21,461,709
Special Education Fund 3,898 3,166.01
Trust Fund - -
Totals 23,491,320 21,464,875
Note 11– Share, Grants and Donation
2017 2016
Share from PCSO 139,752 249,963
Grant and Donations in kind 26,980
Totals 166,731.87 249,962.62
31
Note 12- Transfers, Assistance and Subsidy
General Fund 2017 2016

Assistance and Subsidy
Subsidy from National Government 49,040,614 12,070,622
TRUST FUND 2017 2016
Transfers from General Fund to Trust Fund 779,404 2,270,364

Transfers, Assistance and Subsidy (Consolidated)
2017 2016
General Fund 49,040,614 12,070,622
Trust Fund 779,404 2,270,364
Totals 49,829,018 14,340,986
Note 13– Miscellaneous Income
2017 2016
Miscellaneous Income
Miscellaneous Income 227,540 136,000
Note 14 - Employee Costs
GENERAL FUND 2017 2016

Personnel Services
Salaries and Wages – Regular 34,430,988 30,615,803
Other Compensation
Personal Economic Relief Allowance 2,835,818 2,869,364
(PERA)
Representation Allowance (RA) 2,013,750 2,052,100
Transportation Allowance (TA) 2,031,750 2,106,100
Clothing/Uniform Allowance 590,000 615,000
Subsistence Allowance 321,000 377,025
Honoraria - 60,000
Hazard Pay - 19,219
Overtime and Night Pay 84,156 382,848
Year End Bonus 3,123,496 5,110,875
Cash Gift 601,750 600,000
Other Bonuses and Allowances 4,152,254 3,788,400
Personnel Benefit Contribution
Retirement and Life Insurance Premiums 4,082,825 3,609,463
Pag-IBIG Contributions 137,400 142,000
PhilHealth Contributions 330,213 332,216
Employees Compensation Insurance 140,626 140,770
32
Premiums
Other Personnel Benefit
Terminal Leave Benefits 7,279,911 4,056,825
Other Personnel Benefits 63,157 70,871
Totals 62,219,094 56,948,878
Personnel Services 2017 2016

Salaries and Wages – Casual/Contractual 543,186 533,273
Other Compensation
Honoraria 198,000 274,000
Cash Gift 14,000 13,000
Totals 755,186 820,273
Personal Services (Consolidated)

General Fund 62,219,094 56,948,878
Trust Fund - -
Totals 62,974,280 57,769,151
Note 15 – Maintenance and Other Operating expenses
GENERAL FUND
Travelling Expenses 2017 2016

Traveling Expenses – Local 4,803,961 4,017,147
Training Expenses 1,248,565 1,343,228
Supplies and Material Expenses
Office Supplies Expenses 1,531,443 1,341,809
Accountable Forms Expenses 401,697 399,938
Food Supplies Expenses 2,280,555 2,257,966
Welfare Good Expenses 1,094,276 -
Medical, Dental and Laboratory Supplies
Expenses 22,200 -
Fuel, Oil and Lubricant Expenses 4,091,015 3,623,666
Other Supplies and Materials Expenses 665,817 824,815

Utility Expenses
Water Expenses 480,527 418,453
Electricity Expenses 5,826,765 5,546,390
Communication Expenses
Telephone Expenses 588,669 612,683
Internet Subscription Expenses 190,575 260,030
33
Cable, Satellite, Telegraph and Radio
Expenses 29,700 37,900
Awards/Rewards and Prizes
Prizes 1,055,588 154,750
Survey Expenses
Survey Expenses 96,500 25,000
Demolition/Relocation and Desilting/Dredging
Expenses
Desilting and Dredging Expenses 2,057,650 1,001,040
Extraordinary Expenses
Extraordinary and Miscellaneous Expenses - 15,000
Totals 26,465,503 21,879,814
Travelling Expenses 2017 2016

Traveling Expenses – Local - 103,360
Training Expenses 255,700 296,335
Supplies and Material Expenses
Office Supplies Expenses 171,236 159,733
Fuel, Oil and Lubricants Expenses 20,200 18,071
Other Supplies and Materials Expenses 22,200 2,467
Utility Expenses
Water Expenses 10,955 10,355
Electricity Expenses 53,262 53,673
Communication Expenses
Telephone Expenses 9,042 -
Internet Subscription Expenses 17,881 28,376
Cable, Satellite, Telegraph and Radio
Expenses 6,516 4,560
Totals 566,992 676,930
Note 16 – Contracted Services
2017 2016
Professional Services
Auditing Services 113,125 101,260
Consultancy Services 352,375 182,875
Totals 465,500 284,135
Note 17 – Repairs and Maintenance

Repairs and Maintenance -Infrastructure Assets 561,913 1,418,200
Repairs and Maintenance -Buildings and Other
Structures 461,167 204,595
34
Repairs and Maintenance -Machinery and
Equipment 1,449,670 2,006,317
Repairs and Maintenance -Transportation
Equipment 466,714 29,509
Repairs and Maintenance- Furnitures and
Fixtures 8,500 -
Totals 2,947,964 3,658,621

Repairs and Maintenance -Buildings and Other 733,030 554,644
Structures
Repairs and Maintenance- Machinery and 3,200 -
Equipment
Repairs and Maintenance-Transportation 11,790 14,629
Equipment
Totals 748,020 569,273
Note 18- Financial Assistance/Subsidy
2017 2016
Subsidy to Other Local Government Units 3,113,567 2,762,047

Subsidies to Other Funds 15,600
Totals 3,113,567 2,777,647
Note 19 - Transfers
2017 2016
Transfers of Unspent Current Year DRRM
Funds to the Trust Fund 779,404 2,270,364
Transfers for Project Equity Share/LGU
Counterpart 1,788,130 4,357,464
Totals 2,567,534 6,627,828
Note 20 - Insurance Premiums and Other Fees
2017 2016
Fidelity Bond Premiums 94,125 104,062.50
Insurance Expenses 305,185.42 91,671.77
Totals 399,310.42 195,734.27
Note 21 – Other Maintenance and Operating Expenses

Advertising Expenses 200,000 68,000
35
Representation Expenses 4,398,196 3,054,970
Membership Dues and Contributions to
Organization - 75,900
Subscriptions Expenses 2,750 -
Donations - 500,000
Other Maintenance and Operating Expenses 26,937,484 28,765,250
Totals 31,538,430 32,464,120

Other Maintenance and Operating Expenses 40,000 55,000
Note 22 - Financial Expenses
2017 2016
Interest Expenses 4,204,951 3,717,036
Bank Charges 50 -
Other Financial Charges 83,642 106,850
Totals 4,288,643 3,823,886
Note 23- Prior Years’ Adjustment

2017 2016
General Fund 33,000 (12,830)
Special Education Fund- - 10,976
Totals 33,000 (1,854)
Note 24 – Non-Cash Expenses

Loss on Assets - 138,093
Depreciation
Depreciation- Land Improvements - 1,065
Depreciation-Infrastructure Assets 6,251 6,251
Depreciation-Buildings and Other Structures 3,812,306 3,773,283
Depreciation-Machinery and Equipment 4,082,800 4,211,321
Depreciation-Transportation Equipment 711,274 855,403
Depreciation-Furniture, Fixtures and Books 87,619 80,915
Depreciation-Other Property, Plant and Equipment 2,375 2,375
Totals 8,702,625 9,068,706
SPECIAL EDUCATION FUND 2017 2016

Depreciation
Depreciation- Land Improvements - 7901
Depreciation- Buildings and Other Structures - 7,358
Depreciation- Machinery and Equipment 189,263 187,978
36
Depreciation-Transportation Equipment 39,843 39,843
Depreciation-Furniture, Fixtures and Books 4,827 8,377
Totals 233,933 244,347
Non-Cash Expenses (Consolidated) 2017 2016

General Fund 8,702,625 9,068,706
Trust Fund - -
Totals 8,936,558 9,313,052
Note 25 - Reconciliation of Net Cash Flows from Operating Activities to

Surplus/(Deficit)

Surplus/(Deficit) 39,853,813 39,522,743
Non-cash transactions
Depreciation 8,702,625 8,930,613
Amortization of Intangible Assets - -
Impairment Loss - -
Increase in payables 6,976,498 1,808,679
(Gains) Losses on Sale of PPE - -
(Gains) Losses on Sale of Investments - -
Increase in current assets 5,854,670 1,426,915
Prior Period Adjustment 33,000 (41,830)
Increase in receivables 95,644 130,975
Net Cash from Operating Activities 61,516,250 51,778,096
SPECIAL EDUCATION FUND 2017 2016

Surplus/(Deficit) 1,115,215 535,027
Depreciation 233,933 244,347
Impairment Loss - -
Increase in payables 95,800 195,169
Increase in current assets - (245,923)
Prior Period Adjustments (54,230) (10,976)
Increase in receivables
Net Cash from Operating Activities 1,390,718 717,644
Note 26 - Government Equity (Consolidated)
2017 2016
General Fund 263,176,693 135,830,863
37
Totals 267,288,110 138,827,065
38
PART II – COMMENTS AND OBSERVATIONS
DETAILED FINDINGS AND RECOMMENDATIONS
A. Financial Audit
Financial Assistance

Section 4 of P.D. No. 1445 otherwise known as the State Audit Code of the
Philippines provides, thus:
“Fundamental principles. Financial transactions and operations of any

government agency shall be governed by the fundamental principles set forth hereunder,
to wit:
(4) Government funds or property shall be spent or used solely for public
purposes.
(6) Claims against government funds shall be supported with complete

documentation.
(7) All laws and regulations applicable to financial transactions shall be

faithfully adhered to.”
Section 3.1 of COA Circular No. 2012-001 dated June 14, 2012 provides the
general guidelines for transfer of funds to implementing agencies, “fund transfers should
be properly taken up in the books of both agencies, used only for the purpose intended,
and properly accounted and reported (COA Circular No. 94-013 dated December 13,
1994).
Post-audit of various disbursement vouchers disclosed financial assistance to

different National Government Agencies (NGAs) and Non-Government Organizations
(NGOs)/Private Organizations (POs) in the total amount of P350,000 (Appendix A), as
summarized below:
Recipients Amount
NGAs 70,000
NGOs/POs 280,000
Total P 350,000
36
The above-cited financial assistance was recorded as Subsidy to LGUs and Other
Maintenance and Operating Expense under Account 874 and 969 of the General Fund.
However, the Barangays, NGAs and NGOs/POs in association with the Municipality of
Lala, Lanao del Norte, the financial assistance given to them should be treated as Fund
Transfers (Due from LGUs, Due from NGAs and Due from NGOs/POs) subject to the
liquidation by the concerned Barangays, Schools and Private Organizations.
These funds were released to the receiving parties without requiring them to
submit liquidation reports, thus proper monitoring of the implementation of their
identified projects, programs and other activities could not be achieved and rendering the
government funds to possible wastage and misuse. More-so, transparency and proper
accountability of public funds was not attained.
Recommendation:
a.) Require the concerned Barangays, NGAs and NGOs/POs to submit the
1. Fund utilization reports, indicating the summary of expense and the

status report of accomplishments, certified by the accountant,
approved by the Local Chief Executive/Head of the receiving parties
and verified by the internal auditor or equivalent official of the
Municipality;
received;
5. Proof of verification by the city official of the validity of the
documents submitted by the receiving parties;
receiving parties of any unutilized/excess amount of the funds
released; and
b) Subsequently, correcting entries should be effected on the recording of funds

released to the various Barangays, NGAs and NGOs/POs. Hence, the
accounts Due from LGUs, Due from NGAs and Due from NGOs/POs should
be debited to record the release of funds to the said Barangays, NGAs and
37
c) Review all liquidation reports to ensure that funds are spent for its intended
funds will not be paid/used for private purposes or for purposes not within
the intention of the source agency.
d) Refrain from incurring unnecessary expenditure of government funds to

of the LGU.
Management Comment:
During the discussion, the management admitted that they have transferred funds
to such recipients acknowledging only the receipt of such amount without requiring any
liquidation of any forms since the nature of such transfer is financial assistance and it
doesn’t need any supporting documents to justify the amount.
Auditor’s Rejoinder:
The audit team maintained their stand with regards to its observation
requiring the concerned NGAs and NGOs/POs to submit documentary
requirements, where applicable, as prescribed under Section 3.0 of COA Circular
No. 2012-001 dated June 14, 2012 specifically liquidation reports of such funds
transfers to ensure that public funds are not used for private purposes.
2. Payment for cash for work and financial assistance totaling P 2,789,200.00
were done thru the grant of cash advance to the Disbursing Officer instead
paying directly to the claimant/intended beneficiary contrary to Section 93
of PD 1445 and COA Circular No. 97-002, thus providing opportunity for
possible misuse of funds.
Section 93 of the Government Auditing Code of the Philippines states that,

“warrants chargeable to revenue or trust funds of the NG or checks drawn against the
treasury Checking Account for Agencies maintained with any government depository
shall be made payable either directly to whom the money is due or to a DO for official
disbursement.”
Likewise, COA Circular No. 97-002 provides that “ideally all payments must be
made by checks except for certain instances when it may be difficult or impossible to
make payments by check. In such case, payments may be made by the disbursing officer
through his cash advance.”
38
Post-audit of the accounts revealed that payment for cash for work and financial
assistance totaling P 1,700,000 were done thru the grant of cash advance to the
Disbursing instead paying directly to the claimant or awarded beneficiary. Hereunder are
the cash advances granted as follow to wit:
Name of Check
Disbursing DV’s No. Numbe Amount Purpose
Officer r
Mercilita A. Financial Assistance
Baran 10/18/2017 1169602 300,000 Payroll
Mercilita A.
Baran 12/22/2017 1170086 400,400 Cash for work payroll
Mercilita A.
Baran 12/29/2017 1187127 1,000,000 Cash for work payroll
Total 1,700,000
Nevertheless, we observe that these paid payrolls lacked with supporting

documents such as:
1. Social Case Study Report

2. Certification from the Barangay Captain
3. Medical Abstract /Death Certificate
The existing practices provide opportunity for possible misuse of funds.
We recommended to the management the following:
a) Stop the practice of payment of financial assistance and cash for work
thru cash advances. Payment should be made payable directly to the
intended beneficiary
b) Require the Accounting Department to review thoroughly similar claims

as to completeness of supporting documents and compliance with to
Section 93 of PD 1445 and COA Circular No. 97-002 to avoid the
opportunity for possible misuse of funds .
Earned Leave Benefits
Statements, disregarding the prescribed and proper use of Chart of Accounts
for the Local Government Units under the Manual on the New Government
Accounting System (NGAS) Volume III Section 263 (Terminal Leave
Benefits).
39
COA Circular No. 2002-003 dated June 20, 2002 prescribing the Manual on the
New Government Accounting System (NGAS) for use in Local Government Units, one
of the essential accounts created is the recognition of money value for earned leave
credits of government personnel, such as:
Account Title Description

