Cotabato City 2008 COA Audit 2
July 2, 2010
2. Failure of the management to comply on the documentary requirements in the appointment/designation of a new disbursing officer resulted to unliquidated cash advances amounting to P 13 million for confidential and intelligence funds at year end in violation to COA Circular No. 2003-003 dated July 30, 2003.
COA Circular No. 2003-003 provide the general guidelines and documentary requirements for the audit and liquidation of Intelligence and Confidential Funds of the Local Government Unit:
General Guidelines:
1. All cash advances chargeable against the intelligence and/or confidential funds of all local government units shall be liquidated within one (1) month from the date the purpose of the cash advance was accomplished.
2. If the liquidations and supporting papers are in order, the COA Chairman or authorized representative shall issue a credit advice addressed to head of the local government, Attention the Chief Accountant, copy furnished the provincial or city auditor of the local government unit.
3. Subsequent cash advances shall be granted only after the issuance of credit advice from the Chairman or the submission of liquidation vouchers or reports for the previous cash advance to the COA Chairman. One copy of the transmittal letter, for the purpose, duly received by the Chairman or his authorized representative, must be forwarded to the Accountant of the local government unit and the auditor concerned for reference.
Documentary Requirements:
1. Appointment/Designation of a new Disbursing Officer:
Whenever a new Disbursing Officer is appointed or designated, the following must likewise be submitted.
a. Certified copy of the designation of the Special Disbursing Officer (SDO)
b. Certified copies of the Fidelity Bond of the designed SDO.
c. Specimen signatures of officials authorized to sign cash advances and liquidation reports, particularly:
c.1 Special Disbursing Officer
c.2 Governor/Mayor
c.3 Chief Accountant
c.4 Budget Officer
For the year under audit, the city government initially appropriated their annual budget the amount of P 13 million for confidential and intelligence funds.
Verification of records maintained by the City Accounting Office disclosed that the allocation of funds intended for the said accounts was fully utilized for the year drawn against cash advance of the following Special Disbursing Officers. Details are shown on Annex C and summarized as follows:
Accountable Officer Confidential (881) Intelligence (882)
1. Phebe T. Binangon P 1,000,000.00 P -
2. Michael A. Odin 2,400,000.00 900,000.00
3. Armando V. Siang 4,500,000.00 1,000,000.00
4. Ohmar M. Gaya 2,050,000.00 1,100,000.00
5. Abouzeid A. Sinsuat 50,000.00 -
Total 10,000,000.00 3,000,000.00
It has been observed by the audit team that the agency had appointed or designated five (5) Special Disbursing Officer to draw cash advances and therefore it could be to difficult and voluminous to comply with all the existing requirement of the law considering that five (5) personnel are assigned on one specific account.
During the exit conference, one of the SDO, Omar M. Gaya reasoned out that they already submitted the liquidation documents to COA Central Office, however, it was returned for the same lacks supporting documents as required under COA Circular No. 2003-003 dated July 30, 2003 and DILG Memorandum Circular No. 99-65 dated April 23, 1999 such as:
1. Philippine National Police’s Certification of the peace and order situation in the City for the years indicated;
2. Summary explanation indicated;
3. Fidelity bond corresponding to the year of cash advance availments;
4. Specimen signatures of all accountable officers signatories to the disbursement and liquidation vouchers and obligation request/ALOBS;
5. Approved Budget for CY 2006, 2007 and 2008;
6. Allocations for confidential and intelligence funds (CIF) approved by the DILG;
7. Peace and order program (POP) for CY 2006, 2007, 2008 duly approved by the Peace and Order Council and concurred by the Sanggunian Bayan concerned; and
8. Certified copy of the minutes of meeting evidencing 2/3 votes of the Peace and Order Council for the release of the intelligence/confidential fund.
The failure to liquidate the confidential and intelligence funds resulted in the understatement of expenses and overstatement of related asset and government equity accounts for the year ended.
Recommendation for Cotabato City Government:
Require all the Special Disbursing Officer to liquidate their cash advances pursuant to COA Circular No. 2003 dated July 30, 2003. If possible, assigned or appoint only one (1) disbursing officer to draw cash advance specifically account confidential and intelligence fund in order to closely monitor the liquidation of said accounts.
Cotabato City 2008 COA Audit 1
July 2, 2010
I. Financial and Compliance Audit
1. The agency’s appropriation and expenditures for personal services exceeded the 45% limitation set forth under Section 325 (a) of RA 7160 and Local Budget Circular No. 75 involving a total amount of P31.365 million.
