EXECUTIVE SUMMARY

A. Introduction

Initially established as a supporting body to the Department of Environment and

Natural Resources (DENR) in CY 1987, the Philippine Environmental Management
Bureau (EMB) became a line bureau with its own offices and independent enforcement
authority in CY 2002. It is the national authority responsible for pollution prevention and
control, and environmental impact assessment.

EMB is mandated to implement the following national environmental laws:

 PD 1586 -Environmental Impact Statement System

 RA 6969 -Toxic Substances and Hazardous and Nuclear Waste
Control Act of 1990
 RA 8749 -Clean Air Act of 1999
 RA 9003 -Ecological Solid Waste Management Act of 2000
 RA 9275 -Philippine Clean Water Act 0f 2004
 RA 9512 -Environmental Awareness and Education Act of 2008

It is also mandated to provide research and laboratory services, and serve as

secretariat in the adjudication of pollution cases.

EMB is headed by a Director assisted by an Assistant Director. EMB has nine

divisions namely: (a) Administrative, Financial and Management Division; (b) Policy,
Planning and Program Division; (c) Legal Division; (d) Environmental Research and
Laboratory Services Division; (e) Environmental Quality and Management Division; (f)
Environmental Education and Information Division; (g) Solid Waste Management
Division (h) Environmental Impact Assessment and Management Division; and (i)
Climate Change Division. It has 16 Regional Offices, each headed by a Regional
Director.
In implementing the vision, mission and goals of the Bureau and its regional
offices (ROs), the EMB has a total personnel complement of 1,743 consisting of 1,249
regular employees and 494 job order employees.

B. Financial Highlights

The EMB’s financial position, performance and sources and application of funds
for CY 2015 are as follows:
Amount
Particulars
2015 2014
A. Financial Position
Assets P 2,149,709,936.83 P1,765,503,116.30
 Amount
Particulars
2015 2014
Liabilities 169,958,179.61 103,947,283.89
Net Assets/Equity P 1,979,751,757.22 P1,661,555,832.41
B. Financial Performance
Revenue P 178,971,991.37 P 366,995,781.38
Net Financial Assistance/Subsidy 1,138,609,584.26 1,401,477,036.56
Gains 1,084,518.30 1,874,704.94
Total 1,318,666,093.93 1,770,347,522.88
Less: Current Operating Expenses 905,753,169.41 886,526,830.47
Losses 861,517.16 5,597,400.66
Surplus (Deficit) for the Period P 412,051,407.36 P 878,223,291.75
C. Sources and Application of Funds
Allotments P 1,211,331,369.25 P1,435,934,170.43
Obligation Incurred 1,158,398,170.52 1,425,945,644.64
Unobligated Balance P 52,933,198.73 P 9,988,525.79

C. Scope and Objectives Of Audit

The audit covered the accounts, financial transactions and operations of the EMB
for CY 2015. It was conducted to (a) ascertain the level of assurance that may be placed
on management’s assertions on the financial statements; (b) determine the propriety of
transactions as well as the extent of compliance with laws, rules and regulations;
(c) recommend agency improvement opportunities; and (d) determine the extent of
implementation of prior years’ audit recommendations.

A Value for Money (VFM) Audit was also conducted to assess EMB’s efficiency
on the implementation of the Air Quality Monitoring Project and Solid Waste
Management.

The consolidated financial statements are the combined financial statements of the
EMB-CO and 16 regional offices. Part II of this report are the observations and
recommendations pertaining to EMB-CO and regional offices, except Regions 4B, 7, 9
and 13 whose audit report were not yet received.

D. Independent Auditor’s Report

A qualified opinion was rendered on the fairness of presentation of the financial

statements due to the accounting errors/deficiencies, which are discussed in detail in Part
II of the report.

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E. Other Significant Observations and Recommendations

The other significant observations and the corresponding recommendations which

are discussed in detail in Part II of the report are as follows:

1. The goal to achieve cleaner, safer and healthier environment by reducing the water
pollution through the Adopt-an-Estero/Water Body Program has not yet been
attained for the past five years in the NCR, Regions 3, 6 and 11 due to: (a) non-
abatement of the dumping of domestic wastes and that only 10 percent of the total
water body in Metro Manila was adopted as of December 31, 2015; (b) the terms
and conditions of the MOA are not fully observed; (c) non-involvement of the
residents in the management of the estero; and (d) low enforcement of ordinance on
solid waste management in the barangay level. (Observation No. 1)

We recommended and the Director agreed to

a. increase the targeted number of estero/water bodies to be adopted per year by
exerting more efforts to solicit more donor-partners (EMB-NCR);

b. require the donor-partners to fully comply with all the undertakings, terms and
conditions of the MOA (Region 3);

c. include the LGUs among the parties to the MOA to enlist the
cooperation/involvement of the concerned residents in the clean-up drive
(Regions 3 and 6);

d. conduct intensive periodic IEC seminars especially on livelihood projects that

will benefit the concerned residents (Regions 6 and 11); and

e. request the LGU partners to strengthen the implementation of the ordinance on

solid waste management (Region 11).

