NOTES TO FINANCIAL STATEMENTS

1. Agency Profile

1.1 The Municipality of Abucay, Bataan is a developing town located in the northern
part of Bataan and Pampanga, 119 kilometers away from Manila. It is composed
of nine barangays with a total land area of 7,970 hectares.

1.2 For the past years, the Municipality undertook plans, programs and activities
geared towards social, infrastructure and economic development. Tourism,
industry, as well as agriculture projects were given priorities.

1.3 Some of the infrastructures/projects that eventually led to development and

betterment of Abukenos are as follows:

 Constructed Farm to Market Roads & Bridges

 Constructed/Established Abucay Memorial Garden
 Constructed/Established Abucay Public Mega Market
 Awarded 93 low cost lots to the poor residents of Barangay
Capitangan
 Awarded 25 housing units to the relocated squatters of Barangay
Salian
 Assisted/provided offices/multi-purpose hall for elderly citizens and
disabled persons
 Daycare centers were improved and provided especially in the sitios
area of the Barangays
 Social and Educational growth were given emphasis thru the presence
of Colleges, Letran and Kalayan School of Colleges

1.4 The Lying-In Hospital, offers profound health services. From an initial birthing
health care, 7/24 round the clock services by the RHU team, the rehabilitation
center physical therapy/treatment for elderly and physically challenged
individual built up endurance of proper health care. Medical laboratories,
ultrasound, x-rays, dental and other primary medical services are tendered.

1.5 Adept with the mission to relocate the squatters along the creek areas, Mayor
Ana D. Santiago prioritized the development of the GK Resettlement Site at
Gabon, Abucay, Bataan. A 10M worth of roads and alleys were constructed
through the assistance given by the National Housing Authority and a potable
water system from the LGU’s 20% Development Fund was provided. In
addition to the previous 25 single detached houses, an apartment type (12 units)
was constructed and awarded by the Gawad Kalinga Foundation.

1.6 Adopted the President’s 4Ps program by providing educational assistance to 200
qualified high school and college students of Abucay.

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 1.7 Skills Training and Livelihood Program for out of school youth linked with
TESDA Program were continuously implemented.

1.8 Eco Waste Management Program was also given priority by establishing the
Municipal Landfill at Capitangan, Abucay, Bataan. Construction of Material Recovery
Facility is now afoot and in progress. Upon receiving a trash boat from DENR, the
management ensures to incorporate the coastal clean-up drive in the solid waste
management program.

1.9 Economic Enterprises Operated:

 Sibul Spring Resort

 Abucay Memorial Cemetery
 Abucay Mega Market
 Slaughterhouse

2. Basis of Financial Statements Presentation

The consolidated financial statements have been prepared in accordance with

Philippine Financial Reporting Standards. The accounts used were in conformity with
the NGAS Chart of Accounts prescribed under COA Circular No. 2004-008 dated
September 20, 2004 and Accounting Circular No. 2007-002 dated January 19, 2007.

The accompanying financial statements have been prepared on a going concern

basis, which contemplate the realization of assets and settlement of liabilities in the
normal course of business.

3. Significant Accounting Policies

3.1 Real property taxes are accounted following the modified accrual method of
accounting. All other taxes, fees, charges and other revenues are recognized
using the cash method of accounting.

3.2 All expenses are recognized when incurred upon obligation of allotment and
reported in the period to which they relate.

3.3 The Modified Obligation System is used to record allotments received and
obligations incurred. Separate registries are maintained to control allotment and
obligations for each class of allotment.

3.4 Supplies and materials purchased for inventory purposes are recorded using the
Perpetual Inventory System and priced following the moving average method.

3.5 Property, plant and equipment are carried at historical costs and presented in the
financial statements net of accumulated depreciation. The cost of public
infrastructure for general public purposes are not carried in the books but were
transferred to the Registry of Public Infrastructures.
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 3.6 The straight-line method of depreciation is used for property, plant and equipment
subject to depreciation. A residual value, computed at ten percent of the cost of
asset is set up and depreciation is computed monthly starting on the second month
after purchase/completion of the property, plant and equipment. No amount of
depreciation was computed on public infrastructures since they are already
transferred in the Registry of Public Infrastructures.