Terminal Leave Benefits Debit this account to record the money value of the
accumulated leave credits of government officials and
employees.
Leave Benefits Payable Credit this account to record the money value of the earned
leave credits of government personnel. Debit this account
for payment of leave benefits
Review of the financial statements as of December 31, 2017 revealed that money
value for earned leave credits of the LGU personnel only credited P 5,214,095 as accrued
liability which was also disclosed in the Notes to Financial Statements. However, records
of the Human Resource Management Office (HRMO) of the LGU has computed money
value of the accumulated leave credit balances of employees in to the total amount of
P39,324,212 (Appendix B). In an interview with the HRMO Head, these accumulated
leave credits have not been forwarded to the Accounting Office which makes the account
Accrued Leave Payable not updated and reconciled leaving an understatement of
P34,110,217 for the said account in the financial statements.
Failure to record the correct total Accrued Leave Payable or to disclose the proper
accumulated leave credit balances of the employees in the Notes to Financial Statements
would be non-compliant to the prescribed and proper use of Chart of Accounts under the
Manual on the New Government Accounting System (NGAS). Besides, its disclosure to
the Notes to Financial Statements would update each employee of the LGU on their leave
balances.
The Municipal Human Resource Officer has to submit the required master list of
municipal personnel of the Municipality indicating there in the corresponding position,
rate per month and the reviewed computed balance of earned leave credits as of
December 31, 2017.
1. Require the Head of the Human Resource Officer to furnish a copy of the
Accumulated Leave Credits in the Master List Personnel in the LGU to
the Accounting Office.
40
2. Direct the Budget Officer to appropriate every year the appropriation for
3. Direct the Municipal Accountant to make the necessary adjustments to

record the correct accrued leave payable after ensuring the reliability of
the accumulated leave credit balances of employees as of December 31,
2017.
4. Direct the Municipal Accountant to set up a special fund for the purpose.
Management Comment:
The Municipal Accountant admitted to have missed recording the correct amount
of accrued earned leave benefits of employees for the year 2017 based on the records of
Human Resource Management Office (HRMO). However, she said that such amount is
too large to be reflected in the Financial Statements as liability and that it would create a
speculation and somehow would affect the LGU in their borrowing capacity to contract
for bank loans. Even if they would accrue such amount, they could not afford to pay the
amount and it would affect so much of their Financial Statement. Aside from that, the
management is already making big efforts with regards to employees’ pensions and
benefits. It was stated that they are appropriating funds within the 5-year range as
accrued payable on terminal leave benefits earned by each employee and all of their
retirees are being paid efficiently.
We stand by our recommendation that the Municipal Budget Officer should make
an appropriation every year for the accrued payable on Terminal Leave Benefits earned
by each employee and that the Municipal Accountant should make necessary adjustments
to properly correct the understatement of the Accrued Leave Payable to ensure reliability
of the accumulated leave payable as of December 31, 2017. We believe that it’s not an
excuse not to take up the employees’ pensions and benefits just because it would greatly
affect the Financial Statements and the borrowing capacity of the Municipality. This
would somehow make the auditors question the reliability and completeness of the
Financial Statements of the Municipality.
B.COMPLIANCE AUDIT
School Assistance
41
Section 4.6 of Presidential Decree No. 1445 states that “claims against
government funds shall be supported with complete documentation.” Likewise, COA
Circular No. 2012-001 dated June 14, 2012 was issued to prescribe the Revised
Guidelines and Documentary Requirements for Common Government Transactions
which requires that all types of disbursements shall be supported with sufficient and
relevant documents to establish validity of them.
Review of disbursements disclosed that the auditee released checks to five (5)
public and private schools within the Municipality in the amount of P 70,000 each or a
total of P 350,000 as a school assistance to defray expenses incurred during the 2017
Araw ng Lala activities per payroll No. 101-17-01-141. It was noted that no supporting
documents were attached to the mentioned disbursements. Details of the grant are shown
below (Appendix C):
Check
PAYEE AMOUNT
NUMBER DATE
North Central Mindanao Colleges 1136268 1/31/2017 P 70,000
Lanipao Catholic High School 1136269 1/31/2017 70,000
Christ the King College de
Maranding 1136271 1/31/2017 70,000
Integrated Rural Development
Academy 1136272 1/31/2017 70,000
Lala National High School 1136276 1/31/2017 70,000
Total P 350,000
The management is advised to be reminded that claims for against government

funds shall be supported with complete documentation. For this purpose, should the
Municipal Accountant and the Municipal Treasurer diligently exercised their respective
duties, functions and responsibilities, the agency’s disbursement could have been
thoroughly reviewed and examined as to the completeness of the required documents that
should have been attached. The funds of the LGU could have been assuredly protected
and safeguarded as well.
The Municipal Accountant in the absence of Municipal Internal Control Unit

(ICU) shall act as Internal Auditor. Aside from that, it is inherent in his/her position that
before he/she affixed signature to the vouchers he/she must see the completeness of the
documents that must be attached thereto.
The above-noted deficiencies cast doubts as to the propriety of such

disbursements which runs contrary to COA Circular No. 2012-001.
42
a. To require the Municipal Accountant to submit the required supporting
b. To comply with the submission of necessary supporting documents to ensure

that all claims and payments were properly substantiated and validated.
Management Comment:
During the discussion, the management disclosed that such fund transfers to
public schools are not being required with liquidation documents to justify such
transfers. The Municipal Accountant also indicated that such amounts are automatically
expensed once transferred instead of recording it as receivables. And since the transfer
was made in 2017, most of the documents such OR might be not available anymore.
However, the management will make big efforts to comply with the recommendations set
forth in this audit observation.
Rejoinder:
The Audit Team will monitor its implementation.
Non Submission of Monthly Reports

The subject of COA Circular No. 2013-004 dated January 30, 2013 is the
Information and Publicity on Programs/Projects/Activities (PPA) of Government
Agencies. Section 3.1 requires that the Head of Agency to inform its SA and ATL within
ten (10) days after the award of the infrastructure project or before the start of the
program/activity that the appropriate project signboards and/or public notices are already
posted, and the SA and ATL shall validate the same.
Section 3.2 of the same circular also states that based on the data sourced from the
monthly monitoring report prepared by the agency and verified by the Technical Audit
Specialist, the project status, the format of which is provided as Annex A to the said
Circular, be maintained as current as possible and updated using the prescribed schedule
as shown in the following table:
Contract Duration Frequency of Interval of Verification

Verification (Percentage of Work Accomplished)
43
90 days or less 2 times 50% and 100%
91 - 180 days 3 times 30%, 50% and 100%
181 - 240 days 4 times 25%, 40%, 60%, 80% and 100%
241 - 360 days 5 times 20%, 40%, 60%, 80% and 100%
361 - 720 days 7 times 15%, 30%, 45%, 60%, 75%, and 100%
More than 720 days 10 times Every 10%
Verification of records showed that there was no submission of any monitoring

reports by the agency to the Office of the Auditor for the CY 2017. From the planning
stage to implementation down to the completion of all PPAs, information pertaining to all
the projects that required verification/validation by COA was not submitted. It was only
when we demanded the submission of the information on PPA that the same was
submitted. Thus, verification/validation of the PPA was not conducted on time. Rather,
this was conducted during post-audit of the transactions.
The non-submission of the monthly Monitoring Report precluded validation by

the TAS of the actual status of the projects and timely submission by the Audit Team to
the Regional Director of the Quarterly Report on the Publicized Government
Projects/Programs/Activities. Any deficiency, lapses or area for improvement could not
be communicated to the management on time. Non-submission of said reports is
reflective of operational inefficiency in the system.
a. The Municipal Engineer comply with the requirement on notification and

b. The implementing departments/offices/units submit the monthly
Management Comment:
The Municipal Engineer promised to strictly comply with the requirement on

notification and publicity of the PPAs as well as monthly submission of monitoring
reports prescribed in Annex A of COA Circular No. 2013-004.
Rejoinder:
The audit team will monitor its implementation.
No Approved Budget for the Contract
44
Section 17 of the Revised Implementing Rules and Regulations of Republic Act

No. 9184, otherwise known as the Government Procurement Reform Act, provides that
the Bidding Documents shall be prepared by the Procuring Entity following the standard
forms and manuals prescribed by the GPPB. The Bidding Documents shall include the
following:
a. Approved Budget for the Contract;

b. Instructions to Bidders, including criteria for eligibility, bid evaluation
and post qualification, as well as the date, time and place of the pre-bid
Conference (where applicable), submission of bids and opening of bids;
c. Terms of Reference;
d. Eligibility Requirements;
e. Plans and Technical Specifications;
f. Form of Bid, Price Form, and List of Goods or Bill of Quantities;
g. Delivery Time or Completion Schedule;
h. Form and Amount of Bid Security;
i. Form and Amount of Performance Security and Warranty; and,
j. Form of Contract, and General and Special Conditions of Contract.
Verification of records disclosed that the Approved Budget for the Contract of the
six completed projects of the Municipality in Calendar Year 2017 has not been submitted
as part of the bidding documents.
Approved
No Budget for Contract Winning Bidding
Name of Project STATUS
. Contract Amount (PHP) bidder Date
(PHP)
RUDHIL
Completion of Lala CONSTRU
10,354,4
1 Centralized Evacuation 10,372,444 CTION & 4/5/2017 ON GOING
Center 29 ENTERPRI
SES, INC.
RUDHIL
Construction/Upgradin CONSTRU
12,794,9
2 g of 1 km. Rebe- 12,898,000 CTION & 6/27/2017 ON GOING
Pendulonan Road 83 ENTERPRI
SES, INC.
PRIME
Construction of HAUS
2,989,4 2,927,7 BUILDERS
3 Community Fish & 7/17/2017 ON GOING
Landing Center 96 82
ENTERPRIS
ES
45
CANAL
PRIME
IMPROVEMENT HAUS
OF 1,960,6 BUILDERS 12/27/201 NOT YET
4 1,999,895 AND
PINAMPARAN 97 7 STARTED
ENTERPRIS
DD (DIVERSION ES
DAM)
Construction of
Abaga-Simpak
5
Farm to Market 4,939,0 4,860,1 Dicon
Road (FMR) 00 18 Builders ON GOING
Rehabilitation/Con
creting of
6
Pinuyak-Simpak- 41,438,4 41,416,1 Lanao COMPLETE
Maranding FMR 41 47 Builders D
Furthermore, the Approved Budget of Contract shall be prepared on the basis of

the design plans for the project which has been duly approved by authorized officials in
accordance with existing regulations.
The Manual of Procedures for the Procurement of Goods and Services states that
the ABC is the budget for the contract duly approved by the Head of the Procuring
Entity, as provided for in:
1. The GAA and/or continuing appropriations, in the case of NGAs;

2. The corporate budget for the contract approved by the governing board,
pursuant to E.O. No. 518, series of 1979, in the case of GOCCs and GFIs;
and R.A. No. 8292, in the case of SUCs; or
3. The budget approved by the Sanggunian in the case of LGUs.
Thus, the ABC referred to in R.A. 9184 and its IRR-A basically refers to the
proposed budget for the project approved by the Head of the Procuring Entity based on
the Annual Procurement Plan (APP) as consolidated from various (Project Procurement
Management Plan) PPMPs.
During the auditorial contract review of the infrastructure projects of the

Municipality for 2017, it was found out that there were no attached Approved Budget of
Contract form duly approved and signed by the Head of the Procuring Entity as part of
the Bidding Documents of the 23 completed/ongoing projects (See Appendix D).
In conclusion, the Approved Budget of Contract (ABC) being compared with the
Contractor’s Bid of the 23 projects and as the ceiling for acceptable bid prices in
accordance with the provision of R.A. 9184, cannot be relied on since no budget has been
prepared on the basis of the design plans duly approved for the said projects of the
Municipality. In effect, the non-preparation of the Approved Budget of Contract (ABC)
cannot be accurately and comprehensively reflect the main elements of the Bidding
Documents and PPMP and thus affect the proper preparation of procurement of projects
especially in the procurement planning activities linked to budgets, PPMP and APP.
46
Recommendation:
We have recommended to the Local Chief Executive to direct the Municipal

Engineer to include in the submission of Bidding Documents, the Approved Budget
for the Contract as mandated under the Revised IRR of RA 9184 for review to the
Office of the Audit Team Leader.
Management Comment:
The Municipal Engineer acknowledged that they have not been preparing for an
Approved Budget of Contract as part of their bidding documents. However, the
management agreed to submit the ABCs of the 6 projects stated in Annex A for review to
the Office of the Auditor.
Rejoinder:
The audit team will monitor its implementation.
Government (DILG).
Special Education Fund (SEF) utilization is well defined under Section 272 of
R.A. No. 7160 which shall be allocated and expended exclusively for the following:
3.1.1 Operation and maintenance of public schools;

