20% Development Fund

Sample Audit Observations and Recommendations

Audit Observation Recommendation

1. A Local Development Council which shall Create a Local Development Council which
be composed of representatives from the shall be composed of representatives from the
different sectors outlined in Section 107 of different sectors as outlined in Section 107 of
RA 7160 was not created. RA 7160.
2. Members of the Local Development
Council, who also composed the City
Development Council Executive Committee,
is [sic] not in accordance with the provision
of RA 7160.
 20% Development Fund
Sample Audit Observations and Recommendations
Audit Observation Recommendation
3. No AIP was submitted with details on the Instruct the Municipal Planning and
amount appropriated and the program, Development Officer that the audit team be
projects and activities to be financed from furnished a copy of the AIP.
the 20% Economic Development Fund, thus,
the utilization of the fund could not be
verified if the expenditures charged against
the same were in accordance with the
identified and prioritized activities/
program/projects under the AIP.
4. The AIP was not submitted to DILG and Submit the AIP to DILG and DBM through their
DBM, through their respective Regional respective Regional Offices in accordance with
Offices. item 6.0 of JMC No. 2017-1 dated February 22,
2017.
 20% Development Fund
Sample Audit Observations and Recommendations

Audit Observation Recommendation

5. The City did not comply with the budgetary Enforce strictly the provision cited in Section
requirements of the Local Development 287 of the Local Government Code of the
Fund or 20% Development Fund in Philippines.
preparing the City Annual Budget
amounting to __________ contrary to Section
287 of the Local Government Code of the
Philippines.
 20% Development Fund
Sample Audit Observations and Recommendations
Audit Observation
6. The non-implementation of various
development projects during the year
resulted in the unutilized amount of
___________ under the 20% development fund
thereby depriving the constituents of the
immediate benefits from the use of said
fund, and may also render the programs
irrelevant specially those projects
programmed in prior years which still
remained unimplemented and adversely
affect the efficiency of the City towards the
achievement of its goals.
Recommendation
 Direct the different implementing offices
to execute all program/projects/activities
planned for implementation during the
year and to submit accomplishment
reports on a monthly or quarterly basis to
the City Planning and Development
Coordinator (CPDC).
 Advise CPDC to monitor and evaluate the
implementation of the
program/projects/activities, and submit
periodic reports to the City Mayor
incorporating issues and concerns
affecting the execution of projects.
 Schedule the implementation of
program/projects/activities in
coordination with the implementing
offices by apportioning the number of
projects to be implemented within the four
quarters of the year.
 20% Development Fund
Sample Audit Observations and Recommendations
Audit Observation
7. Of the 20% Development Fund current
year’s budget and continuing
appropriations available for reprogramming
totaling ___________, only _______ or __% was
utilized during the year leaving a balance of
_________ or ___%; thereby, depriving the
City’s constituents of the vital services and
benefits due them had the same been fully
and properly implemented.
8. Various disbursements amounting to
₱____________ were charged against the 20%
Development Fund even if these were not
covered under its proper utilization
contrary to DILG and DBM JMC No. 2011-1
dated April 13, 2011 thereby resulting in
the irregular disbursement of government
funds.
Recommendation
Maximize the utilization of 20% Development
Fund allocated for the implementation of
various projects, programs and activities that
are envisioned to help in the attainment of
social economic and environmental
development and optimally utilize the 20%
Development Fund to help achieve desirable
socio-economic development and
environmental outcomes.
 Explain the use of the 20% Development
Fund for purposes other than those
intended under DILG and DBM JMC No.
2011-1 dated April 13, 2011.
 Refrain from paying expenses not
connected with the development projects,
programs and activities mentioned under
DILG and DBM JMC No. 2011-1 to avoid
audit disallowances.
 20% Development Fund
Sample Audit Observations and Recommendations
Audit Observation
9. Non-development projects amounting to
__________ were included in the 2014 AIP for
Local Development Fund which are not
supportive of the socio economic
development programs of the City.
10. Certain provisions of the RIRR of RA 9184
on eligibility checking, post-qualification
and contract implementation were not
adhered to by the BAC resulting in the
award of the contract to unqualified
contractors and delay in the
implementation of the projects.
Recommendation
Limit the utilization of the 20% Development
Fund to viable and sustainable programs,
projects and activities that directly generate
jobs and livelihood opportunities to its
constituents in accordance with DBM and DILG
JMC No. 2011-1 and Section 287 of RA 7160.
 Explain the noted deficiencies and submit
immediately the required documents.
 Strict compliance to the RIRR of RA 9184
on eligibility checking and contract
implementation.