The Department of Budget and Management issued Local Budget Circular No. 75 dated July 12, 2002 providing guidelines on the preparation and review of the Personal Services (PS) components of the Annual and Supplemental Budget of Local Government Unit’s (LGU’s) in relation to the waiver on the Personal Service limitation under Section 325 (a) of the Local Government Code of 1991 (RA 7160) quoted herein below:
“Section 325 (a) of the code prescribe that the maximum allowable Personal Service (PS) cost that a Local Government Unit may incur shall not exceed forty five percent (45%) in the case of first to third class provinces, cities and municipalities and fifty five (55%) in the case of fourth class or lower of the total annual income from regular sources realized in the next preceding fiscal year. Said Personal Services (PS) limitation/cap is provided to insure that LGU’s shall have a balance budget and reasonable amount/funds are allocated to the delivery of basic services and development projects.”
Also, Section 306 (k) of the Code defines Personal Services (PS) as appropriation for the payment of salaries, wages and other compensation of permanent, temporary, contractual and casual employees of the Local Government Unit.
As of December 31, 2008, the agency’s total PS expenditures exceeded anew the 45% limitation in the amount of P 31.365 Million. Illustrated below is the breakdown of computation governing PS limitation cost:
Based Year 2007
(In million)
Total Income from regular sources
Realized the next preceding fiscal year P 338,857
PS limitation _________45%
Allowable PS level P 152,486
PS Cost of existing personnel as of Dec. 31, 2008
A. Salaries of Existing Personnel
1. Regular 116,594
2. Contractual 354
B. Statutory and Contractual Obligation
1. Retirement & Life Insurance Premium (RLIP) 13,932
2. PAG-IBIG Contribution 2,205
3. PhilHealth Contribution 1,400
4. ECC 934
C. Authorized Allowance/Benefits
1. Personnel Economic Relief Allowance (PERA) 4,091
2. Additional Compensation (AdCom) 12,510
3. Rep. and Trans. Allowance (RATA) 4,487
4. Uniform/Clothing Allowance (U/CA) 2,833
6. Honoraria 892
7. Overtime and Night Pay 344
8. Cash Gift 7,370
9. Year-end Benefits 6,366
11. Terminal Leave Benefits 1,269
12. Other Personal Benefits ______ 8,270
Total PS Expenditures P 183,851
Excess Over PS Limitation P ( 31,365)
Interview conducted with George B. Busque, City Human Resource Management Officer revealed that as of December 31, 2008 the number funded positions of the City Government totaled Seven Hundred Thirty One (731), itemized as follows:
Office Number of Position
1. Office of the City Mayor 143
2. Office of the Sangguniang Panlungsod 66
3. City Planning and Development Office 27
4. Housing Projects 2
5. Office of the Civil Registry 24
6. Office on General Services 29
7. Garbage Collection 23
8. General Maintenance Division 17
9. Maintenance of Parks Monuments & City St. 29
10. City Budget Office 14
11. Accounting and Internal Audit Services 31
12. City Treasury Office 67
13. City Assessor’s Office 37
14. Office for Legal Services 15
15. Office on Health Services 52
16. Office on Social Welfare & Dev. Services 35
17. Office on Population Development 7
18. Office for Veterinary Services 19
19. Agriculture Services 9
20. City Engineering Office 46
21. Construction and Maintenance Division 17
22. Operation of Motor pool 22
Total 731
Aside from the number of regular employee mentioned above, we also found out that support staff numbering Four Hundred Sixty (460) employee in the existing record of HRMD funded under the 20% Annual Development Plan. To this effect, a Value for Money Audit (VFMA) was conducted and discussed in this report under finding No.9 regarding the utilization of the 20% Development Fund.
Furthermore, granting that the appropriations contained in the Annual Budget and Annual Development Plan were approved by the Sangguniang Panlungsod and were therefore in effect and used as a basis for the computation of the personal services appropriation of the agency. The initiative to enforce economy measures in order to generate savings must emanate from the executive branch of the local government authorities concerned. The amount of P31.365 million in excess of expenditures for personal services could have been allocated to other projects, programs and activities, considered beneficial and advantageous to enhance the development of the city constituents.
Recommendation for Cotabato City Government:
We recommend to the Local Chief Executive that appropriation for personal services shall be reduced or appropriate measures shall be instituted to comply with the requirements of the law.
Give priority budget allocation for the construction of local roads and bridges, school buildings, health centers, drainage and flood control structures and other similar facilities to promote the economic well being of the people.
