REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
Local Government Sector
Audit Group C – Capiz Province
Provincial Satellite Auditing Office
Sitio Ilawod, Brgy. Dinginan, Roxas City

AUDIT PROGRAM
LOCAL DISASTER RISK REDUCTION MANAGEMENT FUND
CY 2021

I. Background:

Republic Act No. 10121, otherwise known The Philippine Disaster Risk Reduction and
Management Act of 2010, shifted the focus from disaster response and recovery towards disaster
risk reduction, preparedness and mitigation. It also modified the use and appropriation of the
Local Calamity Fund or what is now known to be as the Local Disaster Risk Reduction and
Management Fund.

II. Audit Criteria:

1. Republic Act (RA) 10121 – Implementing Rules and Regulations of RA No. 10121 also
known as the Philippine Disaster Risk Reduction and Management Act of 2010;
2. DILG Memorandum Circular 2012-73 dated April 17, 2012 – Utilization of Local Disaster
Risk Reduction and Management Fund (LDRRMF);
3. COA Circular 2012-002 dated September 12, 2012 – Accounting and reporting guidelines
for LDRRMF of Local Government Units (LGUs), National Disaster Risk Reduction and
Management Fund (NDRRMF) given to LGUs and receipts from other sources;
4. JMC No. 2013-1 dated March 25, 2013 of the NDRRMC, DBM and DILG – Allocation and
utilization of the LDRRMF;
5. COA Circular 2014-002 dated April 15, 2014 – Accounting and reporting guidelines on the
receipt and utilization NDRRMF, cash and in-kind aids/donations from local and foreign
sources, and funds allocated from the agency regular budget for DRRM program;
6. COA Memorandum 2014-009 dated August 28, 2014 – Guidelines in the Audit of DRRM
funds;
7. COA Circular 2020-009 dated April 21, 2020 – Temporary relaxation in the application of
certain provision of COA Cir. No. 2014-002 and COA Memorandum No. 2014-009 in areas
subject to quarantine during the period of the Sate of Calamity declared under Proclamation
No. 929, dated March 16, 2020;
8. RA 9184/GPPB Resolution No. 03-2020 – Approving the adoption of efficient, effective and
expedient procurement procedures during a state of public health emergency
9. COA Circular 2012-001 dated June 14, 2012 – Revise guidelines and documentary
requirements on common government transactions;
III. Summary of Audit Risks and Audit Objectives

Audit Risks Audit Objectives

1. Risk that sources of LDRRMF and Special To determine that funds for LDRRMF and
Trust Fund may not be properly set aside, Special Trust Fund are properly allocated,
recorded, and reported recorded and maintained

2. Risk that Programs/Activity/Project may To ascertain compliance with

not be in accordance with prescribed laws/rules/regulations of the
government guidelines and criteria. Programs/Activity/Project in the Local Disaster
Risk Reduction Management Plan/LDRRMIP
3.a Risk that Plans, Programs and Activities To determine the propriety, necessity and
under LDRRMF may not be implemented legality of the utilized/disbursed LDRRMF
on a timely manner as planned and
approved;

b Risk that the LDRRMF CY’s

appropriation, unexpended balances in
Special Trust Fund, cash donations and
fund transfers may not be fully utilized to
address the changing needs of the
stakeholders and meet clients expectations
in accordance with approved PPAs.
4. Risk that procured inventories may not be To evaluate inventory system in the
properly recorded, accounted for as management of supplies, materials, and
requisitioned equipment procured and those received from
donations intended for local disaster risk
reduction management
5. Risk of unauthorized issuance of To validate distribution of funds, goods,
procured/donated inventories may led to supplies and services to affected individuals
unnecessary waste of resources and loss and properties during period of disaster
this time of COVID-19 or state of calamity;
6. Risk that reportorial requirements on the To ascertain agency’s compliance to
utilization of the LDRRMF may not be reportorial requirements (accountability
accomplished reports) on the utilization of the LDRRMF to
the Commission On Audit(COA), Regional
Disaster Risk Reduction Management Council
(RDRRMC) through the Regional Office of the
Civil Defense(OCD) copy furnished Regional
offices of the Department of the Interior and
Local Government(DILG) and Department of
Budget and Management (DBM)

IV. AUDIT PROGRAM

Audit Risk No. 1 Risk that sources of LDRRMF and Special Trust Fund may not be
properly set aside, recorded, and reported

