The state auditor also noted that more than P4.5 billion from delinquent real property taxes (RPTs) could have been added to the City’s coffer, emphasizing that the City needs to improve its collection efforts to generate more income which could be used for development programs and projects of the City and its 80 barangays.
The 2022 annual audit report was submitted and included in the agenda of the Cebu City Council during the regular session on Wednesday, July 12, 2023.
Typhoon Odette financial assistance
The state auditor questioned the regularity and validity of the financial assistance for survivors of Typhoon Odette after several deficiencies were found, including the presence of signatures opposite the names of some constituents who claimed to have not received the cash assistance; duplication of names and payments; and non-submission of complete supporting documents.
After Typhoon Odette hit parts of the country in December 2021, including Cebu City, the City decided to provide financial assistance or subsidies of P5,000 for homeowners whose houses were either damaged or destroyed.
Based on the record of the City Accounting Department, a total of P791.835 million was disbursed in 2022 for 158,367 beneficiaries.
Mayor Michael Rama issued Executive Order 149 on Dec. 23, 2021 to set the rules and regulations for the Typhoon Odette assistance, which also contained the mayor’s instruction to the Department of Social Welfare Services, in coordination with the Cebu City Disaster Risk Reduction Management Office, to prepare the list of beneficiaries.
As part of audit procedures, the audit team conducted a random written interview with 241 residents from 10 different barangays on Nov. 16, 17, 19, 21, 22, 24, and 28 and on Dec. 1 to verify whether there was strict adherence to the set guidelines.
One of the questions was: “Did you receive the financial assistance from the Cebu City Government for the victim of typhoon Odette? If no, please state the reason/s given by the cash disbursing personnel why you were not given the aid/assistance?”
Of the 241 responders, 91 answered yes, while 150 answered no, according to COA.
COA also noted the inconsistent application of the EO that resulted in selective profiling.
Some residents disclosed that they were not selected for the reason that their house was only damaged.
COA said the non-adherence to the guidelines set in the EO only promoted government distrust.
It also found various loopholes in the data profiling which made it difficult to identify the specific person listed as qualified beneficiary, opening rooms for possible fraud or irregularities.
The state auditor found 296 names or beneficiaries with a total amount of P1.480 million appearing twice or thrice in the submitted database, with 70 belonging to the same barangay while the remaining 226 belonging to different barangays.
COA also noted that distribution was delayed for three to 12 months with P138.620 million, or 14.90 percent of available funds, still undistributed.
Other notable observations included names lacking the complete information such as middle names and the names of their sitios of residence, duplication of misspelled or interchanged names which may refer to one, and non-submission of the endorsement letter or barangay certificate of residence and copies of the valid identification card with specimen signatures of the beneficiaries, among others.
The City has agreed to COA’s recommendation to further investigate the noted deficiencies.
COA also recommended avoiding giving a similar task to two or more offices with equivalent or parallel authority as this may cause confusion, disagreements, conflicts, or opportunity for fraud.
Based on the COA report, it has yet receive a concrete comment from the City on the findings.
Unnecessary expenditures
The state auditor also flagged several expenses the City made in 2021 to 2022 as unnecessary or irregular, including:
• Purchase of 1,957 T-shirts amounting to P391,400 for the general assembly and election of officers of Cebu City Habal-Habal Riders in December 2021;
• Purchase of 1,000 T-shirts amounting to P200,000 for the general assembly meeting of persons with disabilities (PWDs) on Dec. 26, 2021;
• Purchase of 517 T-shirts amounting to P103,400 for the LGBTQ+ strategic planning in December 2021;
• Purchase of 1,754 T-shirts amounting to P263,100 for religious purposes, orientation, and anniversary celebration in October 2021;
• Purchase of 2,000 T-shirts amounting to P300,000 for senior citizens and PWDs in October 2021;
• Purchase of 2,000 T-shirts amounting to P300,000 for the anniversary celebration of Repos Angels Inc., a nongovernment organization, and Quiot LGBT in October 2021;
• Provision of afternoon snacks for a morning half-day event which COA deemed unnecessary, adding that the event’s budget of P93,792.19 could have been lower;
• Provision of lunch for a half-day event and morning snacks for an afternoon event incurring a total of P986,593, both of which COA deemed unnecessary;
• Provision of breakfast for various activities, including 1,500 breakfast meals amounting to P240,000 for the Barangay Women’s Culinary Courses on Nov. 20, 2021, and another P1,500 breakfast meals amounting to P240,000 for the Barangay City Health Workers general assembly in November 2021; and
• Provision of breakfast totaling P158,485 for a morning event.
The state auditor recommended strengthening the City’s measures to curb and cut unproductive spending or eliminate unproductive, unnecessary, wasteful expenses, and maximize use of funds for programs that support an important objective.
“In the context of limited government resources and against the backdrop of competing government priorities, curbing or cutting unproductive spending should always be an important government objective,” the COA stated in its report.
Senior citizens financial assistance lapses
COA noted various lapses in the grant of financial assistance to senior citizens totaling P922.780 million in 2022, such as claims through authorization despite explicit prohibition, inconsistent signatures, inclusion in the distribution payroll of deceased senior citizens, and signed payroll for deceased senior citizens.
The City disbursed a total of P922.780 million in 2022 for such program.
COA conducted an audit using more than 5,000 samples.
It found that in 2022, senior citizens who were unable to personally claim their financial assistance were subjected to different guidelines set by the City or the executive director of the Office of the Senior Citizens Affairs (Osca) depending on the distribution period.
Of the total samples, 35 samples fell under this audit condition.
“Notwithstanding such clear and express prohibition on claims via authorization letter ‘for and on behalf’ of the qualified SC (senior citizen), the AOs (account officers) did not strictly comply with the same as we discovered that some SCs financial aid were still received by another person through authorization letter,” COA noted.
COA also noted that some beneficiaries’ signatures appeared to differ significantly from one payroll to another, which raised doubts about authenticity.
As part of the audit process, the state auditor also wrote to the Office of the City Civil Registrar for a copy of the list of deceased senior citizens in 2021 and 2022.
From the data the COA gathered, a total of 4,691 senior citizens died in 2021 and 3,727 in 2022. After cross-checking 1,483 samples, it found 30 deceased senior citizens still included in the current payroll.
COA discovered that the names of 13 deceased senior citizens were signed, manifesting that their financial assistance was claimed.
COA also noted large amounts of unclaimed or returned funds amounting to P40.225 million, indicating either excessive grant of cash advances or flawed distribution methods.
The state auditor recommended improving the City’s distribution and communication methods by having a fixed distribution schedule per barangay with a clear communication flow employing all available platforms to target beneficiaries.
The City has agreed to COA’s recommendation to further investigate the noted deficiencies.
P4.5 billion delinquent RPT
COA noted delinquent RPTs amounting to P4.598 billion in the records of the City Treasurer Office (CTO), which remained uncollected as of December 2022.
It recommended instructing the CTO to strategize and exert effort to enforce collections of delinquent RPTs, including the conduct of a tax campaign and sending of notices of delinquencies.
It also recommended tapping the barangays.
COA noted that during the exit conference, it was informed that the CTO still had to reconcile and update its records with the City Assessor’s Office.
It said the City also committed to maximize collection in the future.