Findings No. COA Annual Audit Report 2005

July 25, 2008

Unexpended balances of appropriations of completed projects/programs/ activities as of December 31, 2005 amounting to P3,240,124.17 were not reverted to the unappropriated surplus of the general fund but remained idle in the government coffers in violation of Section 322 of Republic Act No. 7160.

Section 322 of Republic Act No. 7160 provides that unexpended balances of appropriations authorized in the annual appropriations ordinance shall revert to the unappropriated surplus of the general fund at the end of the fiscal year and shall not thereafter be available for expenditure except by subsequent enactment. However, appropriations for capital outlays shall continue and remain valid until fully spent, reverted or the project is completed.

The balances of continuing appropriations shall be reviewed as part of the annual budget preparation and the sanggunian concerned may approve, upon recommendation of the local chief executive, the reversion of funds no longer needed in connection with the activities funded by said continuing appropriations subject to the provision of this section.

Records revealed that as of December 31, 2005, the unexpended balances of appropriations of completed projects/programs/activities since 1996 totaling P3,240,124.17, [Annex D], were not reverted to unappropriated surplus of the general fund, as follows:

Year Projects/Program/Activities were Completed

No. of Projects

Unexpended Balance200410P 1,380,276.1720039123,702.4420026258,491.3420014262,314.132000134,000.0019992195,060.4719981851,872.001997165,470.851996168,936.77TOTAL35P 3,240,124.17

The following were noted:

Some of the projects/programs/activities programmed are already completed/ accomplished, but the unexpended balances of appropriations were not yet re-appropriated.

Some of the projects/programs/activities which are classified as maintenance and other operating expense were closed at the year end as Continuing Appropriations, capital outlays, instead of reverting automatically the said unexpended balance to the general fund account and be made available once again for further appropriation in the annual budget.

Some of the projects/programs/activities remained unimplemented to date.

4. Some of the projects/programs/activities are no longer viable.

Failure of the City Government to revert on time the unexpended balances of appropriations of completed projects/programs/activities violated Section 322 of Republic Act No. 7160 and deprived the City for the early utilization of the funds for its priority projects.

In reply to our Audit Observation Memorandum, the City Engineer commented that:

“We had already coordinated with the Office of the City Accountant, Tita G. Garrido, in the early part of February anent these unexpected balances. Last February 2, 2006, we had already transmitted to the said office, List of Projects and its Allotment Balances, for reversion to surplus, pursuant to existing regulations. Moreover, it is true that some of the projects/programs/ activities remained unimplemented. As we have elucidated, the implementation of these were also affected by other factors beyond our controls such as lack of manpower, failure of procurement, none availability of needed equipment, sudden increase in the prices of materials needed and non-delivery of materials.

Further, while it is true that some of the projects/programs/activities were no longer viable. However, this office has already recommended these projects for conversion to more viable ones. As a matter of fact, some of these projects were already under process of conversion, and some were already reverted to fund the city’s priority projects.”

Recommendations:

Require the City Engineer, City Planning and Development Officer, City Accountant, City Treasurer and the City Budget Officer to review the balances of continuing appropriations every end of year for possible inclusion in the annual budget preparation.

Secure a certification from the City Engineer and concerned Head of Offices on all completed projects/programs/activities under their supervisions and revert the unexpended balances to the unappropriated surplus of the general fund in accordance with Section 322 of Republic Act No. 7160 to ensure maximum and efficient utilization of government resources.

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Written by admin · Filed Under Commission on Audit, Gingoog City