REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
REGIONAL OFFICE NO. VIII
LGAS C – Leyte II and Biliran Province
Provincial Satellite Auditing Office (PSAO)
Baybay City, Leyte

Team R8-03, Baybay City

AOM No.: 2023-001

Date : November 7, 2023

AUDIT OBSERVATION MEMORANDUM (AOM)

For: ANALIZA O. HUMANG-IT

Punong Barangay
Barangay Tuy-a
Abuyog, Leyte

Attention: ROCKYLYN M. ANADIA

Barangay Treasurer

NARITA S. DELA CERNA

Barangay Kagawad-CCA

MARIO C. MORA JR.

Barangay Bookkeeper

MICHELLE L. EFREN
Municipal Accountant

We have audited some of the Barangay transactions for Calendar Years 2019,
2020 and 2021 and 2022 and observed the following deficiencies:

Property, Plant and Equipment

1. The accuracy of the Barangay’s reported Property, Plant and Equipment

(PPE) accounts aggregating ₱3,867,696.05 as of December 31, 2022 cannot
be confirmed due to absence of the required records and reports on
property accounting and management contrary to Section 111 of PD 1445
and pertinent provisions of the Manual on the Financial Management of
Barangays, affecting the fair presentation of the accounts in the financial
statements.

AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 1 of 17

1.1. Section 111 of PD 1445 states that:

“(1) The accounts of an agency shall be kept in such detail as is necessary to

meet the needs of the agency and at the same time be adequate to furnish the
information needed by fiscal or control agencies of the government.

(2) The highest standards of honesty, objectivity and consistency shall be

observed in the keeping of accounts to safeguard against inaccurate or
misleading information.”

1.2. Pertinent provisions in Chapter VII of the Manual on the Barangay Financial
Management of Barangays provide:

7.1 Specific Policies

Property, Plant and Equipment/Infrastructure Assets

Xxx

7.1.6 Property/Equipment Card (PEC), see Annex 26.1, shall be maintained for
all property and equipment of the barangay by the BT.

7.1.7 Property/Equipment Ledger Card (PELC), see Annex 26.2, shall be

maintained by the C/M Accountant as subsidiary ledgers for all property
and equipment of the barangay.

7.1.18 The barangay shall conduct an annual physical inventory of all supplies,
property and equipment of the barangay.

7.1.19 Report on the results of physical inventory of property/equipment shall

be reconciled with the accounting records.

Xxx

7.2.5 Inventory Taking and Reconciliation

The Inventory Committee headed by the PB or his authorized representative and

the BT as his member shall conduct a physical count of all property and
equipment of the barangay at least once a year.

The Inventory Committee, upon the completion of the physical count, shall
prepare three copies of Report on Inventory of Property and Equipment (RIPE),
as shown in Annex 30 and shall be approved by the PB. The RIPE shall be
distributed as follows:

Original- to COA Auditor through C/M Accountant

AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 2 of 17
 Duplicate copy- to the C/M Accountant
Triplicate copy- to the BT

The RIPE shall be the basis of the C/M Accountant for reconciling the results of
inventory with the PPE accounts.

The RIPE shall be the basis of the BT for reconciling the equipment covered by
PAR and the PECs on file and the ICS for the small items considered as
inventories.

1.3. As of December 31, 2022, the Barangay’s financial statements showed the total,
PPE account of ₱3,867,696.05 representing 59% of its total assets of ₱6,552,894.38
The details of the total PPE account are presented in Table 1.

Table 1. Property, Plant and Equipment

PPE Amount
22,673.7
Land 1
1,073,647.4
Road Networks 6
1,274,890.4
Water Supply Systems 0
548,500.0
Power Supply System 0
345,863.2
Other Structure 0
2,549,112.5
Building 5
142,085.0
Office Equipment 0
Information and Communication Technology 110,955.2
Equipment 0
33,000.0
Communication Equipment 0
76,032.0
Disaster Response & Rescue Equipment 0
147,000.0
Furniture and Fixture 0
65,000.0
Other Property, Plant and Equipment 0
6,388,759.5
Total 2
2,521,063.4
Less: Accumulated Depreciation 7
Net Amount 3,867,696.0
AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 3 of 17
 5

1.4. The required Subsidiary Ledgers or the PPE Ledger Cards and
Property/Equipment Cards were not maintained by the Municipal Accountant
and the Barangay Treasurer, respectively. The absence of the PPE Ledger Cards
made the confirmation of the balance of the PPE account impossible. Likewise,
without the Property/Equipment Cards, the Barangay Treasurer will have
difficulty in filling-out columns 1 to 6 of the RIPE which will be the basis of the
Inventory Team in the conduct of the physical count.