Audit Objective To determine that funds for LDRRMF and Special Trust Fund are properly
allocated, recorded and maintained
Work Assig Man-
Audit Procedures Paper ned Hours
Ref. to
1. Secure a copy of the approved annual appropriation ordinance for CY
2021;
2. Ascertain the sources of the LDRRMF. WP-A
a. In the General Fund, prepare working paper to:
 verify appropriation for CY’s LDDRMF is not less than 5%
of the estimated revenues from regular sources of the LGU;
 confirm allocation for Quick Response Fund is equal to 30%
of the allocation for LDRRMF;
 confirm Disaster mitigation, prevention and preparedness is
70% of the allocation for CY's LDRRMF;
 secure SL to confirm existence of continuing LDRRMF for
CO

b. The unexpended balance of the LDRRMF in the preceding years

 Secure Subsidiary Ledgers (SLs) for Trust Liabilities -
DRRM in the Trust Fund books;

 Verify and confirm the unexpended balances of the LDRRMF

in the next preceding five (5) years were transferred to the
Special Trust Fund under the account “Trust Liability-DRRM
(Code 438) in the Trust Fund books and SLs are maintained
by year of transfer;

 Validate if unexpended balances in the Special Trust Fund

and under the account “Trust Liability-DRRM” are within the
five (5) years prescription period.
c. Funds transferred from the NDRRMF, National Government,
private or international donors, and other LGUs;

 Secure Subsidiary Ledger for TL-DRRMF in the Trust Fund

books;

a. If Cash Donation is 100,000.00 and above, verify if the

SL is per donor/per purpose; and
b. If Cash Donation is below 100,000 verify the SL if
labeled as “Various Donors” per purpose
 Secure CRJ and GJ to trace posting in SL to corresponding
 Cash Receipt Journals and General Journal;
 Trace posting in CRJ and GJ and secure related JEVs;
 Analyze entries in JEV. Funds received should be recorded as
special trust liability using the account “Trust Liability-
DRRM (Code 438) in the Trust Fund books of the receiving
LGU;
 Check supporting documents (RCD, Official Receipts,
Deposit Slips, Credit Notices) in the JEV to confirm the
source of the fund transferred.
 Verify if a separate bank account is maintained;
 Secure Memorandum of Agreement, Special Allotment
Release Order and other similar document to support the
transfer;

d. Verify other sources not taken up by the LDRRMF and Trust

Liability DRRM; WP-
 Secure CRJ and GJ in the GF and Trust Fund; A.1
 Prepare working paper for the confirmation of receipts and
purpose of said fund transfer;
 Check for receipt of fund transfers not recorded for DRRM
and secure related JEVs;
 Analyze entries in JEV and confirm source and purpose of
transfer; if fund is for DRRM Funds, require the adjustment
of said fund transfer to the Special Trust Fund DRRM,
otherwise, confirm that it is for other program/project;
 Check supporting documents (RCD, Official Receipts,
Deposit Slips, Credit Notices) in the JEV to confirm the
source of the fund transferred.
 Secure Memorandum of Agreement, Special Allotment
Release Order and other similar document to support the
transfer
e. Unutilized LDRRMF in the Special Trust Fund/Cash Donations

 Verify if unutilized portion of the Special Trust Fund-DRRM,

those more than five years, is reverted back to unappropriated
surplus of the GF and made available for other social
services1;

 Verify if unutilized cash donations after the purpose had been

served are2:
a. remitted to the Bureau of Treasury (BTr), if no
condition to return any unused amount to the donor;

1
Rule 18, Section 3 of RA 10121; Item 5.1.13 of COA Cir. 2012-002, dated September 12, 2012
2
Item IV.B.13 of COA Cir. 2014-002 dated April 15, 2014
 b. returned to the donor, if specified in the agreement;

c. returned to the Bureau of Treasury if no conditions are

stated
3. Prepare Audit Query/conduct interview for confirmation/clarification
on deficiencies noted
4. Prepare an Audit Observation Memorandum for all deficiencies
noted and require management to comment on it within fifteen (15)
days from receipt;
5. Include in the audit report all deficiencies noted which were not
justified by management
Audit Risk Risk that Programs/Activity/Project may not be in accordance with
prescribed government guidelines and criteria.

