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 6, 2023

AUDIT OBSERVATION MEMORANDUM (AOM)

For: HON. MARCIAL T. ABELGOS

Punong Barangay
Barangay Burubud-an
Abuyog, Leyte

Attention: MARISSA A. CABIAS

Barangay Treasurer

ADELINA G. CAÑA
Barangay Kagawad-CCA

ALJO BELOY
Barangay Bookkeeper

MICHELLE L. EFREN
Municipal Accountant

We have audited some of the Barangay transactions for Calendar Years 2019,
2020, 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 ₱8,864,717.23 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.

1.1. Section 111 of PD 1445 states that:

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
 “(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

Duplicate copy- to the C/M Accountant
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
 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, 2021, the Barangay’s financial statements showed the total,
PPE account of ₱11,067,866.65 representing 73% of its total assets of
₱7,001,522.21 The details of the total PPE account are presented in Table 1.

Table 1. Property, Plant and Equipment

PPE Amount
Land ₱ 226,815.00
Road Network 8,498,135.66
Water Supply System 454,175.00
Power Supply System 160,252.48
Office Buildings 2,178,387.30
Office Equipment 71,747.00
Information & Communication Technology Equipment 39,800.00
Communication Equipment 104,500.00
Disaster Response & Rescue Equipment 140,359.00
Other Machineries & Equipment 41,000.00
Furnitures & Fixtures 110,000.00
Books 68,828.00
Total 12,093,999.44
Accumulated Depreciation Expense 3,229,282.21
Net Amount ₱ 8,864,717.23

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 afore-cited deficiencies, the valuation of the properties that constitute
the Property, Plant and Equipment account amounting to ₱8,864,717.23 could not
be established, thus affecting the fair presentation of the account in the FS.

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page

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

1.7. 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. Unexpended balance of DRRMF on CY 2022 totaling ₱170,747.95was 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.

2.2. In CY 2022, the barangay appropriated a total of ₱135,058.50 for its LDRRMF.
In addition, it has a balance of ₱113,747.95 from previous year’s unexpended
balance, while no disbursements were made during the year, leaving a balance of
₱248,806.45. Details are shown in Table 2.

Table 2. Balance of BDRRMF

PPA Appropriation Disbursements Balance
30% QRF ₱ 40,517.55 ₱ - ₱ 40,517.55
94,540.95 94,540.95
Current
Chainsaw; evacuation tent; seminar and
Year -
workshop

Subtotal Current Year ₱ 135,058.50 ₱ 0.00 ₱135,058.50

Previous Years Unexpended 113,747.95 0.00 113,747.95
Total ₱ 248,806.45 ₱ 0.00 ₱248,806.45

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

disclosed that only the amount of ₱78,058.50 was transferred to the Special Trust
Fund instead of the balance of ₱248,806.45, thus an understatement in transfer
amounting ₱170,747.95.

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

amounting ₱170,747.95, the Trust Liabilities-DRRMF account was understated
by the same amount at year-end.

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page

2.5. We recommend that the Municipal Accountant thru her Designated
Bookkeeper transfer and record the unexpended BDRRM Fund amounting
₱170,747.95 Trust Liabilities-DRRMF under Special Trust Fund and
maintain subsidiary ledgers by year of transfer.

5% DRRMF Utilization

3. Only ₱486,821.50 out of ₱695,110.40 or 70% was utilized out of the

LDRRMF available appropriations in CYs 2019, 2020, 2021 and 2022, of
which none was utilized in CY 2022 contrary to COA Circular No. 2012-002,
Section 21 of RA No. 10211 and Local Budget Circular 124, thereby limiting
the capacity and readiness of the Barangay in responding to disasters and in
assisting the constituents in times of calamity and COVID-19 pandemic.

