EXECUTIVE SUMMARY

Introduction

The Municipality of Marantao is a 2nd class municipality in the Province of Lanao del
Sur. According to the census last 2015, the Municipality has a population of 32,974. The
source of revenue and income of the municipality depends mainly from the share on
internal revenue allotment received from the national government.

The municipality is now under the leadership of Hon. Akira Indol Alonto who won in the
just concluded Local and National Elections on May 13, 2019. He comes from a strong
political clan, the brother in-law of the incumbent governor of Lanao del Sur and at the
time his uncle from maternal side. The Municipal Government of Marantao is composed
of 35 component Barangays. Like other municipalities in the province, its populace is
about 98 percent Maranao. Also, Maranao dialect is the most widely spoken language.
Arabic studies likewise is widely taught among the Madrasa and elementary schools in
the municipality so that considerable number of its populace can read, write and speak
Arabic but government public schools use English as the medium of instruction.

By virtue of Republic Act 7160, “The Local Government Code of the Philippines”, the
Municipality of Marantao is mandated to develop its own capacities for self-governance
and to build a self-sufficient community in pursuit of the very essence of local autonomy
to operate hand in hand with other government agencies in serving its constituents. Its
responsibility and role as the premier level of local government unit in the Municipality is
to ensure effective delivery of basic services to the people. The basic services the
municipal government provides are as follows:

a) Administrative Services;
b) Legislative Services;
c) Maintenance of Peace and Order;
d) Primary Health Services;
e) Social Welfare Services;
f) Infrastructure Services, and
g) Economic and Agricultural Services

In the pursuit to attain its state purpose, the municipality also exercises police power,
power of eminent domain, power of taxation and corporate powers as sanctioned by the
Code.

Financial Highlights

The financial profiles of the Municipality of Marantao for the year then ended December
31, 2022 with comparative figures for calendar year 2021 are shown on the next table:

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Financial Position

Particular CY 2022 CY 2021 Increase(Decrease)

Total Assets ₱ 92,317,409.16 ₱ 71,806,641.32 ₱ 20,510,767.84
Total Liabilities 1,564,648.32 895,229.92 669,418.40
Government Equity ₱ 90,752,760.84 ₱ 69,492,849.35 ₱ 21,259,911.49

Financial Performance

Particular CY 2022 CY 2021 Increase(Decrease)

Revenue ₱ 342,646,265.90 ₱ 240,982,639.53 ₱ 101,663,626.37
Expenses 322,858,916.77 243,337,817.89 79,521,098.88
Surplus (Deficit) ₱ 19,784,349.13 ₱ (2,355,478.36) ₱ 22,139,827.49

Scope of Audit

A financial audit was conducted on the accounts and transactions of Municipality of

Marantao, Lanao del Sur for CY 2022. The audit was aimed at determining whether
management presented fairly the financial statements of the Municipality, in adherence to
the generally accepted accounting principles and whether prevailing laws, rules and
regulations have been complied with.

Auditor’s Opinion on the Financial Statements

The Audit Team Leader rendered a qualified opinion on the financial statements due to
The Audit Team Leader rendered a qualified opinion due to non-conduct of a physical
count of its Property, Plant and Equipment (PPE) in the sum of ₱66,172,808.95 and the
non-recognition of depreciation expenses for the Municipality’s Road Networks which
resulted to an understatement of an expense account and overstatement of the related
asset account, thus, both findings affect the fairness of the presentation of the financial
statements as of December 31, 2022.

Summary of Audit Findings and Recommendations

1. The existence, accuracy and valuation of the balances of the Property, Plant
and Equipment (PPE) in the total amount of ₱66,172,808.95 cannot be
ascertained due to inability of the management to update and submit the
Report on the Physical Count of Property, Plant and Equipment (RPCPPE),
which is contrary to Section 124, Volume I of the New Government
Accounting System Manual (MNGAS) for Local Government Units (LGUs).