1.5. Due to the aforementioned deficiencies, the valuation of the properties that
constitute the Property, Plant and Equipment account amounting to
₱3,867,696.05 could not be established, thus affecting the fair presentation of the
account in the FS.

1.6. We recommend that the Municipal Accountant maintain and update the
prescribed PPELC and reconcile these with property records of the
Barangay Treasurer.

1.3 We also recommend that the Barangay Treasurer maintain

Property/Equipment Cards for each kind of PPE owned by the Barangay
and reconcile the same with the accounting records.

Non-Transfer to Special Trust Fund of unexpended DRRMF

2.0. Unexpended balance of DRRMF on CY 2022 totaling ₱245,696.30 was not

transferred to the Special Trust Fund contrary to Section 4.4 an of COA
Circular 2012-002, thus, the Trust Liabilities-Disaster Risk Reduction and
Management Fund(DRRMF) was understated by the same amount at year-
end.

2.1. Section 4.4 of COA Circular 2012-002 states “The unexpended LDRRMF shall
accrue to a special trust fund solely for the purpose of supporting disaster risk
reduction and management activities of the Local Disaster Risk Reduction
Management Council (LDRRMC) within the next five years.

2.3. In CY 2022, the barangay appropriated a total of ₱127,412.35 for its LDRRMF. In
addition, it has a balance of ₱195,696.30 from previous year’s unexpended
balance, while there was no disbursements made during the year charged to the
fund. Details are shown in table 2.

Table 2. Balance of BDRRMF

Disbursement
PPA Appropriation s Balance
Current 30%QRF 38,223.70 - 38,223.70
AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 4 of 17
 Year 70% NO
LDRRMFIP 89,188.65 - 89,188.65
Subtotal Current Year 127,412.35 - 127,412.35
Previous Years
Unexpended 195,696.30 - 195,696.30
Total 323,108.65 - 323,108.65

2.4. However, review of the Trust Liabilities-DRRMF account as of year-end disclosed

that only the amount of ₱77,412.35 was transferred to the Special Trust Fund
instead of the balance of ₱323,108.65, thus an understatement in transfer
amounting ₱245,696.30.

2.5. Due to non-transfer of the unexpended balance of DRRMF as of CY 2022

amounting ₱245,696.30, the Trust Liabilities-DRRMF account was understated
by the same amount at year-end.

2.6. We recommend that the Municipal Accountant thru her Designated

Bookkeeper transfer and record the unexpended BDRRM Fund amounting
₱245,696.30 as Trust Liabilities-DRRMF under Special Trust Fund and
maintain subsidiary ledgers by year of transfer.

Local Disaster Risk Reduction Management Fund

3.0. Disbursements totaling ₱397,812.00 in CY 2019 and 2020 were paid from
current and prior year’s unexpended DRRMF despite not having an
approved LDRRMF Investment Plan for CYs 2019, 2020, 2021 and 2022 and
not having an updated LDRRMFIP for Special Trust Fund for previous
years unexpended DRRMF, contrary to Sections 5.1.2 and 5.1.3.2 of COA
Circular 2012-002, thus, resulted to irregular expenditures.

3.1. Section 5.1.2 of COA Circular 2012-002 states that, a Local Disaster Risk
Reduction and Management Fund Investment Plan (LDRRMFIP) for the DRRM
program shall be prepared annually. It shall present the 30% allocation for QRF in
lump sum and the allocation for disaster mitigation, prevention and preparedness
with details as to projects and activities to be funded. The LDRRMFIP shall also
include under a separate caption, the list of projects and activities charged to
the unexpended LDRRMF of previous years.

