EXECUTIVE SUMMARY

INTRODUCTION
Angeles City was created on January 1, 1964 with the enactment of R.A. 3700 otherwise known
as the Charter of Angeles City. The City is composed of 33 barangays and was transformed into
a highly urbanized city pursuant to Memorandum Circular No. 83-49 of the then Ministry of
Local Government .
Pursuant to R.A. No. 7160 or the Local Government Code of 1991, the City, like other local
government units, enjoys autonomy in managing, deciding and planning its own administrative,
fiscal and development affairs in conformity with the national governments thrust for
sustainable social and economic growth.
It is under the leadership of City Mayor Edgardo D. Pamintuan who is ably supported by City
Vice-Mayor Vicky Vega-Cabigting and twelve Sangguniang Panlungsod members.
FUNCTIONS AND OBJECTIVES
1. To enhance economic development for the upliftment of the living condition of the
constituents.
2. To enforce all laws and ordinances relative to the governance of the municipality and the
exercise of its corporate power.
3. To exercise supervision and control of all programs, projects, services and activities of
the city.
4. To initiate and maximize the generation of resources and revenues for the implementation
of development plan.
5. To provide comfort and convenience thru better service to constituents.

FINANCIAL HIGHLIGHTS
The Citys assets, liabilities and residual equity stood at P1.991 billion, P884.2 million and
P823.3 million, respectively, which increased by 13.8%, 32.1% and decreased by .48%,
respectively, from previous years level.
For 2012, the City government had appropriated the total amount of P1.2 billion for the
implementation of its various programs, projects and activities designed to address its needs.
The amount of P87.1 million was appropriated for the 20% economic development fund.

The City realized a total income of P1.082 billion which was 82.30% of the targeted income of
P1.314 billion. Expenditures totaled P1.043 billion, resulting to a net income of P39.6 million
for the year.

OPERATIONAL HIGHLIGHTS
For CY 2012, the City aimed to implement projects that dwell on the main concerns and
immediate needs of the people of Angeles. These are:

Affordable quality education

Government transparency
Environmental management and protection
Growth-oriented industries
Social Service and Gender-development
Peace and Order
Public market reformation
Barangay modernization

This year was a banner year for the City Government of Angeles. Spearheaded by its City
Mayor, Honorable Edgardo D. Pamintuan, and ably supported by Honorable Vice- Mayor Vicky
Vega-Cabigting and 12 Sangguniang Panglungsod members, it was a recipient of numerous
awards from both local and international organizations, as follows:
1. 2012 Top 8 World Mayor from the City Mayors Foundation, a London-based
organization, besting 900 plus original nominees all over the world. It honors mayors
with the vision, passion and skills to make their cities incredible places to live in, work in
and visit;
2. 2012 Most Outstanding Mayor from Superbrands Marketing International;
3. Department of Interior and Local Government (DILG)
a) Gawad Pamana ng Lahi Highly Urbanized City Category
b) Local Governance Performance Management System (LGPMS)-Plaque of
recognition for consistently garnering high ratings on LPGMS for profile
years 2009-2011
c) Seal of Good Housekeeping (SGH) for 2nd straight year
d) Three additional certificates of recognition on performance areas:
Valuing fundamentals of Good Governance
Social Governance
Administrative Governance
e) Best Legislative Council in Central Luzon-Highly Urbanized City Category

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4. Central Luzon Growth Corridor Foundation, Inc.

a) 1st place, excellent implementation of the citys documented streamlined
procedure on the issuance of Mayors permit, 2011-2012
b) Best business One-Stop Shop (BOSS)
5. Philippine Drug Enforcement Agency
- Best Anti-Drug Abuse Council
In consonance with its 3-year term with the Angelenos, the administration has implemented the
following infrastructure projects, some of which were completed and others were on-going,
namely:
1.
2.
3.
4.
5.
6.
7.

Construction of City College of Angeles;

Construction of the extension of the Ospital Ning Angeles;
Construction and renovation of various Barangay Halls;
Concreting of barangay roads;
Repair of various classrooms;
Construction, repair and improvement of drainage systems in the city;
Riprap along rivers and creeks.

