Browse > Home / Camiguin, Commission on Audit / Findings No.6 COA Annual Audit Report 2006

Findings No.6 COA Annual Audit Report 2006

July 25, 2008

6. The project Improvement of Bonbon-Kilon-ac-Minocol Farm to Market Road implemented by the Province through contract was not provided with adequate appropriation in violation to Section 7 of the Implementing Rules and Regulations of RA 9184 and Section 85 (1) of Presidential Decree No. 1445.

Pursuant to Section 7 of the Implementing rules and Regulations of Republic Act No. 9184, in infrastructure contract packages projects, the ABC shall cover the individual cost components of civil works only. The ABC for the contract shall be at all times consistent with the appropriations for the project authorized in the General Appropriations Act (GAA) and/or continuing appropriations. While Section 85 (1) of Presidential Decree No. 1445 also states “No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefore, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure.


In CY 2005, the Improvement of Bonbon-Kilon-ac-Minocol road proposed by the Province as ADB Assisted Project for Agrarian Reform Communities was approved.

Proposed funding of the project would be derived from the following:

Loan Proceeds (ADB) P8,814,703.56

Gov’t of the Phils (GOP) 991,069.03

LGU Equity 2,910,710.24

Total P12, 716,482.83

The Approved Agency Estimate of the project was P10,811,662.20. Per Project Cost Summary, the cost is broken down as follows:

Direct cost

DAR-ADB-ARCP P 7,283,051.41

LGU Equity 1,726,667.09

Taxes (DAR-ADB-ARCP) 900,971.85

Profit (GOP) 900,971.85

Total P10,811,662.20

According to the Provincial Accountant and Provincial Engineer, the Province committed the following as LGU equity:

Cash Equity P 1,003,848.78

In Kind (Equipment

Utilization) 1,726,667.09

Contingency 180,194.37

Total P 2,910,710.24

In the Annual Appropriations of CY 2005, the Province appropriated the following for the above-mentioned project:

Non-Office P 339,000.00

20% Development Fund 500,000.00

Total P 839,000.00

The Provincial Treasurer opened an account with LBP for the LGU Equity in the amount of P839,000.00 October 25, 2005. Another deposit was made on April 12, 2006 in the amount of P1,300,000. The amount was taken from the Local Government Support and Equalization Fund (LGSEF) of the Trust fund which they intend to replenish, the Provincial Accountant said. Actual cash deposited totaled P2,139,000. The transfer was authorized by the Local Sanggunian as embodied in SP Resolution No. 103 Series of 2005 duly discussed during their Session on December 12, 2005. According to the Provincial Accountant, the receipt of the LGSEF Fund has no specific purpose and they just recorded it in the Trust Fund books ready to be used for augmentation of funds for other needed projects.

On the 21st day of October, 2005, the Province signed a Contract with L.G. Lasacar Construction the Improvement of Bonbon-Kilon-ac-Minocol road amounting to P10,775,412.27. The Provincial Engineer has reported completion of the project on July 30, 2006.

Review of the project plans and contract revealed the following:

The Project Cost Summary and Summary of Item Cost did not specify that LGU equity will be divided into in-kind and cash equity. In fact, LGU equity in the Summary of Item Cost is broken down as follows:

Materials P 1,553,816.83

Labor 67,088.90

Rental 105,761.36

P1,726,667.09

The Instruction to Bidders did mention that the LGU Equity in the amount of P1,726,667.09 which is part of the Approved Budget Cost (ABC) shall be in the form of Heavy/Light Equipment usage.

It was not also stated in the Contract Agreement for the Improvement of Bonbon-Kilon-ac-Minocol Road that the LGU Equity shall be in the form of Equipment usage.

Under the payment 3rd partial billing, the Provincial Accountant deducted the amount of P1,124,020.99 as in kind equity of the Province represented by the light/heavy equipment usage of the contractor. The deduction was opposed by the contractor on the ground that he was not duly informed about it. He expected to be paid in full of his accomplishment. Since, it was not duly stipulated in the contract and other supporting documents, the province could not adequately rebut the contractor’s allegations. The Office is not precluded to have an in-kind equity but it should be clearly communicated or agreed upon by both parties.

Meanwhile, the Province should have included the equipment usage they have pledged as LGU equity of the project in the estimated income and fully appropriated the said amount for the said purpose so that it would be recorded as part of the project cost.

RECOMMENDATION

Require the Provincial Budget Officer to prepare supplemental budget for the LGU equity. Adhere strictly to Section 84 and Section 85 (1) of P.D. 1445. In the future, LGU Equity which is part of the contract price and contemplated to be contributed in kind should be duly stipulated in the Contract and other supporting documents to avoid misunderstanding.

Written by admin · Filed Under Camiguin, Commission on Audit 

Comments

Got something to say?





Philippine Elections 2010

LIST OF CANDIDATES

Click this link to see all lists of candidates for the entire Philippines