The Commission on Audit has pointed out several lapses in the spending of P61 million by the city government of Baguio, which is part of its more than P158M Covid-19 funds.
In a report published in the COA website, state auditors said the city’s disbursement of P61M from its P158,171,839.65 budget for Covid-19 interventions through cash advances without detailing the purpose, without proper documentation, without ensuring that previous cash advances were settled, and transferring the cash advances from one accountable officer to another is a circumvention of COA rules on cash advances.
The city’s P158M Covid-19 funds came from the Bayanihan Grant to Cities and Municipalities (BGCM), the city’s Quick Response Fund (QRF), supplemental budget for Covid-19 operational expenses, Disaster Risk Reduction and Management trust fund, and donations for Covid-19 trust fund.
The P61M city spending in question was allotted from the BGCM, QRF, and supplemental budget.
Aside from the absence of documents to substantiate the cash advances, the COA has censured the city for immediately transferring the cash advances, which was originally received by two disbursing officers at the City Treasurer’s Office (CTO), to other accountable officers at the General Services Office.
The cash advances received by the two CTO disbursing officers amounted to P24M and P37M. The COA said the GSO officers whom the cash advances were transferred to are “not appropriately bonded as disbursing officers” and the transfer of cash was evidenced only by an acknowledgement receipt.
“Their bonds are approved only as property accountability; thus, they should not be made to handle cash of such nature and magnitude,” the COA said.
State auditors added the P24M and P37M granted to the CTO disbursing officers “exposed the city government to the risk of unrecoverable loss of funds in the event of unrelieved losses in the accounts of the disbursing officers considering that their bonds covered only a maximum cash accountability of P1M.”
“It was prejudicial to burden the CTO disbursing officers with enormous amounts of accountability for monies that were not physically in their safekeeping, but were actually under the custody and discretion of other accountable officers,” the COA added.
The COA report added that during their exit conference, the city government explained that due to the extraordinary circumstances brought about by the pandemic, certain accounting and auditing rules and regulations were not strictly complied with.
The city reportedly assured that “the procedural lapses were merely facilitative measures because time was extremely of the essence and that the same were not in any way resorted to perpetuate fraud (See related story on page 2).”
In the same observation on the P61M fund spending, the COA told off the city government for purchasing P51.1M worth of goods and medical supplies through cash, and not through checks, an act that was contrary to a COA circular that provides that cash should be handled under the principles of the imprest system where all payments must be made by check.
Although the COA acknowledged that payments in cash is allowed in instances when it is impossible or impractical to pay in checks, it likewise said there was no way it was impossible for the city to pay in checks for the goods and medical supplies it purchased, considering that the amounts paid to the suppliers were enormous.
“Considering the huge amounts paid to the suppliers, where one payment transaction amounted to P4.5M, it cannot be said that the mode of paying through check in this instance is more difficult, impractical, or impossible than paying through cash; more so in the face of the pandemic where paying through cash requires face-to-face encounter with the supplier and the recipient needs to make an accounting in the presence of the payor before issuing an official receipt of sales invoice,” the COA said.
The COA also directed the city to require the suppliers that simply issued “collection receipts” to submit official receipts or sale invoices as an acknowledgement of the payment for the goods/medical supplies by the city government.
State auditors also required the city government to submit a list of cash and in-kind donations received and how these were spent or distributed, following the COA format.
The Covid-19 fund use is only among the observations contained in the report of the COA’s audit on Baguio’s books for 2020. – Jane B. Cadalig