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Thursday, July 20, 2006
COA to Capitol: Seek damages
By Jeanette P. Malinao Sun.Star Staff Reporter
More than P200 million worth of the Capitol’s pro-jects were completed beyond their contract schedule, and the Commission on Audit (COA) wants the Province to demand damages from contractors.
In the annual audit report that Sun.Star Cebu obtained yesterday, auditors cited the delay in the completion of several infrastructure projects, despite extensions granted to contractors.
Some projects worth P200.7 million were 95 to 99 percent complete as of December 2005, but COA said these should have been completed as far back as 2004, based on the approved contract time and extensions granted.
COA cited Republic Act 9184: “Where the contractor refuses or fails to satisfactorily complete the work within the specified contract time... the contractor shall pay the procuring entity for liquidated damages... until the work is completed...”
RA 9184 is the new law on government procurements.
The law further states that in case the delay is more than 10 percent of the specified contract time, “the procuring entity may rescind the contract, forfeit the contractor’s performance security and take over the prosecution of the project or award it to a qualified contractor through a negotiated contract.”
Late penalty
Government auditors listed P200,668,504 worth of projects that were 95 to 99 percent complete by yearend, but were supposed to have been finished in 2004.
Four projects with a total amount of P19.9 million are still considered “ongoing” long after their approved contract time has lapsed.
Two bridge projects worth a total of P12.1 million also remain unfinished, more than one year from target date of completion.
These are in San Fernando town.
The COA report cited a comment from the provincial engineer that the contractor for the two bridges had only collected partial payments.
As for the rest of the infrastructure projects cited, the Capitol also explained that these were “actually physically completed on time or within the contract duration.”
It was just that they had “deficiencies to be corrected,” so these were declared “substantially completed.”
Still, COA recommends that the provincial engineer “impose liquidated damages” against “erring contractors to protect the interest of the government.”
Honoraria
The auditors also cited the Capitol’s payment of P357,000 to members of the bids and awards committee (BAC), technical working groups and BAC secretariat out of current appropriations, instead of following the guidelines on where it must be charged.
The budget department order said the honoraria can only be taken from the sale of bidding documents, fees from contractors, fees charged for copies of minutes of bid openings and other BAC documents, protest fees, liquidation damages and proceeds from bid/performance security forfeiture.
However, the Capitol charged the honoraria to an allocation of P1.5 million in the annual budget.
The Capitol agreed to transfer the erroneous charges, but the COA also recommended that the provincial treasurer and accountant “require the immediate refund of the honoraria.”
On another matter, COA also said there was no Provincial Board (PB) resolution authorizing the release of P1,000 as an educational assistance fund to officials and employees, totaling P1.9 million.
COA said the budget department authorized the release of the benefit, but “subject to the passage of an appropriate resolution for the purpose.”
‘Overstated’
Provincial officials explained that the release was based on an augmentation ordinance the PB passed, which authorized the governor to augment items in the annual budget from savings in other items within the same expense class.
Auditors, in their rejoinder, said the chief executive can augment items that are already in the budget, but the educational assistance was not in the annual allocation.
Other observations include the need to reconcile reports and inventories, understating an account entry and overstating another.
For example, the ledger balance for “property, plant and equipment” was P478,308,454, while the corresponding inventory reports totaled P460,522,749 or a difference of P17.8 million.
The “property, plant and equipment” entry was overstated as some of the items under this, totaling P175,361,561, should have been classified as public infrastructure projects and listed under the “registry of public infrastructure.”
The accounting department also failed to prepare bank reconciliation statements, so the cash in bank-local currency account is unreliable. The books say it’s P116 million, while the bank balance lists only P111 million.
Misclassified expenditures make unreliable the income and expenses for the year, such as financial assistance to towns that were either classified as subsidies to local governments, or donations.
There were other misclassified entries such as various expenditures under the maintenance and operating expenses, making the account unreliable and inaccurate.
COA urged the concerned personnel to review properly the account charges, so that these will reflect the correct amounts involved.
For Bisaya stories from Cebu. Click here. (July 20, 2006 issue)
Write letter to the editor.Click here.
Join the Sun.Star message board.Click here.
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