‘Over 300 LGUs misused P1.8-billion development funds in 2017’

MANILA, Philippines — Despite clear rules and guidelines on how development fund allocations can and should be utilized, more than 300 local government units (LGUs) misused over P1.8 billion of it last year.

In its 2017 Annual Financial Report released recently, the Commission on Audit (COA) said 126 cities, municipalities or provinces spent P986.047 million “for programs and projects classified as ‘not among the priority development projects and do not partake the nature of investments or capital expenditures’.”

An additional 175 LGUs also used the Development Fund allocations amounting to P612.080 million “for expenditures not related to the implementation of development programs and projects.” 

State auditors said such expenditures included salaries, honoraria, travel expenses, repairs and maintenance, and other operating and administrative expenses.

The COA report noted that Section 287 of the Local Government Code of 1991 requires each LGU to appropriate in its annual budget no less than 20 percent of its annual Internal Revenue Allotment share for development projects. 

State auditors cited DILG-DBM Joint Memorandum Circular 2017-1, issued on Feb. 22, 2017, provides the updated guidelines on the appropriation and utilization of money intended for development programs and projects.

They said the guidelines aim to enhance transparency and accountability in the utilization of the Development Fund, which is intended to finance priority development projects and programs in approved local development plan that directly support the Philippine Development Plan, the Medium-Term Public Investment Program and the Annual Investment Program. 

The 2017 Annual Financial Report covered significant and common audit observations and recommendations from 1,712 Annual Audit Reports of 80 provinces, 145 cities and 1,484 municipalities.

Apart from misuse, state auditors said 516 LGUs failed to spend Development Funds accumulating to P12.68 million due to the non-implementation or delayed implementation of development projects as of Dec. 31, 2017. 

“Poor planning, lack of coordination with concerned offices and non-monitoring of the implementation of the development projects brought about the condition,” the COA report said. 

It also noted that disbursements made by 26 LGUs – totaling P270.9 million – were not supported with complete documentary requirements.

The COA report said the departments of Budget Management and of the Interior and Local Government should strictly require the preparation of the Annual Investment Program containing the detailed information of the specific program, project and activities funded from the 20 percent Development Fund to solve the problem and correct the issues.

It added that both agencies should also require the prior approval or authorization from the local Sanggunian before the utilization of all lump-sum appropriations from the Development Fund.

Governors and mayors, state auditors said, should likewise be required to strictly adhere to the guidelines on the appropriation and utilization of funds for development programs and projects.

The COA report said concerned government agencies should require the regular monitoring and evaluation in the implementation of the development projects to ensure optimum utilization of the Development Fund and achieve the main purpose of the same while discouraging the disbursement of government funds without complete documentation.