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Findings No.3 COA Annual Audit Report 2004

July 26, 2008

3. The management did not pay promptly their loan amortization which resulted to incurrence of additional expense of P47,793.79 representing interest expense. The practice is contrary to sound management.

Section 2 of PD 1445 requires all heads of agency to manage, spent or utilized their resources in accordance with laws, rules and regulations and safeguarded against loss or wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operation of government.

The above mentioned regulation was not fully implemented when management decided not to pay their loan payable of P676,613.50 on December 31, 2003.

The Balance Sheet as of December 31, 2003 showed that the provincial government had a long-term liabilities of P676,613 from QUEDANCORP.

The amount of loan is supposedly fully paid last December 31, 2003. However, the management did not pay the loan amortization, despite that they had sufficient cash. Instead, they requested for the restructuring of the loan balance and paid additional interest expense of P47,793.79.

Management justified that their failure to collect repayments of loan granted to beneficiaries caused the delayed payments of the account due to QUEDANCORP.

Recommendation

Stop availing loans since the agency had sufficient cash to finance local projects. By so doing, it could avoid incurrence of unnecessary interest expense.

For the existing loan, management is advised to pay immediately the amount of P 724,406.79 to QUEDANCORP.

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

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