EXECUTIVE SUMMARY

INTRODUCTION

Apalit is an old town founded in 1597. Its name was derived from the tree Ptecarpus
Indicus or Apalit tree in Kapampangan word. Metalcraft, tinsmithery and agriculture are
presently some of its main sources of livelihood.

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 Pedro C. Nucom,

assisted by the Municipal Vice Mayor and the members of the Sangguniang Bayan,
namely:

Name Position
Hon. Augusto D. Manlapaz -Municipal Vice-Mayor
Hon. Jesus G. Torres -SB Member
Hon. Elias M. Mendoza, Jr. M.D. -SB Member
Hon. Sanny D. Mendoza -SB Member
Hon. Kenneth T. Nunag -SB Member
Hon. Andrew H. Manlapaz -SB Member
Hon. Ma. Ana Theresa M. Macalino -SB Member
Hon. Edmon DC. Simon -SB Member
Hon. Fortunato D. Castro -SB Member
Hon. Precy T. Eboña -ABC President

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)
2016 2015
Amount %
Financial Position
Assets 183,902,781.86 145,734,032.41 38,168,749.45 26.19
Liabilities 64,232,847.56 45,882,497.91 18,350,349.65 39.99
Net 19.85
119,669,934.30 99,851,534.50 19,818,399.80
Assets/Equity
Results of Operations
Income 216,992,096.30 203,046,474.60 13,945,621.70 6.87

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 Increase/ (Decrease)
2016 2015
Amount %
Expenses/Losses 197,848,876.11 187,499,242.03 10,349,634.08 5.52
Subsidies and (100)
-o- 30,000.00 (30,000.00)
Donations
Surplus/(Deficit) 19,143,220.19 15,577,232.57 3,565,987.62 22.89
Sources and Application of Funds
Appropriations 231,949,546.40 223,210,473.40 8,739,073.00 3.92
Obligations 185,920,337.68 182,589,791.59 3,330,546.09 1.82
Balances 46,029,208.72 40,620,681.81 5,408,526.91 13.31

OPERATIONAL HIGHLIGHTS

Based on the Annual Investment Plan the following projects, among others, were
implemented in CY 2016:

Major Accomplishments Amount

Concreting of Banag-Batasan Road, Brgy. Balucuc 479,375.00
Concreting of Road at Dona Asuncion, Brgy. San Juan 575,425.00
Concreting of Road at Sitio Aroma, Barangay Sampaloc 528,285.00
Rehabilitation of Footbridge, San Juan 776,975.00
Upgrading and Concreting of Road-Danga Colgante 441,705.00
Construction School Libraries at Paligui E.S. and Tabuyuc E.S. 2,400,000.00
Construction FacultymRoom at Sampaloc E.S. 1,200,000.00

SCOPE OF AUDIT

The audit was conducted on the financial transactions and operations of the
Municipality for CY 2016. Our audit was also made to (a) verify the level of assurance
that may be placed on management’s assertions on the financial statements; (b)
recommend agency improvement opportunities; and (c) determine the extent of
implementation of prior year’s audit recommendations.

INDEPENDENT AUDITOR’S REPORT

The Auditor rendered a qualified opinion on the fairness of presentation of the financial
statements of the Municipality of Apalit for the year ended December 31, 2016 because the
Property, Plant and Equipment accounts balances (net of depreciation) amounting to
P61,982,953.35 at year-end remained unreliable as in the previous year owing to inability
of the Accounting and General Services Offices to (a) conduct full inventory of PPE
items and submit properly accomplished Report on the Physical Count of Property, Plant
and Equipment (RPCPPE); (b) prepare Property Cards (PCs) for each category of assets;

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and (c) determine the true status, ownership and valuation of 22 parcels of land with
assessed value of P2.535 million.

We recommended that the Local Chief Executive (a) augment, as far as possible, the
composition of the inventory committee to expedite the completion of the physical
inventory process and pave the way for the preparation of Report on the Physical Count
of Property, Plant and Equipment (RPCPPE) that is duly reconciled with the accounting
and property records and submission to the Auditor’s Office; (b) require the Municipal
Accountant and the designated Property Officer to (i) continue the provision of subsidiary
ledgers for PPE items by aiming for the full completion of the current and a percentage of
recent year’s acquisition until all PPE items are covered; (ii) reconcile the respective
records of the Municipal Accountant and the designated Property Officer relative to the
PPE balances; (c) create an appraisal committee for the un-booked parcels of land and
record the same under the PPE account; and (d) require the Municipal Treasury, Supply
Officer and the Municipal Assessor to ascertain the status of parcels of land owned by the
agency with titling issues and work for the titling thereof in the name of the Municipality
of Apalit, assuming funds have been provided thereof.

