By Joseph Bernard A. Marzan
The Commission on Audit (COA) flagged the Iloilo Provincial Government (IPG) in its 2023 Annual Audit Report (AAR), publicized on Monday, Dec. 2, for issues related to underutilization of development funds, unliquidated fund transfers, and incomplete projects funded by a special allocation from the national government.
The COA gave the IPG a qualified opinion. According to the commission in 2022, this opinion level indicates material misstatements or insufficient and appropriate audit evidence, but it is not deemed pervasive to the overall financial statements.
The audit report revealed that PHP 939.41 million in continuing appropriations of the development fund (DF) were not optimally utilized due to partial and non-implementation of Programs, Projects, and Activities (PPAs).
The DF refers to the portion of local government units’ budget for development projects, taken from 20 percent of their National Tax Allotment, as mandated by Section 287 of Republic Act No. 7160 (Local Government Act of 1991).
The Department of Budget and Management defines continuing appropriations as those “available to support obligations for a specified purpose or project, such as multi-year construction projects which require the incurrence of obligations even beyond the budget year.”
These appropriations indicated in the report refer to DF allocations stretching back to calendar years (CY) 2014 to 2022 and are distinct from the PHP 728.606 million allocated for CY 2023 alone.
As of 2023, only PHP 476.53 million or 50.7 percent of the continuing DF appropriations were utilized for 77 out of 149 PPAs to which they were dedicated.
The commission noted that this was inconsistent with Item No. 4.0 of Department of Budget and Management-Department of Finance-Department of the Interior and Local Government (DBM-DOF-DILG) Joint Memorandum Circular (JMC) No. 1, series of 2020.
The JMC item provides that the responsibility and accountability for how the DF is utilized rests with the local chief executive, in this case Iloilo Governor Arthur Defensor Jr., and other concerned local officials.
In contrast, the 2023 DF appropriation was maximized, with 54 out of 59 PPAs having fund utilization or obligations worth PHP 604.69 million or 83 percent of the total allocation.
Observations for the latest DF appropriations stated that only two out of 19 road projects were not implemented due to procurement hurdles, and 188 fund transfers out of 242 that were obligated were already disbursed.
However, on the fund transfers, the commission also observed that as of Dec. 31, 2023, only PHP 6.79 million had been liquidated, and the implementation status of the unliquidated transfers was unknown by that date.
They said that this ran in contrast to the provisions in the memorandums of agreement signed by the IPG with the implementing agencies, which required either implementation or liquidation of the funds within six months upon receipt.
COA recommended that the IPG direct implementing offices to maximize the utilization of the continuing appropriations.
“With the partial/non-utilization of funds and partial and non-implementation of the PPAs, the desired socio-economic targets and outcomes were not fully realized, and the benefits from the completed projects were not fully enjoyed by the constituents. Nevertheless, we recognize the efforts of the management in increasing the utilization of the 20% DF, especially the current year’s appropriation,” COA stated in its audit observation.
UNCOMPLETED NTF-ELCAC PROJECTS
The COA also flagged 68 projects worth PHP 130.418 million that were not yet completed. Of these, 42 projects, valued at PHP 97.884 million, were still not funded as of Dec. 31, 2023.
These were funded from the Local Government Support Fund-Support to Barangay Development Program (LGSF-SBDP) of the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC).
The LGSF-SBDP is a funding program by the national government aimed at furthering development in barangays said to be affected by conflicts between state forces and the Communist Party of the Philippines (CPP) and its wings, the New People’s Army (NPA) and National Democratic Front (NDF).
In Iloilo province, the incomplete projects under this program include 33 projects in Tubungan, 18 in Leon, 10 in Igbaras, and seven in Miagao.
These involve rural water and sanitation, agricultural livelihood, electrification, schools, and health and evacuation center projects.
The COA noted that the IPG had not issued a letter of commitment to complete the LGSF-SBDP projects, which was inconsistent with Item 5.2.1.b of Department of the Interior and Local Government (DILG) Memorandum Circular (MC) No. 2023-063.
The item requires local governments “to commit to completing the remaining works using their funds and to issue a letter of commitment for those projects that are ongoing but not yet completed.”
They remarked that some of the projects have already been facing ruin despite their incomplete status.
Some observations include a lack of water distribution lines to some households, idle facilities due to unprocured sewing machines and unfinished rice mill constructions, non-functional or damaged solar streetlights, and non-operational or partly operational centers.
“The non-completion of the projects hindered the full attainment of the objectives of the program and the enjoyment of the expected benefits. This also exposed the non-operating projects and materials to deterioration due to exposure to the elements and will entail additional costs of completion due to increasing prices,” the report said.
The COA recommended compliance with DILG MC No. 2023-063 and hastening completion of the projects.
UNLIQUIDATED FUND TRANSFERS
Another snag flagged by COA was PHP 979.14 million of fund transfers to other LGUs in prior years that were not fully liquidated. This included PHP 243.97 million from the Special Education Fund (SEF), PHP 675.61 million from the General Fund (GF), and PHP 59.66 million from the Trust Fund (TF).
PPAs allocated from the GF include those intended to address concerns on COVID-19, solid waste management, disaster risk reduction and management, and others that were not specified.
COVID-19 fund transfers made in 2020 and 2021 had a six-month implementation period, but PHP 52.417 million remained unliquidated.
The COA said these were due to the volume of accounts requiring monitoring and analysis and were inconsistent with Item 6.1 of COA Circular No. 2016-005.
The item provides government entities to “conduct regular monitoring and analysis of receivable accounts to ensure that these are collected when they become due and demandable and that cash advances and transfers are liquidated within the prescribed period depending upon their nature and purpose.”
“The non-liquidation of the remaining balances hinders the ascertainment of the status of the implementation of the PPAs,” they said in the report.
They recommended that the IPG direct concerned offices and personnel to monitor and analyze all fund transfers and issue reminders or demand letters, especially for those that have been long outstanding, to reduce unliquidated balances.
This report was made with the aid of the COA Beat Assistant, an artificial intelligence chatbot developed by Filipino journalist Jaemark Tordecilla through custom GPT that breaks down COA annual audit reports.
The actual 2023 AAR was double-checked against the summaries provided by the AI program to verify accuracy.
This report was made with the aid of the COA Beat Assistant, an artificial intelligence chatbot developed by Filipino journalist Jaemark Tordecilla through custom GPT that breaks down COA annual audit reports.
The actual 2023 AAR was double-checked against the summaries provided by the said AI program to verify their accuracy.
