COA: Manila P3.5 B in debt

MANILA, Philippines - The city government of Manila, the country’s capital, was in debt by more than P3.5 billion as of Dec. 31, 2012, according to a Commission on Audit (COA) report released yesterday.

Because of such financial problems apparently left by his predecessor Alfredo Lim, state auditors urged former President and now Mayor Joseph Ejercito Estrada to continue implementing cost-cutting measures and strategies to improve Manila’s cash position.

The COA report said Manila’s cash balances for all funds as of the end of 2012 totaling P1.5 billion was not sufficient to meet its current liabilities amounting to P3.5 billion.

State auditors said the city government’s General Fund, Special Education Fund, and even its Trust Fund (TF) had insufficient balances to cover debts and payables incurred during the year.

The audit team also discovered that the deficit under the TF indicates that a portion of the fund was expended for other purposes, which violates Section 309 (b) of the Local Government Code and Section 122, Volume 1 of the Government Accounting and Auditing Manual.

State auditors said incurring an overdraft for all funds shows the insufficiency or inability of Manila to pay its short-term debt obligations at yearend. 

Manila officials told COA that the local finance committee had issued various memoranda on cost-cutting measures, which included the reduction of consultants, casuals and job-order employees.

They also said they are monitoring the use of electricity and water within the city hall and other city government installations.

 State auditors said they are reiterating the prior year’s recommendation that the local finance committee and the officials concerned closely monitor the cash inflows against outflows using a cash flow analysis prepared by the city accountant to ensure that no cash overdraft is incurred and that trust funds are used only for their intended purposes.