3.2. Section 5.1.3.2 of the same circular states that the release and use of LDRRMF
shall be supported by LDRRMFIP for projects and activities listed in the
approved plan as incorporated in the local development plan and annual work and
financial plan

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3.3. During the review of Barangay’s appropriation and utilization of the 5% BDRRM
Fund, the Audit Team noted that Barangay Tuy-a appropriated a total amount of
₱397,685.20 under DRRM Fund during the 4-year period under audit, as
presented in Table 3.

Table 3. BDRRMF balance

Amount
Particulars Total
2019 2020 2021 2022

Beginning Balance 323,235.45 278,786.70 97,692.90 195,696.30 323,235.45

Current
Appropriation 80,628.25 91,641.20 98,003.40 127,412.35 397,685.20

Utilization 125,077.00 272,735.00 - - 397,812.00

Balance as of year-
end 278,786.70 97,692.90 195,696.30 323,108.65 323,108.65

3.4. It was further noted by the Audit Team that the Barangay still had a balance of
₱323,235.45 out of its prior years’ LDRRM Fund as of December 31, 2018.
However, it was observed that there was no LDRRMFIP prepared for CYs 2019,
2020, 2021 and 2022. Consequently, the current years appropriation and the
unexpended balances of prior years’ cannot be used in the absence of the
LDRRMFIP which should have indicated the PPAs for which said current and
prior years’ balances will be used for.

3.5. In addition, audit disclosed that there were disbursements in CY 2019 and CY
2020 that were charged against the unspent 2017 DRRMF, there were also
disbursements in CY 2020 that were charged against the 2019 unspent DRRMF
with a total of ₱397,812.00. Both disbursements were supported with a
LDRRMFIP for special trust fund for unspent prior years DRRMF, however, the
said LDRRMFIP should have been updated yearly for its disbursements to be
valid since disbursements were made not on the year the plan was made. (see
details in table 4)

3.6. Moreover, disbursement amounting to ₱8,675.00 was charged against the CY

2020 BDRRMF without an approved LDRRMFIP. Details of disbursements are
shown in table 4.
Table 4. Disbursements charged to LDRRMF

AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 6 of 17

 Amount

Check Charged to
Date Particulars Charged to Total Remarks
No. Previous
Current
Years
Appropriation
unexepended

Purchase of
Distaster
Equipments(rec
hargeable
Charged to
flashligh,
LDRRMFIP
extension
STF for
ladder and 49,927.0
unexpended
11/29/19 1156190 whistle) 49,927.00 0
2017
Purchase of 3
DRRMF-but
box first aid kit,
there was no
15pcs. boots,
updated
and 15 pcs. 31,350.0
LDRRMFIP
12/20/19 1156198 Raincoats 31,350.00 0
for STF at the
Purchase of
beginning of
3pcs.Handheld
CY 2019
radio ,
3pcs.emergency
lights and 1 pc 43,800.0
12/20/19 1156199 megaphone 43,800.00 0
Purchase of '1pc Charged to
Stereo mixing LDRRMFIP
amplifier , 4 STF for
pcs. Trumpa , 1 unexpended
pc Usb , 1 2017
pc.paging DRRMF-but
microhone , 40 there was no
mt flatcord 1 updated
unit portable LDRRMFIP
speaker , 1 unit for STF at the
AVR @ and 1 49,500.0 beginning of
03/17/20 1156237 lot service fee 49,500.00 0 CY 2020
No
1 pc. Spine 8,675.0 LDRRMFIP
03/17/20 1156238 Board 8,675.00 0 CY 2020
Charged to
LDRRMFIP
STF for
Relief Goods 200,000.0 unexpended
03/24/20 1156245 (100 sack rice) 200,000.00 0 2019
DRRMF-but
Medical there was no
Equipment(face updated
mask, Alcohol, LDRRMFIP
gloves, ascorbic 14,560.0 for STF at the
04/15/20 1156248 acid 14,560.00 0 beginning of
AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 7 of 17
 Amount

Check Charged to
Date Particulars Charged to Total Remarks
No. Previous
Current
Years
Appropriation
unexepended

CY 2020
397,812.0
TOTAL 8,675.00 389,137.00 0

3.7. Without an approved LDRRMFIP for the current year and previous year’s
DRRMF balances, the Chairman Committee on Appropriation had no basis for
certifying the existence of available appropriations authorized for the purpose.
Thus, disbursements charged against LDRRMF were irregular. In addition, the
absence of an approved plan denotes that the procured items and other activities
were not approved by the other members of the LDRRM Council and based only
on arbitrary decision of the requesting officials.

