COA questions transactions

CEBU, Philippines - The Commission on Audit has discovered some irregularities in the financial transactions of the Municipality of San Fernando last year, particularly regarding the utilization of the 20-percent development plan.

The 2011 Annual Audit report prepared by State Auditor IV Herma Sebial, copies of which were given to Mayor Abe Canoy, included the payments of teachers’ allowances and the unliquidated cash advances now amounting to P3.9 million.

The audit report revealed that the town “misused” their 20 percent development funds sourced from the Internal Revenue Allotment (IRA), which has a total amount of P9, 376, 085.49. 

According to COA’s audit report, the town did not actually utilize the said amount for development projects but instead were utilized for the payment of maintenance and other operating expenses and capital expenditures. 

The Municipality of San Fernando allotted a total of P12, 902,025.60 for the 20-percent development fund for the year 2011 or 20-percent of the IRA, which were intended for expenditures 

Of the amount, P9.3 million funded out of the 20-percent development fund revealed that these were incurred without adherence to the guidelines set forth in Section 287 of Republic Act 7160 and Section 2.3 of the Joint Memorandum Circular No.1, and of the Department of Interior and Local Government and the Department of Budget and Management. 

Under the circular, the development projects include the construction or rehabilitation of evacuation centers, potable water supply system, evacuation centers, local roads or bridges, sanitary landfills, material recovery facility and public facilities such as multi-purpose halls; purchase or repair of area-wide calamity-related alarm or warning system and appropriate rescue operations equipment; and purchase and development of land for relocation of victims of calamities, among others.

COA noted that the town used the amount for something not related to or not connected with the implementation of development projects including the insurance, miscellaneous and confidential expenses, repairs and maintenance of vehicles and equipment, purchase of office furniture and equipment, and food supplies expenses and electrical expenses. 

 The COA also discovered that the town gives incentives allowance to public elementary and secondary school teachers, which they charged to the Special Education Fund in the total sum of P413,000.  

The auditors found out that the local government give incentive allowance to teachers, was charged to the SEF, which is a violation of Section 272 of RA 7160 and DECS, DBM & DILG Joint Circular No.1 of 1998.

Sections 272 of RA 7160 explicitly provides that “the proceeds of Special Education Fund shall be allocated for the operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, educational research, purchase of books and periodicals and sports development as determined and approved by the Local School Board.” 

By way of implementation, Joint Circular No. 01 series of 1998 of DECS, DBM and DILG, under the caption “4.0 Prioritization of Expenses chargeable to SEF”, provide that: “the Local School Boards shall give priority to the following expenses chargeable against Special Education Fund (SEF)”: ”Operation and Maintenance of public schools, including organization of extension, non formal, remedial and summer classes as well as payment of existing allowances of teachers granted by local government units chargeable against SEF as of December 1997, provided that any additional allowances that may be granted to teachers by LGUs shall be charged to the general fund of LGUs subject to existing budgeting rules and regulations.

“While the claim per se may not be illegal, these allowances must not be charged against the Special Education Fund but may be charged to the General Fund whenever authorized,” the auditors said.

Also, the town continued to grant cash advances to officials and employees amounting to P3,961,760.41 and remained unliquidated as of Dec. 31, 2011, in violation of Presidential Decree 1445 and COA Circular No. 97-002. 

It was also noted that those who were given such advances, particularly for travel, did not bother to settle them while the municipal accountant allowed the grant of additional cash advances despite non-settlement of previous cash advances.

The COA informed the town that the failure to act on the matter would be sufficient grounds to deduct the advances from their salaries without prejudice to the applicable sanctions that may be imposed.  (FREEMAN)