Toledo City investment with ACMDC questioned

CEBU, Philippines - The Commission on Audit has questioned the P10 million stock investment of Toledo City government with the Atlas Consolidated Mining and Development Corporation.

State auditors said the investment has deprived the constituents of the city of beneficial projects that could have been implemented using the money.

“This investment may have hindered the implementation of beneficial projects/programs/activities, thus depriving the constituents of the benefits that could derived therefrom,” COA said in its 2014 audit report.

The state audit agency said it is contrary to Section 22 of COA Circular No. 92-382 which states that “Idle funds in excess of  normal  operating requirements shall generally mean the level  of  funds which an entity can freely invest in government  securities  and/or  fixed  term  deposits after  considering  provisions  for  coverage  of regular and recurring operating expenses  like  salaries  and wages, repairs and maintenance, inventories  and  supplies,  debt servicing, etc., within the context of the  entity's cash operating cycle. Unremitted national collections and funds set aside for payment of obligations   to government corporations/cooperatives shall not form part of the idle funds of local government units.”

 COA said the LGU is a service-oriented entity whose primary purpose is to provide services for or implement programs that would redound to the benefit of its constituents.

 Such primary purpose should outweigh and take precedence over the prospect of generating revenue thru dividends from investment in stock.

 “In the final analysis, whatever income that may be derived will be translated into basic services or projects for the benefit of constituents, albeit at a later time. These amounts also indicate under-utilization of budget intended for projects/programs/activities and/or delayed delivery of services and implementation of projects/programs/activities,” it said.

COA recommended that the city government implement projects, programs and activities in order that the needed services of the constituents may not be delayed or sacrificed in favor of earning income in stock investment.

Further, COA recommended that the city government converts the investment with ACMDC to cash in accordance to Section 22 of the COA circular. —(FREEMAN)