By: Gerome Dalipe
ABOUT 126 cooperatives in Iloilo owe the Provincial Government at least P2.66-million in livelihood loans.
Unfortunately, the Provincial Government may have a hard time collecting the outstanding loans since these cooperatives have stopped operating, the state auditors discovered.
Apart from the 126 inactive cooperatives, 43 others were not included in the documents turned over by the Provincial Planning and Development Office (PPDO), the Commission on Audit (COA) said.
“They should first establish the correct balances of receivables and ensure that these cooperatives are qualified,” read COA’s 2018 annual audit report on the Iloilo Capitol.
The Provincial Government has been extending loans to various cooperatives pursuant to its Provincial Livelihood Project Fund (PLPF) Program.
According to Section 7 of COA Circular 2016-005, the provincial accountant is mandated to conduct regular analysis and validation of the existence of receivables, unliquidated cash advances, and fund transfers to determine the concerned debtors, accountable officers, and the sources and implementing government entities concerned.
Verification by state auditors showed that about 126, or 48.46 percent, of the cooperatives with outstanding loans from the Provincial Government, were not operating.
Thus, the probability of collections or recovery of the loaned amount was low, the auditors said.
The provincial cooperative office said they are gathering documents to validate and establish the non-operation of the cooperatives so that they can request for the write-off.
On the other hand, the Provincial Accounting Office explained that the reconciliation of the loans receivable was assigned to some staffers and that they have not monitored the status.
COA also urged the Provincial Accounting Office to coordinate in reconciling and validating the livelihood loans receivable and determine those which are eligible for write-off or condonation.
This is not the first time that COA called out the Iloilo Capitol on how it handled public funds doled out to various entities.
For one, several municipalities in Iloilo have yet to account or liquidate the P391.67 million that were transferred from the Capitol coffers for supposed development programs.
The long-overdue of unsettled advances and fund transfer was due to Capitol’s failure to conduct regular monitoring and analysis of the fund transfers, the auditors said.
It also violated COA Circular 2016-005, which provides the rules and regulations on the granting, utilization and liquidation of funds transfers to different municipalities for their priority projects.
“Consequently, additional transfers were made to those that have not liquidated within the prescribed period and with no demand issued to liquidate long overdue transfers,” read the COA report.
The Provincial Government transferred funds to various municipalities and even barangays to “accelerate” the implementation of various development projects.
Each transfer was covered by a memorandum of agreement, which provided for the responsibilities of the parties and the terms and conditions of implementation.
Every local government unit is tasked to implement the project within six months from the signing of the agreement.
The Provincial Government, on the other hand, requires the recipient government unit to submit the fund utilization report and report of disbursements upon its program completion.
Pursuant to Sec. 6.1 of COA Circular 2016-005, all government entities are mandated to conduct regular monitoring and analysis of receivable accounts.
This is to ensure that the funds are collected when these become due and demandable and that cash advances and fund transfers are liquidated within the prescribed period depending upon their nature and purpose.
But the auditors said the liquidation for fund transfers from various towns were not properly monitored and analyzed.
Additional fund transfers amounting to P273.89-million were granted to various towns despite the fact that they were unable to submit their liquidation reports for previous transfers.
For the fiscal year, 2018, only P90,844,330.42 liquidations were credited, the auditors discovered. This increased the un-liquidated fund transfers from P208,621,609.10 in 2017 to P391,671,879.08 in 2018.
COA also scored the Iloilo provincial government for releasing P12.15 million to 13 cooperatives that lacked accreditation from the provincial board.
Worse, the monies were used to augment the cooperatives’ micro-financing capital (pautang), which violated Section 67 of the General Provisions of the 2018 General Appropriations Act and Section 35 of the Local Government Code.
Pursuant to the contracts signed by the cooperatives’ representative and the governor, the fund shall be “solely used by the cooperative to finance or fund their livelihood project.”
But the fund released to nine cooperatives was used to augment their working capital for micro-financing and not for livelihood activities, the auditors said.
“Although there was some that generically states that the fund will be loaned to their members to finance livelihood activities, there was no link established that indeed it was used for the intended purpose,” read the 2018 COA report.
The cooperatives’ projected income statements showed that the significant amount of their income was exclusively sourced from interest income.
A quarterly monitoring report of the cooperative operations revealed that the loaned amount was used as salary, special loan, honoraria, regular or ATM loan.
The loan extended to various cooperatives was meant to give their members income-generating opportunities that will help improve their economic sufficiency.
However, the auditors said that these income-generating opportunities appeared to stop at the level of the cooperative and have not reached their members.
“Hence, it was only the cooperatives that were directly generating income out of government funds,” the auditors said.
COA noted that instead of uplifting their members’ economic status, the cooperatives even added to their financial burdens because of the loans they incurred.