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EXECUTIVE SUMMARY

Consolacion became a municipality on February 14, 1920 by Acta de Consejo de


Mandaue under Resolution No. 3, Series of 1920. It is composed of twenty-one (21)
barangays. Pursuant to Memorandum Circular No. 01-M(74)-05 of the Bureau of Local
Government Finance (BLGF) dated March 23, 2006, the Municipality of Consolacion was
reclassified from third class to second class municipality effective July 29, 2005.
Per BLGF Memorandum Circular No. 01-M(25)-08 dated November 18, 2008, the
Municipality of Consolacion was reclassified to first class effective July 29, 2008.
Pursuant to RA 7160, known as the Local Government code of 1991, the municipality
like other local government unit enjoys total independence in managing, deciding and
planning its own administrative, fiscal and development affairs in conformity with the national
governments thrust for sustainable social and economic growth.
The Municipality has accomplished various projects during the year as shown in
Annex 1.

HIGHLIGHTS OF FINANCIAL INFORMATION


During the year, the municipality realized a total income of P115,835,456.83 compared
to 2007 of P106,469,805.01 or an increase of P9,365,651.82 or 8.79%. The agency
appropriated the total amount of P167,737,430.93 which is lower than that of 2007. On the
other hand, total disbursements amounted to P79,904,254.72 or an increase of
P2,744,016.39 or 8.92%.
The municipalitys assets, liabilities and residual equity as of December 31, 2008 were
P245,920,140.95, P101,715,305.87, P144,204,835.08 respectively, which correspondingly
increased by 16.16%, increased by 58.08% and decreased by 2.15%.

SCOPE OF AUDIT
An audit was conducted on the accounts and operations of the Municipality of
Consolacion for the calendar year ended December 31, 2008. The audit was made to
ascertain the regularity of disbursement, the reliability of financial reports and the adequacy
of accounting reports and to determine whether plans, programs and activities for the year
were attained in an efficient, economical and effective manner.

OPINION IN THE STATE AUDITORS REPORT ON THE FINANCIAL STATEMENTS


The auditor rendered a qualified opinion on the financial statements as the validity,
existence and correctness of the agencys property, plant and equipment amounting to
P178,261,792.81 or 72.49% of its total assets, could not be ascertained due to the nonsubmission of a physical inventory report. Existing records did not allow us to perform
alternative audit procedures.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS


FINANCIAL AND COMPLIANCE AUDIT
1. Cash advances were granted to various officers and employees who were not bonded in
violation of Section 101 of PD 1445, Section 305(f) of RA 7160, the Local Government
Code of 1991, and Section 66 of the Government Accounting and Auditing Manual,
Volume 1, thus exposing government funds to risk of loss or misappropriation.
Management should strictly comply with the bonding requirements of accountable officers
before granting cash advances, as provided under Section 101 PD 1445, and Section 305
of RA 7160, the Local Government Code of 1991. Likewise, the Accountable Officer
should be duly designated as Special Disbursing Officer to perform disbursing functions.
2. Elected officials were still granted cash advances for purposes other than for official
travel, contrary to Section 4.1.4 of COA Circular No. 97-002 dated February 10, 2008,
prohibiting the grant of cash advance to elected officials other than for official traveling
expenses.
It is recommended that the management should strictly follow the guidelines in the
granting and utilization of cash advances provided under COA Circular No. 97-002 dated
February 20, 1997.
3. Cash advance granted in the amount of P200,000.00 intended for the Sinulog Festival
2009 was charged against the Special Education Fund (SEF) contrary to DECS-DBMDILG Joint Circular No. 01 s. 1998 dated April 14, 1998.
Management should stop charging expenses in the SEF that do not fall within the
guidelines set under DECS-DBM-DILG Joint Circular No. 01 s. 1998 dated April 14, 1998,
and DECS-DBM-DILG Joint Circular No. 01-A dated March 14, 2000.
4. Disbursements were made for expenses amounting to P10,556.45 in connection with the
celebration of the Lenten Season, in violation of Section 335 of RA 7160, the Local
Government Code of 1991 prohibiting expenditures for religious or private purposes.
Management should stop the practice of charging against municipal funds expenses for
religious activities, and adhere strictly to the provision of Section 335 of RA 7160 which
prohibits the use of public funds for religious or private purposes.
5. Contracts in the total amount of P13,190,165.20 were not supported with a Sangguniang
Bayan Resolution authorizing the Municipal Mayor to enter into contract as required under
Section 22 of the Local Government Code of 1991 (RA 7160). In addition, payment made
for a road concreting project was not supported with complete documentation contrary to
Section 4 (6) of PD 1445 and the Implementing Rules and Regulations of RA 9184, The
Government Procurement Reform Act. Thus, verification and evaluation of the regularity
of the claims made cannot be readily ascertained.
It is recommended that the provisions of Sec. 22(c) of RA 7160 requiring prior
authorization by the Sangguniang Bayan for the Municipal Mayor to enter into contract,
and Sec. 37 of RA 9184 and Sec. 4 of PD 1445 for the complete documentation of all
claims against government funds, should henceforth be strictly observed.

6. Honoraria granted to the Bids and Awards Committee (BAC) and the Technical Working
Group (TWG) amounting to P167,500.00 was charged against the General Fund, contrary
to Section 3.1 of Budget Circular No. 2007-3 dated November 29, 2007 which provides
the guidelines on the grant of honoraria and overtime pay to government personnel
involved in government procurement.
The BAC members, TWG and BAC Secretariat should refund the amount received by
each of them since the payment was not from the authorized funding source. Granting of
honoraria should be in accordance with Section 3.1 of Budget Circular 2007-3 dated
November 29, 2007.
7. Purchases of fuel and oil were paid out of cash advance granted to the Municipal Mayor
instead of making payments directly to the supplier, in violation of Sec. 9 of COA Circular
No. 92-382 dated July 3, 1992 which requires that all disbursements shall be made by
check, and COA Circular No. 97-002 dated February 10, 1997 which provides the
guidelines in the granting, utilization and liquidation of cash advance.
Management should strictly adhere to the provisions of COA Circular No. 92-382 dated
July 3, 1992 which requires that all disbursements shall be made by check; COA Circular
No. 97-002 dated February 10, 1997 which provides the guidelines in the granting,
utilization and liquidation of cash advance; and COA Circular 77-51 dated September 27,
1977 prescribing specific rules and regulations in the use of government vehicles.
8. Expenses on hotel accommodation, boat fares, perdiems and miscellaneous expenses in
the total amount of P647,864.00 were incurred in holding the committee hearing of the
municipalitys 2009 annual budget outside of the locality which are unnecessary in nature
as stated under COA Circular No. 85-55A dated September 8, 1985, and the Government
Accounting and Auditing Manual Volume I.
Municipal officials should exercise prudence or the diligence of a good father of a family in
handling the municipalitys funds which are sourced from the taxpayers.
9. Unnecessary expenditures amounting to P117,000.00 were incurred in holding a team
building seminar in a luxurious hotel, and P10,150.00 incurred in an Executive-Legislative
Caucus held relative to the filing of comment to the Office of the Ombudsman of a
complaint on the said team building seminar.
Municipal officials should exercise prudence or the diligence of a good father of a family in
handling the municipalitys funds which are taxpayers money. Each participant should
refund the amount spent for unnecessary expenses.

STATUS OF IMPLEMENTATION OF PRIOR YEARS AUDIT RECOMMENDATIONS


During the year, out of the twenty-six (26) prior years audit recommendation, six (6)
were implemented, nine (9) were partially implemented, and eleven (11) were not
implemented.