3.8. We recommend that the BDRRMO, through the Punong Barangay, convene
the LDRRM Council and prepare the LDRRMFIP which also includes PPAs
to be paid from previous years’ unexpended DRRMF annually as basis for
the use of the LDRRMF based on the priority programs, projects and
activities outlined in COA Circular 2012-002.

3.9. We also recommend that the Punong Barangay, Chairman Committee on

Appropriation, and Barangay Treasurer stop processing disbursements from
LDRRMF if said disbursement is not included in the approved LDRRMFIP.

20% Development Fund

4.0. Three projects identified to be priority development projects for CY 2020 to

2022 totaling ₱1,264,027.80 remained unimplemented as of December 31,
2022, contrary to Section 3.2.3 of DBM-DOF-DILG JMC No. 1 dated
November 24, 2020 hence, optimal utilization of the fund was not achieved
and the constituents were deprived from enjoying its benefits.

4.1. DBM-DOF-DILG Joint Memorandum Circular No. 1 dated November 24, 2020
provides the revised guidelines on the appropriation and utilization of the 20% of
the annual internal revenue allotment for development projects. The JMC was
issued to increase the responsiveness of the guidelines and promote greater
autonomy, transparency and accountability in the LGUs’ appropriation and
utilization of their respective 20% DF. Pertinent sections of the subject
Memorandum Circular are as follows:

AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 8 of 17

 a) Section 3.1 – In accordance with Section 287 of RA No. 7160, each LGU
shall appropriate in its annual budget no less than twenty
percent (20%) of its annual IRA for development projects.

b) Section 3.2 – The LGUs are enjoined to observe the following policies and
guidelines in the appropriation and utilization of the 20% DF:

3.2.1 The 20% DF shall be utilized to finance the LGUs'

priority development projects, as embodied in their
respective duly approved local development plans, and
medium-term and annual investment programs, which
should be harmonized with the Regional Development
Plan and the Philippine Development Plan.

3.2.2 The development projects that may be included under

the 20% DF shall be those that are necessary,
appropriate, or incidental to efficient and effective local
governance, and those which are essential to the
promotion of the general welfare of the people.

3.2.3 The LGUs shall ensure that the development

projects to be funded out of the 20% DF are well-
planned and procurement-and-implementation-
ready.

3.2.4 Technical assistance may be sought from National

Government Agencies (NGAs), such as, but not limited
to, the Department of Agriculture, DBM, Department of
Education, Department of Environment and Natural
Resources, DOF, Department of Health, DILG,
Department of Public Works and Highways,
Department of Social Welfare and Development, and
National Economic and Development Authority, for the
determination of the more relevant and responsive
development projects that may be included under the
20% DF and to ensure compliance with the standards
prescribed by the NGAs concerned.

3.2.5 The following expenditure items shall not be allowed to

be charged against the 20% DF:

3.2.5.1 Personal Services expenditures, such as salaries,

wages, overtime pay, and other personnel
benefits;

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 3.2.5.2 Administrative expenses, such as supplies,
meals, representation, communication, water
and electricity, petroleum products, and the like;
3.2.5.3 Traveling expenses, whether domestic or
foreign;
3.2.5.4 Registration fees and other expenses related to
the conduct of and participation to trainings,
seminars, conferences or conventions;
3.2.5.5 Purchase, maintenance or repair of
administrative office' furniture, fixtures,
equipment or appliances; and
3.2.5.6 Purchase, maintenance or repair of motor
vehicles used for administrative purposes.

4.2. During the conduct of our audit, it was noted that the Barangay had appropriated
projects for 20% Development Fund amounting to ₱321,113.00, ₱365,164.80,
₱390,613.60 and ₱508,249.40 for CY 2019, CY 2020, CY 2021 and CY 2022,
respectively. For the 4-year period, the 20% DF appropriation totaled to
₱1,585,140.80. The Barangay had also its beginning balance in the Fund from CY
2018 amounting ₱308,825.89. The said annual appropriations were for the
following projects:

