CEBU CITY, Philippines — The Commission on Audit (COA) has asked the Cebu City government to remit the P43,156,394.00 funds withheld in 2019 due to the Bureau of Internal Revenue, Government Service Insurance System (GSIS), PAG-IBIG Fund, and PhilHealth.
In the recommendations of COA for Cebu City’s 2019 Annual Audit Report released to the public on July 9, 2020, the city has not remitted a total of P15,471,665.94 to the agencies as of January 2020, and still had a total of P27,684,728.06 unremitted amount for the previous years.
“Further analysis of the ledgers of the accounts obtained from the electronic New Government Accounting System (e-NGAS) also disclosed that out of the ₱43,156,394.00 unremitted balance, ₱15,471,665.94 or 36 percent pertains to taxes and contributions withheld in CY 2019 while the remaining ₱27,684,728.06 or 64 percent pertains to taxes and contributions withheld in prior years,” said COA.
The city owes BIR a total of P15,524,043.78, GSIS a total of P20,174,642.75, PAG-IBIG a total of P3,197,519.78, and PhilHealth a total of P4,260,187.69 as of January 2020.
COA warning
The COA warned that this might hamper the government’s immediate use of the funds for various programs and projects and would subject the withheld amount to penalties and surcharges for delayed remittances.
COA reminded the city that the BIR Revenue Regulations No. 2-98, as amended, requires the remittance of withheld taxes for expanded withholding and withholding on compensation on or before the 10th day of the month following the month the withholding was made, and value-added and another percentage on or before the 15th day of the month following the month the withholding was made, except for taxes withheld for December which shall be paid on or before January 20 of the succeeding year
Similarly, COA reminds the city that failure to remit to GSIS, PAG-IBIG, and PhilHealth would also incur corresponding penalties of simple interest of two percent per month delayed for GSIS, or a fine of P5,000 to P10,000 per employee for PhilHealth.
“The non-remittance of the withheld taxes, contributions and loan payments of employees deprived the national government of the use of such funds to finance its various projects. This practice may also result in the forfeiture of the employees’ claims or benefits provided by those aforementioned agencies.
“Also, non-compliance of management with the cited rules and regulations subjects the city to penalties, surcharges and sanctions, to the detriment of the city. In addition, this practice exposes City funds which were already withheld to risk of loss or misappropriation,” said the state’s audit.
Ongoing reconciliation
COA said that the city had repeatedly under-remitted to the national agencies for the four consecutive years from 2015 to 2018 and in 2013 before that.
The city said that the balances pertained to prior years and were the subject of an on-going reconciliation but due to lack of personnel, more time was requested.
“We reiterated our prior years’ recommendation that the Office of the City Accountant remit immediately the long outstanding balances and funds withheld to BIR, GSIS, PAG-IBIG and Philhealth to avoid paying penalties, surcharges and interests arising from delayed remittances. Also, transfer the ₱49,689,143.18 payment as abatement to the assessment of the taxable year 2010 from the Government Equity account to the Due to BIR account,” they said.
For the fifth time in a row, under the new administration of Mayor Edgardo Labella, the city once again said that there was an on-going reconciliation.
The city said in the conference with COA that the reconciliation of the beginning balances was on-going.
CDN Digital tried to reach the city’s finance officer, but queries remained unanswered. /dbs