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 registered a completion rate of 59.38.7% or 19 projects of the

32 projects approved by different national agencies and Provincial Government of
Pampanga to be implemented thru fund transfers and utilized 45.31% or ₱12,095,651.57
of the ₱26,693,730.00 funds received in CY 2015-2016. However, three units of
Vermiculture facilities at Barangay San Juan; San Vicente, and Balucuc and another three
Greenhouse Projects completed in Barangay San Juan; Balucuc, and Calantipe remained
idle after four and half months and three months of completion, respectively, for lack of
materials in their operation thus, posing a threat to waste of funds if the issues are not
addressed. (Observation No. 2)

We recommended that the Local Chief Executive, Sangguniang Bayan and Local
Development Council strictly comply with the Memorandum of Agreement agreed upon
by both parties (Funding agencies and the implementing agency) and ensure the effective
and efficient implementation of the proposed projects within their targeted completion
period through close monitoring and supervision to maximize the developmental benefits
and the early enjoyment thereof by the intended beneficiaries.

2. Some expenditures in the Special Education Fund (SEF) could not be considered
as priority spending and were contrary to the provisions of R.A. 5447, Sections 100 and
272, RA 7160, Deped-DBM-DILG Joint Circular Nos. 01, s. 1998 dated April 14, 1998,
No. 01-A, March 14, 2000, No. 01-B, dated June 25, 2001 and related DepEd issuances
thus depleting the funds of the SEF for other expenditures and projects with high priority

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such as for the construction of additional school buildings and classrooms. (Observation
No. 4)

We recommended that the Members of the Municipal Local School Board (a) prepare a
balanced budget with conscious and concerted efforts of observing compliance with the
legal and regulatory requirements on SEF budgeting, allocation and utilization as laid
down in the latest guidelines under DepEd, DBM & DILG Joint Circular No. 1 s. of 2017
which specifically identified that the repair and construction of classrooms shall be a
priority item in the SEF budget over other eligible items; and (b) request for inputs from
the Deped official/School Division Superintendent in the prioritization of SEF projects
and expenditures in accordance with the DepEd criteria and with due regard to the
provisions of laws, rules and regulations such as the latest guidelines in DepEd, DBM &
DILG Joint Circular No. 1 s. of 2017.

3. The Municipality complied with DILG-DBM Joint Memorandum Circular No.

2011-1 dated April 11, 2011 on the appropriation of 20% Development Fund of
₱33,296,056.20, registering a utilization rate of 52.31.7% or ₱17,416,074.20 in CY 2016.
However, it could have maximized the attainment of its desired socio-economic
development and environmental management outcomes had it fully completed the
remaining ₱4,935,319.35 worth of projects that would render long-term benefit to the
constituents. (Observation No. 5)

We recommended that the Local Chief Executive, Sangguniang Bayan and Local
Development Council strictly comply with DILG-DBM Joint Memorandum Circular No.
2011-1 dated April 11, 2011 and (a) invest in high-impact capital expenditures projects in
the utilization of its 20% Development Fund and refrain from proposing non-capital
investment projects under the Fund; and (b) ensure the effective and efficient
implementation of the proposed projects within their targeted completion period through
close monitoring and supervision to maximize the developmental benefits and the early
enjoyment thereof by the intended beneficiaries.

4. The Municipality has substantially complied with the laws, rules and regulations,
in relation with the implementation of PPAs and the preparation of accomplishment
report on Gender and Development and registered 81.31% accomplishment on its plan.
However, some of the projects/program/activities enumerated therein were not
implemented. Likewise, with regard to the GAD Plan and Budget, the GAD Focal
Person, together with the Local Planning and Development Office failed to establish a
GAD database as a basis for its gender planning, programming and policy formulation, as
prescribed by Joint Memorandum Circular 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. 6)

We commended management of its efforts to achieve effective planning, implementation

and monitoring of the Agency’s GAD PPAs. However, we recommended that the (a)
GAD focal person initiate the establishment and maintenance of the GAD database to

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serve as basis for gender-responsive planning, programming and policy formulation; and
(b) GAD board re-evaluate the achievement of objectives thru the full implementation of
programmed GAD PPAs before augmenting the same to other PPAs, and (c) abide by the
schedule on GAD Planning and budgeting provided by Joint Memorandum Circular
2012-001.

5. Only 2.21% of the reported ₱1,063,774.30 Office Supplies Expense were

procured from the Procurement Service (PS) of the Department of Budget and
Management (DBM) contrary to Sections 52 and 53.5 of the Revised IRR of RA 9184,
Section 4 of Administrative Order No. 17 dated July 28, 2011 and GPPB Resolution No.
24-2014 dated October 31, 2014. (Observation No. 7)

We recommended that the General Services Officer procure, as far as practicable and
feasible, directly from the PS-DBM all anticipated common-use supplies, and resort to
local suppliers only upon unavailability of supplies needed using the prescribed
alternative modes of procurement.

