The Commission on Audit (COA) has questioned the Davao City government’s assets amounting to more than P9.48 billion or 40 percent of its total assets recorded as of Dec. 31, 2020 as well as its millions of coronavirus disease (COVID-19) disbursements last year.
Based on the 2020 audit of the Davao City released on Wednesday, May 5, the Davao City’s Property, Plant, and Equipment (PPE) accounts amounting to more than P9.48 billion “cannot be ascertained as to its validity, correctness and existence.”
“Amidst the COVID-19 pandemic restrictions, there was no CY 2020 RPCPPE (Report on the Physical Count of Property, Plant and Equipment) neither prepared, nor a physical inventory-taking was conducted as required by established rules and regulations, thus the difficulty to apply alternative audit procedures in determining the fairness of presentation of such PPE accounts in the financial statements at year-end,” the report said.
In its “qualified opinion” on the city government’s financial statements dated Feb. 28, 2021, the COA noted that the P9.48-billion PPE accounts represent 40.10 percent of the city government’s P23,664,385,255.91 total assets, as of December last year.
State auditors reminded that the Government Accounting Manual (GAM) for Local Government Units (LGUs) Volume I provides that “the LGU shall have a periodic physical count of PPE, which should be done annually and reported on the Report on the Physical Count of Property, Plant, Equipment as of December 31 of each year.”
The COA said confirmation from the personnel assigned in the Inventory Division of the City General Services Office (CGSO) revealed that the physical inventory-taking of the property was not conducted as at year-end because entry and exit of personnel to and from different offices were regulated during the COVID-19 pandemic community quarantine. “As a result, the RPCPPE could not be prepared and submitted within the prescribed period,” the report read.
The COA also flagged the Davao City government for its “doubtful and unreliable” inventory account balances amounting to P97 million.
The state auditors said “there had been no actual count conducted nor an RPCI was submitted to validate such recorded balances, neither a reconciliation was made possible between the supply records and accounting records, both resulted from the unprecedented COVID-19 restrictions.”
They said such lapses “could lead to possible loss or wastage of government assets and created difficulty in determining the accuracy and reliability of the Inventory accounts with a reported cost amounting to P97 million.”
In the independent auditor’s report signed by Gloria A. Cañete, supervising auditor, the COA said it conducted the audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs).
“We are independent of the agency in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements,” the report said.
“We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion,” it added.
In the same report, the COA also flagged the Davao City government’s COVID-19 expenditures in 2020.
State auditors questioned a number of disbursements made by the city government last year for supposed lack of transparency, the purported violation of country’s procurement rules and alleged failure to follow the guidelines set by the Government Procurement Policy Board (GPPB).
These include the P33.44 million payment of hazard pay; P199.903 million for procurement of goods intended for constituents affected by the COVID-19 pandemic, such as groceries and rice; P48.505 million for the purchase of 38,804 sacks of rice from the National Food Authority (NFA); P24.086-million COVID-19-related procurement utilizing Bayanihan Grant for Cities and Municipalities (BGCM) funds; P8.526-million payments to crematorium and/or funeral service providers for COVID-19 related burial or cremation; and payment of funeral assistance amounting to P535,000 to 12 COVID-19 related deaths, among others.
The COA also took note that the procurement of various items amounting to P325.137 million during COVID-19 pandemic, through Negotiated Procurement under Emergency Cases modality, “were deficient of the required documents, and inconsistent with the laws, rules and regulations, thus affecting the legality and propriety of procedures in the procurement.”
Government auditors said procedural guidelines on the use of Davao City Peace and Order Council (DCPOC) Funds for COVID-19 related Programs, Projects, Services and Activities (PPSAs) “were not observed contrary to the DILG Memorandum Circular (MC) No. 2020-079, casting doubt on the CGD’s (City government of Davao) compliance with the interior and local government’s directives.”
“We recommended that the CGD Management direct the offices concerned to abide by the documentation provided in the DILG MC 2020-079 on the use of DCPOC funds for COVID-19 related PPSAs.”
The report also showed that goods procured totaling P309.93 million in response to the COVID-19 pandemic, “were directly negotiated with suppliers by representative/s from the City Mayor’s Office (CMO) without a written delegation of authority from the Head of Procuring Entity (HoPE) on such conduct of procurement activities thru Negotiated Procurement (Emergency Cases), contrary to Item Nos. 3 and 4 of the GPPB (Government Procurement Policy Board) Resolution No. 03-2020, dated 9 March 2020.”