Explain P6.2B deficit, COA tells Cebu City

STATE auditors want the Cebu City Government to answer for the P6.2-billion deficit from its transactions and operations last year.

In an exit conference last week, the Commission on Audit (COA) found 554 deficiencies in City Hall’s transactions and operations in 2015.

It also found that although the City’s total trust liabilities and reserve at year end totaled P10.6 billion, there was only P4.4 billion available cash.

This would mean that the City had a cash shortfall amounting to P6.2 billion, which would adversely affect the delivery of basic services and development projects of the City.

The City is also at risk of facing legal suits from creditors due to unpaid obligations.

Acting Mayor Margarita Osmeña, in a news conference yesterday, said the City must come up with an answer for those issues that were not resolved during the conference.

She said one of the expenses the City has yet to resolve is the P30,000 bonus given to the 5,000 City Hall employees in December last year.

“It was supposed to be performance-based, how could everybody receive it? It’s like they’re all excellent because everybody got the same amount,” she said.

Osmeña said that when they met with the state auditors, former City Treasurer Diwa Cuevas did the answering.

She, however, pointed out that it was a matter of recording.

Sun.Star Cebu tried to call Cuevas, but got no response.

“But again, it’s the interpretation of the available documentation for audit. You should see it this way, basically, what did you collect last year?” Osmeña said.

She added that the state auditors are going to look into the documentation on whether last year’s transactions and operations were verifiable or not.

The City’s annual budget for 2015 showed that the P4.4 billion taken from the South Road Properties’ (SRP) proceeds was only going to be used for capital outlay.

Osmeña said the outgoing administration only considered what was collected from regular sources and the Internal Revenue Taxes, which amounted to around P4.3 billion.

Payables

Based on records, the City has outstanding payables to the Bureau of Internal Revenue, Government Service Insurance System, Pag-ibig, and Philhealth, totaling P84.4 million.

The City has also not returned its unused Priority Development Assistance Fund and Countrywide Development Fund amounting to P80 million as of December 2015 to the National Treasury.

The City’s unexpected balance for continuing and current capital outlay and local disaster risk reduction and management fund is now without cash backup as well.

The City has yet to implement its Material Recovery Facility Program, from the P55 million granted by the Department of Interior and Local Government as a recipient of the Seal Of Good Housekeeping in 2011.

It also has yet to release to the 80 barangays their share of real property tax collections amounting to P71.6 million.

Aside from requiring an explanation on the cash deficit, the state auditors, through a memorandum, recommended that the City Accountant, City Budget officer and City Treasurer “monitor cash utilization and refrain from using cash balances intended for trust funds and other trust liabilities and reserves to avoid penalties, surcharges and legal implications in cast the City would be unable to meet its obligations.”

Osmeña lamented that the records might not show the exact amount, but it reflected a cash deficit, which has resulted in the City’s lack of infrastructure projects.

“It’s bad. We now have to tighten our belts. Again, it’s a reflection of how the City was run,” she said.

She also questioned what would happen to the salaries, overhead expenses, and infrastructure projects of the City considering that it only collected P4.4 billion and the employees’ honoraria alone amounts to P3 billion.

“We have to put things again to their proper places. Just look in your personal lives, you can’t keep on making loans, it’s going to catch up with you,” she said.

Questions

Osmeña questioned the council’s decision last week to ratify the P800 million in cash aid to the barangays last year.

In a previous report, Councilor James Cuenco said the ratification was an effort to cure the notice of disallowance issued by COA.

Osmeña, however, pointed out that the disallowance was based on the appropriation being a lump sum allocation, therefore, any charge against it should have a council resolution.

“It can’t cure the defect. It has already been disallowed,” she said.

As for the scheduled special session for the budget hearing on Osmeña’s P6-billion second proposed and revised 2016 annual budget today at 2 p.m., she said she has no idea if it will be approved by the council or not.

“Hindi ba, they returned, we submit, then they say they’ll return, and after three days we’ll not return...so now they scheduled a special session for today, and then they postpone. So who knows?” she said.

“We already did our part, and it’s not a very complicated budget, it’s almost exactly the same,” she added.

The special session was supposed to happen yesterday, but Cuenco appealed for its postponement as they had yet to conduct a late-night meeting with Team Rama.

The department heads are also invited to today’s special session.

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