EXECUTIVE SUMMARY

Introduction

Many stories tell about how the town got its present name – that of “Abelnan”, a
legendary tree belonging to the gods and “A Boar Land” as the place was once haven of
wild boars. The most popular is the story of one American who, standing in the midst of
the forest, was amazed at the sight of so many wild boars that he exclaimed, “This is a boar
land!”. From then on, the place was called “a boar land”. With the passing of time, it was
changed to Aborland and finally at present it is now known as Aborlan.

Aborlan was officially created as a municipality on June 28, 1949 by virtue of

Executive Order No. 232 under the presidency of President Elpidio Quirino of the Republic
of the Philippines.

Aborlan is a first class municipality and situated on the central portion of the island
of Palawan. The seat of the municipal government is located 70 kilometers southeast of
Puerto Princesa City. It is bounded on the north by Puerto Princesa City, on the south by
the Municipality of Narra, on the southwest by the Municipality of Quezon and on its east
by Sulu Sea and west by West Philippine Sea. Stretching to an area of 80,733 hectares, the
Municipality is divided into nine coastal barangays and ten non-coastal barangays. It has
total population of 35,091 according to 2015 census.

The Municipality of Aborlan serves as the gateway to the southern municipalities.

It is accessible from the major growth centers of the province through the Palawan South
National Road extending from Puerto Princesa City down to the Municipality of Brookes’
Point and Bataraza via Aborlan. It is the only town in the province with an agricultural
college, now called the Western Philippines University.

Development Vision

A premiere eco-cultural tourist destination in Palawan, economically vibrant

agricultural trading center and productive agro-industrial Municipality governed by
competent, dynamic and committed public servants, supported by adequate and reliable
infrastructure facilities, with empowered, secured and healthy society sustainably
managing the environment.

Municipal Mission

To create a positive environment for sustainable growth through collective,

transparent and proactive approach for a better quality of life of ABORLANONS.
Financial Highlights

For Calendar Year (CY) 2018, the Municipality of Aborlan generated a total
income of ₱220,356,229.65 from local taxes, permits and licenses, service and business
income and Internal Revenue Allotment. The total funds utilized for the year amounted to
₱185,314,078.70 or 44.72% of the total appropriations of ₱414,348,773.54.

The Municipality’s financial condition and results of operations for CY 2018

compared with that of the preceding year are summarized below and shown in detail in the
attached audited financial statements.

2018 2017 Increase

Assets 711,636,074.48 606,558,213.85 105,077,860.63
Liabilities 249,956,769.47 217,094,977.95 32,861,791.52
Equity 461,679,305.01 389,463,235.90 72,216,069.11
Income 220,356,229.65 206,837,700.72 13,518,528.93
Expenses 164,433,995.22 133,283,659.95 31,150,335.27

Scope of Audit

Financial and compliance audit was conducted on the accounts, transactions and
operations of the Municipality of Aborlan, Palawan, for the Calendar Year 2018. It
included analysis of accounts of the financial statements, review of transactions and test of
compliance with financial rules and regulations. The objectives of the audit are to ascertain
the fairness and reliability of the Municipality’s financial position and results of operations
and to determine whether the Municipality’s operations were conducted in compliance with
applicable laws, rules and regulations.

Audit Opinion on the Financial Statements

The Audit Team rendered a qualified opinion on the fairness of the presentation of
the financial statements as of year-end December 31, 2018 due to the failure of the
Municipality to complete the conduct the yearly physical count of its Property, Plant and
Equipment with net book value of ₱60,415,572.08 as of December 31, 2018.

Significant Observations and Recommendations

For the exception cited above, we recommended that the Municipal Mayor instruct
the Inventory Committee to prioritize the completion of the physical count of its PPE and
henceforth, strictly comply with the provisions of Section 124 of the Manual on New
Government Accounting System (NGAS) for LGUs on the submission of the annual
Report on Physical Count of the Property Plant and Equipment (RPCPPE).
 The following is the summary of other significant audit observations and
recommendations in the audit of the Municipality of Aborlan for the year 2018:

1. Various reconciling items reflected in the bank reconciliation statements remained

unadjusted in the accounting books due to lack of credit/debit memo, paid disbursement
vouchers and validated deposit slips thereby understating the Cash in Bank account
balance by ₱89,168.62 as of December 31, 2018.

