University’s mode of transferring P198-M to external campuses ‘erroneous’ – COA

By Gerome Dalipe IV

The mode of cash transfer employed by the Iloilo State University of Fisheries Science and Technology (ISUFST) main campus in Barotac Nuevo, Iloilo to support its four external campuses was erroneous.

This, according to the Commission on Audit (COA) in its annual audit report for 2022, which called on ISUFST, formerly Iloilo State University of Fisheries Science and Technology (ISCOF), to stop such practice in issuing notice of cash allocations (NCAs) to its external campuses in Iloilo.

State auditors said the university transfer of some P198.104 million through the List of Due and Demandable Accounts Payable with Advice to Debit Account (LDDAP-ADA) was erroneous.

LDDAP-ADA is a form used by the government and its operating units to settle their accounts payable to their creditors. ISUFST has external campuses in Dingle, Dumangas, San Enrique, and Barotac Nuevo.

The Department of Budget and Management (DBM) National Budget Circular (NBC) No. 488 dated May 22, 2003, institutionalized the revised procedures for transferring funds under the agency budgets.

The Circular provides that the practice of transferring support through funding checks under the Letter Advice Authority (LAA) shall be discontinued.

Hence, COA has issued a circular letter dated Nov. 19, 2003, providing the accounting guidelines and procedures on the discontinuance of the practice of releasing funding checks to operating units and other agencies within the same agency or department.

In its annual audit report for 2022, the state auditors said that an audit of transactions of ISUFST’s external campuses showed they received notice of cash allocations amounting to ₱324.915 million as of December 31, 2022.

About P198.104 million was transferred through LDDAP-ADA to the four schools’ external campuses with the Land Bank of the Philippines.

However, the auditors pointed out the receipt of the external campuses’ share should have been deposited in the regular account with the Landbank.

“The practice of transferring funds through LDDAP-ADA for the operational requirements of each external campus prevented the implementation of the Modified Disbursement System (MDS) where any unexpended portion of their NCA for a certain period will be automatically reverted to the account of the National Treasury,” read COA report.

Such a mode, the auditors said, allowed the school to transfer cash to the accounts of the external campuses so that the unused portion of the cash allocation was not reverted resulting in the accumulation of a significant amount of cash balances in Landbank.

“As a result, the objectives of attaining adequate cash management control and cost reduction for the government were not facilitated,” the auditors stressed.

The practice would also defeat the government’s objectives to institutionalize the transfer of funds covering centrally managed lump-sum amounts under agency budgets, and attaining optimum cash management control, COA said.

During the exit conference, ISUFST officials told state auditors that they had already remitted their unused cash allocation to the Bureau of the Treasury as of January 2023.

The auditors also advised the school to discontinue the release of funding using such a scheme to support their external campuses.

The state auditors also directed the school accountant to instead use the Notice of Transfer of Allocation (NTA) to the accounts of the external campuses.

The accountants and bookkeepers of four external campuses were also directed to account for the balance of unutilized cash allocations as of year-end for remittance to the Bureau of the Treasury.