EXECUTIVE SUMMARY
Introduction
The Municipality of Tanay was founded on November 12, 1606, it is among the oldest
towns in the Province of Rizal. Before the coming of the Spaniards, the Indonesian and
Malay voyagers have already settled in the locality. It became an independent town of
Rizal by virtue of Republic Act No. 137, enacted on June 1901 by the Philippine
Commission. Tanay is located at the foot of Sierra Madre Mountains, it lies at
approximately 14” 30' North and 121" 17’ East, in the island of Luzon. It is now
classified as a first class Municipality in the Province of Rizal with 19 barangays under its
jurisdiction.
For Calendar Year (CY) 2020, the organizational structure of the Municipality is as
follows:
a. Key Officials
Mayor : Hon. Rex Manuel C. Tanjuatco
Vice-Mayor : Hon. Rafael A. Tanjuatco
Members of the Sanggunian : Hon. Allan T. Sacramento
Hon. Enrique S. Vergel De Dios III
Hon. Ricardo S. Bernados
Hon. Jessica J. Linog
Hon. Ivan Allen B. Tongohan
Hon. Nelson M. Ocampo
Hon. Rading J. Juco
Hon. Jaime B. Vista
Liga ng Barangay President : Hon. Ruel P. Estrella
Liga ng Barangay Vice-President : Hon. Arcadio R. Gomez
Sanggunian Kabataan President : Hon. Jovel C. Mawili
The financial operations of the Municipality are headed by the following:
OIC-Municipal Accountant : Mr. Leo Anthony A. Santos
OIC-Municipal Treasurer : Ms. Marissa J. Paat
Municipal Budget Officer : Ms. Leilanie L. Pacardo
b. No. of Personnel Complement
Elected - 13
Permanent - 195
Temporary - 1
Co-terminous - 8
Job Order - 418
Contract of Service - _3
Total MS
Scope of Audit
Financial and compliance audits were conducted on the accounts and operations of the
Municipality of Tanay for CY 2020. The audit was conducted to ascertain the fairness of
the presentation of the financial statements and compliance of the Municipality with laws,
rules and regulations, as well as the economical, efficient and effective utilization of
resources.
Financial Highlights
For CY 2020, the Municipality generated total income of P448,841,554.49 from local
taxes, permits, licenses, service income, business income, internal revenue allotment
and other income and excluding transfers, assistance and subsidy from national
government agencies/local government units/other funds totaling £24,253,421.00. The
CY 2020 total revenue is P15,800,685.24 or 3.65 percent higher than last year’s revenue
of £433,040,869.25. On the other hand, expenses reached R394.910,280.19, excluding
transfers, assistance and subsidy to other LGUs/other funds totaling P 1 1,935,461.53
with an increase of P99,908,298.29 or 33.87 percent from last year’s level of
P295.001,981.90.
On the other hand, total appropriations amounted to £743,610,527.51 of which
£497,628,468.68 were expended during the year.
The Municipality’s consolidated assets, liabilities and equity as of December 31, 2020
compared with the preceding year are as follows:
CY 2020 CY 2019 Increase (Decrease)
Total Assets £2,296,853,667.77 £2,209,162,605.74 £ 87,691,062.03
Total Liabilities 942,623,291.00 945,266,885.88 (2,643,594.88)
Equity 1,354,230,376.77 1,263,895,719.86 90,334,656.91
Total Income 473,094,975.49 433,040,869.25 40,054,106.24
Total Expenses 406,845,741.72 303,477,374.00 103,368,367.72
Operational Highlights
For CY 2020, the Municipal Governmentreported the following awards and recognitions:
Award Award Giving Body
1. ASEAN Sustainable Tourism Award (Rural Association of Southeast Asian Nations
Category) (ASEAN)