3.7 Assets not used in operation and unserviceable assets are not subject to
depreciation.

3.8 Infrastructures under construction are valued following the construction period
theory.

3.9 Payable accounts are recognized and recorded in the books of accounts only upon
acceptance of the goods/inventory/other assets and rendition of services to the
agency.

3.10 Financial expenses, such as bank charges, are separately classified from
Maintenance and Other Operating Expenses.

4. Correction of Fundamental Errors

Fundamental errors of prior years are corrected using the Prior Year’s
Adjustments account while errors affecting the current year’s operations are charged to
the current year’s accounts.

5. Cash

This account, at year-end, consists of:

2014 2013
Cash in Vault P - P 403,827.12
Cash in Bank – LCCA 37,418,688.32 23,513,672.20
Total P37,418,688.32 P23,917,499.32

Cash liquidity increases by 56% or P13,501,189.00. Hence, the amount represents

the Net Cash Balance of P9.09M in the General Fund and P4.25 in SEF Account.

An aggregate amount of P5,392,659.80 for unutilized DRRMF realized income

and the earned interest income is deposited in the Special Trust Bank Account.

6. Receivables

This account consists of:

2014 2013
Accounts Receivable P 570,391.00 P 819,682.75

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 RPT Receivable 228,009.22 2,702,295.86
SET Receivable 266,299.71 3,106,596.10
Due from Officers & Employees 600,000.00 600,000.00
Due from LGUs 32,462.00 97,466.00
Receivables-Disallowances/Charges 3,225.15 3,225.15
Total P 1,700,387.08 P 7,329,265.86

Accounts Receivable were derived from the sales of Cemetery Plots at the
Abucay Memorial Garden, low cost lots at San Andres Subdivision, exclusively for
Capitangan residents and St. Leonora lots exclusively for Municipal Employees on
installment basis.

2014 2013
Cemetery P 466,850.00 P 634,743.75
San Andres 103,541.00 184,939.00
Total P 570,391.00 P 819,682.75

The set-up Real Property Tax Receivable for Basic and SET were based on
Assessor’s Tax Assessment Reports of CY 2013 plus a 50% increase on land tax
assessment.

2014 2013
Land P15,664,417.80 P 8,258,720.00
Building 7,722,590.80 5,196,800.00
Total 23,387,008.60 13,455,520.00

RPT Collections 28,335,581.86 10,192,075.76

Over/(under)estimated Collections P 4,948,573.26 (P3,263,444.24)

The set-up RPT receivable increased by 74% or P9.931M compared with 2013.
RPT collections had a marginal increase of 178% or 18.1M due to tax revision on land
assessment and the settlement of levied taxes previously deferred by the Sanggunian. The
income appearing in the statement, Basic and SET represents the 40% and 50% share of
the Municipality.

Due from LGUs - the balance of P32,462.00 is collectible from the Barangay
Government of Wawa for the sale of old market site on a 5 year term installment basis at
0% interest.

SB Resolution and MOA was extracted giving the Barangay Wawa an edge to
procure and pay the said lot (400 sq.m.) for their barangay hall and daycare center.
Based on the Resolution, 200 sq.m. shall be paid at the current market price of
P3,250/sq.m., and the remaining 200 sq.m., will be a donation from the Municipality.

Due from Officers & Employees - the amount of P600,000 represents the
unliquidated cash advances of Mayor Ana D. Santiago for intelligence and confidential
fund. Liquidation for P100,000 and P500,000 was submitted to the Commission on
Audit, Intelligence Fund Division on September 24, 2010 and December 6, 2011
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respectively. The corresponding expense account would be credited upon receipt of
liquidation clearance.

