Around P1.272 billion worth of transactions of the Land Transportation Office (LTO) with German firm Dermalog Identification System GMBH could be the subject of a notice of disallowance (ND) from the Commission on Audit (COA) if the transport agency fails to address the deficiencies unearthed.
The COA issued the warning in a notice of suspension (NS) addressed to LTO Chief, Assistant Secretary Vigor D. Mendoza II, dated last Nov. 29.
The audit body said the transactions amounting to P1,272,440.22.34 cover payments to Dermalog for the Road Transportation Information Technology (IT) Infrastructure Project – Component A, also known as the Land Transportation Management System (LTMS), from 2019 to 2022.
It said it had to suspend the audit due “to various deficiencies involving non-compliance with applicable laws, rules and regulations; non-conformance with the contract requirements; and incomplete submission and/or presentation of all the relevant supporting documents/evidences.’
“Please settle the above audit suspension through compliance with the requirements indicated which we will evaluate and refer to COA-ITAO for further review/evaluation,” the COA instructed the LTO.
It warned that "items suspended in audit which are not settled within ninety (90) days from receipt hereof shall become a disallowance….”
It identified Dermalog and 70 LTO officers as responsible for complying with the requirements.
The COA defines disallowance as "the disapproval in audit of a transaction, either in whole or in part”.
It said it already sent to the LTO a Feb. 6 audit observation memorandum (AOM) that contains “the observations noted by the COA-Information Technology Audit Office (ITAO) on their technical evaluation of the contract and inspection which are contained in 13 Technical Evaluation and Inspection Reports (TEIRs) dated March 13, 2023 to September 13, 2023.”
“The observations cited in the 13 TEIRs which were communicated to the Management through the aforesaid AOM pertain to various deficiencies involving non-compliance with applicable laws, rules and regulations; non-conformance with the contract requirements; and incomplete submission and/or presentation of all the relevant supporting documents/evidences,” it also said.
“The Audit Team has yet to receive the complete compliance and/or justifications from the Management on these noted observations/issues on the aforesaid AOM. On May 21, 2024 and Nov. 26, 2024, the Audit Team issued two (2) follow-up letters to the LTO but still no response has been given by the Management as of this date, hence, the issuance of this Notice of Suspension (NS),” it recounted.