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 We recommended that Municipal Mayor:

a. Require and supervise the Inventory Committee of the municipality to

conduct the physical count of PPE and update and submit the RPCPPE to
the Office of the Auditor; and
b. Require the General Services Office to maintain Property Cards to reconcile
their records on a regular monthly basis with the Accounting Office.

2. Non-recognition of depreciation charges for the Municipality’s Road

Networks as required in Philippine Public Sector Accounting Standards
(PPSAS) 17, overstates its carrying amounts and understates the
corresponding depreciation expense account.

We reiterated to recommend that Local Chief Executive require the Municipal

Accountant to duly recognize the annual depreciation of their Road Networks to
reflect its correct carrying amounts as of year then ended.

3. Copies of the Memorandum of Agreement (MOA) on various funds

transferred to LGU were not submitted to the Office of the Auditor within
five (5) working days from perfection thereof coupled with non-submission of
reports and Disbursement Vouchers and all its supporting documents related
thereto, contrary to COA Circular No. 2009-001 and COA Circular No. 94-
013, thus the review, evaluation and monitoring of the projects/services
completed out of the fund transfer could not be immediately evaluated.

We recommended that Local Chief Executive require the following:

a. Submit copy of the MOA by and between MPW-BARMM and the

Municipality Government to the Office of the Auditor;
b. Ensure the submission of copy of all other MOA/contracts of fund transfers
from Other Government Offices/NGOs within five (5) working days from
perfection thereof pursuant to COA Circular No. 2009-001 to facilitate
review and technical evaluation of the infrastructure projects;
c. Establish the keeping of separate updated subsidiary records for each fund
transfer; and
d. Immediate submit all un-submitted reports, if any, pertaining to the
aforementioned projects to the Office of Auditor;

4. The Report on Sources and Utilization of Local Disaster Risk Reduction and
Management (LDRRM) Fund for the CY 2022 were not submitted and
cannot be verified of its propriety and was not adequately disclosed in the
Notes to Financial Statements, in contrary with Item Nos. 5.1.5, 5.1.10 and
5.1.16 of COA Circular No. 2012-002.

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 We reiterated to recommend that Local Chief Executive require:

a. The members of the LDRRMC to include in the Local Disaster Risk

Reduction Management Fund Investment Plan (LDRRMFIP) all
unexpended balances of local DRRMF; and

b. The Municipal Accountant to:

i. Disclose all unobligated balances of local DRRMF in the Notes to
Financial Statements using the prescribed format (Annex D of
aforementioned COA Circular); and
ii. Prepare and submit regularly on a monthly basis the Report on
Sources and Utilization of Local Disaster Risk Reduction and
Management Fund, duly noted by the MDRRM Officer.

5. The Municipality has not provided the Office of the Auditor a list of all on-
going projects/programs/activities (PPAs) and those that are to be
implemented for the CY 2022 as required in Items 2.1 and 3.1 of COA
Circular No. 2013-004, thus, timely monitoring and rendition of appropriate
audit action could not be made thereon.

We recommended that Local Chief Executive enforce the due compliance with
the requirements prescribed under COA Circular No. 2013-004, specifically the
following:

a. At the beginning of the year, the SA/ATL should be provided with a list of
all-on-going government PPAs and those that are to be implemented during
the year;
b. Provide the ATL with a monthly “Project Status” based on the data of the
monthly monitoring report of PPAs; and
c. Inform the SA/ATL within 10 days after the award of the infrastructure
project or before the start of the program/activity with appropriate project
signboards and/or public notices.

6. Delayed submission of required financial reports and documents of the

Municipality such as Reports of Checks Issued (RCI), Reports of
Disbursements (ROD) and Reports of Collections and Deposits (RCD)
contributed to the late audit of financial transactions and verification of their
accounts in violation of Sections 122 of PD No. 1445 and 7.1.1 of COA
Circular No. 2009-006, thereby affecting the immediate detection and
correction of deficiencies, if any.