Table 5. Projects to be paid from 20% Development Fund

CY Project/Title Appropriation Utilization Balance
308,825.8
2018 Unidentified 308,825.89 9 -
Concrete Pathway to Sitio 288,988.0 32,124.9
2019 Tagaytay 321,113.00 7 3
365,164.8
2020 Construction of Road Pathway 365,164.80 - 0
Extension of Pathway to sitio 390,613.6
2021 Tagaytay 390,613.60 - 0
Extension of Pathway to sitio 508,249.4
2022 Tagaytay 508,249.40 - 0
597,813.9 1,296,152.7
TOTAL 1,893,966.69 6 3

4.3. Review of utilization revealed that out of the available appropriations the
barangay disbursed a total amount of ₱597,813.96 to implement the Concreting
Pathway Phase I funded under 20% Development Fund from CYs 2018 to 2019
amounting ₱597,813.96, per check number 1237926 dated November 25, 2020
under the contractor Victoria Development Venture Corp.

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4.4. As can be seen in Table 5 only one project was implemented during the 4-year
period. Out of the ₱1,893,966.69 appropriation, ₱597,813.96 was actually
disbursed, which is only equivalent to 31% of current and previous years
appropriation.

4.5. Review of the status of implementation of projects of the barangay disclosed that
three projects identified and budgeted in CYs 2020 to 2022 totaling
₱1,264,027.80 were not implemented.

Table 6. Unimplemented Projects Appropriated in CYs 2019-2022

Budget
Year PPAs Appropriation
2020 Construction of Road Pathway 365,164.80
2021 Extension of Pathway to sitio Tagaytay 390,613.60
2022 Extension of Pathway to sitio Tagaytay 508,249.40
TOTAL 1,264,027.80

4.6. We recommend that the Punong Barangay implement all the projects
appropriated under 20% Development Fund so that funds are utilized to its
optimum to help achieve the desirable socio-economic development and
environmental outcomes of the Barangay.

Lack of Appropriation for LCPC

5.0. No funds were appropriated in the CY 2019 to 2022 budget of the barangay
for the implementation of programs, projects and activities for the protection
of children, contrary to Republic Act No. 9344, thus protection of children’s
rights within the barangay is not strengthened.

5.1. Republic Act No. 9344 (Juvenile Justice and Welfare Act of 2006) adopts as a
policy the protection of the interests of children and promotes their physical,
moral, spiritual, intellectual and social well-being. The Act also recognizes the
rights of children to assistance, proper care and nutrition and special protection
from all forms of neglect, abuse, cruelty and exploitation, and other conditions
prejudicial to their development.

5.2. Section 15 of the said Act mandates the creation of Local Councils for the
Protection of Children (LCPC) in all levels of local government. It provides
further that 1% of the internal revenue allotment (IRA) of barangays,
municipalities and cities, shall be allocated for the strengthening and
implementation of the LCPC.

5.3. Our perusal of the Annual Budget of the barangay disclosed that no funds were
appropriated for the implementation of programs, projects and activities (PPA)
AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 11 of 17
 intended for the Council for the protection and well-being of children although the
barangay has established and created their own LCPC. Based on the estimated
IRA for the noted budget years, the following could have been appropriated for
LCPC programs and activities:

Table 7. Available Funds for LCPC

Particulars CY 2022 CY 2021 CY 2020 CY 2019

Estimated IRA 2,541,247.00 1,953,068.00 1,825,824.00 1,605,565.00

SHOULD BE - 1% of
IRA 25,412.47 19,530.68 18,258.24 16,055.65
ACTUAL Appropriation
- - - -

Lacking Appropriation 25,412.47 19,530.68 18,258.24 16,055.65

5.4. Without the necessary budget and plan, the rights, interest and well-being of the
children in the barangay will not be protected, established and strengthened.

5.5. We recommend that the Punong Barangay include in its annual budget an
appropriation equivalent to 1% of its IRA intended for the protection and
welfare of the children in the barangay, identify and implement the
programs, projects and activities using the said fund pursuant to RA 9344.

1% Allocation for Senior Citizen and PWD

6.0. No funds were appropriated for programs and projects for Senior Citizens
and Persons with Disabilities (PWD) in CY 2019 to 2022 which should be 1%
of the barangay’s IRA, contrary to DBM and DSWD Joint Circular No.
2003-01 dated April 28, 2003, thus depriving the elderly citizens in the
barangay the full benefits of the programs due them.

