Findings No.8 COA Annual Audit Report 2006

July 25, 2008

8. In view of the weak specific and monitoring controls, the Province has collected only P549,680 of the total loans receivable of P22,494,522.93 or has 2% efficiency rate in the collection of the SAIL and PNPL Loans thus casting doubts on the effectiveness of the program in the attainment of its objectives specifically on the religious repayment of loan for roll-over purposes and increase production of agricultural products.

The Operational Scheme of the PNPL Program states the basic features of the program which are the following:

Principle of credit as a fundamental right. Every deserving poor person should be given a fair chance to improve his/her economic condition by ensuring the privilege to credit.

Lending without collateral at zero interest rate

Small Loan, Small Repayment. This is a scheme aimed at alleviating poverty. To provide convenient means of living, small loan is offered to interested constituents to repay also in small and less burdensome amount depending on the capacity of the borrower to pay. No required amount of payment is demanded so long as it is done religiously for roll over purposes.

Moreover, in the project outline attached to the Annual Investment Plan (AIP), project objectives includes 1) to minimize the importation of vegetables being marketed in the locality from the mainland and 2) to be self sufficient in vegetable production.

Records showed that the Province has been extending no collateral loans to interested constituents since 1991. Funding of which was initially from the Spanish Assistance for Integrated Livelihood. In CY 2001 to 2002, the Department of Agriculture, Regional Office No. 10 and Southern Philippine Development Academy also provided funding for the said program. Then, starting in the year 2002, the Province provided funds for the PNPL program under the 20% Development Fund as follows:

CY 2002 P 1,400,000

CY 2003 1,600,000

CY 2004 1,000,000

CY 2005 500,000

CY 2006 500,000

Total P5,000,000

On Sept. 4, 1998, a Special Order was issued authorizing some personnel of the Provincial Agriculture Office to collect loan repayments. But, On May 19, 2005, the Provincial Governor has issued amendatory Office Order designating the Provincial Agriculturist as the accountable officer in the collection. However, the Provincial Agriculturist also designated its municipal coordinators as collectors of loans in their field assignments. Field collectors remitted collection to the Office Clerk assigned by the Provincial Agriculturist to prepare the consolidated Report of Collections and Deposits and to maintain the cashbook. Under this setup, late remittances of collections could not be directly associated to specific collector.

During the same period, Accounting Office did not maintain individual records of loan borrowers. Only the Office of the Provincial Agriculture maintained subsidiary records upon which the Provincial Accountant relied so much. At this instance, record keeping and collections was done by the same Office.

In the CY 2005 Annual Audit Report, it was recommended that the Provincial Treasurer’s Office intensify collections of the loans.

As of December 31, 2006, total collections of the Province for the Loans Receivable Account of P22,494,522.93 was only P549,680 leaving a collectible balance of 21,944,842.93. ( Annex 4)

The PNPL operational guidelines mentioned that “All PNPL Coordinators, Institutional Development coordinator and Community Organizers will have weekly meeting to update themselves on the updates of PNPL programs and other relevant information on PNPL.”

According to one PNPL coordinator, they have not followed the conduct of weekly meetings. Various problems they have encountered in collections includes the following:

Some borrowers claimed they have previous arrangement with the Local Chief Executive in the loan repayments thus, they would not pay.

PNPL coordinators are not provided with due financial support like reimbursement of traveling expenses in going to the barangays even actual transportation expenses. They could not afford to take the daily transportation expenses from their meager take home pays.

Some of the projects no longer existed thus, borrowers could no longer pay.

Some borrowers view government loans as dole-outs so they refuse to pay.

The above-stated problems have not been properly addressed so it contributed to the low repayment rate.

Section XI of the Operational Scheme mentioned that demand letters will be sent to borrowers who have not paid their loan after a given grace period of 6 months but it did not mention whose Office would do the job. Per inquiry, neither the Provincial Accounting Office nor the Provincial Agriculture Office has made the demand letters. However, the Provincial Accountant promised to inform the Local Chief Executive on the status of the loans receivable as of December 31, 2006.

In the actual operations, no independent office is assigned to review the records of the PNPL borrowers, confirm office records with the borrower’s record for correctness of collections and balances and no periodic reports was required on the status of the program.

Had borrowers paid their dues religiously, the amount of P5,000,000 appropriated in the years 2002-2006 would be enough seed money for the program.

Weak specific and monitoring controls in the implementation of the program resulted to 2% collection efficiency thus; attainment of the objectives specifically on the religious payment of loan for roll-over of the funds and the increase production of agricultural products could hardly be realized.

RECOMMENDATION:

For the above stated deficiencies, we recommend the following:

Designate the Municipal Coordinators as the accountable officer to establish his accountability for the collections received by him and to enable the auditor to pinpoint who among them are not remitting regularly. Let them maintain own cash books for their collections.

Designate responsible person who will monitor the project implementation and will prepare the monthly monitoring report which would include problems encountered in the field.

Issue Office Orders to person/office responsible for the issuance of demand letters to delinquent borrowers.

Issue Office Order to persons/office responsible for the reconciliation/confirmation of the records with the borrowers for proper monitoring of collections and balances.

CLICK HERE for the latest 2nd Hand Laptops, Mobile Phones, SMART/ GLOBE /TALK 'N TEXT/ TOUCH MOBILE / SUN CELLULAR Postpaid, Pre-paid and International Roaming PROMOS, Philippine Airlines (PAL) and Cebu Pacific Airlines Airline AIRFARE DISCOUNT tickets for sale!

Check out our Updated/Latest List of GOVERNMENT JOBS AND OTHER GOVERNMENT VACANT POSITIONS, PRIVATE JOBS, PRIVATE FULL-TIME JOBS, PRIVATE PART-TIME JOBS and OTHER ONLINE JOBS in this link!

Written by admin · Filed Under Camiguin, Commission on Audit