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Republic of the Philippines

COMMISSION ON AUDIT

Commonwealth Avenue, Quezon City

ANNUAL AUDIT REPORT

ON THE

MUNICIPALITY OF SAN ILDEFONSO

Province of Ilocos Sur

For the Year Ended December 31, 2011

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Republic of the Philippines

COMMISSION ON AUDIT

Office of the Supervising AuditorAudit Group G- Ilocos Sur Province

Provincial Capitol, Vigan City

March 30, 2012

HONORABLE MARK ANTHONY A. PURISIMA

Municipal MayorMunicipality of San Ildefonso, Ilocos Sur

Sir:

We transmit herewith the report on the comprehensive audit of the accounts and

operations of the Municipality of San Ildefonso, Ilocos Sur for the year ended December31, 2011, in compliance with Section 2 Article IX - D of the Philippine Constitution and

pertinent section of Presidential Decree No. 1445. The report was prepared by Ramon B.Festejo, Audit Team Leader, Team IX.

The audit was conducted to ascertain the propriety of financial transactions and

compliance with prescribed rules and regulations. It was also made to ascertain theaccuracy of financial records and reports, as well as the fairness of the presentation of the

financial statements. The audit also aimed to assess or determine whether the resources of

the municipality were disbursed economically, effectively and efficiently.

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 Recommendations and Part IV - Annexes. The Detailed Findings and

Recommendations were discussed with the concerned management officials and staff inan exit conference held on February 21, 2012. Managements comments were included in

the report, where appropriate.

We request that the findings and recommendations contained in the said 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 94 of the GeneralProvisions of Republic Act No. 10147, otherwise known as the General Appropriations

Act of 2011.

We acknowledge the cooperation extended to the audit team by the officials andstaff of that agency.

Thank you.

Very truly yours,

ELVIRA M. JIMENEZSupervising Auditor

cc: The Director, DILG, Regional Office No. I, San Fernando City, La Union

The Director, BLGF, Regional Office No. I, San Fernando City, La UnionThe Director, DBM, Regional Office No. I, San Fernando City, La Union

The Presiding Officer, Sangguniang Bayan, San Ildefonso, Ilocos Sur

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The Assistant Commissioner, LGS, COA, Quezon City

Republic of the Philippines

COMMISSION ON AUDIT

Audit Group G- Ilocos Sur ProvinceTeam IX

Municipal Hall, Bantay, Ilocos Sur

February 29, 2012

ELVIRA M. JIMENEZ

Supervising AuditorCommission on Audit

Audit Group G- Ilocos Sur Province

Provincial Capitol, Vigan City

Madam:

In compliance with Section 2, Article IX-D of the Philippine Constitution and

pertinent sections of Presidential Decree No. 1445, we conducted a comprehensive auditon the accounts and operations of the Municipality of San Ildefonso, Ilocos Sur for the

year ended December 31, 2011.

The audit was conducted to ascertain the propriety of financial transactions and

compliance of the agency to prescribed rules and regulations. It was also made toascertain the accuracy of financial records and reports as well as the fairness of the

presentation of the financial statements. The audit also aimed to assess or determine

whether the resources of the municipality were disbursed economically, effectively andefficiently.

The results of our audit are embodied in our attached report consisting of fourparts: Part I - Audited Financial Statements, Part II Detailed Findings andRecommendations, Part III Status of Implementation of Prior Years Audit

Recommendations and Part IV - Annexes. The Detailed Findings and Recommendations

were discussed with concerned Management Officials and staff during an exit conferenceheld on February 21, 2012.

An unqualified opinion was rendered as to the fairness of the presentation of the

financial statements of the Municipality of San Ildefonso, Ilocos Sur as of December 31,2011 because these were free of material misstatements.

Our audit was conducted in accordance with generally accepted state auditing

standards and we believe that it provides reasonable bases for the results of the audit.

We acknowledge the cooperation extended to the Audit Team by the officials andstaff of the agency.

