Republic of the Philippines

COMMISSION ON AUDIT
Office of the State Auditor
Department of Public Works and Highways
Regional Office No. XI
R. Magsaysay Ave., Davao City
 (082)226-9337 /  (082)224-6799 (Tele/Fax)
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AUDIT OBSERVATION MEMORANDUM

AOM No. 19-003
January 22, 2019

ENGR. ALLAN S. BORROEO, CESO IV

OIC-Regional Director
Department of Public Works and Highways
Regional Office No. XI
R. Magsaysay Ave., Davao City

Attention: MS. MELINDA M. CABE

Chief, Finance Division

MS. ROWENA P. JAMITO

Chief, Maintenance Division

We have audited the “Inter-Agency Receivables- Due from LGUs” account under MVUC fund and
observed the following observations:

1. Cash advances on the Special Local Road Fund (SLRF) project implemented by the City
Government of Davao remain outstanding, despite of the completion of the intended project,
contrary to Sections 4.6, 4.7 and 4.9 of COA Circular No. 94-013, and the signed
Memorandum of Agreement (MOA), thus exposing the government funds to possible loss
misuse and/or misappropriation.

2. Sections 4.6 and 4.9 of COA Circular no. 94-013 provides that:

4.6 Within ten (10) days after the end of each month/end of the agreed period for the Project,
the IA shall submit the Report of Checks Issued (RCI) and the Report of Disbursement (RD)
to report the utilization of the funds. Only actual project expenses shall be reported. The
reports shall be approved by the Head of the IA.

4.7 The SA shall draw a Journal Voucher to take up the reports. The amount to take up the
liquidation per the RCI shall be net of the cash advances granted by the IA to its accountable
officers in accordance with Commission on Audit Circular No. 90-331 dated May 3, 1990.

4.9 The IA shall return to the SA any unused balance upon completion of the project.

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 3. Also, the Memorandum of Agreement (MOA) entered by DPWH- Regional Office XI and the said
LGU requires the full liquidation of the cash advance within one (1) month upon the final
inspection of the projects.

4. Our evaluation disclosed that as at December 31. 2018, the reported Inter-Agency Receivables-
Due from LGU account of the City Government of Davao has amounted to P3,170,333.00. This
represents unliquidated cash advances of the said LGU for the SLRF project, despite the
completion of the project. Details are shown below:

Project Name Project Actual Actual Date Unliquidated Days

Amount Start Completion Granted/ Amount Outstanding
Date Date Released
Safety P8,632,821.00 9/1/2017 1/31/2018 2/20/2017 P3,170,333.00 679 cal. days
Projects/
Traffic
Services
Maintenance
of Various
Streets within
Davao City

5. We also noted that the management only received the Report of Expenditures from the said LGU,
amounting to P5,462,488.00 last June 8, 2018, four (4) months after the reported completion of the
project on January 31,2018.

6. Report of joint inspection made by DPWH-Regional Office XI, DILG XI, and the City
Government of Davao last February 27,2018 shows some deficiencies on the implementation of
the project. Since then, the said LGU has not made any updates regarding the rectification of the
deficiencies despite follow-ups, thus resulting to the delay of full liquidation of the cash advance.

7. This could have been avoided if proper monitoring of the project during the implementing stage
was made.

8. Furthermore, if these has been liquidated the funds will not be left idle and have been returned to
the national treasury available for future use.

9. We recommend that Management:

a. Issue demand letters to the concern officials of the City Government of Davao for the
immediate rectification of the deficiencies noted in the project, immediate liquidation of
the cash advance, and to return any unused amount/balance of the funds, if any, for
completed/terminated projects/activities.

b. Refrain from considering requests for financial assistance from units with outstanding
accounts and for those who do not follow the requirements of the MOA and the said COA
regulation.

c. Strengthen the preventive and monitoring controls on the implementation of the SLRF
project to ensure timely submission of liquidation documents and ensure that funds
released for the implementation of the projects was duly accounted for.

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May we have your comments on the foregoing audit observations within ten (10) days from
receipt hereof.

ANNIE E. VALLES
State Auditor IV
Audit Team Leader

ALICIA D. SAN JUAN

State Auditor IV
OIC-Regional Supervising Auditor

Proof of Receipt of AOM:

Name Position Date Signature

ENGR. ALLAN S. OIC-Regional Director,
BORROMEO, CESO IV DPWH Regional Office
XI
MS. MELINDA M. CABE Chief, Finance Division

MS. ROWENA P.
JAMITO Chief, Maintenance
Division

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