EXECUTIVE SUMMARY

A. INTRODUCTION

Apalit is an old town founded in 1597. Its name was derived from the Pterocarpus
Indicus or Apalit tree in Kapampangan word. It is situated in the eastern portion of the
Province of Pampanga in Central Luzon Region. It has a total land area of 6,147 hectares
more or less and it is composed of twelve (12) barangays. Metal craft, tin smithery and
agriculture are presently some of its main sources of livelihood. Its present population
was reported at 112,449 at the end of 2014.

The Municipality of Apalit is an advocate of good governance, providing an atmosphere

of trust, confidence and transparency in its business affairs serving as a portal for
opportunities, growth and development in agriculture, trade and industry, health,
education, livelihood and job generation benefitting its people from its twelve (12)
barangays.

With the implementation of the Local Government Code of 1991, the primary role of the
municipality is to serve as a general-purpose agency whose main task is the coordination
and delivery of basic services and to ensure effective governance of the inhabitants
within its territorial jurisdiction.

The Municipality of Apalit, Pampanga is headed by Honorable Mayor Oscar D.

Tetangco, Jr. assisted by the Municipal Vice Mayor Hon. Pedro C. Nucom and the
members of the Sangguniang Bayan, Hon. Elias M. Mendoza, III. M.D., Kenneth T.
Nunag, Andrew H. Manlapaz, Edmon DC. Simon, Krizzane Paula M. Mangsal, Jedalyn
L. Dalusung, Maria Victoria M, Mendoza, and Pablo E. Nabong.

B. FINANCIAL HIGHLIGHTS

The following comparative data show the financial condition, results of operations and
sources and application of fund of the Municipality of Apalit, Pampanga:

Increase/ (Decrease)
Particulars 2020 2019
Amount %
Financial Position
Assets ₱ 341,920,071.61 ₱ 317,407,377.69 ₱ 24,512,693.92 7.72%
Liabilities 95,376,808.09 130,331,380.18 -34,954,572.09 -26.82%
Net Assets/Equity 341,920,071.61 187,075,997.51 154,844,074.10 82.77%

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 Increase/ (Decrease)
Particulars 2020 2019
Amount %
Results of Operations
Income 324,123,772.11 291,392,295.48 32,731,476.63 11.23%
Expenses/Losses 282,944,115.67 279,416,802.59 3,527,313.08 1.26%
Subsidies and Donations -4,663,826.87 -5,179,015.41 515,188.54 -9.95%
Surplus/(Deficit) 36,515,829.57 6,796,477.48 29,719,352.09 437.28%
Sources and Application of Funds
Appropriations 314,381,024.00 299,123,226.26 15,257,797.74 5.10%
Obligations 273,652,147.64 285,729,693.69 -12,077,546.05 -4.23%
Balances 40,728,876.36 13,393,532.57 27,335,343.79 204.09%

A. SCOPE OF AUDIT

The audit covered the examination, using risk-based approach of the accounts and
financial transactions of the Municipality of Apalit for CY 2020 particularly those
contained in the Memorandum dated October 15, 2020 of the COA Local Government
Sector Assistant Commissioner. Part II of this Report contains the audit exceptions on
the 2020 Audit Focus and Thrusts for the Local Government Sector and other high-risk
accounts.

The audit was aimed to (a) verify the level of assurance that may be placed on
management’s assertions on the financial statements; (b) determine compliance of
management with the laws, rules and regulations on the pre-identified audit thrusts/areas
and recommend agency improvement opportunities thereon; and (c) determine the extent
of implementation of prior year’s audit recommendations.

C. INDEPENDENT AUDITOR’S REPORT

The Auditor rendered a qualified opinion on the fairness of presentation of the financial
statements of the Municipality for the year ended December 31, 2020 because the
validity, accuracy and existence of the Property, Plant and Equipment (PPE) accounts
with a reported carrying value of ₱189,577,499.67 remained doubtful due to (a) absence
of complete records for PPE; (b) unreconciled PPE account balances of ₱19,281,961.21;
(c) undisposed unserviceable properties contrary to pertinent Sections of the New
Government Accounting System (NGAS) Manual and Philippines Public Sector
Accounting Standards (PPSAS) 17; (d) unreconciled Land balance of ₱9,408,250.00; (e)
non-maintenance of Subsidiary Ledger Cards and Property, Plant and Equipment Ledger
Cards; and (f) property custodianship and location were neither established due to
absence of property records and the absence of complete annual physical inventory-
taking.

