Findings No.6 COA Annual Audit Report 2006

July 25, 2008

5. Non-compliance with laws, rules, and regulations

5.1 5. Non-compliance with laws, rules, and regulations

5.1 Cash advances granted to Disbursing Officers (DOs) aggregating P4,032,967.55 and Due from Officers and Employees totaling P1,676,359.97 remained unsettled as of year-end, thus exposing funds to risk or misuse. Additional cash advances were granted even if previous ones were not yet liquidated.

Section 5.8 of COA Circular No. 97-002 provides that “all cash advances shall be fully liquidated at the end of each year. Except for petty cash fund, the Accountable officer shall refund any unexpended balance to the Cashier/collecting officer who will issue the necessary official receipt.

Review and analysis of cash advances account revealed the following:

Cash Advances of P4,032,967.55 in the hands of Disbursing Officers for payment of salaries and wages and other benefits of officials and employees, were not liquidated or settled as of December 31, 2006 contrary to above-mentioned regulations.

On cash advances under account Due from Officer and Employees (123) as of December 31, 2006 amounting to P1,458,420.04 and P217,939.93 in the General and SEF/Trust Funds, respectively, remained unliquidated as of year-end. This pertains to cash advances and/or prepayments for travels. Aging of these receivables was not made possible because the GL and SL are incomplete; the only source of data was the computerized schedule in the Accounting Office. However, analysis of the schedule showed that of the said total year-end balances of account 123 in the General Fund of P1,458,420.04, P1,390,531.45 belongs to the prior years advances while P747,966.09 belongs to advances that are current. During the year, only 32% of P680,077.50 was liquidated while the other 30% of P63,664.16 are payments made for the prior and current cash advance. More so, these accountable officers were allowed additional cash advances even if their previous cash advances were not settled yet and Twenty five (25) of the accountable officers with cash advances amounted to P187,446.92 and P32,262.50, are no longer connected with the City Government due to retirement from service or transfer to another office and yet they were not required to settle their accounts. One accountable officers is already deceased and one is out of service with cash advances amounting to P14,000 and P65,000, respectively. (Annex 13)

The non-implementation of the above provision resulted in the accumulation of unliquidated cash advances totaling P5,709,327.52 at year end and for which funds maybe exposed to possible misapplication/misuse.

Management justified that Cash advances made by Disbursing Officers were already liquidated after closing.

Recommendation

The pre-audit section of the Accounting Office should see to it that laws, rules and regulations on grant of cash advances are strictly followed. Prepayments for travels of officials and employees should not be granted unless the previous ones were settled. Laws, rules and regulations strictly requires accountable officer to liquidate cash advances within in 30 days or 60 days, as the case maybe, upon return to station. For those who are no longer connected with the City Government due to retirement or separation from government service and whose liabilities to the city were not deducted from the benefits they were supposed to receive from the city should not be the liability of the officers who approved payment so said benefit. The concerned officials of the city should make representation with offices to where official employees have transferred for those who transfer to another office, which did not require clearance from the city, while those city employees who have gone at large should be the responsibility of the officials who gave authority of the cash advance. For the deceased official/employees, the unsettled account should be deducted from whatever benefits to be received from the city government or the responsibility of the officials concerned who had been remiss in their duties for having the account not settled.

Monitoring of cash advances should be made to avoid accumulation of unliquidated so that proper balances. Cash advances shall be liquidated at the end of the year so that proper adjustments could be made to both the particular expense account, and the asset account Due from Officers and Employees, otherwise expenses will be understated and the asset will be overstated.

Review and analysis of cash advances account revealed the following: