(Audit Report for 2023 Transactions) Cebu City told: Curb ‘unneeded expenses’

CEBU, Philippines — The Commission on Audit (COA) has reiterated its recommendations for the Cebu City government to tighten measures to curb “unnecessary expenditures and unproductive spending” and redirect appropriations to programs with more important objectives.

In their audit of City Hall’s 2023 transactions, state auditors particularly noted the city’s lack of “concrete” effort to recover P199.324 million it granted as 15-percent mobilization fund to contractors of drainage projects.

They noted that one contract that cost P1.3 million did not even progress beyond the design stage, thus depriving the city of the timely use of its “huge resources for some meaningful programs and projects.”

They advised that the mayor immediately demands from the contractor the return of the advance payment.

“We further recommended that the City Mayor direct the Contract Termination Review Committee (CTRC) to expedite the resolution of the contract to finally determine the amount legally recoverable by the City from the contractor with respect to the amount of advance payment of P10,950,000.00 for the Design Phase,” COA said in its report.

It also said that the City’s Local Finance Committee (LFC) projected City revenues in the last five years that were “consistently unrealistic, hence potentially compromising budget execution due to insufficient cash back-up to support the appropriated expenditures.”

In line with this, the state auditors recommended that the City through the LFC will exercise more caution in developing income estimates.

They reminded that estimates serve as basis for the City's budget formulation in any fiscal year the LFC should ensure that they do not differ significantly from the actual revenue.

COA’s report further cited that the City has been observed to be consistently over delayed in the processing of payments to suppliers ranging for an average of 53 to 637 days, which is based on 20 sampled transactions in 2023.

This, it said, was due to “lengthy processes and inadequately trained personnel” handling the initial evaluation.

In line with this, they recommended “multiple measures in conducting a thorough assessment of the existing process, and reducing or eliminating unnecessary steps or processes.”

“Ensure that each procurement officer-in-charge of the end-user department where the claims are first filed are thoroughly trained on the basic documentary,” state auditors said.

To prevent unnecessary revisions, COA also recommended to require the Bids and Awards Committee (BAC) and its secretariat to ensure the “appropriateness and correctness of the contents of each bidding document such as, the dates and document references.”

Furthermore, COA has also noted that several expenditures in 2023, which totals to more than P4.3 million, were considered “unnecessary and/or irregular.”

“We reiterated our recommendation that Management tighten their measures towards curbing/ cutting unproductive spending or unnecessary expenditures and instead maximize the use of the City's funds to some programs that support an important objective. Ensuring the proper use of public funds can avoid future disallowance in audit,” it said.

Further, COA reported audit disallowances and suspensions amounting to P633.74 million and P620.76 million that remained unsettled as of Dec. 31, 2023.

Under the Independent Auditor's Report on the Financial Statements, COA said it has rendered a qualified opinion on the fairness of presentation of the financial statements of the Cebu City Government, with noted exceptions.

It said that “Road Networks” account totaling to more than P2 million could not be relied upon due to non-segregation of the cost component of the road network and “non-computation of separate depreciation for each road components”, among others.

Aside from this, COA also noted that financial assistance granted to Local Government Units from 2009 to 2016 have an accumulated balance of P432.273 million that are unliquidated fund transfers, unresolved suspended liquidations, and with unidentified beginning balances and inconsistent balance confirmations.

COA has also questioned the non-recognition of the realized portion (P206.273 million) of the deferred revenue from the advance collection of real property taxes for fiscal years 2020 to 2023, resulting in the understatement of the City's reported revenue.

Additionally, COA likewise questioned fund transfers to different non-government organizations or people's organizations since 2009 for the implementation of programs and projects that have accumulated to P114.58 million.

“(D)ue to certain practices which are inconsistent with a particular COA Circular, it has affected the reliability of the reported balance,” she said. —/RHM (FREEMAN)