Findings No.9 COA Annual Audit Report 2004

July 26, 2008

9. Had the Province imposed rental fees on construction equipment lent to various municipalities it could have generated an income of P3.8 Million from July 1 to December 3, 2004 which could be used to finance its monthly loan amortization of P4,125 Million with the bank.

Sections 301(c) of RA 7160 provides that repayment or amortizations of loan including accrued interest thereon maybe financed partly from the income of the projects or services and from the regular income of the local government unit, which must be provided for and appropriated regularly in its annual budget until the loan and interest thereon shall have been fully paid.

Verification of records disclosed that the provincial government obtained a long term loan from the Land Bank of the Philippines in the amount of P82.5 Million for the acquisition of four (4) units Payloader, three (3) units Motor Grader, two (2) units Bulldozers and twelve (12) units Dumptrucks payable for a term of 7 years. The heavy equipment were to be used for projects of the Province in the construction and maintenance of roads/bridges, buildings and other projects located in the municipalities and barangays. The payment of loan was taken from the budget of 20% Local Development Fund.

It was noted, however, in the audit that some of the heavy equipment of the Province were being borrowed by various municipalities in the construction and maintenance of municipal and barangay projects and no minimum fees were imposed by the province for the use of the heavy equipment. It was confirmed from the municipalities and barangays that they did not pay rental fees to the province. Although the objective of the provincial government is for the good and best interest of public service, it needs additional income to cover the maintenance cost of heavy equipment and to finance partly the payment of monthly amortization of the bank considering that heavy equipment were acquired in a form of loan, and the financial condition of the provincial government is not very well sound.

Evaluation of the Accomplishment Report of the heavy equipment obtained at the Provincial Engineers Office showed that the heavy equipment were used by various municipalities and barangays in the implementation of its projects for a period of 313 days or 2504 hours from July to December 2004 with a total amount of P3.8 Million. (Annex H) The computation of rental rates of heavy equipment were taken from the Equipment Guidebook from the Department of Public Works and Highways.

Had the province imposed rental fees on construction equipments lent to various municipalities it could have generated an income of P3.8 Million for 6 months. The said amount could have been used to finance partly the payment of monthly loan amortization with the bank and maintenance cost of the heavy equipment.

An Audit Observation Memorandum has been served to management calling their attention on the observation, but no reply has been received.

Recommendation:

Conduct an in-depth studies on the possibility of imposing rental fees on the use of heavy equipment, to various municipalities and barangays in order to generate additional income. The money generated shall be used for payment of loan amortization with the bank.

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 Commission on Audit, Misamis Oriental