We recommended that Local Chief Executive enjoin the:

a. Municipal Treasurer to submit the monthly RCI, ROD, RCD and other
related financial transaction documents regularly at the end of the month to
the Municipal Accountant; and

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 b. The Municipal Accountant, thereafter, shall submit to the Office of the
Audit Team Leader the monthly RCI, ROD and RCD within the first 10
days of the ensuing month and the quarterly interim financial statements not
later than the fifth (5th) day of the ensuing quarter for audit and verification.

7. Gender and Development (GAD) projects, programs and activities (PPAs)

could not be readily determined due to the inability of the management to
specifically identify the object for expenditures to be funded from its fund,
which is not in adherence with PCW-NEDA-DBM Joint Circular 2012-01,
thus cast doubts as to whether or not its utilization was gender-responsive to
the protection and fulfillment of women’s human rights.

We recommended that Management conduct an orientation on GAD among

concerned personnel, ensure that proper budgeting, accounting and reporting
thereof are duly complied with and utilized according to its intended purpose.

8. Non-submission of the Municipality to the Auditor’s Office a copies of

Purchase Orders (POs)/Contracts and Acceptance and Inspection Reports
(AIRs) relative to the procurement of goods within five (5) working days
from the execution thereof and 24 hours from acceptance of goods,
respectively, contrary to COA Circular Nos. 2009-001 and 95-006, which
precluded the Audit Team to perform timely review and evaluation thereof.

We recommended that the Management comply with the submission to the

Auditor’s Office copies of Purchase Orders (POs)/Contracts and Acceptance and
Inspection Reports (AIRs) relative to the procurement of goods within five (5)
working days from the execution thereof and within 24 hours from acceptance of
goods, respectively, pursuant to COA Circular Nos. 2009-001 and 95-006.

9. The Municipality has not submitted to the Office of the Auditor the Monthly
Report of Fuel Consumption of government motor transportation within the
first 10 days of the succeeding month which is contrary to Section 361 of
Government Accounting and Auditing Manual (GAAM) thus, precluded the
Audit Team to conduct timely review thereof.

We recommended that Management comply with the submission of Monthly

Report of Fuel Consumption and complete documentary requirements related
thereto of government motor transportations in pursuance to Section 361 of
Government Accounting and Auditing Manual.

We recommended that the LCE being the HoPE immediately designate an

additional BAC member who shall complete the Bids and Awards Committee or
designate a replacement who shall serve for the unexpired portion left by the
deceased BAC Chairman.

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 10. Payment of Pakyaw Labor Contract for vegetation control activity on
various municipal roads were doubtful due to non-submission of complete
supporting documents required under Section 9.1.3.2 of COA Circular No.
2012-001 rendered doubt on the regularity and validity of the transaction.

We recommended that the Honorable Mayor enjoin the Municipal Treasurer and
the Municipal Accountant to see to it that required documents are prepared and
submitted prior to payment of salaries and wages of laborers/workers.

Summary of Suspensions, Disallowances, and Charges as of Year-End

Beg. Balance As This Period January 1, 2022 to End Balance As

Particulars of January 1, December 31, 2022 of December 31,
2022 Issuances Settlements 2022
Notice of Suspensions ₱ 12,118,220.57 ₱13,029,961.31 ₱25,148,181.88 ₱ 0.00
Notice of Disallowance 8,000.00 0.00 0.00 8,000.00
Notice of Charges 0.00 0.00 0.00 0.00
Total ₱12,126,220.57 ₱13,029,961.31 ₱25,148,181.88 ₱ 8,000.00

Status of Prior Years’ Audit Recommendations

Of the 22 prior years’ audit recommendations, there were seven (7) fully
implemented, nine (9) partially implemented and six (6) more were not yet implemented
as of report date. The details of which is provided as Part III of this report.

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