COA requires Cabadbaran City to return to national treasury P20.7-M balance in Covid-19 support fund


The Commission on Audit (COA) has required the City of Cabadbaran in Agusan del Norte to return to the national treasury the P20.7 million balance out of the P55 million the city received from Local Government Support Fund for Covid-19 Financial Assistance (LGSF).

In its 2023 audit report, the COA flagged Cabadbaran City for still spending P12.4 million out of the P55 million fund beyond the fund's validity period.

The COA said the city's unobligated balance of P20,734,933.70 in the LGSF was still not reverted to the national treasury, therefore affecting the propriety and validity of the pertinent disbursements charged against the said fund beyond the fund's validity period.

It said that the city received its LGSF-Covid-19 Financial Assistance of P55 million on June 30, 2021 for the implementation of priority projects of the city. The budget was divided into five projects -- procurement of medical equipment, supplies, vitamins, and personal protective equipment (P30 million), procurement of relief goods (P10 million), procurement of response/transport vehicles (P10 million), establishment of temporary shelter (P4 million), and capacity development for health workers and frontliners (P1 million).

From that time the fund was received, the COA said the city disbursed a total of P2,801,445, which equated to a 5.09 utilization rate. It said state auditors discussed this low utilization rate with city officials through Audit Observation Memorandum (AOM) No. 2022-022 dated Feb. 18, 2022.

The audit team found that the city commenced 18 sub-programs and projects in 2021 with a contract cost of P21,828,455.50.  The team recommended that the city make a representation with the Department of Budget and Management (DBM) for an extension to utilize the unobligated amount, the COA said.

For its part, the Cabadbaran City  reasoned that it mistook the fund validity period, considering that all other fund transfers from the national government do not have an expiry period. City officials added that they already sent out a letter-request to the DBM last July 18, 2022 but have not received a response.

The COA issued another AOM and made the same recommendation for the city to request for an extension to utilize the unobligated amount otherwisde the amount should be returned to the national treasury. The city government made a follow-up letter with the DBM on March 23, 2023.

But the COA said the letter request "did not clearly specify the conditions on the timelines from which the fund was received and its validity period, which was basically six-month period of implementation, thereby affecting the full utilization of the fund."

On May 5, 2023, the DBM denied Cabadbaran City's request as it ordered that the remaining funds be reverted to the national treasury.

"From the foregoing, a total of P21,828,455.50 were obligated and/or disbursed as of Dec. 31, 2021 based on the payments made and results of review of the start date of the procurement process, while a total of P12,436,610.80 were still obligated and disbursed by the City despite lapse of the fund validity and adequate notices to them through audit observation memoranda," the COA said.

"It was also noted that the unutilized and unobligated funds amounting to P20,734,933.70 remained not reverted to the National Treasury as at year-end, as required," it added.

With the city using P12.436 million and charging it against the LGSF-Covid-19 Financial Assistance despite its expiry, the COA said that the deficiencies affected the propriety and validity of the disbursements.

The COA directed the directed the City Accountant and City Treasurer to return the remaining unobligated funds to the national treasury.