P35.8M unliquidated financial aid to barangays, SKs in Naga

CEBU, Philippines — According to the Commission on Audit (COA) P35.80 million in financial assistance extended by the Naga City government in Cebu to barangays and Sangguniang Kabataan (SK) has remained unliquidated as of December 31, 2025, with some balances outstanding for more than five years.

In its 2025 audit report, state auditors attributed the prolonged non-liquidation partly to the absence of formal agreements between the city government and the recipient barangays and SKs specifying requirements for project implementation, reporting, and liquidation.

The audit covered P35,801,286.14 in outstanding financial assistance recorded under the Due from LGUs account.

COA said P33,001,286.14 was due from barangays while P2.8 million was due from SKs.

Of the total, P9.62 million, or 17 percent, was less than two years old; P20.88 million, or 66 percent, had been outstanding for two to less than four years; P5.30 million, or 17 percent, was four to less than five years old; and P800 had remained outstanding for five years or more.

COA noted that the majority of the balances had been dormant for two to five years, a period it said should have been sufficient for the completion of the barangays’ priority projects.

The city annually included a lump-sum appropriation under the Office of the City Mayor for consultative services and financial assistance to its 28 component barangays.

Based on the Annual Investment Program, the city allocated P63.19 million in 2021 and P159.81 million annually from 2022 to 2025 for the purpose.

COA said the financial assistance was released based only on barangay resolutions requesting assistance, project proposals, and city resolutions approving the grants.

However, no memorandum of agreement or similar document was executed between the city government, as source agency, and the barangays, as implementing agencies, to establish timelines and requirements for project implementation, reporting, and liquidation.

COA cited COA Circular No. 94-013, which requires the source agency to enter into an agreement with the implementing agency specifying requirements for project execution and reporting.

It also cited COA Circular No. 2012-001, which includes a memorandum of agreement or trust agreement among the documentary requirements for fund transfers.

The audit agency said the absence of a stipulated liquidation period contributed to the accumulation of P35.80 million in unliquidated financial assistance and made it difficult to assess whether the projects were implemented effectively and whether their intended objectives were achieved.

COA also noted that the prolonged non-liquidation could prevent the release of subsequent financial assistance, as existing rules require certification that previously transferred assistance had been fully liquidated and properly recorded before additional assistance may be released.

The audit further found that P3.06 million of the unliquidated assistance had already been used for project implementation in 2025, based on inquiries with barangay treasurers.

However, the corresponding fund utilization reports, disbursement vouchers, and supporting documents had not been submitted to the city government for recording.

As a result, COA said the expenditures could not be validated and remained unrecognized in the city’s books.

The audit agency said the continued non-liquidation misstated the Due from LGUs and expenses accounts, affecting the fair presentation of the city’s financial statements.

COA also noted recurring problems in the component barangays involving the failure or delay in submitting transaction documents despite demand letters issued by the City Accounting Office and the audit team.

Barangay officials cited changes in administration and the lack of proper turnover of records as among the reasons for difficulties in liquidation.

COA said these issues could have been mitigated if formal agreements had prescribed specific implementation and liquidation timelines.

The audit also found that the SKs of South Poblacion and Inoburan did not actually receive the financial assistance recorded for them.

For South Poblacion SK, the assistance had been set up as accounts payable in December 2024, but no check had been issued as of year-end.

For Inoburan SK, the check remained unclaimed as of December 31, 2025.

COA also called attention to P1 million in financial assistance extended by the city to the City of Lapu-Lapu for fire victims under Check No. 69295335 dated December 15, 2023.

The amount, charged against the 2023 Local Disaster Risk Reduction and Management Fund–Disaster Response, remained outstanding for more than two years as of December 31, 2025 and continued to be reflected under the Due from LGUs account.

COA recommended that the city re-evaluate the recognition of financial assistance recorded under Due from LGUs for the South Poblacion and Inoburan SKs, considering that the assistance was not actually received or claimed.

The audit agency also recommended that the city require the execution of a formal agreement or similar document for every financial assistance granted, clearly specifying project implementation, reporting, and liquidation requirements.

The agreement should also require the return of the financial assistance to the City Treasurer’s Office if the proposed projects are not implemented within the specified period, COA said.

City management, on the other hand, informed COA that guidelines governing the grant, utilization, reporting, liquidation, and return of financial assistance to barangays were being finalized.

It said the guidelines already incorporated COA’s recommendations and would serve as the basis for future financial assistance transactions upon approval by the Sangguniang Panlungsod.

COA acknowledged the initiative but stressed that formal agreements for each fund transfer remain necessary to establish the responsibilities of the parties, implementation timelines, reporting requirements, and liquidation procedures. — (FREEMAN)