EXECUTIVE SUMMARY
Introduction
The Environmental Management Bureau (EMB) as a line bureau of the Department
of Environment and Natural Resources (DENR) is mandated to implement the five (5)
major environmental laws, namely:
RA 8749
Clean Air Act of 1999
RA 9275
Clean Water Act of 2004
PD 984
National Pollution Control Decree
of 1976
Philippine Environmental Impact
Statement System
PD 1586
RA 6969
RA 9003
An Act Providing for a Comprehensive Air Pollution
Control Policy
An Act Providing for a Comprehensive Water Quality
Management
Providing for the Revision of Republic Act No. 3931,
Commonly Known as the Pollution Control Law
Establishing an Environmental Impact Statement System
Including Other Environmental Management Related
Measures
An Act to Control Toxic Substances and Hazardous and
Nuclear Wastes, Providing Penalties for Violations
Thereof
Toxic Substances and Hazardous
and Nuclear Wastes Control Act of
1990
The Ecological Solid Wastes
Management Act of 2000
An Act Providing for an Ecological Solid Waste
Management Program, Creating the Necessary
Institutional Mechanisms and Incentives, Declaring
Certain Acts Prohibited and providing Penalties,
Appropriating Funds Therefor
Under Executive Order No. 192, the Bureau is also tasked to formulate and
implement comprehensive plans, policies, projects and activities for the prevention and
control of pollution and protection of the environment and to conduct education and
information campaign, provide research and laboratory services and to adjudicate
pollution cases.
For calendar year 2005, the Bureau targeted activities committed under the DENR
general plan of action (GPOA) in addition to its regular activities. The DENR GPOA
serves as a road map for the period 2005-2010.
The total work force of EMB as of December 31, 2005 was 804, consisting of 725
permanent, 1 temporary, 7 co-terminus, 36 casuals and 35 contractual employees (Annex
A).
Operational Highlights
The EMB reported significant accomplishments in 2005 pursuant to its mandate, as
follows:
A. On Improving Air Quality
On the improvement of Air Quality in Metro Manila and major urban centers nationwide
thru the LINIS HANGIN Program, the Bureau claimed a remarkable reduction in terms of
Total Suspended Particulates (TSP) by 16% from 162ug/Ncm in CY 2003 to 135ug/Ncm in
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CY 2005. Out of total 9 air quality monitoring stations monitored in Metro Manila, 6 stations
reflected a decrease in TSP, 4 of which even exceeded the 10% target reduction. TSP
reduction was also reported in some major centers in Regions 1-6. Moreover, Regions 11-13
have sustained the TSP level within standards in their areas and even recorded TSP level
much lower than the required standards.
Under the Bantay TAMBUTSO Program, out of the 20,581 vehicles flagged down along
EDSA and other areas in Metro Manila, 6,335 or 31% were found passing the standards.
For Bantay TSIMNEYA, 153 stack sampling tests were conducted in Metro Manila and
375 outside Metro Manila. The Bureau issued Permit to Operate under RA 8749 (Clean Air
Act) to 9,659 firms; monitored 6,580 firms (68%) and issued Notice of Violations (NOVs) to
611 firms (216 in NCR) to those found violating RA 8749; and issued Cease and Desist
Order (CDOs) to 5 firms (4 in Valenzulea City).
B. On Improving Water Quality
Under the SAGIP ILOG Program, out of the 19 priority rivers identified, 11 rivers
reflected improved water quality in terms of Biological Oxygen Demand (BOD)/Dissolved
Oxygen (DO) level and six were found compliant with set standards.
The Bureau issued 2,755 waste water discharge permits (valid for 5 years), monitored
2,778 firms and conducted 1,194 affluent sampling tests which resulted in the issuance of 263
NOVs and CDOs to 14 firms.
Under the Beach Ecowatch Program, out of the total monitored 41 priority bathing
beaches, 34 passed the Fecal Coliform (FC) criterion and 7 failed to meet the allowable limit.
On Tapwatch Monitoring Program, for the quality of the drinking water, of identified 87 poor
communites/barangays, 21 were found to be supplied with water that was potable, 27 not
potable and 39 for further testing.
For details of major accomplishments, please refer to Annex B.