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6.1. DBM-DSWD Joint Circular No. 2003-001 dated April 28, 2003 was issued to
prescribe guidelines for the implementation of Section 29 of the General
Appropriations Act of 2003 which states that the plans, programs and projects
intended to address the concerns of senior citizens and persons with disability
shall be integrated in the regular activities of the agencies. Sections 4.2 and 4.3
thereof directs all government agencies, departments, bureaus, offices,
commissions and state universities and colleges to allocate at least one percent
(1%) of their respective budget to be utilized in the implementation of
programs/projects/activities/services which will address the needs of older persons
and persons with disabilities (PWDs).

6.2. Our perusal of the Annual Budgets of the barangay disclosed that no funds were
appropriated for Senior Citizens and PWDs programs and activities for the
periods CY 2019, CY 2020, 2021 & CY 2022 as shown in Table 8.
Table 8. Fund for Senior Citizens and PWDs Programs/Projects
Particulars CY 2022 CY 2021 CY 2020 CY 2019

Estimated IRA 2,541,247.00 1,953,068.00 1,825,824.00 1,605,565.00

SHOULD BE - 1% of
IRA 25,412.47 19,530.68 18,258.24 16,055.65
ACTUAL Appropriation
- - - -

Lacking Appropriation 25,412.47 19,530.68 18,258.24 16,055.65

6.3. Without the necessary appropriation sanctioned by law, the elderly citizens and
PWDs of the barangay are deprived of the benefits of the programs, which could
have been financed from the said amount.

6.4. We recommend that the Punong Barangay and its Council appropriate funds
in its annual budget for programs and projects benefitting Senior Citizens
and Persons with Disabilities (PWDs) at an amount of no less than 1% of the
annual IRA as required by the Expanded Senior Citizen Act, R.A. No. 9994.

PS limitation

7.0. Appropriations and actual expenditures in CYs 2019 to CY 2022 on Personal

Services (PS) exceeded the 55% PS limitation contrary to Section 331 (b) of
Republic Act No. 7160, thereby incurring illegal disbursements and reducing
the funds that could have been allocated for other beneficial programs and
development projects.

7.1. Section 331 (b) of Republic Act (RA) No. 7160 otherwise known as the Local
Government Code of 1991, states that “The total annual appropriations for
AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 13 of 17
 personal services of a barangay for one (1) fiscal year shall not exceed fifty-five
percent (55%) of the total annual income actually realized from local sources
during the next preceding fiscal year.”

7.2. DBM Local Budget Circular No. 98 issued on October 14, 2011, prescribed the
guidelines in determining compliance to the personal services (PS) limitation on
local government budgets. Section 4.2 thereof defines Personal Services (PS)
Limitation as the prohibition under Section 331 (b) of the Local Government
Code against appropriating funds for PS in excess of the limits set therein. It
provides further that PS Limitation refers to the amount beyond which no
additional appropriation for PS items is allowed.

7.3. Section 4.6 of the same Circular defines next preceding fiscal year as the fiscal
year that is two (2) years before a budget year. For example, if FY 2011 is the
budget year, the next preceding fiscal year is FY 2009.

7.4. Section 4.3 of the same Circular on the other hand provides items which are
waived in the determination of compliance to the PS limitation in LGU PS
budgets which includes payment of minimum Year-end Bonus of ₱1,000.00 for
the Punong Barangay and P600.00 for other mandatory barangay officials, and
their Cash Gifts.

7.5. Review of the annual budget of the barangay disclosed that appropriations for
Personal Services in CY 2022, 2021, 2020 and CY 2019 exceeded fifty-five
percent (55%) of the total annual income actually realized from local sources
during the next preceding fiscal year. The excess amount is computed in Table 9.