We recommended that the Municipal Treasurer immediately transmit to the Municipal

Accountant the identified unrecorded disbursements and receipts. Likewise, make
representations with the depository bank to obtain copies of the unrecorded debit and
credit memo to facilitate recording thereof in the books of accounts. Henceforth, the
Municipal Treasurer ensure that the reports of disbursements and deposits and all its
supporting documents are strictly monitored and completely transmitted to the office
of the Municipal Accountant.

We further recommended that the Municipal Treasurer exert diligent effort in the
retrieval of the supporting documents pertaining to unrecorded items which have been
long outstanding, with dates as far back as February 1993, April 1995, January 2005
and onwards.

2. Seventy three (73) Stale Checks totaling ₱ 84,489.75 were not cancelled thereby
overstating the balance of Cash in Bank with corresponding understatement of the
Accounts Payable balance by the same amount.

We recommended that the Municipal Treasurer cancel the stale checks and the
Municipal Accountant to record adjustment of the Cash in Bank and Accounts Payable
balances. Hereafter, the Municipal Treasurer should closely monitor the issuance and
releases of checks and send a written notice to the payee on the existence of the check
at least one month before the checks become stale.

3. The Municipality maintained time deposit account totaling ₱1,626,933.91 in the Trust
Fund contrary to Sections 21 of COA Circular No. 92-382, Section 4(3) of P.D. No.
1445 thus, depriving the public of the expected immediate benefits for which the funds
were granted.

We recommended that the Municipal Mayor refrain from placing trust fund in time
deposit and/or special savings account, instead utilize said funds in accordance with the
purpose for which they were granted.

We further recommended that the (a) Municipal Accountant prepare and submit the
Bank Reconciliation Statements for the Trust Fund Special Savings Account; and (b)
Municipal Treasurer maintain cashbook and complete records of all the transactions
relative to these accounts.
4. Cash Advances granted to officials and employees totaling ₱684,751.62 remained
unliquidated as of December 31, 2018 in violation of Section 5.8 of COA Circular No.
97-002 dated February 10, 1997 thus, expenses were not recorded in the year these
were incurred and raised doubt on whether the purpose of the cash advance was
achieved.

We recommended that the Municipal Mayor (a) require the concerned accountable
officers to liquidate their cash advances totalling ₱134,751.62; (b) ensure strict
compliance with the provisions of COA Circular No. 97-002 dated February 10, 1997
on the granting, utilization and liquidation of cash advances; and (c) demand from the
former Municipal Mayor the immediate settlement of his outstanding cash advance for
Confidential Fund totalling ₱550,000.00.

5. The Municipality failed to implement projects totalling ₱13,960,656.96, despite receipt

of downloaded funds from NGAs resulting in delayed delivery of services to the
intended beneficiaries. Moreover the non-liquidation of funds for completed projects
amounting to ₱24,884,426.05 and failure to return unutilized funds totalling
₱3,018,255.66 to the source agencies as of December 31, 2018 was contrary to Section
4.9 of COA Circular No. 94-013 dated December 13, 1994 thus, exposing the funds to
risk of misapplication and misuse.

We recommended that the Municipal Mayor:

a) instruct the MPDO and the Municipal Engineer to fast track the implementation of
all projects under the trust fund to ensure that the desired benefits/services are
delivered to the constituents on time to address their needs specially the
marginalized poor sectors;

b) instruct the Municipal Accountant to exert effort to retrieve the records of old
accounts and submit to the source agencies the liquidation report and initiate the
immediate return of the unutilized fund balance to the source agencies in
accordance with Section 6.7 of COA Circular No. 97-013; and

c) ensure that fund receipts from National Government Agencies are properly
documented and that status of implementation of all projects are included in the
Report on Status of Government PPAs for proper monitoring.