3.1.2 Construction and repair of school buildings;
3.1.3 Facilities and Equipment;
3.1.4 Educational research;
3.1.5 Purchase of books and periodicals; and
3.1.6 Sports development
Further, Section 100 (c) of the same law provides that the annual school board
budget shall give priority to the following;
3.3.1 Construction, repair and maintenance of school buildings and other

facilities of
public elementary and secondary schools;
47
3.3.2 Establishment and maintenance of extension classes where necessary;
and
3.3.3 Sports activities at the division, district, municipal and barangay levels.
48
Audit of CY 2017 disbursements under the Special Education Fund for the period
January 1 to December 31, 2017 revealed that expenses totaling P 11,298 were
improperly charged against the SEF such as the payment for the repair of government
service vehicle as follows (Appendix E):
Nature of Activities Amount

Payment for the repair of Bongo KIA DepEd Service Vehicle P 2,350
Payment for the repair of Bongo KIA DepEd Service Vehicle 9,042
Total P 11,298
While SEF is available to the agency for use on activities identified by the local
school board, still its utilization must conform to the requirements and should be among
the purposes identified under the provision of RA 7160. The meager funds of the
municipality, especially the SEF, should be spent in a manner that would finance priority
programs, projects and activities of public elementary and secondary schools within the
Municipality, otherwise, goals on improving the education service of the government
may not be achieved.
a) The Local School Board should consider expenditures to be included in

the budget those that were authorized and enumerated under the Revised
b) Stop the charges and payment of expenditures for the operation of the
district office and schools which are not directly attributable to the use
and purpose of Special Education Fund otherwise it will disallowed in
audit.
Management Comment:
The management recognized such charged expense to the SEF and was allowed
since it was part of the approved school budget. It was not noticed by the management
that the repairs of school vehicle are not included in the list of utilization of SEF.
However, during the discussion, they rebutted the auditors saying that such repairs may
be classified under 3.1.3 of Section 272 of RA 7160 which is Facilities and Equipment.
The audit team maintained their stand with regards to its observation
requiring the management to allow charges to the SEF only those that were
49
authorized and enumerated under the Revised Guidelines on the Use of the SEF,
Joint Circular NO. 1, S. 2017 issued by DepED, DBM and DILG.
C. PERFORMANCE AUDIT
20% Development Fund

not implemented thus, depriving the constituents of its intended
beneficiaries.
Section 287 of the Local Government Code provides that “Each LGU
shall appropriate in its annual budget no less than twenty percent (20%) of its
annual internal revenue allotment for development projects.”
Also, Section 2.0 of the DILG-DBM Joint Memorandum Circular No.

2011-1 dated April 13, 2011 provides that:
1.2 It may be utilized to finance the priority development projects and

programs, as embodied in the duly approved local development plan that
directly support the Philippine Development Plan, the Medium-Term
Public Investment Program and the Annual Investment Program.
1.3 All Projects to be funded shall contribute to the attainment of desirable

socio-economic development and environmental management outcomes
and shall partake the nature of investment or capital expenditures.
Further, the Government Procurement Policy Board (GPPB)

Procurement Manual for Local Government Units (LGUs), Volume III on the
Procedures for the Procurement of Infrastructure Projects provides that LGUs
should have a well-planned procurement program so that they will have sufficient
time to procure the required infrastructure projects for its operations promptly
within a reasonable time.
Annex E of the Revised IRR of R.A. 9184, on the other hand, requires,
among others, that detailed engineering activities should be conducted to
establish the technical viability of projects.
For CY 2017, the auditee passed and approved the Programs/Project/Activities of

the 2017 Annual Investment Program - 20% Development Fund Component and
continuing appropriation amounting to P28,524,739 and P 19,687,058, respectively
50
purposely for Economic Services, Social Services, Community Development and
Revenue Generation.
Review of transactions affecting the utilization of 20% development fund for and
continuing appropriation, revealed that the following projects in the total amount of P
6,728,742 were not yet implemented under the continuing appropriation as follows to wit
(Appendix F):
Program/Project/Activities Amount Remarks

1. Concreting of South Mercado (part) and Purok Not
Rambutan Streets-Maranding 2,909,517 implemented
2. Concreting of PRDP-Crossing NIA road, Brgy. Not
Simpak 167,905 implemented
3. Construction of Slope Protection-TulayngPangulo, Not
Pinoyak 3,651,320 implemented
GRAND TOTAL P6,728,742
Thus, leaving a significant unexpended amount of P 6,728,742 of prior years,
thereby depriving its constituents of the benefits from timely implementation of the
planned priority development projects contrary to the provisions of DILG and DBM Joint
Memorandum Circular No. 2011-1 dated April 13, 2011.
The delay or non-implementation of the aforementioned proposed and approved

development projects and programs posed risk that the desired socio economic
development &environmental management outcomes as envisioned by their Municipality
will not be fully achieved, depriving its constituents of the benefits that could have been
derived there from.
a.) Give priority in implementing projects under the 20% development fund
b.) The Local Development Council and Municipal Planning and

Management Comment:
The management noted that such projects were still on-going process in 2017
when Typhoon Vinta interrupted and brought damage to the Municipality of Lala during
December 2017 which caused the delay of the foregoing projects. One of the major
effects of the typhoon was the scarce resource of sand and gravel needed for the
51
construction of these projects due to advisory of stoppage of some quarry industries
within the province. However, the management assured the audit team of full
implementation of these projects by the end of 2018.
52
SOLID WASTE MANAGEMENT / ENVIRONMENT COMPLIANCE

accomplished.
R.A. No. 9003, otherwise known as Ecological Waste Management Act of 2000
provides the following provisions;
Section13. Establishment of Multi-Purpose Environment Cooperatives or

Associations in Every LGU – Multi-Purpose cooperatives and associations that shall
undertake activities to promote the implementation and/or directly undertake projects in
compliance with the provisions of this Act shall be encourage and promoted in every
LGU.
Section 16. The province, city or municipality through its local solid waste
management boards, shall prepare its respective 10-year solid waste management plans
consistent with the National Solid Waste Management Framework.
Section 17 (h). Open dump sites shall not be allowed as final disposal sites. If an
open dump site is existing within the city or municipality, the plan shall make provisions
for its closure or eventual phase out within the period specified under the framework and
pursuant to the provisions under Sec. 37 of this Act. As an alternative, sanitary landfill
sites shall be developed and operated as a final disposal site for solid and, eventually,
residual wastes of a municipality or city or a cluster of municipality and/or cities.
Sanitary landfills shall be designed and operated in accordance with the guidelines set
under Secs. 40 and 41 of this Act.
Section 37. No open dumps shall be established and operated, nor any practice or
disposal of solid waste by any person, including LGUs, which constitutes the use of pen
dumps of solid waste, be allowed after the effectivity of this Act. Provided, that within
three (3) years after the effectivity of this Act, every LGU shall convert its open dumps
into controlled dumps, in accordance with the guidelines set in Section 41 of this Act:
Provided, further, that no controlled dumps shall be allowed five (5) years following
effectivity of this Act.
Section 30. Prohibition on the use of non-environmentally acceptable packaging.

No person owning, operating or conducting a commercial establishment in the country
shall sell or convey at retail or possess with the intent to sell or convey at retail any
products that are placed, wrapped or packaged in on packaging which is not
environmentally acceptable packaging: The presence in the commercial establishment of
non-environmentally acceptable packing shall constitute a rebuttable presumption of
intent to sell or convey the same at retail to customers. Any person who is a
manufacturer, broker or warehouse operator engaging in the distribution or transportation
53
of commercial products within the country shall file a report with the concerned local
government unit within one (1) year from effectivity of this Act, and annually thereafter,
a listing of any products in packaging which is not environmentally acceptable. The
commission shall prescribe the form of such report in its regulations. A violation of this
Section shall be sufficient grounds for the revocation, suspension, denial or non-renewal
of any license for the establishment in which the violation occurs.
Section 48.Prohibited Acts. – The following acts are prohibited:
 Littering, throwing, dumping of waste matters in public places, such as

roads, sidewalks, canals, esteros or parks, and establishment, or causing or
permitting the same;
 Causing or permitting the collection of non-segregated or unsorted waste;
 The manufacture, distribution or use of non-environmentally acceptable
packaging materials;
The Municipality had appropriated for Enforcement of RA 9003 and Garbage
Collection & Disposal Programs for CY 2017 in the total amount of ₱800,000. This
amount is intended purposely to purchase garbage dump truck. However, records showed
that no disbursement was made up to this time.
The Municipality Solid Waste Management Ten (10) Year Plan as required above
was already prepared and submitted however it was not updated.
The following were noted as per assessment on the Municipality’s solid waste
management program:
1. The Municipality 10 year solid waste management plan is still on probation on

its approval by the EMB-10.
2. Closure of the controlled dumpsite was on processed.
3. Sanitary landfill was partially implemented.
4. Used of cellophanes by all business owners/operators were still practiced.
5. Segregation of waste as to biodegradable and non-biodegradable was not
strictly followed by some residents.
6. Receptacles were not properly labeled as to biodegradable and non-
biodegradable waste by some residents, in commercial establishment were
already labeled.
1. That the 10 year plan of the Solid Waste Management of the Municipality
shall be properly reviewed and updated in accordance with the National
Solid Waste Management Council as required under Section 16 of RA
9003.
2. That a Sanitary landfill shall be established and the controlled dumpsite
shall be closed.
54
3. To ensure efficiency and effectiveness of the program, we also
recommended the following:
 Established a Multi-Purpose Environment Cooperatives or

Associations.
 Discouraged the use of cellophanes by all business owners/operators
and replaced it with paper bags.
 Both the residents and the owners of commercial establishments
should segregate the waste as to biodegradable and non-
biodegradable before pick up by the garbage bags.
 Receptacles should be properly labeled as to biodegradable and non-
 Imposed strict compliance as to collection of biodegradable and non-
Management Comment:
The management commented that the DENR has already inspected the said
dumpsite and was given an extension for the full closure and establishment of a sanitary
landfill. It was also noted that the Municipality has long-adopted the waste segregation
scheme. However due to the devastation of Typhoon Vinta last December 2017, majority
of the Municipality including the dumpsite was greatly affected thus increasing the
severity of the circumstance. The Municipal Mayor acknowledged the problem and
promised to take actions within the year.
10. Contracts were not submitted to the Office of the Auditor within five days,
hence was not subjected to contract review within five (5) days after its
perfection/issuance as required under Section 3.1.1 and Section 3.2.1 of COA
Circular 2009-001.
Section 3.1.1 of COA Circular No. 2009-001 states that “within five (5) working
days after the perfection of a by the government or any of its subdivisions, agencies or
instrumentalities, including government-owned and controlled corporations and their
subsidiaries, a copy of said contract and each of all the documents forming part thereof
by reference or incorporation shall be furnished to the Auditor of the agency concerned
xxx.”
Records of this Office showed that submission of perfected contracts and

supporting documents for various government projects within the prescribed period was
not complied with, and at times lacking in some basic supporting document, the
following are as follows:
55
Approved
Contract
Budget for Winning Bidding
Name of Project Amount STATUS
No. Contract bidder Date
(PHP)
(PHP)
RUDHIL
Completion of Lala CONSTRU
10,354,4
1 Centralized 10,372,444 CTION & 4/5/2017 ON GOING
Evacuation Center 29 ENTERPR
ISES, INC.
RUDHIL
Construction/Upgradi CONSTRU
12,794,9
2 ng of 1 km. Rebe- 12,898,000 CTION & 6/27/2017 ON GOING
Pendulonan Road 83 ENTERPR
ISES, INC.
PRIME
2,989,4 2,927, BUILDERS
Landing Center 96 782
ENTERPRI
SES
CANAL
IMPROVEMENT PRIME
OF HAUS
1,960,6 BUILDERS 12/27/201 NOT YET
4 PINAMPARAN 1,999,895
97 AND 7 STARTED
DD ENTERPRI
(DIVERSION SES
DAM)
Construction of
Abaga-Simpak 4,939,0 4,860,
5
Farm to Market 00 118 Dicon
Road (FMR) Builders ON GOING
Rehabilitation/Co
ncreting of 41,438,4 41,416,1
6
Pinuyak-Simpak- 41 47 Lanao COMPLETE
Maranding FMR Builders D
Because of the delayed submission of perfected contracts , the Auditor cannot

undertake the timely auditorial review which consist of evaluation on compliance of
pertinent laws, rules and regulations, completeness of the documentary requirements and
an evaluation .
Due to commitment to other official priorities, officers directly responsible in the

submission of contracts became less attentive on this issue.
a) To instruct the BAC Secretariat to regularly furnish copies of contract of

infrastructure projects to enable the local auditor to conduct the necessary
legal and auditorial reviews as well as future reference of COA-TAS in the
56
conduct of technical review and inspection in pursuant to the guidelines on
Manual on Contracts Review.
b) Instruct the Bids and Award Committee, BAC-Secretariat and BAC –twg to
ensure the timely preparation and submission of contracts and Purchase
Orders and make sure that complete supporting documents were properly
complied with project and make the necessary request for inspection of COA
engineer upon completion of projects prior to its final payment.
Management Comment:
Management asked for consideration on the delayed submission of the contracts

because of lack of manpower and there are things that need to be strengthened in the
preparation of the documents, and assured that the incurrence of delay is unintentional .
They however promised to improve their procurement process with the participation of
the concerned members of the Bids and Awards Committee.
LOCAL DISASTER RISK REDUCTION MANAGEMENT FUND (LDRRMF)
During the year, the Municipality of Lala appropriated 5% or P 9,128,099

LDRRMF in its General Fund of which the amount P 6,440,451 was expended leaving an
unutilized balance of P 2,687,649 as of December 31, 2017. Status of appropriations,
expenditures and balances of the 5% calamity fund for the period CY 2017, are shown as
follows:
Particulars 30% QRF 70% Mitigation Total