6. Public safety is placed at risk owing to the non-enforcement of Municipal Tricycle

and Pedicab Franchise and Regulatory Ordinance or Code particularly on the prohibition
on tricycles from operating along the national highway. Likewise, the presence of
various obstructions along the national road and sidewalk contributed to major traffic
build-up thereby resulting in productivity losses to the riding public and in heightened
risk of road accidents both to pedestrians and motorists. (Observation No. 10)

We recommended that the (a) Members of the SP re-enact appropriate ordinance to

prevent undesirable outcomes as a result of unregulated proliferation of tricycles along
the national highway to improve flow of traffic and promote public safety and order; (b)
Secretary to the SP ensure that original and back-up copies of all ordinances are properly
archived and filed for ready reference; (c) Local Chief Executive, thru his Administrator
and the Traffic Management Head (i) with proper consultation with stakeholders, design
the re-routing plan for the tricycles from normally using the McArthur Highway to the
one using the alternative routes to ease the flow of traffic along the national highway; (ii)
strictly direct all enforcers/personnel under his command to apprehend those traffic
violators, sidewalk vendors and also vendors who occupy sidewalk as extension to their
vending place; (iii) assist the affected vendors in scouting for allowable area where they
sell their wares or put up the stalls; and (iv) ensure the effective enforcement of the
Ordinance banning the operation of tricycles-for-hire along the national road.

7. The Municipality substantially complied with the salient provisions of the IRR of
RA No. 10121, otherwise known as the Philippine Disaster Risk Reduction and
Management Act of 2010; Department of Interior and Local Government (DILG)
Memorandum Circular No. 2012-079; COA Circular No. 2014-002; and National
Disaster Risk Reduction Management Council (NDRRMC) Nos. 3 and 4, particularly on
disaster preparedness upon assumption of the newly-appointed LDRRMO Officer in the
last quarter of CY 2016 under the leadership of the newly- elected officials. However,
some areas were still for compliance so as not to compromise the protection and safety of

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the residents of low-lying areas at the strike of heavy typhoon/monsoon rains and other
similar disasters. (Observation No. 11)

We commended the LCE and MDRRMO Officer and his staff of their efforts to comply
with the provisions of the Implementing Rules and Regulations (IRR) of Republic Act
No. 10121, otherwise known as the Philippine Disaster Risk Reduction and Management
Act of 2010 and other related rules/regulations/laws regarding disasters preparedness.

However, we recommended that the Local Chief Executive require (a) the MDRRMO to
continue efforts to train, research on and conduct planning to improve further
competencies in operations and warning to effectively and efficiently address the
requirements of the existing rules and regulations on disaster preparedness, mitigation,
recovery and response; (b) as head of the MDC, to fast track the preparation of the
Municipality’s Comprehensive Development Plan (CDP) and Comprehensive Land-Use
Plan (CLUP) in order that disaster risk management activities could be integrated to the
development plan of the Municipality to prevent further loss of lives and properties; and
(c) Members of the MDRRMC ensure that the member CSOs/NGOs to the Council
possess the eligibility requirements cited under NDRRMC No. 3 to assure of effective
and strengthened citizen’s participation in the locality

8. The Municipality has not been successful in its efforts in complying with RA 9003
as manifested by (a) filthy surroundings along barangay roads and mixed wastes in
receptacles from non-compliance with mandatory segregation of waste at source and with
the no-segregation, no collection policy; (b) non-establishment of MRF for the 7 out of
12 barangays for re-use, recycling and composting of wastes; and (c) the absence of a no-
littering ordinance and the other components of the Solid Waste Management Program
(SWMP); (d) non-resubmission of its Ten-Year Solid Waste Management Plan to the
EMB Region III; and (e) non-creation of the new Solid Waste Management Board thus,
the municipality incurred ₱3,152,948.40 in hauling fees of 8,758.19 metric tons of
residual waste for the period December 2015 to December 2016 thus, the total protection
of the environment and general welfare of the constituents were not attained.
(Observation No. 12)

We recommended that the Local Chief Executive (a) through the Liga ng mga Barangay,
encourage 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; (b)
through the ESMO, comply with the requirements of the law on waste segregation by
placing trash bins with proper labels and by collecting only those garbage that are
properly segregated; (c) ensure that the existing MRF of the five component barangays
are fully functional and provide necessary support in enjoining the remaining seven
barangays to establish their own MRF; (d) recommend to the Sangguniang Bayan (SB)
policies and possible measures that will ensure full compliance by the barangays on the
provisions of R.A. No. 9003; (e) initiate the passage of Anti-Littering policy ordinances
as provided by Section 48 of R.A. No. 9003 for those barangays that had existing policy;

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(f) create a new Municipal Solid Waste Management Board comprised of officials who
could actively perform their respective duties and perform their functions as intended; (g)
review every two years or as the need arises the Municipal Solid Waste Management
Plan for the purposes of ensuring its sustainability, viability, effectiveness and relevance
in relation to local and international developments in the field of solid waste management
(h) provide support to the concerned barangay for the construction of secured fence for
the MRF for security, health and sanitation purposes; (i) relocate those in the nearby area
safe from hazardous elements; and (i) address with dispatch the issue concerning the
MRF near the slaughterhouse to protect the health of the residents.

STATUS OF SUSPENSIONS, DISALLOWANCES AND CHARGES

For CY 2016, P450,625.00 or 33.95% of the total disallowance of P1,327,500.00

as of December 31, 2015 were already settled. Total suspensions, disallowances and
charges at year-end stood at P 0.00, P 876,875.00, and P 0.00, respectively.

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Of the 31 audit recommendations contained in the 2015 Annual Audit Report, 19

were implemented, eight were partially implemented and four were not implemented.

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