Mendoza, former COA chief: Clean opinion is not proof of no irregularities
The Cebu City Hall. CDN Digital photo | Brian J. Ochoa
CEBU CITY, Philippines — A clean audit opinion is not proof that there are no irregularities in transactions of a local government unit (LGU).
This was the explanation of Heidi Mendoza, former Commission on Audit (COA) commissioner and officer-in-charge, in response to a public query on Facebook made by Cebuano mediaman, Max Limpag.
Limpag asked her opinion over the claims of the Cebu City government that the irregularities pointed out by the COA in the Annual Audit Report had been settled through explanation.
Mendoza said that an audit opinion was not a rating and would only signify that the financial statement was fairly presented in all material respects.
“Pag sinabing fairly present tumutukoy sya dun sa FS (financial statement). Tama ba yung accounting treatment? nasunod ba yung international standards? Sa madaling salita hindi masasalamin sa isang audit opinion ang katiwalian sa paggamit ng pondo ng bayan. Hindi komo may clean opinion ka ay walang katiwalian sa pagpapatakbo ng iyong ahensya,” she said in a Facebook post.
(When you say fairly present, this refers to the FS (financial statement). Was the accounting treatment right? Were the international standards followed? In short, an audit opinion does not show the irregularities in using the funds of the LGU. Having a clean opinion does not mean that there is no irregularities in running the agency.)
Mendoza further explained that before the issuance of an audit opinion, there would be other financial and compliance audit involved that would determine if the receivables were valid and existing and if the procurements followed the process of law.
There are also other audits that are being done including the Fraud Audit, which she said would determine if frauds and irregularities occurred.
“Pwede rin yung procurement audit na titingin naman kung nasunod ba yung procurement objectives at guidelines. Ang bawat uri ng audit ay may kanya kanyang objective. To obtain a clean opinion is not proof that there are no irregularities,” said Mendoza.
(It could also be the procurement audit which will check if the procurement objectives and guidelines were followed. The different kinds of audit have different kinds of objective. To obtain a clean opinion is not proof that there are no irregularities)
Mendoza said that an Unmodified Opinion would not mean that the irregularities stated in the COA Annual Report had been settled or that the state audit had accepted the explanation of the LGU.
Her statement came after the city government insisted that even with over 30 irregularities pointed out by COA in the Annual Audit Report, the Unmodified Opinion would prove a clean government.
In a press release by the Cebu City government, they said that “the unmodified opinion rendered by COA on Cebu City’s financial statements for 2020 was proof that the audit observations were, in fact, already satisfactorily remedied and answered by the city government.”
City Administrator Floro Casas Jr. said that the audit observations made by COA would serve to guide the city government in its future operations.
“We welcome those observations. These recommendations are good because these will also guide us in the future transactions of the City. We will surely implement those recommendations,” he said.
The city government said that COA’s issuance of an Audit Observation Memorandum (AOM) was an exercise of their constitutional power, authority, and duty to audit, examine and settle government funds and would not, in any way, prevent COA from still rendering a favorable audit opinion on the financial transactions of an agency.
Cebu City insists that the unmodified opinion rendered by COA shows that the city government has been able to significantly address the concerns.
However, Mendoza said that if COA had accepted the explanation, this would no longer be included or pointed out in the Annual Audit Report including all pertaining rejoinders or justifications.
If the audit findings remain in the Audit Report, it means that the COA has not accepted the explanation and will want the LGU to resolve it, essentially making the city government liable.
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