Audit Objective No.2 To ascertain compliance with laws/rules/regulations the

Programs/Activity/Project in the LDRRMP/LDRRMIP
Work Assign Man-
Audit Procedures Paper ed to Hours
Ref.
1. Secure copy of the approved Local Disaster Risk Reduction
Management Plan (LDRRMP) and LDRRMIP for CY 2021;
2. If no approved LDRRMP is in place, perform audit procedure No.
6;
3. Secure copies of MOA/SARO for fund transfer from the National
Disaster Risk Reduction Management Council, other LGUs and
other sources;
4. Validate compliance of Program/Activity/Project (PAP) indicated WP-B
on the LDRRMP which shall cover the four (4) thematic areas of
disaster risk reduction in accordance with the national, regional
and provincial framework and policies in coordination of LDC
with focus on:

1. Disaster Prevention and Investigation

2. Disaster Preparedness
3. Disaster Response
4. Disaster Rehabilitation and Recovery

a. National Disaster Risk Reduction and Management Plan

(NDRRMP) in accordance to the approved Annual Investment
Plan (AIP) of the LGU;
b. COA Circular 2012-002 dated September 12, 2012
c. JMC No. 2013-01 dtd. 3/25/2013
Subject: Allocation and utilization of the LDRRMF
d. COA Memo No. 2014-009 dtd. 8/28/2014
Subject: Guidelines in the Audit of DRRMF
5. Indicate the funding source and amount for each
Program/Activity/Project
6. Prepare Audit Query/conduct interview for
confirmation/clarification on deficiencies noted
7. Prepare an Audit Observation Memorandum for all deficiencies
noted and require management to comment on it within fifteen (15)
days from receipt;
8. Include in the audit report all deficiencies noted which were not
justified by management
Audit Risk a. Risk that Plans, Programs and Activities under LDRRMF may not be
implemented on a timely manner as planned and approved:
b. Risk that the LDRRMF CY’s appropriation, unexpended balances in
Special Trust Fund, cash donations and fund transfers may not be
fully utilized to address the changing needs of the stakeholders and
meet clients expectations in accordance with approved PPAs.
Audit Objective No. 3 To determine the timeliness, propriety, necessity and legality of the
utilized/disbursed LDRRMF
Work Assign Man-
Audit Procedures Paper ed to Hours
Ref.
 Secure Registry of Appropriations, Allotments and Obligations
(RAAO) for LDRRMF in the Gen. Fund
 QRF;
 MOOE;
 Capital Outlay (CO)
 Secure individual Subsidiary Ledgers for Trust Liability-DRRM by
year of transfer of the unutilized DRRMF, receipts of NDRRMF,
DRRMF from other LGUs and other sources by donor;
 Trace obligations in RAAOs-QRF, RAAO-MOOE, RAAO-CO for
LDRRMF in Check Disbursement Journal, Cash Disbursement
Journal and General Journal in the General Fund.
 Verify correctness of postings in individual Subsidiary Ledgers for
Trust Liability-DRRM in Check Disbursement Journal, Cash
Disbursement Journal and General Journal in the Trust Fund.;
 Secure corresponding Disbursement Vouchers, Liquidation Reports
and Journal Entry Vouchers (JEV) and all supporting documents
thereto;
 Using the above documents, validate PAP implementation, charged WP-C
to LDRRMF/ DRRM funds in the Special Trust Fund/ Fund
transfers, if in conformity with the following:
a. Approved CYs LDRRMP/ LDRRMFIP;
b. Memorandum of Agreement for fund transfer from NDRRMC,
other LGUs and donors;
c. COA Circular 2012-002 dated Sept. 12, 2012;
d. COA Circular 2012-001 dated June 14, 2012;
e. RA 9184/GPPB Res. No. 03-2020;
f. Items 5.0 and 6.0 of NDRRMC, DBM and DILG’s JMC No.
2013-1 dated March 25, 2013;
g. DILG MC 2012-73 dated April 17, 2012;
h. COA Circular No. 2014-002 dtd. April 15, 2014
i. COA Memorandum No. 2014-009 dtd. Aug. 28, 2014
 Verify that implemented PAP is in compliance with: WP-
 the thematic areas of disaster risk reduction , namely,
3 C.1
 c. Disaster prevention and mitigation
d. Disaster Preparedness
e. Disaster Response
f. Disaster Rehabilitation and Recovery
 Implementation of the 30% QRF is supported by a resolution of
the local Sanggunian declaring the LGU under the state of
calamity or a Presidential declaration of state of calamity upon
recommendation the NDRRMC;
 Approved LDRRMP;
 Memorandum of Agreement
9. Validate compliance with Laws, Rules, Regulations on WP-
Disbursements, particularly the following: C.2
 COA Circular 2012-001 dated June 14, 2012 on Documentary
Requirements;
 Equipment purchase or received from donations and used solely
for disaster response and rescue activities are classified as
“Disaster Response And Rescue Equipment”
 The acquisition of heavy equipment although used in disaster
response and rescue activities are classified under the account
“Construction and Heavy Equipment”
 Purchase/acquisition of expendable items such as fire
extinguisher, flood light, chain saw, ropes, ladder, breathing
apparatus, flashlight and the like are classified as “Supplies or
Inventories”.
10. Validate that provisions of RA 9184, specifically Section 53.2 of WP-
the revised 2016 IRR and Item V(D)(2a) of Annex “H” of the same C.3
IRR for procurements under the State of Public Health Emergency,
State of Calamity, or any other similar declaration by the
government per GPPB Resolution No. 03-2020, are adhered to for
the:
 Procurement of Drugs and medicines;
 Procurement of medical, dental, and laboratory supplies;
 Procurement of welfare goods for distribution;
 Lease/rental of real property or venue for use as quarantine
centers, evacuation sites, medical relief and aid distribution
locations, warehousing facilities, or similar temporary
disaster or emergency response facility
11. Prepare an Audit Observation Memorandum or NS/ND if
warranted, for all deficiencies noted and require management to
comment on it within fifteen (15) days from receipt.
12. Include in the audit report all deficiencies noted which were not
justified by management