2. Grassroot Implementer Award Government Financial Management
3. Enhanced Electronic NewGovernment lnnovators Circle, Inc.
Accounting System (eNGAS) and Electronic
Budget (eBudget)
4 . 2 0 2 0 Special Ward on Anti-Drug Abuse Department of the Interior and Local
Council (ADAC) Government (DILG)
5. Sustainable Tourism Award Department of Tourism
Audit Opinion on the Financial Statements
The Auditor rendered a qualified opinion on the fairness of the presentation of the
financial statements due to the following:
1. The correctness of the year-end balances of Property, Plant and Equipment (PPE)
accounts with a carrying value of P1,002,611,012.18 remained doubtful and their
existence and condition could not be readily and fully established due to:
(a) discrepancies between the accounting records and the submitted Report on the
Physical Count of Property, Plant and Equipment (RPCPPE) amounting to
P 7,901,734.23 and (b) inclusion of inventoried items for write-off consisting of
unserviceable, damaged, demolished, and unaccounted properties totaling
P 11,334,259.11 in the RPCPPE, contrary to Section 111 of Presidential Decree (PD)
No. 1445, Sections 123 and 124(2) of the Manual on the New Government
Accounting System (MNGAS) for Local Government Units (LGUs), Volume I.
2. The year-end balance of the Cash and Cash Equivalents amounting to
P535,757,230.77 is unreliable due to: (a) difference in the Cash-Local Treasury
account balances between Accounting and Treasury records of P 1 ,356.55;
(b) difference in the balances of Cash in Bank, Local Currency, Current Account
(CIB-LCCA) between the Municipality’s books and bank records totaling
P'14,143,337.95 (net) which remained unadjusted as of year-end due to delays in the
submission of the monthly Bank Reconciliation Statements (BRS) pertaining to the
Municipality’s four bank accounts and its non-submission for two bank accounts;
(c) inclusion of abnormal balance of PNB bank accounts totaling P1,623,051.99 in
the Municipality’s books and (d) difference of P102,433,880.06 between the
Accounting and Treasury’s records of CIB-LCCA account, contrary to the provisions
of Presidential Decree (PD) No. 1445.
3. The Municipality was still not compliant with the transition provision on the phased
recognition of the Local Road Networks in the books of accounts, which required
100 percent compliance at the end of year 2019 due to the failure of the Municipal
Engineering Office to provide the detailed Road Map and the complete description
and cost segregation of road components for road projects for lack of manpower,
contrary to COA Circular No. 2015-008 dated November 25, 2015, thus rendering
the reported balance of the Road Networks account totaling P 160,429,495.74 as at
year-end unreliable.
4. Supplies and Materials totaling P30,215,120.28 purchased during the year were
directly treated as outright expenses, without coursing through the inventory account,
contrary to Section 114 of the Manual on the New Government Accounting System
(MNGAS) for Local Government Units (LGUs), Volume I, thus rendering the
accuracy and correctness of the balances of inventory and expense accounts as at
year-end unreliable, and thereby providing no control over their proper and prudent
utilization, and leaving no trail to determine the necessity of subsequent
procurements. Moreover, the balance of Inventory Held for Distribution as well as
Office Supplies Inventory and Drugs and Medicines Inventory totaling P4,564,501.71
remained non-moving since December 31, 2018 due to non-submission by the
General Services Officer of the Summary of Supplies and Materials Issued (SSMI) to
the Municipal Accounting Office for proper recording in the books, thereby casting
doubt on the correctness of balances of the said accounts.
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5. The Municipal Public Market consisting of Building with a carrying value of
R19,408,004.01 and the corresponding Land amounting to £14,060,718.56 were
misclassified as Investment Property instead of Property Plant and Equipment under
Markets and Land accounts, contrary to Paragraph 7 of International Public Sector
Accounting Standards (IPSAS) 16 and Section 272(g) of Government Accounting
Manual (GAM) for Local Government Units (LGUs), thus affecting the fair
presentation of accounts in the financial statements. Moreover, an unaccounted
amount of P6,964,200.11 and demolished structures totaling P448,661.47 were
included in the misclassified property, thereby casting doubt on the correctness of
the recorded balance of the same.