Appropriations P2,738,430 P6,389,669 P 9,128,099
Expenditures 1,959,026 4,481,425 6,440,451
Unexpended Balances P 779,404 P 1,908,245 P 2,687,649
CREDIT FINANCING
The LGU had a long term loan with Land Bank of the Philippines, Tubod Branch,
Tubod Lanao del Norte in connection with the construction of their Maranding New
Plaza Arcade, Wet Market, Heavy Equipments & Site Dev’t.-Wet Market and was able
to pay during the year in accordance with the amortization schedule wherein the principal
and interest were P36,628,703, P20,592,151, P4,785,175 and P5,051,644. As of
December 31, 2017, the remaining outstanding balance of the principal is P 72,293,870.
COMPLETE SUBMISSION OF ACCOUNTS
Submission of the financial records and monthly reports such as disbursement

vouchers, payrolls and other related reports were properly accomplished by the auditee. It
is worthy to note that the LGU managed to submit their financial statements on February
14, 2018.
57
58
GENDER AND DEVELOPMENT
Adherence to Executive Order, otherwise known as the Philippine Plan for

Gender Responsiveness Development, the Municipality had undertaken various programs
and activities utilizing the required at least 5% of its budget for gender and development
such as holding of GAD seminar, women empowerment program and awareness on RA
Nos. 9262 and 9208, various sports activity, health and wellness program, capability
building and other GAD related programs and activities.
The municipality appropriated a total amount of P 10,210,103 for Gender and

Development and utilized P 7,291,691 for the implementation of GAD plan activities for
CY 2017.
COMPLIANCE WITH TAX LAWS AND REGULATIONS
The Management as a withholding agent of the Bureau of Internal Revenue fully

complied with BIR Regulations on withholding of taxes. They remitted the value added
and expanded withholding tax for the supplies and materials, equipment and services it
procured and taxes withheld on compensation for Calendar Year 2017 in the total amount
of P 10,715,162 to the government in accordance with the BIR Regulations.
SUSPENSIONS, DISALLOWANCES AND CHARGES
During the calendar year 2017, the audit team has not issued audit suspensions,
disallowances nor charges. Some audit deficiencies were immediately complied by the
management in the course of audit
59
PART III - STATUS OF
IMPLEMENTATION OF PRIOR
YEAR’S AUDIT
RECOMMENDATIONS
Status of Implementation of Prior Year’s Audit Recommendation
Actions taken by Auditor’s Validation

Observation and Recommendation Reference
management Result
1. Cash advances to officers and AAR Management Partially Implemented.
employees amounting to ₱ 2016 explained that
75,396 remained unliquidated follow-up for the The Local Chief
as of December 31, 2016, ₱ liquidation of cash Executive has not yet
2,945,700 were liquidated advances thru requested any authority
beyond the prescribed period, issuance of to write-off on the
₱1,415,700 were granted despite Demand Letters to dormant unliquidated
the unliquidated previous cash concerned officials cash advances to the
advance contrary to Section 89 and employees COA Audit Team
of P.D. 1445 and COA Circular were undertaken. Leader and/or
No. 97-002 dated February 10, However, all the Supervising Auditor.
1997 and COA Circular No. school teachers
2016-005 dated December 19, are nowhere to be
2016. found. According
to the Municipal
We have recommended that the Accountant, these
management to: cash advances
were outstanding
For Dormant unliquidated cash since 2011 and
advances: have not been
liquidated then. It
a. Direct the Municipal was mentioned by
Accountant to prepare an the accountable
aging of unliquidated cash officer that the
advances to support the liquidation of such
request for write-off, indicate cash advances is
in the remarks column the not closely
existence of the applicable monitored due to
conditions such as: circumstances like
heavy workload
 unknown whereabouts of the and unforeseen
accountable delays on the
officer/employee/debtor; transactions
involved.
 that he/she could not be
located despite diligent efforts
to find him/her;
 exhaustion of all possible

remedies by the Management
to collect the receivables;
57
management Result
 To demand liquidation of cash
advances and fund transfers.
b. Require the Local Chief

Executive to file for request
of authority to write-off on
unliquidated cash advances as
mentioned above to COA
Audit Team Leader (ATL)
and/ or Supervising Auditor
(SA).
For Unliquidated Cash

Advances on active service:
c. The Municipal Accountant

should ensure that all cash
advances are liquidated
immediately as soon as the
purpose has been served,
otherwise send letter of
demand.
d. Refrain from processing

disbursement vouchers for a
new cash advance for those
with previous unsettled cash
advances.
e. The Municipal Accountant

should effect the withholding
of salary to concerned
officials.
f. Ensure cash advance are

liquidated after its purpose
has been served. For failure of
the accountable officer to
settle/liquidate outstanding
accountabilities as soon as the
purpose for which it was
given has been served, send
demand letters enjoining the
officials and employees
58
management Result
concerned.
2. The granting of cash advances AAR During the exit Fully Implemented.
for KALAHI CIDSS activities 2016 conference, the
of the LGU with an aggregate Treasurer of the
amount of ₱ 804,079 were not Municipality of
supported with the necessary Lala affirmed the
supporting documents required deficiencies noted
under COA Circular 97-002 and further
dated February 10, 1997. explained that
there has been no
We have recommended the monitoring on the
Municipal Accountant and the supporting
Municipal Treasurer should documents when it
discontinue the practice of comes to granting
granting cash advances without the of cash advances.
approved payroll or estimated To comply with the
detailed list/estimates of expenses audit
to support the amount drawn in recommendations,
compliance to COA Circular 97- they assured the
002 to avoid excessive cash Audit team that
advances. they will attach
approved payroll
or estimated
expenses
especially on the
grant of cash
advances for
wages for
KALAHI-CIDDS.
3. The transfer of funds of AAR During the exit Fully Implemented
KALAHI CIDSS to the 27 2016 conference, the
Barangays of the Municipality Municipal
under Trust Fund account Planning
amounting to ₱ 1,500,000 was Development
not supported with liquidation Officer commented
documents contrary to Section that they have not
3.1 of COA Circular No. 2012- attached the copy
001 dated June 14, 2012 of Approved
integrating COA Circular No. Program of Work
94-013 dated December 13, since the
1994. Accounting
Department did
We have recommended that not require such
the management: documents on the
59
management Result
release of funds.
a. Direct the concerned Punong Thus, no copy has
Barangay of Barangay been transmitted
Simpak, Lala, Lanao del to the Office of the
Norte as the MIBF elected Auditor.
barangay to lead the
implementation to submit the 1. With regards to
liquidation documents of the the non
received fund transfer for submission of
review, evaluation and liquidation
validation as required under documents, the
Section 3.1.1 of COA Circular Municipality
2012-001 dated June 14, according has
2012. not required
such
b. Ensure that the above fund liquidation
transfer be supported with since the
complete documents. Implementing
Agency has
c. Require the Municipal already issued
Accountant to prepare the OR
following adjusting entry to acknowledging
reclassify the fund transfer the receipt of
from Trust Fund – KALAHI transfer of
CIDSS to Brgy. Simpak funds worth P
recognizing the use of 1,500,000.
“Subsidy to/from Special According to
Accounts” (898) on the inter- the Municipal
fund transfer, “Due from Mayor, it is the
LGUs” (131) on the release of Implementing
funds to implementing agency Agency, Brgy.
and “Subsidy to LGUs” (606) Simpak who
upon liquidation of the has the
implementing agency; responsibility
to provide the
d. The Committee created per liquidation
Memorandum of Agreement documents to
consisting of the Ponung the Office of
Barangay, KALAHI-CIDDS the Auditor
Coordinator and the and not the
Municipal Engineer should Municipality,
monitor the project the Source
implementation including Agency.
among others the project
status, its projected as
60
management Result
compared against actual date 2. The Municipal
of completion and periodic Accountant
inspection. affirmed the
reclassification
of accounts
with regards to
the proper use
of account
titles.
1. The Municipal
Engineer also
acknowledged
his
participation
in the
implementatio
n and
monitoring
together with
Brgy. Simpak
as the Lead
Barangay and
Implementing
Agency.
4. Various contracts on the AAR According to the Fully Implemented
procurement of 2016 Municipal
infrastructure projects were Engineer, there
entered with inadequate was a delay of
documentary requirements implementation in
contrary to Revised IRR of the establishment
Republic Act 9184, Manual of Agri-Pinoy Rice
Procedures for the Processing Center
Procurement of II due to revisions
Infrastructure Projects of the estimates
Volume 3 and COA Circular from 3-unit
No. 2012-001 dated June 14, mechanical dryer
2012. into 1 mechanical
dryer, delayed
We have recommended the fabrication and
following: delivery (Origin
from Laguna) and
a. The Municipal Engineer’s Office installation of 3
thru the Bids and Award phase connection
61
management Result
Committee (BAC) Secretariat from single phase;
should submit all supporting 1. The last tranche
documents needed for review and in the amount of P
evaluation by the Audit Team for 3,034,141 from the
the noted projects. Department of
Agriculture has
b. All deficiencies noted and not yet been
identified per project should be downloaded as of
complied strictly pursuant to the February 7, 2017.
2016 Revised Implementing The MAO has
Rules and Regulations of already submitted
Republic Act 9184, Manual for the required
the Procurement of Infrastructure liquidation
Projects Volume 3 and COA documents to the
Circular No. 2012-001 dated June Department of
14, 2012. Agriculture and
requested for the
c. Appropriate corrective measures download of the
shall be addressed to further last tranche.
improve the operations of the 2. According to the
Municipality. Municipal
Accountant, the
retention money in
the amount of P
1,160,957 was
used to partially
pay the contractor
as final payment
for the project.
This was due to
delay in the
downloading of
the last tranche
resulting from
non-submission of
the required
liquidation
documents to the
Department of
Agriculture for the
total project cost
of P13,474,110
that prohibited
them to download
62
management Result
the last tranche
which was
intended for the
final payment to
Rudhil
Construction &
Enterprises, Inc.
3. The MPDC as
the BAC Chairman
confirmed that
such missing
documents exist
and assured to
submit the
required
documents. It so
happens that the
BAC Secretary
does not forward it
to the Office of the
Auditor for review
and evaluation.
5. Submission of contracts and AAR The Municipal Fully Implemented

purchase orders for auditorial 2016 Mayor informed
and legal review were not the Audit Team
submitted to the Auditor that because it was
within five (5) days from its the practice of the
consummation. Also, some of LGU ever since,
the contracts were not they are not aware
supported with complete that it should be
documentation that the BAC’s
contravened the provision of prerogative to
Sections 3.1.1 and 3.2.1 of create or
COA Circular No. 2009-001, designate the
thus needed review to composition of the
determine its compliance with TWG.
legal, auditorial and technical Nevertheless, they
requirements was not made. assured that
recommendations
We have recommended that: shall be
appropriately
The concerned procuring Officer complied with by
thru the Bids and Awards issuing an
Committee (BAC) Secretariat executive order
63
management Result
should submit copies of all designating the
contracts and purchase orders BAC will be the
within five (5) working days from one to perform the
its and make sure that complete selection of the
supporting documents were composition of the
properly complied with to enable TWG.
the assigned auditor to conduct
the necessary legal and auditorial
review as well as future reference
to COA-Technical Services
Office in the conduct of technical
review and inspection.
6. Unserviceable properties AAR The management Partially implemented.
amounting P 3,835,000 were not 2016 disclosed that this
properly derecognized nor has been a long- The management has
disposed due to non- running issue and already prepared the
preparation of the Inventory were thankful to Inventory and
and Inspection Report of have this Inspection Report of
Unserviceable Properties addressed during Unseviceable Properties
(IIRUP) contrary to Section the Exit (IIRUP) and a
125, Chapter 7 of Volume I of Conference. The resolution regarding the
the New Government Municipal Mayor creation of Appraisal
Accounting System (NGAS) in coordination and Disposal
Manual prescribed under COA with the Municipal Committee subject to
Circular No. 2002-003 and GSO commits the Local Chief Executive’s
Paragraphs 82 and 84 of PPSAS creation of an approval. The same was
17 on derecognition of Appraisal submitted to the Office
Property, Plant and Equipment Committee and of the Audit Team
of Philippine Public Sector Disposal Leader. An indorsement
Accounting Standards Volume Committee thru a letter was then
II. resolution to make submitted to the Office
action on the of the Supervising
We have recommended the disposal of the Auditor requesting for
following: unserviceable technical evaluation,
items. The inspection and or
a. Create an Appraisal Committee to Inventory validation relative to the
evaluate the unserviceable Committee headed Inventory and
properties, refer to Annex M of by the MGSO Inspection Report of
COA Memorandum 2005-027 confided to submit Unserviceable
dated February 28, 2005; the IIRUP to the Equipments dated
MAO to reconcile February 27, 2018 of
b. Instruct the Inventory Committee and make the Municipality of
headed by the General Services necessary Lala, Lanao del Norte.
Officer to submit the Inventory adjustments in
64
management Result
Report of Unserviceable their records.
Properties (IRUP);
c. Recommend the applicable mode

of disposal of the items in a
Disposal Committee resolution
for the Local Chief Executive’s
approval.
d. Submit these documents to the

Auditor for evaluation and action
thereon prior to the disposal of
unserviceable items.
e. Require the Accounting Office to

derecognize the obsolete, non-
functional and those no longer
used in the operation based on the
submitted IRUP from the General
Services Office from their
respective Asset account after
applying the applicable mode of
disposal.
7. A discrepancy of P 84,067,373 AAR The Municipal Fully Implemented
was found under the account 2016 Accountant
Land of the Municipality due to explained that they
unreconciled balances between have not received
the trial balance having a book any reports from
value of onl1,335,287 per record the MGSO thus no
with the Inventory and reconciliation
Inspection Report of Real transpired in the
Property maintained by the accounting
Municipal General Services records. The
Office with a balance of P MGSO committed
85,402,660 as of December 31, to submit the
2016 contrary to PPSAS 17 – updated Inventory
Property, Plant and and Inspection
Equipment; Section 120 and Report of Real
124 of the Manual on New Property to the
Government Accounting MAO to book
System (NGAS) Volume 1 for unrecorded
use in LGUs and Section c.3 of properties of the
the Chapter V of the Manual on Municipality. The
Property Custodianship. MGSO and MAO
65
management Result
also confirmed to
We have recommended to the Audit Team to
management: maintain updated
Property Cards
a. Direct the Inventory Committee and Real Property
which includes the MGSO and Ledger Cards,
MAO representatives to conduct a respectively to
joint reconciliation of real regularly monitor
properties between the inventory the real
report and the accounting records. properties.
All discrepancies noted must be
analyzed, investigated and
reconciled immediately.
b. Subsequently, require the