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For the above deficiencies, we recommended that the Local Chief Executive require the
Accounting Office, Treasury Office and the Inventory Committee, as the case may be, to
(a) conduct physical inventory taking and submit the Report on the Physical Count of
Property, Plant and Equipment not later than January 31 of each year; (b) prepare and
maintain property cards for each category of assets starting with current year’s
acquisition; (c) adopt all the principles prescribed in PPSAS 17 for proper accounting of
PPEs and fair presentation of the asset accounts in the financial statements (d) facilitate
confirmation with the Land Registration Authority (LRA) and seek technical assistance,
if necessary, to be able to have the remaining 21 lots titled in the name of the
Municipality of Apalit.

D. OTHER SIGNIFICANT FINDINGS AND RECOMMENDATIONS

The other significant findings and recommendations on the accounts and operations of
the Municipality are as follows:

1. The Municipality failed to comply with the budgetary and utilization guidelines
set out in DILG-DBM Joint Memorandum Circular No. 2017 – 1 dated February 22, 2017
on the appropriation of the 20% Internal Revenue Allotment for developmental projects
by charging unrelated expenditures, depriving the public of the optimum desired socio-
economic development and environmental benefits that could be derived therefrom.
(Observation No. 2)

We recommended that the Local Chief Executive to lead the Local Development Council
in improving the planning and project identification of projects for funding under the 20%
Development Fund by referring to the latest guidelines under DILG-DBM Joint
Memorandum Circular No. 2017 – 1 dated February 22, 2017, giving priority to capital
investments and continue to invest in high-impact capital expenditure projects in the
utilization of its 20% Development Fund and refrain from proposing non-capital
investment projects/programs under the Fund.

2. The Municipality failed to reconstitute and strengthen its GAD Focal Point system
and establish the GAD database contrary to Joint Memorandum Circular No. 2013-01 of
the Department of the Interior and Local Government (DILG), Philippine Commission on
Women (PCW), Department of Budget and Management (DBM), and National Economic
and Development Authority (NEDA). (Observation No. 3)

We recommended that the Local Chief Executive direct the Municipal Planning and
Development Officer, together with the GAD Focal Person and TWG to pursue its plan of
building up a CBMS that can be used as well as database for GAD to serve as basis for
gender-responsive planning, programming and policy formulation as provided for by
Joint Memorandum Circular 2013-001 and reconstitute its GAD Executive Committee to
abide with its mandated composition and include other key officials that can contribute to
the committee.

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3. Inadequate implementation of Solid Waste Management Policies and non-
enforcement of the mandatory segregation of waste at source and the non-
establishment/operation of Materials Recovery Facility (MRF) had cost the Municipality
₱10,729,565.00 in tipping fees rendering the compliance with the provisions of Republic
act (RA) No. 9003 and its Implementing Rules and Regulations ineffective. (Observation
No. 4)

We recommended that the Local Chief Executive: (a) through the MENRO and Liga ng
mga Barangay, encourage the active participation of barangay officials to support the
solid waste management program of the government by educating their respective
constituents on the proper segregation of reusable or recyclable materials from
compostable wastes and coordinate efforts in the implementation of the five basic
environmental laws on preserving and protecting the environment required under R.A.
No. 9003; (b) through the MENRO and Liga ng mga Barangay, strengthen the
implementation of existing ordinances and policies on solid waste management at the
barangay level in order to achieve community compliance and eventually abide by the
provisions on preserving and protecting the environment; and (c) as far as the Municipal
budget permits, provide necessary support in enjoining barangays of the municipality to
establish their own or clustered MRF.

4. Management has substantially observed the provisions of R.A. No. 10121 on the
following: (a) 5% allocation of the Local Disaster Risk Reduction and Management
(LDRRM) Fund; and (b) development of the Comprehensive Land Use Plan (CLUP) for
the Municipality of Apalit. However, some of the standards set forth in the National
Disaster Risk Reduction and Management Council (NDRRMC) Disaster Preparedness
Minimum Standards Volume 2 were not essentially met, thereby compromising the
protection and safety of the residents particularly those from the low-lying areas at the
strike of heavy typhoon/monsoon rains and other similar disasters. (Observation No. 5)

We commended the Management for its efforts in the establishment and approval of its 5-
Year LDRRM Plan (2017-2021), CLUP for CY 2016-2025, CLUP for CY 2017-2026
and in complying with some of minimum standards of disaster preparedness as required
by the National Disaster Risk Reduction and Management Council. Likewise, we
recommended that the officials concerned continue to accelerate efforts in the completion
of the Municipality’s Comprehensive Development Plan (CDP), whose formulation
thereof is on-going.

However, for the Municipality to be considered fully disaster-prepared, we recommended

that the Management, thru the MDRRM Office, comply with the completion of items
listed in the checklist cited in the NDRRMC Disaster Preparedness Minimum Standards,
Vol. 2 pursuant to RA 10121.