7. Inventories

This account consists of the following year-end balances:

2014 2013
Office Supplies Inventory P 8,000.00 P 17,920.00
Accountable Forms Inventory 35,804.66 7,247.16
Drugs and Medicines Inventory 314,975.45 21,553.50
Medical, Dental and Laboratory
Supplies Inventory 814,689.00 817,523.72
Total P 1,173,469.11 P 864,244.38

8. Prepaid Expenses

This account, at year end, consists of Prepaid Insurance for the following:

2014 2013
Vehicle Insurance P 8,588.78 P 18,547.58
Fire Insurance – Market 209,387.79 232,731.84
Fidelity Bond 5,875.00 6,783.67
Total P 223,851.57 P 258,063.09

9. Investments in Securities

This account, at year end, is composed of the following investments by the LGU:

2014 2013
Memorial - Cemetery P 1,994,854.00 P -
San Andres Low Cost Lot 516,687.83 516,687.83
Total P 2,511,541.83 P 516,687.83

Cemetery Account – new investment was set on the cemetery account for the
establishment of 220 units/plots of Columbary Structure at Abucay Memorial Garden.

San Andres Subdivision – 93 low-cost lots with an area of 60 sq.m. each were
made available to Capitangan residents at the cost of P700-800 per square meter, payable
on installment basis within five year at 0% interest.

Cost of Sales are deducted from the investment cost for the single lot fully paid
and transferred at year end. Payments without corresponding contract or assigned lots
and the estimated allowance for titling costs were credited to Deferred Credits account.

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10. Property, Plant and Equipment

This account consists of:

Net Addition
Balance, 2013 Balance, 2014
(Reduction)
Land P 16,508,304.00 P - P 16,508,304.00
Land Improvements 5,407,675.75 - 5,407,675.75
Office Buildings 18,821,856.40 1,466,044.00 20,287,900.40
School Buildings 1,168,057.72 - 1,168,057.72
Hospitals and Health
Centers 5,932,586.90 93,039.00 6,025,625.90
Markets and
Slaughterhouses 70,397,581.07 (1,026.00) 70,396,555.07
Other Structures 29,408,800.33 964,238.00 30,373,038.33
Office Equipment 165,445.00 (31,035.00) 134,410.00
Furniture and
Fixtures 1,108,786.50 506,517.21 1,615,303.71
IT Equipment and
Software 1,879,147.17 199,583.84 2,078,731.01
Communication
Equipment 84,867.25 - 84,867.25
Construction and
Heavy Equipment 4,189,040.00 1,700,000.00 5,889,040.00
Medical, Dental and
Laboratory
Equipment 282,000.00 - 282,000.00
Other Machineries
and Equipment 1,821,395.57 507,459.00 2,328,854.57
Motor Vehicles 1,861,030.00 600,000.00 2,461,030.00
Other Transportation
-
Equipment 83,700.00 83,700.00
Other Property, Plant -
148,612.00 148,612.00
and Equipment
Construction in
Progress-Agency
Assets 840,000.00 17,095,750.00 17,935,750.00
Total Property, Plant
and Equipment 160,108,885.66 23,100,570.05 183,209,455.71
Less: Accumulated
Depreciation 40,799,912.89 7,445,985.81 48,245,898.70
Net Book Value P119,308,972.77 P15,654,584.24 P134,963,557.01

11. Current Liabilities

2014 2013
Accounts Payable P11,414,934.91 P2,030,690.70
Inter-Agency Payables 10,970,251.07 6,093,734.87
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 Other Payables 625,996.42 106,213.56
Total P23,011,182.40 P8,230,639.13

Inter–Agency Payables include Due to LDRRMF amounting to

P5,283,483.67 which represents the amount set aside by the LGU to support its
disaster risk management activities pursuant to R.A No. 10121, otherwise known as
the “Philippine Disaster Risk Reduction and Management Act of 2010”. The amount
available and utilized during the year totaled P8,738,530.41 and P3,455,046.74,
respectively.

Particulars Available Utilized Balance

Current Year Appropriation:
Quick Response Fund (QRF) 1,218,802.24 1,182,002.00 36,800.24
Mitigation Fund (MF)
MOOE 2,843,871.88 2,273,044.74 570,827.14
Capital Outlay
Sub-total 4,062,674.12 3,455,046.74 607,627.38
Continuing Appropriation:
Special Trust Fund
CY 2011 2,158,352.13 - 2,158,352.13
CY 2012 2,376,290.74 - 2,376,290.74
CY 2013 141,213.42 - 141,213.42
TOTAL 8,738,530.41 3,455,046.74 5,283,483.67

12. Long Term Liabilities

This account, consists of:

2014 2013
Loans Payable – Domestic P14,746,179.06 P18,703,526.62

A P45 Million loan was granted by Land Bank of the Philippines for the
Construction of Abucay Wet Market in September 2006. The loan is payable for a period
of 12 years at a current prevailing rate.