6. The existence, completeness and valuation of Property, Plant and Equipment (PPE)
account with net book value of ₱60,415,572.08 (excluding Construction in Progress
and PPE with actual physical count) as of December 31, 2018 could not be ascertained
due to (a) failure of the Inventory Committee to complete physical count of PPE and
non-maintenance of property cards by the General Services Officer in violation of
Sections 114, 119 and 124 of the Manual on the New Government Accounting System
(NGAS) for Local Government Units (LGUs), Volume I; (b) the PPE account balance
includes unidentified properties totaling ₱5,505,389.46; and (c) unserviceable and/or
junked PPE costing ₱22,981,079.83 were not disposed of contrary to Section 79 of
 Presidential Decree (PD) No. 1445 thereby overstating the PPE account balance by the
same amount as of December 31, 2018.

We recommended that the Municipal Mayor (a) instruct the Inventory Committee to
prioritize the completion of the physical inventory count. Henceforth strictly comply
with Section 124 of the Manual on NGAS on the annual conduct of physical inventory
and submission of RPCPPE; and (b) require the GSO to exert diligent effort in the
retrieval of the PPE records, reconstruct the property cards and thereafter, maintain and
establish a database of all PPE of the Municipality to facilitate its reconciliation with
accounting records and RPCPPE.

We also recommended that upon completion of the physical count by the Inventory
Committee, the Municipal Mayor require the GSO to initiate the proper disposal of all
obsolete and unserviceable properties pursuant to Section 79 of PD 1445 and Sections
379-381 of RA 7160 and in accordance with procedures cited in COA Circular No. 89-
296.

7. The reciprocal accounts “Due from Other Funds” and “Due to Other Funds” with
balances of ₱5,873,200.07 and ₱4,691,200.07, respectively, as of December 31, 2018
are doubtful due to discrepancy of ₱1,182,000.00 thereby affecting the reliability of
balances reflected in the financial statements.

We recommended that the Municipal Accountant identify the source of unreconciled

difference between the two reciprocal accounts and immediately effect the adjustments
upon verification. Henceforth, ensure that the reciprocal accounts are reconciled at all
times.

8. The Municipality failed to fully implement the programs and projects funded out of the
20% development fund, registering a rather low utilization rate of 22% for total
obligations of ₱18,980,018.94 out of ₱87,813,002.67 appropriations thus, depriving the
constituents of the benefits that could be derived from the development projects had
they been implemented.

8.1 The 20% Development Fund continuing appropriations balance in the Status of
Appropriations, Allotment and Balances (SAAOB) as of December 31, 2018 was
understated by ₱36,120,857.99.

8.2 Only one (1) priority project or 5.88% was implemented out of the seventeen (17)
projects appropriated under the 20% DF for CY 2018 while only eight (8) or
33.33% out of twenty four (24) projects under the continuing appropriations were
implemented during the year.

8.3 Prior Sangguniang Bayan (SB) approval is required before project implementation.
We recommended that the Municipal Mayor:

i. Maximize the utilization of the 20% Development Fund by speeding up the

implementation of the prioritized programs, projects and activities to achieve
desirable socio-economic developments and environmental outcomes;

ii. Ensure that coordination among officials involved in planning, execution and
monitoring of PPAs is being undertaken to achieve desired level of outcome;

iii. Instruct the Municipal Planning Development Officer to immediately look into the
status of the unimplemented developmental projects, identify causes of non-
implementation and develop feasible and specific solutions to effectively
implement the projects;

iv. Instruct the Municipal Budget Officer to review the balances of the 20%
Development Fund of prior years and initiate appropriate action for inclusion of the
same in the Status of Appropriation Allotment Obligation and Balances for proper
implementation and monitoring; and

v. Ensure that a more detailed local development plan and annual investment plan are
prepared for the priority development projects funded out of the 20% DF, such that
programs and projects should be specifically identified and provided with complete
information including sufficient description, cost allocation and project location.

We further recommended that the Sangguniang Bayan discontinue the practice of

requiring prior approval on the implementation of PPAs that are already included in
the approved Annual Budget and to avoid the lump sum appropriations for priority
programs and projects.

9. The Municipality failed to execute lease contracts for its 201 market stallholders as of
December 31, 2018 due to absence of provision therefor in the 2006 Market Code
thereby causing difficulty in enforcing civil remedies in case of default and may expose
the Municipality to issues on legality and regularity.