Financial Highlights
The financial condition, results of operation and sources and applications of funds of
EMB are as follows:
2005
Financial Condition
Assets
Liabilities
Government Equity
Results of Operation
Total Income
Expenses
Net Income (Loss)
Sources and Application of Funds
Allotments
Obligation Incurred
P 265,547
32,046
232,930
2004
Amount
Increase
(Decrease
(In Thousand Pesos)
P 249,692
P 15,855
30,983
1,063
218,709
14,221
% of
Increase
(Decrease)
6.35
3.43
6.50
326,841
312,618
14,222
413,022
323,590
89,432
(86,181)
(10,972)
(75,210)
(20.87)
( 3.39)
(84.10)
317, 592
287,592
277,045
277,045
40,547
10,547
14.64
3.81
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Management Responsibility
Section 2 of PD 1445 states that fiscal responsibility rests directly with the chief or
head of the agency. This carries with it the responsibility to maintain a system of
accounting and reporting which provides the necessary controls to ensure that
transactions are properly authorized and recorded, assets are safeguarded against
unauthorized use or disposition and liabilities are recognized.
It also carries
management’s responsibility to prepare and present its financial statements in conformity
with generally accepted state accounting principles.
Scope of Audit
The audit covered the accounts, financial transactions and operations of the EMB for
CY 2005. The objective of the audit was to express an opinion on the fairness and
reliability of the Bureau’s consolidated financial statements and the reported financial
position and results of its operation for the year then ended. It also included a
determination of the agency’s compliance with existing laws, rules and regulations.
Auditor’s Report
The observations and recommendations which were discussed with the concerned
officials and employees, and their comments incorporated in the report where
appropriate, are summarized below (details of which are discussed in Part II of the
report).
Financial
1. The audit team rendered a qualified opinion on the fairness of presentation of the
consolidated financial statements due to the deficiencies and misstatements found in
the accounts examined namely, Cash, Receivables, Inventories, Property, Plant and
Equipment (PPE) totaling P49,970,392.07 and Income of P2,389,842.87 comprising
19% of the total assets and 0.73% of the total income, respectively. A summary of
these is shown below:
Ref.
Par. No.
1–8
9 -21
22 – 35
36 – 41
42 – 46
47 – 65
Accounts Affected
Cash Disbursing Officers
Cash in Bank – LCCA
Due from Officers and
Employees
Due from LGUs
Due
from
Regional
Offices and Staff Bureaus
and Due to Central Office
Inventories
Deficiencies (Misstatements)
Unliquidated cash advances for Personal
Services and MOOE
Unreconciled difference between the
balance per books and per Bank
Statement
Amount
P 1,625,764.92
6,387,900.85
Unliquidated cash advances for travel
Unliquidated funds transferred to LGUs
1,773,449.73
809,626.00
Unreconciled reciprocal accounts
Unreliabile balance due to unreconciled
difference between general ledger balance
and the balance per physical inventory
1,109,073.47
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66 – 78
Property,
Equipment
Plant
and
report (PIR)
Doubtful/unreliable existence/validity of
PPE due to:
• Unreconciled difference between the
balance per GL and the PIR;
• Overstatement of PPE; and
• Unrecorded PPE
79 – 95
Total
Percent to Total Assets
Income accounts
• Overstatement due to unremitted
collections to the BTr
• Uncertain Fines and Penalties due to
lack of complete computation
Total
Percent to Total Income
4,912,775.59
30,431,758.81
2,719,872.70
200,000.00
P 49,970,392.07
19%
P
1,744,842.87
645,000.00
P 2,389,842.87
0.73%
2. The grant to employees of Collective Negotiation Agreement (CNA) Incentive amounting to
P11,136,848.13. was not in accordance with DBM guidelines issued pursuant to
Administrative Order No. 135 and contrary to the provisions of the Public Sector LaborManagement Council (PSLMC) Resolution No. 04, series of 2002.
3. The payment of Magna Carta (Subsistence and Laundry Allowance) benefits of P475,600
was not in accordance with R. A. No. 7305, otherwise known as the Magna Carta of Public
Health Workers and Sec. 4 of NGAS Manual, Vol. 1.
4. The validity and authenticity of payroll claims were doubtful due to lack of supporting
documents.
5. The utilization of Environmental Revolving Fund (ERF) amounting to P2,007,014.83 was not
in conformity with DENR Administrative Order (DAO) No. 99-37, series of 1999
(Implementing Rules and Regulations of P.D. No. 1586) and Memorandum Circular No. 01.
6. The payment of hazard pay totaling P173,000 lacked a certification from the Secretary of
National Defense and not complying with the rules and regulations specifically provided by
DBM Circular No. 2005-4.
Value For Money (VFM)
7. Non-imposition of fines and penalties on projects/proponents that were found to have
violated PD 1586 and its Implementing Rules and Regulations (IRR) amounting to
P30,015,500, non-collection of imposed penalties in the amount of P3,020,000 and nonrecording of receivable accounts in the books resulted to loss of government income in the
total amount of P33,035,500 and understatement of income and receivable accounts of the
same amount.
8. Some projects/entities found violating ECC conditions or rules and regulations were not
served Notices of Violations (NOVs) nor suspension or cancellation of ECCs and/or fined
contrary to Section 11.B of DAO 2003-30.
