Deposit increased by 788 percent: P609M unrecorded

CEBU, Philippines — Aside from unutilized equipment and other considerations, the Commission on Audit (COA) has also flagged more than P609 million in unrecorded deposits and more than P27 million in disbursements by the Cebu City Government last year.

Instead of being addressed after the same failure was pointed out in the audit report for 2022 transactions, the P609 million represents a 788-percent increase.

In their examination of the City’s transactions, state auditors learned that unrecorded deposits by the City Government rose to 788 percent in 2023, or that the City’s current bank accounts amounting to P609.52 million and disbursements totaling P27.8 million from fiscal years 2014 to 2023 were not taken up in the City’s books of accounts.

They said such it is a departure from Paragraph 27 of the International Public Sector Accounting Standards (IPSAS), which provides that “Financial Statements shall present fairly the financial position, financial performance, and cash flows of an entity”.

They defined “fair presentation” as the “faithful representation of the effects of transactions” and “recognition criteria for assets, liabilities, revenue, and expenses set out in IPSAS.”

They also said that Section 111 (2) of Presidential Decree (PD) No. 1445, provides that “the highest standard of honesty, objectivity, and consistency shall be observed in the keeping of accounts to safeguard against inaccurate or misleading information.”

The COA that after verifying bank statements with the corresponding Bank Reconciliation Statements (BRS), it learned that various credit memos and direct deposits to the City's current checking accounts were not recorded in the City's books of accounts.

“Review of the details of the BRS showed that some of these credits aggregating P609,519,462.64 were for the calendar years 2014 to 2023,” it said.

COA then underscored that the same observation was also brought to the city’s attention during last year’s audit for 2022 transactions, but instead of being addressed, the amount of unrecorded credits or collections has instead risen to 788.14 percent.

The unrecorded deposits are that for the General Funds for Cebu City Medical Center (CCMC) and City Markets, Trust funds for CCHD PhilHealth, Private Power, NOAH Complex, and Educational Fund.

COA noted that deductions were made that indicated that there were efforts to reconcile the balance, but there were also additions that were mostly unrecorded interest revenues

“In our further evaluation of the movements of cash in bank accounts, it was observed that the significant increase of P521,205,882.80 in the Special Education Fund (SEF) came from the time deposits which already matured and were terminated,” COA also said.

Despite this, no adjustment was made in the City’s books of accounts by reclassifying the accounts from “Investment in Time Deposit Account” to “Cash in Bank Account.”

The COA said the “Chief Administrative Officer” (CAO) of the City reasoned that the transactions cannot be taken up in the books because the type or nature of collection or revenue “cannot be identified.”

“These transactions were just credited as per bank statements but lacking any information as to the purpose and nature of payments,” it quoted the CAO as saying.

The City Treasurer's Office (CTO) has allegedly already stopped the practice of receiving collections through direct deposit because of this “adverse effect” of understating the City’s current account by P609.52 million, as of Dec. 21, 2023.

“Further verification disclosed that several checks issued by the City were already debited/deducted from the city's bank accounts, however, these were not recorded in the accounting books,” COA likewise said.

Further inquiry by state auditors also revealed that that the disbursements cannot be taken up in the books since the CTO was not able to submit the Disbursement Vouchers (DVs) with complete supporting documents.

“Our inquiry further revealed that these disbursements cannot be submitted to the CAO yet because they are still waiting for the other needed attachments such as the Official Receipts, the duly signed payrolls, and other supporting documents,” they said.

“We recommended that Management, through the CTO, immediately submit the remaining DVs and the supporting documents to the CAO for recording in the books of accounts, and for the CAO to submit to the Audit Team for post-audit,” they added. — (FREEMAN)