SCOPE OF AUDIT
The audit covered the financial transactions and operations of the City of Angeles for the year
ended December 31, 2012. The objectives of the audit were to (a) ascertain the level of
assurance that may be placed on managements assertion on the financial statements; (b)
recommend agency improvement opportunities; and (c) determine the extent of implementation
of prior years audit recommendations.

INDEPENDENT AUDITORS REPORT ON THE FINANCIAL STATEMENTS

We rendered a qualified opinion on the fairness of presentation of the financial statements of
the City Government of Angeles for the year ended December 31, 2012 becausethe correctness
and existence of the reported balance of the Property, Plant and Equipment (PPE) account
amounting to P1.726 billion could not be established due to unreconciled records, incomplete
physical inventory count, inclusion of unserviceable properties and failure to locate missing
properties amounting to P36,549,107.28 and the failure of theTreasury Office to prepare and
submit an annual Certified List of Taxpayers and Taxes Due to the Accounting Division to be
used as basis in recording the Real Property Tax (RPT)/Special Education Tax (SET)
Receivables resulting in the understatement of assets and government equity by at least P25
millionas discussed in Part II of the Report.

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OTHER SIGNIFICANT FINDINGS AND RECOMMENDATIONS

The other significant findings and recommendations on the accounts and operations
of the city are as follows:
1. Obligations incurred by the City Government for the current year exceeded its actual
collections by P148,825,775.88 as of December 31, 2012 which is an indication that
current obligations incurred could not be paid on time, in violation of Section 337 of RA
7160 and Section 4 (3) of P.D. 1445, thereby adversely affecting the cash flow of the
ensuing year.
We recommended that the Local Finance Committee and other officials concerned use
the Cash Flow Analysis in monitoring cash inflows and outflows to ensure that sufficient
cash is available to meet all its obligations as they fall due pursuant to Section 337 of RA
7160 and Section 4 (3) of PD 1445.
2. The low average collection efficiency rate of receivables from beneficiaries of the low
cost interest free housing projects financed by the city for informal settlers resulted in a
high outstanding receivable account balance of P8,357,600.06, of which P5,324,682.98
were two to six years past due as of year-end, hence depriving the city of the return on its
investment within the targeted period of collection.
We recommended that the implementing office, the Local Urban Poor Affairs and
Housing Office (LUPAHO) exert effort to enforce the provisions of the Memorandum of
Agreement in order to collect what is due the city. Consider including legal sanctions, if
warranted for the speedy collection of the receivables through the Citys Legal Office.
3. The correctness and existence of the reported balance of the Construction in Progress
amounting to P594 million could not be established because of the presence of
unaccounted balances of prior years balances amounting to P35.19 million which can no
longer be traced due to lack of subsidiary ledgers contrary to Sections 20 and 10,
Volumes I and II, respectively of the NGAS Manual for LGUs.
We recommended that management require the Accounting Department to validate and
account for the details of the long outstanding unaccounted balance of P35,186,964.99.
Exercise caution in the accounting and recording of CIP and related accounts to ensure
that only on-going and uncompleted projects are reflected under the CIP account through
the maintenance of individual subsidiary ledgers of the projects.
4.Priority development projects under the 20% Economic Development Fund (EDF) were not
fully implemented during the year, thus defeating the purpose of attaining desirable
socio-economic development and environmental management outcomes as provided for
under Section 5 of Joint Memorandum Circular (JMC) No. 2011-11 of the DILG and
DBM dated April 13, 2011.
We recommended that management see to it that the formulated plans/programs and
projects in its Annual Investment Plan (AIP) under the 20% EDF be implemented in
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accordance with the provisions of Joint Memorandum Circular No. 2011-11 dated April
13, 2011 of the Department of Interior and Local Government (DILG) and the
Department of Budget and Management (DBM).
Also, require responsible officials to fast track the completion of all on-going and yet to
be started projects in order to attain the desired socio-economic development and
environmental management outcomes. On the other hand, projects which are not covered
by the said JMC should instead be charged to the Maintenance and Other Operating
Expenses (MOOE) of the General Fund.
5. No report on the utilization of the Local Disaster Risk Reduction Management Fund
(LDRRMF) and other dedicated risk reduction and management resources have been
submitted to the office of the Local Auditor as required under Section 12.c.24 of R.A.