6. The accuracy and validity of the recorded balances of Due from and Due to Local
Government Units (LGUs) accounts of P6,960,290.51 and P16,871,701.49,
remained doubtful due to unreconciled differences of P 2,513,011.30 and
P12,717,465.51, respectively, with the reciprocal accounts in the books of the
Provincial Government of Rizal, thereby affecting the fair presentation of those
accounts in the Municipality’s financial statements.
Significant Audit Observations and Recommendations
For the exceptions cited above, we recommended that the Municipal Mayor:
1. direct the: (a) OIC-Municipal Accountant and the General Services Officer to conduct
thorough reconciliation of their respective records in order to determine the details
and causes of discrepancies between the balances per accounting records and
physical count and make the necessary adjustments to present the true value of PPE
accounts in the financial statements; (b) Inventory Committee to conduct a complete
and accurate physical inventory of all the Municipality’s property in order to confirm
its existence or condition and prepare/submit the required report thereon to the Audit
Team and (c) General Services Officer to prepare Inventory and Inspection Report of
Unserviceable Property (IIRUP) to account for all unserviceable and obsolete items
previously taken up in the books as assets and to facilitate the completion of all the
documentary requirements needed, so that they may be properly disposed of and
dropped from the accounts. Moreover, the disposal of property shall be made in
accordance with COA Circular No. 89-296 dated January 27, 1989
2. direct the: (a) OIC-Municipal Accountant to immediately record the transactions in
the Municipality’s books to present the correct balances of the CIB-LCCA and other
affected accounts at any given time; (b) OIC-Municipal Accountant to coordinate with
the depository bank for the prompt release of the monthly bank statements or
consider enrolling the Municipality to online banking facility for easy access of bank
statements to facilitate the timely preparation of the BRS;
(c) Accounting Office to prepare and submit the BRS for the LBP bank account
numbers 1141-0566-85 and 1142-1045-35; (d) OIC-Municipal Accountant to
investigate the details of the negative balance of PNB bank accounts and make
formal representation to the PNB Manager to identify the valid reconciling items.
Thereafter, prepare the necessary journal entries to adjust/record all valid book
reconciling items to present the correct balances of the said bank accounts; and
(e) OIC-Municipal Accountant and OIC-Municipal Treasurer to complete the
reconciliation of their records for both Cash-Local Treasury and CIB-LCCA accounts.
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Thereafter, conduct periodic reconciliation of the two records to ensure accuracy in
recording. Also, necessary adjustments, if there is any, should be effected at once to
avoid accumulation of the discrepancies between the two records.
3. direct the: (a) OIC-Human Resource Officer to provide additional engineering
personnel to ensure the preparation of the complete description and detailed cost
segregation of road components of completed road projects and the detailed Road
Map of the Municipality; (b) Municipal Engineer to provide the General Services
Officer and the OIC-Municipal Accountant with the complete description and detailed
cost segregation of road components of completed road projects of the Municipality
for years prior to 2015 to facilitate the conduct of inventory, reconciliation and proper
recognition of the same in the books of accounts; and OIC-Municipal Accountant
upon receipt of the corresponding required reports from the Municipal General
Service and the Municipal Engineering Offices make the necessary adjustments to
recognize the cost of the previous years' Local Road Network in order to present the
correct balance of the Local Road Networks account in the financial statements.
4. direct the General Services Officer to prepare SSMI for the Inventory Held for
Distribution, Office Supplies Inventory and Drugs and Medicines Inventory and
submit copy of the said document to OIC-Municipal Accountant. Thereafter, OIC-
Municipal Accountant to record all purchases of supplies and materials in the
appropriate inventory account/s and ensure that deductions/credits to these accounts
are based on the SSMI. Likewise, require him to validate and update records
relative to the issued supplies and materials, make the necessary adjustments to
reflect the correct balances of the expense and inventory accounts in the financial
statements by debiting Expense account and crediting the corresponding Inventory
account, and promote better control of its receipts and issuances.
