Madaue fails to liquidate P15 million cash advances

CEBU, Philippines — Cash advances totaling P15.99 million granted to officers and employees of the Mandaue City Government remained unliquidated as of December 31, 2025, including P2.56 million that had been outstanding for more than 10 years.

This was flagged by the Commission on Audit (COA) in its 2025 annual audit report on the city government.

According to COA, the failure to liquidate the cash advances despite the completion of their intended purposes was inconsistent with Section 89 of Presidential Decree No. 1445 and COA Circular No. 97-002.

Section 89 of PD 1445 requires cash advances to be reported and liquidated as soon as the purposes for which they were granted have been served.

COA Circular No. 97-002 also prescribes specific periods for liquidation, including five days for salary and wage advances, 20 days after the end of the year for petty and field operating expenses, and 30 days after returning to the permanent official station for local official travel.

The audit report said the city’s financial statements as of December 31, 2025, showed total unliquidated cash advances of P15,992,512.21.

Of the total amount, P15.65 million represented advances to officers and employees under the General Fund, P324,922.10 represented advances under the Special Education Fund, and P17,157.99 represented payroll advances under the General Fund.

COA’s aging analysis showed that P12.76 million of the outstanding advances were less than one year old, while P407,185.46 had remained unsettled for more than one year but up to five years.

Another P269,336.39 had been outstanding for more than five years but no more than 10 years.

The audit team also found P2,559,511.88 in cash advances that had remained unliquidated for more than 10 years.

COA said the non-liquidation of the advances delayed the timely accounting of transactions for the periods concerned.

It added that this potentially overstated the receivables account and understated the corresponding expense accounts as of the reporting period.

Given the long delays in liquidation, COA said the prescribed procedures for cash advances had not been properly observed.

Dormant accounts noted

The audit team further noted that two accountable officers with unliquidated balances had been confirmed dead by the Local Civil Registrar.

However, the audit team said it had not received any requests for the write-off of these dormant accounts.

Under COA Circular No. 2023-008, dormant 

unliquidated cash advances are amounts granted to disbursing officers, agency officers, or employees that have remained inactive for 10 years or more and whose settlement or collectability can no longer be ascertained.

The circular provides procedures for the proper disposition and derecognition of such dormant accounts.

COA said the matter had already been raised with the Mandaue City Government management during the previous year’s audit.

According to management, the city had been consistently sending demand letters and notices to active employees with unliquidated balances, including warnings that their salaries could be withheld if they failed to liquidate their cash advances.

Demand letters were also sent to former employees, but many were returned for reasons such as insufficient addresses.

COA reiterated its recommendation for the city to exert efforts to reach accountable officers with long-overdue cash advances and demand their immediate liquidation, particularly from those still connected with the city government.

The audit team also recommended that the city consider available legal remedies for substantial unliquidated cash advances.

In a written response dated March 23, 2026, the city accountant reported that the amount of unliquidated cash advances had been substantially reduced to P3,462,370.01 as of January 31, 2026.

During the exit conference, however, management said the recommendation to write off dormant accounts had not yet been considered, although the other recommendations had already been implemented. (CEBU NEWS)