By Joseph B.A. Marzan
The Commission on Audit (COA) in its 2020 audit report took notice of the Sangguniang Panlalawigan (SP) of Iloilo’s “mismanagement and excessive procurement” of housekeeping supplies.
COA made two separate observations on housekeeping supplies by the SP, the first on the absence of well-established operating standards on Property and Supply Management System (PSMS).
The report said that there was no proper guidance on supply management, as the SP relied on existing and previous practices. Most of the supply officers also averred that requests and issuances were made verbally and regularly assigned to any personnel.
Even measures to inform personnel of their functions and their degrees of responsibility and accountability were not done as only two supply officers were formally designated by their respective offices.
Verification by the COA also revealed unsystematic recording of receipts and release of supplies and a poor internal control system of the supplies, as shown in the following instances:
– Supplies were issued in 2020 even if they were shown to be unavailable since none of the items were purchased in 2020, and the issuances also exceeded purchases meaning that there were supplies not included in the Report of Physical Count of Inventory (RPCI) in 2019;
– The SP’s 2019 RPCI stated that the inventory was as of December 31, 2019, but the actual count was done in October 2019, and had not been updated since, but this was not disclosed in the report;
– Only one Requisition and Issue Logbook was maintained in the SP Office and none for all other offices, in lieu of stock cards per item, thus all receipts and issuances could not be properly accounted; and
– Housekeeping supplies were given to constituents during visits to Board Members’ Offices, but these were not accounted for due to a lack of control record.
The lack of proper recording of housekeeping supplies, the COA said, resulted in discrepancies and variances which were not timely discovered and corrected.
State auditors also noted that the Board Members’ giving of supplies to constituents must be stopped because “the [provincial government] suffered losses”.
The COA noted that this was contrary to its Circular No. 92-386, as well as the PSMS Handbook.
Circular No. 92-386 mandates the Local Chief Executive (LCE) to develop operating standards to guard against the improper or wasteful use of supplies or property with approval by their local sanggunian.
The PSMS Handbook states that internal control system policies and procedures are designed to safeguard the accuracy and reliability of the information by preventing and detecting errors on a timely basis.
A draft of the operating standards and policies was submitted to the Office of the Auditor in November 2020, but as of the audit report’s release, this is still being polished. The target of transmitting a report to the SP was set in the First Quarter of 2021.
The Supply Officer of the SP Secretariat told COA in a reply that they are now strictly maintaining the stock cards, RIS, utilization reports and logbooks, to properly account the receipt and issuance of supplies and prepare the required reports to establish the correct balances of supplies.
Those in charge of supplies in SP Members’ offices were also said to have been given verbal and online notices to strictly practice PSMS operating standards.
The COA recommended the LCE, in this case Governor Arthur Defensor Jr., to direct the General Services Office to:
– Address the lapses in internal control and fast track the formulation and approval of the Standard Operating Procedures on Property and Supply Management;
– Facilitate the conduct of orientation on the basic procedures and fundamentals of Property and Supply Management for all concerned personnel and Property and Supply Officer of each office.
It was also recommended for the governor to officially designate a Supply Officer in writing, with the office heads’ recommendation, to establish proper accountability and responsibility.
The Supply Officer and personnel in charge of supplies in the Board Members’ offices were also recommended to do the following, which they agreed to:
– Maintain appropriate records and prepare the required reports to properly account the receipt and issuance; and establish correct balances of supplies; and
– Stop the practice distributing supplies to constituents.
EXCESSIVE, INCORRECT SUPPLIES
The COA also noticed that the SP Office bought supplies in excess of legal requirements, and deliveries were accepted despite being different from what was stated in the purchase order (PO).
Records showed that the SP requested and received a year’s worth of housekeeping supplies for 2020 amounting to P960,000. The items delivered were also observed to kept in different locations which were inadequate for safekeeping of stocks.
The Audit Team during their random check also noted the following deficiencies:
– 1000 bottles of rubbing alcohol were not presented;
– 225 milliliters (mL) of liquid hand soap was presented instead of 450 ml liquid foaming soap as indicated in the PO;
– The brands of some items was different from the one specified in the purchase order; and
– The delivery was only partial, as confirmed verbally by the focal person.
Re-inspection and validation were done by the Audit Team on the said deliveries, and they still found that some of the brands that were delivered did not match the brands indicated in the PO.
In some instances, there were two brands of the same product instead of just one, and some were even of higher market value than the price indicated in the PO.
For example, for a 500 mL alcohol 70 percent solution, the PO stated the Green Cross brand only, however, the brands presented during validation were a mix of Green Cross, Casino, and Best Lab.
In another example, 500-gram Pride detergent powder was indicated in the PO, but what was presented was the Surf brand, with 550, 1000, and 1100 gram sizes available in the inventory.
These instances, the COA said, were contrary to provisions of Republic Act No. 11465 (General Appropriations Act of 2020) and the PSMS Handbook.
Section 25 of Rep. Act No. 11465 provides that the inventory of supplies, materials and equipment spare parts to be procured shall not exceed the agency’s two-month requirement.
The PSMS Handbook states that regardless of the how they were bought, supply deliveries must be in accordance with specifications, terms and conditions provided in the PO or Contract and there must be an inspection to ensure compliance with the said specifications, terms and conditions.
The GSO, in response to the COA’s inquiry on the deficiencies, said an inspection conducted as a matter of practice. The COA found that the inspector’s claim that delivery and inspection were completed was inconsistent with the focal person’s statement.
But the GSO was also unable to explain the variations between the items listed in the PO and the items delivered to them.
The SP’s Supply Officer, however, explained that the items, despite being different in brand than what was stated in PO, were still essential to keep everyone safe from the coronavirus disease 2019 (COVID-19) pandemic.
While the COA recognized the impact of the COVID-19 situation, compliance with specifications, terms, and conditions of the purchases were not relaxed.
“[COA] took cognizance of the present situation brought by the COVID-19 and understood the explanations made by the personnel of the SP. However, it is emphasized that compliance with the guidelines is still required in all government transactions. Although there was relaxation of some rules and guidelines issued by appropriate government agencies due to the pandemic, the guidelines quoted in this circumstance were not among those relaxed,” the COA report said.
Ultimately, the COA recommended to SP personnel in charge of supplies, as well as the governor, to ensure compliance with provisions on buying and delivering supplies.
The governor was also recommended to direct the GSO, Supply Officer, and the Inspector to ensure that items delivered are in accordance with the POs, and to strengthen practices in delivery, inspection, and acceptance to be included in its proposed operating standards on the PSMS.