Table 9. Excess of Appropriation over PS Limitation

2022 2021 2020 2019
Total Actual Income
(Next Preceding Year)
2020/2019/2018/2017 1,839,851.00 1,723,449.34 1,472,025.00 1,364,637.00

PS Limitation 55% 1,011,918.05 947,897.14 809,613.75 750,550.35

Less:Apropriations

Annual Budget 1,066,842.25 1,002,342.24 809,542.27 750,482.76

Supplemental Budget 215,592.0 105,800.0 62,000.0
No.1 0 150,056.76 0 0
Supplemental Budget
No.2 80,000.00 38632 57,664.00
1,362,434.2 953,974.2 870,146.7
Total Appropriations 5 1,152,399.00 7 6
Excess (350,516.20 (204,501.86 (144,360.52 (119,596.41

AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 14 of 17

 2022 2021 2020 2019
) ) ) )

7.6. In addition, actual expenditures for CYs 2022, 2021, 2020 and 2019 on personal
services also exceeded the ceiling for the reason that the budget itself for CY 2019
to CY 2022 provided a greater PS appropriation than what was required. Details
on table 10.
Table 10. Excess of Actual PS Expenditure over PS Limitation
2022 2021 2020 2019
1,011,918.0 809,613.7 750,550.3
PS Limitation 55% 5 947,897.14 5 5
Less: Actual PS 951,168.0 876,444.0
Expenditures 1,264,841.00 1,131,236.00 0 0
(252,922.9 (183,338.8 (141,554.2 (125,893.6
Difference 5) 6) 5) 5)
Total PS cost for waived 62,000.0
items 56,400.00 56,400.00 56,400.00 0
Excess (Difference less (196,522.9 (126,938.8 (85,154.2 (63,893.6
waived items) 5) 6) 5) 5)

7.7. The Barangay officials were under the notion that since the budget of the
barangay was already reviewed by the Budget Officer and approved by the
Sangguniang Bayan, their budget was already in consonance with the regulations.

7.8. Failure to observe the mandatory limit on PS resulted in illegal disbursements

totaling ₱472,509.71 and impaired the delivery of some basic services of the
barangay because the excess funds spent for Personal Services could have been
allocated for other beneficial programs and development projects. This is without
prejudice to the issuance of Notice of Disallowance.

7.9. We recommend that the Punong Barangay and Committee Chairman on

Appropriation limit the appropriations and expenditures for Personal
Services of the barangay strictly in accordance with Section 331 (b) of RA
7160 to avoid disallowances on irregular and excessive PS disbursements.

7.10. We further recommend that the barangay council should strive to find ways
to improve collection of revenues from local sources so that the Personal
Services ceiling will correspondingly increase.

Delayed and Partial Deposit of Collections

8.0. The Barangay Treasurer did not deposit her collections regularly, intact and
on time, contrary to Section 69(1) of PD 1445, COA Circular No. 92-382
dated July 3, 1992 and Section 2.1 of COA Circular No. 97-002 dated
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 February 10, 1997 and the Manual on Financial Management of Barangays,
thus exposing barangay funds to the risk of loss, through misuse and/or
misappropriation.

8.1. Section 69(1) of PD 1445 provides: “Public officers authorized to receive and
collect moneys arising from taxes, revenues, or receipts of any kind shall remit or
deposit intact the full amounts so received and collected by them to the treasury of
the agency concerned and credited to the particular accounts to which the said
moneys belong. The amount of the collections ultimately payable to other
agencies of the government shall thereafter be remitted to the respective
treasuries of these agencies.”

8.2. Section 8 of COA Circular No. 92-382 dated July 3, 1992 issued to implement the
provisions of Republic Act No. 7160 states that all collections shall be deposited
intact with authorized depositories. The practice of retaining part of the
collections as a cash reserve for cash disbursements shall be discontinued.

8.3. Section 2.1 of COA Circular No. 97-002 dated February 10, 1997 also requires
that daily receipts of collections must be deposited intact with the proper bank.

8.4. Section 4.1.13 of the Manual on Financial Management of Barangays states that:

4.1.13 Collections received by the BT as deputized collector of the

city/municipality shall be remitted intact to the treasurer of the
city/municipality concerned daily or once the collections reach
P5,000.00.

8.5. During the conduct of cash examination, it was noted that for the period July 6,
2019 to December 31, 2022, the Barangay Treasurer did not deposit her
collections regularly. Moreover, comparison of the actual collections and
deposits disclosed that the collections were not deposited intact, as can be seen in
Table 11.

