COA FINDINGS: Capitol released P12.15M to 13 unaccredited coops

By: Gerome Dalipe

THE Iloilo Provincial Government released financial assistance to 13 cooperatives amounting to P12.15 million purportedly for their members’ livelihood or development projects last year.

But instead of uplifting their members’ economic status, these cooperatives used the funds to augment their micro-financing capital, which is contrary to existing laws.

Worst, the Provincial Government released the funds to the cooperatives despite the fact that they lacked the accreditation from the Provincial Board, the Commission on Audit (COA) discovered.

Using Capitol’s financial aid to increase the cooperatives’ micro-financing capital is contrary to Section 67 of the General Provisions of the 2018 General Appropriations Act and Section 35 of the Local Government Code.

Instead of uplifting the members’ economic status, the cooperatives even added to their financial burdens.

During the exit conference, the Provincial Cooperative Development Office (PCDO) confirmed the cooperatives lacked accreditations from the Provincial Government.

The PCDO said they were not aware of such requirement and that the accreditation was not among the documentary requirements prior to the release of financial aid to cooperatives.

Nonetheless, they agreed that the requirements for accreditation including the minimum conditions enumerated in the General Appropriations Act will be included in the updated guidelines for the release of the fund.

Pursuant to the provisions of the General Appropriations Act, a government agency may transfer public funds to a “civil society organization.”

But the cooperatives should comply with the conditions. These include implementing a government program or project jointly with the government agency and accredited by the concerned state agency, among others.

Likewise, Sec. 35 of the Local Government Code provides that the state agency may grant financial assistance to non-government organization or cooperatives.

But these cooperatives should engage in the delivery of certain basic services, capability-building and livelihood projects.

The group should also develop local enterprises designed to improve productivity and income, diversify agriculture, spur rural industrialization, promote ecological balance and enhance the economic and social well-being of the people.



In 2018, the Iloilo Capitol released P12.15 million to 13 cooperatives. This fund was intended to finance viable and economically feasible income-generating activities.

The projects included for funding were medium, small and micro-enterprises (SME) of the cooperatives/association supportive of the thrust towards countryside development.

But the state auditors discovered the cooperatives were not accredited by the Provincial Government.

These cooperatives were Dingle Multi-Purpose Cooperative, San Enrique (Iloilo MPC), Tu-og Multi-Purpose Cooperative, Swine Production, Sta. Barbara Multi-Purpose Cooperative, Maasin Kawayan, Dingle Agricultural and Technical College Teachers and Employees Multi-Purpose Cooperative     , District of San Enrique Public School Teachers and Non-Teachers MPC, San Julian Multi-Purpose Cooperative, Pepsi-Cola Employees Multi-Purpose Cooperative (PEMCO), Badiangan Officials and Employee MPC (BOE MPC), Kapihan of Estancia Port Credit Cooperative, PRO 6 Development Cooperative, and Pototan Teachers and Employees Multi-Purpose Cooperative.

Pursuant to the contracts signed by the cooperatives’ representative and the governor, the fund shall be “solely used by the cooperative to finance or fund their livelihood project.”

But the fund released to nine cooperatives was intended to augment their working capital for micro-financing and not for livelihood activities, the auditors said.

“Although there was some that generically states that the fund will be loaned to their members to finance livelihood activities, there was no link established that indeed it was used for the intended purpose,” read the COA report.

The cooperatives’ projected income statements showed that the significant amount of their income was exclusively sourced from interest income.

A quarterly monitoring report of the cooperative operations revealed that the loaned amount was used as salary, special loan, honoraria, regular or ATM loan.

The loan extended to various cooperatives was meant to give their members income-generating opportunities that will help improve their economic sufficiency.

However, the auditors said that these income-generating opportunities appeared to stop at the level of the cooperative and have not reached their members.

“Hence, it was only the cooperatives that were directly generating income out of government funds,” the auditors said.

So, who should be blamed for this mess?

The Provincial Cooperative Development Office (PCDO), the implementing office, should be prudent in evaluating the purpose of the loan applied by prospective beneficiaries, the auditors said.

“Livelihood projects to be implemented by cooperatives or its members should be clearly specified with corresponding financial requirements in the project proposal,” the auditors said.

And the PCDO should ensure that all releases were utilized for livelihood projects by requiring periodic submission of the financial status and result of their operations.

In the report, the auditors asked the governor to direct the Provincial Cooperative Development Office to coordinate with the Internal Audit Services Office and Provincial Planning and Development Office to formulate guidelines and conditions for release of such fund.

The PCDO is also tasked to ensure that the loan extended to any cooperative is intended only for their livelihood projects of their members.