5. direct the OIC-Municipal Accountant to coordinate with the General Services Officer
to determine the details of the unaccounted, demolished and damaged structures
under Investment Property-Building account; and thereafter, analyze the details and
information gathered for proper reclassification of said account to Markets account
together with the Investment Property-Land account to Land account, both under
Property, Plant and Equipment of the Municipality to present the correct balances of
affected accounts in the financial statements.
6. direct the OIC-Municipal Accountant to: (a) make a detailed review of all the
recorded reciprocal accounts and coordinate with the Provincial Accounting Office in
order to determine the cause/s of the unreconciled amounts of P2,513,011.30 and
P 12,717,465.51 between the recorded balances of Due from and Due to LGUs of the
Municipality and the Rizal Provincial Government. Thereafter, make the necessary
adjustments/corrections in the books of accounts to present the true balances of the
affected accounts; and henceforth, (b) exercise due professional care in the
recording and classifying the Municipality’s financial transactions to ensure that the
balances of the reciprocal accounts be the same at all times.
The following are the other significant audit observations and recommendations, which
were all discussed with the concerned Municipal officials:
1. The correctness of the year-end balances of Property, Plant and Equipment (PPE)
accounts with a carrying value of P1,002,611,012.18 remained doubtful and their
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existence and condition could not be readily and fully established due to non-renewal
of Property Acknowledgment Receipt (PAR), contrary to Section 111 of Presidential
Decree (PD) No. 1445, Sections 123 and 124(2) of the Manual on the New
Government Accounting System (MNGAS) for Local Government Units (LGUs),
Volume I.
We strongly reiterated our previous recommendation that the Municipal Mayor direct
the General Services Officer and the Property Officer to ensure that Property Cards
and PARs are completely maintained and updated to facilitate an orderly physical
count of all the Municipality’s properties. Also, determine the officials/employees to
whom the equipment was issued and issue the corresponding PAR for each property
to pinpoint accountability and responsibility. Lastly, assure that PARs are renewed
at least once in every three years or every time there is a change in custodian of the
property.
2. The submitted Report on Local Road Network was not in accordance with the format
prescribed by the said Circular.
We reiterated that the Municipal Mayor direct the General Services Officer to
coordinate with the Municipal Engineer to prepare the Report on Local Road Network
in proper format as prescribed by COA Circular No. 2015-008 dated November 25,
2015 and Road Map of the Municipality to facilitate the preparation of a proper
inventory and reporting of the Municipality's road network system.
3. Breeding Stocks amounting to P837.359.00 remained dormant or non-moving for
several years due to the failure of the Municipality to conduct periodic appraisal of
the breeding stocks and reflect the prevailing market price at year-end, contrary to
Paragraphs 16 and 19 of International Public Sector Accounting Standards (IPSAS)
27, thereby casting doubts on the valuation and accuracy of the account in the
financial statements.
We recommended the Municipal Mayor direct the OIC-Municipal Accountant to
reflect the fair value of the Breeding Stocks in the financial statements and
recognize gain from changes in fair value less cost to sell of the biological assets
due to physical change based on the periodic appraisal of breeding stocks to be
conducted by the Municipal Agriculturist, pursuant to IPSAS 27.
4. The Municipality has consistently complied with the requirement on deducting the
correct premium contributions/loan deductions from employees’ compensation as
well as the withholding taxes on government money payments and employees’
monthly compensation. However, several deficiencies were noted: (a) Funds
withheld due to Bureau of Internal Revenue (BIR), Government Service Insurance
System (GSIS), Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industria at
Gobyerno (Pag-IBIG) and Philippine Health Insurance Corporation (PhilHealth)
recorded under Inter-Agency Payables accounts were still not remitted in full to the
concerned government agencies, which in effect, may result in the imposition of
surcharges, interests and penalties in the case of taxes, may cause forfeiture of
claims/benefits due to the respective GSIS and Pag-IBIG members/employees of the
Municipality and may deprive the concerned agencies of the timely use of the funds
due them; (b) Unavailability of the documents for transactions totaling P30,038.85
was included under the Due to GSIS account and Due to Pag-IBIG in the Trust Fund
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books, thus hampering its remittance and may affect the entitlement of the agency
personnel to benefits under the program.