3
Item 5 of NDRRMC, DBM, DILG’s JMC No. 2013-1
Audit Risk Risk that acquired inventories and equipment may not be properly
recorded, accounted for as requisitioned
Audit Objective No. 4 To evaluate inventory system in the management of supplies, materials,
and equipments procured and those received from donations intended for
local disaster risk reduction management
Work Assig Man-
Audit Procedures Paper ned to Hours
Ref.
A. Procurement
1. Secure Property Cards and Stock Cards from the local General
Services Officer/Municipal Treasurer and Property Ledger Cards
and Supplies Ledger Cards maintained by the local Accountant
pertinent to purchases and/or receipt of donations of supplies,
materials and equipment relative to local disaster risk reduction
management;
2. Secure files of Inspections and Acceptance Report (IAR) and
Requisition and Issue Slips (RIS) and check postings on cards for
receipts and issuances of supplies and materials;
3. Conduct of actual inventory; WP-D1;
4. Reconcile balances per cards with SLC and WP-D2
actual stocks on hand except for PPE Issuances for distribution to
end users/beneficiaries which shall be supported with RIS and
taken up under appropriate expense accounts.
5. Reconcile Property Cards and Stock Cards with Property Ledger
Cards and Supplies Ledger Cards maintained by the local
Accountant;
6. Secure/retrieve Monthly Report of RSMI submitted and prepared
by Property and Supply unit.

7. Prepare an audit observation memorandum for all deficiencies

noted and require management to comment on it within fifteen
(15) days from receipt.
8. Include in the audit report all deficiencies noted which were not
justified by management

B. For Donations in-kind from Local and Foreign Sources

pursuant to COA Circular 2020-009 dated April 21, 2020

9. Secure Summary List of Donations Received, Distributed and

Balances.
a. Verify if the Summary/List are categorized
d. Food
e. Medical Supplies
f. Drugs and Medicine
 b. Verify if Summary List of Donation Distributed and Balances
are submitted within 10 days end of quarantine
-If quarantine exceeds 3 months, within 10 days after the end
of each quarter.

c. Verify if the attachments to Summary List of Donation

Distributed as follows:

i. Acknowledgment receipts of donation in-kind

ii. Proof of receipt by and distribution to the beneficiaries, not
necessarily in the required form; and
iii. Inventory of remaining undistributed items, if any.

d. Verify the costing of remaining balances and the recording of

the donations after the quarantine in the books or registries.

