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Thursday, September 29, 2005
Lanao, Misamis Occidental governments lag in finance reports
By Danilo V. Adorador III
NOT only that Lanao del Norte Provincial Government failed to update its bank reconciliation statements last year, the Commission on Audit (COA) 2004 report also showed that the auditing agency was unable to conduct a physical account of all its properties amounting to over a billion peso because of inadequacies in accounting reports.
The COA Local Government Sector-Mindanao report released on May 15 this year revealed that an aggregate amount of P1,202,382,676.55 in local property, plant and equipment of the provincial government unit had not undergone properly inventory.
"Failure of the agency to conduct a physical inventory of each property item, casts doubts on the existence, validity and accuracy of the recorded account balance of P1,202,382,676.55 for Property, Plant and Equipment (PPE)," the COA report said.
The audit agency recommended that the Lanao del Norte provincial management "conduct physical inventory of supplies and of property, plant and equipment, in order to ascertain the validity, existence and accuracy of the recorded supplies and fixed assets accounts."
On the other hand, one of the most flagrant violations observed by the auditing team was the failure of the former Provincial Treasurer to turn over the undeposited balance of P220,776.83 "which remain in her possession despite of her separation from the government service."
This resulted in non-reconciliation in the accounting records and the cashbook balances, thus, "casting doubts on the validity and existence of the declared balances."
COA demanded the return of the money, "otherwise, file appropriate charges against her."
The second discrepancy involved an amount of P131,025,664.77 between accounting records and cashbook balances upon "verification of Cash in Bank balances as of December 31, 2004.
"Further verification showed that there was no reconciliation made by the Accounting and the Treasury Division, thus any discrepancy of accounts could not be immediately known and corrected," the COA report said.
Actual cash
It added: "In effect, the cash accounts carried in the books are unreliable and doubtful as these do not reflect the actual cash position of the agency as of year end."
The Provincial Administrator and the Accountant's reason for these discrepancies? "Due to lack of personnel and non-availability of supporting documents, this problem was not attended to."
As a consequence, COA advised the Accountant/Provincial Treasurer to "reconcile and update their books and/or accounts balances" and instructed the Provincial Accountant to "reflect only the actual cash in bank accounts and to present the true and correct cash position of the Provincial Government."
On other violations, the audit team cited the failure of the Lanao del Norte provincial government's "failure to pay promptly loan amortization which resulted to incurrence of additional expense of P47,793.79 representing interest expense."
COA commented that this practice is "contrary to sound management."
The audit agency also noted that "the management's accounting reports and records are incomplete and inadequate, thus validity and accuracy of most accounts in the financial statements could not be ascertained and determined."
It then pointed out that the "inadequacy of the management's reports and records," the auditing team were not able to apply other auditing procedures "to satisfy ourselves on the validity and accuracy of the affected accounts..."
Absence
Two other provincial governments within Northern Mindanao were cited in the COA 2005 report as having deficiencies and have committed accounting violations set forth by the state auditing body.
Bukidnon province violated Section 375 of the Local Government Code of 1991 when it failed to submit a physical inventory report of property, plant and equipment in the total amount of P1,382,055,434.71.
COA said the absence of subsidiary records did not permit the audit team to apply alternative audit procedures "to satisfy ourselves as to the validity and accuracy of the account balance.
Bukidnon provincial government also violated COA Circular Nos. 86-253 and 90-343 when its General Journal for CY 2004 together with the supporting documents were not submitted because the same were not yet completed.
Transactions recorded in the GJ included proceeds and payment of loans, liquidation of cash advances, adjustment of supplies and many others, which involved big amounts affecting cash accounts.
COA also found that "the subsidiary ledgers for cash in bank do not tally with the general ledger, because posting of entries were not reconciled, in violation of Section 10, NGAS Volume II, thus it affected the balances of the accounts."
The province still has P1,117,456.14 unliquidated cash advances.
Misamis Occidental, meanwhile, has cash advances for travel worth P4,421,316.44 that remained unliquidated and were treated as Accounts Payable at the end of the year in violation of COA Circular No. 2002-003 dated June 20, 2002.
COA also noted that seventy eight percent (78%) of the total expenses in the Special Education Fund of the provincial government were disbursed as donations "instead of the Province taking charge directly of the expenses incurred."
As a result, COA said the propriety of the expense account was not truly reflected.
COA also found out that "Plant, Property and Equipment account was erroneously reduced by P1,171,054.71 due to erroneous conversion of accounts, thus the asset and government equity accounts are understated by same amount."
(September 29, 2005 issue)
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