5. Several deficiencies were noted in the employment and payment of salaries of Job
Order personnel namely: (a) automatic renewal of contracts every six months and/or upon
expiration and (b) non-referral to DTRs for payrolls and non-submission of
accomplishment reports contrary to Section 77 of R.A. No. 7160, Section 2, Rule XI of

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the Revised Omnibus Rules on Appointments and Other Personnel Actions, under CSC
Memorandum Circular No. 40 and Section 4 of P.D. No. 1445. (Observation No. 7)

We reiterated our recommendations that the Local Chief Executive and the Municipal
HRMO to: (a) revise the Contract of Service to include a clause stating that the
employment of JO personnel is limited to “No work, No pay” basis, instead of monthly
basis to avoid undue payment of wages; (b) require the submission of their duly
verified/accepted Daily Time Records (DTRs) bi-monthly and monthly Accomplishment
Report prior to the payment of their salaries; and (c) continue to evaluate the performance
of personnel and review the necessity of their employment.

6. Monthly Report of Fuel Consumption of Motor Vehicles and Monthly Report

of Official Travel were not prepared and submitted to the Auditor contrary to the
provisions of COA Circular No. 77-61 dated September 26, 1977, thus the
reasonableness of fuel consumption for the month cannot be established. Hence,
propriety of gasoline, oil and lubricants for the year could not be ascertained.
(Observation No. 9)

We recommended that Management to: (a) prepare and submit the Report of Fuel
Consumption, properly filled-up to include data on the different types of motor vehicles
utilized by the Municipality during the month, total distance travelled, total fuel used and
the normal fuel consumption for each vehicle within ten (10) days of the succeeding
month for validation and (b) require the driver of each of the motor vehicle of the
Municipality to prepare at the end of the month, a Monthly Report of
Official Travels, summarizing in chronological order his trips for the month and the
report shall be certified by the driver and approved by the GSO or his authorized
representative.

7. Recording of procured supplies/good were recognized as an outright expense in

violation of the provisions of Sections 114 and 121, Volume I of the Manual on the New
Government Accounting System (NGAS) for Local Government Units resulting to the
understatement of inventory account. (Observation No. 10)

We recommend that the Local Chief Executive direct the Municipal Treasurer/General
Service Officer/Municipal Accountant to abide to the provisions of Sections 114 and 121,
Volume I of the by the requirements of the Manual on the New Government Accounting
System for Local Government Units on the purchase, recognition and issuances of
Supplies and Property.

8. The guidelines provided under the Department of Budget and Management

(DBM) Local Budget Circular (LBC) No. 125 dated April 7, 2020 pertaining to the
Bayanihan Grant to Cities and Municipalities (BGCM) amounting to ₱20,610,919.00
were substantially complied with by the Municipality. However, the documentary
requirements prescribed in Paragraph 4.2 of GPPB Circular 01-2020 dated April 6, 2020
were not complied with. (Observation No. 11)

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We recommend that the management (a) submit the documentary deficiencies for the
transactions stated above and henceforth observe the existing guidelines on emergency
procurements including the preparation and submission of documents for auditing
purposes; and (b) require the Municipal Accountant to verify the completeness of
attached supporting documents before payment is made.

9. Deviations from the guidelines were noted in the implementation of Social

Amelioration Program (SAP) such as (a) discrepancies on the list of beneficiaries in the
master list provided by the Department of Social Welfare and Development (DSWD)
Regional Office No. III as compared to the recipients in the actual payrolls; (b) lack of
necessary information of the beneficiaries; and (c) infraction in the distribution of the
financial assistance contrary to the Department of Social Welfare and Development
(DSWD) Memorandum Circular No. 4 Series of 2020 dated March 30, 2020.
(Observation No. 12)

We recommend that for future program with similar nature, the concerned personnel
evaluate thoroughly the identified beneficiaries by requiring them to provide all the
necessary information, particularly their family members, occupation and income as basis
in the assessment of their eligibility to the program.

Likewise, we recommend that the Local Chief Executive require the MSWD Officer and
barangay officials concerned to submit a comprehensive report on the issues in the
implementation and distribution of SAP.

B. SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND

CHARGES AT YEAR-END

Suspensions, disallowances and charges as of December 31, 2020 stood at ₱0.00, ₱0.00,
and ₱0.00, respectively.

C. IMPLEMENTATION OF PRIOR YEAR’S UNIMPLEMENTED AUDIT

RECOMMENDATIONS

Of the 22 audit recommendations for CY 2019, 7 or 32% were fully implemented, 9 were
partially implemented and six were not implemented.

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