10121 and the unutilized balance of the fund in 2011 amounting to P47,522,453.36 was
not constituted as a Special Trust Fund in 2012 to be used solely for the purpose of
supporting disaster risk reduction and management activities within the next five years in
violation of Section 3 of Rule 18 of the IRR of R.A. 10121.
We recommended that the City Accountant set apart from the regular funds of the Citys
2012 unutilized balance of P17,408,011.66 of the LDRRMF through deposit in a separate
bank account as Special Trust Fund in compliance with rules and regulations.
We also recommended that management require the LDRRMC to regularly prepare a
Report on the Utilization of the LDRRMF and submit the same to the Local Auditor.
Likewise, require the LDRRMC to make the report public through publication and
postings in conspicuous places including its website, which is available.
6. The City was not able to realize its collection targets for CY 2012 totalling P1.3 billion
by 21.80% or P284 million due to inaccurate/unrealistic estimates in some revenue items
resulting to unreliable basis in the program of expenditures during the year thus,
depriving the agency of the much needed income to implement its programs.
We recommended that the members of the Local Finance Committee determine targeted
income for the year based on reasonable estimates that are collectible/realizable to
prevent the incurrence of budget deficit. Historical data of past performance should be
used in determining the budget for the ensuing year.
7. There was shortfall on the collection of P108 million or 50.23% of the estimated
collections of P215 million for CY 2012 due to the continuous failure of the City to
revise the assessments and real property classification as prescribed by Section 219 of
RA 7160 and the non-implementation of mandatory procedures and remedies in the
collection of taxes pursuant to Section 256 of RA 7160.
We recommended that (1) management undertake an efficient and aggressive tax
collection efforts and formulate strategies to improve collection efficiency, by seeking
the assistance of the barangays in the implementation of the Citys tax campaign; (2)
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management direct the City Assessor to prepare a general revision of assessment and
classification of real property in order to generate more income and improve the financial
position and operations of the agency to be able to fund its plans and programs.
8. The examination of the books of accounts of business taxpayers nor the confirmation of
the declared gross receipts in their application for renewal of business licenses with other
government agencies were not conducted in violation of Section 171 of R.A. 7160,
resulting to the shortfall in the collection of business taxes based on budgeted estimates.
To address the above observations, we recommended the following courses of action:
a) Instruct the City Treasurer or her authorized representatives to conduct
examination of the books of accounts of the business taxpayers to ensure and
ascertain the accuracy of the declared gross receipts;
b) In case the examination of the books could not be conducted immediately, the
taxpayers may be required to submit their preceding years audited financial
statements and BIR Form No. 1701 or 1702, or complete Monthly Value Added
Tax (VAT) Returns (BIR Form No. 2550M) or Quarterly VAT Returns (BIR
Form No. 2550Q) for VAT registered individual, partnership and corporation and
Percentage Tax Returns (BIR Form No. 2551M) for non-VAT registered. The
aforementioned documents maybe added in the list of requirements printed in the
application form for renewal of business permit/license.
Based on these
documents, the City Treasurer or her representatives may be able to determine
the reasonable amount of their gross receipts subject to tax.
c) In the absence of the complete supporting documents, the application for the
renewal of business permit/license and payment thereof may be accepted but the
financial data stated therein should be validated with the records of other
government agencies, such as, the BIR and PCAB.
Any
discrepancy/misdeclaration resulting in inaccurate collection of taxes, notices
should be sent to the taxpayers concerned requiring them to settle their unpaid
taxes, including interests and surcharges.
9. Real property tax of at least P14.5 million for calendar years 2005 to 2012 were not
collected from the taxpayers/landowners due to the failure of the City Treasurer to strictly
impose the additional five per cent Ad Valorem Tax as provided under Sections 236 and
239 of RA 7160 and further mandated under Section 2.A.38 of City Ordinance No.56, S2005, thereby depriving the City of additional revenues that could have been utilized to
fund its projects and programs.
We recommended that the City Treasurer see to it that collection of the unpaid 5% Ad
Valorem Tax on idle lands amounting at least P14.5 million be made through concerted
collection efforts of the Department, in coordination with the Office of the City Assessor
for the updated list thereof.

