Findings No.4 COA Annual Audit Report 2005

July 28, 2008

4. Accounts Receivables amounting to P151,878.78 remained outstanding at the year-end due to the failure of the City Agriculturist to supervise and monitor the collection of loans granted to 152 farmers, thereby depriving the other barangays to avail of the loan.

Section 21 of the Manual on the New Government Accounting System, Volume III described Accounts Receivable as an account used to record among others, the amount due from customers/clients resulting from trading/business transactions/operations.

The city government, in its desire to uplift the living condition of its constituents in the barangays, particularly the farmers, had always included in its agriculture program the supply of fertilizers to farmers on credit. This was strengthened by a Memorandum of Agreement duly executed by and between the city government and the farmers who availed of the loan.

Records showed that the recipients of the loan totaled 152 farmers coming from the 20 barangays of the city. The agreement included among others, that the fertilizer loan would be paid in installment basis; that it would be payable within one (1) year from the time it was granted. The total amount of loan was P478,574.82. Out of the total amount loaned to farmers, P326,246.04 or 68% was collected thereby leaving a balance of P151,878.78 at year-end. (Annex 5). Moreover, the records also revealed that farmers from the four (4) barangays paid 100% of their loan, 14 barangays paid 50% or less and the remaining two (2) barangays did not pay at all.

The City Agriculture’s Office which was tasked to supervise the implementation of the program, keep the records of farmers and monitor the collection of payments from farmers did not prepare and submit monthly report on the status of the farmers’ accounts, thus the City Agriculturist had no way of knowing who regularly paid and whether the amount paid was sufficient to cover for the amount loaned.

Due to the failure of the City Agriculturist to supervise and monitor the collection, the unpaid balance of P151,878.78 remained outstanding at year-end, thus deprived the other farmers of the remaining 35 barangays to avail of the loan.

Recommendation

Require the City Agriculturist to prepare the monthly report on status of the farmers’ account to be able to closely supervise and monitor the payments of the farmers; intensify collections when it is logging behind to avoid huge balances of accounts receivable from the farmers at year-end to give way for other farmers to avail of the loan.

Written by admin · Filed Under Commission on Audit, Tangub City