COA: City budget may be "illegal"

CEBU, Philippines - The last Supplemental Budget of former Cebu City mayor and incumbent Cebu City South District Rep. Tomas Osmeña before he left the Cebu City government may be “illegal”, according to state auditors.

This was 2010’s Supplemental Budget No. 3 amounting to over P1.3 billion which funded the P340-million infrastructure projects for Cebu City barangays, most of them in the north district.

SB 3 was passed in February, barely three months before the May 2010 elections.

SB 3 also included renovations, road concreting and construction of multi-purpose buildings, health centers, drainage and the P370-million payment for the city’s foreign debt.

The recent Audit Observation Memorandum of the Commission on Audit says that SB 3 passed in February last year amounting to P1.3 billion may have no back-up funds because the actual retained operating surplus for 2009 is only P505 million contrary to the P1.4-billion surplus certified by former city treasurer Ofelia Oliva.

“Based on the Statement of Government Equity prepared by the Accounting Unit, retained operating surplus was only P505,525,675.35. This makes the statement certified by Ms. Oliva blown up by almost P1 billion,” COA said.

Oliva certified last year that the city retained an operating surplus of P1,476,352,290.00 for 2009 which was made the source for the SB 3 of Osmeña.

“It is important to know that any retained operating surplus does not always mean available funds. This is because included here were disbursements which were not yet recorded as expenses based on normal accounting procedure such as unliquidated cash advances, financial assistance, subject to liquidation and therefore recorded as receivables, un-issued or unused inventory and continuing appropriations,” COA said.

“In the event that the approved supplemental budget actually had no back-up funds, this will mean that the related disbursements were illegal and unauthorized,” COA added.

Councilor Jose Daluz III said that Oliva has to explain the findings of COA.

Daluz said that the council approved the Supplemental Budget based on the certification of the city treasurer.

“There was a certification from the treasurer and we believed her. She assured the council that there was an available fund so we approved the budget,” Daluz said.

COA also recognized that the certification from Oliva was the basis made by the council to come up with the appropriation ordinance.

Daluz said he was already informed by the OIC city treasurer about the issue. He, however, said that even if the city has no surplus, it does not mean the city has no funds. He said the city government has P2.5 billion cash in bank.

He also confirmed that the retained surplus are funds that are already obligated but have not been paid. The city may decide to either use them to pursue pending projects or cancel the projects.

“Concerned officials should explain this. In 2006, nahitabo na sad ni. That was when we passed an ordinance canceling the budget found with no back-up funds,” Daluz said.

He said that for SB 3, if worse comes to worst, they can pass an ordinance canceling those items that have not been used or those appropriations that have not been allocated.

“Pwede nato ma-cancel ang wala magasto,” Daluz said.

He said though that the budget cannot be referred as illegal because it was approved by the Department of Budget and Management.

“Once it passed, it becomes a legal and valid law,” Daluz said.

“If we have to resort to canceling the budget, it is our obligation to explain to the people why some of the projects are not pushed through. Maybe nagkulang sad mi sa council because we did not scrutinized Oliva. We are answerable to the people but cannot be liable for that,” Daluz added. 

“Then why didn’t the city run out of funds? We even had SB 4 and 5. Anyway, refer the matter to budget officer (Nelfa) Briones who makes the accounting entries,” Osmeña said. — /BRP (FREEMAN)