The Commission on Audit (COA) has flagged the provincial government of Aurora over the "misuse" of its Rice Processing Complex (RPC) worth $2.3 million and the uncollected income from its supposed lease to a farmers' cooperative.
The RPC was constructed on a $2.3 million grant from the Korean government through the Korea International Cooperative Agency (KOICA), the COA said in its 2023 annual audit report (AAR) on the province.
COA said the RPC was constructed on a 3,789-square-meter lot at Barangay Reserva, Baler, Aurora in December 2007 with the primary purpose of creating jobs and increasing incomes of farmer-beneficiaries by reducing their post-production losses, enhancing the quality of their milled rice, and improving distribution.
But COA said its 2011 audit revealed that the operation of the RPC was not recognized in the books of the province. In fact, there were no financial transactions from RPC's operation from 2009 to 2011, it said. The Provincial Accounting Office (PAO) was then directed to recognize the RPC operations under special accounts and submit the related financial reports to the COA.
Upon compliance, COA said the total grant of $2.3 million for the establishment and operation of RPC was finally taken up in the books of the province in 2012. Now, there were "operational concerns" that popped up, it said.
The RPC's operations took a screeching halt in 2013 because of its overall unprofitable outlook, COA said. The provincial government tried to revive things in 2018 by operating the RPC through a Farmer's Organization (FO) by way of joint ventures of cooperative agreements.
As the biggest farmer's cooperative in the province, the Maria Aurora Development Cooperative (MADECO) was chosen to operate the RPC and they entered into a MOA on Dec. 11, 2018, COA said.
Sadly, state auditors noticed "gaps" pertaining to the implementation of the MOA. Part of the MOA stated that "a rental fee for the use of the facilities of the provincial government of Aurora shall be determined based on the profitability analysis laid out in the business plan," the auditors said.
They said that while the province intended to lease out the RPC, a review of financial records from January to December 2023 showed that the terms of the contract on rental fees were not enforced. The province was not able to collect any rental fees from MADECO since it started using the facilities, it said.
At the same time, the use of the RPC and status of operations were not monitored by the province, it also said. "Lack of concrete information on the result of operations of RPC deprived the province of inputs in deciding whether the continued non-collection of rental fees from MADECO is justified notwithstanding the absence of legislative sanction on the matter," it added.
"The non-observance of the provisions and guidelines set forth in the MOA constitutes a breach of the agreement that rendered questionable the operation of MADECO at the Aurora RPC. Further, the province's goal of re-establishing the Aurora RPC as an economic enterprise may be derailed as the supposed income from this contract was not realized," it also said.