3.1. COA Circular No. 2012-002 dated September 12, 2012 on Accounting and
Reporting Guidelines of the Local Disaster Risk Reduction and Management
Fund (LDRRMF) of Local Government Units provides:

5.1.2 A 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.
Xxx.

3.2. Section 21 of Republic Act No. 10211 provides, “The present Local Calamity
Fund shall henceforth be known as the Local Disaster Risk Reduction and
Management Fund. Not less than five percent (5%) of the estimated revenue from
regular sources shall be set aside as the LDRRMF to support disaster risk
management activities such as, but not limited to, pre-disaster preparedness
programs including training, purchasing life-saving rescue equipment, supplies
and medicines, for post-disaster activities, and for payment of premiums on
calamity insurance. The LDRRMC shall monitor and evaluate the use and
disbursement of the LDRRMF based on the LDRRMP as incorporated in the local
development plans and annual work and financial plan. …”

3.3. DILG Memorandum Circular No. 2012-73was issued to provide the list of early
warning systems, preparedness equipment and other equipage which may be
procured by the LGUs from the 70% Mitigation Fund of its LDRRMF, depending
on the kind of disaster. Among these the following items:
Flooding Earthquake
* Rubber boats with live vests, rescue * Fork lift
whistles and megaphones * Grader
* Inflatable Rafts/ Boats * Hack Saw

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page

 Flooding Earthquake
* Rain Gauges * Backhoe
* Breathing Apparatus * Chisel
* Portable Generator Set * Electric Drill
* Illuminated Jackets (Night Light) * Chain Saw Electric
* Warning Bella * Concrete Cutter
* Bolt Cutters * Jack Hammer
* Life Buoys * Megaphone w/ siren & rescue
whistle
* Pulling and Lifting Machine * Flashlight with batteries
* Chain Saw Electric * Work Gloves
* Portable Tower Light * Ax- weighing at least 6 lbs
* Hand Gloves * Shovel-both flat head& pointed
* Hydraulic Cutter Hydraulic * Coils of rope and wire
Spreader
* Power Pack Pump * Compass
* Core Hose Pipe 20 m. long * crow bar/claw tool- 36'' or longer
* Foldable Stretcher Search Lights * Safety Full Body Harness
* Hi-power Torches * Tent- Family Sized
* Emergency Torches * Sleeping Bags
* Emergency Lights Rain Coat * Bolt Cutters
* Grapnel with Poly propylene rope * 10 ton chain pulley block
* Body Bags * Pulling and Lifting Machine
* Aluminum Ladder 24 ft. * 1" Manila rope 100 meters roll
* Electric Drill * Portable Tower Light
* Snap Link * Hard hat
* Eye Googles * Search, emergency light
* Water Proof Tents * Foldable Stretcher
* First Aid Boxes Fire Extinguisher * First Aid Boxes (50pax/ per box)
* Fire Extinguisher * Chain Saw

Volcanic Eruption Landslide

* Grader * Dump Truck
* Backhoe * Grader
* Megaphone * Back hoe
* Rescue Whistle * Megaphone with serene
* Warning Bells * Rescue Whistle Search Foldable
Stretcher
* Forklift * Forklift
* Pulling and Lifting Machine * Pulling and Lifting Machine
* 10 Ton Chain Pulley Block * Electric Drill
* Crowbar/ Pickaxe/ Shovel * Shovel
* Portable Generator Set * 10 Ton Chain Pulley Block
* Inflatable Flood Light AIT 4500 * Search Lights
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
 Volcanic Eruption Landslide
* Grapnel with Poly propylene Rope * Hi power Torches
* Hard Hat * Emergency Lights
* Breathing Apparatus * Body Bag
* Safety Full body Harness * Compass
* Search Lights * Search Camera set/ victim
location unit
* Hi-power Torches * Foldable Stretchers
* Emergency Lights * Snap link safety
* Search Camera Set/ Victim * Full body Harness First Aid
Location Unit Boxes (50 persons per box)
* Ascending and Descending Device
* Snap Link * Safe line Rescue Ropes

3.4. Also, the Department of Budget and Management issued Local Budget Circular
(LBC) No. 124 dated March 26, 2020 set the policy guidelines on the provision of
funds by the Local Government Units for PPAs to address the Corona Virus
Disease 2019 (COVID-19) situation.

3.5. Section 2.5.5 and 2.5.6 of the said LBC states:

2.5.5 In view of the foregoing legal bases, LGUs are authorized to utilize
the LDRRMF, beyond the 30% QRF, to address the disaster
response requirements of the COVID-19 emergency, among the
other purposes sanctioned by the law (i.e., disaster prevention and
mitigation, preparedness, and rehabilitation and recovery), provided
that the same is consistent with the approved LDRRMP as
incorporated in the AIP.

