February 27, 2014

Ms. Cecilia G. Ancheta

Supervising Auditor
Audit Group F Pangasinan
Binalonan, Pangasinan

Madam:

In compliance with Section 2, Article IX-D of the Philippine Constitution and pertinent
sections of Presidential Decree No. 1445, we conducted a financial and compliance audit on the
accounts and operations of the Municipality of San Nicolas, Pangasinan for the year ended December
31, 2013.

The audit was conducted to ascertain the propriety of financial transactions and compliance
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 the financial statements. A Value for Money
Audit was undertaken on selected areas to determine whether the agencys goals and objectives were
attained in an economical, efficient and effective manner.

The results of our audit are embodied in our attached report consisting of four parts: Part I -
Audited Financial Statements, Part II Detailed Findings and Recommendations, Part III Status of
Implementation of Prior Years Audit Recommendation and Part IV Annexes. The findings and
recommendations were discussed with concerned Management officials and staff.

A qualified opinion has been rendered on the fairness of the presentation of the financial
statements as the validity, accuracy, and existence of the Property, Plant and Equipment valued at
P26,928,419.90 (net of depreciation) as of December 31, 2013 could not be ascertained due to non-
conduct of physical inventory of these assets, thereby affected the fair presentation of the Property,
Plant and Equipment account balances in the financial statements. Moreover, cash advances granted
to various municipal officials and employees in the total amount of P7,542,317.66 remained
unliquidated at year-end, thereby understating the Expenses account balance while overstating the
Receivables and Government Equity accounts balances.


Our audit was conducted in accordance with generally accepted state auditing standards and
we believe that it provides reasonable bases for the results of audit.

We acknowledge the cooperation extended to the audit team by the officials and staff of
that Agency.

Very truly yours,


JESUS C. ROBOSA
State Auditor III
Team Leader





Republic of the Philippines
COMMISSION ON AUDIT
Office of the Auditor
Team 2-Audit Group F-Pangasinan
Rosales, Pangasinan


Republic of the Philippines
COMMISSION ON AUDIT
Regional office No. I
OFFICE OF THE SUPERVISING AUDITOR
City of San Fernando, La Union
Tel Nos. 888-5779/242-7690


February 28, 2014
Honorable Mayor Rebecca G. Mejica- Saldivar
Municipality of San Nicolas, Pangasinan

Dear Mayor Saldivar :

We transmit herewith the report on the financial and compliance audit of the
accounts and operations of the Municipality of San Nicolas, Pangasinan for the year
ended December 31, 2013, in compliance with Section 2, Article IX-D of the Philippine
Constitution and pertinent Sections of Presidential Decree No. 1445.

The audit was conducted to ascertain the propriety of financial transactions and
compliance 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 the
financial statements. Likewise a Value for Money Audit (VFM) was conducted to
determine whether the resources of the Municipality were utilized in an economical,
efficient and effective manner.

The report consists of four parts: Part I-Audited Financial Statements, Part II-
Detailed Findings and Recommendations, Part III- Status of Implementation of Prior
Years Audit Recommendation and Part IV- Annexes. The findings and
recommendations were discussed with concerned management officials and staff of that
Municipality in an exit conference held on March 21, 2014. Managements comments
are included in the report, where appropriate.

We request that the comments and observations contained in the report be fully
addressed and we would appreciate being informed of the action taken in this regard
within sixty (60) days from receipt hereof, pursuant to Section 90 of the General
Provisions of Republic Act No. 10352, otherwise known as the General Appropriations
Act of 2013, by accomplishing the Agency Action Plan and Status of Implementation
attached herewith.
We acknowledge the cooperation extended to the audit team by the officials and
staff of that Agency.

Thank you.

Very truly yours

CECILIA G. ANCHETA
Supervising Auditor

Cc: The Director, DILG Regional Office No. I, City of San Fernando, La Union
The Director, BLGF Regional Office No. I, City of San Fernando, La Union
The Director DBM Regional Office No. I, City of San Fernando, La Union
The Presiding Officer, Sangguniang Bayan, Municipality of San Nicolas, Pangasinan
Assistant Commissioner, LGS, COA, Quezon City