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10. The city paid a total of P64,735,241.56 to the Philippine Veterans Bank (PVB)
representing loan amortizations from 2010-2012, including interests charged against the
Internal Revenue Allotment (IRA) for the purchase of land and the initial construction of
a sports complex which was not completed due to the non-pursuance of the project by
the present administration resulting to increased debt servicing expenses which
negatively affects the cash position of the agency.
We recommended that management formulate strategies to address the alternative use of
the land acquired by the city in order to benefit the constituents and stakeholders or
consider/explore other revenue generating projects to recover whatever expenses incurred
and augment the loan amortizations in the next ten years of the term loan.
11. Due to the incomplete and deficient preparation of the Annual Procurement Plan (APP)
and Project Procurement Management Plan (PPMP) as guide in the procurement
activities of the year, the City resorted to splitting of Purchase Requests and Purchase
Orders in the procurement of various goods and services to circumvent the requirements
of public bidding in violation of the provisions of the Revised Implementing Rules and
Regulations (IRR) of Republic Act 9184.

We strongly recommended that management require the General Service Office to

comply with the provisions of RA 9184 on the preparation of APP and PPMPs to adhere
to the principle of transparency, accountability, equity, efficiency and economy in its
procurement process. Stop the practice of splitting Purchase Requests and Purchase
Orders in order to comply with the requirements of public bidding.
We also recommended that the procurement officer/inspection officer see to it that
information details of documents pertaining to procurement, inspection and acceptance
are properly and completely accomplished especially the Purchase Order in accordance
with requirements of COA Circular No. 96-010 dated August 15, 1996 in order to
determine accurately the reasonableness of the price and quality of the items in audit.
Require the end users requisitioning the items to indicate all details pertaining thereto.
Further, we recommended that the BAC schedule their procurement of goods and
services in accordance with the APP in order to serve its purpose.
12. The lack of policy guidelines issued by the City Government on the screening and
hiring/recruitment of job order employees pursuant to Section 2, Rule XI of the Revised
Omnibus Rules Implementing Book V of Executive (EO) No. 292 resulted in the failure
to assess/evaluate, determine and monitor the necessity of the number of employees to be
hired and set the rates to be paid, thereby giving undue strain to the scarce resources of
the government.
We recommended that management prepare and issue policy guidelines to address the
necessity and propriety of hiring of job orders pursuant to Section 2, Rule XI of the
Revised Omnibus on Appointments and Other Personnel Actions, Rules Implementing
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Book V of EO No. 292, in order to limit the expenditures to programs that are highly
essential to merit the recruitment of the same. Avoid the hiring of job orders whose
functions overlap/duplicate those of the regular employees of the city.
We also recommended that management review the daily rates granted to job orders
which should be commensurate to the nature of the work assigned to them.
13. Prior years audit suspensions of P425,408.00 and audit disallowances totaling
P240,000.00 remained unsettled as of December 31, 2012, in violation of COA Circular
No. 2009-006 dated September 15, 2009.
We recommended that management enforce the immediate settlement of audit
suspensions through the submission of required documents and disallowances by
withholding the salaries or other claims due the persons liable in satisfaction of the
amounts disallowed.

STATUS OF IMPLEMENTATION OF PRIOR YEARS AUDIT RECOMMENDATIONS

Evaluation of the extent of implementation by management of recommendations
contained in the 2011 Annual Audit Report disclosed that four recommendations were
fully implemented, two were partially implemented and one remained unimplemented.

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