2.5.6 Further, the unexpended balances of the LDRRMF that accrued to the
special trust fund pursuant to Section 21 of RA No. 10121 may be
used to address the disaster response requirements of the COVID-19
emergency, among the other purposes sanctioned by the law (i.e.,
disaster prevention and mitigation, preparedness, and rehabilitation
and recovery), provided that the same is consistent with the approved
LDRRMP as incorporated in the AIP, and following the procedures
under COA Circular No. 2012-002 and NDRRMC-DBM-DILG JMC
No. 2013-1.

3.5. During the review of Barangay’s appropriation and utilization of the 5% BDRRM
Fund, the Audit Team noted that Barangay Burubud-an appropriated a total
amount of ₱405,106.15 under DRRM Fund during the 4-year period under audit,
as presented in Table 3.

Table 3. BDRRMF balance

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page

 Amount
Particulars Total
2019 2020 2021 2022
Beginning Balance ₱ 330,521.80 ₱ 185,957.65 ₱ 64,290.45 ₱ 113,747.95 ₱
330,521.80
Current Appropriation 80,364.85 91,625.30 98,057.50 135,058.50 405,106.15
Utilization 224,929.00 213,292.50 48,600.00 - 486,821.50
Balance as of year-end ₱ 185,957.65 ₱ 64,290.45 ₱ 113,747.95 ₱ 248,806.45 ₱
248,806.45

3.6. Based on existing regulations, the 30% QRF shall be used only when there is a
declaration of a State of Calamity. If unused, the amount shall be transferred to a
Special Trust Fund on the succeeding year and such amount can be utilized for
other disaster-mitigation purposes. From the appropriations in Table 3, only the
30% QRF appropriation for CY 2022 cannot be used by the Barangay unless there
is a declaration of a State of Calamity on that year. Thus, the total LDRRMF
which the Barangay could have utilized for the 4-year period amounted to
₱695,110.40, computed as follows:
₱330,521.8
Prior years Unexpended LDRRMF- as of January 1, 2019 0
LDRRMF CY 2019 to CY 2022 405,106.15
Less: CY 2022 QRF 40,517,.55
₱695,110.4
Total Available LDRRMF 0

3.7. Based on the submitted report of utilization provided by the Barangay through the
Barangay Bookkeeper, no utilization was made from the CY 2022 LDRRMF,
while utilizations only amounted to ₱486,821.50 from CY 2019 to 2021, as can be
seen in Table 4.

Table 4. DRRMF Utilization in CYs 2020

Gross
Check Date Check No. Payee Particulars
Amount
12/20/19 68345034 Washington Purchase of Generator ₱ 41,000.00
Enterprises
11/21/19 68345032 Electronic City & Purchase of Public Siren 47,300.00
Services Center
11/11/19 68345023 VIS Marketing Purchase of Chainsaw & 44,459.00
Spine Board
21/10/2019 68345015 CB Premiere Trading Purchase of BDRRM 48,670.00
Services Equipment
(Flashlight,Megaphone,Whist
le,Rope,Raincoat,Boots &
Fire Extinguisher)
24/09/2019 68345005 Electronic City & Purchase-Two-way Hand 43,500.00
Services Center Held Radio
17/03/2020 68345077 Prinsayas Corporation Purchase of Goods (Noodles 167,292.50
& Canned Goods)
09/12/2020 72787722 Electronic City & Purchase of Two-Way 46,000.00
Services Center HandHeld Radio
03/11/2021 77513119 Electronic City & Purchase of 2pcs flashlight, 48,600.00
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
 Gross
Check Date Check No. Payee Particulars
Amount
Services Center 2 Handheld Radio, 16
raincoats, 16 boots
TOTAL ₱486,821.50

3.8. As can be seen in Table 4, the barangay only utilized the total amount of
₱486,821.50 out of the total available LDRRMF appropriation amounting
₱695,110.40, hence, the fund was not fully maximized while the capability of the
Barangay to respond effectively during disasters was not greatly improved.

3.9. The occurrence of several typhoons, earthquake and flooding for the past years
and the crisis brought by the COVID-19 pandemic should have been enough
reason for the Barangay Officials to actively perform their various responsibilities
and initiate the implementation of disaster-prevention and mitigation activities.

3.10. The non-implementation of the planned LDRRM activities per LDRRMFIP did
not improve the capability of the Barangay and its Officials to prepare, manage
and respond to disasters as well as its ability assist the constituents in times of
calamity.

