Findings No.1 COA Annual Audit Report 2005

July 26, 2008

The provisions on the grant and liquidation of cash advances as provided under COA Circular No. 97-002 were not fully observed by management, thus resulted to accumulation of unsettled cash advances accounted as “Cash Disbursing Officer” and Due from Officers and Employees” of P8,884,644.74 and P4,046,919.48, respectively.

COA Circular No. 97-002 dated February 10, 1997 provides for the rules and regulations on the grant, utilization and liquidation of cash advances as follows:

Section 4.1.2- No additional cash advances shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made.

Section 5.1.3 of same circular provides that cash advance for travel shall be liquidated within sixty (60) days after return to the Philippines in the case of foreign travel or within thirty (30) days after return to the permanent official station in the case of local travel.

Section 5.7 – When cash advance is no longer needed or has not been used for a period of two (2) months, it must be returned to or refunded immediately to the collecting officer.

Section 5.8 – All cash advances shall be fully liquidated at the end of each year. Except for the petty cash fund, the Accountable Officer (AO) shall refund any unexpended balance to the Cashier/Collecting Officer who will issue the necessary official receipt.

Section 5.9 – At the start of the ensuing year, a new cash advance may be granted, provided that a list of expenses against the previous cash advance is submitted. However, when no liquidation of the previous cash advance is received on or before January 20, the Accountant shall cause the withholding of the AO’s salary.

That failure of the Accountable Officer to liquidate his cash advance within the prescribed period shall constitute a valid cause for the withholding of his salary and the institution of other sanctions as provided for under paragraphs 9.2 and 9.3 hereof.

Further, Section 8 of the same circular provides that, it shall be the responsibility of the Head of the Agency to ensure that proper granting, utilization and liquidation of all cash advances are in accordance with these rules and regulations.

Observation disclosed that cash advances were granted to Disbursing Officers as well as to officers and employees despite previous unliquidated cash advances. These were accounted as Cash Disbursing Officer and Due from Officers and Employees, respectively. (Annex 1)

Also, it was noted that cash advance in the amount of P865,000.00 was granted to the Disbursing/Accountable Officer of other National Government Agency, Mr. Flor C. Mantilla of the Department of Education wherein the agency has no control.

The conditions were mainly caused by the following:

Non-orientation/briefing by the Accountant and the Treasurer of the newly designated Disbursing/Accountable Officers before discharging his/her duties hence, most of the designated AOs are unaware of the procedure on handling, liquidating and other matters related to the work of an AO. To that effect, lots of liquidation reports submitted to the accounting office were not accounted nor recorded in the books, instead were returned to the concerned AOs due to lack of some documentation, lack of signature, etc.

- Non -installation of a monitoring system on the liquidation of the said cash advances by the accounting office and the pressures confronting the pre-audit section obscured the implementation of the prescribed rules and regulations on the grant and liquidation of cash advances.

In an effort of helping management and in compliance with the regulation, the auditor sent demand letters for liquidation/return of cash advance which the management supported favorably by sending written reminders to the concerned officials and employees of which P4,161,666.39 or 50.70% of the total amount granted for travel were liquidated during the year. Compared to last year, cash advances granted to Disbursing Officers decreased by P293,987.75 or about 3.2 %. However, unliquidated cash advances for travel still accumulated to P4,046,919.48 (Annex 2) while cash advances granted to Disbursing Officers reached to P8,884,644.74 (Annex 3) as of December 31, 2005.

Most of this amount had already been expended during the year or of the prior years’ operations thus, an entry made debiting the expense account was made. However, instead of crediting the cash and receivable accounts, liability accounts were credited hence, cash, receivable and liability accounts were overstated.

Further, the chances of liquidation of cash advances especially those granted in the prior years and to those officials and employees who are no longer connected with the agency would be very remote.

The management took the audit observation with appreciation and assured to take appropriate action to enforce liquidation of the outstanding cash advances.

Recommendation:

Observe fully the aforecited provisions on the granting and liquidation of cash advance in the ensuing operations to minimize if not eliminate unliquidated cash advance.

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Written by admin · Filed Under Commission on Audit, Misamis Occidental