Findings No.1 COA Annual Audit Report 2006

July 26, 2008

1. Cash advances by the disbursing officers of P2,550,291.81 and the accumulated cash advances of P11,208,565.69 by the officers and employees, remained unliquidated at year end in violation of Section 89 of PD 1445 and COA Circular No. 97-002, thereby exposing part of the amount to possible loss, misuse or misappropriation and resulting to the understatement of the expense account and overstatement of assets.

COA Circular No. 97-002 and Section 89 of RA 1445, prescribed the guidelines on the granting, utilization and liquidation of cash advances. The law provides that:

no cash advance shall be given unless for legally authorized specific purpose.

No additional cash advance 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.

Cash advances shall be reported and liquidated as soon as the purpose for which it was given has been served.

Moreover, COA Circular No. 96-004 dated April 19, 1996, states that domestic traveling expenses shall also be taken up in the book of accounts as cash advances and the same shall be liquidated by the official or employee concerned strictly within thirty (30) days after his return to his permanent official station as required under Section 16 of Executive Order 248. Otherwise, payment of his salary shall be suspended until he complies therewith.

Review and verification of the financial report disclosed that the status of cash advances as of December 31, 2006 granted to the Regular and Special Disbursing Officers had an outstanding balance of P2,550,291.81 at year end. The cash advances consists of P1,801,250.61 for the current year and P749,041.20 for the prior years (Annex A-A1).

Furthermore records showed that the unliquidated cash advances of officers and employees at year end amounted to P11,208,565.69, please see (Annex A2).

This is a previous year audit finding but is hereby reiterated due to the materiality of the amount even though reduction in the amount of P14,378,672.46 or 56% has been effected as compared to last year’s cash advances P25,587,238.15 for the officers and employees.

Had these cash advances been liquidated immediately, proper accounting of expenses and accurate determination of assets could have been undertaken.

The OIC-Provincial Accountant promised to closely monitor the submission of liquidation papers to immediately settle the accumulated cash advances.

RECOMMENDATION

Comply strictly with the laws, rules and regulations pertaining to cash advances in order to lessen the accumulation of the same. Limit cash advances to the minimum or actual needs of the province or individual employee.

The accounting office, being the internal audit unit of the agency should see to it that previous cash advances are fully settled prior to the granting of new cash advance.

Demand from the concerned accountable officers the immediate liquidation of the subject cash advances. Instruct the OIC, Provincial Accountant to withhold the salaries of the concerned accountable officers who failed to liquidate their obligations within thirty (30) upon receipt of the demand letter.

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Written by admin · Filed Under Commission on Audit, Lanao del Norte