By Rjay Zuriaga Castor
The Iloilo City Government Employees Multi-Purpose Cooperative (ICGEMPC) has had no income since 2020 and was “operating at a loss,” an external auditor revealed.
In a special general assembly convened by the cooperative’s Ad Hoc Committee on September 1, external auditor Korina Lazarraga pointed out that based on the audited financial statements from 2020 to 2022, ICGEMPC had no income since 2020 apart from grappling with incurred losses and operating at a financial deficit.
“In reality, there was no income. It was falsely presented that the cooperative was generating income, but in truth, the cooperative was actually operating at a loss. This was concealed from the members,” Lazarraga stressed.
Despite the losses, Lazarraga said the ICGEMPC still declared a patronage refund and interest to the members, which technically should not have been done.
This declaration, according to the external auditor, further increased the cooperative’s losses.
“Where will the patronage refund come from considering that there’s a loss? If this is an error, one error has been compounded by another. The initial loss has been increased by an additional loss caused by giving you a patronage refund and interest from share capital, which is not allowed,” Lazarraga explained.
From 2020 to 2022, the cooperative has exceeded its total income. The financial figures from the external audit revealed that the cooperative has a net surplus (deficit) of P1.31 million in 2020, P1.51 million in 2021, and P1.33 in 2022.
As of June 2023, Lazarraga said the cooperative already has a deficit of P220,220.
She noted that since ICGEMPC is operating in losses, it reduced the cooperative’s share capital. This, according to the external auditor, led to the manipulation of financial statements particularly the adjustments of the income and overstatement of the loans receivable.
Lazarraga further revealed that no accruals were noted and that the ICGEMPC used a cash basis accounting method to record its income and expenses.
The external auditor furthered that the cooperative is operating at a loss due to its unjustifiable expenses, particularly in its general assembly expenses amounting to more than 2 million.
In 2022, the cooperative spent P2.67 million for its general assembly, and P2.33 million as of June 2023.
“If the cooperative is aware that it has losses, why would you spend it on a general assembly?” she said.
Lazarraga shared that she talked with Alona Sta Rita, the external auditor of the 2022 financial statement, to discuss the identified discrepancies and inaccuracies.
“She told me that she signed the financial statement correctly. It seems to me that the auditor is trying to absolve herself,” she said.
Lazarraga revealed that the cooperative is still looking for 24 million pesos, with 5.4 million pesos stemming from overstatements or adjustments made to reflect income in both 2020 and 2022, and an additional 15 million pesos for an unaccounted balance.
But despite the cooperative’s losses and reduction in its share capital, the investment deposits from non-members have kept the cooperative afloat.
Meanwhile, findings from an investigation of the ad hoc committee showed that investments and loans were extended to non-members of the cooperative. Non-members have unreturned investments totaling between P18 and P19 million.
Lazarraga highlighted that the shared capital of the cooperative includes investment deposits from non-members, which kept the cooperative afloat. The investment deposits account to P9.83 million as of July 2023.
Though the ICGEMPC was functioning, the audit and credit committees of the cooperative went inactive and the BOD and officers were not entitled to honorarium when it incurred losses in the preceding year.
NEGATIVE FINANCIAL STATUS
Atty. Joseph Areño of the Ad Hoc Committee said there is a need for further investigation into the controversies in the ICGEMPC.
“These things deserve a thorough investigation. We cannot do it in just six weeks. We have to get deeper,” he said.
Areño described the financial status of ICGEMPC as “on the negative,” and the situation is further worsened by 399 members of the cooperative submitting their letter of withdrawal.
He noted that the ad hoc committee has submitted a letter to the Cooperative Development Authority requesting bank statements and returned cheques dating back to 2016, as the cooperative currently only possesses records from that year onwards.
Iloilo City Mayor Jerry P. Treñas, a cooperative member himself, asserted that every officer and member of the BOD should be made to account for the losses of the cooperative due to their illegal acts or omissions.
The mayor emphasized the need to thoroughly examine potential criminal and civil liabilities and to pursue legal actions against those found responsible.
“I do not condone any wrongdoing even from my appointees or friends,” the city mayor added.