Municipal Accountant to make
the necessary adjusting entry for
the unrecorded lots to reflect a
more reliable balance of Land
account in the Financial
Statements; and
c. Require the Acting MGSO and

the Municipal Accountant to
maintain updated Property Cards
and Real Property Ledger Cards,
respectively to regularly monitor
and reconcile their records and
make necessary adjustments
thereon on the discrepancies
noted.
8. Ownership and proper AAR The Municipal Partially implemented.
valuation of the Land could not 2016 Mayor confirms
be ascertained due to absence of the creation of a Per verification to this
Transfer Certificate of Title for committee to observation, it was
the six (6) lots owned by the handle such noted that the six (6)
Municipality of which two (2) application for lots that is supposed to
has no Current Market Value TCT on those be owned by the
and Property Identification various lots Municipality has
Number rendering the allegedly owned already been occupied
ownership and proper valuation by the with informal settlers.
doubtful, contrary to Section Municipality. However, the settlers
449 of GAAM Vol. 1. agreed to buy the said
occupied lots from the
66
management Result
We have recommended the Municipality and have it
following: entitled to their names
instead.
a. Create a committee headed by the
General Services Officer to
identify the various lots owned by
the Municipality.
b. Assign a member of the

committee to handle the
processing in the application for
the titling of various lots
identified to be owned by the
Municipality.
c. Prepare a budget estimate in the

titling of lots and submit to the
Municipal Budget Officer for
resolution by the Sanggunian
concerned and finally for
approval by the Municipal mayor.
d. Submit timetable to the Local

Chief Executive in order to
constantly monitor the progress of
said activity.
e. Document the problems

encountered that causes the delay
in securing Transfer of Certificate
of Title.
f. Addressed the problems

encountered by recommending
solutions.
9. The Municipality did not AAR In response to this Fully Implemented

maximize the use of its 20% 2016 observation, the
Development Fund thus, 21% Municipal Mayor
or P 7,626,041 remained confirms to give
unutilized as of December 31, priority in
2016, depriving the intended implementing the
beneficiaries with the said projects for
immediate benefits of the the attainment of
67
management Result
projects. the objectives
stated in the
We have recommended to Annual Investment
management: Plan. Aside from
that, the MPDO in
a. Give priority in implementing coordination with
projects under the 20% the Municipal
development fund so that the Engineer commits
project objectives can be attained to monitor the
in accordance with the Annual status of
Investment Program of the implementation of
Municipality. the PPAs.
b. Based on the 20% Approved

Budget, the Local Development
Council and the Municipal
Planning and Development
Officer should closely monitor
and vigorously pursue the timely
and full implementation of all
programs, projects and activities.
c. Submit regular status report to the

Local Chief Executive for his
information so that appropriate
measures can be instituted to
obtain optimal utilization of the
fund.
10. The use of the Local Disaster AAR In a letter Fully Implemented
Risk Reduction and 2016 response from the
Management Fund (LDRRMF) Office of the
was not in accordance with Municipality
Section 21 of R.A. 10121, COA Mayor of Lala to
Circular No. 2012-02 and Ms. Marilou C.
NDRRMC-DBM-DILG Joint Mampao,
Memorandum Circular No. Supervising
2013-1 and dated September 27, Auditor thru Ms.
2010, September 12, 2012 and Macrina M.
March 25, 2013, respectively. Gentiles, Audit
Team Leader
We have recommended that the dated January 19,
management to observe the 2017 re: The use
proper utilization of the LDRRM of Local Disaster
funds pursuant to DBM – DILG Risk Reduction
68
management Result
Joint Memorandum Circular No. and Management
2013 and COA issued Circular Fund (LDRRMF)
No. 2012-002 dated September was not in
27, 2010; March 25, 2013 and accordance with
September 12, 2012, respectively. Section 21 of R.A.
We recommend that the 10121, NDRRMC-
management: DBM-DILF Joint
Memorandum
Circular No. 13-1
and COA Circular
No. 2012-02, the
Municipal Mayor
justified and we
quote:
“That under joint
memorandum
circular No. 2013-
1 of the
NDRRMC-DBM-
DILG there
appears a
provision, citing
item 6.0 on
Policies and
Procedures on the
utilization of
LDRRMF,
specifically sub
items 6.4 and 6.5.
Evidently, any
unused amount of
the LDRRMF at
the end of the year
shall accrue as a
special trust fund
and the same
maybe released or
utilized exclusively
for the
PROGRAMS/PRO
JECTS, and
ACTIVITIES
(PPA) to support
disaster risk
69
management Result
reduction and
management
activities of the
LDRRM Council
within the next five
(5) years.
Further, while
balances at the
end of the year are
held as Special
Trust Fund, the
same maybe
released and
utilized for new
expenditure items
upon submission
of a revised AIP as
approved by the
local sangguniang
and Local Chief
Executive (LCE)
upon
recommendation
of the LDRRMC in
accordance with
the approved
LDRRMP to which
the Municipal
Government of
Lala had
appropriately
complied with.
Now therefore, the
amount utilized
(Php 6,131,482)
from our Special
Trust Fund as an
additional funds
for the
construction of
Phase II of the
Centralized
Evacuation Center
70
management Result
is in accordance
with the existing
rules cited above.
All of the
municipal
government’s
unexpended/unuse
d LDRRMF AIP
balances on 30%
AND 70% in the
previous years
from 2011 to 2015
had been already
transferred to
Special Trust
Fund. LDRRMF
utilization report
dated December
31, 2015 signed by
the Municipal
Accountant is
attached herein as
an integral part of
this letter.
It is noteworthy,
and by reason of
transparency,
prior to the
utilization for the
release of the said
special trust fund,
the Municipal
Government of
Lala through the
undersigned had
referred the matter
to the DBM
Regional Office 10
through RD
Annabelle M.
Atillo. Even after
the issued AOM,
the municipal
71
management Result
government had
communicated to
the latter office for
distinct and
definite answer.
During the
Regional Disaster
Risk Reduction
and Management
Summit on the 1st
quarter in
Cagayan de Oro
City facilitated by
the Office of the
Civil Defense and
participated by
Mayors and
LDRRMO’s in
whole Region 10
the same response
was reiterated by
DBM 10.
Hence, with all
honesty, and with
all our supporting
documents and a
confirmation from
the respected
authority whom we
sought assistance
and whom we
believe is the
rightful agency on
the issue at hand,
we humbly claim
that the municipal
government did
not incur any
lapses to the
above-mentioned
laws as alleged by
your good office.
We solely based
72
management Result
our arguments on
the said joint
memo circular and
by the oral and
written answer of
the DBM to which
the undersigned
believed that the
same was referred
by the regional
office to the
national office in
Manila.”
11. Gender issues were not fully AAR In response to this Fully Implemented
addressed as stipulated in the 2016 observation, the
PCW-DILG-DBM-NEDA Joint LGU GAD Focal
Memorandum Circular No. Point System
2013-01 due to a) non- headed by the
establishment of LGU GAD MSWDO commits
Database; b) implementation of the set up and
non-gender related activities; c) maintenance of a
less stringent monitoring of the GAD Database for
GAD accomplishment. the Municipality of
Lala. With regards
We have recommended the to the assistance
management to: given to Senior
Citizen and PWD
a. Direct the members of the GFPS, activities, the
thru the MSWDO, to spearhead management
the setting up and maintenance of explained that they
the GAD Database to serve as will stop the
basis for gender-responsive payments of cash
planning, programming and assistance out of
policy formulation. They shall the GAD Budget,
conduct examination of the instead allocate an
agency’s level of gender amount on their
mainstreaming or extent of the Local Budget for
gender responsiveness of the Senior Citizen and
municipal programs and PWD. The
activities, the level of gender MSWDO obliged
awareness and competence of its to submit an
personnel and the presence or updated GAD
absence of enabling mechanisms Accomplishment
73
management Result
that support gender Report (AR) based
mainstreaming. from the DILG-
approved
b. Based on the results of gender proforma.
audit, the GFPS determine
programs, projects and activities
that are responsive to gender gaps
or issues faced by their women
and men employees, as well as
their clients and constituents.
c. Direct the TWG to prepare the

consolidated GAD
accomplishment Report (AR)
based from the DILG approved
GPB following the instructions
and format prescribed under the
Joint Circular to provide
consistent data for more accurate
assessment of actual
accomplishments.
12. Expenses charged to the Special AAR On the issue Fully Implemented
Education Fund amounting P 2016 regarding the
118,751 are not among those charges to SEF,
authorized and/or enumerated the management
under Section 1 of RA No. 5447, explained that it
thereby depriving its usage for has been practiced
the programs and activities in their
beneficial to the school children Municipality to
in the Municipality. charge such
expenditures to
We have recommended that the Special Education
Local School Board: Fund and they
were not aware
a. During the planning and budget that the provisions
preparation for the ensuing year, stated prohibits
consider and include only the charging of
such expenditures.
expenditures appropriately
Nevertheless, they
chargeable against the Special assured that they
Education Fund pursuant to the will stop the
provision of RA 5447; and payments not
b. Stop the charges and payment of appropriately
expenditures for the operation of chargeable
74
management Result
the district office and schools against SEF. In
which are not directly attributable the prospective
to the establishment and operation application, the
management
of extension classes.
commits that the
SEF shall be
utilized solely for
its purpose.
75
PART IV – ANNEXES
Annex Title
A Financial Assistance granted to NGAs/NGOs/POs

B Total Earned Leave Credits for CY 2017
C School Assistance Released by the Municipal
D No Approved Budget for the Contract for CY 2017
E Statement of Financial Position – General Fund
F Statement of Financial Position – Special Education Fund
G Statement of Financial Position – Trust Fund
H Statement of Financial Performance – General Fund
I Statement of Financial Performance – Special Education Fund
J Statement of Financial Performance – Trust Fund
K Statement of Condensed Cash Flows – General Fund
L Statement of Condensed Cash Flows – Special Education Fund
M Statement of Condensed Cash Flows – Trust Fund
N Statement of Changes in Net Assets/Equity – General Fund
O Statement of Changes in Net Assets/Equity – Special Education Fund
P Status of Appropriation, Allotment and Obligation
APPENDIX A
AAR Findings No. 1
Financial Assistance granted to NGAs/NGOs/POs

For Calendar Year 2017
Recipients Amount
NGAs 70,000
NGOs/POs 280,000
Total P 350,000
Prepared by: Verified by:
ALEEN REA A. MARTINEZ MACRINA M. GENTILES

State Auditing Examiner II State Auditor IV
Audit Team Member Audit Team Leader
APPENDIX B
AAR Finding No. 2
TOTAL EARNED LEAVE CREDITS FOR CY 2017
NAMES Total Amount
Allan J. Lim, et. Al 2,314,289

Mila C. Aranas, et.al 440,599
Marichu M. Sanchez, et.al 2,383,279
Dr. Ava O. Liwanag, et.al 6,193,707
Rosa P. Tablando, et.al 2,118,389
Engr. Ramonito C. Liwanag, et.al 3,043,651
Zenaida O. Alcoran, et.al 1,016,921
Josephine L. Rebucas, et.al 712,968
Nestor H. Patalinghug, et.al 901,424
Ronel S. Baroy, et.al 6,537,683
Marvin W. Barba, et.al 733,400
Engr. Guardalupe R. Villondo, et.al 2,215,222
Engr Bonifacio R. Sumalpong, et.al 1,667,117
Anastacio B. Baran, et.al 2,341,062
Mercelita A. Baran, et.al 3,692,610
Almario S. Guzman, et.al 3,011,891
TOTAL 39,324,212

77
APPENDIX C
AAR Finding No. 3
SCHOOL ASSISTANCE RELEASED BY THE MUNICIPALITY FOR

CY 2017
Check
PAYEE AMOUNT
NUMBER DATE
North Central Mindanao 1/31/201

Colleges 1136268 7 70,000
1/31/201
Lanipao Catholic High School 1136269 7 70,000
Christ the King College de 1/31/201

Maranding 1136271 7 70,000
Integrated Rural Development 1/31/201

Academy 1136272 7 70,000
1/31/201
Lala National High School 1136276 7 70,000
Total 350,000

78
APPENDIX D
AAR Findings No. 5
No Approved Budget for the Contract for CY 2017
Approved
N Budget for Contract Winning Bidding
Name of Project STATUS
o. Contract Amount (PHP) bidder Date
(PHP)
RUDHIL
Completion of CONSTRU
10,372,44 10,354
1 Lala Centralized CTION & 4/5/2017 ON GOING
Evacuation Center 4 ,429 ENTERPRI
SES, INC.
Construction/Upgr RUDHIL
CONSTRU
ading of 1 km. 12,898,00 12,794
2 CTION & 6/27/2017 ON GOING
Rebe-Pendulonan 0 ,983 ENTERPRI
Road SES, INC.
PRIME
2,989 2,92 BUILDERS
Landing Center ,496 7,782 ENTERPRIS
ES
CANAL
PRIME
IMPROVEMENT HAUS
OF 1,96 BUILDERS 12/27/201 NOT YET
4
PINAMPARAN
1,999,895 AND 7 STARTED
0,697 ENTERPRIS
DD (DIVERSION ES
DAM)
Construction of
Abaga-Simpak
5
Farm to Market 4,939 4,86 Dicon
Road (FMR) ,000 0,118 Builders ON GOING
Rehabilitation/Con
creting of Pinuyak-
6
Simpak- 41,438 41,416 Lanao COMPLETE
Maranding FMR ,441 ,147 Builders D

