Findings No.4 COA Annual Audit Report 2004

July 25, 2008

4. P44.361 Million appropriations intended for local development projects out of the 80% proceeds derived from National Wealth was not utilized during the year, depriving the city inhabitants of the benefits that could have accrued.

Section 289, Republic Act 7160 provides that Local government shall have an equitable share in the proceeds derived from the utilization and development of the national wealth with their respective areas, including sharing the same with the inhabitants by way of direct benefits. It further provides under Section 294 that the proceeds shall be appropriated to finance local development and livelihood projects:

Provided, however, that at least eighty percent (80%) shall be applied solely to lower the cost of electricity in the local government unit where such a source of energy is located.

In pursuant of the above-quoted provisions of RA 7160, the City Government of Iligan, in its Annual Budget for CY 2004 appropriated the sum of P44.361 Million for local development projects out of the balances of the 80% proceeds from national wealth at the end of CY 2003.

Verification from the Accounting Office disclosed that the P44.361 Million appropriation earmarked for local development projects sourced from 80% of National Wealth has not been utilized for the year under review. The appropriations was in lump sum, there have been no specific projects identified and targeted periods of implementation. By operation of law, the LGU must attempt to provide lowering electricity cost consumption to lessen the burden of the local populace. The absence of specific projects had caused the non-utilization of the funds in deprivation of basic goods and services to the public.

Recommendation:

Ensure timely implementation of development projects, especially projects funded from national wealth whose purpose is to lower basic cost consumption to lessen economic hardship.

Ensure compliance of the procedures prescribed under Article 410, Rule XXXIV, IIR of Republic Act No. 7160, specifying therein projects proposed for inclusion in the local government budget.

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