Sunday, June 29, 2008 Audit report provokes City's review
THE Mandaue City Council has passed a resolution requesting City Accountant Eliseo Ledesma and other department heads to review the recent Commission on Audit (COA) findings on the City Government’s 2007 finances and to submit a report.
The COA noted deficiencies, including the fact that supply records did not reconcile and showed a discrepancy amounting to over a billion pesos.
Drafted by Councilor Emil Rosal, committee on finance and appropriation chairman, Resolution 112/08 cited all 13 significant findings and recommendations of the COA.
“As (members of) a policy-making body,...it is but proper for us to know whatever deficiencies in our fiscal management in order to correct and improve the system,” stated the resolution.
Discrepancy
The COA also mentioned the overstatements and understatements of expenses and inventory accounts, respectively, in the purchase of medical and laboratory items worth millions of pesos.
The COA report revealed that the accounting and supply officers’ records on property, plant and equipment did not reconcile, reflecting a discrepancy of P1.033 billion.
Rosal said this can be corrected if accounting records are regularly reconciled with inventories.
For example, a million-peso equipment listed in accounting records may have been actually unserviceable and already considered “condemned” in inventory records.
Citing Section 114 Volume 1 of the New Government Accounting System (NGAS) manual, the COA said that the chief accountant and general services officers are required to maintain a perpetual inventory of records—comprising stock cards and property cards for supplies—and property, plant and equipment to account for their receipt and disposition.
The COA recommended for the accountant and property supply officer to reconcile the records regularly so that any difference could be immediately corrected.
Rosal believed that the discrepancies were due to improper documentation and poor fiscal management.
The COA findings also revealed that purchases of drugs and medical and laboratory supplies were not recorded as inventory, resulting in understatements of around P2.87 billion.
The correct NGAS procedure, said Rosal, is that purchases of drugs, medical, dental and laboratory supplies must be recorded as inventory.
Then, every time the same stocks are withdrawn for regular use, these must be recorded as expense.
But some accountable officers resorted to short cuts to avoid cumbersome recording, Rosal said, that they recorded purchases as expenses, resulting to inventory overstatement and expense understatement.
The COA gas also noted the non-reconciliation of balances in the real property tax and special education tax receivable accounts.
Discounts
City Treasurer’s Office records showed understatements in real property tax income and receivables by P34.747 million, and special education tax income and receivables by P24.328 million.
Rosal said that when one pays the annual real property tax before the April deadline, for example, he is entitled to a 10 percent discount. So instead of paying P100,000, he one only pays P90,000.
He said that both the gross and discounted amounts must be reflected in the records to show the whole picture.
If only either is recorded, understatements or overstatements happen, hence the discrepancies that COA noted.
In passing the resolution, the council also expressed its desire to know what action the City has taken to stop the practice of granting advance payments.
The COA cited the advance payment of P56.53 million to the city’s public market contractor. The City now needs to pay P1.5 million in interest because the amount was a bank loan.
Also among the COA’s findings is that the P122.162-million development fund appropriation that remains unused, depriving the intended beneficiaries of its benefits.
Rosal said all that the COA mentioned were standard accounting procedure violations, and the council wanted to know why the department heads erred. (OCP)
