Findings No.7 COA Annual Audit Report 2005

July 25, 2008

7. No appropriate action has been taken towards the liquidation of financial assistance in the total sum of P7.334 Million extended to some Non-Government Organizations. Liquidation thereof is prescribed under COA Circular No. 96-003.

There is the time honored principle that Government funds/money shall be used only for public purposes, i.e., for the general welfare of the greater number of the inhabitants instead of only a few. On this matter, Section 305 (a) and (b) of RA 7160 prescribes:

“Sec. 305. Fundamental Principles. – The financial affairs, transactions, and operations of local government units shall be governed by the following fundamental principles:

No money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law.

Local government funds and monies shall be spent solely for public purposes.”

Subject to the general guidelines provided in COA Circular No. 96-003 dated February 27, 1996, Government Agencies/LGUs may entrust government funds, in the form of financial assistance, to accredited Non Government Organizations (NGOs) or Peoples’ Organizations (POs) to implement government projects/program, which shall be covered by Memorandum of Agreement (MOA) defining the grants, usages and liquidation/reporting thereof.

Financial assistance extended to NGOs/Pos is considered as funds entrusted to the NGOs/POs to be used for public purpose such as implementation of government development projects. These are classified as receivable in the books of accounts, subject to liquidation. The amount advanced shall be debited to expenses upon liquidation and/or submission of report.

Our review of the accounts reveals the following financial assistance granted to various NGOs/POs amounting to P7.334 Million that would have been liquidated on or before the end of CY 2005 as required in their respective supporting Memorandum of Agreement, as follows:

NameAmount1.MASICAP MSME Development Foundation, Inc.P125,000.002.AYUDA sa Tao450,000.003.Group Circle SEA-Kaunlaran 300,000.004.Association of Barangay Council2,084,000.005.Iligan Investment and Promotion Center2,822,000.006.Iligan City Stastical Coordination25,000.007.Iligan Cooperative Development Council157,250.008.BSP-Iligan City Council644,750.009.Philippine National Red Cross330,709.0010.United Way of Iligan50,000.0011.Girl Scout Iligan City Council233,750.0012.Macaraeg-Macapagal Property150,444.9813.Cooperative Union of Iligan85,000.0014.National Statistic Office (NSO)75,000.00Total P7,333,803.98

As to age is shown below:

1.Less than 30daysP3,700,959.002.31 days to 90 days932,250.003.91 days to 365 days2,700,150.004.Over one year444.98

During the exit conference, the management promised to act favorably on this matter by requiring/directing anew concerned NGOs to submit liquidation reports.

Recommendations

Direct the City Accounting Office to review the documentary requirements set forth in COA Circular No. 96-003 before releasing financial assistance to Non-Government Organizations.

Take appropriate action to ensure compliance of COA Circular No. 96-003 towards the liquidation of financial assistance extended to Non-Government Organizations

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