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Republic of the Philippines

Local Government Sector



Brgy. I , Laur, Nueva Ecija

Report on the Financial Statements

Pursuant to Section 2, Article IX-D of the Philippine Constitution and pertinent

provisions of Presidential Decree No. 1445, we have audited the accompanying Financial
Statements of Barangay I, Municipality of Laur, Nueva Ecija which comprise the
Statements of Financial Position as of December 31, 2016 and December 31, 2017 and
the Statement of Comprehensive Income, Statement of Changes in Government Equity
and Statement of Cash Flows for the years 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 State Accounting Principles, and for such internal control
as management determines in necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud of 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 misstatements.

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 on the risks of material misstatement in the financial
statement whether due to fraud or error. In making those risks assessment, the Auditor
considers internal control relevant to the entity’s preparation and fair presentation 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 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 a basis for our qualified opinion.

Basis for Qualified Opinion

As discussed in Part II, the Auditor rendered qualified opinion on the fairness of
presentation of the Financial Statements because the reported balance of Property, Plant
and Equipment of ₱3,060,592.43 of December 31, 2017 was unreliable due to the failure
of the Barangay to conduct physical count of its property and absence of property records
to support the accounting and recording contrary to the Systems and Procedures Manual
on the Management of Barangay Funds and Property.

Qualified Opinion

In our opinion, except for the effect of any adjustment which might have been determined
to be necessary based on the matters discussed in the Basis for Qualified Opinion
paragraph, the financial statements present fairly the financial position of the Barangay as
of December 31, 2016 and December 31, 2017 and its financial performance and cash
flows for the years then ended in accordance with State Accounting Principles..



State Auditor II
OIC-Audit Team Leader

May 30, 2018