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9. There was a very low accomplishment on the monitoring of projects issued with ECCs for
CY 2004 and 2005, thus, judicious implementation of sound environmental management on
the unmonitored projects was not ensured.
10. Several business establishments in Region 1 were found to have violated Sec.4 of PD 1586
thereby processing of application of ECCs were held in abeyance pending resolution of the
violations.
11. The agency failed to implement the prescriptive period for the availment of the
Administrative Relief Penalty (ARP) on projects operating without ECCs resulted in
undercollection of penalties amounting to P1,882,500 and 833,000, respectively.
To correct the deficiencies, we recommend that Management:
Financial –
•
require all accountable officers to liquidate their cash advances on time and/or refund
unexpended amounts, otherwise withhold the salaries of those who fail to comply;
•
prepare monthly Bank Reconciliation Statements for all accounts maintained with
AGDBs, regularly reconcile General Ledger balance with Subsidiary Ledger balances,
make a proper accounting of all registration fees received and expenses incurred on
seminars/trainings conducted, make the necessary precautions in depositing collections
and make necessary adjustments for unbooked amounts;
•
require LGUs concerned to submit liquidation reports and refund the unused
transferred fund, if any;
•
reconcile reciprocal accounts of the Central Office and Regional Offices concerned;
•
conduct physical count of all inventories, prepare a report on the result thereon and
reconcile with Accounting records; regularly prepare and submit to the Accountant the
RSMIs to record issuance of supplies and materials; adopt the Perpetual Method of
recording inventories by debiting the inventory account upon acquisition and crediting
the expense account upon issuance of supplies and materials; and make the necessary
adjustments in the books for the misclassified accounts.
•
locate the documents/records to substantiate the validity, accuracy and existence of
recorded PPE; conduct physical count of all PPEs and prepare a report thereon and
reconcile PPE records of the Accounting and the Property Sections; conduct a physical
inspection of all unrecorded PPEs for recording; and make the necessary adjustment in
the books for misclassified PPEs;
•
remit to the Bureau of Treasury collections of fines and penalties under PD 984/RA
9275 and RA 8749, and future collections thereof and to stop utilizing the ERF Funds in
accommodating payments of expenditures of other offices not related to the
implementation of PD 1586;
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•
attach supporting documents showing complete computation on the fines and penalties
imposed under the Clean Water Act of 2004 (RA 9275) to determine the veracity of
assessment and avoid the occurrence of probable understatement of collection;
•
refrain from granting incentives in the absence of DBM guidelines and to adhere strictly
to the provisions of AO 135 and PSLMC in the granting of CNA incentives;
•
require the refund of unauthorized personnel benefits from all concerned officials and
employees and stop the practice of granting the same as well as stop the practice of
paying prior years’ obligations out of current year’s obligations and funds;
•
require the submission of necessary supporting documents to the payroll claims;
•
fully implement Sec. 41 of GAA for CY 2005 in relation to the mandatory P3,000 net
take home pay; and
•
submit certification from the Secretary of the Department of National Defense to
support the payment of hazard pay.
Value for Money (VFM)
•
to strictly enforce the provisions of DAO 2003-30 and other rules and regulations
implementing PD 1586 on the proper imposition of fines and penalties on
projects/entities operating without ECC and those with violations of ECC conditions
and to evaluate carefully the standard operating procedures and be guided by the
limitations set by law for the imposition/reduction of penalties for projects covered by
the above laws and regulations.
•
to adhere strictly to the provisions of DAO 2003-30 and other rules and
regulations for projects issued with ECCs under PD 1586. We recommend for
the issuance of Notice of Violations for projects found operating without ECC
and for those violating their ECC conditions. Management should adhere to the
procedures of issuing NOV before collection of the same is made.
•
to coordinate with the Department of Trade and Industry and concerned LGUs
to monitor new business establishments covered by the ECC from EMB.
Intensify their information dissemination by posting in conspicuous places
information on ECC application
•
to explain and justify their actions in granting reduced penalty even beyond the
moratorium period contrary to DENR Memorandum Circular No. 03-21. We
recommend the Division Chief concerned to adhere strictly to the provisions of
the above Circular.
Status of Implementation of Prior Years’ Audit Recommendations
Of the nine audit recommendations contained in the CY 2004 Consolidated Annual
Audit Reports, three or 33% were fully implemented, five or 55% were partially
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implemented and one or 11% was not implemented at all. Implemented recommendations
include the correction of deficiencies in the MOA before the checks become stale in
Region 3, submission of liquidation reports by LGUs in Region 2 and recognition of
obligations when goods/services are accepted/rendered. Partially implemented
recommendations were reiterated in the attached report.
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