3.11. We recommend that the Punong Barangay implement during the year the
projects in the LDRRMFIP for the year, in order to equip the Barangay
Officials and its constituents the skills and knowledge to prepare and manage
disasters.

Minimal 20% Development Fund Utilization

4. Only ₱1,640,851.77 or 68% of the ₱2,420,257.53 continuing and current

appropriations of the 20% Development Fund for CYs 2019 to 2022 was
utilized, 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:

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.

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page

 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.
3.2.5.2 Administrative expenses, such as supplies,
meals, representation, communication, water
and electricity, petroleum products, and the
like;
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
 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 CYs 2019, 2020, 2021 and 2022, the amount set aside by the Barangay
as 20% Development Fund, based on the approved Annual Budgets totaled
₱1,608,824.60. This amount was appropriated based on the Internal Revenue
Allotment (IRA) of the Barangay. Moreover, the Barangay still has a balance of
₱811,432.93 as of December 31, 2018 as continuing appropriations. Thus, the
20% Development Fund of the Barangay totaled to ₱2,420,257.53. Table 4
presents the programs, projects and activities funded from 20% Development with
their corresponding appropriations based on the Annual Investment Plans
submitted.

Table 5. 20% BDF CY 2019 to 2022 PPAs

CY Project/Title Appropriation
2018 and previous years Unidentified Projects ₱ 811,432.93
2019 Construction of footbridge 319,659.40
2020 Riprap hanging bridge 363,501.20
2021 Riprap hanging bridge 388,830.00
2022 Rehab of hanging bridge 536,834.00
TOTAL ₱2,420,257.53

4.3 Review of utilization revealed that out of the available appropriations the
barangay disbursed 68% or a total amount of ₱1,608,824.60 to implement the
projects funded under 20% Development Fund from CYs 2019 and 2021 and
prior years continuing appropriations as follows.

Table 6. Disbursements paid out of 20% Development Fund

Check
Check No. Payee PPA Gross Amount
Date
9/20/2019 68345002 Victoria Development & Construction of Hanging ₱ 806,851.77
Ventures Corporation Bridge
4/19/2021 72787757 5 Star J Enterprises Construction of Concrete 399,500.00
Footbridge
12/14/2021 77513130 Venus Engineering & Construction/ 434,500.00
Construction Improvement of
Hanging Bridge (Riprap)
Total ₱1,608,824.60

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page

4.4 Since not all of the identified projects were implemented, the fund was not
optimally utilized hence the constituents were deprived of the benefits from the
noted projects.

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

Lack of Appropriation for LCPC

5. 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)
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 ₱ 2,684,170.00 ₱ 1,944,150.00 ₱ ₱
1,817,506.00 1,598,297.00
SHOULD BE - 1% of IRA 26,841.70 19,441.50 18,175.06 15,982.97
ACTUAL Appropriation - - - -
Lacking Appropriation ₱ 26,841.70 ₱ 19,441.50 ₱ ₱
18,175.06 15,982.97

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.
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
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. 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.

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 ₱ 2,684,170.00 ₱ 1,944,150.00 ₱ 1,817,506.00 ₱ 1,598,297.00
SHOULD BE - 1% of 26,841.70 19,441.50 18,175.06 15,982.97
IRA
ACTUAL Appropriation - - - -
Lacking Appropriation ₱ 26,841.70 ₱ 19,441.50 ₱ 18,175.06 ₱ 15,982.97

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
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
7. Appropriations in CY 2019 to CY 2022 and actual expenditures in CY 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
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 ₱1,836,695.00 ₱1,666,711.25 ₱1,478,103.00 ₱1,372,459.00
Preceding Year)
2020/2019/2018/2017
PS Limitation 55% 1,010,182.25 916,691.19 812,956.65 754,852.45
Less: Appropriations
Annual Budget 1,065,137.47 1,016,519.43 812,937.54 754,837.90
Supplemental Budget 211,614.00 211,097.00 88,813.00 128,177.64
Total Appropriations 1,276,751.47 1,227,616.43 901,750.54 883,015.54
Excess ₱ (266,569.22) ₱ (310,925.24) ₱ (88,793.89) ₱ (128,163.09)

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7.6. In addition, actual expenditures for CY 2022 on personal services also exceeded
the ceiling for the reason that the budget itself provided a greater PS appropriation
than what was required. Details on Table 10.
Table 10. Excess of Actual PS Expenditure over PS Limitation
Particulars 2022 2021 2020 2019
PS Limitation 55% ₱ 1,010,182.25 ₱ 916,691.19 ₱ 812,956.65 ₱ 754,852.45
Less: Actual PS Expenditures 1,195,336.00 972,716.00 846,514.00 693,976.00
Difference (185,153.75) (56,024.81) (33,557.35) 60,876.45
Total PS cost for waived items 62,000.00 62,000.00 62,000.00 62,000.00
Excess (Difference less waived ₱ (123,153.75) ₱ 5,975.19 ₱ 28,442.65 ₱ 122,876.45
items)

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 ₱123,153.75 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.