2. Delayed/slow construction of buildings at EMB-Regions 8 and 11 and non-

utilization of the office building acquired by EMB-Region 3 since June 2013,
resulted in incurrence of additional expenses causing continuous undue
disadvantage to the government. Moreover, 12 Technical and Scientific Equipment
of EMB-Region 11 amounting to P7,360,368.00 remained idle/unused from the
time they were acquired in 2008, 2011, and 2013, exposing the equipment to
obsolescence, deterioration and damage that could eventually result in wastage and
loss of government funds and resources. (Observation No. 2)

We recommended and the Director agreed to require the concerned officers of:
a. EMB-Region 8 to continuously communicate with DPWH to fast track the
implementation/execution of the project;

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 b. EMB-Region 11 to (i) require the contractor to expedite the completion of the
laboratory and office building; (ii) determine possible overruns in the construction days
and if warranted, demand for liquidated damages from the contractor for the delay in
the construction; (iii) determine the persons responsible for the delays that have caused
possible losses of government funds and take appropriate action against them; and
(iv) inform EMB-CO on the status of the idle/unutilized equipment delivered to them
for possible redistribution to other EMB ROs which might be needing them or could
utilize them;

c. EMB-Region 3 to facilitate the on-going construction of the building extension for

additional office space and cause the immediate transfer of equipment to the acquired
building; and

d. EMB-CO to stop the practice of procuring equipment not requested by its regional
offices instead inquire first on the equipment requirements of its regional offices before
procurement.

3. DOAS worth P10 million installed in Region 2 does not generate real-time
information thereby not achieving its objective. Furthermore, due to the damage on
light source the equipment cannot produce data on other gases for almost a year,
hence, the maximum benefits from the equipment could not be derived.
(Observation No. 3)

We recommended and the Director agreed to require the EMB-Region 2 to (a)

request EMB-CO to provide the necessary training to those who will operate the
equipment; and (b) conduct regular inspection and monitoring to determine the
status of the equipment and to report immediately to EMB-CO any malfunction of
the equipment.

4. Trust receipts, dormant bank accounts, interest income, trust receipts and other
collections in the total amount of P1.329 million were not remitted to the National
Treasury. (Observation No. 4)

We recommended and the Director agreed to instruct the Chief Accountant to cause
the immediate remittance of all unnecessary special and trust funds, interest earned,
trust receipts and other collections to the National Treasury.

5. The non-liquidation of funds transferred to IAs resulted in the long-outstanding

year-end balances of the “Due from” accounts amounting to P785.666 million.
(Observation No. 5)

We recommended and the Director agreed to (a) require the implementing agencies
to fast track the implementation/execution of the project and settle immediately the
outstanding balance, otherwise, the said fund transfers will be suspended in audit;
(b) require the concerned Accountant to exert efforts in reconciling the balances
with the concerned implementing agencies based on the Fund Utilization Report
submitted; and (c) strictly observe the rules and regulations on the granting,
utilization and accounting of fund transfer granted to implementing agencies.

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6. Long delays in the deliveries/liquidation of advances to PS-DBM for the
procurement of office supplies and PPE amounting to P626.671 million resulted in
the accumulation of idle funds and delay in the utilization of office supplies and
PPE for their intended use. (Observation No. 6)

We recommended and the Director agreed to direct the concerned officials to

require the (a) Accountant and Property Officer of EMB-CO to (i) work closely
with the PS-DBM for the immediate delivery of already paid office supplies,
equipment and other services, otherwise, demand refund, in case of non-delivery;
(ii) stop transferring funds to PS-DBM, instead, offset the balance against current
and future requisitions; and (iii) reconcile periodically with the Accounting Section
and the PS-DBM regarding the undelivered office supplies, equipment and other
services; and (b) Accountant and Property Officer of EMB-Region 8 to follow-up
the delivery of the two units of motor vehicles.

7. Unserviceable property amounting to P2.570 million were not yet disposed of as of

year-end, thus, they continuously occupy space which could be used for more
productive purposes and are exposed to further deterioration and diminish their
salvage value. (Observation No. 7)

We recommended and Management agreed to require the Property Officer of EMB-

Regions 1, 2 and 6 to immediately dispose the unserviceable property following the
requirements of Section 79 of PD 1445 to prevent further deterioration and to
recover the salvage value from probable sale of the asset.

The observations and recommendations which were discussed in Part II of this

report were discussed with concerned agency officials in an exit conference conducted on
May 10, 2016. Management views and comments were considered in this report, where
appropriate.

F. Enforcement of Settlement of Accounts

Out of the total disallowances of P26,247,755.35, only P548,643.95 or 2.09

percent was settled during the year, thereby leaving a balance of P25,702,111.40 as of
year-end.

G. Status of Implementation of Prior Years’ Audit Recommendations

Out of the 49 prior years’ audit recommendations, 30 were fully implemented, 17

were partially implemented, and two were not implemented.