COA chides Palawan officials over P1.26-B loan, but maintaining a P2.08-B time deposit in bank » Manila Bulletin News

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  • COA chides Palawan officials over P1.26-B loan, but maintaining a P2.08-B time deposit in bank

COA chides Palawan officials over P1.26-B loan, but maintaining a P2.08-B time deposit in bank

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By Ben Rosario

The Commission on Audit (COA) has scolded Palawan provincial officials for availing for the province a P1.26-billion loan from various banks although it is maintaining a P2.08-billion time deposit account in another bank.

Commission on Audit (MANILA BULLETIN)

Commission on Audit (MANILA BULLETIN)

COA, in its 2018 annual report for Palawan, criticized officials for failing to observe “sound cash management” as auditors noted that the province has incurred interest expense of P68.26 million for its existing loan but earned only P18.56 from the time deposit account under the General Fund.

In the same audit report, COA also chided provincial officials for failing to collect some P154.5 million in rental payments for its heavy equipment leased to municipalities.

“Lease agreements for rental of heavy equipment of the PGP to various Palawan municipalities lacked technical aspects such as monthly lease payment and period of lease to determine the reasonableness of the contract amount rendering it defective and difficult to enforce resulting in uncollected operating lease receivables of P154,575,011.12, thus deprived the PGP of additional resources therefrom,” the audit report stated.

Auditors urged Governor Jose Alvarez to “promptly negotiate with the lessees” after amending the Memorandum of Agreement for the immediate settlement of their past due accounts.

Alvarez, an accomplished businessman, failed to impress auditors of his business acumen as a result of the availment of loans by the provincial government.

Audit examiners disclosed that the provincial government has incurred loans totaling P1,264,474,000 from the Philippine Veterans Banks, Landbank of the Philippines, and Municipal Development Fund Office. The amount was to be used to finance various programs of the province.

The total amount of loans availed in 2018 added to the existing loans of P2.54 million.

Auditors noted that the province still availed itself of the loans notwithstanding the fact that it has “substantial unutilized and available funds for its needs.”

“Despite, however, having sufficient financial resources in time deposits, the PGP unnecessarily resorted to credit financing for its various programs and project which seemingly does not conform to sound cash management,” said COA.

“With the loans availed of by the PGP, it will incur substantial amount of interest in the future after the release of loan proceeds for each loan drawdown as opposed to utilizing the available resources of the PGP,” the audit agency stated.

Loan interest payments will be sourced from the 20 percent Development Fund (DF) of the province which is authorized under the Department of Interior and Local Government and the Department of Budget and Management.

“This, however, could affect the future of priority programs, projects, and activities that will be determined by the Local Development Council based on the urgency of needs of GP’s constituents since the projects to be funded by DF will be limited only to the available funds after deducting the amortizations and interest allocated for the loans, thus, the utilization of fund for the projects covered for Social Development, Economic Development, and Environmental Management would certainly be sacrificed,” COA said.

In reaction, provincial officials argued that the time deposit is comprised mainly of funds allotted for various priority programs, projects, and activities and other claims that are still in process.

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