Delayed and Partial Deposit of Collections

8. 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
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
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
 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
Total Cash on Amount Deposited/
Date during the Retained by
Hand Remitted
Month Brgy. Treasurer
Beg. 910.00
Jul-19 8,720.00 9,630.00 7,910.00 1,720.00
Aug-19 800.00 2,520.00 1,000.00 1,520.00
Sep-19 1,120.00 2,640.00 - 2,640.00
Oct-19 3,010.00 5,650.00 - 5,650.00
Nov-19 100,370.00 106,020.00 2,500.00 103,520.00
Dec-19 1,390.00 104,910.00 104,500.00 410.00
Jan-20 6,230.00 6,640.00 5,000.00 1,640.00
Feb-20 2,740.00 4,380.00 1,000.00 3,380.00
Mar-20 2,380.00 5,760.00 2,500.00 3,260.00
Apr-20 2,640.00 5,900.00 2,500.00 3,400.00
May-20 1,880.00 5,280.00 2,500.00 2,780.00
Jun-20 900.00 3,680.00 1,000.00 2,680.00
Jul-20 1,980.00 4,660.00 1,500.00 3,160.00
Aug-20 2,560.00 5,720.00 4,000.00 1,720.00
Sep-20 2,220.00 3,940.00 3,000.00 940.00
Oct-20 1,400.00 2,340.00 2,000.00 340.00
Nov-20 1,290.00 1,630.00 1,500.00 130.00
Dec-20 2,380.00 2,510.00 2,500.00 10.00
Jan-21 1,270.00 1,280.00 - 1,280.00
Feb-21 490.00 1,770.00 1,000.00 770.00
Mar-21 5,050.00 5,820.00 3,000.00 2,820.00
Apr-21 2,200.00 5,020.00 3,500.00 1,520.00
May-21 5,500.00 7,020.00 4,000.00 3,020.00
Jun-21 3,100.00 6,120.00 4,000.00 2,120.00
Jul-21 3,580.00 5,700.00 3,000.00 2,700.00
Aug-21 1,000.00 3,700.00 3,000.00 700.00
AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page
 Collections Amount
Total Cash on Amount Deposited/
Date during the Retained by
Hand Remitted
Month Brgy. Treasurer
Sep-21 2,400.00 3,100.00 2,000.00 1,100.00
Oct-21 2,360.00 3,460.00 2,000.00 1,460.00
Nov-21 1,060.00 2,520.00 1,500.00 1,020.00
Dec-21 4,900.00 5,920.00 8,000.00 (2,080.00)
Jan-22 156,300.00 154,220.00 - 154,220.00
Feb-22 1,140.00 155,360.00 156,200.00 (840.00)
Mar-22 32,260.62 31,420.62 3,000.00 28,420.62
Apr-22 430.00 28,850.62 25,000.00 3,850.62
May-22 2,155.00 6,005.62 3,000.00 3,005.62
Jun-22 1,080.00 4,085.62 5,000.62 (915.00)
Jul-22 2,760.00 1,845.00 3,000.00 (1,155.00)
Aug-22 1,885.00 730.00 3,000.00 (2,270.00)
Sep-22 2,370.00 100.00 2,000.00 (1,900.00)
Oct-22 2,775.00 875.00 3,000.00 (2,125.00)
Nov-22 6,640.00 4,515.00 4,000.00 515.00
Dec-22 1,130.00 1,645.00 4,000.00 (2,355.00)

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 September to October 2019, January 2021 and
January 2022, 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. Moreover, it can also be seen that there are instances
when deposits are exceeded the amount of collections, thereby showing weak
monitoring of cash on hand.

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:

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page

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

AOM No. 2023-001 Brgy. Burubud-an, Abuyog, Leyte Page