THE Cebu City Government has yet to settle more than P913 million worth of transactions that have been either suspended or disallowed as of end-2019, according to the annual audit report by the Commission on Audit (COA).
The report, which was sent to Cebu City Mayor Edgardo Labella, also questioned 11 transactions in 2019.
According to state auditors, P67,656,992 in suspensions and P845,574,748 in disallowances remained unsettled as of Dec. 31, 2019.
Audit suspensions refer to transactions that are temporarily disallowed while disallowances are disbursements that are found to be illegal, irregular, unnecessary, excessive or extravagant.
The COA report did not identify the disbursements that were questioned or disallowed.
A suspension or disallowance shall be settled by the persons responsible or liable therefor through compliance with the requirements, or payment/restitution or by any of the modes of extinguishment of obligation provided by law.
The report said audit suspensions and disallowances amounted to P158.534 million and P845.19 million at the beginning of 2019.
During the year, notices of suspension amounting to P10.77 million were issued while P101.649 million transactions that were temporarily disallowed were settled, leaving a balance of P67.656 million by the end of the year.
Notices of disallowances were also issued for P665,062 transactions during the year while P280,792 was settled, thus, ending the year with P845.574 million in disallowances.
Meanwhile, the report listed the following deficiencies in 2019:
Twenty-one garbage trucks worth P147.7 million were not recorded in the books of accounts as of Dec. 31, 2019 despite the delivery within the year, thus understating the asset and its related accumulated depreciation and expense accounts.
Six properties with a net book value of P41.5 million were not derecognized in the accounting books although these have been demolished because the Department of General Services failed to submit the pertinent documents to the City Accountant.
Buildings worth P31.6 million that were transferred from the Department of Public Works and Highways Cebu City Engineering District were not yet recorded in the books of accounts resulting in the the understatement of the city’s property, plant and equipment (PPE).
Receipt and utilization of funds from the Philippine Amusement and Gaming Corp. were recorded as due to national government agencies (NGA) instead of government owned and controlled corporation (GOCC) thereby overstating the balance due to NGA by P218.07 million and understating what is due to GOCC.
Funds withheld amounting to P43.156 million have not been remitted to the Bureau of Internal Revenue, Government Service Insurance System, Pag-Ibig Fund and PhilHealth. Delayed remittance may result in penalties and surcharges.
Drugs and medicine supplies worth P846.6 million and medical, dental and laboratory supplies worth P47.3 million, which were purchased during the year, were directly issued to end-user and treated as outright expenses without setting up the inventory account contrary to rules, thus, understating the asset accounts while overstating the expense accounts.
The accuracy and correctness of fuel, oil and lubricants inventory amounting to P110 million as of Dec. 31, 2019 remained unreliable due to unreconciled difference in quantity of 1.784 million liters between the accounting and property records.
The City did not adjust the effects of changes in foreign exchange currency rates on its dollar savings deposit accounts, resulting in the understatement of loss and foreign exchange account by P12 million as of Dec. 31, 2019.
The due from LGUs (local government units) account was understated by P4 million because of the incorrect recording of the grant and financial assistance to Barangay Day-as and its subsequent return affecting the fair presentation of the financial statements.
Receivable amounting to P20.1 million to cover the deficiency of the value of land in Banawa and Lorega in Cebu City swapped by Felix Gochan and Sons Realty Corp. for the city’s Lahug property remained unrecorded in the books despite the final Supreme Court ruling on April 10, 2019, thus understating the city’s assets.
The city did not record interest income amounting to P1.131 million rolled over from the time deposits in Land Bank of the Philippines for the Bus Rapid Transit under trust fund books, thus understating the cash in bank-local currency, time deposits and the trust liability-interest income on time deposit accounts.
COA recommended the compliance of its recommendations in the settlement of the deficiencies.
Cebu City had a total of P8.249 billion in total income in 2019, P7.224 billion in expenses and P1.024 billion in net income.