COA: LSB’s P400M idle

THE COMMISSION on Audit (COA) found that the city’s Local School Board (LSB) was not budgeting at least 80% of its capital outlay, while idle funds amounting to P400 million remained unused in special or high-yield savings bank accounts.

On its annual audit report, the COA said that there were “inefficiencies and the planning and budgeting process” of the LSB.

In effect, the allotments of around P151.8 million remained unobligated by the third quarter of calendar year 2016, during the time of the audit.

This resulted to a low utilization of the city’s capital outlay, the COA report added, with another P400 million in cash deposited in a special savings account.

“Hence, a low utilization rate for Capital Outlay at only 0.07%, and a consequent placement of idle cash amounting to P400 million to Special Saving Deposit.

“The very low utilization rate of 0.07% equates to a slow or non-implementation of intended capital outlay projects in the current year considering that [capital outlay] has been given the biggest budget share,” the COA report said.

The capital outlay had the most unobligated amount, at 80.3% of the total allotment.

According to the COA, this means that there was not enough budgeting being done for the benefit of local public schools whose funding is being assisted by the city.

The COA also called out the practice of the local government of budgeting capital outlay projects at the end of the year, for both calendar years 2015 and 2016.

“Additional appropriations for Capital Outlay projects were only submitted and approved in a supplemental budget ordinance near the end of the budget year,” the COA report said.

“Delayed supplemental budgets defeat the very purpose of planning and budgeting for the year’s activities. It defers the implementation of projects and timely delivery of basic education services to the intended beneficiaries.”

 The COA said that this practice encouraged a bottleneck and was “an inefficient way of planning.”

 “Had projects in the supplemental appropriations been programmed earlier and incorporated in the annual budget for as long as it does not exceed income estimates for SEF, implementation rate could be higher. Thus, a need to enhance budgeting practice is very important to avoid delays,” the COA said.

 Because of this, the local government is currently not using around P400 million in LSB funds from 2015 to the third quarter of 2016.

 The COA also cautioned the local government from placing the idle amounts in special savings deposit accounts and high yield savings accounts, as this practice restricts the local government from withdrawing the funds any time or as needed.

 “There is a high risk that management can incur unnecessary bank charges if these are pre-terminated prior to maturity date,” the COA report said.

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