79
Statement of Financial Position
General Fund
As at December 31, 2017
Notes 2017 2016

ASSETS
Current Assets
Investments - -
Receivables 5 410,335 208,269
Inventories - -
Prepayments and Deferred Charges 5 - 2,406,389
Non-Current Assets
Investments - -
Receivables 5 3,637,916 3,637,916
Total Assets 349,942,137 210,853,030
LIABILITIES
Current Liabilities
Inter-Agency Payables 7 112,973 1,200,000
Intra-Agency Payables 779,404 -
Deferred Credits/Unearned 7 110,043 156,135
Income
Deferred Credits/Unearned - -
Income
Provisions - -
Other Payables - -
Total Non-Current Liabilities 58,518,825 57,381,507
NET ASSETS/EQUITY
Government Equity 26 263,176,693 135,830,863
(SGD.) ROSA P. TABLANDO
80
Municipal Accountant
81
As of December 31, 2017
Not 2017 2016

e
ASSETS
Current Assets
Investments -
-
Receivables -
-
Inventories -
-
Prepayments and Deferred Charges -
-
Non-Current Assets
Investments
-
Receivables 5 674,706 674,706
Investment Property -
-
Property, Plant and Equipment 6 758,847 896,503
Biological Assets -
-
Intangible Assets -
-
Total Assets 4,416,236 3,214,451
LIABILITIES
Current Liabilities
Financial Liabilities 7 140,800
-
Inter-Agency Payables -
-
Intra-Agency Payables 7 26,465.18 23,080
Trust Liabilities -
-
Deferred Credits/Unearned Income 7 137,554 195,169
Total Current Liabilities 304,819 218,249
82
Financial Liabilities -
Deferred Credits/Unearned Income -
Provisions -
Other Payables -
Total Non-Current Liabilities -
Total Liabilities 304,819 218,249
NET ASSETS/EQUITY
Government Equity 4,111,417 2,996,202
Total Liabilities and Net 4,416,236 3,214,451
Assets/Equity
83
Trust Fund
Note 2017 2016
ASSETS
Current Assets
Investments - -
Receivables 779,404 -
Inventories - -
Prepayments and Deferred Charges 1,498,132 -
Non-Current Assets
Investments - -
Receivables 5 394,459 394,459
Biological Assets - -
Intangible Assets - -
Total Assets 79,593,803 92,955,597
LIABILITIES
Current Liabilities
Financial Liabilities 7 9,905 9,905
Inter-Agency Payables 7 63,923,143 74,355,547
Intra-Agency Payables 7 3,248,921 4,294,506
Deferred Credits/Unearned Income - -
Financial Liabilities -
Deferred Credits/Unearned Income -
Provisions -
Other Payables -
Total Non-Current Liabilities -
NET ASSETS/EQUITY
Government Equity - -
84
Statement of Financial Performance
General Fund
Note 2017 2016

Revenue
Tax Revenue 9 16,480,399 14,004,923
Share from Internal Revenue 9 142,226,870 129,328,896
Collections
Other Share from National -
Taxes
Service and Business 10 23,487,422 21,461,709
Income
Shares, Grants and 11 166,732 249,963
Donations
Gains - -
Other Income 13 227,540 136,000
Total Revenue 182,588,963 165,181,492
Less: Current Operating

Expenses
Personnel Services 14 62,219,094 56,948,878
Maintenance and Other Operating 15/16/17/ 64,384,241 65,110,252
Expenses 19/20/21
Non-Cash Expenses 24 8,702,625 9,068,706
Financial Expenses 22 4,288,643 3,823,886
Surplus (Deficit) from

Current Operation 42,994,360 30,229,769
Add (Deduct):
Transfers, Assistance and 12
Subsidy From 49,040,614 12,070,622
Transfers, Assistance and 18
Subsidy To (3,113,567) (2,777,647)
Surplus(Deficit) for the 88,921,407 39,522,743
period

85
Note 2017 2016

Revenue
Tax Revenue 9 3,455,448 2,897,684
Share from Internal Revenue - -
Collections
Other Share from National Taxes - -
Service and Business Income 10 3,898 3,166
Shares, Grants and Donations - -
Gains - -
Other Income - -
Total Revenue 3,459,346 2,900,850

Personnel Services 14 755,186 820,273
Maintenance and Other Operating 15/17/2 1,355,012 1,301,203
Expenses 1
Non-cash Expenses 24 233,933 244,347
Financial Expenses - -
Surplus (Deficit) from Current 1,115,215 535,027

Operation
Add (Deduct):
From - -
Transfers, Assistance and Subsidy To
- -
Surplus(Deficit) for the period 1,115,215 535,027

86
Trust Fund
Not 2017 2016

e
Revenue
Grants and Donations -
-
Total Revenue -
-

Personnel Services -
-
Maintenance and Other Operating -
Expenses -
Non-Cash expenses -
-
Current Operating Expenses -
-
Surplus (Deficit) from Current

Operation
Add(Deduct) Transfers, Assistance and - -
Subsidy
Transfers, Assistance and Subsidy From - 2,270,364
Surplus(Deficit) for the period - 2,270,364

87
Statement of Condensed Cash Flows
General Fund
Note 2017 2016

Cash Inflows
Share from Internal Revenue Allotment 9 142,226,870 129,328,896
Receipts from business/service income 10 23,377,710 21,465,891
Dividend Income - -
Other Receipts 2,470,589 4,300,365
Cash Outflows
Payment of expenses -
15/16/
Payments to suppliers and creditors 17/21 53,187,458 46,373,078
Payments to employees 14 58,893,419 55,265,653
Interest Expense 22 4,204,951 3,717,036
Other Expenses 18/19/20 6,707,066 11,766,984
Net Cash Flows from Operating Activities P 61,516,250 51,778,096
Cash Inflows
Proceeds from Sale of Investment Property -
Proceeds from Sale/Disposal of PPE -
Proceeds from Sale of Non-Current Investments -
Collection of Principal on loans to other entities -
Total Cash Inflows P -
Cash Outflows
Purchase/Construction of Investment Property -
Investment -
Purchase of Bearer Biological Assets -
Purchase of Intangible Assets -
Grant of Loans -
Net Cash Flows from Investing Activities P (40,238,459) (41,167,978)
Cash Inflows
Proceeds from Issuance of Bonds -
88
Proceeds from Loans 16,728,343 21,369,822
Cash Outflows
Payment of Long-Term Liabilities
Retirement/Redemption of debt securities - -
Payment of loan amortization 14,663,861 13,337,901
Net Cash Flows from Financing Activities P 2,064,482 8,031,921
Total Cash Provided by Operating, Investing and P 18,
Financing Activities 23,342,273 642,039
Add: Cash at the Beginning of the Year 39,041,521 20,399,483
Cash Balance at the End of the Year P 62,383,794 39,041,521
Notes to Cash Flow Statement

a) Cash and Cash Equivalent
Cash and cash equivalents consist of cash on hand, balances with banks. Cash and cash
equivalents included in the cash flow statement comprise the following statement of
financial positions amounts:
2017 2016
Cash on hand and balances with banks 62,383,794 39,041,521
Cash Equivalents - -
62,383,794 39,041,521
b) Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)

2017 2016
Surplus/(Deficit) 88,921,407 39,522,743
Depreciation 8,702,625 8,930,613
Impairment Loss - -
Increase in payables 6,976,498 1,808,679
Increase in current assets (43,212,925) 1,426,915
Increase in investments due to revaluation - -
Increase in receivables 95,644 130,975
Prior Period Adjustment 33,000 (41,830)
Net Cash from Operating Activities 61,516,250 51,778,096

89
Note 2017 2016

Cash Inflows
Share from Internal Revenue Allotment -
Receipts from business/service income - -
Dividend Income - -
Other Receipts - 5,000
Cash Outflows
Payments to suppliers and creditors 15/1 1,040,127 1,264,292
7
Payments to employees 14 755,186 820,273
Interest Expense
Other Expenses 21 215,700 55,000
Net Cash Flows from Operating Activities P 1,390,718 717,644
Cash Inflows
Proceeds from Sale of Investment -
Property -
Proceeds from Sale/Disposal of PPE - -
Proceeds from Sale of Non-Current Investments -
-
Collection of Principal on loans to other entities -
-
-
Cash Outflows
Purchase/Construction of Investment Property
-
Purchase/Construction of PPE 6 51,278 159,789
Investment - -
Purchase of Bearer Biological Assets - -
Purchase of Intangible Assets - -
Grant of Loans - -
90
Total Cash Outflows P 51,278 159,789
Net Cash Flows from Investing P (51,278) (159,789)
Activities
Cash Inflows
Proceeds from Issuance of Bonds -
-
Proceeds from Loans -
-
-
Cash Outflows
Payment of Long-Term Liabilities - -
Retirement/Redemption of debt - -
securities
Payment of loan amortization -
-
Total Cash Outflows P
-
Net Cash Flows from Financing Activities P
-
Total Cash Provided by Operating, Investing P 1,339,440 557,855
and Financing Activities
a.) Cash and Cash Equivalent
Cash and cash equivalents consist of cash on hand, balances with banks. Cash and cash
equivalents included in the cash flow statement comprise the following statement of
financial positions amounts:
2017 2016
2,982,682 1,643,242
b.) Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)
2017 2016
Surplus/(Deficit) 1,115,215 535,027
Depreciation 233,933 244,347
91
Impairment Loss - -
Increase in payables 95,800 195,169
Increase in current assets - (245,923)
Prior Period Adjustment (54,230) (10,976)
Increase in receivables - -
Net Cash from Operating Activities 1,390,718 717,644

92
Trust Fund
Not 2017 2016

e
Cash Inflows
Collection from taxpayers P - -
Share from Internal Revenue Allotment - -
Receipts from business/service income - -
Interest Income - -
Dividend Income - -
Other Receipts 7 100,458,998 91,073,583
Cash Outflows
Payments to suppliers and creditors -
Payments to employees -
Interest Expense -
Other Expenses 68,838,391 43,061,854
Net Cash Flows from Operating Activities P 31,620,607 48,011,728
Cash Inflows
Proceeds from Sale of Investment - -
Property
Proceeds from Sale/Disposal of PPE - -
Proceeds from Sale of Non-Current Investments - -
Collection of Principal on loans to other entities - -
Cash Outflows
Purchase/Construction of Investment Property - -
Investment -
Purchase of Bearer Biological Assets -
Purchase of Intangible Assets -
Grant of Loans -
Net Cash Flows from Investing P (26,161,666) (43,106,430)
Activities
93
Cash Inflows
Proceeds from Issuance of Bonds - -
Proceeds from Loans - -
Cash Outflows
Payment of Long-Term Liabilities - -
Retirement/Redemption of debt securities - -
Payment of loan amortization - -
Total Cash Outflows P - -
Net Cash Flows from Financing Activities P - -
Total Cash Provided by Operating, Investing P 5,458,941 4,905,298
and Financing Activities
a) Cash and Cash Equivalent
Cash and cash equivalents consist of cash on hand, balances with banks. Cash and
cash equivalents included in the cash flow statement comprise the following statement
of financial positions amounts:
2017 2016
Total 48,263,374 42,804,433
b) Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)
2017 2016
Surplus/(Deficit) - -
Depreciation - -
Impairment Loss - -
Increase in payables - -
Increase in current assets - -
Increase in investments due to revaluation - -
Increase in receivables - -
Net Cash from Operating Activities - -
((SGD.) ROSA P. TABLANDO
94
95
Statement of Changes in Net Assets/Equity
General Fund
2017 2016
Balance at January 1 135,830,863 96,320,949

Add (Deduct)
Change in Accounting Policy -
Prior Period Errors 33,000 (12,830)
Restated Balance 135,863,863 96,308,119
during the year
Adjustment of Land account 38,931,423
Surplus (Deficit) for the period 88,921,407 39,522,743
Total recognized revenue and expenses for 127,312,830 39,522,743
the period
Balance at December 31 263,176,693 135,830,863
96
Statement of Changes in Net Assets/Equity
2017 2016
Balance at January 1, 2017 2,996,202 2,450,199

Add (Deduct)
Change in Accounting Policy - -
Prior Period Errors - 10,976
Restated Balance 2,996,202 2,461,175
during the year
Adjustment of net revenue recognized directly in
net assets/equity - -
Surplus (Deficit) for the period 1,115,215 535,027
Total recognized revenue and expenses for the
period 1,115,215 535,027
Balance at December 31, 2017 4,111,417 2,996,202

97
STATUS OF APPROPRIATIONS, ALLOTMENTS AND OBLIGATIONS

ALLOTME OBLIGATI UNOBLIGA
FUNCTION/PROGRAM APPRO- NT ON TED
PROJECT/ACTIVITY PRIATION BALANCE
OFFICE OF THE
I. MUNICIPAL MAYOR

Personal Services
Salaries and Wages- 3,20 2,78 2,50 28
Regular 2,374 4,803 0,000 4,803
Personal Economic Relief 22 21 20 4
Allowance 8,000 0,182 6,182 ,000
9 9 9
Representation Allowance 7,200 7,200 7,200 -
9 9 9
Transportation Allowance 7,200 7,200 7,200 -
Clothing/Uniform 4 4 4
Allowance 5,000 5,000 5,000 -
5 5 4 1
Cash Gift 5,000 5,000 5,000 0,000
32 32 31 2
Year End Bonus 1,209 1,209 9,034 ,175
Other Bonuses and 63 40 40
Allowances 0,013 9,577 9,577 -
Retirement and Life Insurance
38 38 35 3
Premiums 4,285 4,285 3,139 1,146
1 1 1 2
Pag-ibig Contributions 3,200 3,200 0,400 ,800
3 3 2 9
PhilHealth Contributions 7,902 7,902 8,538 ,365
1 1 1 3
ECIP 3,200 3,200 0,100 ,100
63 63 20 42
Terminal Leave Benefits 0,564 0,564 1,531 9,033
5,75 5,09 4,32 77
Sub-Total 5,147 9,322 2,900 6,421

