Findings No.5 COA Annual Audit Report 2005

July 25, 2008

5. Funds transferred to the Barangays to implement city development projects totaling P63.258 as of December 31, 2005 were not properly monitored to keep track on the full implementation thereof and the subsequent liquidation of the funds.

In line with the Barangay Empowerment Policy of the City, the City Mayor authorized the release of funds taken from the 20% Development Fund, by way of fund transfer, following the guidelines prescribed under COA Circular No. 93-331. The fund or cash/money transferred shall be taken up as Due from LGUs (138) in the books of accounts of the city and as a trust liability (8-84-100) by the implementing barangay.

Other terms and conditions of the agreement were as follows:

The fund to be transferred to the Implementing Barangay shall be (a) in an amount sufficient for three months operation subject to replenishment upon submission of the reports of disbursements by the (Implementing Barangay), or (b) the total project cost, as may be determined by the City Mayor.

Within ten (10) days after the end of each month/end of the agreed period for the Project, the Implementing Barangay shall submit the Report of Checks Issued (RCI) and the Report of Disbursement (RD) to report the utilization of the funds to the City Accounting Office, furnishing a copy thereof to the Office of the City Auditor. Only actual project expenses shall be reported. The Punong Barangay of the Implementing Barangay shall approve the reports.

Upon receipt of the report, the City Accounting Office shall draw a Journal Voucher to take up the reported expenses in the books as prescribed in COA No. 93-331 dated May 3, 1993.

In no case shall the fund transferred be utilized for the payment of additional compensation to employees in the form of allowances, incentive pay, bonuses, honorarium, or other forms of additional compensation, except as may be authorized by law or existing regulations, nor shall it be used to create new positions, to augment salaries of barangay personnel, other than for the intended purpose.

During the year, total funds released to forty two (42) barangays amounted to P63,258,419.68 recorded under “Due from LGU” account. At year-end, the amount remained outstanding due to the failure of the barangays to submit liquidation reports, such as the Report of Checks Issued (RCI) and/or the Report of Disbursement (RD). This can also be attributed to the failure of the City Accounting Office to monitor prompt liquidation thereof.

Had these been liquidated during the period Due from LGUs account of P63.258 Million would have been substantially lesser. Amounts already disbursed against the funds for CY 2005 would have been adjusted to Plant, Property & Equipment account for capital expenditures, and to the appropriate expense accounts, in the case of expenses.

During the exit conference, the management agreed and promised to implement the recommendations.

Recommendations

Require all barangays concerned to submit their respective liquidation reports, such as the Report of Checks Issued (RCI) and/or the Report of Disbursement (RD), to the City Accounting Office as prescribed in COA Cir. No. 93-331 dated May 3, 1993.

Defer the subsequent release of similar funds for those barangays with unsettled cash advances.

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