We reiterated that the Municipal Mayor direct:
a. OIC-Municipal Accountant and OIC-Municipal Treasurer to reconcile the above
subject accounts and remit whatever the balance due to the agencies concerned
to avoid incurrence of penalties, surcharges and inconveniences to the
employees concerned. Strictly remit in full the withheld taxes, premium
contributions and loan amortizations to the respective government agencies in
accordance with the cited regulations; and
b. OIC-Municipal Accountant to hasten, reconcile and trace the amount of
P30.038.85 with the concerned government agencies so that appropriate
disposition on the said balances can be undertaken.
4. The mandatory plantilla positions of Municipal Accountant and Municipal Treasurer
remained vacant as of December 31, 2020, contrary to Section 470 and Section 474
of Republic Act (RA) No. 7160.
We recommended that the Municipal Mayor direct the OIC-Human Resource
Management Officer (HRMO) to publicize and open the vacant positions to all
qualified applicants for the Municipal Treasurer who will take charge of the
disbursement of all local government funds and such other funds the custody of
which may be entrusted to him/her by law or other competent authority pursuant to
Section 470 of RA No. 7160, and Municipal Accountant who will perform both the
accounting and internal audit services of the Municipality to help ensure the proper
stewardship of public funds pursuant to Section 474 of RA No. 7160.
5. Disbursement and collection reports and their supporting documents covering the
months of January to December 2020 were not submitted to the Auditor within the
prescribed period as required under COA Circular Nos. 95-006 and 2009-006, thus
resulted in the delay of review and verification of the related transactions of the
Municipality.
We recommended that the Municipal Mayor consider assigning or hiring additional
personnel to the Accounting Office; and direct the OIC-Municipal Accountant to
ensure that the monthly reports and their supporting documents are complete and
regularly submitted to the Office of the Auditor within the period prescribed by the
mentioned regulations.
6. The Municipality was not fully compliant with the guidelines set forth on the utilization
of funds received under the Bayanihan Grant to Cities and Municipalities (BGCM)
due to (a) non-creation of Special Account in the General Fund; (b) late preparation
of utilization reports; and (c) non-posting of monthly report on fund utilization and
status of implementation of Projects, Programs and Activities (PPAs) in the
Municipality’s website and non-submission of the same report to the other concerned
agencies, contrary to Department of Budget and Management (DBM) Local Budget
Circular (LBC) No. 125 dated April 27, 2020.
We recommended that the Municipal Mayor to direct:
a. OIC-Municipal Budget Officer and OIC-Municipal Accountant to strictly comply
with the guidelines on the receipt and utilization of BGCM funds as provided
under LBC No. 125, and to ensure that the copy of the utilization report is
submitted to the concerned agencies as well as to the Audit Team for verification;
and
b. Concerned department to update the Municipality’s website and make the
necessary posting as part of their compliance with public disclosure
requirements.
7. Cash refund for Emergency Subsidy Program (ESP) totaling P39,000.00 were not
returned immediately to the Department of Social Welfare and Development (DSWD)
as of year-end, despite having the said amount returned by the beneficiaries, thus
depriving the “left-out” families of the cash assistance that they could have received
in the subsequent tranche.
We recommended that the Municipal Mayor instruct the:
a. OIC-Municipal Treasurer and OIC-Municipal Accountant to immediately remit the
cash refund of the six ineligible beneficiaries totaling P39.00.00 to DSWD Field
Office IV-A so that it can be given to another families who are in need of the cash
assistance from the Government; and
b. MSWDO Head to create a team to revalidate the SACUP for the records of those
who refund, update it and resubmit the same to DSWD for proper monitoring and
validation.
