EXPLAINER: Lapu-Lapu City gets COA 'qualified opinion' on how the City managed its funds in 2021. Eye-poppers: 1. P218.4M purchases of furniture, office supplies, and groceries from one 'middleman'; 2. P69.8M disbursements with no or incomplete papers. Defects though may still be 'corrected, explained.'

·5 min read

KEY POINTS. [1] The “qualified opinion” tag in the 2021 audit says the Commission on Audit (COA) has initially found omissions and discrepancies that it wants Lapu-Lapu City Government to correct or explain.

[2] It’s part of a long audit process that involves claim and counterclaim between COA and local government unit (LGU). Still a long time before the public can see the dispute resolved or any erring official sanctioned.

On a P218 million-plus purchases of food and non-food items from a furniture store (“just a middleman”), the City has defended the supplier and disagreed with COA findings about the firm. The issue may still reach the solicitor general and/or the Ombudsman and Sandiganbayan..

NOT YET FINAL. The audit opinion released by COA this week relates to how Lapu-Lapu Cty officials managed its 2021 assets, comprising mainly of P3,000,615,692.27 total revenue, against P3,139,535,782.56 total expenses. Just like in 2020, the City in 2021 incurred a deficit but P7.82 million less.

The initial bad impression -- highlighted in the executive summary posted on Facebook by media specialist Max T. Limpag -- may change if the local government can provide COA with the required documents, correct defects and explain questioned transactions. For now, the assessment phrases range from ”seemingly” irregular to “of doubtful propriety, validity and legality.”

WHAT 'UNQUALIFIED' MEANS. Just as COA’s “unqualified opinion” on Cebu City’s 2020 financial statements wasn’t a clean bill of health and cause to fully celebrate yet, the COA “qualified opinion” on Lapu-Lapu City for 2021 is similarly inconclusive.

RELATED STORY: EXPLAINER: COA clarifies 'highest rating' it gave Cebu City, other agencies in 2021. Late but still useful. Audited units may brag provided they don’t change COA meaning, mislead the public.

In a June 22, 2022 clarification, COA said the audit opinion is only a facet of the agency’s review and (a) does not conclude compliance with laws and regulations and (b) does not show whether the audited LGU or was economical, efficient and effective in its operations.

SLOW PROCESS. COA’s initial comments on Lapu-Lapu City’s 2021 performance may yet end up well. It’s a process that allows corrections and explanations: from exit interviews to appeals from adverse findings before COA’s Audit Team, its director, and commission en banc, etc. If that fails, a disputed issue may be raised to solicitor general, on money claims, or the Ombudsman and Sandiganbayan, on criminal action.

It’s the publicity that public officials fear, especially when public comments disregard the nature of the findings and pounce on the likelihood of ignorance, negligence or fraud by the LGU managers. Some comments on Max Limpag’s post quickly leaped to conclusion of guilt.

THE EYE-POPPERS. What COA labeled as “significant observations” were undoubtedly eye-catchers, though not likely to put anyone at risk of falling off his seat. . The amounts are much smaller than in national government agencies but the report on Lapu-Lapu City is about home: the possible stink is closer and stronger.

Consider these two in the catalogue of alleged violations or lapses:

[1] P218.435 million-plus worth of equipment, furniture, office supplies, groceries and other materials, the City bought from a company called Heritage Muebles Mirabile Export Inc., which, COA says, “may not be qualified to transact business” with the City. COA alleges Heritage Muebles is “just a middleman,” a “blatant disregard of the law,” thus defeating the purpose of Republic Act #9164: to get prices most advantageous to the City.

An exchange of claims between the City and COA at the exit interview, however, show that the City disagrees with COA assessment of Heritage Muebles. In its reply to the preceding year’s (2020) audit, the City defended the firm on COA findings of “discrepancies” in the purchase of P47 million food and non-food items from the furniture store. On the basis of that report, seven city barangay captains sued Mayor Junard Chan for corruption last February.

COA recommends that the bids and awards committee members justify or explain, under threat of suspension and discontinuance, the choice of Heritage Muebles and why the city managers “followed” the BAC recommendation.

[2] A total of P69.812 million-plus in disbursements -- whose “propriety, validity and legality” are “doubtful” because of “incomplete supporting documents --

allegedly violated the law (Presidential Decree #1445).

COA recommends that the city managers (a) “immediately submit” the lacking required documents to avoid suspension or disallowance and (b) order all those who process the papers to see to it the requirements are met before payment is made.

JUST BEING SLOPPY? In these other cases cited by COA in its report, also big amounts are involved but, at first look, can be just the result of sloppy work:

[a] No physical inventory of roads in Lapu-Lapu, no road map, thus no report under the Road Network System and COA cannot determine the roads’ “existence, valuation and condition,” obviously to check out spending on the island’s roads, which in 2021 were valued by COA at P443.382 million.

[b] Understated, unrecorded or un-adjusted figures of the city’s cash in bank, involving P50.138 million-plus. And erroneous recording of collections, involving P26.261 million, and funds received, involving P3.570 million.

“Unreliable” recording may lead to ill-informed money decisions by the city mayor and City Council.

[c] 331 parcels of land, with total market value of P1.935 billion, still not covered by Torrens title, a violation of COA circular, “exposing (the lands) to third-party claims and land disputes.”

COA recommends “hasty titling” by providing for the fees and meeting other requirements of the law.

‘ABANGAN.’ COA’s executive summary highlighted the eyesores but didn’t leave out the “pogi points,” namely, Lapu-Lapu City’s completed projects and “awards and recognitions” for 2021.

Doubts and suspicions suggested by the audit opinion may turn out to be untrue, simple slips or innocent lapses. Watch out for the last word on the COA report, if you will.

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