Maintenance & Other
Operating Expenses
80 80 68 11
Traveling Expenses 0,000 0,000 3,849 6,151
45 8 8
Training Expenses 0,000 0,000 0,000 -
98
10 10 8 1
Office Supplies Expense 0,000 0,000 8,852 1,148
Gasoline, Oil and Lubricants
3,00 3,45 3,42 2
Expenses 0,000 0,000 8,594 1,406
36 41 39 2
Water Expenses 0,000 6,000 0,521 5,479
6,00 6,00 5,72 27
Electricity Expenses 0,000 0,000 4,292 5,708
2 2 1 1
Telephone Expense-Mobile 4,000 4,000 4,000 0,000
35 35 13 21
Internet Expense 0,000 0,000 4,400 5,600
6 6 3 2
Cable ,000 ,000 ,600 ,400
30 30 30
Survey Expenses 0,000 0,000 0,000 -
10 10 8 1
Auditing Services 0,000 0,000 5,885 4,115
40 40 31 8
Consultancy Services 0,000 0,000 3,500 6,500
10,00 12,75 12,75
Other Professional Services 0,000 8,774 8,774 -
Repair & Maint.-Machinery &
2,00 2,00 1,91 8
Equipment 0,000 0,000 2,827 7,173
Repair & Maint.-Transportation
50 84 84
Equipment 0,000 9,828 9,828 -
1,50 1,37 99 38
Miscellaneous Expense 0,000 5,000 2,000 3,000
40 40 40
Insurance Expense 0,000 0,000 0,000 -
Other Maint. & Operating 3,29 3,70 3,23 46
Expense 8,249 6,496 7,703 8,793
18 18 18 1
-DILG 2,000 2,000 0,343 ,657
8 7 7
-BIR 0,000 8,745 8,745 -
10 10 9
-MCTC 0,000 0,000 9,690 310
70 70 70
-Araw ng Lanao del Norte 0,000 0,000 0,000 -
2,50 2,50 2,06 43
-POPS 0,000 0,000 9,830 0,170
2,00 2,00 2,00
-Araw ng Lala 0,000 0,000 0,000 -
7 7 7
-Rizal Day 0,000 0,000 - 0,000
6 6 6
-Independence Day 0,000 0,000 0,000 -
-Cooperative 10
99
0,000 - - -
1,00 10 10
-Tourism 0,000 0,000 - 0,000
45 45 44 1
-BAC 0,000 0,000 8,971 ,029
2,00 1,24 1,02 21
-Barangay Assistance 0,000 3,033 5,132 7,901
1,15 1,15 1,15
-Equity on Projects (PRDP) 7,270 7,270 7,270 -
25 25 13 11
Revision of Local Code 0,000 0,000 5,450 4,550
Maint. Of DAR-ADB, FMR 52 42 42
(PIELSADAI) 5,000 5,350 5,350 -
Improvement of Municipal Roads-
2,50 2,50 2,30 19
Maranding 0,000 0,000 0,271 9,729
Maint. Of DAR-ADB, 32 29 12 16
FMR (SICAP) 0,000 3,333 4,800 8,533
5 5 5
Katarungang Pambarangay 0,000 0,000 - 0,000
50 50 50
CLUP 0,000 0,000 0,000 -
44,13 45,77 42,70 3,07
Sub-Total 2,519 5,830 4,477 1,353
-
1,70 1,70 18 1,51
Capital Outlay 0,000 0,000 0,430 9,570
1,70 1,70 18 1,51
0,000 0,000 0,430 9,570

51,58 52,57 47,20 5,36
Total 7,666 5,151 7,807 7,344

I Office of the Sangguniang
I Bayan
Personal Services
Regular 8,957 8,957 7,693 1,264
Allowance 6,000 6,000 6,000 0,000
84 84 82 2
Representation Allowance 1,050 1,050 0,800 0,250
84 84 82 2
Transportation Allowance 1,050 1,050 0,800 0,250
Allowance 0,000 0,000 0,000 -
5 5 5 5
Cash Gift 5,000 5,000 0,000 ,000
Year End Bonus 64 64 59 5
100
9,942 9,942 1,668 8,274
Other Bonuses and 56 56 51 4
Allowances 7,786 7,786 8,735 9,051
81 81 76 4
Premiums 3,475 3,475 9,871 3,604
1 1 1 1
5 5 3 2
PhilHealth Contributions 7,750 7,750 4,125 3,625
1 1 1 1
ECIP 3,200 3,200 1,700 ,500
95 95 95
Terminal Leave Benefits 0,000 0,000 - 0,000
11,87 11,87 10,42 1,45
Sub-Total 7,410 7,410 3,192 4,218

Maintenance & Other
Operating Expenses
1,44 1,26 1,26
Traveling Expenses 0,000 9,083 9,083 -
20 20 19 9
Training Expenses 0,000 0,000 0,689 ,311
7 7 7 4
Office Supplies Expense 5,000 5,000 0,137 ,863
Telephone Expense- 7 7 7
Landline 5,000 5,000 4,697 303
26 24 24
Telephone Expense-Mobile 4,000 0,000 0,000 -
65 65 65
Representation Expense 0,000 0,000 0,000 -
Repair & Maint.-Transportation
20 20 19 1
Equipment 0,000 0,000 8,193 ,807
Other Maint. & Operating 3,93 3,93 3,90 3
Exp. 2,000 2,000 0,000 2,000
6,83 6,64 6,59 4
Sub-Total 6,000 1,083 2,800 8,284
3,60 3,60 22 3,37
Capital Outlay 0,000 0,000 8,680 1,320
3,60 3,60 22 3,37
Sub-Total 0,000 0,000 8,680 1,320

22,31 22,11 17,24 4,87
Total 3,410 8,493 4,672 3,822

I
I
I Secretary to the SB
Personal Services
101
Regular 9,764 9,764 1,874 7,890
Allowance 4,000 4,000 3,000 1,000
8 8 8
8 8 8
Allowance 5,000 5,000 5,000 -
4 4 2 1
Cash Gift 0,000 0,000 5,000 5,000
16 16 12 4
Year End Bonus 4,398 4,398 2,026 2,372
Allowances 0,632 0,632 0,632 -
19 19 17 2
Premiums 9,172 9,172 8,331 0,841
9 9 6 3
Pag-ibig Contributions ,600 ,600 ,000 ,600
1 1 1 5
9 9 5 3
ECIP ,628 ,628 ,833 ,795
11 11 11
Terminal Leave Benefits 1,921 1,921 1,921 -
16 16 5 10
Other Personnel Benefits 1,921 1,921 5,000 6,921
2,92 2,92 2,51 41
Sub-Total 7,685 7,685 0,743 6,942

Maintenance & Other
Operating Expenses
10 9 9
2 2 1 9
1 1 1
Postage & Deliveries 0,000 0,000 - 0,000
2 2 2
Other Maint. & Operating 10 10 7 2
Exp. 3,897 3,897 9,340 4,557
26 26 21 4
Sub-Total 2,897 2,475 8,449 4,026

3 3 3
Capital Outlay 5,000 5,000 - 5,000
3 3 3
Sub-Total 5,000 5,000 5,000
102

3,22 3,22 2,72 49
Total 5,582 5,160 9,192 5,968

I Municipal Planning &
V Development Coordinator
Personal Services
Regular 2,176 2,176 1,294 0,882
Allowance 0,000 0,000 2,000 8,000
8 8 8
8 8 8
Allowance 5,000 5,000 5,000 -
2 2 1 5
Cash Gift 0,000 0,000 5,000 ,000
12 12 10 1
Year End Bonus 2,577 2,577 8,615 3,962
Allowances 8,149 8,423 8,423 -
16 16 14 1
Premiums 2,630 2,630 8,070 4,560
4 4 3 1
1 1 1 1
4 4 3 1
ECIP ,800 ,800 ,600 ,200
60 60 60
2,65 2,65 1,91 74
Sub-Total 6,710 6,984 9,077 6,205

Maintenance & Other
Operating Expenses
20 16 16
10 10 9 8
2 2 2
Other Maint. & Operating 5 3 3
Exp. 0,000 8,825 8,825 -
37 33 32 8
Sub-Total 4,000 2,615 3,725 ,890
103

4 4 4
Capital Outlay 5,000 2,395 2,395 -
4 4 4
5,000 2,395 2,395 -

3,07 3,03 2,28 75
Total 5,710 1,994 5,198 5,095

V
. Local Civil Registrar
Personal Services
Salaries and Wages- 79 79 79
Regular 6,242 6,242 6,242 -
Personal Economic Relief 4 4 4
Allowance 8,000 8,000 8,000 -
8 8 8
8 8 8
Allowance 0,000 0,000 0,000 -
1 1 1
Cash Gift 0,000 0,000 0,000 -
7 7 7
Year End Bonus 0,900 0,900 0,900 -
Allowances 3,106 3,106 3,106 -
9 9 9
Premiums 5,549 5,549 5,549 -
2 2 2
Pag-ibig Contributions ,400 ,400 ,400 -
6 6 6
PhilHealth Contributions ,813 ,750 ,750 -
2 2 2
ECIP ,400 ,400 ,400 -
1,28 1,28 1,28
Sub-Total 7,410 7,347 7,347 -

Maintenance & Other
Operating Expenses
10 10 8 1
Traveling Expenses 0,000 0,000 9,419 0,581
5 5 5
Office Supplies Expense 0,000 0,000 0,000 -
2 2 2
104
Exp. 6,000 6,000 8,200 ,800
23 23 21 1
Sub-Total 0,000 0,000 1,619 8,381

7 7 2 4
Capital Outlay 0,000 0,000 5,670 4,330
7 7 2 4
0,000 0,000 5,670 4,330

1,58 1,58 1,52 1
Total 7,410 7,347 4,636 8,381

V
I General Services Office
Personal Services
Regular 8,264 8,264 3,786 4,478
Allowance 4,000 4,000 6,545 ,455
8 8 8
8 8 8
Allowance 5,000 5,000 5,000 -
6 6 5 8
Cash Gift 0,000 0,000 2,000 ,000
17 17 15 2
Year End Bonus 7,411 7,411 6,321 1,090
Allowances 4,305 4,305 4,305 -
23 23 22 6
Premiums 6,063 6,063 9,709 ,354
1 1 1
Pag-ibig Contributions 4,400 4,400 4,300 100
2 2 1 2
1 1 9 4
ECIP 4,252 4,252 ,640 ,612
3,24 3,24 3,15 9
Sub-Total 7,121 7,121 2,611 4,510

Maintenance & Other
Operating Expenses
10 6 6
12 6 6
105
2 2 2
Exp. 0,000 0,000 9,737 263
36 27 27
Sub-Total 4,000 3,418 3,155 263

6 3 3
Capital Outlay 0,000 1,450 1,450 -
6 3 3
0,000 1,450 1,450 -

3,67 3,55 3,45 9
Total 1,121 1,989 7,216 4,773

V
I Office of the Municipal
I Budget
Personal Services
Salaries and Wages- 1,05 1,05 61 44
Regular 5,476 5,476 5,300 0,176
Allowance 8,000 8,000 4,000 ,000
8 8 8
8 8 8
Allowance 5,000 5,000 5,000 -
2 2 1 5
Cash Gift 0,000 0,000 5,000 ,000
11 11 5 5
Year End Bonus 2,495 2,495 4,797 7,698
Allowances 2,234 2,510 2,510 -
12 12 7 4
Premiums 6,146 6,146 6,986 9,160
4 4 3 1
1 1 7 5
PhilHealth Contributions 2,963 2,963 ,588 ,376
4 4 3 1
ECIP ,800 ,800 ,600 ,200
1,67 1,67 1,11 56
Sub-Total 3,914 4,190 0,381 3,809