C. In-kind Donations from Local and Foreign Sources (COA WP-D.3

Circular No. 2014-002 dated April 15, 2014)

1. Verify if acknowledgement receipts for In-kind Donations for

DRRM was issued by Head of Agency for the receipt of in-
kind donations.
2. Verify if donated relief goods for distribution to intended
beneficiaries and user is supported with Issuance Form for in-
kind donation DRRM (annex E)
3. Verify if Donated PPE is recorded based on declared value in
the deed of donation or bill of lading/airway bill/parcel notice
or fair market value in the absence of declared value.
4. Check if Fair Market Value Donated PPE is recorded in
appropriate Asset account and credited to Government Equity
Account.
Audit Risk a. Risk of unauthorized issuance of procured/donated goods that may lead to
unnecessary waste/loss of resources during the period of calamity;
b. Risk of improper and inadequate distribution of goods to intended
beneficiaries.
Audit Objective No. 5 To validate distribution of welfare goods to affected individuals during
period of calamity.
Work Assign Man-
Audit Procedures Paper ed to Hours.
Ref
1. Secure copy of official declaration of state of calamity by the
President/Local Sanggunian Resolution.

2. Gather from the local agency’s departments involved in relief

operations information pertinent to the following: WP-E1
a. Name of calamity;
b. Date/Period of occurrence;
c. Number/Name of affected individuals and number of
households, and damaged properties per barangay;
d. Estimated amount of damage from calamities
e. No. of quarantine facilities maintained (during COVID-19
pandemic)
f. No. of Covid cases reported (during COVID-19 pandemic)
g. Sex Aggregated Data of affected individuals on quarantine
(during COVID-19 pandemic)

3. If the above information is not available, perform Audit Procedure

No.10;
4. Secure report on the distribution of relief/welfare goods with
consideration of the following:
a. Number and names of persons involved in relief operations;
b. Date/Schedule, destination/place of distribution, and mode of
transporting relief goods;
c. Monitoring system in the relief operation in terms of getting
through to all the affected areas; and
d. Determine the goods procured/prepared and Contents of relief
goods delivered.
5. Secure proof of receipt by calamity victims indicating therein
names, date of receipt and brief description of relief/welfare goods
received and quantity;
6. Secure photos documenting the distribution of goods;

7. If sent through the barangay officials, secure proof of receipt from

the barangay certified correct by the barangay official concerned;
8. Conduct random interviews to recipients indicated on the proof of
receipt. Interview shall include the funds, goods and materials
received from the local government and from other sources;
9. Compare actual quantity of goods received by the recipients per
 confirmation/audit with the records of the local government;

10. Prepare an audit observation memorandum for all deficiencies

noted and require management to comment on it within fifteen (15)
days from receipt.
11. Include in the audit report all deficiencies noted which were not WP-E2
justified by management
Audit Risk Risk that reportorial requirements on the sources and utilization of the
LDRRMF including report of donations received may not be accomplished
Audit Objective No. 6 To ascertain agency’s compliance to reportorial requirements (submission
of accountability reports) on the sources and utilization of the LDRRMF
and of cash and in kind donations received.
Work Assign Man-
Audit Procedures Paper ed to Hours
Ref.
1. Check submission of the Report on Sources and Utilization
of LDRRMF prepared by the Local Disaster Risk Reduction
Management Officer (LDRRMO) through the Local Disaster
Risk Reduction Management Council (LDRRMC) and Local
Development Council (LDC) on or before the 15 th day after
the end of each month to the Commission On Audit; (per
COA Circular 2012-002 dtd. September 12, 2012)

2. Secure copies of transmittals to the OCD copy furnished the

regional offices of the DILG and DBM pertinent to submissions
of the approved/revised annual LDRRMFIP and the monthly
and annual Report on Sources and Utilization of LDRRMF
(per COA Circular 2012-002 dtd. September 12, 2012 and
NDRRMC DBM DILG JMC 2013-001 dtd. March 25,
2013)
3. For cash donations and in-kind donations
a. Verify if a one-time report, separately for cash and in-
kind donations, within ten (10) working days after the
end of the quarantine (any community quarantine
classification) was submitted to NDRRMC through office
of the Civil Defense, copy furnish the respective COA
Auditors.
b. If the quarantine exceeds three (3) months, the report
shall be submitted within ten (10) working days after the
end of each quarter
(per COA Circular 2014-002 dtd. April 15, 2014 as
amended by COA Circular 2020-009 dated April 21,
2020)

4. If no reports are submitted, perform Audit Procedure No. 5.

5. Prepare an Audit Observation Memorandum for all
deficiencies noted and require management to comment on it
within fifteen days from receipt.
6. Include in the audit report all deficiencies noted which were WP-F
not justified by management