13. Deferred Credits

This account consists of:

2014 2013
Deferred RPT Income P 228,009.22 P 2,702,295.86
Deferred SET Income 266,299.71 3,106,596.10
Other Deferred Credits 755,178.67 1,286,704.88
Total P 1,249,487.60 P 7,095,596.84

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14. Income

This account consists of:

2014 2013
Local Taxes
Amusement Tax P 168,998.50 P 156,009.35
Business Tax 2,561,061.79 2,253,091.00
Community Tax 338,526.01 285,558.82
Occupation Tax 135,600.00 120,928.55
Real Property Tax (net of Discount
on RPT) 5,422,981.89 2,401,699.48
Special Education Tax (net of
Discount on SET) 6,956,470.18 2,935,034.49
Tax on Sand, Gravel and Other
Quarry Products - 1,800.00
Fines & Penalties – Local Taxes 234,693.93 115,475.70
Sub-Total 15,818,332.30 8,269,597.39

Permit and Licenses

Fishery Rental Fees 352,052.20 365,655.80
Permit Fees 1,523,412.06 1,468,093.33
Registration Fees 80,697.50 70,665.00
Sub-Total 1,956,161.76 1,904,414.13

Service Income
Clearance and Certification Fees 379,945.00 362,090.00
Garbage Fees 307,179.66 358,161.00
Inspection Fees 106,345.00 77,275.00
Medical, Dental and Laboratory
Fees 569,366.50 573,479.00
Other Service Income 676,348.36 655,779.68
Sub-Total 2,039,184.52 2,026,784.68

Business Income
Income from Markets 1,449,956.64 1,473,632.27
Income from Slaughterhouses 203,662.50 173,750.00
Landing and Parking Fees 215,860.00 218,060.00
Rent Income 350,485.00 356,544.00
Other Business Income 5,376,638.02 4,617,811.00
Sub-Total 7,596,602.16 6,839,797.27

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 Other Income
Interest Income 104,468.34 147,318.52
Sale of
Confiscated/Abandoned/Seized
Goods and Properties 16,360.10 132,077.29
Internal Revenue Allotment 67,914,929.00 60,018,030.00
Miscellaneous Income 415,000.00 -
Sub-Total 68,450,757.44 60,297,425.81
Total Income P95,861,038.18 P79,338,019.28

15. Expenses

This account consists of:

2014 2013
Personal Services
Salaries and Wages – Regular P18,814,912.68 P19,366,572.90
Salaries and Wages – Casual 552,855.87 543,331.84
Personal Economic Relief
Allowance (PERA) 2,395,500.00 2,472,363.64
Representation Allowance 1,735,000.00 1,585,000.00
Transportation Allowance 1,726,000.00 1,585,000.00
Clothing/Uniform Allowance 505,000.00 520,000.00
Productivity Incentive Allowance 176,000.00 174,000.00
Other Bonuses and Allowances 787,000.00 610,000.00
Hazard Pay 170,659.09 186,704.54
Longevity Pay 130,000.00 -
Overtime and Night Pay - 31,819.25
Cash Gift 498,000.00 519,375.00
Year End Bonus 1,585,432.30 1,682,174.45
Life and Retirement Insurance
Contributions 2,103,260.87 2,345,342.81
Pag-IBIG Contributions 105,246.00 123,687.04
PHILHEALTH Contributions 218,287.50 200,387.50
ECC Contributions 102,316.11 205,221.33
Terminal Leave Benefits 684,239.19 1,479,617.27
Health Workers Benefits 280,102.80 284,696.46
Other Personal Benefits 375,072.10 400,694.19

