2020 Audit Report

Minganilla officials told: Justify COVID-19 expense to avoid disallowance

By: Doris C. Bongcac - Editor/CDN Digital | July 16,2021 - 08:36 AM

| File Photo

MANDAUE CITY, Cebu – Government auditors questioned the disbursement of over P200 million which the Municipality of Minglanilla in southern Cebu used for its COVID-19 response in 2020 because these were either given to non-qualified beneficiaries or lacked proper documentation.

Of the amount, P109 million was spent on medicines, medical supplies and relief goods, which town officials recorded as an outright expense resulting to a “misstatement of the account.”

Another P143.2 million was spent on the purchase of medicines and relief goods under the Bayanihan Act while P13.9 million was allocated for the purchase of meals and release of hazard pay to frontiers as well as the financial aid that was given to patients who tested positive for the coronavirus disease.

These transactions, auditors said, were not covered by proper documentation that would identify its recipients and justify the purpose of the disbursement in compliance with audit rules.

Town officials were directed to submit documents to support the disbursements made last year to avoid disallowance.

A concern was also raised on the town’s failure to submit “properly filled-up” contracts and purchase orders for  P107 million worth of projects that were awarded to at least 13 contractors and suppliers.

The projects included the improvement of barangay roads, drainage, barangay halls and multipurpose halls among others.

All of these observations were contained in the management letter which the Commission Audit (COA) sent to Minglanilla Mayor Elanito on May 31, 2020.

A copy of the report was received at the office of the mayor on June 3, 2021.

In its 2020 report, government auditors also mentioned of the town officials willingness to review the transactions and comply with the audit observation.

“Management informed that they will revisit the transaction and will comply with the recommendation,” reads a portion of the 64-page report signed by Supervising Auditor Maria Daisy Bercede.

Purchases

In its 2020 report, COA said the municipal government allocated P190.3 million for the purchase of medicines, medical supplies and relief goods that were recorded as outright expense which is contrary to government accounting rules.

The purchase included rice that were given to personnel of the Bureau of Jail Management and Penology (BJMP).

“Verification of the disbursement indicates that aside from the fact that these were recorded as outright expense, these were also not supported with distribution list of the recipients and/or usage,” a portion of the COA report reads.

The purchase, COA said, should have been recorded as inventory to ensure proper monitoring and to avoid wastage, damage and event loss.

Another disbursement amounting to P143.2 million for use in emergency procurements under the Bayanihan Act lacked the needed warranty clause that would have protected the municipal government “in case of legal disputes that may arise out of these transactions.”

The warranty clause would assure the purchaser that the products delivered are free of any defects while these also conforms with quality standards and the technical specifications of the contract.

The purchase included medical supplies, cleaning and disinfectant supplies, PPEs, that were made between March to December 2020.

“Management informed that they recorded it as outright expense considering that it would be immediately distributed and to simplify the recording of transaction and will just adjust it at year-end.  Management informed that they will conduct an inventory as to how much is left and submit a copy of such inventory,” the report said.

Hazard Pay

Government auditors also flagged the “irregular” disbursement of hazard pay worth  P8.9 million to barangay officials and employees even if they are not regular employees of the municipal government.

Its recipients include elected barangay officials, tanods, GAD focal persons, utility workers, street sweepers and even some daycare workers.

During their review, auditors also noted that only 12 of the 19 recipient barangays were able to submit supporting documents “related to the payment of hazard pay.”

Auditors only received documents to justify the release of P5.5 million leaving a “difference” of P3.4 million.

Department of Budget and Management (DBM) Circular No. 2020-1 allows the payment of hazard pay only for regular, casual or contractual employees and Job Order employees of the local governments concerned.

Barangays have their own allocations “which are also subject to their own budgetary limitation with regard to hazard pay.”

Meals

Auditors said the municipal government also disbursement P3.6 million for the meals and snacks of those who were brought to the town’s quarantine facility, its frontliners, policemen, traffic personnel and other government employees who rendered service during the pandemic.

Of the amount, P2.1 million was paid to two caterers who served packed meals in April and May 2020.

The municipal government also released reimbursement of P1.5 million for the purchase of “raw food” that were used for the preparation of the meals of patients and frontliners assigned at the town’s quarantine facility starting July 2020.

Auditors said that the meals given to government workers was “irregular, unnecessary and excessive considering that they are performing functions in line with their duty.”

They also noted the failure of the caterer to provide a breakdown of the total amount payable while the town’s Inspection and Acceptance Report did not match with the list of recipients.

In its reply, the municipal government reasoned that hazard pay was released to the recipient barangay officials and employees because they rendered service during the pandemic.

Still, town officials promised to “revisit” DBM Circular No. 2020-1 “in order to assessment such transaction.”

Audit Observations

Other observations that were included in COA’s 2020 report are as follows:

  • Failure to liquidate the P24.4 million Bayanihan Grant that was released to boost the municipal government’s COVID-19 response.
  • Disbursement of P6.6million in 2019 and P5.1 million in 2020 as assistance to individuals in crisis situation (AICS) lacked documentary support.
  • The P2 million that was released to fund preparations of the cancelled Kabanhawan Festival was not returned and no supporting documents were submitted to substantiate the disbursement.
  • Cash advance of P1.4 million that was released in the form of financial and medical assistance to COVID-19 patients lacked documentary support.
  • SAP funds amounting to P240, 000 were disbursed to 40 “ineligible” beneficiaries.
  • Delay in the completion of the town plaza rehabilitation project worth P24.9 million.
  • Unliquidated cash advances amounting to a total of P11.7 million

/bmjo

READ MORE: COA’s report a slap to Cebu City, says opposition

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TAGS: 2020 Audit Report, COA, COVID-19 expense, disallowance, Minglanilla

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