Maintenance & Other
Operating Expenses
106
12 10 10
5 2 2
2 2 2
Exp. 5,000 1,040 1,040 -
32 25 25
Sub-Total 4,000 1,430 1,430 -
-
6 6 6
Capitaol Outlay 0,000 0,000 0,000 -
6 6 6
0,000 0,000 0,000 -
-
2,05 1,98 1,42 56
Total 7,914 5,620 1,810 3,809
-
V
I
I Accountant -
Personal Services -
Regular 5,452 5,452 7,734 7,718
Allowance 2,000 2,000 0,000 2,000
8 8 8
8 8 8
Clothing/Uniform 3 3 2 5
Allowance 0,000 0,000 5,000 ,000
3 3 2 1
Cash Gift 5,000 5,000 5,000 0,000
17 17 15 2
Year End Bonus 8,865 8,865 0,057 8,808
Allowances 5,624 5,624 5,624 -
21 21 19 2
Premiums 6,656 6,656 3,327 3,329
8 8 6 2
107
2 2 1 6
8 8 6 2
ECIP ,400 ,400 ,000 ,400
2,82 2,82 2,53 28
Sub-Total 3,886 4,246 6,017 8,229
-
Maintenance & Other
Operating Expenses -
20 20 19 4
Traveling Expenses 0,000 0,000 5,319 ,681
15 15 14
Office Supplies Expense 0,000 0,000 9,526 474
2 2 2
Exp. 0,000 0,000 6,983 3,017
57 57 55 1
Sub-Total 4,000 4,000 5,828 8,172
-
10 10 7 2
Capital Outlay 0,000 0,000 2,384 7,616
10 10 7 2
0,000 0,000 2,384 7,616
-
3,49 3,49 3,16 33
Total 7,886 8,246 4,229 4,017
-
X Treasurer -
Personal Services -
Salaries and Wages- 3,70 3,07 3,07
Regular 3,276 3,837 3,837 -
Allowance 6,000 6,000 3,727 2,273
12 12 9 3
12 12 11 1
Allowance 5,000 5,000 5,000 -
48 48 48
Other Bonuses & Allow.-Meal Allow. 6,362 6,362 6,362 -
Cash Gift 8 8 7 5
108
0,000 0,000 4,750 ,250
35 37 37
Year End Bonus 2,205 9,453 9,453 -
44 44 34 9
Premiums 3,370 3,370 6,574 6,796
1 1 1 4
4 4 3 1
1 1 1 4
ECIP 9,200 9,200 4,293 ,907
1,73 1,73 1,50 23
7,56 6,96 6,47 48
Sub-Total 5,805 3,614 4,333 9,281
-
Maintenance & Other
22 22 22
15 15 14
Training Expense 0,000 0,000 9,842 158
16 16 16
Office Supplies Expense 5,000 5,000 4,274 726
45 40 40
Accountable Forms 0,000 1,698 1,698 -
2 2 2
15 15 12 2
Fidelity Bond Premium 0,000 0,000 3,615 6,385
Exp. 0,000 8,696 8,696 -
1,60 1,46 1,43 2
Sub-Total 4,000 4,393 7,124 7,269
-
15 15 9 5
Capital Outlay 0,000 0,000 9,447 0,553
15 15 9 5
Sub-Total 0,000 0,000 9,447 0,553
-
9,31 8,57 8,01 56
Total 9,805 8,007 0,904 7,103
-
Office of the Municipal
X Assessor -
109
Personal Services -
Salaries and Wages- 1,11 78 78
Regular 4,726 5,074 5,074 -
Allowance 8,000 8,000 2,000 6,000
8 8 8
8 8 8
Allowance 0,000 0,000 5,000 ,000
2 7 7
Cash Gift 5,000 5,000 5,000 -
16 5 5
Year End Bonus 8,174 8,862 8,862 -
Allowances 0,000 3,133 3,133 -
13 4 4
Premiums 3,438 2,924 2,924 -
6 6 3 2
1 1 8 7
6 6 3 2
ECIP ,000 ,000 ,680 ,320
48 48 48
2,25 1,81 1,78 3
Sub-Total 3,650 7,305 3,695 3,610
-
Maintenance & Other
10 10 9
Traveling Expenses 0,000 0,000 9,914 86
7 7 7
2 2 2
Exp. 3,663 3,663 5,534 ,129
30 30 29 8
Sub-Total 2,663 2,663 4,448 ,215
-
5 4 4
Capital Outlay 0,000 1,632 1,632 -
110
5 4 4
0,000 1,632 1,632 -
-
2,60 2,16 2,11 4
Total 6,313 1,600 9,775 1,825
-
X Office of the Municipal
I Health Services -
Personal Services -
Regular 2,997 6,165 6,165 -
Allowance 8,000 8,000 5,000 3,000
8 8 8
8 8 8
Allowance 0,000 0,000 0,000 -
Subsistence, Laundry & Quarterly
34 27 27
Allow. 2,000 1,000 1,000 -
3 3 2 7
Laundry Allowance 4,200 4,200 6,850 ,350
9 9 9 5
Cash Gift 5,000 5,000 0,000 ,000
43 41 41
Year End Bonus 5,610 1,864 1,864 -
Allowances 3,639 3,639 5,009 8,630
59 59 58 1
Premiums 7,992 7,992 0,984 7,008
2 2 2 1
5 5 5 5
2 2 2 1
ECIP 2,800 2,800 1,767 ,033
49 49 49
8,38 8,10 7,54 56
Sub-Total 6,248 4,670 3,013 1,657
-
Maintenance & Other
111
2 2 2
Exp. 5,000 5,000 8,500 ,500
7 7 7 6
Sub-Total 9,000 9,000 2,500 ,500
-
8,46 8,18 7,61 56
Total 5,248 3,670 5,513 8,157
-
X Office of the Municipal
I Social Welfare &
I Development -
Personal Services -
Regular 4,613 8,908 8,908 -
Allowance 0,000 0,636 0,636 -
8 8 8
8 8 8
Allowance 0,000 0,000 0,000 -
5 5 2 3
Cash Gift 5,000 5,000 1,000 4,000
20 9 9
Year End Bonus 5,208 2,935 2,935 -
Allowances 4,331 4,331 6,634 7,697
19 19 15 3
Premiums 0,826 0,826 5,129 5,697
1 1 4 8
Pag-ibig Contributions 3,200 3,200 ,400 ,800
2 2 1 1
1 1 5 7
ECIP 3,200 3,200 ,600 ,600
63 63 41 22
3,38 2,98 2,58 40
Sub-Total 0,202 2,860 1,664 1,196
Maintenance & Other
20 16 16
112
15 15 11 3
Training Expense 0,000 0,000 1,600 8,400
10 2 2
2 2 2
Other Maint. & Operating 2,30 2,17 2,17
Exp. 5,000 9,632 9,632 -
2,77 2,54 2,51 3
Sub-Total 9,000 9,257 0,857 8,400
-
10 10 2 7
Capital Outlay 0,000 0,000 4,000 6,000
10 10 2 7
Sub-Total 0,000 0,000 4,000 6,000
-
6,25 5,63 5,11 51
Total 9,202 2,117 6,521 5,596
-
X
I
I Agricultural Services -
Personal Services -
Regular 9,555 1,675 1,675 -
Allowance 2,000 2,000 2,000 -
8 8 8
8 8 8
Allowance 5,000 0,000 0,000 -
9 9 9
Cash Gift 0,000 0,000 0,000 -
32 32 32
Year End Bonus 9,613 9,613 9,613 -
Allowances 4,445 4,445 6,520 7,925
42 5 5
Premiums 7,147 1,253 1,253 -
2 2 1 3
113
4 4 3 5
2 2 1 2
ECIP 1,600 1,600 9,100 ,500
1,17 1,17 1,17
6,76 4,81 3,57 1,24
Sub-Total 6,889 8,115 8,036 0,079
-
Maintenance & Other
50 50 49 6
5 5 4 4
Training Expense 0,000 0,000 5,574 ,426
5 5 4 2
2 2 2
Exp. 0,000 4,145 4,145 -
1,07 74 73 1
Sub-Total 4,000 8,145 4,762 3,382
-
5 5 5
Capital Outlay 0,000 0,000 - 0,000
5 5 5
0,000 0,000 - 0,000
-
7,89 5,61 4,31 1,30
Total 0,889 6,259 2,798 3,461
-
X
V Engineer -
Personal Services -
Regular 5,459 5,459 1,025 4,434
Allowance 4,000 4,000 0,000 4,000
8 8 8
8 8 8
114
Allowance 5,000 5,000 0,000 ,000
4 4 3 8
Cash Gift 0,000 0,000 2,000 ,000
16 13 13
Year End Bonus 5,268 3,339 3,339 -
Allowances 1,582 6,007 6,007 -
19 19 18 1
Premiums 9,856 9,856 5,171 4,685
9 9 7 2
2 2 1 7
9 9 7 2
ECIP ,600 ,600 ,200 ,400
2,68 2,62 2,37 24
Sub-Total 2,566 5,062 7,142 7,920
-
Maintenance & Other
20 20 20
15 15 14 5
2 2 2
Exp. 0,000 0,000 0,000 -
47 47 47 5
Sub-Total 4,000 5,591 0,515 ,076
-
10 10 9 1
Capital Outlay 0,000 0,000 8,464 ,536
10 10 9 1
0,000 0,000 8,464 ,536
-
3,25 3,20 2,94 25
Total 6,566 0,653 6,121 4,532
-
Office of the Municipal
X Economic & Enterprise
V Development -
Personal Services -
115
Regular 7,740 0,728 0,728 -
Allowance 6,000 6,000 7,000 9,000
8 8 8
8 8 8
Allowance 0,000 0,000 0,000 -
42 35 35
Other Bonuses & Allow.-Meal Allow. 8,556 3,450 3,450 -
6 6 4 2
Cash Gift 5,000 5,000 2,000 3,000
19 19 13 6
Year End Bonus 1,914 1,914 0,056 1,858
23 18 18
Premiums 7,730 8,036 8,036 -
1 1 1 5
2 2 1 6
1 1 1 5
ECIP 5,717 5,717 0,412 ,305
16 16 16
3,61 3,08 2,92 16
Sub-Total 9,300 7,488 7,136 0,352
-
Maintenance & Other
5 5 4 4
8 8 8 2
2 2 2
Repairs & Maint.-Bldgs. & Other
40 40 36 3
Structures 0,000 0,000 0,506 9,494
Other Maint. & Operating 1,05 1,07 1,07
Exp. 0,000 6,702 6,702 -
1,61 1,63 1,59 4
Sub-Total 2,000 8,702 2,524 6,178
6 6 6
Capital Outlay 0,000 0,000 0,000 -
6 6 6
0,000 0,000 0,000 -
116

5,29 4,78 4,57 20
Total 1,300 6,190 9,660 6,530
X
V Office of the Municipal
I Administrator -
Personal Services -
Salaries and Wages- 81 59 59
Regular 2,115 5,825 5,825 -
Allowance 0,000 0,000 8,000 2,000
4 4 2 2
4 4 2 2
Allowance 5,000 5,000 5,000 -
1 1 1 5
Cash Gift 5,000 5,000 0,000 ,000
9 4 4
Year End Bonus 8,059 0,052 0,052 -
Allowances 8,352 8,352 8,352 -
9 5 5
Premiums 7,165 7,771 7,771 -
3 3 2
Pag-ibig Contributions ,600 ,300 ,400 900
1 1 6 4
3 3 2 1
ECIP ,600 ,600 ,400 ,200
1,25 94 87 6
Sub-Total 4,817 0,826 7,137 3,689
-
Maintenance & Other
10 10 10
10 10 10
Training Expense 0,000 0,000 0,000 -
8 8 8
2 2 2
Exp. 0,000 0,000 4,041 ,959
117
55 55 54 5
Sub-Total 4,000 4,000 8,041 ,959
-
10 5 5
Capital Outlay 0,000 8,256 8,256 -
10 5 5
Sub-Total 0,000 8,256 8,256 -
-
1,90 1,55 1,48 6
Total 8,817 3,082 3,434 9,647
X
V
II Non-Office Expenditures -
5% Local Disaster Risk Mngt. 9,38 9,12 7,21 1,90
Fund 1,185 8,099 9,854 8,245
20% Development Fund- 28,52 28,44 23,03 5,41
2016 4,739 5,374 4,526 0,848
2 2 2
Aid to Barangays 7,000 7,000 7,000 -
3 3 3
Discretionary Fund 9,592 9,592 - 9,592
15 15 14 4
Disable 0,000 0,000 5,550 ,450
45 45 44
Senior Citizen 0,000 0,000 9,448 552
Local Climate Change Action 1,30 1,30 1,30
Fund 0,000 0,000 - 0,000
Acquired Immune Deficiency
10 10 10
Syndrome 0,000 0,000 - 0,000
Local Councils for the Protection of
1,42 1,42 89 52
Children 6,237 6,237 6,835 9,402
10,21 10,21 7,29 2,91
Gender and Development 0,103 0,103 1,691 8,412
51,60 51,27 39,06 12,21
Sub-Total 8,856 6,405 4,904 1,501
187,6 182,5 154,2 28,27
Grand Total 23,695 61,983 84,390 7,593
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Republic of the Philippines

February 23, 2018

HON. ALLAN J. LIM

We rendered a qualified opinion on the fairness presentation of the financial

1. Financial Assistance totaling P350,000 granted to National Government

a. Require the concerned Barangays, NGAs and NGOs/POs to submit the

b. Subsequently, correcting entries should be effected on the recording of funds

d. Refrain from incurring unnecessary expenditure of government funds to

We have recommended to the Local Chief Executive the following:

c) Direct the Municipal Accountant to make the necessary adjustments to

We recommended to the Local Chief Executive:

a. To require the Municipal Accountant to submit the required supporting

b. To comply with the submission of necessary supporting documents to

4. The Municipality was not able to submit monthly monitoring reports

a) The Municipal Engineer comply with the requirement on notification and

We have recommended to the Local Chief Executive to direct the

We have recommended the following:

a. The Local School Board should consider expenditures to be included in the

7. Development projects under the 20% Local Development Fund remained

We recommended to the Local Chief Executive the following:

1) Give priority in implementing projects under the 20% development fund

8. The Ecological Solid Waste Management was not fully implemented, as

We have recommended to the Local Chief Executive the following:

c) To ensure efficiency and effectiveness of the program, we also recommended

We request that the recommended remedial measures be immediately

By Authority of the Chairman

The Secretary, Sangguniang Bayan, Municipality of Lala

February 26, 2018

In compliance with Section 2, Article IX-D of the Philippine Constitution and

Very truly yours,

ANNUAL AUDIT REPORT

For the Period Ended December 31, 2017

The Municipality of Lala is envisioned to be a livable, productive municipality

The Municipal Government of Lala is manned by a total of 289 personnel with 11

Calendar Calendar Increase/ % Increase/

CY 2017 CY 2016 Increase/(Decrease)

D. Sources & Application of Funds

E. Scope of the Audit

F. Auditor’s Opinion on the Financial Statements

A qualified opinion was rendered on the fairness of the presentations of the

G. Significant Findings and Recommendations

1. Financial Assistance totaling P350,000 granted to National Government

a. Require the concerned Barangays, NGAs and NGOs/POs to submit the

b. Subsequently, correcting entries should be effected on the recording of funds

d. Refrain from incurring unnecessary expenditure of government funds to

We have recommended to the Local Chief Executive the following:

We recommended to the Local Chief Executive:

a) To require the Municipal Accountant to submit the required supporting

b) To comply with the submission of necessary supporting documents to

3. The Municipality was not able to submit monthly monitoring reports

a. The Municipal Engineer comply with the requirement on notification and

b. The implementing departments/offices/units submit the monthly

We have recommended to the Local Chief Executive to direct the

We have recommended the following:

a. The Local School Board should consider expenditures to be included in the

6. Development projects under the 20% Local Development Fund remained

We recommended to the Local Chief Executive the following:

1. Give priority in implementing projects under the 20% development fund

2. The Local Development Council and Municipal Planning and