We recommended that the Municipal Mayor, with the help of the Municipal Economic
Enterprise and Development Officer, execute lease contracts agreements with all the
market stallholders.

Moreover, we recommended that the Chairman of the Market Committee cancel the
lease of stallholders with sub-lessee and declare the stall vacant and open for
application in accordance with Section 5A.06(d) of the 2006 Revenue Code.

10. The poorly maintained Municipal Slaughterhouse failed to adhere with the Sanitation
Standards of the Philippines thus, protection and promotion of health and sanitation in
Slaughterhouse services were not achieved, which may adversely affect the
Municipality’s constituents, public and the environment.
 We recommended that the Municipal Mayor thru the Sangguniang Bayan revisit the
operation of the Municipal Slaughterhouse and address its sanitation issues. Moreover
instruct the Municipal Planning and Development Officer and the Municipal Engineer
to closely monitor the status of the Construction of the New Slaughterhouse and
institute action to speed up its completion to provide new and improved Slaughterhouse
facilities and services to the local constituents and the public as well.

11. The Municipality incurred lapses in the implementation of Solid Waste Management
(SWM) System such as (a) failure to enforce the implementation of the mandatory
segregation at source of different types of wastes; (b) non-imposition of fines and
penalties on SWM prohibited Acts; (c) non-establishment of Material Recovery
Facility (MRF) of 14 out of 19 Barangays; and (d) open Burning of animal hair in the
Municipal Slaughterhouse premises. Thus, the environmental laws on preserving and
protecting the environment required under Republic Act (RA) No. 9003, the Ecological
Solid Waste Management Act of 2000 were not complied, moreover posing health
hazards and environmental risks.

We recommended that the Municipal Mayor:

i. through the Liga ng mga Barangay, encourage active participation of barangay

officials to support the solid waste management program of the Municipality by
educating their respective constituents through Information Education Campaign
on the proper segregation of reusable or recyclable materials from compostable
wastes and the importance of their participation in the implementation various
SWM programs;

ii. provide necessary support in enjoining the remaining 14 Barangays in establishing

their own MRF;

iii. ensure that fines and penalties for violation of SWM prohibited acts are strictly
imposed in accordance with Section 18 of Municipal Ordinance No. 09-017 and
Section 49 of RA No. 9003;

iv. instruct the Market Supervisor who is in-charge of the slaughterhouse to stop the
improper disposal and burning of the animal hair within the premises;

v. through the MENRO and the Municipal Health Officer, conduct proper information
dissemination like production of posters/tarpaulin on the harmful effects of smoke
from burning of solid wastes to the public health;

vi. instruct the MENRO to follow up on the status of approval of their 10-year SWM
Plan and ECC application for timely implementation of related SWM programs;
and
 vii. as the chairman of the SWM Board, initiate the conduct of regular meetings for
purposes of planning, coordination and monitoring of the implementation of SWM
plans and programs.

12. The Municipality failed to optimally utilize its Local Disaster Risk Reduction and
Management Fund (LDRRMF) and failed to prepare LDRRMFIP for the unexpended
balance transferred in the Special Trust Fund thus, desired goals and objectives of
reducing disaster risks and enhancing disaster preparedness and response capabilities
were not achieved contrary to the declared policy of the State to capacitate and
strengthen the Local Government Units to build disaster resilient community.

We recommended that the Municipal Mayor implement the activities, programs and
projects to be funded by the Local Disaster Risk Reduction and Management Fund to
effectively strengthen the LGU’s capacity to build a disaster resilient community.
Moreover, we recommend that the Municipal DRRMC allocate and include in the
LDRRMFIP the programs and projects to be funded by the unexpended LDRRMF-
Special Trust Fund for that would strengthen their capacity for disaster risk reduction
and management to help mitigate the impact of the disasters.

Status of Implementation of Prior Years’ Audit Recommendations

Of the fifteen (15) recommendations embodied in the 2017 Annual Audit Report,
eight (8) were fully implemented, five (5) were partially implemented, while the remaining
two (2) were not implemented.