‘Mandaue’s P1.4 billion time deposit has no SP consent’

CEBU, Philippines — The Mandaue City government has maintained P1.4 billion in time deposit without prior authority from the Sangguniang Panlungsod (SP), according to the Commission on Audit’s 2018 Annual Audit Report.

COA said the council authority is required before the city government can deposit idle funds from the General Fund.

The requirement is provided for under Section 21 of COA Circular No. 92-382 dated July 3, 1992, while Section 22 of the same Circular also clarifies when funds can be considered as idle.

COA said there was also no proof that the fund was indeed idle.

The cashier-in-charge in safe keeping of the savings or time deposits told the audit team that “there is no record on file of an ordinance that was passed by the Sangguniang Panlungsod that authorized the city mayor and the city treasurer to place funds under time deposit with authorized depository banks.”

The only document that the city presented was a letter by the city treasurer and the city mayor to the bank manager to place certain amount for time deposit.

Though COA did not disclose which bank and when the funds sourced from General Fund, 20 percent development fund (DF), market, slaughterhouse, trust fund, national assistance to local government units, and special education fund (SEF) were deposited.

“We noted that there were no details of the sources of funds prior to the investment, thus, it could not be established whether the funds involved were essentially idle of for regular and recurring operating expenses within the context of entity’s cash operating cycle or unremitted national collections or set aside for payments of obligations of the city,” COA said.

With regard to the time deposit from the 20 percent DF and the Trust Fund Account, COA said these are funds set aside for payment of obligations and earmarked for a specific project or purpose and therefore should not form part of the idle funds of the city government.

The time deposit placed in the SEF was not also covered by a resolution from the Local School Board for the placement or termination for the investment in time deposit.

“Time deposits are time bounded. Although pre-termination may be allowed by the bank if so provided, nevertheless, this may involve observing bank policies requiring longer periods of processing and may entail pre-termination fees,” COA report said.

The city government reportedly was not aware of the SP requirement.

It said the SP resolution was not among the requirements of the depository banks.

The city treasurer said the time deposit was only for a six-month period.

But the treasurer said the city will comply with COA requirements.

COA asked the city mayor to instruct the city treasurer to secure authority from the SP to support the investment of all-time deposits without authority.

It also recommended the submission of the specific sources of the funds used for the total investments in time deposits to establish whether these were essentially idle funds in accordance with Section 21 and 22 of COA Circular No. 92-382. — KBQ (FREEMAN)