Total Personal Services 32,944,884.51 34,315,988.22

Maintenance and Other Operating Expenses

Traveling Expenses - Local 131,672.00 164,022.00
Training Expenses 2,132,694.80 676,166.94
Office Supplies Expenses 453,856.72 607,653.23
Accountable Forms Expenses 144,834.30 174,644.64
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Drugs and Medicines Expenses 359,726.05 367,296.50
Medical, Dental and Laboratory
Supplies Expenses 1,321,756.72 705,948.28
Gasoline, Oil and Lubricants
Expenses 1,960,874.19 2,071,688.47
Other Supplies Expenses 750,614.42 590,243.84
Electricity Expenses 3,344,205.04 2,615,598.28
Telephone Expenses-Landline 215,288.78 227,974.17
Telephone Expenses-Mobile 310,001.89 186,219.36
Internet Expenses 124,958.40 99,684.60
Membership Dues and
Contributions to Organizations 123,700.00 132,200.00
Advertising Expenses 18,230.40 -
Representation Expenses 312,127.06 110,087.95
Transportation and Delivery
Expenses 9,000.00 -
Subscription Expenses 23,280.00 8,390.00
General Services 7,092,049.27 5,756,052.68
Security Services 210,000.00 254,625.00
Other Professional Services 509,350.00 606,840.00
Repairs and Maintenance - Office
Buildings 287,621.46 344,020.27
Repairs and Maintenance -
School Buildings 158,215.71 34,929.00
Repairs and Maintenance –
Hospital and Health Centers 10,289.29 143,382.90
Repairs and Maintenance -
Markets and Slaughterhouses 111,087.52 61,782.40
Repairs and Maintenance - Other
Structures 442,084.86 334,860.18
Repairs and Maintenance - Office
Equipment 2,710.00 24,510.00
Repairs and Maintenance –
Furniture and Fixtures - 3,480.00
Repairs and Maintenance - IT
Equipment and Software 19,575.73 10,308.75
Repairs and Maintenance - Motor
Vehicles 507,952.50 785,736.00
Repairs and Maintenance -
Construction and Heavy
Equipment 144,554.00 208,971.52
Repairs and Maintenance –
Hospital Equipment - 35,000.00
Repairs and Maintenance – Other
Machineries and Equipment 67,806.80 39,830.00
Repairs and Maintenance -
Roads, Highways and Bridges 117,100.00 -
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Repairs and Maintenance –
Plazas, Parks and Monuments 26,183.00 5,256.96
Repairs and Maintenance -
Irrigation, Canals and Laterals 15,120.00 80,000.00
Repairs and Maintenance - Other
Public Infrastructures 133,299.77 27,590.00
Miscellaneous Expenses 1,542,971.18 -
Taxes, Duties and Licenses 14,256.30 90,380.31
Insurance Expenses 507,378.81 564,604.52
Depreciation - Land
Improvements 371,711.97 486,690.82
Depreciation - Office Buildings 587,161.33 557,311.33
Depreciation - School Buildings 35,041.73 35,041.73
Depreciation - Markets and
Slaughterhouses 2,111,896.65 2,096,219.43
Depreciation – Hospitals and
Health Centers 180,768.78 177,977.61
Depreciation - Other Structures 2,673,956.99 2,569,040.57
Depreciation - Office Equipment 23,923.80 24,049.05
Depreciation - Furniture and
Fixtures 108,608.97 77,921.01
Depreciation - IT Equipment 334,271.67 281,915.14
Depreciation - Communication
Equipment 5,819.21 5,819.21
Depreciation – Construction &
Heavy Equipment 683,677.20 754,027.20
Depreciation – Medical, Dental
and Laboratory Equipment 29,160.00 21,600.00
Depreciation - Other Machineries
and Equipment 210,105.18 190,367.97
Depreciation - Motor Vehicles 281,569.50 281,569.50
Depreciation - Other
Transportation Equipment 12,555.00 3,386.25
Depreciation - Other Property,
Plant and Equipment 13,375.08 13,375.08
Other Maintenance and Operating
Expenses 3,237,733.77 3,864,956.15
Sub-Total 34,557,763.80 29,591,246.80

Financial Expenses
Interest Expenses 1,257,111.76 1,574,517.09
Sub-Total 1,257,111.76 1,574,517.09

Total Expenses P68,759,760.07 P65,481,752.11

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