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Non-adherence to laws governing Cash Advances, particularly Section 89 of PD 1445 and COA

Circular No. 97-002 dated February 10, 1997 resulted in unliquidated cash advances amounting to
P936,018.93.

The pertinent provision of Section 89 of PD 1445 states that, a cash advance shall be
reported on and liquidated as soon as the purpose for which it was given has been served. No
additional cash advance shall be allowed to any official or employee unless the previous cash
advance given to him is first settled or a proper accounting thereof is made.

COA Circular No. 97-002, reiterates with amendments the rules and regulations on the
granting, utilization and liquidation of cash advances. It explicitly provides that within 60 days
after return in case of foreign travel or within thirty (30) days after return to his permanent official
station in the case of local travel, the accountable officer shall liquidate his cash advances.

Section 5.9 thereof also provides that at the start of an ensuing year, a new cash advance
may be granted, provided that a list of expenses against the previous cash advance is submitted.
However, when no liquidation of the previous cash advance is received on or before January 20,
the Accountant shall cause the withholding of the AO's salary.

Examination of the account Advances to Officers and Employees (148) disclosed a balance
of P936,018.93 for cash advances for local travel as of December 31, 2015. Ageing of the
Advances to Officers and Employees account showed that the P936,018.93 was composed of the
following:

Ageing Amount Not Yet Due Due


Less than 30 days P 5,423.00 P 5,423.00
31-90 days 236,718.48 P 236,718.48
91-385 days 233,280.66 233,280.66
over 1 year 61,365.72 61,365.72
over 2 years 15,310.00 15,310.00
3 years and above 383,921.07 383,921.07
Total 936,018.93 5,423.00 930,595.93
99.42%

Analysis of the working paper revealed that 99.42 percent or P930,595.93 of the total
balance were already due or had not been liquidated within the prescribed period as provided in
COA Circular No. 97-002 (see attached schedule)

Verification of the agencys cash advances report submitted to the Office of the Auditor as
of December 31, 2015 revealed that P222,428.12 or 23.76% of the total unliquidated cash advances
were due to lack of supporting documents, P148,320.80 or 15.85% owing to death, separation in
service and were out of the country. Moreover, P103,184.78 or 11.02 % were refunded in 2016
and P107,317.96 or 11.47% were liquidated in 2016 (see attached schedule).
No. of
Status/Reason of Non-
Cash Amount Percentage
Liquidation
Advances
Out of the Country,
Separated in Service, 21 P 148,320.75 15.85%
Death
From Deped 3 12,019.29 1.28%
Error in Recording 5 17,393.00 1.86%
Dropped in Rolls 1 11,672.00 1.25%
Refunded in 2016 44 103,184.78 11.02%
Liquidated in 2016 10 107,317.96 11.47%
Lack of Supporting
25 222,428.12 23.76%
documents
Not Stated 57 313,683.03 33.51%
Total 166 936,018.93 100.00%

The non-liquidation of cash advances indicated insufficiency of controls in the monitoring


of the cash advances granted to officers and employees resulting in government funds being
exposed to risk of loss and misappropriation. Consequently, assets were overstated and expenses
were understated which bear on the reliability on the fair presentation of the financial statements.

In view of the above, we recommend that the Provincial Accountant:

Require the immediate liquidation of cash advances for local travel within
thirty (30) days after the return of the officer/employee to his official
station.

Establish a database and assign a staff to monitor cash advances due for
liquidation in order to timely send out demand letters to concerned
officers or employees to prevent the further accumulation of the
unliquidated cash advances.

For retired officials/employees with unliquidated cash advances, deduction be made from
their unpaid claims/benefits or exhaustive effort be undertaken to properly inform them of
their outstanding obligations with the Provincial Government

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