8. The Municipality is non-compliant with the mandatory staffing requirements of Local
Disaster Risk Reduction and Management Office (LDRRMO) despite existing items
in the plantilla of personnel of the said office, contrary to Section 12 of Republic Act
(RA) No. 10121 and National Disaster Risk Reduction and Management Council
(NDRRMC), Department of the Interior and Local Government (DILG), Department of
Budget and Management (DBM) and Civil Service Commission (CSC) Joint
Memorandum Circular (JMC) No. 2014-01 dated April 4, 2014, thus may affect the
effective and efficient implementation of the disaster related activities and projects.
We recommended that the Municipal Mayor direct the OIC-Human Resource
Management Officer (HRMO) to immediately comply with the mandatory staffing
requirements of LDRRMO as prescribed by RA No. 10121 and NDRRMC, DILG,
DBM and CSC JMC No. 2014-01, who shall primarily responsible for setting the
direction, development, implementation and coordination of disaster risk
management programs within the municipality towards strengthening the country’s
National DRRM System.
9. The Municipality’s existing stockpiling did not meet the minimum standards
prescribed by the National Disaster Risk Reduction and Management Council
(NDRRMC), thereby may limit its full potential to become disaster ready local
government.
We recommended that the Municipal Mayor direct OIC-LDRRMO to reassess the
storage situation in terms of stockpiling and Memorandum of Agreement with the
Eastern Tanay Supermaket so that in case of emergency the Municipality is ready
and can immediately help their constituents.
10. Payment for the infrastructure project with a total contract amount of P36,256,143.45
was made despite lack of supporting documents and non-compliant with certain
procedural requirements, contrary to Section 4(6) of Presidential Decree (PD) No.
1445, Section 9 of COA Circular No. 2012-001 and Revised Implementing Rules and
Regulations (IRR) of Republic Act (RA) 9184, thus validity and propriety of the
expenses could not be properly ascertained.
We recommended that the Municipal Mayor direct the OIC-Municipal Accountant to
submit to the Audit Team the lacking supporting documents to substantiate the
disbursements made. Thereafter, Bids and Award Committee and all those involved
in the procurement process to strictly comply with the procedural and documentary
requirements for government procurement prescribed in the above law and
regulations.
11, Programs, Projects and Activities (PPAs) amounting to P 10,096,423.02 charged
against the Gender and Development (GAD) Budget for CY 2020 did not clearly
address gender-related issues and concerns, contrary to Item 4.B.2.d of COA
Circular No. 2014-01 dated March 18, 2014 and Annex D of Philippine Commission
on Women (PCW), Department of the Interior and Local Government (DILG),
Department of Budget and Management (DBM) and National Economic and
Development Authority (NEDA) Joint Memorandum Circular (JMC) No. 2013-01, as
amended by JMC No. 2016-01, thereby defeating the purpose of establishing the
said fund and denying the benefits accorded to the intended beneficiaries.
We recommended that the Municipal Mayor direct GAD Focal Person to:
a. Review the GAD Plan and Budget to determine the PPAs that are responsive to
gender gaps or issues faced by their women and men employees, constituents
and clients; and
b. Utilize the GAD Fund solely for PPAs that would address the identified gender
issues in the locality based on COA Circular No. 2014-01 dated March 18, 2014.
Management’s reactions and comments were appropriately incorporated in this report.
Summary on the Status of Audit Suspensions, Disallowances and Charges
No audit suspensions, disallowances and charges remained unsettled as of year-end.
Status of Implementation of Prior Year’s Audit Recommendations
Of the 24 audit recommendations embodied in the CY 2019 Annual Audit Report, eight
were fully implemented, seven were partially implemented and nine remained
unimplemented by the Municipality.
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