Table 11. Collections Which Were Not Deposited Intact

Collections Amount Amount

Total Cash on
Date during the Deposited/Rem Retained by
Hand
Month itted Brgy. Treasurer

July 5, 2019 285.00

July 6-31, 2019 940.00 1,225.00 1,039.00 186.00
August 2019 8,579.00 8,765.00 - 8,765.00
September 2019 1,785.00 10,550.00 10,555.00 (5.00)
October 2019 2,055.00 2,050.00 2,055.00 (5.00)
November 2019 12,372.54 12,367.54 950.00 11,417.54
December 2019 1,340.00 12,757.54 - 12,757.54
January 2020 11,485.00 24,242.54 11,427.54 12,815.00

AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 16 of 17

 Collections Amount Amount
Total Cash on
Date during the Deposited/Rem Retained by
Hand
Month itted Brgy. Treasurer

February 2020 1,245.00 14,060.00 10,000.00 4,060.00

March 2020 675.00 4,735.00 4,000.00 735.00
April 2020 3,000.00 3,735.00 - 3,735.00
May 2020 600.00 4,335.00 3,200.00 1,135.00
June 2020 8,395.00 9,530.00 - 9,530.00
July 2020 1,605.00 11,135.00 1,500.00 9,635.00
August 2020 1,995.00 11,630.00 9,400.00 2,230.00
September 2020 1,285.00 3,515.00 - 3,515.00
October 2020 760.00 4,275.00 4,100.00 175.00
November 2020 1,410.00 1,585.00 - 1,585.00
December 2020 1,415.00 3,000.00 3,000.00 -
January 2021 1,000.00 1,000.00 - 1,000.00
February 2021 1,100.00 2,100.00 2,100.00 -
March 2021 5,910.00 5,910.00 - 5,910.00
April 2021 2,980.00 8,890.00 2,000.00 6,890.00
May 2021 103,845.00 110,735.00 3,000.00 107,735.00
June 2021 3,060.00 110,795.00 105,900.00 4,895.00
July 2021 4,680.00 9,575.00 3,100.00 6,475.00
August 2021 2,760.00 9,235.00 4,960.00 4,275.00
September 2021 3,740.00 8,015.00 4,000.00 4,015.00
October 2021 20,087.23 24,102.23 4,000.00 20,102.23
November 2021 1,100.00 21,202.23 21,187.23 15.00
December 2021 2,000.00 2,015.00 2,000.00 15.00
January 2022 3,540.00 3,555.00 3,540.00 15.00
February 2022 4,505.00 4,520.00 3,410.00 1,110.00
March 2022 3,705.00 4,815.00 3,710.00 1,105.00
April 2022 8,325.56 9,430.56 8,700.75 729.81
May 2022 1,680.00 2,409.81 - 2,409.81
June 2022 5,105.00 7,514.81 5,445.00 2,069.81
July 2022 4,620.00 6,689.81 5,300.00 1,389.81
August 2022 2,305.00 3,694.81 4,155.00 (460.19)
September 2022 1,340.00 879.81 1,500.00 (620.19)
October 2022 6,635.00 6,014.81 3,500.00 2,514.81
November 2022 1,060.00 3,574.81 3,000.00 574.81
December 2022 1,825.00 2,399.81 2,300.00 99.81

8.6. It can be seen in Table 11 that for most of the time, there is always a variance or
an amount retained in the custody of the Barangay Treasurer at the end of each
month. Also, for the month of August 2019, December 2019, April 2020, June
2020, September 2020, November 2020, January 2021, March 2021 and May
2021, no deposits were made by the Barangay Treasurer despite existence of cash
on hand. This practice exposes government funds to the risk of loss, misuse or
misappropriation.
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8.7. We recommend that the Barangay Treasurer deposit the full amount of
collections at the Barangay’s authorized government depository bank daily,
weekly or once the collections reach ₱5,000.00, whichever is applicable.

May we have your comments on the foregoing audit observations within five (5)
calendar days from receipt hereof.

ARNE S. CABIGAS
State Auditor II
OIC- Audit Team Leader

SANTIAGO P. SEÑASE
State Auditor IV
OIC-Supervising Auditor

Proof of Receipt of AOM:

Name of Receiving Date
Officer Signature
Officer Received
Punong Barangay
Barangay Treasurer
Barangay Kagawad-
CCA
Barangay Bookkeeper
Municipal Accountant

AOM No. 2023-001 Brgy. Tuy-a, Abuyog, Leyte Page 18 of 17