Very truly yours,

RAMON B. FESTEJO

State Auditor III

Audit Team Leader

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EXECUTIVE SUMMARY

A. Highlights of Financial Operation

The municipalitys assets, liabilities and government equity as of December 31,

2011 registered at P100,297,508.93, P17,195,373.95 and P83,102,134.98 respectively.

This years income totaled P45,701,683.81 compared to that of last years income

of P38,338,766.03 registering an increase of 19.20%.

Total appropriations for the year amounted to P47,773,680.05 broken down into

Current Appropriations and Continuing Appropriations of P47,729,180.08 and P44,500.00

respectively.

Total expenditures during the year amounted to P23,082,862.26 broken down into

Personal Services, Maintenance and Other Operating Expenses, Financial Expenses andSubsidies and Donations in the total amounts of P17,084,349.04, P5,752,513.22, P100.00

and P245,900.00 respectively.

B. Operational Highlights

Below are the major plans and targets vis--vis accomplishments of the

Municipality for the year 2011:

Programs/Projects/Activities Targets AccomplishmentsPercentage of

Accomplishments

Repayment of Loan to World Bank P 636,004.00 P 636,003.48 100%

Solid Waste Management 448,626.64 400,997.84 89.38%

Outreach Program 364,851.76 363,051.00 99.51%

Day Care Services 303,600.00 303,600.00 100%

Kinder Education 180,000.00 180,000.00 100%

Aid in Financial Crisis Situation 161,000.00 161,000.00 100%

CBMS Formulation 125,000.00 125,000.00 100%

Support to Agriculture Program 100,000.00 72,564.40 72.56%

Textbooks 75,000.00 74,902.50 99.87%

Supplemental Feeding 75,000.00 75,000.00 100%

Improvement of BNHS 70,000.00 70,000.00 100%

Sports Development Program 58,500.00 53,000.00 90.60%TOTAL P 2,597,582.40 P 2,515,119.22 96.83%

C. Scope of Audit

A comprehensive audit was conducted on the accounts and operations of theMunicipality of San Ildefonso, Ilocos Sur. The audit consisted of review of operating

procedures, inspection of the municipalitys programs and projects, interview of concerned

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government officials and employees, verification, reconciliation and analysis of accounts

and such other procedures considered necessary.

D. Auditors Opinion on the Financial Statements

The auditor rendered an unqualified opinion on the fairness of presentation of the

financial statements of the Municipality of San Ildefonso, Ilocos Sur as of December 31,

2011 because these were free of material misstatements.

E. Significant Findings and Recommendations

The following are the significant findings and their corresponding

recommendations which were discussed with management during the exit conference.Management comments are included in the report, where appropriate.

1. The Other Receivables account balance of P3,084,000.00 representing claims

against various debtors was still carried in the books although the account has

remained dormant for more than ten (10) years and whose collectability has beenrendered improbable due to the lack of source documents to support the account.

We recommend that the Municipal Mayor should instruct the Municipal

Accountant to request in writing to the Commission Proper thru the Audit Team Leader

for the writing-off of the dormant and uncollectible accounts amounting toP3,084,000.00.

2. The observers were not invited by the Bids and Awards Committee (BAC) in all

stages in the procurement of goods and infrastructure projects through public

bidding valued at P1,176,781.50 and P10,035,550.71, respectively, as required

under pertinent provisions of the Implementing Rules and Regulations (IRR) ofR.A. No. 9184 thereby defeating the principle of transparency in the procurement

process because the observers were unable to assess the extent of the BACs

compliance with the provisions of the IRR and areas of improvement in the BACs

proceedings.

We recommend that the Bids and Awards Committee should invite in writing

the required observers in all stages in the procurement of goods and infrastructureprojects through public bidding as required under pertinent provisions of the

Implementing Rules and Regulations of R.A. No. 9184 to enhance transparency in the

procurement process and to enable the observers to assess the extent of the BACs

compliance with the provisions of the IRR and areas of improvement in the BACsproceedings.

3. The Bids and Awards Committee did not adopt the required conditions and

procedures in the conduct of post-qualification on the bi