Findings No.2 COA Annual Audit Report 2006

July 25, 2008

2. The Suspension of the implementation of Executive Order No. 395, amending or revoking Executive Order No. 196-A caused the non-recording of various purchases totaling P11.574 Million in the Office of the City General Services, in violation of Section 118. Vol. I, NGAS.

Before leaving for United States of America, Honorable Lawrence Ll. Cruz, the City Mayor, issued Executive Order No. 395 dated August 9, 2006, entitled “Further, Amending E.O. 196 and 196-A, Hereby Withdrawing the Additional Functions Granted to the Special Bids and Awards Committee under Executive Order No. 196-A dated December 27, 2005”, This was by way of implementing our letter of comment dated May 31, 2006 recommending for the immediate revocation and/or withdrawal of Executive Order No. 196-A, s. of 2005, dated December 27, 2005 (Annex B).

It was our position that Executive Order No. 196-A dated December 27, 2005 delineating the following mandated functions of the City General Services Office to the Special Bids and Awards Committee (for the procurement of Medical Supplies, Equipment, Goods and Services for the City Health Office, Social Welfare and Development, Gregorio T. Lluch Memorial Hospital), such as:

1. Preparation and serving of Purchase Orders;

2. Accept deliveries of procured medical supplies and equipment;

Prepare vouchers for claims for payment of goods and its supporting papers documents.

Precisely, the import of EO 196-A, in so far as delineating the functions of the CGSO to the Special Bids & Awards Committee, is contrary existing laws and prescribed state accounting procedures and fiscal controls, specifically the following (in italic):

As prescribed in Republic Act 9184 – “The Government Procurement Reform Act”

The functions of the Bids and Awards Committee (BAC) are explicitly defined in Section of the IRR, Part A, of RA 9184. Among others, the BAC recommend the award or purchase order or contract to the head of the procuring agency after it has performed all the required procedures adopting a particular mode of procurement. In accordance with the principle on check and balance, there being conflict of interest, the BAC, its TWG and Secretariat, are divorced from the implementation of contract/purchase order. Their respective responsibility in procurement ends when the contract or purchase order is awarded/issued.

As prescribed in Republic Act 9160 – “The Local Government Code”

One of the mandated functions of the general services officer, as provided in Section 490 {3(i)} of RA 7160 read as: “take custody of and be accountable for all properties, real or personal, owned by the local government unit and those granted to it in the form of donation, reparation, assistance and counterpart of joint project.

Prescribed State Accounting and Auditing Procedures

1. Person/Unit responsible to preparation and serving of purchase orders

Purchase order shall be serialized and numbered, making it easy to monitor and keep of them. Section 122 (d) of Volume I, Manual on New Government Accounting System for Local Government Units (NGAS) prescribed that the person/unit responsible in the preparation of Purchase Order is the GSO/Local Treasurer.

2. Person/Unit responsible to accept deliveries of items purchased

Deliveries of items purchased by the local government units shall be accepted first by the general services officer or municipal treasurer as the case maybe before inspection. Inspection of purchases shall be made by the authorized inspector/s for conformity with specification. (Section 118, Vol. I, NGAS). The General Services Officer or the Local Treasurer, as the case maybe, shall number each type of supplies and maintain Stock Cards per stock number. He shall likewise maintain Property Cards per category of property, plant and equipment. (Section 119, Vol. I, NGAS)

3. Person/Unit responsible to prepare vouchers for claims for payment purchases goods.

After recording of delivered items in the stock property cards. The GSO prepares Disbursement Vouchers (DV), sign box A and forward the same with the delivery receipts/invoices/appropriate documents to Accounting Unit. (Section 122 (h), Vol. I, NGAS)

But, the said EO 395 (Annex C) was never implemented because the City Vice Mayor, in his capacity as Acting City Mayor, issued Executive Order No. 416 dated August 18, 2006 (Annex D), “Suspending the Implementation of Executive Order No. 395 dated August 9, 2006, and hereby directing the Members of the Special BAC to continue performing the functions embodied in Executive Order No. 196-A dated December 27, 2005.

EO 395 was not implemented because the Office of the City Legal Officer has manifested a conflicting view with regards to the implications of E.O.395. We received no reply relative to our Memorandum dated August 24, 2006 addressed to the Office of the Regional Legal and Adjudication Office, COA Regional Office No. X. requesting for legal opinion/advice on the matter.

The schemed adopted disabled the City General Services Office in recording goods purchased handled by the Special – Bids and Awards Committee totaling about P11,574,556.66 for the year in review, as follows:

Drugs and medicines - P 7,413,744.13

Dental & Laboratory Supplies - P 4,043,711.53

Total P11,574,556.66

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The City Mayor was not in attendance during the exit conference. The City Administrator in attendance promised to brief the City Mayor on this matter. On April 23, 2007, the City Mayor issued Executive Order No. 140, Series of 2007, An Order Reconstituting the Special Bids and Awards Committee. By implication, it repealed the provisions of EO 196-A deemed repugnant to existing prescribed rules and regulations.

Recommendation:

Direct the Special Bids and Awards Committee, through its Chairman, to submit a listing of purchase orders served and the corresponding deliveries made brought about by the issuance of EO 196-A amounted to P11,574,556.66 to the Office of the City General Services for recording.

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