COA takes officials of Maguindanao del Norte town to task over financial mess

GENERAL SANTOS, Philippines – The Commission on Audit (COA) has taken officials of Datu Odin Sinsuat town in Maguindanao del Norte to task for their failure to provide documents and adhere to government procedures in support of their financial statements.

In an audit report furnished to Datu Odin Sinsuat Mayor Lester Sinsuat and made public through the COA website, several issues were raised by the commission, which recommended immediate action by the town officials.

Datu Odin Sinsuat town’s mayor is the husband of Maguindanao Vice Governor Ainee Sinsuat, who, until this year, positioned their hometown to assume the role of the new provincial capital following the division of the larger Maguindanao province into two political territories in 2022. 

Ainee had assumed as Maguindanao governor only to find herself stepping aside and giving way to Bangsamoro region senior minister Abdulraof Macacua, who was appointed officer-in-charge/governor of the new province.

In a letter to the mayor, COA supervising auditor Basilio Rudyard Yap said that “the validity, propriety, and accuracy of the financial transactions could not be ascertained” due to the local government’s late submission of disbursement vouchers, official receipts, and supporting documents.

Auditors said the failure constituted a violation of Sections 100 and 122 of PD No. 1445, otherwise known as the Government Auditing Code.

Recording problem

One concern raised by COA was the town government’s cash-in-bank account stated in the financial statement, amounting to P15.79 million.

The auditors expressed doubt about the reliability of the statement due to the failure of the local government’s cashier or disbursing officer to update, compile, and record daily transactions in their official cashbooks.

The failure cast doubt on the statement’s accuracy and completeness, the auditors said.

They said the practice contradicts Paragraph 6 of COA Circular No. 97-002, dated February 10, 1997, which outlined the proper handling, custody, and disposition of cash books.

Based on the rules, cashbooks should be kept in the office of the accountable officer and stored in a safe or cabinet when not in use. Only the auditor or an authorized official designated by the agency head should remove the cashbook, issuing the necessary receipt.

During the examination of the accountable officer’s cash and accounts, auditors discovered that daily transactions were not promptly recorded in the cashbook, leading to discrepancies such as understated cash in the bank, overstated expenses, and understated government equity.

The auditors recommended that Mayor Sinsuat instruct the cashier or disbursing officer to update, compile, and record daily transactions in their official cash books as required by COA.

No detailed inventory

Another matter flagged by COA was the absence of an inventory report from the local government, covering all the properties and equipment listed in the town’s financial statement, amounting to over P464.65 million.

State auditors expressed doubt about the accuracy of the amount since no detailed inventory report was provided to verify it.

The financial statement merely presented a summary of the following properties and equipment:

• Infrastructure assets: P36.95 million
• Buildings and other structures: P67.4 million
• Machinery and equipment: P6.9 million
• Transportation equipment: P89 million
• Furniture, fixtures, and books: P3.89 million
• Leased assets improvements: P2.63 million
• Other property, plant, and equipment: P1.26 million
• Construction in progress: P256.57 million

The COA said the absence of a detailed inventory report raised doubts about the accuracy of the financial statement.

State auditors also said the town government failed again to implement a uniform property identification number system for its assets and equipment, which would assign a unique property number to each item.

Despite continuous verbal communication and attempts to reach the municipal accountant through phone and Messenger, no reports have been submitted to date, the auditors said.

They said that without a detailed report containing a physical count, they cannot determine whether the properties and equipment were acquired through purchase, donation, or constructed by administration.

The auditors reminded town officials that the non-submission of the report violated auditing rules and regulations, particularly Section 6.3 of COA Circular 2020-006 dated January 31, 2020, and Section 124, Chapter 7 of the Manuals on the National Government Agencies for local governments, which requires the report to be submitted by January 31 each year.

During the audit, auditors also discovered assets and equipment that were unserviceable, obsolete, and no longer needed but were still recorded in the town government’s books of accounts, resulting in an overstatement of reported values.

The COA recommended that the local government establish an inventory committee composed of an adequate number of members to conduct a physical inventory within three months or less.

They said the committee should include representatives from the accounting and property divisions or units and should account for all equipment, assets, and properties, regardless of their acquisition method or location.

Mayor Sinsuat and municipal accountant Zushmita Ala, in their signed statement, said the financial statements were prepared following generally accepted accounting principles and reflected amounts based on informed judgment and best estimates, taking into account materiality.

The officials asserted that the town government has established an accounting and reporting system that ensures proper authorization and recording of transactions, safeguards assets against unauthorized use or disposal, and recognizes liabilities. – Rappler.com